On 30 July, Society of Motor Manufacturers and Traders (SMMT) Chief Executive Mike Hawes warned that Chinese brands are piling pressure on legacy automakers operating in the UK, forcing them into ever-deeper discount schemes to fend off the competition from lower-cost imports. Chinese-owned brands—led by SAIC’s MG, BYD, and Chery’s Omoda and Jaecoo lines—now account for roughly 15% of UK new car registrations.

According to SMMT, this is having a marked effect on local production. SMMT reports that UK vehicle output fell 7.5% in the first half of 2026, to 385,979 units, with domestic-market production down a sharper 13.2% against a more modest 5.6% decline in exports, though Q2 alone stabilised at close to flat. 2025 was already on record as the weakest year since the early 1950s for British vehicle production output. Hawes cited Chinese competition as one factor among several, alongside high energy costs, weak investment, and increasingly stringent regulation both in the UK and neighbouring mainland Europe.

Chery’s rise captures how quickly the shift has occurred. Its Jaecoo 7 SUV became the UK’s single best-selling car outright in March, regardless of powertrain, registering more than 10,000 units and beating long-established rivals like the Nissan Qashqai and Ford Puma. It is noteworthy that plug-in hybrid variants accounted for 85% of those sales, finding particular appeal among suburban and fleet customers. Chinese brands overall made up roughly one in ten new UK car sales in 2025, but the figure is now closer to around 15%—a striking climb from a standing start only a few years earlier.

The UK’s policy response to Chinese competition has diverged sharply from Europe’s. The EU imposed punitive tariffs on Chinese-built electric vehicles in 2024 over unfair subsidy concerns, but the UK has introduced none. Hawes added he isn’t aware of any automaker filing the kind of complaint that would trigger an investigation, plausibly reflecting how important China remains as an export market for the UK’s luxury segment. Things are already quite bleak for UK vehicle exports to China: down 44.7% in the first half of the year to just 12,323 units. This has been a substantial contributor to the recent struggles of domestic luxury marques like Aston Martin.

Chery’s Jaecoo, sometimes referred to as the ‘Temu Range Rover’, has emerged as the UK’s best-selling car outright 

Chinese price competition is far from the British industry’s only headache. Earlier in 2026, SMMT issued a separate warning that the UK’s Zero Emission Vehicle (ZEV) mandate is running ahead of natural demand, forcing automakers to subsidise sales at unsustainable levels. Every industry leader responding to the trade body’s own survey said the UK is lagging behind its 2030 EV trajectory, with nearly three-quarters calling it significantly behind, as annual battery-electric sales targets are set to jump from 23.9% today to 38% by January 2027 and 52% by 2028.

SMMT is also pressing the EU to grant UK-built vehicles, parts and batteries equivalent treatment under its proposed Industrial Accelerator Act, warning that exclusion could trigger a roughly £1.4bn (US$1.87bn) tariff hit from 2027 and disrupt a UK-EU auto trading relationship worth around €80bn (US$91.7bn) a year.

Manufacturers have already spent more than £12bn on discounts just to meet ZEV mandate targets, above and beyond the price cuts being forced by Chinese competition. Increasingly the situation appears like a perfect storm, leaving the industry fighting a regulatory timeline, a trade-rules dispute with Brussels and underpriced imports all at once, with little room to address any single pressure without worsening another.

Taken together, Chinese competition looks less like the industry’s core problem than its most visible symptom. It is exploiting exactly the pricing and margin room that ZEV mandate costs and trade uncertainty have already stripped from UK and European automakers, which means that even a well-designed tariff response would resolve only one of several simultaneous pressures squeezing the sector, not the underlying vulnerability itself.