Another car manufacturer quits Australia’s saturated market in defeat

The luxury brand Infiniti is the latest in a long line of car companies to back out of the Australian market.

The luxury brand Infiniti is the latest in a long line of car companies to back out of the Australian market. Photo: Getty

Infiniti has become the latest car-maker to pull out of the congested Australian market, following a well-worn road to failure here. However, it does stand out as a rare brand to do it twice.

The luxury division of Japanese auto giant Nissan, first dabbled in Australia briefly in the 1990s and returned in 2012. It announced last week it will close its Australian operation by late 2020, declaring its intention to focus on the giant Chinese and US vehicle markets.

But it’s also failed to make sales dent here, selling about 4000 cars in seven years.

Infiniti is far from the only vehicle importer to depart Australia ignominiously. The Smart mini-car brand folded in 2015, despite the marketing might of Mercedes-Benz. German brand Opel launched in 2012 and lasted only 12 months, while US luxury brand Cadillac’s Aussie launch was cancelled at the 11th hour in the 2009 aftermath of the global financial crisis.

You can check out a more complete list of recent Aussie market misfires below.

Swatch’s Smart Mini-Car just didn’t cut it for Aussie drivers. Photo: Getty

Ross Brodie, the general manager of the vehicle valuation and specification website, says those who fail all make the same mistakes.

“They come into the market and follow the competition – so they provide nothing new or different. They don’t spend enough money to tell anyone and don’t have a distribution network that represents how many vehicles they are trying to sell,” Mr Brodie said.

“They then order too many cars in, they then have to dispose of those cars via a cheaper price which then then destroys the brand value of what they were trying to do in the first place.

“It becomes this never-ending cycle and, eventually, they have no choice – they have to pull out.”

Australia is make or break

Some brands are attracted to Australia because they want a chunk of the million-sales per annum on offer. Emerging brands have also used Australia as a place to hone skills ahead of tackling bigger western markets such as the US.

With at least 55 brands on-sale here it’s a tough battleground.

Which is what the Chinese are now doing, using Australia to learn about foreign sales operations just like the Japanese and Koreans have decades earlier. MG – yep the same MG that was once a proudly British sports car specialist – is the most successful of them here.

It has steadily built up sales in Australia following a stuttering start. The cornerstones of that success have been a seven-year warranty and service plan and competitive pricing for its MG3 small car and ZS SUV.

It is on track to sell about 8000 vehicles in Australia in 2019, the sort of numbers where breaking even becomes possible.

“MGs are good value, well positioned cars, making a decent offer,” said auto industry analyst Matthew Wiesner of the Raven Group. 

“They have got all those things right and people couldn’t give a rat’s if they are built or owned by the Chinese.”

MG plans to launch an electric ZS in Australia soon and could cut the access price for a battery electric vehicles in Australia to a new low of about $40,000.

Wiesner predicts it will be the forerunner of a wave of Chinese BEVs and brands arriving in Australia. But he warned they faced the same challenges as those who have tried and failed before them.

“The broader Chinese strategy is they are going to skip a few steps and go straight into electrification, which means they become one of the great manufacturers and exporters of EVs and players in that market over the next decade,” he said.

“The questions they (Chinese EV brands) have to ask is how do they become relevant and how do they add something and mean something to the Australian market.

“They will have a clear point of difference because their focus will be purely around electrification and offer the mass market that technology.

“That’s all well and good, but you still have to define who you are and what you stand for in that space. People still want to connect with something because their car does represent an extension of what they are.”

The cars that broke down in Australia

Cadillac: General Motors killed off the launch of its luxury brand in Australia in 2009 before it even went on sale. Eighty-nine right-hand drive vehicles were already in the country when the axe fell. They were mostly sold in New Zealand.

Daewoo: The Korean brand arrived with grand ambitions in the 1990s. General Motors bought the global business in the early 2000s, then evicted it from the Australian market as Holden took over its rebadged small cars.

Daihatsu: The mini-car specialist was axed after three decades here. With Australia a big-car country, it was in decline by the time Toyota  took it over in 2000 and gone by 2006.

Daewoo exited the Australian market in the 2000s. Photo: Getty

Dodge: Once a name that graced an Australian-built Chrysler ute, it launched as a stand-alone brand here in 2006. But without right-hand drive versions of the V8 Charger or RAM trucks that were so popular in the USA, it dwindled away to nothing by 2016.

Infiniti: First offered in the 1990s and again in the 2000s. Both times it failed to make dent in the German domination of the local luxury market.

Opel: The German brand’s arrival in Australia was part of a global expansion plan that failed lamentably. General Motors gave up and sold it to France’s PSA a few years later.

Proton: A Malaysian brand that marketed itself as an Asian BMW. No-one believed it. Now owned by China’s Geely (which also made a brief foray down under), Proton may return with new model line-up.

Rover: Storied British brand disappeared from Australia when parent collapsed in 2005. Now owned by China’s SAIC, the same company that owns MG. Renamed Roewe.

Saab: Quirky Swedish brand struggled for years as a division of General Motors, was sold off during the GFC and then dribbled away. Local operation went with it.

Saab and its distinctive silhouettes was another victim of the crowded Australian car market. Photo: Getty

Seat: VW’s Spanish outpost had two cracks at Australia around the turn of the millennium. Both failed. Rumours persist it wants another go. Who knows why.

Smart: Micro-car brand originally created by the Swatch watch people. Over-priced and under-sized, struggles anywhere people have access to decent parking.

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