Riding the EV market wave

Australia's auto sector hit new highs in sales, with Chinese carmakers continuing their inroads — fueled by growing demand for electric vehicles — to help consumers benefit from stronger competition in the industry, according to the latest analysis.

The new vehicle market recorded 103,325 sales in October, up 3.8 percent year-on-year, according to the Federal Chamber of Automotive Industries (FCAI).

China was the largest source of vehicles, supplying more than one-third (36.3 percent) of the market, with EVs from major brands such as BYD and Geely helping Chinese manufacturers make up half of the list of top 10 models by sales volume, the chamber said in a statement.

Consumers were benefiting from stronger competition across brands, models and technologies, with battery-electric vehicles (BEVs) accounting for 23.1 percent of sales from all sources, almost three times their share a year earlier, FCAI chief executive Tony Weber said.

"Australia's open and competitive market has put consumers in the driver's seat, with more choice across brands, technologies, features and price points," he said.

The strong demand for BEVs through the year was also attributed to factors such as continued instability in the Middle East, sustained higher fuel prices and the federal government's tax concessions, "with little indication that demand is easing".

Hussein Dia, professor of transport technology and sustainability at the Swinburne University of Technology in Melbourne, told China Daily that the growth of BEVs signaled "a particularly significant shift" in the sector, giving "further evidence that electric vehicles are moving from a relatively small part of the market toward the mainstream".

"Chinese manufacturers are now playing a major role in reshaping competition in the Australian market," he said.

"The contribution is not only about selling more vehicles. Chinese manufacturers have introduced many new models across different price points and vehicle categories, particularly in electric and plug-in hybrid vehicles," Dia said.

The benefits to consumers were considerable as a major barrier to EV adoption has always been the upfront purchase price, "so greater competition and more affordable models can bring the technology within reach of many more households", he said. The next challenge for Chinese manufacturers in Australia will be "converting rapid sales growth into durable brands", Dia added.

Beyond the showroom, servicing networks, spare-parts availability, warranty support, vehicle reliability, software support and resale values will become increasingly important, Dia said.

The growth of car brands presented other challenges such as lower margins and greater stock risk, the Australian Automotive Dealer Association (AADA) said in a statement.

"Australians benefit from choice and competition, but manufacturers' growth ambitions must reflect what this market can support," AADA CEO James Voortman said.

"Dealers invest in local jobs, apprenticeships, technical training and the servicing and warranty support motorists rely on. Governments, manufacturers and suppliers all have a stake in keeping that network viable," he said.

University professor Dia added that the intense competition within China's own automotive market is also relevant.

"Competition can stimulate innovation and drive costs down, but excessive price competition or 'involution' can become counterproductive if margins become too thin to sustain investment in quality, research, servicing, and long-term customer support," he said.

For Australia, Dia noted, the brands that succeed are likely to be those that "combine competitive products with strong local support and consumer trust".

Other than being an export destination, Australia can also play a bigger role in the sustainable development of Chinese automotive manufacturing, he said.

"It is an open and highly competitive vehicle market … a useful test of whether emerging brands can compete internationally on product quality, technology, price, and the overall ownership experience," Dia said.

"Australia also presents demanding operating conditions, including long travel distances, regional driving, diverse climates, and growing expectations around charging infrastructure. Manufacturers that perform well here can learn a great deal about the requirements of international markets," he said.