Why do Chinese cars cost so much more in Europe?

What are Chinese cars more expensive in the UK? 

Given all the concern about Chinese encroaching on the European brands over here, the threat will be much reduced if they can’t compete on price.

A recent teardown of the BYD Seal saloon overseen by the bank UBS by its analysts totted up a list of the biggest costs faced by the Chinese as they import into Europe.

From its selling price in China of €26,572 (£22,970), shipping added €2,000 euros, 10% import tariffs €3040, sales distribution €1500 and the difference in VAT €2230. So that car is now up to €35,342 (£30,552).

The fact that the Seal sells from £45,695 in the UK indicates that BYD is reluctant to position its cars as a cheap alternative, with the company telling Autocar back in April it wanted to exploit a "brand premium" to price at a higher level.

If BYD – China’s biggest-selling car company - wanted to go aggressive on price, it still could without harming the bottom line too much. But there’s also a danger it could be accused of dumping cheap cars on us and threatened with higher tariffs. 

Why aren't Chinese cars as cheap in Europe?

Among the Chinese brands, BYD is one of the best on electric car costs, due partially to its strategy of making a lot of the parts itself, including the battery. 

The UBS teardown of the Seal concluded the car had 15% lower costs than a Tesla Model 3 made in Shanghai, and over 35% lower costs than a Volkswagen ID 3 made in Germany.

It also calculated that if BYD decided to locate production in a cheaper part of Europe, for example Romania, the same car would only add another €1000 more to build with the removal of tariffs and shipping costs.

Other export costs highlighted by Great Wall in a statement to Autocar include changes to satisfy local homologation requirements, for example crash and active safety. For the UK, the cars also have to be built in right-hand-drive. 

It’s also more expensive when you’re just starting up. In China, Great Wall’s size generates economies of scale not just in production but also distribution to dealers.

“In a smaller or less established international markets, the lower sales volume may restrict those economies of scale,” the company said. It also flagged up exchange rates, as a weak pound is currently pushing up UK prices of imported cars.

Shipping presents another sizable bill. “It’s one of the biggest costs right now,” MG UK commercial director Guy Pigounakis told Autocar recently.

Such is the demand for the roll-on-roll-off transporters that makers usually use to ship vehicles that MG this year will transport between 25,000 and 28,000 cars to the UK by shipping container, a far more pricey option, Pigounakis said. “Battery prices seem to have stabilised but shipping costs are still absurd,” he added.

However, MG parent SAIC has commissioned ships of its own as it expands its export business (SAIC is by far China’s biggest automotive exporter).