A cyclist rides past a General Motors storage facility in Melbourne. Chinese automakers look unlikely to take advantage of the trade agreement between China and Australia. [Photo/Agencies]
More car exports to Oceanic country look unlikely in near future
Chinese carmakers look unlikely to take advantage of the free trade agreement between China and Australia signed this month due to their lack of competitiveness in the Oceania market and poor sales performance to date.
Under the agreement, Chinese automakers would have opportunities to ship more products to Australia, with reduced tariffs that will be cut completely in five years.
Several Chinese carmakers have been shipping finished and disassembled cars to Australian distributors since 2009, and have been paying a 5 percent tariff.
The Ministry of Commerce said China's industrial products would have competitiveness in Australia and that high potential for export growth lies in eight main categories, including transportation.
However, Chinese auto-makers indicated they would not adjust their short-term operations in light of the agreement, but did not comment on future plans.
Shanghai General Motors' Public Relations Manager Liu Weiyi said the Sino-US joint venture does not plan to export their vehicles to Australia due to the small volume there.
"The company will not adjust the production plan in accordance with the new event. The production plan was set one year ago," she said. Shanghai GM's car exports are mainly shipped to South Africa, Russia and Spain.
New South Wales-head-quartered Ateco Automotive Pty Ltd imports Great Wall, Chery and Foton models and distributes the vehicles to local sellers.
Ateco Automotive spokesman Daniel Cotterill told the Australian media that its Chinese car import business is vulnerable as payments to Chinese carmakers are in US dollars, which is stronger than the Australian dollar.
Great Wall's Australia sales slumped to 2,637 vehicles in 2014, less than a half of the 6,105 sold in 2013. Last year, Chery's sales dropped to 592 from 903 in 2013.
Foton Motor entered the Australian market last year with 201 pickups.Cotterill said Chinese cars are less competitive as the products are weak compared with the major players in Australia.
BYD Co Ltd focuses on the new-energy vehicle market in Australia, as the nation's conventional energy vehicle market is saturated leaving limited business opportunities, according to the Chinese battery and automaker.
Great Wall Motor Co sells its SUVs and pickup trucks in Australia as budget choices, and Chery Automobile's SUVs and hatchbacks are also positioned at low-end segments.
Toyota, Ford and General Motors currently produce and assemble cars in Australia but are reducing manufacturing capacities and plan to cease Australian production next year or in 2017.
Australia is a relatively small car market in the Asia-Pacific region and relies heavily on finished car imports from overseas. Australia's new car sales volume totaled 1.11 million last year, a decrease of 15 percent from 2013.
Australia's annual car sales were less than China's monthly volume of 1.61 million units in May.
Toyota dominated the Australian market with about 203,500 new car sales in 2014, and the Japanese brand is also popular in the used car market.
Australia's used cars market's capacity is more than double the nation's new car market.