“Drivers will always vote with their pockets, so if it’s cheap enough, they’ll take it. End of.” That is AFP vice chair, Lorna McAtear, neatly summing up why company car drivers like EVs so much.
It stands to reason, then, that the torrent of new Chinese brands is destined for greatness in fleet. Most specialise in EVs and PHEVs so tick the tax box, lower production and battery costs mean P11Ds are almost universally cheaper than anything from established brands and the UK’s lack of EV import tariffs makes it an attractive market.
In its Road to 2030 report, Auto Trader claimed new entrants “dominated by Chinese brands” could account for up to 25% (400,000 cars) of the UK EV market by the turn of the decade, and said UK dealers stocking a Chinese new entrant car rose from 34 in January to 173 by the end of 2024.
Such companies are clearly off to a flying start, but their sheer numbers and differing approaches suggest some are more likely to stick around than others, and some believed fleet would be an easy route into the UK. Industry consultant and former Hyundai CEO, Tony Whitehorn, who has worked with new entrants, explains why it is not that simple.
“There was one company, that approached me and said, ‘we’d like to come into the UK, but we just want to get in there gradually and not necessarily have a big network, so we’ll go straight into fleet… not realising how just how complex fleet was. A couple of Chinese manufacturers asked me about that.
“I explained to them that what fleets want is accessibility to aftersales and parts – that’s fundamental to them, because they cannot have vehicles off the road, and that surprised a number of companies.”
Aftersales focus
Operators and leasing firms support Whitehorn’s view that fleets require a solid aftersales service. Chris Chandler, principal consultant at Lex Autolease (its parent company, Lloyds, funds Ora and Xpeng), says it is very much a prerequisite.
“We have to consider [a brand’s] support services: maintenance, repair, the costs that feed into that and the network that exists to enable them. At the end of the day… our customers are leasing vehicles from us, and even though we don’t build them, they’re still deemed our service.”
“If you get a fault and it can’t be fixed over the air, where do you take that vehicle?” adds McAtear, “that’s something fleet managers really have to bear in mind, because the nature of a company car driver is: ‘I make a phone call, you fix it for me. If you tell me I’ve got to drive 100 miles to take that car for a service, I’m going to tell you where to go’.
“That is the attitude and mentality that we deal with. Why are we dealing with that? Because we’re used to having a dealership on our doorstep.”
That is well at odds with manufacturers’ desires to sell cars directly and shrink the dealer’s role. It is in no way exclusive to new entrants, but the rise of the agency model and online sales earlier in the decade – around the time many Chinese brands were circling the UK – generated the impression that newcomers could set up shop Amazon-style, with minimal physical presence.
“The only one that got it right is Polestar because of the partnership with Volvo,” says McAtear, “they piggybacked onto their existing dealerships. That did two things: elongated the life of the Volvo dealerships and gave Polestar an immediate footprint in the UK.
“BYD, to be fair, are trying to go slower because they realise they need to build that network. For the rest of them, I haven’t got a clue. ‘Where am I going to service an Xpeng if something goes wrong?’ That will be the question my drivers ask me.”
Dealer or no dealer?
We counted 71 outlets on BYD’s UK dealer locator in March, which illustrates its traditional bricks and mortar approach and that it has exploited the gaps left by established manufacturers trimming their networks, such as Ford and Stellantis. Many of those will be multi-franchise sites, too, with existing sales and service operations spread across more than one brand.
MG’s 101-year history in the UK hardly qualifies it as a new entrant, but heritage aside, it sets the standard for Chinese-owned car brands in its modern form, with an electric-heavy model mix and a meteoric ascent in the sales charts, from less than 3,500 units in 2015 to more than 81,000 in 2024 (BYD reportedly has a 60,000 sales target for 2025, while other new entrants are allegedly seeking 50,000-100,000 within the next two years). It, too, follows a traditional franchise model, which makes the case for the format, even if it is a long game.
Establishing a UK sales operation and hiring local senior management is another successful method from the MG playbook, as Whitehorn explains.
“[New entrants] need to set up a traditional national sales company with an indigenous person at the head of that operation. That has worked very well [for MG]. Guy [Pigounakis] gets on with it, and guess what? He sells 80,000 vehicles.”
A national sales company is closer to what we might think of as a traditional manufacturer, with a long-term sales strategy and ambitions to build the brand. It is distinct from a distributor – such as IM Group, which sells Isuzu, Subaru and, more recently, Xpeng and Great Wall Motor in the UK – which tends to have a shorter-term outlook in terms of profits and branding.
Whitehorn’s initial suggestion that there is room for a greater understanding of the UK market is more than skin deep. He explains that some new entrants considered Motability and rental easy ways to get a foothold which, to a point, is not unfounded, but nuance is once again the stumbling block.
“Some have gone into Motability big time,” he explains, “the reason for that is, it is relatively easy to get into and you can sell the cars fairly cheap. However, Motability have now caught a bit of a cold on electric vehicles. They were accounting for something like nearly 30% of all EVs at one stage last year. They’ve pulled back from that and put their residual values up.”
Motability – which reported a £564.6 million pre-tax loss for 2024 – confirmed that new entrants including BYD and Omoda had joined its scheme and that it doubled its number of EV customers to more than 70,000 last year. It said it accounted for 16% of UK BEV registrations in 2024 and cited a BVRLA announcement from September stating that used EV values had fallen 50% over the previous 24 months.
“We therefore have to carefully select vehicles that we believe will maintain their residual value to ensure the long-term viability of the scheme,” it said in a statement.
Whitehorn continues: “Motability and self-drive hire… both require a lot of support, but they do get cars out on the road. The issue here is that residual values are being hit quite hard, because the Chinese manufacturers have gone into those two routes quite severely. A lot of the self-drive hire companies are just looking at the holding cost, because obviously, they don’t take those cars on risk – they’re on buyback.
“A lot of Chinese manufacturers don’t really understand buyback, and they’re saying, ‘why do we need to buy these cars back? We don’t know what they are going to be worth in six months/a year’s time,’ and that is a challenge. So, there’s a bit of naivety by the new entrants coming into the fleet market.”
Too many SUVs?
Then there is the subject of the product range to be addressed. No manufacturer, new or established, can be blamed for developing a mid-sized SUV but, frankly, they have overdone it. Fleets want and need cars in all shapes and sizes – the recently departed MG5 EV was popular, because it was the only electric estate car on the block – and, BYD Dolphin aside, McAtear thinks choice is lacking.
“[Manufacturers] are actually competing against themselves, let alone against the new ones coming in. They’ve brought in vehicles that are exactly the same in that mid-segment. That’s probably where they get the sweet spot between margin and loss, but what they haven’t realised is that they diluting that market and the market share they are after, unless somebody goes pop and leaves.
“You still need some city cars. You need some executive cars. Ford have pulled out from doing the Fiesta and some of their other models, so who’s in that space?”
Finally, there is the court of public opinion, which applies just as much to new entrants to the market as to electric cars in general, and McAtear believes that allaying misinformation that is spread in this area, is a big part of today’s fleet manager’s job.
“The biggest problem we have is that social media is truth – regardless. It doesn’t
matter what goes out there, if somebody’s chatting to somebody else who read that this person did this, that company’s done that and you can’t buy from there, then that is the truth – whether it is or it isn’t.
“The job of a fleet manager now is to dispel what they’ve heard, because their mate down the pub was right or that BBC article was right. It is an interesting challenge, because some of those new entrants are tarred with an unfair bias.”
