As Chinese automakers try to become significant players in Europe, they are facing many of the same hurdles once faced by Japanese and South Korean brands.
Established automakers increasingly view these Chinese upstarts as a significant threat to their market share. They fear rivals from China will use their cost advantages, particularly when it comes to batteries and manufacturing, to undercut them on pricing during the transition to electric vehicles.
That has prompted a backlash, most prominently a European Commission investigation into Beijing’s support for Chinese-built EVs that could lead to tariffs or other measures – and potentially set off a trade war if China retaliates.
The prospect of a new global force in automaking using cost advantages to upend an established local industry recalls a similar situation about 40 years ago, when highly cost-efficient Japanese brands such as Toyota and Nissan outgrew their domestic market and sought new customers abroad, in Europe and the U.S.
In response, the European Community struck a deal with Japan in the early 1990s to set a ceiling on imports of Japanese cars. That followed local quotas in countries such as Britain, France, Italy and Spain.
Faced with similar potential roadblocks, Chinese brands including BYD, MG Motor and Great Wall Motor are now looking at the next step -- local production in Europe.
"When you sell 200,000 cars per year, it’s better to build local," William Wang, head of U.K. and Europe at MG, told Automotive News Europe earlier this year. The advantages for MG include being more responsive to European tastes, as well better integration into the market, he said.
MG's sales in Europe increased 123 percent to170,000 through October, according to figures from market researchers Dataforce.
"Building local means you work together with local people. It’s more commitment," Wang said, without disclosing a time frame or location for European production.