Incumbents ‘nervous’ about new brand influx
BY MATT CAMPBELL | 3rd Jun 2024
AUSTRALIA is about to see the biggest shake-up in the automotive industry in years, with an influx of new brands heading our way in the next 18 months – and the big-name established players are “nervous” about what that could mean for their businesses.
That is according to Hyundai Motor Company Australia chief operating officer John Kett, who said at the recent Santa Fe large SUV launch that well-known nameplates in the new-vehicle market’s top 10 sellers cannot take their positions for granted as a wave of new Chinese brands arrive in the coming months.
Some of the brands confirmed to be heading this way include Geely, Zeekr, Smart, Xpeng, Jetour, Jaecoo, Leapmotor, GAC and Aion, many of which will have value for money and pricing as key focal points for their positioning in the market, not to mention to promise of affordable electric cars in light of the New Vehicle Emissions Standard legislation that requires lower-emitting models to be more readily available to consumers.
“I think everyone's nervous about it,” Mr Kett said of the competition that is heading Australia’s way.
“We have to be confident in the things that we're doing," he said. "I think, progressively, the constant evolution of our portfolio and the technology that we're bringing, the years that we've been in the country and the lessons that we've learned and the scale that we brought -- that whole business model that we started off with is now being replicated by eight or nine brands coming to the market.
"We often look at how long it took us to become – to get into the top 10, and the top five – true volume scale. And the actions across our portfolio that were required to get there are the pricing related to that, and the channel that you sell,” Mr Kett said, reinforcing that a strong dealer presence is a key consideration for building and maintaining relationships with customers.
“To get into the top 10 in Australia, you’ve got to be around 40,000 (sales) a year. That's tough, but you can get there,” he said.
“Unless your portfolio really broadens and you're looking beyond just a rental channel mix, or two or three cars, it will take some time.”
Mr Kett intimated that there will be a pricing battle that, to this point, may have only involved a couple of budget players, but that Australian car buyers will have more choice from new brands, and that will leave the legacy marques to either rethink their mix, or sharpen the pencil to match the newcomers.
“There's no doubt (the incoming brands) will disturb pricing,” he said. “There's no doubt that some of the historical top 10 brands that aren't evolving maybe as quickly as we are in terms of HEV and EV will be at some risk, and the only way to offset that risk is to maybe price for it.
“But we feel comfortable that we're well positioned as a brand offering. We're conscious of it. We're trying to avoid the turbulence that comes with it in terms of pricing, but that’s going to happen,” he said.
Fellow South Korean car-maker Kia has spoken of a similar ‘believe in what we’re doing’ approach, with Kia Australia CEO Damien Meredith saying that the influx of new brands will force existing players to stay on their toes.
“It’s obvious that Australia is going to get more and more brands into the country,” Mr Meredith said at last month’s launch of the Kia Carnival.
“You have a choice with what you do. You can go into the corner and suck your thumb. You can leave the market. You can play the discount game. Or, you can have faith, and by that, I mean what we’ll do.
“We believe in our product, we believe in our brand and we believe in our dealer network to still do the job that’s required in regards to customer satisfaction, our volume, our market share, and ensuring there is growth in our brand ongoing, even with that competition.”
Hyundai and Kia have been running a close race in 2024 so far.
After the first third of the year, Kia had delivered 25,571 units to sit in fourth place, ahead of Hyundai with 23,035 in fifth.
