Chinese carmakers gain ground in UK with no trade barriers

This investment comes at a time when Chinese carmakers are rapidly expanding their footprint in the UK market. In 2026, Chinese-owned brands account for roughly 15% of new car sales—up sharply from just 1.3% five years ago. Notably, the Jaecoo 7 recently became the UK’s best-selling car for the first time, highlighting the scale of this shift.

Business Secretary Peter Kyle has signalled that the government does not intend to curb this trend. Instead, ministers argue that openness to imports benefits consumers and could attract further foreign direct investment. The government is particularly keen to encourage Chinese manufacturers to establish production facilities in Britain, echoing the wave of Japanese investment in the 1990s.

However, this strategy carries risks. UK vehicle production has halved over the past decade, and critics warn that domestic firms may struggle to compete against lower-cost, technologically advanced Chinese imports. Concerns have also been raised about potential national security implications linked to data usage in connected vehicles.

Opposition figures have been quick to criticise the government’s approach. Andrew Griffith argued that policies phasing out petrol and diesel engines have weakened British manufacturers, while Robert Jenrick called for tariffs and quotas to counter what he described as unfair competition from China.

Unlike the UK, both the US and the EU have imposed tariffs on Chinese EVs. Britain’s decision not to follow suit has made it a more attractive market for Chinese exporters, who have rapidly expanded dealership networks and marketing efforts.

Industry leaders offer a more pragmatic view. Mike Hawes of the Society of Motor Manufacturers and Traders noted that Chinese brands are succeeding largely because they deliver what consumers want: competitively priced vehicles with strong technology and build quality.

Against this backdrop, the Agratas gigafactory is seen as essential to maintaining the UK’s competitiveness. By strengthening domestic battery production, it could help secure exports—particularly to the US—and reduce reliance on overseas supply chains.

Ultimately, the UK’s strategy reflects a broader balancing act: embracing globalisation and the rise of China’s auto industry while attempting to rebuild its own industrial base. As Chinese manufacturers continue their global expansion, Britain’s openness may offer short-term gains—but the long-term impact on domestic production remains uncertain.