Australian dealers call for pause on Chinese EV brand influx

Australia's dealer association is calling for a pause on new car brands entering the market, citing a surge in competition that has pushed dealer profitability into negative territory for the first time since the global financial crisis.

The Australian Automotive Dealer Association (AADA) said the number of car brands available locally rose from 39 in 2021 to 67 this year, with many new arrivals being Chinese manufacturers. In September, the industry reported its first quarterly loss since 2008.

"There are simply too many manufacturers operating in this market and we need a pause on further car brands entering this market," AADA chief executive James Voortman told AutoTalk Australia. "At a time when other countries are trying to slow the rate of change and number of brands, Australia is allowing unfettered access to this market."

Chinese brands have significantly increased their footprint. According to accounting firm Pitcher Partners, Chinese-made vehicles captured 38.8% of Australian new vehicle sales in October, totaling 41,671 units. BYD was the country's second best-selling brand for the seventh consecutive month with 10,025 sales, up 153%, while Geely sales jumped 520% to 4,365 units.

Voortman warned that dealers are being squeezed by excessive stock pushes, heavy discounting, and financing costs for unsold inventory. "Aggressive discounting erodes margins and devalues vehicles while dealers carry the financing costs and risk of unsold vehicles," he said.

The AADA also highlighted risks to buyers, including rapid depreciation, slower parts supply, longer repair times, and the possibility of cars being left orphaned if brands withdraw from Australia.

In response, the association has drafted a ten-point plan requesting a pause on new brands, a capped licensing regime, realistic sales targets, the right for dealers to refuse excess stock without penalty, support for aged inventory, and compensation when manufacturer price cuts reduce dealer stock value.

Ten Chinese automakers currently offer more than 20 brands in Australia, with about a dozen additional brands expected, according to Pitcher Partners.

The AADA delegation traveled to Beijing last month to present these concerns to Chinese government representatives and manufacturers.