6th March, 2023 ยท CEO Message

CEO Message No. 84

2 minutes to read

There is no more interesting trend in our industry than the phenomenal growth of Chinese vehicle brands in Australia. We all see the evidence daily on our roads, but a look at the numbers makes for fascinating reading.

Only four years ago in 2018, the proportion of new Chinese-made vehicles sold in Australia was 0.9%. Fast forward to the 2022 calendar year and they made up more than 11% of total new car sales. For the first two months of 2023, they make up more than 15% of total new car sales.

In 2022, vehicles imported from China overtook those coming from the EU and it is now our fourth largest source market. In the first two months of 2023 China as a source country has overtaken South Korea and now only sits behind Japan and Thailand.

Now some of the vehicles being sourced from China are from European or US-based OEMs such as Teslas, Polestars and Volvos, but the overwhelming majority are from Chinese brands such as MG, GWM and LDV. The trend is likely to continue, the final quarter of 2022 saw the arrival of BYD, the world’s largest EV manufacturer, and we are also seeing the reappearance of the Chery brand in Australia.

What is also striking is the complete dominance in the supply of EVs – of the more than 33,000 EVs sold in Australia in 2022 almost 80% were sourced from China.

It’s clear that Chinese brands are being accepted by Australians, which is testament to the improvement in the design and quality of the product, but also the affordability.

For years Australia has been one of the most competitive automotive markets in the world with more brands active here than in other industrialised markets. The emergence of the Chinese brands is intensifying this competition and benefitting consumers – it certainly will be interesting to see how this dynamic plays out as supply chains normalise.

It will also be interesting to see how they respond to their success. Will they seek to grow their Dealer networks and will they demand greater investments in facilities? What will their view be of different distribution models? Will they encourage and formally recognise Dealer Councils like other established brands have?

The emergence of Chinese-brands on the global scale will also be worth watching. Already we have seen the United States enact protectionist legislation seeking to disrupt China’s total control of EV battery supply chains. I also question whether traditional automotive manufacturing bases like Europe will hold their nerve on ICE bans when their OEMs struggle to compete with affordable Chinese product.

The emergence of new countries as automotive powers is not new. We experienced the growth of the Japanese brands and more recently the Korean brands. However, China’s automotive emergence is occurring as the global industry faces some of the biggest changes in its history. Dealers here in Australia are no doubt watching these developments and preparing to capitalise on the opportunities that arise.