THE CHALLENGE OF CHINESE VEHICLES
Having anticipated China’s emergence as a mass car producer, Thatcham Research began working with its vehicles manufacturers several years ago. Now with numerous Chinese brands flooding Europe and moving into the UK, Dean Lander, Head of Repair Sector Services, discusses the challenges surrounding the repairs of these new models as well as the positive steps being taken to ensure the sector is ready for this influx from the East.
The electric dreams of the world’s emerging car producers are fast becoming a reality – and that has created an immediate headache for body shops across the UK.
According to reports almost half a million Chinese-made vehicles were registered in Europe during the first nine months of 2023. The competitive price points of some of these car brands are attractive to consumers, and sales are increasing rapidly as a result. But insuring these vehicles and managing them through the claims supply chain presents the industry with a big challenge.
Nor is the challenge restricted to one global region. The likes of India and Vietnam are also fast producing new models. All market entrants face a difficult problem: how can they guarantee that their vehicles will be insured in the UK, in the absence of essential historic repair data to build confidence and enable clarity in terms of pricing risk?
Competitive pricing might be an attractive proposition for consumers but the hassle and expense of repair caused by a dual lack of data and parts could quickly turn any perceived gain into a loss through expensive repair costs and high insurance premiums, if indeed insurance is made available at all.
Inevitably, body shops also risk delays in the workshop caused by a gap in both knowledge and components.
That’s why Thatcham Research is supporting these vehicle manufacturers (VMs), insurers and repair businesses, offering insight and experience to bring safe, secure, sustainable mobility solutions to the UK.
Will the new wave engulf body shop business?
We foresaw the rapid growth in China’s share of the automotive market several years ago. While Electric Vehicles (EVs) have been imported from the Far East for some time – the MG6 arrived here as long ago as 2011 – interest has ramped up since the middle of the decade when the UK Government began to encourage motorists to switch to electric power trains. We stand to work with China’s growing legion of VMs in the last decade to highlight the need for safe, secure, sustainable mobility.
Disappointingly, while we made good progress, our efforts were stalled by the pandemic. During the three years when it was difficult to visit automotive firms in the country – of which there are at least 15 groups, housing 75 brands – launch planning at VMs continued apace.
Now with vehicle production in full flow again, we are experiencing a bow wave of Chinese cars entering the UK car parc. While the volume remains small as a proportion of the entire car parc, the scale of the challenges they bring is not.
Body shops will very soon need to repair these vehicles on a far more regular basis than they have so far, bringing potential problems around parts and data to the masses.
Fundamentally, there is nothing wrong with the cars being produced – they are good products, by and large. But the VMs in question have insufficient knowledge of the UK repair and insurance market because it hasn’t previously been a consideration.
One example of the variations between China’s and the UK’s repair operations revolves around labour costs. In China, these are noticeably lower – so expectations are very different. For instance, repairing a complete side of a vehicle body in China is a common occurrence. In contrast, when the same damage occurs in the UK the labour cost could well be deemed inviable, and the vehicle written off.
To support repair and other areas of insurance, we are working hard to collaborate with emerging market VMs to ensure current and future models have parts and methods fit for the UK market.
Over the past year experts from Thatcham Research have travelled to China and met officials from major VMs: BYD, Chery, Geely Group and MG among them.
Our goal was not just to scope out repair challenges, but to also build closer links with businesses to discuss how we could collaborate and help the UK repair sector handle the influx of new vehicles.
These efforts are resulting in a number of positive developments. Developed using information currently provided by BYD and MG, this gives repair teams the right level of data, delivered directly into the insurer workflow. The data is of course a key component of body shop businesses remaining compliant with the recently updated BS 10125 repair standards.
Encouraging repairability by design
Alongside providing better data, our ongoing discussions with China’s VMs are focused on availability of parts and improving parts logistics across the supply chain. More fundamentally, we’ve been pleased to note how keen the VMs are to improve future manufacture by adopting an approach of ‘repairability by design.’
The more companies can do to make repair easier and cost-effective, while also cutting key-to-key times for consumers, the greater their chance of sustained success in the UK market.
Facilitating direct dialogue between China’s VMs and the UK repair sector is another item that’s high on our agenda. Thatcham Research recently hosted BYD at a produce showcase event held in our Repair Technology Centre where stakeholders from across the value chain gained insights into vehicles and its future plans.
Our work with BYD, driven by our programme of automotive risk intelligence, is ensuring safety, security and sustainable repair are a key attribute of its future vehicle design; and that repair data is made available throughout the value chain.
BYD became the global leader in fully electric vehicle sales in the last quarter of 2023. However, one of the reasons it agreed to work with us is to better understand UK and European market requirements for insurable vehicles.
While there remains much work to be done, BYD is one brand applying itself to this journey in a positive way. As an example of its commitment, BYD is sponsoring Thatcham repair method projects on the Seal and AATO 3.
Thatcham Research remains willing to support BYD and other VMs to strive for safe, secure, sustainable mobility. Our message to exporters from China, India and Vietnam is to think carefully about UK-specific considerations before selling cars here. Understand the market in full and make sure the right logistics are in place.
As part of this, we continue to champion the UKs independent repair network as a positive force in making new vehicles sustainable in the marketplace and driving down the total cost of ownership. That’s a better outcome for the VMs, for the insurance and repair value chain and, ultimately, for the consumer.
All this work is intended to ensure repair teething problems are dealt with as quickly and efficiently as possible. In this way VMs can pre-empt issues in future and managing the continued influx of vehicles, whether from China or other emerging markets, should become smoother over time.
This will bring a sense of relief to repair businesses that keep glancing anxiously at the volume of new vehicles – with diversity of systems and components they contain – which are currently revving up on the staring grid.
Dean Lander, Thatcham Research
