Australia’s roads have long been dominated by the auto giants of Japan, Germany and the United States but China is fast earning its spot in the garage of glory.
This year, vehicles from China became the third most popular choice for new car sales in Australia, knocking South Korea — the home of Kia and Hyundai — down to fourth place, and rapidly gaining ground on manufacturing leaders Thailand and Japan.
The rise of Chinese cars in Australia has been meteoric, jumping from 4,154 sales in 2014 to 193,433 last year.
And it’s likely to keep growing, with models from Chinese giants Guangzhou Automobile Group and Geely Auto set to roll onto Australian roads next year.
But while Australians are fast falling in love with Chinese cars, some other Western nations are trying to break up.
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Is the love affair with Chinese cars on the rocks?
The success of China’s auto industry has been met with hostility in the US, with the White House last month quadrupling the border tax on Chinese electric vehicles (EV) from 25 per cent to 100 per cent.
The tariff is an unabashed attempt to protect America’s auto industry from Chinese competition, with President Joe Biden also introducing punitive measures against other Chinese imports including computer chips, batteries and steel.
“They’re flooding the market,” Mr Biden said.
“It’s not competing, it’s cheating.”
Europe, which has its own billion-dollar auto industry to consider, is also wary of Chinese success.
In September, the European Commission started investigating whether it should impose its tariffs with an announcement expected in early June.
President Ursula von der Leyen said global markets were being “flooded with cheaper electric cars” with prices “kept artificially low by huge state subsidies”.
China has hit back at the accusations, with the country’s Commerce Ministry saying the US tariffs would “severely affect the atmosphere for bilateral cooperation”.
How did China become so successful?
While the backlash against China’s auto industry has been swift, its success didn’t happen overnight.
The Chinese government has spent decades trying to help its flagging auto industry catch up to the giants of Europe, Asia and the US, and while it failed in the era of petrochemical propulsion, it found success in the age of the electric vehicle.
Marina Zhang, from the University of Technology Sydney’s Australia-China Relations Institute, said while “substantial industrial policies and financial subsidies” had helped its EV industry mature, China also had several competitive advantages.
“China’s EV industry controls the majority of the supply chains,” she said.
“So they often have very short supply chains compared to other car manufacturers, which are often stretched to several different continents.”
China’s automakers could also leverage the country’s existing expertise in battery manufacturing, which further pushed down costs through vertical integration, she said.
Professor Zhang said the government’s history of supporting the sector had fostered strong domestic competition, with hundreds of EV startups now whittled down to the biggest and best.
“Among the top 20 EV manufacturers in the world, half of them are Chinese and those 10 large ones that dominate the market came out of the competition for sales,” she said.
“So I wouldn’t say government subsidies or government policies hand-picked those winners.”
“It is really the consolidation of the market and the internal competition.”
Why are Australians buying from China?
Growing consumer awareness, cost competitiveness, technological advances and a cut in tariffs thanks to the Australia-China Free Trade Agreement are all helping to drive sales of Chinese vehicles in Australia.
Much of the growth can be attributed to the rising popularity of EVs, with 72,342 of the 86,828 sold in Australia last year coming from China.
A spokesperson from Australia’s Federal Chamber of Automotive Industries (FCAI) said increased competition and the availability of Chinese-produced vehicles had “enhanced consumer choice, allowing Australians to purchase cars that best fit their work, recreation, and family”.
But the growth in Chinese sales isn’t just about Chinese brands.
FCAI sales data shows that of the almost 200,000 Chinese-manufactured cars sold in Australia last year, a quarter were EVs made by US company Tesla, which can produce up to 750,000 a year at its “gigafactory” in Shanghai.
And what constitutes a “Chinese car” is further complicated by Chinese companies’ moves to purchase Western brands. For example, Chinese firm Geely bought Volvo — a company synonymous with European style — in 2010.
Is Australia also planning to introduce tariffs?
The Australian government has so far not followed the lead of the US in introducing tariffs, largely because Australia no longer has an automotive industry to protect.
But the international backlash has not escaped the attention of the Department of Foreign Affairs and Trade, which said it will “encourage cooperative avenues to manage these issues, in a manner consistent with international trade rules”.
“Australia is committed to maintaining a level playing field for our manufacturers and producers by supporting a robust multilateral rules-based trading system,” a spokesperson said.
When asked whether Australia would consider introducing tariffs, the department said decisions on trade policy matters were “made in Australia’s national interest”.
The FCAI said it supported competition “including an increased presence of Chinese-produced vehicles, that will ultimately benefit Australian consumers”.
“Australia maintains a fair and competitive market environment where vehicles from various countries, including China, must meet our regulatory standard,” the spokesperson said.
“Looking ahead, the key priorities for the industry include continuing to provide Australians with choice, innovation, and environmentally friendly options.”
The 200,000 Chinese vehicles sold in Australia in 2023 are still far behind the 345,000 coming from Japan.
Professor Zhang said despite claims China was “flooding the market” with EVs, the global vehicle fleet was still dominated by internal combustion engines and consumers would ultimately “choose products that suit their needs”.
“I’m sure there are consumers that want to support our allied countries, and continue to buy very expensive EVs made in Germany, the US,” she said.
“But I think most consumers will vote using their wallet and Chinese EVs are just demonstrating very strong cost advantages.
“BYD, China’s largest EV maker, has seen its sales grow sixfold in Australia in the past couple of years. So that suggests consumers accept vehicles made in China.”