Chinese carmakers are moving up the ranks in Australia's auto sector, with electric vehicles set to leverage their lead amid rising fuel costs due to supply disruptions caused by the ongoing conflict in the Middle East, according to the latest industry trends.

China has officially become Australia's largest supplier of new vehicles, with over 22,000 units sold in February, the Australian Automotive Dealer Association, or AADA, the key industry body that represents franchised motor vehicle dealers in the country, said in a statement.

It marked the first time China had surpassed Japan's long-standing dominance in Australia's vehicle market, breaking a 28-year record, driven by "competitive pricing, technology, and design" of the cars, AADA said.

Australia's new vehicle market recorded unit sales of 94,131 in February, a slight dip compared to the same period last year, it said. The AADA said that evolving consumer preferences are becoming increasingly evident, with the share of battery electric vehicles accounting for over 11 percent of the total monthly sales.

At an AADA event in Sydney on March 18, Australian Prime Minister Anthony Albanese said the latest conflict in the Middle East, following attacks by the United States and Israel on Iran, is "disrupting supply chains, pushing up fuel prices and adding to pressure on inflation, here and right around the world".

"Even if this is a relatively short conflict, it will have a long economic tail," Albanese said, adding that measures taken by the government to face global challenges include boosting fuel supplies and accessibility.

AADA's member businesses are themselves "on the front line of economic change", including adaptation to new efficiency standards, a growing field of new manufacturers and changing consumer preferences, he said.

Significant role

The auto sector continues to play a significant role in the Australian economy, with 3,868 dealerships across the country contributing A$21.5 billion ($15.2 billion) in economic activity and employing more than 64,000 people, including 7,508 apprentices, according to the latest figures from AADA, which positions itself as the top advocacy body representing franchised new car and truck dealers in Australia.

The association's figures for new vehicle sales showed Chinese brands like Chery, GWM and BYD clocking considerable gains.

David Smitherman, chief executive officer of EVDealer Group, Australia's largest BYD retail and service network, told China Daily that customer inquiries for its products have risen by more than 50 percent, spurred in part by the higher prices of fuel for traditional gasoline-powered vehicles.

"Some consumers have been thinking about transitioning to an EV and the additional costs have tipped them over the edge, to jump from a traditional vehicle to an electric vehicle in Australia," he said.

"The transition to new energy vehicles, that's going to continue. The feedback we're getting is, they are loving this technology. They love the design, the safety and the performance of the vehicles," Smitherman said.

"What we're seeing from our dealer's point of view is, the supply chain is very strong and robust; they're able to supply the vehicles that we need here in Australia."

The Electric Vehicle Council, the main body representing Australia's EV sector, has called on the authorities to continue an electric car discount policy, which encourages motorists to adopt EV technology.

"Every time there is conflict in oil-producing regions, Australians pay the price … as long as Australia relies on imported oil, households remain exposed to global shocks beyond our control," the council's CEO Julie Delvecchio said in a statement.

"Retaining the Electric Car Discount is more important than ever. The policy, which is under review, is helping Australians switch to EVs, giving them more control over their household budgets," she said.

"EVs are cheaper to run and don't face the same exposure to global oil shocks. Their 'fuel' is electricity — often cheaper off-peak and free for households with rooftop solar."