The global boss of Australia’s newest auto brand GAC, which was officially launched locally this week, has said the Chinese automaker won’t participate in a price war with rival brands, and will price its models sustainably.
He also told CarExpert that Australian GAC dealers will be able to make profitable margins on their vehicles, despite aggressive pricing for the most affordable of its first three models sold here, the Emzoom small SUV, which starts at just $25,590 before on-road costs.
“Our principle is to establish the accurate pricing,” said GAC International President, Wei Haigang.
“We cannot choose to set a lower price just for the sake of setting a low price, as without profits we cannot make our business sustainable.”
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While the list of new car brands from China is long, the list of those that are profitable is not – with only a handful of them, such as BYD, returning a profit on their global sales.
In Australia, the hyper-competitive market has seen some dealers hand back franchises of Chinese brands due to margins so narrow that they’re unable to make a profit.
Chinese auto brands such as MG, Chery and GWM have engaged in price battles and vied for the title of offering Australia’s cheapest models in specific segments – such as the lowest-priced electric vehicle (EV), which is currently the new BYD Atto 1 hatchback priced from just $23,990 before on-road costs.
The battle for the mantle of Australia’s cheapest SUV, meantime, is currently a tie between the Mahindra XUV 3XO and the Chery Tiggo 4, both priced from $23,990 drive-away, but the most affordable new model overall remains the long-running Kia Picanto micro hatch at $19,190 before on-road costs.
However, GAC is not aiming to win any ‘cheapest’ contests in Australia, said Mr Wei.
“Our operational strategy in Australian market is to have accurate pricing and to have accurate positioning. We want to set ourselves as the middle premier brand, but with very high quality and with competitive price.
“We do not want to set a lower price, so you can see our price comes with relatively higher configuration or trim.”
The Emzoom, which is exclusively petrol-powered and pitched at younger and cost-conscious buyers, is more expensive than Australia’s cheapest SUVs, but it’s also larger than them and the top-selling Hyundai Kona, and almost as big as the next most popular small SUV, the MG ZS.
Chery Australia boss Lucas Harris told CarExpert earlier this month the brand didn’t want to participate in price wars at the expense of resale values.
“If we are chopping and changing pricing dramatically all of the time, that has a really bad impact on residual values for customers,” Mr Harris said.
“It’s about consistency and earning the right to sell them another car.”
Suzuki Australia general manager Michael Pachota toldCarExpert earlier this year the Japanese brand would also price its models in line with customer expectations – and not simply to undercut competitors.
And during a media briefing in Melbourne last month, GWM International president Parker Shideclared BYD “too aggressive”.
“We’re not waiting to engage in… I want to say price war but is there really a price war – [buying] market share a faster way with price [cuts],” Mr Shi said.
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