Huge change coming to Aussie car market in 2025

Australia’s car market is facing its biggest shake-up in decades, with some experts calling it the largest shift in automotive history.

Australia’s car market is undergoing one of its biggest shake-ups in decades, with some experts calling it the most dramatic shift in automotive history.

From surging Chinese car brands and a cooling electric vehicle market to aggressive discounting and oversupply, the car industry is in for a bumpy ride.

Federal Chamber of Automotive Industries data shows 1,237,287 new cars were delivered in 2024, a 1.7 per cent increase on the previous year.

But that growth is not expected to continue.

Cox Automotive Australia corporate affairs manager and analyst Mike Costello said flagging sales should improve in the second half of the year.

“Rate cuts from the RBA will help turn this around in H2, as will an uplift in government fleet post Federal Election,” Mr Costello said.

While the first half of 2024 was strong, the closing months revealed a slowdown as manufacturers cleared Covid-era backlogs and Australian buyers felt the economic pressure, from inflation and rising interest rates.

Now, in the lead-up to June 30, brands are rolling out aggressive discounts and generous drive-away deals.

The discounting we’re seeing isn’t just due to softening demand but is being driven by improved vehicle supply, global overproduction and intensifying competition.

The Hyundai Santa Fe is a smart pick for a family-oriented SUV thanks to its three rows of seating and ample room for people and cargo. Picture: Hyundai Motor America via AP

During the Covid-19 pandemic, stock shortages meant car dealers could sell vehicles with little or no negotiation but those days are defiantly over.

Mr Costello said the industry is at a real “turning point”.

“We’ve moved from a seller’s market in Covid to a buyer’s market now – more in line with historical norm, there’s been an improvement in vehicle supply, which has led to the return of incentives and discounting,” he said.

Global factories are also playing a role with Chinese automakers facing oversupply in their home market and tightening trade restrictions in Europe and the Unites States.

BYD has built it’s own carrier vessels to transport EVs globally. Picture: AFP

Australia has become a viable market for Chinese car manufacturers which has lead to aggressive local pricing, especially from brands such as BYD, Chery and GWM.

Carsales.com.au data services Director Ross Booth said much of the automotive growth is coming from electric and electrified vehicles.

“We’re seeing a clear shift towards more fuel-efficient vehicles, with strong growth in New Energy Vehicles – which include hybrids, plug-in hybrids, and battery electric vehicles,” Mr Booth said.

Hybrid and electric vehicle sales made up just 8 per cent of new cars in 2021, jumping to 25 per cent by the end of 2025.

“Looking ahead, we’re predicting NEVs to account for up to 35 per cent of the new vehicle market by the end of 2025, driven largely by increased demand for hybrids and PHEVs,” Mr Booth said.

Conventional hybrids like the Toyota RAV4 seem to be a sweet spot for buyers. Picture: AFP

Conventional hybrids seem to be the sweet spot for buyers not ready to take the full EV jump.

In 2024, more than 172,000 hybrid vehicles were sold in Australia, a 76 per cent year-on-year increase, according to Federal Chamber of Automotive Industries (FCAI) data.

EV uptake is slowing down despite new models reaching showrooms each month.

The biggest shake-up for the industry comes from China.

New brands such as BYD, Xpeng, Zeekr and Chery appeal to cost-conscious buyers.

BYD sales are up 103 per cent this year, Chery is up 234 per cent and GWM is up 14 per cent.

Despite the growth, Mr Costello said some buyers still have reservations.

“It’s clear that while a subset of buyers still have reservations, perhaps in part because of their broader opinions on the Chinese State, an ever-growing cohort are opting for more affordable Chinese cars, swayed by their long warranties, cutting-edge tech, and modern designs,” Mr Costello said.

“People are also learning that these vehicles are often no less reliable or capable than other products.”

Originally published as Huge change coming to Aussie car market in 2025