Yahoo Finance Cars: The newest market China is set to dominate
In the car market, old is (kinda) new again and it's making some waves.
The list of Australia’s top-selling cars for 2022 is out, and there’s a new pecking order.
From out of nowhere, China has muscled its way up the bestseller list with a Chinese-made, Chinese-owned vehicle. Jason Murphy investigates how the Australian motoring landscape may be in for a change in 2023.
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The MG ZS, a small SUV, sits at number 7 on the list of top-selling cars in Australia for 2022. The badge on the front of the car was once a heralded British icon. MG stands for Morris Garages, a business that stood in Oxford, England, and started making sports cars between the wars. But the MG brand was sold to China in 2005 and ended up being owned by SAIC Motors, a Chinese state-owned enterprise.
They have done incredible things with it. The MG ZS is an amazing car, selling for as little as $22,990 new. It also comes in an electric variant, which is Australia’s cheapest new EV at as little as $44,670.
No wonder it is selling so well. As the next chart shows, the MG ZS is now selling as many units as the once-invincible Toyota Corolla.
China is making loads of EVs. Not only from well-known brands like MG but under their own brands. I drove past a BYD the other day for the first time, with a badge on the back that said: “Build Your Dreams”. The first model from BYD – the Atto 3 - was launched only a couple of months ago but has already sold more than 1,000 units in Australia.
EV sales rose sharply in Australia in 2022, with a new phenomenon occurring – electric sales are no longer just about Tesla. The Elon-Musk-owned brand was, for a long time, the dominant EV brand in Australia. And, while the Model 3 is also on the list of top-selling cars, in recent months, the market has become a lot broader. Thousands of non-Tesla EVs are sold each month, many from China.
Of course, the premium for buying an EV is still high, which means if you want to justify it in terms of the fuel saving, you need to drive a lot of kilometres every year - generally more than 20,000 km - to be able to pay the cost premium back within 10 years. That distance could be shorter if fuel prices stay elevated, though.
The China story
China’s success is so strong that it just bumped Korea from the number 3 spot, as the next chart shows. This chart shows only where cars are made, not owned. The China line includes foreign brands made in China, like Tesla, not just cars from Chinese-owned companies. As you can see, Thailand is also a major location for car-making with Ford in particular making a lot of vehicles there.
The lessons here are two-fold:
First is how fast China is rising, and how quickly it can learn. From nowhere, it now has a major position in the global automotive industry. China has weaknesses – not least its inflexible political system - but it also has strengths, especially its ability to move its economy into more and more sophisticated sectors.
Second is the power of branding. Not long ago, few people wanted to drive an unknown Chinese car brand when it had a badge on it proclaiming Great Wall Motors, especially compared to well-known brands like Toyota, Ford or Hyundai - which continue to dominate some of the most popular car brands.
So, China has acquired some well-established brands, such as LDV and Volvo, and hasn’t looked back. LDV is another old British car brand also now owned by SAIC. I’m surprised GM hasn’t sold them the Holden brand since it isn’t using it anymore.
The Top 10
The top of the 2022 best seller list is still a Toyota, proving some things in cars don’t change so quickly. But it’s not a Corolla. We buy bigger cars now and the top-selling car in Australia is the Hilux.
Toyota Hilux 4X4 47,329 sold
Ford Ranger 4X4 43,128 sold
Toyota RAV4 34,845 sold
Mazda CX-5 27,062 sold
Toyota Corolla 25,284 sold
Mitsubishi Triton 4X4 23,953 sold
MG ZS 22,466 sold
Hyundai i30 21,166 sold
Toyota Prado 21,102 sold
Isuzu Ute D-Max 4X4 20,124 sold
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