Chinese carmakers stress-test for Europe's markets

As new Chinese electric vehicle brands arrive in the UK, many prospective buyers are encountering an unexpected obstacle before they even reach the showroom: insurance.

Unlike established manufacturers, new Chinese entrants often lack the detailed crash, repair and theft data that European insurers rely on to price risk. Without that information, some vehicles face high premiums or struggle to secure cover altogether.

"The biggest problem that Chinese manufacturers are finding is that the insurance system across Europe is very, very different to the insurance market in China," says Ben Townsend, Head of Automotive at Thatcham Research. 

"Without that data and without that historical packet of information for that car, they find that insurers simply aren't prepared to take the risk."

Based in Berkshire, Thatcham Research plays a central role in closing that information gap. The not-for-profit organization assesses new vehicles entering the UK market, generating the data insurers need to decide whether and how to underwrite them.

Inside Thatcham's test halls, cars are deliberately subjected to physical testing – as Townsend puts it, "We test that vehicle, we crash that vehicle, we try and break into that vehicle." 

Low-speed impact tests are used to assess likely repair costs, while security teams attempt to penetrate vehicles mechanically and electronically. The results are then shared with the insurance industry. 

"What Thatcham does is provide that into the marketplace," Townsend says. "So we distribute that across the marketplace to enable insurers to make those decisions."

Repairability concerns 

But insurance risk is only part of the challenge. Repairability remains a major concern, particularly for brands without established European parts networks or repair guidance. 

In some cases, even minor collisions can leave vehicles off the road for extended periods while replacement components are sourced. From the perspective of UK repairers, the issue is clear. 

"The three things that make it difficult for repairers are the lack of repair methods, the lack of technical data from vehicle manufacturers, and the lack of parts," says Thomas Hudd, Development Manager at the National Body Repair Association.

Chinese manufacturers are now working to address those shortcomings, building dealer networks, logistics partnerships and parts supply chains across Europe. According to Townsend, once issues are identified, Chinese firms often move quickly.

"If we look historically at some of the legacy brands, they would say it would take three and a half to four years to make changes to vehicle platforms," he says. "When we give Chinese companies advice, where you can see those changes happening in a matter of weeks."

And the flow of new brands shows little sign of slowing, with Townsend saying "We're definitely going to see more and more Chinese companies coming into the marketplace." 

Looking ahead, he adds: "I believe by 2030, 30 percent of new cars sold in the UK would be Chinese manufactured cars." 

As Chinese electric vehicles continue their push into the UK, it is this behind-the-scenes work – testing, analyzing and sharing data – that may ultimately determine how quickly they can compete on British roads.