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Another week, another new car company joins the Australian market.
Ok, so it may not actually be one new brand each week, but it certainly feels like that sometimes given the rate of change. Unfamiliar names like Zeekr, Leapmotor, Xpeng are joining more familiar brands like Cadillac, Smart and Chevrolet, and on the surface that sounds like a great thing.
More brands equals more competition and that should make for a more competitive market. Except that’s yet to play out quite that cleanly and instead the market is becoming saturated and increasingly confusing for buyers to navigate.
In the past five years the list of new brands competing in Australia has grown by at least a dozen - BYD, Cupra, Chevrolet, Cadillac, GMC, Smart, Foton, Polestar, Leapmotor, JAC, Xpeng and Zeekr. But, honestly, there’s every chance I’m missing one or two as the rate of growth has accelerated significantly in the last 12 months.
Australia typically sells slightly more than one million new cars per year, which is small compared to most markets around the world. I’ve never been very good at maths but it doesn’t take a genius to work out that unless the total volume of sales dramatically increases, rapidly expanding the amount of brands only means each car company will have a smaller piece of the pie (so to speak). And that will inevitably lead to some brands being unable to survive.
Don’t believe me? Ask your local Holden dealer… oh wait, you can’t. Maybe try the folks at Citroen… or Chrysler…
The reality is, this is a free market and only the most competitive brands will survive, so if those that can’t keep up disappear, that's part of business. The issue is these new brands, in particular those from China, have dramatically shifted the established players more upmarket. Most have successfully undercut the more established players and that has driven prices of once mainstream models into a new price bracket.
Ultimately this leaves consumers with a difficult choice - pay more for a proven brand or risk your money on something new and unproven?
Of course, the major brands like Toyota, Ford, Hyundai and Kia have little to worry about, but these new brands will put increasing pressure on smaller, struggling car companies like Peugeot, Jeep and the like.
The size of our market simply cannot continue to support such growth and what happens if you buy a new ‘Insert New Car Company Name’ and then they go out of business before your warranty has even expired?
Competition is great, a flooded, crowded and complicated market is not.
Ultimately, that’s not your problem as a consumer, and you’ll probably enjoy having more choice for your next new car. But just make sure you do your research (here at CarsGuide.com.au, of course!) and choose wisely.
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