Analysis: Will UK-China tensions affect Britain’s motor industry?

Political tension between China and the UK has started to affect industrial investment in the UK – the Huawei 5G furore, nuclear power projects and the HS2 railway line being some of the higher-profile examples.

But how will this tension affect China’s car industry investments in the UK, led by Geely, SAIC and Nio? At stake are thousands of jobs and billions of pounds of investment in UK facilities.

“It’s definitely a concern,” said Professor David Bailey of Birmingham Business School. “Government has a new relationship with China and the big question mark is, even if these investments are private Chinese companies, they operate in a country where the state is much more active in day-to-day operations.”

The biggest Chinese investor in the UK is Geely, an industry newcomer that started selling cars in 1997 yet expanded rapidly by buying ‘distressed’ overseas companies: Volvo in 2010 for $2 billion (£1.5bn), Manganese Bronze Holdings (the London taxi maker) in 2013 and Proton and Lotus in 2017. Geely’s decade of ownership of Volvo has been textbook, bolstered by around £8.5bn of investment and delivering a convincing impression of long-term strategy.

In the UK, Geely has more than 2000 employees and a financial commitment put at £1.0bn to £1.5bn, with plenty more to come, especially as Lotus accelerates into its Vision80 plan, which should lift production to more than 5000 cars per year by 2028.

A Geely spokesman said the company is firmly established in the UK and is sticking with its agreed business plans for all UK companies: “Geely Holding remains committed to its operations, ongoing business investments and market presence the UK, where its strategy is unchanged.”

Like other car firms Autocar contacted, Geely declined to discuss the geopolitical situation at government level. But Autocar understands from industry sources that there is unease at a high level that further deterioration in the relationship could spill over into the automotive sector.

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11 Volvo Car UK – Maidenhead HQ, sales, marketing and aftersales. UK sales in 2019: 56,208. Employs 160 people

12 Volvo Car UK – Daventry Training and development centre. Employs 40 people

Q&A: Hui Zhang, VP, Nio Europe

Why did Nio select the UK for an engineering centre?

“There were two reasons. We have strong connection to England that links back to our sadly missed co-founder, Martin Leach. The other is the very long automotive tradition in the UK.”

And why Oxford?

“It was chosen specifically for the access to extremely skilled engineers. Additionally, there’s a lot of momentum in Oxford for EVs.”

Do current government tensions concern Nio?

“We’ve always kept out of politics. But we see the benefits that global trade brings, and a strong economic co-operation is in all our interests.”

How much investment has Nio committed to the UK?

“We’re seeing the fruits of our investments, which have been very significant over the years. And we have achieved a positive margin on our products for the first time this quarter.”

What about UK sales of Nio electric SUVs?

“We were targeting sales outside of China this year but, due to Covid-19, we have had to postpone. It will take another two years to achieve. A launch in select European countries hasn’t been fixed but is coming. An analysis of which markets has been under way for some time.”