BYD brings price war to Japanese market in bid to win over customers

By Emi Tanimoto

 

More than two years after BYD Co.’s high-profile foray into the Japanese market, the Chinese electric vehicle maker is still struggling to win over drivers. 

 

The automaker sold just 5,300 vehicles between January 2023 and June this year despite opening its 45th sales location in Japan, introducing a fourth EV model and touting plans to debut an electric ‘kei’ car in late 2026. 

 

The moves have done little to ignite demand and BYD is now turning to discounts — a practice that’s put it front and center of an industry crackdown in China — to try and boost sales. The company is offering discounts of up to ¥1 million ($6,700) that, in addition to government subsidies, can slash sticker prices by as much as 50 per cent. Its Atto 3 retails for just under ¥4.2 million. 

 

Even that makes it an outlier as Japanese carmakers rarely cut prices. And while discounts have helped make BYD the most popular EV brand in China, it could backfire in Japan as it risks making early buyers feel duped for paying higher prices and it hurts resale value, according to Bloomberg Intelligence senior auto analyst Tatsuo Yoshida.

 

The challenges show the difficulties foreign automakers face in Japan, where locals favor legacy brands like Toyota Motor Corp. and largely eschew battery EVs in favor of gas-electric hybrids. The overwhelming loyalty to homegrown giants has already hammered major legacy marques. General Motors Co. withdrew its Saturn brand after poor sales, while Hyundai Motor Co. is trying once again after abandoning the market in 2009. 

 

For BYD, the lackluster welcome in Japan contrasts with surging sales in Europe as the carmaker looks to expand abroad to counter challenges back home in China. 

 

But the longer-term opportunities of staying the course in Japan outweigh the shorter-term headwinds. EVs are set to account for just 3.4 per cent of new car sales in Japan this year, according to BloombergNEF, with the market expected to see growth in coming years.  

 

“Winning Japan isn’t the point; leaving a mark is. Earning even a sliver of recognition from the most demanding customers in the world matters for BYD,” Yoshida said. “What they really want is to have a track record of doing business in Japan with the world’s most discerning, quality conscious customers, even if it’s not economically rational.” 

 

Still, the company has a long way to go to claw market share away from domestic Japanese makers. BYD sold 512 units in June across all models, compared with 1,137 for Nissan Motor Co.’s Sakura — the country’s most popular EV. That’s likely insufficient to cover salaries and keep showrooms running, Yoshida said. 

 

Other well-loved Japanese carmakers are getting into the sector, too. Honda debuted its first compact passenger EV this month, and Toyota and Suzuki Motor Corp. have announced plans to jointly launch a kei EV this year. 

 

“Selling cars is all about securing brand loyalty, about creating lifelong customers — and it’s highly doubtful whether BYD can really do that in Japan,” Yoshida said.