Burnham needs to avoid scaring Chinese car-makers off

Burnham needs to avoid scaring Chinese car-makers off Andy Burnham has reportedly been warned by the German chancellor that rejoining the EU will not be possible unless the UK raises tariffs on Chinese electric cars to 45 per cent. But he needs to be careful, warns Steve Fowler - Bookmark - CommentsGo to comments Become an Independent member to bookmark this article Already a member? Log in Well, it was fun for the Chinese while it lasted. But as Andy Burnham has reportedly been warned by German chancellor Friedrich Merz that rejoining the EU will not be possible unless the UK raises tariffs on Chinese electric cars to 45 per cent, the days of a Jaecoo sitting at the top of the sales charts may be long gone. Or will they? The complications of cosying up to China and the EU are huge. So far, we’ve been hoping that being relatively tariff-free has boosted trade relationships with China – a market that’s crucial for British car brands and likely to be one of the most lucrative for the new Jaguar Type 01, for example – and encouraged Chinese investment in the UK. But that pathway means the EU, who Burnham seems keen to grow stronger ties with and even potentially rejoin, might not include British-made cars in its ‘Made in Europe’ plans which could mean additional incentives offered to people who buy eligible vehicles. Politics is tough, isn’t it? Let’s look at what happened when Trumps tariffs first hit: did prices for British-made cars suddenly skyrocket in the US? Well, you’ll be surprised how much room there is for car makers to take a bit of the burden, which is exactly what happened and that’s what may well happen with the mega-rich Chinese car makers. And not all tariffs are the same. Across the EU, car makers that are owned by the state, or those that don’t co-operate with the EU’s anti-subsidy investigation, are hit the hardest. MG owner SAIC, for example, sits in the highest band as it’s Chinese government owned and gets the full 45 per cent tariff. What does that do for prices? An MG4 Urban – the entry into MG’s electric car range, lists at €27,190 in Germany, which equates to around £23,000. The same car in the UK costs from £23,495. Tariff? What tariff? As for other Chinese car brands, privately-owned BYD gets hit with a total of 27 per cent in tariffs, with Geely at 28.8 per cent. Prices don’t seem to be much higher in Europe for those cars, either. We all know how quickly the Chinese move when it comes to developing and launching new cars, and they’re being just as quick when it comes to European production, which will get around tariffs for the biggest-selling models that are planned to be built in Europe. Building a new factory isn’t the work of a moment, although BYD’s Hungarian factory is coming on stream in what looks like record time. Others are using more cunning plans, with Chery talking to Nissan about using its Sunderland plant for production, as well as looking at production in Spain. Spain seems popular as Leapmotor is talking to its co-owner Stellantis about building cars at the existing Madrid and Zaragoza factories – and sharing tech that will mean new Vauxhalls could well use Leapmotor platforms, too. SAIC is also rumoured to be looking at Spanish production. Geely has the advantage of owning Volvo, which has factories in Sweden, obviously, but also Belgium. It also owns Lotus, which has done plenty of engineering work on Geely models, while Chinese state-owned Changan has had a research and development facility in the UK for years. So, what will the impact be of tariffs on Chinese cars coming into the UK? Looking at what’s happening in Europe, my guess would be not much. We may see prices for Chinese-made models rising a touch, which isn’t exactly what you want to see in a competitive market. It’ll be interesting to see if European brands follow suit and use it as an opportunity to raise prices, too. What may well happen is we see the acceleration of local production from Chinese car makers – although that’s unlikely to be the UK. Some years ago when Tesla opened its Berlin factory, I asked Elon Musk why he didn’t consider the UK for a factory. His response was simple: Brexit made it too difficult. Burnham needs to turn on the charm with the EU and the Chinese to have any chance of a Chinese car maker doing a Nissan or Toyota and build cars here. Honda turned tail and disappeared pretty quickly. One thing we do want to avoid is scaring Chinese car makers off. It may be unlikely, but the last thing we’d want is for all those Jaecoo owners to have nowhere to take their cars for servicing or repairs. And although these new brands aren’t building cars in the UK, many are employing a great many people in their British operations and through their retailers. It’s a difficult balancing act, but I don’t see the Chinese car makers going anywhere anytime soon – they’re in it for the long haul, more brands are planning to come to the UK and, judging by the sales numbers, Brits seem to be very happy to buy Chinese. Join our commenting forum Join thought-provoking conversations, follow other Independent readers and see their replies Comments