Another Chinese car brand arrives to seek its fortune in the UK

Omoda, part of China’s largest car exporter, has already outsold Tesla in Spain. Should we be concerned by an influx from the Far East?

Step up the next contender in the great family SUV market. Omoda is a brand of Chery, China’s leading passenger car exporter since 2003 and the country’s fifth-largest producer, selling 1.9 million vehicles last year with more than half exported. Lest one doubt its ambition in Europe, Omoda outsold Tesla, Jeep and Fiat in Spain last month.
However, with SAIC-owned MG and BYD now firmly ensconced in the UK, what might be the impact of another Chinese car maker joining the market?
Chery is a state-owned company, founded in 1997 by officials of the Wuhu municipal government and launched its first car in 1999. In the interim, Chery has proved adept at building unexceptional but reasonably reliable cars, which look a lot like leading rivals. It was accused of copyright infringements by General Motors in 2003 for plagiarising the Daewoo Matiz. The subsequent out-of-court settlement warned off the Chinese firm, though how much that changed things might be judged by the assessment of Gordon Fairclough in an article for The Wall Street Journal in December 2007, in which he described Chery’s corporate culture as “an odd hybrid of Communist state enterprise and entrepreneurial start-up”.
There have been other accusations of plagiarism since, but by and large, Chery, with its export-led outlook, has started to rely more on its own design department and steer a more legitimate path to distinction. After tying its coat tails to various entrepreneurs in Canada and elsewhere, Chery has picked on a tried-and-tested route into the UK with its Omoda name, which has been specially designed for European buyers.
As with Chinese rivals BYD and MG, Chery has chosen a traditional dealer model of sales rather than the highly experimental and controversial agency model in which sales are direct from the manufacturer and prices are fixed. So far, 60 dealers have been recruited, with plans to expand to 130 eventually, according to Victor Zhang, country director of the sub-brands Omoda and Jaecoo. As well as big UK dealer groups, such as Peter Vardy and Listers, they’re also picking off the multi-generation family-owned local dealers that once carried Ford and Vauxhall banners (and then, when the big groups abandoned them, brands such as Skoda and Mitsubishi. 
It’s worth noting that dealers and service points such as these don’t sell in the volumes of the retail-park dealer groups. But the children of their staff and customers attend the same school and loyalty is stickier than No More Nails, whatever brand they’re selling. 
“We’re aiming to seize the core European markets,” says Zhang, sounding a bit like a Bond villain and scarily evoking the “disruptive pricing” boasts of MG when it entered the UK markets in volume. So, Chery has recently launched in Spain, Poland, Italy and now the UK, with cars already on sale. 
The launch, held in a hangar in an obscure part of London’s Docklands close to the Dome, avoided the obvious dragon theming. Instead, it offered a strange mix of 1980s Peugeot launch (perky models, Dr Who music and strobe lighting, with Pinot Grigio and Peroni on tap) and high tech (with a creepy robot dog which followed people around performing clackety somersaults). 
Steve Eum, VP and General Manager of design at Chery, tried valiantly to “explain” the highly derivative Omoda design, linking it with artificial intelligence, fashion, sustainability and “sexy and young sporty” buyers. No one appeared to have told him that people buy on price at this end of the market or that, however sexy and sporty they might be, young people generally don’t buy new cars. 
“In the national consumers’ buying survey, the top reason for buying is price,” said Oliver Lowe, product manager for Omoda and Jaecoo. “Only after that do you add on size, loyalty, reliability and so on.”
With a starter price of £25,235 on the road, and with a straight petrol drivetrain, the Omoda 5 is aimed at the heart of the family SUV market. The pitch is familiar (MG uses it too), with a low price rivalling the smaller class below (think: Nissan Juke, Skoda Kamiq and Ford Puma). But the generous equipment levels match the upper trim levels of the class it is in (think: Nissan Qashqai, Ford Kuga and Kia Sportage). 
