‘Temu Range Rover’ Highlights China’s Ascent in UK Car Market

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1:17What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person. How you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optum.com. Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. It's a bird. It's a plane. It's a so-called Timu Range Rover. Timu? Yeah, Timu Range Rover. It's called the Jayku 7. You may never have heard of it if you're listening or watching us in the United States. but it was the UK's top selling car in March.

2:00It's amazing. A bit more than a year after entering the UK market, the import is outselling Land Rover's comparable Range Rover Evoque on its home turf, earning the nickname Timu Range Rover, a nod to the online discounter, and it's less expensive. It is, and we should note, it's not sold on Timu. No. Yet. No, no, no. It's just a nickname. Not yet. It's just a nickname right now. Jacob Reed is Bloomberg News global business reporter. He joins us from London. Keith Naughton is Bloomberg News Auto Reporter. He joins us from Detroit. Jacob, I want to start with you. I want you to tell us what this JQ7 is.

2:37Yeah, well, look, I can't take credit for the nickname, but it's this SUV that launched in the country not that long ago. And as you say, it's already the best selling car. And also people are likening it to that Range Rover, the shape, the design, the features. And in fact, it's maybe no surprise because those two companies are partners in China. But as you say, it's known for the price. Unlike the US, unlike the EU, the UK hasn't added additional tariffs on. And people love all the snazzy features it comes with, the heated seats, the panoramic sunroof. It's really capturing buyers in the UK.

3:16This is what happened when Range Rover, owned by Jaguar, which is a subsidiary of the Indian and multinational Tata, right? Again, another nesting doll. Another nesting doll. Keith, come on in on this. I mean, the automaker has gone coming off of certainly the crisis, different companies and different countries owning different automakers, I feel like. I don't know. How do you make sense of this? It's just a changing auto market. And I feel like Chinese role in it is changing faster than we all anticipated. Yeah. I mean, the irony is, you know, the U.S. has the greatest barriers to the Chinese.

3:56They're not really in this market. However, you know, Volvo, the Swedish carmaker, is actually owned by Geely, the Chinese auto conglomerate. They have a factory in South Carolina. So the Chinese are sort of in America, but not in a big way, not in the way they are in Mexico, not in the way they are in South America or Europe, where they're making huge inroads because, yes, their cars are cheaper and they look cool and they have great features and great tech and consumers love them. I mean, we have an affordability crisis in the auto industry. So if you can cut 15 ,000 off the price, sold. Yeah, we don't see them here on the streets in the U.S.

4:38But one thing I bring up all the time, Keith, is that Ford CEO Jim Farley talked about a Xiaomi Su7 on a podcast a few years ago. And he had this thing on some loan, you know, and he like didn't want to give it up. Like people people love these cars, but they are all and we talk about this with Ed Lobo all the time. They are all over the road, Jacob, in other countries, including including the UK. It's not just the price that is attractive to people about this. It's also the option and then also the warranty, too. So can you just go through some of the checklist of why this thing is so attractive?

5:11Yeah, I mean, I promise I'm not a Jayku salesman, even though my name is Jacob. But it has that seven-year warranty, as you say. And that's a very deliberate attempt by this Chinese company to say, hey, we're new in this country. You might not know us, but rest assured, we have the quality. We're willing to stand it up. And they've actually, there's a lot of dealerships. And if you read the story we wrote, we went to one of them. But for years and years, it sold cars from Ford. And, you know, the management came in and said, lads, we're going to start selling from Jayco. And they're all like, crikey, what's Jayco?

5:48And they say they've never been busy yet. People love them. So they've got that warranty. They've got all of these add-ons. And they're a third cheaper. It's fascinating. How much, Keith, we're going to bring you back in a second. But Jacob, how much of the market does, is this car in particular, or how much do the Chinese have of the European market or the UK market at this point? Yeah, it's about 20%, approaching 20 % in the UK. I think it's past 10 % in the EU. And it's because the UK has given a really clear answer to a very thorny geopolitical question. That question is, if the Chinese government is in effect subsidizing these car makers, do we let them in?

6:36Do we let them come and gain lots of market share, you know, from an almost standing start? Now they're selling 20 percent of the cars. Are we OK with that? And in the UK, because, as you said before, none of our domestic brands are owned domestically anymore. That's a less thorny question from us. in a cost of living crisis, our government has said, yeah, yeah, we do want you to come in with your cheap cars. And if they're being subsidized by the Chinese government, then all the better. But maybe a less thorny question, our man in London says, but let's go to our man in Detroit and talk about to what extent that damages US automakers.

