New tariffs on Chinese-built cars will provoke a backlash from UK dealers without removing manufacturers’ price advantage, industry experts warn.
Former Hyundai UK president and chief executive Tony Whitehorn believes the rapid establishment of Chinese-brand dealerships has made intervention more contentious, with franchise partners already committed to businesses built around competitive pricing.
Steve Young, managing director of ICDP and also MD at Omoda and Jaecoo dealership Auto West London, believes pressure to protect UK manufacturing could nevertheless push the Government towards additional duties.
Both believe Chinese manufacturers could absorb some additional costs, limiting the effect on their competitiveness.
Brands like BYD and Omoda/Jaecoo are already deeply embedded within UK businesses having already established large geographical coverage and networks of over 140 dealerships. Brands like Changan, Geely, Xpeng and Aion are all targetting 100+ dealer networks in the UK.
Dealer investment raises the stakes
Whitehorn (pictured left) questions the timing of potential intervention, given the infrastructure Chinese brands and their UK partners have already established.
He told Automotive Management: “You should have two or three years ago. Now you’ve got an infrastructure already in existence.
“So you’re going to get more of a backlash on it because of that.”
His concern is that additional duties would affect established UK franchise businesses, rather than simply making it harder for manufacturers to enter the market.
He also believes Chinese manufacturers have sufficient financial capacity to absorb additional tariffs, potentially maintaining competitive prices despite higher import costs.
The comments come as ministers reportedly examine additional duties on Chinese-built electric vehicles.
The Telegraph reported that the Chinese embassy in London had expressed “serious concern” and warned that Beijing could respond to restrictive measures. No decision on additional UK tariffs has been announced.
Manufacturing creates a competing priority
The tariff debate is closely connected to negotiations over the EU’s proposed Industrial Accelerator Act and its treatment of vehicles manufactured outside the bloc.
The proposals would introduce European production requirements for certain public procurement and support schemes. The UK Government has warned that the measures, as drafted, could disadvantage British automotive manufacturing and integrated UK-EU supply chains.
Young argues that securing recognition for UK production could become a significant bargaining point.
“The quid pro quo will be that we have to put tariffs on Chinese cars, you know, somewhat in line with the EU,” he explained.
“In return for the UK being considered as Europe.”
He presents this as a possible negotiating outcome, rather than an agreed condition.
For manufacturers with British factories, the stakes extend beyond competition in UK showrooms.
Young believes they will want to preserve the position of UK plants within European production networks, increasing pressure for an agreement.
That creates competing priorities for the Government: supporting domestic manufacturing while considering the effect of additional duties on dealers and customers.
Tariffs need not translate directly into showroom prices
Young cautions against assuming that a tariff percentage would produce an equivalent increase in a car’s retail price.
He explained: “The tariff is applied on the landed price of the car, and the landed price of the car is still highly competitive.
“You’d rather not have it, but it’s not the end of the world.”
His assessment is that Chinese manufacturers could absorb additional costs, although the outcome would depend on the duties imposed and individual brands’ commercial decisions.
For example, a car priced at £30,000 in a UK showroom might have a customs value of £15,000 when imported. An additional 10% tariff would add £1,500 to its import cost.
If that cost were passed on in full, with 20% VAT, the showroom price could rise by £1,800 to £31,800, an increase of 6%. The increase could be smaller, or avoided, if the manufacturer absorbed some or all of the additional cost.
European factories could change the equation
Whitehorn also believes Chinese manufacturers’ expansion into European production complicates the longer-term picture.
He asked: “You’re going to have Chinese manufacturers manufacturing vehicles in Europe. How do you deal with that?”
He links the UK’s appeal to Chinese manufacturers’ need to find export markets, with barriers in the US and additional duties in the EU making Britain particularly attractive as an “open marketplace”.
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