GWM, then Haval, then MG, then BYD, and now Omoda and Jaecoo, all Chinese brands, have grabbed a sizeable part of the new vehicle sales market, in a relatively short period of time. Our last emerging market was Korea. Now the three Korean brands represent 12% of the New Zealand market.
Only those with selective memories will forget the shift in perception that took place and the journey that Hyundai and Kia have been on in the last 15 or so years.
While it has been true that many of the emerging brands offer vehicles that are great value for money, not all their models are cheap. For example, the new GWM Canon Alpha is from $54,990 to $68,990, the MG Cyberster is $129,000. It is dangerous to dismiss these cars as just cheap.
It is anticipated that there are another twelve Chinese brands that will enter the market over the next 12 months or so. The question we have been asked many times at Boost Auto is, “Is there space for all these new brands?” The short answer to the question is an unequivocal, “Yes.”
Photo by Austin Chan on Unsplash
For a new brand to survive it needs a compelling proposition, that goes beyond good product. A decent warranty, a national dealer network with locally strong partners, good back of house operations (accurate pick rate, good parts supply, local warranty support and technical advice), a strong brand focussed marketing plan to support, trust, confidence and brand recognition, but most of all a clear understanding of their potential customers and what those customers’ are looking for. In other words, a compelling customer AND value proposition.
If we accept that twelve additional brands will enter the market, then the follow-on question should be, which brands will see their market share eroded, or will these new brands grow the overall market.
One scenario that perhaps hasn’t been imagined is that the new brands will duke it out among themselves, model by model and segment by segment. In this scenario though the overall market could grow. We have a sizeable used import market, and there gets to a point where consumers will switch from a used to a new vehicle with lower maintenance costs and a strong warranty. $26,990 for a new GWM Jolion anyone?
Human nature illustrates a key truism. We are more likely to be prepared to embrace or sample a new brand if we feel our custom has been taken for granted elsewhere. In other words, legacy brands are only as good as their customer service in sales and aftersales. Consumers can be slow to forget a poor after sales experience and are likely to quietly vote with their wallets.
New brands will come with many challenges. Every process is new for them, their staff will be new to the brand, there ERP (think wholesaler DMS) might not be set up correctly, their team might lack local market knowledge or experience, and importantly there is no vehicle parc to generate revenue for the back end of your business.
Which is why the introduction of a new bread is not a magic wand for your business. A new brand may offer an additional vehicle sale, perhaps a better margin than the legacy brands, but at lower volume than your key brands, and so a new brand is not a solution in its own right. You might need a vehicle parc of four years plus before your aftersales business has meaningful scale.
Which brings us back to the starting question. Where will the new brands fit in the marketplace, and who might they displace?
Every brand has its day the sun, and as long term practitioners in the industry know, many brands go through peaks and troughs, hopefully at different times. New brands go through growing pains too.
Build your capability, through robust processes, strong KPI measurement, have a good management team, and build a can do will do attitude, alongside a commitment to put customers first. These foundation stones are more important than the brands you represent.
However, if you must look for a new brand, find one with depth and scope, with a locally recruited team, combined with a product line that is ICE, MHEV, PHEV and BEV, with a strong small and medium SUV, a decent warranty, a good margin, and that all important bold value proposition.
At the same time, take a look at your legacy brand models, and check their future product lineup. The market is tough and fickle right now, however a brand without a strong SUV line-up at key price points and without mild hybrids in their line-up, is at risk, particularly those with a weaker than average warranty offering, or poor customer care.
Take a close look at starting prices. Cars have become expensive; just look at a Golf. In 2019 a Trendline was $29,990 as an auto in Australia, and that model replaced by the Life, with the same output is now $39,190. Thats a 30% increase in just over 5 years. It is a similar story with most of the volume products and brands. As starting prices move up, there is a bigger gap for new entrants to sneak in. It's all very well ditching Fiesta, if there is a small walk to the next model. But if Fiesta, and Focus go, then $41K for a Puma looks a high start point to the range.
The market is surprisingly dynamic. Just five years ago when MG was re-introduced into the market almost no one offered a five year warranty. Now, a 7 year warranty is not uncommon, and MG is now 10 years! If your legacy brands are lagging behind, they are not customer focused and that should be a warning sign.
So is there room for 12 or so brands in the market? Absolutely. Will they all succeed? Probably not.
However, their chance of success will be closely aligned to how customer centric they are, and what your business brings to the party. If a new brand brings something valued extras to consumers, then they will likely succeed.
©2025 Boost Auto.
Boost Auto is an automotive consultancy working in seven main areas.
• Sales Training
• Sales and Marketing effectiveness for brands and dealers
• Market Insights & Trends
• Business planning and facilitation
• Operational Effectiveness
• Get Ready Automations
• Go To Market strategies for emerging brands.
You can contact us at hello@boostauto.co.nz
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