While battery-electric and petrol hybrid versions are on the way, the 5 has Chery’s own 1.6-litre petrol turbo engine – pushing out 178bhp and 203lb ft of torque and driving the front wheels via a seven-speed dual-clutch gearbox from Getrag. It weighs less than 1.5 tonnes, delivers about 35mpg and accelerates from 7.8sec.
Nothing particularly special, then, and at 307 litres the boot doesn’t match rivals in the sector. However, part of the reason for this is that the 5 will accept a spacesaver spare wheel, which is a rare thing in this sector. This will appeal to more conservative (older) buyers – the EV version will take a full-sized spare. In addition, there’s a seven-year/100,000-mile warranty, which on paper matches that offered by Kia, although careful perusal of the small print might be required.
Omoda will also have a parts department run by DHL, which claims to guarantee 24-hour delivery (rivals have struggled in this area). It is also working with Thatcham Research, the automotive risk institute, on reducing costs related to theft and repairs, as well as with the RAC on breakdown cover.  
Chery has been working for 18 months on this launch, which is something of an achievement when it comes to signing small-print dealer contracts, setting up a headquarters (in Chiswick, west London) and training staff.
“I’m very confident, because I think the UK is very large, but it’s also a very open market,” says Zhang, “so it’s a market which embraces almost every brand here.
“The Chery Group has gained a lot of international experience and knowledge, and people, which is something which makes us distinctive from other brands. And our product, aftersales service, warranty policy, insurance preparation, rescue service and value calculation show we have prepared ourselves quite well in the last year. All these things combined makes us a little bit different from other car makers or brand.”
Zhang neatly dodges questions about the proposed EU tariff barriers on Chinese-produced cars. After a detailed year-long investigation, the EU Commission concluded that “the battery electric vehicles (BEV) value chain in China benefits from unfair subsidisation, which is causing a threat of economic injury to EU BEV producers”.
A set of proposals for enhanced tariffs on Chinese-produced cars entering the EU will be discussed at the end of next month, but for the moment, the UK regards that as “their [the EU’s] problem”.
Speaking at the G7 meeting in July, Jonathan Reynolds, the new UK trade secretary, said he wasn’t about to follow the EU’s lead in imposing tough tariffs on Chinese electric vehicles. Though, the trade secretary said he was remaining “vigilant”.
“I am not ruling anything out,” he said, “but if you have a very much export-orientated industry, the decision you take [must be] the right one for that sector.”
The question about whether the UK should adopt trade barriers is fantastically nuanced. For a start, they seldom work (see: the Japanese in the eighties). Then there’s the question of what a bright shiny new Labour Government is trying to achieve. It would be tempting for it to welcome Chinese-made EVs, which fits with its slightly frayed-looking Net Zero narrative, but that’s not what the Chinese carmakers are doing.
Yes, they are selling EVs (the 61kWh, 257-mile range Omoda E5 will cost £33,035), but in the main they are selling cheap petrol or mild hybrid family SUVs, which challenge EU producers along with the jobs, intellectual capital and historic marques they represent.
But outside of Stellantis, Nissan and Toyota, the UK doesn’t really have a mass-production industry any more and while it would be politically damaging to let any of these firms pack up and leave like Honda did in Swindon, what if the Chinese wanted to set up a UK plant? And should we be putting on tariffs to save EU car makers?
Experience shows that Governments trying to play the market like this seldom triumph (pun unintended). Things move slowly in car industry product development and players tend to look at the long game. Stellantis is about to launch the results of its own collaboration with Chinese firm Leapmotor, for example; proof that when push comes to shove, all car makers will vote for survival over anything else.
If you’ve got the answers, you should be in Government. Traditionally they dodge, fudge or fail to understand complex issues such as this. Rest assured, however, that Chery is just the next in line of a litany of Chinese carmakers arriving in the UK and trying to make their fortunes. This issue isn’t going to go away…