Analysis: The Australian new car sales market is changing before our eyes

For the second time in 10 years the Australian new car sales market is going through a seismic shift.

Back in 2017, the local car manufacturing market completed its shutdown, formally ending the era of large locally made passenger cars.

SUVs and dual-cab utes had already become the peak sellers, but this was a definable transition point.

It seems likely we will look back on March, April and May 2026 as a moment.

The oil spike created by war in the Middle East has driven the popularity of electrified vehicles to unprecedented heights in Australia, but it’s causing something else even more significant: the breakout performance of Chinese brands.

The percentage sales growth of the likes of BYD in 2026 (120.1 per cent), Chery (84.3 per cent) and to a lesser extent, GWM (23 per cent), among the bigger Chinese brands – along with a surge by smaller brands such as Leapmotor, Omoda/Jaecoo and Zeekr – is reshaping the Australian vehicle market before our eyes.

The Chinese have been coming hard for a while in Australia, but their combination of electric, plug-in hybrid, regular hybrid and orthodox vehicles at affordable prices at a time when oil price rises are exacerbating already tough economic times has claimed a buyer sweet spot.

They are flooding the centre of the Australian market – small, medium and large SUVs – with options.

The rise of the Jaecoo J5 to sixth on the sales ladder in May, followed closely by the Chery Tiggo 4 is evidence. Overall, four Chinese brands are now in the VFACTS top 10.

“From an Australian consumer perspective, the reason why the Chinese work is that now they give a good value for money,” says Ross Booth, the global general manager of the vehicle retailing experts at Redbook.

“They also offer quality. They're not cheap and nasty.”

Of course, just being Chinese is not a guarantee for success. Both JAC and LDV are down in 2026 and the struggles of MG are well chronicled. Then there are the underpinning structural flaws of the Chinese auto industry that are driving them to export in ever larger numbers.

But that’s another story and so is the fact that more Chinese brands are landing in Australia’s tariff-free market in 2026 and beyond with large sales ambitions.

That’s not great news for some of the most familiar brand names on sale in the Australian market – their 2026 performances represent the flipside of the sales story.

Dominant market leader Toyota fell 30.7 per cent for the month of May and 24.6 per cent for the year, while Ford (15/11), Isuzu Ute (30.5/2.8), Mazda (27.4/16), Mitsubishi (30.6/26.4), Nissan (35.8/32.8) and Subaru (32.6/22.1) have also fallen dramatically.

Among smaller players, there are plummeting falls that look like they could be brand killers, and most luxury brands are doing it tough.

There are undoubtedly other issues at stake here, such as supply and model changeover, (Mazda is moving to a new generation of its most important model, the CX-5) but there seems no doubt the rise in diesel prices especially, poses problems for 4x4 ute and SUV-reliant brands.

Diesel vehicle sales were down 26.2 per cent in May and are off 13.1 per cent for the year. The Ford Ranger is down 7.9 per cent year-on-year, as is the Toyota HiLux, down 10.6 per cent (as it also moves to a new generation).

The Toyota LandCruiser 300 Series is up for the year but off almost 40 per cent in May, while the Ford Everest is down on both counts.

Booth argued the price rises have weeded those people out who don’t actually need a diesel to tow or haul heavy loads.

“In my opinion, is the fact that some people used to buy a diesel, because that's just what you did. It was a fashion buy,” he said.

“Now people are looking at it and going, ‘if I don't need a diesel, why would I buy one?’.”

Even if oil prices revert, the old status quo isn’t expected to be revived. Too many people have steered a different course. And that’s bad news for brands that can’t adapt on value and powertrain offerings.

“Toyota is too big and has too many strengths to be under threat, it has a huge model range, a lot of hybrids and it has technology in depth to sustain it,” said Booth.

“But I worry about some others, who have a limited product range and are tied into a market that’s evaporating.”

It’s not written in stone that established brands will inevitably fall to the Chinese.

History is not pre-written. In fact, you can see the responses coming from some of those brands now; Mazda’s tie-up with Changan to bring the well-priced 6e and CX-6e EVs to Australia, Nissan’s embrace of Dongfeng as a key supplier of vehicles led by the PHEV Frontier Pro dual-cab ute and Mitsubishi turning to Taiwan’s Foxconn for an EV.

In May, an EV – the Tesla Model Y – led the Australian new vehicle sales market for the first time.

EVs also accounted for a record 20 per cent of sales in May and electrified vehicles (EV, PHEV and hybrid) claimed 46 per cent of sales.

There’s no doubt the oil price spike backed up by the legislative push provided by the New Vehicle Efficiency Standard (NVES) and the fringe benefits tax exemption for select EVs is driving new vehicle buyers toward electrification.

But Booth remains cautious on how quickly (and by how much) EV sales will continue to grow and says the reality of recharging infrastructure limitations will simply prevent some potential buyers from making the plunge.

It’s a point widely made this week in the wake of the sales record.

Federal Chamber of Automotive Industries chief executive Tony Weber and EV Council CEO Julie Delvecchio were both banging this drum – and the two organisations aren’t known to agree on much.

“As the number of EVs on the road continues to grow, charging infrastructure must become more of a priority. Continued investment and enabling policy settings will be essential to ensure infrastructure keeps pace with consumer adoption,” said Weber.

Then there’s the simple fact no EV cannot yet deliver the towing or carrying performance some buyers need.

“Hybrid and plug-in hybrid are very suitable for the Australian market for the next few years,” argued Booth.

“Down the track battery technology such as solid state should reach a point where EV range performance is so substantial these issues are vastly reduced.

“Then the market will change again."

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