Why are so many Chinese car brands coming to Australia? The reason Zeekr, Xpeng, Skywell and Leapmotor hope to take on the establishment of Toyota, Mazda, Kia and Hyundai | Opinion

Over the past decade, Japan, Thailand and South Korea have held steady as the three nations responsible for building most of the new cars sold in Australia. Until now, that is.

China has overtaken South Korea (the home of Kia and Hyundai) but is coming for Thailand (source of most dual-cabs) and maybe, eventually, Japan.

This year, there has been a slew of Chinese brands announcing their launch in Australia, many as their first major foray into a new market outside China. So what makes Australia such an attractive option for Chinese brands?

There are a few reasons why Australia could be seen as a desirable market for brands from China to launch in, but the main one boils down to politics - Australia is one of the only mature automotive markets in the world that doesn’t have a tariff on imported Chinese cars.

The US has implemented a severe 100 per cent tariff on Chinese car imports in an effort to protect US-based manufacturers, the EU has placed tariffs of up to 37.6 per cent on Chinese car imports for the same reason.

The European Commission published a statement after an investigation found “the BEV value chain in China benefits from unfair subsidisation, which is causing a threat of economic injury to EU BEV producers.”

The EU has imposed a tariff of 17.4 per cent to BYD, 19.9 per cent to Geely, 37.6 per cent to SAIC, 20.8 per cent to other manufacturers that cooperated with the EU investigation and 37.6 per cent to other manufacturers that didn’t.

With no local manufacturing industry to protect from low-cost imports, Australia’s lack of tariffs on Chinese vehicle imports mean manufacturers can be extremely competitive when it comes to pricing. And, while pricing isn’t everything, there is certainly a section of the new-car-buying population that holds a low price as the highest priority.

China’s ability to build cars (especially electric cars) at low cost is relatively specific to China. Some brands in other countries rely on various international parts suppliers to build cars, China is fairly self-sufficient.

In fact, while China’s EV battery production is primarily intended for the domestic market, a significant portion of EVs in the rest of the world have China-sourced batteries.

On top of that, we’ve been told by multiple executives for both Chinese car manufacturers and their local importers, Australia is attractive as it’s a mature car-buying market. 

The trends in customer tastes are relatively slow-moving, the only major changes have been the global popularisation not unique to Australia as well as the rise in dual-cab utes, not unlike the popularity of ‘trucks’ in the US.

The buying habits of Australians, in many ways, broadly reflect the same attitudes as those of the North American and European markets, even if they’re a little behind in areas like electric car uptake.

Perhaps obviously, Australia’s population is also miniscule compared to the likes of the EU and US, with almost half its population centred in a couple of major cities.

If a new brand wanted to test the waters, a physical presence in Sydney and Melbourne would be enough to kick things off, maybe with Brisbane and Perth to follow. The relatively low cost of being able to have a small team (and not too far from China, either geographically or in time zone) cover most of Australia’s population must be a very attractive possibility.