Chinese carmaker Chery has achieved a remarkable milestone in the UK automotive market, with its Jaecoo 7 crossover SUV becoming the country's top-selling vehicle in March. The company sold 10,064 units of the model, surpassing established competitors from the US, Japan, and South Korea.
Rapid Ascent in the UK Market
Launched just over a year ago in Britain, the Jaecoo 7 has quickly climbed to the top of the sales charts. While it is not the first Chinese-made car to claim the UK number one spot—following Tesla's Shanghai-built Model 3 and MG's HS—the speed of its rise has been remarkable. Chery, which is partly state-owned, has been China's largest car exporter for 23 years and is now aggressively expanding into Europe, including the UK, Spain, and Italy.
Cost Advantage Drives Success
The Jaecoo 7's success is partly a result of a brutal price war in China's domestic market, where oversupply has pushed manufacturers to seek profits abroad. Chery benefits from significantly lower production costs compared to European rivals. According to Daniel Hirsch, a partner at consultancy Oliver Wyman, a plug-in hybrid electric vehicle (PHEV) Jaecoo 7 costs around $25,000 to produce, versus $33,000 for a comparable European SUV. Materials costs are 40% lower in China, and labour costs are four times lower.
Chery's scale allows it to purchase parts and materials in massive volumes, reducing complexity. The company shares a common manufacturing platform across four brands, using many identical components, such as the 1.6-litre turbocharged petrol engine found in the Jaecoo 7 and Omoda 5 SUV.
State Support and Quality Improvements
Chinese government subsidies have played a crucial role, supporting the entire supply chain from toolmakers to AI software developers. These subsidies far exceed those provided by European nations. Moreover, Chinese cars have shed their reputation for poor quality. Steve Young, managing director of Auto West London, an Omoda and Jaecoo dealer, noted that cars at the recent Beijing auto show were of comparable quality to European vehicles, with no flimsy doors or fittings.
The Jaecoo 7 is loaded with extras typically found in more expensive cars, including heated and ventilated seats, a panoramic sunroof, synthetic leather upholstery, and a heads-up display. Ginny Buckley, founder of Electrifying.com, observed that many buyers now prioritise in-car technology over driving dynamics.
Tariffs and Market Dynamics
While US tariffs of 100% effectively block Chinese car imports, the UK and EU have remained more open. The UK has declined to impose tariffs, hoping Chinese manufacturers might establish production facilities domestically. The EU imposed a 20.7% tariff on Chery's electric vehicles but notably excluded hybrids, leaving the door open for PHEVs like the Jaecoo 7. This has allowed Chinese brands to capture nearly a fifth of PHEV sales in Western Europe.
Demand for plug-in cars could rise further if oil prices remain elevated due to geopolitical tensions. Renault's UK boss recently noted a "seismic shift" in interest towards electric vehicles following price surges.
Dealer Network and Financing
Chery has expanded its UK dealer network to 126 locations, ensuring most customers are within a 40-minute drive. The company offers 0% finance with zero deposit, leveraging its cost advantage. This strategy has attracted dealers who lost other franchises due to the shift from franchise to agency models.
Chery executives emphasise their commitment to being "in the UK, for the UK," which may eventually include local manufacturing. The company has already taken over a former Nissan plant in Barcelona and held talks with Nissan about using spare capacity at its Sunderland factory.
Despite its success, the Jaecoo 7 has faced criticism. What Car magazine gave it a two-star rating, citing a poor driving experience, fidgety ride, and oversensitive safety systems. The car has also acquired the unflattering nickname "Temu Range Rover," a reference to the budget Chinese website. However, Chery remains focused on growth, with plans to maintain its top spot in the UK market.
