James Voortman, CEO of the AADA, has called on the Federal Government to block the arrival of more vehicle manufacturers into the already-crowded market. The AADA has proposed a “pause” on new entrants, rather than a permanent “ban”, to allow the market to adjust to the current level of competition.
Market Saturation
The Australian car market has become one of the most open in the world, with few tariffs and a broad range of vehicles available to consumers. The number of car brands operating in Australia has surged from 39 to 67 in five years, with another 15 on the way. According to research commissioned by the AADA from data firm BlueFlag, there are 54 car brands operating in Australia per one million new-vehicle sales.
This compares to 19.8 in the UK, 18.9 in Canada, 16.4 in Germany, 6.6 in Japan, and just 1.8 in the US. The US market is protected by tariffs that effectively block Chinese cars, resulting in only 30 vehicle brands covering 16.3 million sales. In contrast, the arrival of the likes of Rox Motor, Xiaomi, Luxeed, and Avatr is already set to bring the tally north of 80 by 2028. Of those 80 brands, 37 – or nearly half – will be Chinese.
Consequences for Dealers
The AADA is concerned that the ambitions of car brands in the Australian market are forcing showrooms to take on more stock than they can sell. This is leading to a race to the bottom, with aggressive discounting eroding margins and devaluing vehicles. Dealers are also carrying the financing costs and risk of unsold vehicles, which is having a negative impact on their businesses.
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The AADA is urging the Federal Government to fast-track unfair trading practices for franchise businesses announced earlier this year. The group is also recommending changes to the penalties for breaching Australian Consumer Law and a “targeted merger notification exemption for smaller and family-owned dealership transactions”. Additionally, the AADA is calling on new car brands to establish dealer councils and assist dealers financially when clearing aged stock.
Current Pricing of Selected Vehicles
The 2024 Mitsubishi Eclipse Cross ES 1.5-L SUV (front-wheel drive) is advertised for $21,888, with government charges excluded. A 2022 Kia Carnival S, 2.2-L diesel people mover, is listed at $34,999, also excluding government charges. The 2020 Lexus NX NX300 Luxury 2.0-L SUV (front-wheel drive) carries a drive-away price of $33,980. A 2019 Mitsubishi Eclipse Cross ES 1.5-L SUV is offered for $15,990 drive-away.
The 2026 GWM Haval Jolion Premium Hybrid 1.5-L SUV (front-wheel drive) is priced at $25,788 drive-away. A 2023 Kia Seltos Sport+ 1.6-L SUV with four-wheel drive lists for $25,990, government charges excluded. The 2011 Mazda BT-50 DX+ 3.0-L diesel extended-cab chassis, four-wheel drive manual, is advertised at $11,990 drive-away.
