China's electric car makers on march in Australia, as Japanese ICE share melts

Australia may have enjoyed its biggest July sales of new cars on record, and the highest share of SUVs. But there are trends appearing that could have a profound impact on the future of the Australian car market.

Japan remains the dominant source of Australia’s new cars – with 183,000 sold in the year to date, leading the market by some margin, and it has five vehicles (all Toyota) in the country’s top 10, according to FCAI data.

But the total sales of Japanese made cars are down 7.5 per cent on last year, and the market share has slumped from 31.8 per cent to 27 per cent. The share of Japanese brands has also slumped – Toyota down from 22.6 per cent to 16.5 per cent, and Mazda and Mitsubishi also falling.

China, however, is now clearly the third biggest maker of cars for the Australian market, nearly doubling its numbers for 2023 to date to 111,705 and overtaking South Korea on the way. Its share of the market has jumped from 9 per cent to 16.4 per cent.

And a key part of that China growth comes from electric vehicles – a key market segment virtually ignored by the Japanese car makers – with Tesla (29,511 in the year to date), the BYD Atto 3 (7,201), the electric version of the popular MG ZS (more than 2,000), and the Polestar 2 (1,453) leading the way.

Tesla is US based but its Model 3 and Model Y for the Australian market are now made in China. Polestar is also made in China at the factories owned by its owner, Geely.

Those EVs account for more than half of China’s auto manufacturing growth in the Australian market so far in 2023, and that is likely to accelerate with the full roll-out of the first EVs priced under $40,000 in Australia – the BYD Dolphin, the MG4, and the GWM Ora – and as the recent price cuts for Tesla’s Model Y and Model 3 take effect.

Already in 2023, the share of full battery electric cars in Australia has nearly trebled in 2023 to 7.4 per cent, while the share of mild hybrids – the technology that Japan has bet the house on – has eased from 7.7 per cent to 7.1 per cent.