7:11If Europe, if the United Kingdom, if South America, if Mexico are all allowing Chinese autos into their car, into their countries, Keith, what does it mean for the folks in your backyard in Detroit? Sure. Well, Jim Farley, Ford's CEO, refers to it as an existential crisis. And as we wrote a couple months ago, the Chinese are on America's doorstep. They're in Mexico. BYD has huge market share in EVs in Mexico. And now Canada is allowing 49 ,000 Chinese imports in a year under a new deal that they have. So the big fear now is that they'll come into the United States. So they're keeping them out with barriers on cars that are connected, which all cars are these days, and on EVs with 100 percent tariffs.

7:56But even Bill Ford said last week, it's only a matter of time before they arrive. So what the American auto industry has to do if it wants to survive is they need to improve their competitiveness, lower their costs, increase their speed to market. All the things that the Chinese are very good at. Keith, this is one thing. Was it Steve Mann, Tim, a while ago? From Bloomberg Intelligence. Right. Who talked about the manufacturing prowess of the Chinese, right? This is by becoming the manufacturer to the world, their factories are unbelievable in terms of what they can do. And they're doing that in the auto space as well.

8:32And I just think about in early days how China partnered with U.S. companies to learn how to do stuff. Are we going to see perhaps a reversal of that where U.S. automakers are going to need to partner perhaps with China to figure out how to do this more in a more efficient and productive way and maybe with a better outcome? Absolutely, Carol. I mean, Farley even broached that subject with Trump cabinet officials earlier this year and said, if you do eventually allow them in, they must come in under a JV that gives the U.S. company the upper hand and they've got to share their technology. It's all the stuff the Chinese required of Western automakers three decades ago when they first went into China.

9:16Because, you know, Chinese cars, the tech is very impressive. You get in and there's facial recognition that'll change the dashboard to customize it to you. You get to a parking garage, you just hop out and it goes up three floors and parks itself. It's unreal. Yeah. Is this, but Jacob, is the JQ doing that at 40, what, roughly 40 ,000 pounds? Is that right? 40 ,000 US. I think that might be that one. 40 ,000 US. It will tell you if you're about to run over a cyclist and it did reverse the seat. I'm grateful for that. Tim is a cyclist. So Jacob, yeah, he was glad you said that. Okay. No, but what's interesting, too, is where's the UK on this?

9:55I think about some of the iconic cars that they used to make. The Mini isn't made by them anymore, right? The Range Rover. Like, it's just kind of wild. Your Aston Martin wasn't made by them, Carol? No, it was not. Okay, sorry. So what happens to their industry? I mean, what are the automakers? I mean, what is left in the UK in terms of automakers? Well, I mean, that's the fascinating question. What's left is all the Japanese brands that came in the 80s and kind of ate the lunch of the British brands that, you know, British Leyland, for example, that were really, really struggling after the post-war period.

10:32They were unreliable. There were lots of strikes. And Margaret Thatcher, you know, not not want to go soft on foreign policy. She really actively courted the Japanese to come in and build this factory. And they did it. And and they sold lots of cars because those cars were better. They were more reliable. They're cheaper. The Koreans did something very similar in the 2010s. And so you see, it's a very competitive industry. And the kind of irony of it all is that Cherry, the company that makes Jayco, they have now struck a deal with Nissan to help Nissan out in a way, because Nissan can't sell enough cars.

11:10It's factory that Margaret Thatcher, our prime minister, tried so hard to get them to make in the 1980s, is only at half capacity. And who's coming to the rescue to get to fill the rest of that capacity and to onshore some of their production? is Jaycu. Keith, the tables have turned again. I mean, I think about it. Yeah. So what does it mean for the global auto industry? And should we allow these cars in because it will make our, the U.S. companies or European more competitive maybe? Well, if you were to allow them into the U.S. today, the view is it would wipe out the U.S. auto industry because, you know, as I said, American cars are averaging$50 ,000.

11:56And so if you have Chinese cars with great tech coming in at$30 ,000, they're going to win the day. So they need some time to get competitive. It's like back to the 80s with the old protectionist measures against the Japanese. Once again, they're behind the eight ball and they have to catch up. they will come in. That's what Bill Ford said last week. They will come in eventually. So if Detroit spends too much time focusing on selling big gas guzzling SUVs and pickup trucks, they will lose in the end. Yeah, but it doesn't, Keith, just very briefly, 20 seconds, it doesn't seem like they're getting that message because that is what Americans are buying.

12:34That is what Americans are buying. And, you know, GM and Ford both still have EV programs going, but they don't make money on them. So they're focusing on the things they make money on and that is risky. Amazing story. Jacob, thank you so much. We've been sitting on this one and wanting to talk about it. So thank you so much for joining us. Jacob Reed, he's global business reporter at Bloomberg News, joining us from London. Keith Naughton, you rock your perspective. So valuable. Thank you so, so much. He's auto reporter at Bloomberg News, joining us from Detroit. What a great pairing. Interesting.

13:08Yeah, very interesting.