Brexit offers opportunity to country's auto sector, buyers

Employees work on black TX4 Euro 5 London taxi cabs as they move along the production line at the London Taxi Company's assembly plant, a unit of Zhejiang Geely Holding Co, in Coventry, UK, in March, 2014. [Photo provided to China Daily]

China's auto industry is unlikely to suffer from Britain's decision to leave the European Union and might even benefit from the move in the long term, experts have said.

"China sells few cars to the UK so exports won't suffer. On the contrary, there is a chance that Brexit will benefit our vehicle industry," said Cui Dongshu, secretary-general of the China Passenger Car Association.

Cui said the UK is home to many first-class car design studios, including CGI, Envisage and Futura, but some might decide to leave as a result of Brexit and the uncertainty over the future of the country's trade deals and relationship with the EU.

This could lead to some local designers choosing to work for Chinese carmakers' research and development centers in the UK.

State-owned companies such as SAIC Motor and Changan Auto, as well as private carmaker Geely, already have such facilities in the country.

Geely also invested 300 million pounds ($398 million) in 2015 to build a plant to produce cars for the London Taxi Company. Geely bought the company in late 2013.

The Zhejiang-based automaker declined to comment on Brexit's possible effects on its business in the UK.

Huang Jiagang, an auto columnist at news portal ifeng.com, said opportunities might emerge for Chinese spare part suppliers to scale up their sales to the UK.

Employees work on black TX4 Euro 5 London taxi cabs as they move along the production line at the London Taxi Company's assembly plant, a unit of Zhejiang Geely Holding Co, in Coventry, UK, in March, 2014. [Photo provided to China Daily]

The UK spends around 35 billion pounds on auto spare parts, and 60 percent of them are imported from EU countries.

He said that local automakers might look for cheaper alternatives to cut costs as they will have to pay a 10 percent tariff as a result of the UK's decision to leave the EU.

Brexit might even prompt British automakers that have plants in China, such as JLR, to accelerate their localization plans.

In addition, Chinese consumers are likely to find that cars imported from the UK are cheaper as a result of the depreciating pound following the vote to leave the EU.

Several major financial institutions have predicted that the pound will slump: Julius Baer Group has estimated that the currency will fall by 30 percent, while Soros Fund Management predicted it would depreciate by 20 percent.

Chinese auto website autoju.com said that now is an excellent opportunity for Chinese consumers to buy premium British cars, including JLR, Bentley and Rolls-Royce.

It said that some dealers are offering a 10 percent discount on imported Land Rover SUVs as a response to the pound's depreciation following Brexit.