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China wants to conquer Britain’s car market – but should you buy their vehicles?

Great Wall Motor Co. ORA R1 electric vehicle - Qilai Shen
Great Wall Motor Co. ORA R1 electric vehicle - Qilai Shen

Drivers looking for a new car will typically find themselves browsing models that hail from a select few countries: the US, Germany, Japan, or perhaps France, Italy or South Korea.

But now a new nation is entering the fray: China. Britain’s car dealers are scrambling to get Chinese vehicle makers on board following the surprise news that top dealer Pendragon will spearhead the launch of Shenzhen-based BYD into the UK market.

China makes more cars than any other country but has typically reserved them for the Asian market. Past attempts to launch into the West have been aborted after poor reviews.

But, after years of manufacturing improvement and with the electric revolution on the horizon, all that looks about to change. China can now offer a cheaper, ready supply of electric vehicles that meet - and often beat - Western-made rivals on specs. Recent reviews of newer models have praised their quality.

“Chinese brands have really come a long way,” says Dr Stephen Dyer, a Shanghai-based managing director at management consultants AlixPartners.

“Now their vehicles are some of the best looking in the global market and they're definitely value for money.”

Chinese models could answer the prayers of desperate buyers and dealers as supplies from elsewhere dries up. The only question is: should you buy one?

Car-making crown

China became the biggest car market in the world by sales more than a decade ago, overtaking the US in 2010. The landmark came after a large step change in production in 2006, when Chinese factories started to make more motors than America.

A year later, China beat Germany, producing 6.4m cars compared to 5.7m, and by 2009 it took the global car-making crown from Japan.

Since then, the gap has been only widening: China made 21.4m of the world’s 57m cars last year, handily beating Japan’s 6.6m and Germany’s 3.1m.

The boom has tracked the growth of China’s economy and its middle class.

According to the Center for Strategic and International Studies, China’s middle class rose from 39.1m people at the turn of the century to about 707m in 2018. Many of them want to buy a car and they know what they want from one, according to Dr Dyer.

“Chinese consumers care about three things,” he says. “They care about the styling, it has to look good, and it has to look imposing. They don't like small, smart, sharp-nosed vehicles; they like big-grilled imposing vehicles. SUVs are pretty popular in China."

Chinese manufacturers typically focus more on passenger comfort and space, he says, rather than the driver being king.

“Because even though Chinese families are small, they tend to travel with their grandparents. And so the back seat is sometimes even more important than the front seat.

“Will the characteristics that Chinese consumers like resonate with European consumers? That's to be seen.”

Early attempts to expand into Western markets quickly stalled.

A decade ago, Chinese brand Great Wall launched its Steed pick-up truck in the UK to withering reviews. Autocar gave it just two stars, saying that while it was “cheap and practical”, it was “nowhere near as competent or as sophisticated as its rivals” and with “questionable build quality”. Great Wall quickly abandoned plans for further expansion in the UK.

Great Wall Steed - Great Wall
Great Wall Steed - Great Wall

Chinese manufacturers initially “failed because their vehicles were not ready for primetime consumers,” said Dr Dyer. “They were obviously cheap, but they either couldn't pass the safety and emission standards of these mature markets, or they couldn't meet the drivability that consumers in these markets are looking for.”

Chinese manufacturers have also long been in the shadows of Western rivals – often uncomfortably so.

Copies were endemic among Chinese car designs around the turn of the century. General Motors accused Chery of copying its Chevrolet Spark with the Chery QQ and reached an out of court settlement with the firm in 2005.

Jaguar Land Rover won a 2019 legal battle against Chinese car manufacturer Jiangling over its Land Wind vehicle, which Land Rover successfully argued was a rip off of its Range Rover Evoque design.

BYD itself was inspired by the Toyota Corolla with its F3, according to reviews, although the relationship between the two companies was unharmed, as they began a partnership in 2019 to develop battery-powered cars together.

In more recent years, the industry is understood to have left behind these more dubious practices. A jump in production has been matched by a rise in quality.

The MG 4 hatchback, built by China’s state-owned SAIC, is a “first rate car” according to The Telegraph’s Andrew English, who awarded it four stars earlier this month.

Now, many players are ready to test international waters once again.

Choosy Western buyers

The UK is an attractive market to Chinese car makers for two reasons, according to Dr Dyer. One is the size of the market, but the other is the ability to tell Chinese buyers that the model they are test driving is popular with choosy Western buyers.

“There's this race to get volume so that you can have critical mass and be perceived by the government as worthy of support and to scare away other new entrants,” he says.

“Part of the credibility is not only to the government, but with consumers - if you can succeed, in a mature market, consumers in China will perceive you to be credible in quality and attractive vehicles.”

While homegrown Chinese brands are yet to take the UK car market by storm, familiar names like MG, Volvo and Lotus have been Chinese-owned for some time.

On Friday, China’s Geely also picked up a 7.6pc stake in Aston Martin. Chinese buyers have snapped up these brands in part because of the prestige these Western names carry in the East.

For British car buyers, the attraction of a Chinese-made vehicle is simple: a BYD model or similar could help you avoid the year-long wait time many customers are facing, particularly for electric cars.

