Opinion: The pros and cons of new manufacturers

By Paul Hollick, chair of the Association of Fleet Professionals (AFP)

It’s a situation that is unprecedented in the company car and van space. In an industry where a major manufacturer might historically have entered the market at a rate of once or twice a decade, dozens and dozens have arrived in the last year or two – mostly Chinese, some American, and a few from elsewhere, almost all concentrating on electric vehicles (EVs).

The question is which of them to take seriously? No fleet manager wants to invest time, resources or actual cash in vehicles that in a short space of time could be heavily compromised by their manufacturer failing to offer the right kind of operational support, withdrawing from the UK market or simply disappearing altogether.

In the US, Fisker is proving something of a salutary lesson in this respect. Their product, while it appears to need some final development, is fundamentally sound but the company are running out of money and the whole operation appears to be gradually grinding to a halt.

Residual values have crumpled and there is no certainty when it comes to future parts availability.

Of course, it’s not unknown for manufacturers to vanish. Rovers and Saabs were once common on fleets but in those instances, some form of service and maintenance support continued for a decade or more after their demise. What we are looking at here is something closer to a total collapse.

So what should fleets do? Perhaps, the most sensible move is to look closely at the investment that the manufacturer is making in the UK market.

At the recent Association of Fleet Operators’ annual conference, both BYD and Omada/Jaecoo presented on their plans in detail. 

They appear to be here for the long haul by creating dealer networks, building parts hubs, working with Thatcham, training technicians and more. These are all highly reassuring signs.

Even with all of this groundwork, there remain risks. President Biden has just imposed a 100% tariff on imports of Chinese EVs entering the US and it is not impossible that similar protectionist policies could follow here, although they probably wouldn’t be quite so dramatic.

Such moves would no doubt have an impact on which manufacturers choose to stay and compete in the UK market.

However, perhaps a bigger danger is simply competition. Last year, a report in the Financial Times predicted that out of a current 50 Chinese EV manufacturers, only 10-12 would still be around at the end of this decade. Consolidation will mean that some potentially weaker brands are saved but there will also inevitably be bankruptcies.

So far in this piece, I haven’t really mentioned the key upside of the new entrants, which is essentially pricing.

Everyone in both the fleet and retail space wants cheaper EVs and these manufacturers are meeting that demand.

They offer lower prices than established market players, while being well-equipped, apparently well-made, and generally appearing attractive and thoroughly engineered. If you’re electrifying your fleet, they’re difficult to ignore.

For some fleets, this degree of value will prove a strong pull but our advice is to tread carefully.

When it comes to these new entrants, there will unavoidably be losers as well as winners over the next few years.

Recognising which manufacturers will end up on the right side of that divide is not necessarily an easy task.