Faisal Islam: Why the government is relaxed about Chinese car imports

Faisal Islam: Why the government is relaxed about Chinese car imports

In a quiet Somerset field, nestled between the construction site of Hinckley Point nuclear power station and the windswept slopes of Glastonbury Tor, a critical transformation is underway. This site, spanning the equivalent of 30 football pitches, is currently a grid of steel frameworks and heavy machinery. By 2027, it will house Agratas, the UK’s largest gigafactory for electric vehicle batteries, fueling Jaguar Land Rover’s shift toward electrification.

For years, successive governments have celebrated the £5bn investment from India’s Tata Group as a cornerstone of industrial strategy. Yet this partnership also represents a baseline effort to sustain British car manufacturing. The sector is now under pressure, highlighted by a recent report showing Chinese cars outsold all others in the UK for the first time. The Jaecoo 7, a medium-sized hybrid or petrol SUV, leads this trend, but the broader impact of Chinese ownership in the automotive market is even more striking.

Chinese brands now account for roughly 15% of new UK car sales in 2026, a sharp jump from 1.3% five years ago. This surge coincides with Business Secretary Peter Kyle’s visit to Agratas, where he secured a £380m grant. When asked about the influx of Chinese imports, Kyle emphasized the importance of consumer choice. “Britain should not fear the rise of Chinese imports,” he stated, adding that while trade distortions are a concern, the opportunity for jobs and investment is significant.

“I would absolutely welcome [Chinese investment] if the conditions are right,” Kyle explained. He drew a parallel to Japan’s 1990s car industry, suggesting that the UK’s openness to foreign capital could mirror past successes.

Yet the sector’s decline raises questions. UK car production has cut nearly in half over the last decade, and some argue that domestic firms struggle to keep up. Shadow Business Secretary Andrew Griffith MP accused government policies of undermining the industry, citing the ban on internal combustion engines as a key factor. “British car makers have been weakened by a foolish engine ban,” he claimed, arguing that it stifled consumer options and boosted imports.

Reform UK’s Robert Jenrick echoed similar concerns, labeling Chinese competition as “unfair.” He warned of potential threats to national security and data integrity, suggesting tariffs and quotas could be necessary to shield jobs. The EU and the US have already implemented such measures, but the UK’s decision not to follow suit has allowed Chinese companies to expand their presence.

Chinese firms have capitalized on this strategy, investing heavily in dealership networks and marketing campaigns. This approach has accelerated their market share. Canada, Spain, and other G7 nations have mirrored this trend, with Spain actively embracing Chinese EV production and Canada reducing tariffs on certain models.

Mike Hawes, head of the Society of Motor Manufacturers and Traders (SMMT), acknowledges the UK’s traditionally open market. “Chinese firms are moving quickly,” he noted, while stressing that consumer demand drives the success of these imports. “At the end of the day, the consumer is right,” he added. “They’re getting attractive products at competitive prices, with strong technology and quality.”

The Agratas facility is central to the UK’s strategy to counter this shift. Its advanced research capabilities aim to match the pace of battery innovation, ensuring British manufacturers can compete in the global EV race. For Jaguar Land Rover, the facility also safeguards its ability to export to the US, with batteries made in the UK poised to meet international standards.