According to the Financial Times, Victor Zhang, the head of Chery Automobile in the UK, has announced that the company plans to enter the UK market in 2024 and aims to establish a local factory by 2030.
As the ninth-largest automotive group in China, Chery Automobile will launch a series of gasoline, hybrid, and electric vehicles through its mainstream brand Omoda in the spring of this year. Subsequently, high-end models under the Jaecoo brand will be introduced in the summer.
Victor Zhang revealed that Chery's goal in the UK market is to compete with South Korean automakers Hyundai and Kia, both of which entered the UK market in the early 1980s and early 1990s, respectively, and currently hold a 10% market share in the UK automotive market.
Additionally, Chery Automobile is considering constructing two factories in Europe. Victor Zhang disclosed that due to Brexit and the scale of the UK automotive market, Chery is contemplating establishing a separate factory in the UK specifically for producing right-hand drive models for the UK and the smaller Irish market. The second factory would serve other regions on the European continent, producing left-hand drive versions.
"Localized production is a very important consideration for future growth," stated Victor Zhang. "From an investment perspective, we believe it makes sense to have a separate factory in the UK because the UK market itself is large, with a demand of 2 million vehicles." It is reported that Chery has initiated preliminary discussions to explore these options.
Typically, automakers need to produce at least 100,000 vehicles annually to justify establishing a factory locally. Chery needs to achieve a 5% market share in the UK, similar to Kia, to reach this goal.
Victor Zhang mentioned that Chery's potential factory in the UK would focus on electric vehicles but could also produce gasoline and hybrid models based on demand, providing customers with a full range of powertrain options. Additionally, he suggested that the future UK factory could export cars to other markets such as South Africa, Australia, and New Zealand.
After a visit to China by a UK delegation in December last year, Chery executives have had preliminary discussions with the local government about establishing a manufacturing base in the UK. Zhang stated that the company would make a final decision on building a factory in the UK in the "near future," although the group has not yet considered specific locations.
"We will start selling in the UK in 2024, and it will take 2, 3, or even 4 years to reach a certain production demand. Only then will we need a dedicated factory in the UK," said Victor Zhang.
Chery's plan is seen as a boost for the UK automotive industry. Two years ago, after the Brexit referendum, Honda closed its factory in Swindon, and BYD indicated that it would not consider establishing a European factory due to Brexit. However, in the past year, the situation has changed. Four out of the five major car manufacturers with factories in the UK (BMW, Jaguar Land Rover, Nissan, and Stellantis) have committed to producing new electric models in the UK in the past year, and Toyota recently stated that it is considering further investment in the UK, including producing a new model.
Like other Chinese automakers entering the UK market, Chery plans to utilize an established dealer network to sell its Omoda and Jaecoo brands. The company has reached agreements with UK dealerships such as Arnold Clark, Listers, and Endeavour, and plans to offer a 7-year car warranty and an 8-year battery warranty for its models to attract consumers.
Chery also plans to price its models competitively with Hyundai and Kia rather than undercutting other mainstream brands in the market. Some competitors are concerned that Chery, with lower production costs as a Chinese automaker, might adopt a low-price strategy. Regarding this, Victor Zhang stated, "We don't want to scare competitors with low prices; we just want to bring good products from a good brand to UK consumers."
