BYD, Chery, Zeekr: Australians Are Buying Chinese Cars in Record Numbers — But the Finance Industry Hasn't Caught Up

The Market Has Shifted. Your Finance Deal Probably Hasn't.

June 2026 was the strongest month in Australian new car sales history. The Federal Chamber of Automotive Industries confirmed 131,134 new vehicle registrations — a 7% jump on June 2025 — with total sales from all sources hitting 140,058, a record never seen before. But look under the surface and something seismic is happening: Chinese brands like BYD, Chery, Zeekr and Geely are reshaping the market faster than any established player can respond.

BYD recorded 18,881 sales in June alone — finishing just 243 units behind Toyota. For the first half of 2026, BYD is up 124% year-on-year with 52,335 units sold. Chery is up 77% to 24,964 units. Zeekr surged from 111 sales to 1,954 in the same period. This is not a trend. It's a structural shift — and it's being driven by two things: fuel prices and affordability.

Here's the problem nobody at the dealership will tell you. The finance model most Australians are using to buy these new, cheaper cars is the same old model designed for expensive Japanese and European vehicles. And it doesn't serve you nearly as well as it should.

Why Chinese Cars Are Winning: The Numbers Make Sense

Escalating fuel prices — spiked further by Middle East tensions — have pushed Australian buyers toward electrified vehicles at unprecedented speed. Battery EVs accounted for 23.3% of all new vehicle sales in June 2026, compared to just 7.6% in June 2025. Electrified vehicles overall — EVs, PHEVs, and hybrids — claimed 46% of total sales in May 2026.

And the brands leading this charge are affordable. The Chery Tiggo 4, for example, sits comfortably in the top 10 best-sellers with a price tag well below most legacy brand equivalents. BYD's entry-level Atto 1 hatch has opened the market to buyers who previously couldn't stretch to an EV. Buyers are no longer just looking at the sticker price — they're calculating total cost of ownership over five years, including fuel, servicing, and depreciation.

That's exactly the right way to think. But here's where most Australians drop the ball: they apply rigorous thinking to the car choice and almost zero thinking to the finance structure.

The Finance Industry's Dirty Little Secret About New Brands

Lenders price car loans partly based on residual value — what the car is expected to be worth when you've finished paying it off. With well-established brands like Toyota and Mazda, lenders have decades of resale data to work with. With newer Chinese brands, that data is thin. Lenders are still figuring out depreciation curves for BYD, Zeekr, and Chery vehicles in the Australian market.

What does that mean for you? A few things — none of them great if you're not paying attention.

• Higher risk premiums baked into your rate. Some lenders charge more for vehicles they consider higher-risk assets. A BYD bought on a standard secured car loan may attract a different rate than a Toyota of similar value, depending on the lender's internal risk assessment.
• Balloon payments that don't match reality. If you take a loan with a balloon payment — that lump sum due at the end — it's supposed to reflect what your car is worth at that point. But if a lender miscalculates the residual on a brand-new Chinese EV brand, you could end up with a balloon that's wildly out of step with actual market value. You either pay the balloon, sell the car and use the proceeds, or refinance. If the car is worth less than the balloon, you're stuck.
• Dealer finance on unfamiliar brands can be even murkier. ASIC's landmark review of 350,000 car loans — released in June 2026 — found that lenders were failing to properly monitor the behaviour of dealers and brokers selling their loans. The report found shortcomings in oversight of third-party distributors and identified a rise in complaints from consumers who felt they had been exposed to financial harm.

What ASIC Found — And Why It Matters Right Now

ASIC Commissioner Alan Kirkland put it plainly: "Responsibility for consumer outcomes cannot be outsourced." But the reality is that when you walk into a dealership — whether it's selling Toyotas or BYDs — and the finance manager slides a contract across the desk, the lender sitting behind that deal is often not in the room. And ASIC says lenders are not doing enough to check whether their dealers are treating customers fairly.

In April 2026, the Federal Court ordered Money3 Loans to pay $1.55 million in penalties for breaching responsible lending obligations. Separate Federal Court proceedings found that Diamond Wheels (trading as Lansvale Motor Group) and Keo Automotive provided car loans to consumers without a credit licence and charged unlawful and excessive interest. These aren't isolated incidents — they're symptoms of a systemic problem ASIC has been watching build for years.

