Wouldn’t it make more sense for the UK Government to welcome more vehicle manufacturing in the UK than to open the doors to a flood of China-built vehicles that could out-compete our domestic brands, wonders Jim Saker, emeritus professor of Loughborough UNiversity’s business school and president of the Institute of the Motor Industry.
Around 10 years ago a team of researchers from Loughborough was doing some work at the then three European Motor Shows in Paris, Frankfurt and Geneva. We were trying to understand what attracted visitors to different stands and what people looked at and for how long.
Although we weren’t due to look at the smaller stands one relatively small exhibitor had attracted a disproportionate amount of interest despite with having only a couple of cars exhibited.
It was Build Your Dreams, a Chinese battery manufacturer who, from the quality of the vehicles exhibited, had simply stuck four wheels on each corner of their core product. They disappeared and in the last three years have returned as BYD, a major force in the global car industry
Over the past month the industry and the media has been awash with the impact of the Trumpian Tariff policy which appears to be formed by picking a number out of the air and then changing it the following week.
Although its implementation is less than systematic, the rationale behind it is consistent. Donald Trump wants to have companies making cars in the USA and not simply importing them.
This, he believes, will generate jobs for the US workforce.
Although there are many economic arguments against tariffs based on the law of comparative cost there is a logic that would appeal to an American voter.
It is interesting to note the policy that China has taken over tariffs during the last four decades in developing their own car industry while penalising European manufacturers.
China’s strategy has been deliberate. Decades of tariffs, joint venture requirements to allow Western OEMs to sell into China, IP transfer, and state subsidies have allowed Chinese firms to absorb Western technology, scale quickly, and dominate their massive domestic market before exporting globally.
Now they’re exporting aggressively, and often at prices European and UK-based manufacturers cannot match, raising concerns about state-supported overcapacity and price undercutting.
What I don’t understand is why the UK Government, through both its 2030 EV targets and the penalties it is imposing, is sitting back and allowing free imports of Chinese vehicles to damage OEMs such as Toyota, Nissan, JLR and Stellantis who have invested in manufacturing in the UK for many years.
There is no way China would allow that situation to happen in the other direction.
One of the roles of government is to protect its citizens from harm whether physical or economic. Why not make a stipulation that the Chinese companies invest in making cars in the UK before flooding the market with cheap EVs that threaten existing jobs but more importantly the wider future investment in the UK car industry?
China restricted access to European cars for years while gaining technical information that has allowed BYD and others to be far more than a battery on wheels. I can’t help but wonder, are we the mugs or simply being mugged?
Author: Professor Jim Saker