Like the Japanese and Korean brands before them, the Chinese are gaining sales by improving the quality and equipment levels of their vehicles while undercutting their rivals on price. It’s a combination most other manufacturers either won’t or can’t match. Japanese brands such as Toyota and Mazda and Korea’s Hyundai and Kia have motored further upmarket seeking profit.
Examples? The MG3 mini-car is the market leader in its segment in Australia with a $16,990 drive-away price. The cheapest Toyota Yaris is about $27,600 drive-away.
The GWM Cannon dual cab 4x4 ute starts at $33,990 drive-away. You’d have to pay almost $20,000 more for a mechanically equivalent Toyota HiLux with less equipment. And so it goes.
Even if you were someone who never wanted to buy a Chinese car. Eventually, you may not have a choice as western brands are getting into the act.
The first Chinese-built car to be sold in Australia was a Volkswagen Polo sedan in 2004. Nowadays the top-selling electric car in the country – the Tesla Model 3 – has been imported from China since early 2021.
And most of the Volvo range comes to us from China. Yes, Volvo is Swedish but it is owned by Chinese giant Geely.
Growing markets, reducing cost
But how are these Chinese manufactures able to undercut their competitors on price? It essentially comes down to a combination of affordable labour, highly automated and efficient factories, tight control over supply lines and huge build numbers, according to Australian automotive industry veteran Kevin Wale.
“All the big Chinese companies have been building their own cars for 20-odd years now, so it’s not like they just woke up and decided to build a car. They have been through that process of what works and what doesn’t.
“If they want to sell a car in Australia, as long as they get their marketing and distribution right, there’s no problems.”
Wale worked globally in a series of senior roles for General Motors, the parent of now-defunct Australian brand Holden. He capped that working life off with more than seven years as president of General Motors China, working closely with local partners including SAIC, the owner of MG and LDV. By his last year in China, 2012, GM vehicle sales totalled 2.8 million and revenues more than $US30 billion.
In those days export wasn’t really a thing for Chinese brands, such was the exponential growth at home. But now that market is steadier and it has become more important fiscally and for corporate prestige. Australia is just a small part of a much larger international expansion.
“[The Chinese] want to be larger players, and the only way to do that is selling overseas. Unlike western brands, they are happy to try, fail, and try again.
“Some are trying to sell in Europe, some are looking at the USA. Some are here in Australia and if you can sell your product here, you still get some decent credos for it.”