Chinese car maker Chery is in early discussions with UK authorities over plans to build a new car factory here.
The company, which will launch its Omoda and Jaecoo sub-brands in the UK in the coming months, is optimistic about its performance potential in the market, to the extent that bosses say local production could quickly become viable.
Speaking to Autocar in the wake of a Financial Times story that broke the news, Chery's UK manager, Victor Zhang, confirmed that "we have started some discussions" with the government "but it's still at a very initial stage".
He added: "We need a closer discussion to see how to develop this kind of potential cooperation."
Zhang said Chery's decision rests on a number of key considerations, including transportation and the timing of various market developments, but most crucially it will depend on the government's willingness to engage.
This, he said, could take the form of "incentives for the land costs or electricity" but said no firm requirements have been outlined. The UK government, Zhang believes, is "very welcoming of overseas investors" but "we need good communication to establish favourable policies".
Notably, Indian company Tata's gigafactory in Somerset – one of the biggest investments in UK automotive in decades – is said to have been supported by £800 million worth of cash grants and energy subsidies from the government.
Any UK-based car factory would also need to be supported by substantial local sales volumes to ensure its viability and Chery is confident of quickly achieving the figures necessary to build cars here.
"The UK is one of the most important strategic markets for the Chery group and also the Omoda and Jaecoo brands," he said, citing the near-two million cars sold here in 2023 as a sign of the market's potential.
He said Chery is targeting 15,000 sales – across the Omoda and Jaecoo brands – in its first year in the UK market, with the first cars from each brand due to touch down in the coming weeks.
Ultimately, he pointed to a Kia-rivalling 100,000 cars per year as the goal and suggested this could be achieved in "possibly three to five years".
At that point, Zhang suggested, producing cars in the UK would make commercial sense. "If we're looking at setting up a factory, 100,000 is a reasonable figure from a more general perspective," he said.
He added that Chery would consider building cars in the UK for export to other right-hand-drive markets, including Australia and South Africa, to maximise productivity and return on investment.
Zhang acknowledged that manufacturing costs in the UK are significantly higher than in China, because of higher wages and inflated energy prices, but said there are a number of other factors that could make the UK a viable production location, including transportation and workforce talent.
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