The UK is no stranger to foreign cars. The bestseller lists in recent years have been dominated by the US’s Ford Puma, Japan’s Nissan Qashqai, Korea’s Kia Sportage and occasionally even Tesla’s Model Y.
But in March the top 10 provided a shock: a Chinese car leapt into the lead.
Little more than a year after launching in the UK, China’s Chery sold 10,064 of its Jaecoo 7 crossover SUVs during the month, beating all the usual suspects.
It was not the first Chinese-made car to make it to UK number one (it follows Tesla’s Shanghai-made Model 3 and the HS made by MG, a formerly British brand owned by China’s SAIC). But the manner of the Jaecoo’s ascent has been dizzying, and Chery has made it clear it wants to keep that spot.
Chery, partly state-owned, has been the largest Chinese exporter for the past 23 years, but now it is making an aggressive push into Europe, starting with sales of its Omoda, Lepas and Chery brands in the UK, Spain and Italy.
The Jaecoo 7 is in part a symptom of a brutal price war in Chery’s home market. Even with China’s vast market of 34m sales in 2025, too many companies are in cut-throat competition. So Chinese manufacturers’ attention has turned abroad in search for profits and a chance to win a chunk of the enormous global car market – with potentially devastating consequences for European rivals.
China’s costs advantage
Chery was founded in 1997 in the city of Wuhu, midway between Wuhan and Shanghai on the banks of the Yangtze River. Its chair and founder, the former local government official Yin Tongyue, recently told Reuters that the company wants to be a mixture of Tesla, the US electric vehicle pioneer, and Toyota, the world’s biggest carmaker. It sold 2.8m cars last year, of which 1.3m were exported. Key to those exports is its advantage on costs.
Daniel Hirsch, a partner at Oliver Wyman, a consultancy, has studied the cost structure of cars in detail, to the point of tearing down different models to work out how much each individual part and manufacturing process costs.
His figures suggest that a plug-in hybrid electric vehicle (PHEV) Jaecoo 7 will cost Chery about $25,000 (£18,400) to make and sell compared with $33,000 for a comparable European SUV. Materials costs are 40% higher in Europe. Labour costs are a smaller part of the overall bill but they are four times higher in Europe. The petrol version is even cheaper, at $23,000.
Chery’s scale at home and abroad means it can buy parts and materials at the scale of millions of cars. That reduces complexity, with four brands sharing an underlying manufacturing blueprint – known as a platform in industry jargon – and many of the same parts, such as the 1.6 litre turbocharged petrol engine that powers the Jaecoo 7 and the Omoda 5 SUV. (European manufacturing groups share platforms between brands as well, but some are still left with more than they want from historic mergers.)
But the Chinese costs advantage also has another element: state support that far outdoes that of European nations. For 25 years China’s government has sought to push the development of “new energy vehicles” – battery cars or hybrids that combine a battery with a petrol or diesel engine – as part of a concerted effort to become one of the world’s dominant carmaking countries.
European carmakers also receive significant state support but, Hirsch said, “subsidies from the Chinese government apply on all levels of the supply chain” – with grants for everything from toolmakers buying robots to designers using AI software to manufacturers building factories.
The Chinese government and its manufacturers are not messing around. Long gone are the days when its cars were unreliable, notably inferior products limited to China and poorer countries.
Steve Young, the managing director of Auto West London, an Omoda and Jaecoo dealer, said that the 1,451 cars on show at last month’s Beijing auto show were of comparable quality to Europe.
“The thing that struck me was universally that the Chinese brands, the product on show, was of a much higher quality than you would have seen seven or eight years ago,” he said. “I didn’t see a car from the show from any brand where the door felt tinny or the fittings felt flimsy, and you couldn’t have said that seven or eight years ago.”
Oliver Lowe, the head of product at Omoda and Jaecoo UK, said: “It feels like a steal because you’re getting a PHEV for £35,000, with the specs of a car for £45,000.”
For Jaecoo, whose brand name is an awkward portmanteau of Jäger (German for hunter) and “cool”, it has not all been positive. There is a nickname for the J7 going round that the company desperately does not want to stick (it has stuck): “Temu Range Rover”. A spokesperson said he believed it was a reflection of “I can’t believe we got this car for the money”, rather than the sometimes shoddy products associated with the bargain Chinese website.
What Car magazine’s two-star review of the Jaecoo 7 said that even with all the extra kit it is “best avoided”, citing a poor driving experience, a “fidgety ride, wayward handling and oversensitive safety systems meaning moments of peace are all too rare”.
But while critics have picked holes, Chery has targeted buyers by offering techy add-ons that are generally found in more expensive cars: heated and ventilated seats, a panoramic sunroof, synthetic leather seats, a heads-up display that projects information onto the windscreen.
“While it’s not one of the best in its class to drive,” said Ginny Buckley, the founder of the British EV-buying website Electrifying.com, “it proves that many buyers now care more about the in-car tech and extras such as heated seats and steering wheels.”
Tariffs miss the mark
US buyers like heated seats and electric wing mirrors, too, but none of them are buying Chinese cars. That is because of 100% tariffs brought in by the former president Joe Biden that effectively shut them out of the market. Under Donald Trump there is almost no prospect of Chinese manufacturers selling cars in the US.
But it is different in the UK and the EU, which have remained open to Chinese imports. The UK has declined to impose tariffs, with ministers publicly saying Chinese vehicles will be good for consumers and privately hoping that manufacturers will decide to build them in the UK. The EU did impose tariffs on Chinese electric car imports – including 20.7% on Chery – but crucially it did not include hybrids, leaving the way clear for PHEVs.
PHEVs use electric motors to power the wheels, so do not require the precise engine tuning that used to set apart Europe’s brands.
Demand for plug-in cars – battery-powered and hybrids – could rise further if oil prices remain elevated because of the Iran war. Renault’s UK boss on Friday said the price surge has started a “seismic shift upwards” in interest in electric vehicles.
Matthias Schmidt, a Berlin-based automotive analyst who tracks European sales closely, said: “PHEVs have offered Chinese manufacturers a get-out-of-jail-free card to mitigate the anti-subsidy tariffs intended to slow their progress across the region, and also prevent a pricing death spiral as witnessed in China.”
Almost a fifth of the PHEVs sold in western Europe are from Chinese brands, including Chery, BYD and SAIC, the owner of the MG brand, said Schmidt – double their share across all fuels. Chery said that 75% of the models it sells in the UK are PHEVs.
‘In the UK, for the UK’
Buckley said Jaecoo and other serious Chinese entrants to the UK market, among them – are “doing the basics brilliantly – strong dealer partnerships, very aggressive financial deals and generous standard equipment”.
Jaecoo has expanded to 126 UK dealers, which it claims puts most of the country within a 40-minute drive. That also helps customers feel more confident that they will be able to get parts and servicing when they get problems. The carmaker has used its cost advantage to offer 0% finance with zero deposit to all buyers.
It has swooped in as European manufacturers try to shift from a franchise model of selling to dealers (who then haggle on price with customers) to making dealers agents who cannot set prices and get only a flat fee.
“A lot of other manufacturers have forced the agency model on to their dealers,” Lowe said. “A lot of our new dealers were people who had lost other franchises.”
Chery executives insist constantly on being “in the UK, for the UK”. That may end up extending to manufacturing. Chery has already taken over a former Nissan plant in Barcelona in Spain, and it has also held talks with Nissan to use some of its spare capacity in its factory in Sunderland, northern England.
Investment from Chinese companies in local manufacturing would be welcomed by many European governments desperate to preserve automotive industry employment, but for European rivals it is a sign that their rivals are here to stay.
