Some Chinese auto brands will fail, says Kia

The number of unfamiliar Chinese auto brands coming Down Under is increasing faster than energy bills right now, with at least a dozen car-makers from Australia’s largest import market set to arrive here in the next 18 months.

There are pros and cons to this Sino-surge.

Aussie auto consumers will be spoiled for choice from 2025, potentially lowering prices across the board – especially in the EV and hybrid segments – but it will put pressure on many of the existing brands and their dealers.

And as the 50-plus automotive brands already available in Australia swells with the launch of countless new Asian challengers, not all of the new Chinese brands will be successful.

Names like Skywell, Aion, Leapmotor, Jetour, GAC, Xpeng, Geely, Jaecoo, Lynk & Co and Changan have all confirmed they will launch in Australia by the end of next year, joining Chinese compatriots already here like MG, BYD, LDV, JAC and Foton.

Like some of those existing Chinese brands, many have ambitious plans to be top-five players – and even market leaders – in the Australian market.

But Kia Motors Australia CEO, Damien Meredith, says there will be casualties in the fight for smaller pieces of a large pie.

“I think that some will survive and others won't,” the straight-talking executive told carsales at the 2024 Kia Carnival launch last week.

Kia knows a thing or two about building a brand, starting from humble beginnings in the late 1990s when it launched the budget-priced Kia Mentor.

Slow sales followed for years because Korean cars were widely ridiculed as being cheap and nasty – just as Japanese car were in the 1960s and 1970s – and now the same thing is occurring with Chinese cars.

The main difference is that by 2030 there will be dozens of new Chinese challengers, not two or three like Daewoo, Kia and Hyundai.

Kia is now one of Australia’s most popular auto brands, currently lying fourth behind Toyota, Mazda and Ford, and established Chinese brands like BYD and MG have boldly predicted they will emulate that success soon.

Kia’s local chief suggested that many Chinese brands with deep pockets could build their businesses in Australia even in the face of extended financial losses.

“At the end of the day, it depends on what the head office [of Chinese car companies] wants them to do,” said Meredith.

“Maybe some of those brands that are coming into Australia plan to continue to cop losses for a decade or so [before being profitable]. There’ll be different methodologies.”

Despite an expected influx of cheap EVs and hybrids from powerful Chinese brands – including dual-cab utes – Meredith insists Kia will “…not enter a price war with all the entrants that come.”

He said it was “obvious that Australia is going to get more and more brands into the country and you have a choice with what you do.

“You can go in the corner and suck your thumb, you can leave the market, you can play the discount game, or you could have faith.

“And by that I mean what we’ll do is we’ll believe in our product, we’ll believe in our brand, we’ll believe in our dealer networks to do the job that’s required in regards to customer satisfaction, our volume and market share, and ensure that there is growth within our brand ongoing, even with added competition.”

The local Kia boss predicts that overall new-vehicle sales will remain strong in 2024 as order backlogs are addressed, which should see the market stay at around the same record 2023 tally of 1.2 million sales this year.

But for Kia, 2025 will be a milestone year as the Korean brand introduces the Tasman ute, which is expected to boost its annual sales from a forecast 80,000 this year to more than 100,000, on equal footing with Mazda.

Australia’s upcoming automotive emissions standard (NVES) and the new Chinese challengers could put a spanner in the works for Kia and its first (diesel-powered) ute, but Kia’s Aussie boss says it’s ready for them.

“We’re going to continue to develop product and continue to develop the brand,” stated Meredith.

“We just want to be consistent and continue to give value to our customers. That’s the way we see it.”

Australia is often seen by new auto brands as a test bed or stepping stone to larger mature auto markets such as the US and Europe, but Meredith says that protectionist policies will make things tough for Chinese imports in those regions.

“I’m not sure they’ll all get to Europe because there’s talk of a 30 per cent tariff on Chinese products in Western Europe. Whether that happens I’m not sure, but in the US if you don’t have a factory it gets expensive – and the upcoming [presidential] election won’t help.

“But I will say we’re always wary and respectful of competition and we never underestimate them.

“It’s going to heat up, there’s no doubt about that and we look forward to it,” said the Kia Australia CEO.