23-06-2025
Gullible Europe has signed the death warrant for its own car industry
The auto industry gathers for its annual summit on Tuesday, hosted by trade group the Society of Motor Manufacturers and Traders (SMMT). But for some, the industry isn't waving, but drowning.
'I don't see a way back,' reckons Nick Molden, chief executive of Emissions Analytics and an honorary senior research fellow at Imperial College. 'It' s now about the funeral and the wake'.
The Government has made its mind up, he thinks – it's not going to protect the UK auto industry from cheap Chinese auto imports, or abandon the all-electric dogma, and so the industry must deal with it.
Around the country, the names of car dealerships are changing, as the Chinese wave begins to crash on to our shores. Chery's Omoda only opened here in September last year, but will have 130 dealerships by the end of 2025, including the flagship Hogarth Roundabout site in Chiswick, formerly a Tesla showroom.
Jaecoo, another Chery brand, only launched in January, and claims to have contracts for 80 showrooms by the end of the year, with plans to eventually have 130 in total. Get used to names like GMW (Great Wall Motors) which has 46, and more.
The state has decreed what technology the consumer must use, and punishes producers for making anything else. It so happens to be a technology in which China has unbeatable cost advantages. The SMMT thinks the UK can compete in this new field.
Mike Hawes, chief executive of trade body, is optimistic. He tells me that billions of pounds of inward investment is evidence of confidence that the UK can compete.
'The sector has fundamental strengths including a highly skilled and productive workforce, engineering excellence and world-class R&D capabilities,' he says.
For now, investment looks healthy. Nissan will manufacture a new Leaf EV in Sunderland, the UK's biggest plant, as well as the electric SUV Qashqai. Toyota is moving production of the GR Corolla from Japan to its Burnaston plant in Derbyshire, where it can take advantage of the UK's lower tariffs – 10pc vs 25pc.
Tata has announced a £4bn gigafactory in Somerset. Jaguar Land Rover remains committed to the UK. Our boutique, low volume brands like Aston Martin and Bentley are genuine survivors who don't compete in the cut-throat budget and midrange markets.
But underneath the surface, you can detect much anxiety. Energy costs make the UK uncompetitive, Nissan told MPs recently. Two weeks ago, Hawes accompanied the SMMT's monthly sales bulletin on new car purchases with a side note.
The current market situation was 'unsustainable', he wrote. The 20.9pc BEV share is some way behind the proportion that Whitehall has mandated in its zero emission vehicle mandate, despite 'significant' discounting.
I'd dearly love Hawes to be right. But we have all underestimated the long game that China is playing. It has convinced the West to dispose of its advantage in internal combustion engines for what one automotive critic calls 'glorified golf carts' that only China can make cheaply. Labour will hide behind free trade and consumer welfare arguments as domestic industries suffer.
'The damage has been done – it devalued the car companies we had', says Emissions Analytics' Molden. 'Governments have forced on the marketplace a technology where only non-European countries can succeed in a competitive market.'
China's advantages are deep and broad. It enjoys much lower energy costs – thanks to coal and gas – a stranglehold on key materials and the refining of them, and its firms enjoy very long subsidy programmes. All these advantages were known when EU and Whitehall bureaucrats set the CO2 emission targets, hoping European industry would spring to life in response. But it can't.
To this day, the EU and Whitehall officials stubbornly refuse to help and permit technologies like synthetic e-fuels and plug-in hybrids after 2030 to dilute their all electric dogma. Those would at least have allowed us to retain our competitive advantages in IP and engineering.
Now China is coming after those lifeboats too. For the first time, last month, Chinese cars topped the best-seller hybrid charts in the UK – the BYD Seal U and Jaecoo 7 taking two spots on the plug-in hybrid vehicle charts.
So what happens next?
'We'll end up in the end game with a European version of British Leyland,' thinks Molden, referring to Tony Benn's monster merger of Triumph, Rover, Mini, and Austin Morris in 1968.
Think of it as an Airbus for cars. That process has already begun. In May, the chief executives of Renault and Stellantis, John Elkann and Luca de Meo, held a joint emergency press conference. 'We can't make smaller cars in acceptable profitability conditions,' de Meo said.
The Airbus for cars will be positioned as a European champion 'and will start off in a blaze of glory. But it will eventually realise it doesn't have a competitive advantage', Molden predicts.
'An Airbus EV would torch auto engineering and R&D jobs,' agrees pundit Hilton Holloway. 'Instead of four or five platforms, there'll be one.'
More realistically, autogeddon will see local jobs in Europe manufacturing lines retained, but the real profits will be returned to China. And another piece on the geopolitical chessboard will have been captured, without a shot being fired.
The great delusion of the globalisation era was that the West could retain global influence without manufacturing anything itself. What a way to find out this was false.
