UK and China agree landmark automotive deal
The UK and China have signed an automotive co-operation agreement designed to create new business opportunities.
The agreement was signed by the Society of Motor Manufacturers and Traders (SMMT) and its Chinese counterpart, the China Association of Automobile Manufacturers (CAAM), at a reception hosted by the Rt Hon Dr Liam Fox MP, Secretary of State for International Trade and SMMT chief executive, Mike Hawes.
China is the world’s largest automotive market, with more than 23 million new cars registered last year, and a key export destination for UK-made cars, behind only the EU and US. More than six per cent of all British-made models sent overseas in 2018 were shipped to China. At the same time over 10,000 Chinese-made cars were registered on UK roads.
While the UK is Europe’s fourth largest automotive manufacturer, producing 1.52 million cars in 2018, China is by far the biggest globally, producing more than 23 million cars in the same period. Production has increased dramatically across the last decade, up 248% since 2008, with an ever-increasing number of new energy vehicles (NEVs), including battery electric and plug-in hybrid models made – totalling some 1.27 million last year.
The opportunities for growth are clear, built on mutual trust and a desire to develop the trading relationship between China and the UK that goes back decades. British investment into the Chinese automotive sector started in the eighties, with GKN the first western company to invest in the country’s component industry in 1988. Today it has some 19 manufacturing locations across China employing more than 8,000 people. Meanwhile, world-renowned British car manufacturers including Aston Martin, Bentley and McLaren have all established dealer networks across China with Jaguar Land Rover producing cars in the country since 2014.
Meanwhile, Chinese investment in the UK automotive industry has ramped up considerably in recent years. Milestones include Shanghai Automotive Industry Corporation (SAIC) establishing its Technical Centre in the country in 2005 to support product development at the famous MG brand and Changan Automobile setting up its UK R&D centre in 2010, dedicated to powertrain development. More recently Geely announced a significant investment in British sports car manufacturer Lotus in 2017 following on from its successful development of LEVC, and BYD will this summer roll out fully electric double deck buses on the streets of London in partnership with British manufacturer Alexander Dennis.
These investors were attracted to the UK because of the strong fundamentals of UK Automotive. Britain has a highly productive workforce and is home to some of the world’s leading designers and component companies, including 6 design and 20 R&D centres, and thousands of cutting-edge suppliers. There is also strong support for industry from government, with the Automotive Sector Deal part of a modern industrial strategy and ongoing investment into developing connected, autonomous and zero emission vehicles.
To date, the UK government and automotive industry have jointly invested more than £500 million in CAV R&D and testbeds – with four major CAV testbeds in existence. Government investment in EV development, infrastructure and market uptake amounts to £1.5bn.
The UK can boast of world-class research universities with advanced capabilities in engineering, software, data science and artificial intelligence. It also has bustling technology clusters, including London Tech City, arguably the most vibrant digital cluster in Europe and in the West Midlands, the UK’s first Future Mobility Area which will trial and demonstrate new modes of transport, services and technologies.
Future challenges to the automotive industry are no longer local issues – they are shared across global borders. Addressing air pollution and climate change, the rapid shift to electric and alternatively fueled vehicles and the rise of increasingly connected and autonomous cars – all seismic issues the sector is confronting here and abroad.
Mike Hawes, SMMT chief executive, said, ‘The UK’s doors are well and truly open for business with key global partners such as China. Both nations have leading reputations in automotive engineering and production and this agreement builds on an already strong relationship with scope to open up new business opportunities in both markets. In a period of unprecedented change for the automotive sector, and bearing in mind the scale of investments needed to drive this change, close collaboration between nations will be essential if shared ambitions are to be met.’
Fu Bingfeng, executive vice chairman and secretary general of CAAM, said, ‘China and the UK have a long history of co-operation in the automotive industry, which has yielded fruitful results and established a profound friendship. Our new co-operation with SMMT is helpful so we can learn from each other and expand investment and collaboration in a wide range of areas based on existing joint projects. With the revolution of intelligence and electrification underway, it’s crucial to promote the healthy development of the Sino-UK automotive industries.’