Employees install batteries onto an electric sport utility vehicle (SUV) during a media tour of the Nio Inc. production facility - Qilai Shen/Bloomberg
Employees install batteries onto an electric sport utility vehicle (SUV) during a media tour of the Nio Inc. production facility - Qilai Shen/Bloomberg

In the year to date, 983,099 cars were sold in the UK, down 11pc compared to a year earlier. That was not through lack of demand, but down to an acute supply crunch.

Chinese car makers have better access to the crucial battery technology needed for electric vehicles (EVs), allowing them to bring vehicles to market faster.

Many Chinese manufacturers have access to batteries through deals with Contemporary Amperex Technology Co, or CATL, the biggest supplier of lithium batteries for cars. China is also dominant in lithium production and refining, as it owns many of the mines which produce it. The country controls about nine tenths of the world’s lithium hydroxide supply.

Chinese car makers are also proving speedier than their European counterparts in finding ways around the lingering computer chip shortages, which have hounded the industry for the last two years.

While a Western car maker might take a year to replace a certain microchip model with a new one, Chinese car makers have been doing it in a fraction of the time allowing them to bring models to market much more quickly.

Means and motive

Chinese entrants into the UK and Europe in the past have tended to be from the luxury end of the market. But BYD sits squarely at the affordable end of the market.

Its advance comes as others are fleeing: Mercedes told investors in the spring that it will recast itself as “a dedicated pure-play luxury car company”, cutting lower-end product lines and focusing on top-end AMG and limousine Maybach models. Fellow German car maker Volkswagen has also promised to slash its range to focus on fewer, more profitable motors.

On paper the marriage is perfect. UK car buyers want affordable cars that are ready for electric, and China has the means and motive to provide them.

Prices have been soaring in the UK as supply has dried up. The prices of popular car models like the Vauxhall Astra, Nissan Qashqai and Ford Fiesta are up 26pc, 25pc and 19pc compared with pre-pandemic values, according to car site Honest John.

Even the cheapest models have felt the inflationary pinch. Cars like the Kia Picanto, Dacia Sandero and Citroen C3 now start at about £12,000 and average at £14-15,000. The Vauxhall Corsa, last year’s most popular model, goes for an average price of about £22,000, surging 46pc in price since 2019, according to data from Auto Trader.

By comparison the Chinese MG 4, a family hatchback, it is much cheaper than many Western-made comparators. Coming in at £25,995, it handily beats Volkswagen’s ID.3 at £36,195 and even the Kia Nero, from £36,245.

Lax security

While the price of Chinese models makes them attractive, some buyers may still be reluctant.

“My concern is, as we start bringing in manufacturers of vehicles from regions and countries where previous regulation isn't as well established, do we open ourselves up to unreasonable commercialisation of our data? That bothers me,” says Ken Munro, a security expert and ethical hacker at Pen Test Partners.

Souring relations between China and the West could also colour the dynamic. In 2018 the Wall Street Journal reported that China is creating an electronic identification system to track cars using an ID chip fitted to windscreens.

A more likely problem in the West, however, is an old-fashioned breach as a result of lax security, says Mr Munro.

“We've seen vulnerabilities in Chinese equipment, I'm thinking more things like CCTV cameras and other Chinese smart goods that were just a result of slapdash coding practices, rather than cynically creating backdoors for foreign agencies to exploit,” he said.

Chinese manufacturers would not be the first to fall victim to this.

Friendly hackers Charlie Miller and Chris Valasek managed to access a Jeep Cherokee remotely in 2015, gaining control of the steering wheel, brakes and transmission. The incident led to the recall of 1.4m vehicles.

While there are no signs that this is possible in any potential export products from Chinese car makers, recent models are laden with internet-connected technology, making a few lines of weak code more likely.

Chinese cars typically feature lane assistance, voice recognition and automatic braking, as well as swish entertainment systems for passengers.

This is one of their best selling points, says Lei Xing, a car enthusiast and former chief editor at ChinaAutoReview.

“Customers are looking for how smart these vehicles are, how they can be integrated into your everyday life,” he says.

Younger buyers who want a car that has the functionality of a smartphone could be much more likely to choose a Chinese model.

A NIO Inc. EP9 sports car - Qilai Shen/Bloomberg
A NIO Inc. EP9 sports car - Qilai Shen/Bloomberg

High-end Chinese electric car maker NIO, which pioneered battery-swapping as a means to keep its cars on the road rather than waiting to charge, recently signed a deal with augmented reality company Nreal to develop AR glasses designed for passengers to watch 3D films without feeling sick.

“Quality-wise, there's been a leap,” said Mr Lei. “In some ways, the foreign brands are falling behind.”

Pendragon plans to start selling BYD’s Atto 3 electric car later this year. Cars delivered to the UK at the same time, cutting the waiting lists currently beleaguering would-be buyers. NIO recently signed a deal to start selling into Norway but expansion into the UK may be on the cards at some future date.

Even Great Wall, whose Steed was synonymous with China’s first failed attempt to crack the West, is returning. Its Ora brand will sell the Funky Cat electric car in the UK from November.

“There definitely will be Chinese car players globally, just like Japanese brands went global in the 1970s and Korean companies in the 80s,” says Dr Dyer. “They've learned a lot, and they're better at it than they ever have been.”