The average variable car loan rate in Australia right now sits at 8.35%. The Reserve Bank reports that the average fixed-term personal loan rate — which includes car loans — is 9.06% per annum. Meanwhile, the lowest advertised rates start around 5.66% for secured loans on qualifying vehicles. The gap between the lowest and the average is enormous — and most people end up closer to the average because they rely on whoever the dealer recommends.

Research published this year found that 47% of Australians who regretted their car loan said their main mistake was relying on the salesperson at the dealership to guide their finance decision. Another 35% said they didn't compare other lenders before signing.

The ATO Just Changed the Rules on Car Tax Claims Too

If you're buying a new Chinese EV or hybrid for work-related driving, the tax landscape just shifted in your favour — but with strings attached. From 1 July 2026, the ATO has increased the cents per kilometre rate to 91 cents for the 2026–27 financial year, up from 88 cents. That means you can now claim up to $4,550 in car expense deductions without keeping a logbook, simply by tracking your work kilometres up to a maximum of 5,000km per year.

The ATO also sent warning emails to more than 500,000 Australian drivers as part of a crackdown on car expense claims — because nearly $12 billion in car-related deductions was claimed last financial year and the ATO believes a significant chunk of those claims are incorrect or excessive. If you've been claiming car expenses, now is the time to make sure your records are airtight. The ATO assistant commissioner was direct: "We are watching car expense claims more closely than ever."

For the 2026–27 financial year, the ATO has also confirmed the car depreciation limit sits at $69,883 — meaning that if you're a business owner financing a vehicle, you can only claim depreciation on the first $69,883 of the car's value, regardless of what you paid. This matters if you're financing a premium Chinese EV or any vehicle above that threshold.

The Depreciation Trap Is Bigger Than Ever With New Brands

Here's a hard truth about buying a brand-new car from any brand: it loses value immediately. A new car typically loses 15–20% of its value the moment it's driven off the lot. For newer Chinese EV brands with limited Australian resale history, that depreciation could be steeper in the short term simply because the used car market for these vehicles hasn't fully matured yet.

If you're financing your car with a standard principal-and-interest loan, you're paying interest on a depreciating asset — and in the early years of your loan, most of your repayments go toward interest, not principal. That means your loan balance stays high while your car's value drops. This is how negative equity happens. And with a brand-new brand in a rapidly shifting market, the maths can move against you faster than you'd expect.

What Smart Australian Car Buyers Are Actually Doing in 2026

The shift to Chinese EVs and hybrids is a smart move on running costs. The finance structure around that car is where you need to be equally smart. Here's what actually matters:

• Don't default to dealer finance. Walk in with a pre-approved loan from a bank or lender. That puts you in control of the conversation and removes the dealer's ability to use finance as a negotiating lever.
• Check the comparison rate, not just the headline rate. A loan advertised at 6.99% might have a comparison rate of 8.4% once fees are included. The comparison rate is the one that tells you the truth.
• Understand what happens at the end of your term. If there's a balloon or residual payment, know exactly what it is, why it was set at that level, and what your options are when it comes due.
• Think about what you actually get back. On a standard car loan, you own the car at the end — but you also own all the depreciation risk. On a GFV loan, the lender sets the minimum future value, which reduces your repayments but transfers residual risk. Read the fine print on both.
• If you're an employee, ask your employer about novated leasing. The EV FBT exemption — zero fringe benefits tax on eligible electric vehicles — is still in place as of July 2026, making salary packaging an EV one of the most tax-effective ways to finance a new car available to Australians. But Treasury is actively reviewing the exemption, and the rules could change. If this suits your situation, speak to a financial adviser sooner rather than later.

The Bottom Line

The Australian car market has never changed this fast. BYD, Chery, Zeekr, and a wave of other Chinese brands are giving Australians genuinely affordable, genuinely good vehicles — and that's a win. But the finance system surrounding those cars is old, opaque, and under active regulatory scrutiny for a reason.

The smartest thing you can do right now is separate your car decision from your finance decision. Choose the car based on the car. Choose the finance based on independent research, a real comparison of rates and fees, and — if you're unsure — advice from a financial adviser, not a dealership finance manager with a commission target.

The market has changed. Make sure your approach to car finance changes with it.

This article is general information only and does not constitute financial advice. Always speak to a qualified financial adviser before making any finance decision.