THE UK car market – as one of the biggest in Europe – is set to become a critical battleground for Chinese automotive brands following the EU’s new tariffs on battery-electric vehicles, according to a Cox Automotive report.

Tariffs in the EU on Chinese-made battery-electric vehicles (BEVs) entering Europe now range from 19 per cent to 46.3 per cent.

Those tariffs are expected to slow growth of Chinese automotive brands in the region.Global advisory firm Grant Thornton’s head of downstream automotive, UK-based Owen Edwards, said in the latest Cox Automotive Insight Quarterly that Europe has traditionally been an attractive market for Chinese brands because of its size and low import tariffs.

“However, the newly proposed EU tariffs on Chinese BEVs, ranging from 19 – 46.3 per cent based on cooperation levels with the EU’s research, could significantly disrupt these expansion plans,” he said.

Cox Automotive’s insight and strategy director, UK-based Philip Nothard, told GoAutoNews Premium that right-hand drive markets – such as the UK and Australia – “are clearly a strategic focus for Chinese OEMs.”

“Many are actively researching and preparing to enter” these markets, he said from the UK.

“Production remains strong and they are making significant investments outside of China.”

He agreed that restrictions in the UK could lead to Chinese car-makers seeking sales in other right-hand drive markets and, given the success in recent years, turn their attention to Australia.

The EU measures target the substantial government support Chinese BEV manufacturers receive, which the EU believes may distort competition and impact the local industry.

China sells more than 30 million new vehicles and 350 million used vehicles each year in its domestic market. Chinese OEMs view both the UK and Europe as key markets for growth.

The UK, being the second-largest new car market in Europe, is poised to be a significant arena for these brands.

Cox’s Philip Nothard said that “the implications for the UK market are still unfolding, as the UK government has not yet clarified its position on import tariffs for Chinese BEVs.

Philip Nothard

“However, as identified by Owen Edwards and the Grant Thornton team, the potential impact on consumer pricing and brand acceptance could be substantial.”

Mr Edwards said that some Chinese brands, like BYD, have shown a willingness to absorb the increased costs while others may pass them on to consumers, possibly slowing their growth in the region.

“In the short term, we may see a dip in sales for some Chinese BEVs due to the new import tariffs,” he said.

“However, brands capable of absorbing the costs may be less affected.“By producing locally, Chinese OEMs could avoid some tariffs, reducing costs and enhancing their competitive edge in the European market.”

The Cox reports said that BYD and others are already planning to establish manufacturing facilities in the EU, with battery plants in Hungary and vehicle plants in Turkey, while Chery is considering manufacturing support in Spain.

Despite these challenges, Chinese brands remain committed to capturing market share in Europe, the report said.

It added that recent research by JudgeService indicated that of car buyers shopping for a premium-brand vehicle, 41 per cent would consider a Chinese brand if priced £3000 ($A5840) more cheaply, while 27 per cent of customers shopping for volume brands would consider a Chinese brand if the vehicle was £3000 ($A5840) cheaper.

Mr Nothard said: “Factors such as brand acceptance, dealer networks, parts supply, and residual values will be crucial in determining their success. 

“It will be interesting to see how much market share Chinese brands can secure and how quickly they can do so.”