Demand for foreign luxury cars is increasing British exports of vehicles to China.
Last year, imports from the UK to China rose 14 percent to $19.1bn (£11.6bn) last year, according to new data released by the Chinese authorities. Transport goods and automobiles contributed to over 40 percent of total sales.
According to the Society of Motor Manufacturers and Traders, total British car sales to China increased by 17.8 percent in the third quarter from a year earlier.
The British car industry also manufactured 1.5 million vehicles last year, a number that is expected to rise to 2 million by 2017 — an all-time high.
Over the past year, China has become the top market of Jaguar Land Rover (JLR). The country’s network of 130 dealers — a number that continues to increase at a rate of two a month — has helped to drive consumer demand. In a joint business venture with Chery Automobile, JLR is also constructing an assembly plant set to open later this year, most likely to manufacture the Range Rover Evoque.
“We are deeply impressed with the speed you can do something in China,” said Ralf Speth, the company’s chief executive.
China also accounts for 28 percent of Rolls-Royce’s global sales, primarily the company’s Ghost model, which markets for up to£400,000 after taxes. Henrik Wilhelmsmeyer, the company’s China chief, described 2013 as “an outstanding year.”
According to The Telegraph, the Communist Party’s current “assault” on extravagance does not seem to be reducing the demand of its private luxury consumers. On the contrary, China’s new rich seem to be driving the demand for expensive vehicles.
The UK’s open-door investment policy is also an important contributing factor to the success. India’s Tata family owns JLR, and Rolls-Royce is owned by the German Volkswagen group. These companies “have both brought a global reach and vision that has combined well with British engineering skills.” Indeed, the British car industry is now owned almost completely by foreign powers.
The spike in automobile demand has also created a much-needed boom in the British economy. The country’s current account deficit is nearly four percent of gross domestic product (GDP), the lowest it has been since 1989 and the lowest of the world’s large developed economies.
This year, British imports have exceeded those of some of the UK’s closest foreign contenders. France was “neck and neck” with Britain during the fourth quarter; however, French imports ultimately fell by three percent to $23bn. Italy’s Chinese imports fell below those of the UK in 2012.
According to Julian Callow, a global strategist at Barclays, the UK’s over-valued exchange rate hurt the country’s economy up until recently.
Now, however, the outlook for British international trade seems much more rosy, especially for the automobile industry.
image credit: jaguar china