Market Insight: Made in China

EUROPEAN and US importation tariffs have recently increased in a bid to stem the flow of Chinese-made vehicles – particularly electric and new energy models – from eroding locally-produced market share.

But in Australia, where no such measures are necessary due to a lack of domestic car manufacturing, Chinese-made imports are thriving, now ranking third behind Japanese and Thai-built vehicles on the VFACTS ladder.

While the reasons behind the success of Chinese cars are self-evident, their popularity is a success story the likes of which the market has never seen with sales growing more quickly than from any other source in Australia’s history.

Taking a snapshot in time, we look here at sales by country of origin in five-year blocks. For accuracy, each is measured at the end of July to gain an accurate insight into the trends shaping Australia’s new car market.

A decade ago, Chinese vehicle imports numbered just 4.2 per cent of those made in Australia (2522 units against 59,826 from Ford, Holden and Toyota), and a mere 1.9 per cent and 1.3 per cent respectively of those sourced from Thailand (129,792) and Japan (194,583).

In 2014, the standard of Chinese-made vehicles was mediocre at best, predominantly represented here by the likes of the Chery J1, J3 and J11, Great Wall X200 and X240 SUVs, and utility models from Foton and Great Wall.

Who knew back then how quickly this would change.

Skipping ahead five years – and with Australian-made cars now a thing of the past – the percentage of Chinese-made models versus those sourced from elsewhere in Asia jumped appreciably.

Against South Korea, penetration of Chinese-sourced vehicles represented 10.7 per cent (9637 units versus 89,923), an increase of 7.5 per cent over the same period in 2014. The increase in volume against Thai-built models rose from 3.9 per cent (against 165,897 units) and 3.5 per cent against vehicles made in Japan.

In 2019, Chery vehicles had vanished from the Australian new-car landscape. Great Wall was making strides, most particularly with its Haval-branded SUVs and GWM utilities, while LDV and MG were making their presence known in the utility and light car segments respectively.

Chinese-model representation for the year included vehicles such as the MG 3 and MG 6 passenger cars, LDV G10 people mover, GWM Haval H2, H6, H8 and H9 SUVs, large segment LDV D90 SUV, LDV V80 light bus, and utility models including the Great Wall Steed and LDV G10, T60 and V80.

Today, it is not just Chinese-branded vehicles that are sourced from China.

Some American and European branded vehicles – including those from BMW and Tesla – are now being produced in the People’s Republic in a bid to save on production costs, take advantage of supply chain efficiencies and trade on proximity to growing markets in neighbouring countries.

Such models are now arriving in Australia alongside established and new Chinese marques including BYD, GWM, JAC, LDV, MG, and Smart – and soon Aion, Deepal, Exeed, GAC, Geely, IM Motors, Jaecoo, Leapmotor, Skywell, Xpeng, and Zeekr.

The newcomers have already – and will continue – to reshape the Australian new car market, putting at risk legacy brands whose dated and more-expensive model offerings simply cannot compete.

Referring again to our snapshot in time we see the percentage of Chinese-made vehicles has increased significantly.

Vehicles sourced from China have now overtaken those arriving from South Korea, selling 14.6 per cent more cars to the year ending July 31 (109,305 unit sales versus 94,467).

Chinese vehicles have also made significant ground on arrivals from Thailand and Japan, increasing 62.8 per cent and 44.6 per cent respectively in the last five years (against 163,756 and 227,011 units).

Where Chinese vehicles will be placed in another five years is a sure bet. Based on the growth we have seen to date it is estimated that cars made in China will outsell those from all other regions, accounting for between one-quarter and one-third of all new vehicles sold here.