BYD making inroads into Japanese market(3)

Policy support

Despite these factors, Japanese automobile manufacturers have gradually released information about upcoming electric vehicles, including lightweight electric cars. Additionally, the Japanese government has introduced carbon neutrality goals and subsidy support for electric cars.

The likely widespread adoption of electric vehicles is a crucial pathway for the country to achieve carbon neutrality by 2050 and a 46 percent cut in greenhouse gas emissions in fiscal year 2030 from its fiscal year 2013 levels. BYD's EVs will actively contribute to Japan's early achievement of carbon reduction targets, Liu said.

"Electric vehicles are not targeted at a single market, but represent the overall trend and direction of future development. Japan may need more time, but it is necessary and feasible for us to let Japanese consumers have sufficient exposure to BYD's products through different scenarios," he said.

Last year, BYD showcased five EV models and core technologies at the Japan Mobility Show 2023, formerly known as the Tokyo Motor Show.

"As the first Chinese automaker to participate in the history of the event, attending this exhibition is significant for BYD. It not only helps promote the BYD brand, but, more importantly, allows Japanese consumers to personally experience that EVs are a direction and trend," Liu said.

On Feb 1 last year, BYD opened its first dealership in Yokohama, Kanagawa prefecture. By the end of last year, there were 51 sales outlets in Japan where one could buy BYD electric cars, including 17 dealerships. The company aims to establish 100 dealerships in Japan by 2025.

"Apart from bringing BYD's technology and products to Japan, it is more important for us to promote and accelerate the development of electric cars in Japan. We hope to collaborate extensively with more local dealers," Liu said.

BYD's marketing model in Japan is based on collaboration with local dealers because this is believed to be the closest approach to consumers.

"To make consumers truly feel that BYD is around them, it is essential to engage in face-to-face communication. Although this approach may not lead to rapid promotion, it subtly and gradually builds trust in BYD electric cars among Japanese consumers," Liu said.

The EV maker has participated in exhibitions, organized test drives, and offered consumers various experiential activities. It conducted outdoor camping activities near Mount Fuji, where power sources came from BYD vehicles at night. At the end of last year, the company used its electric car to illuminate a Christmas tree in central Tokyo.

"We let customers feel that BYD cars are not just a means of transportation, but an integral part of their lives. Consumers can treat BYD cars as their living room, cinema and more. We showcase the upcoming lifestyle with many aspects relying on the EV platform," Liu said.

Japanese consumers have unique perspectives on cars, quality requirements, and service system expectations compared to consumers in other markets. Consequently, the market share of imported vehicles in Japan has never exceeded 10 percent.

Local carmakers enjoy very strong loyalty of Japanese consumers. Though some foreign brands have been present in Japan for decades, they have insignificant market share, said Yale Zhang, managing director of consultancy Automotive Foresight.

Despite this, Chinese automakers can, like those foreign brands, prove their capability to enter this market, which will contribute to their global brand awareness, Zhang said.

"Establishing a subsidiary in Japan of a reasonable size to ensure its visibility not only benefits the global brand image of an automaker, but also helps it recruit more and better experts in various aspects such as design, research and development, and marketing in the Japanese automotive industry," he said.

Lu, the Shanghai-based auto analyst, said some Chinese automotive companies see Japan as a stepping stone to larger markets like Europe and the United States; so they will leverage their advantages in electrification and smart in-cabin experience.

As such features will eventually become the norm for carmakers, the early-mover advantages will help Chinese automotive companies secure a position in the future, Lu said.

"We highly respect the Japanese market. Entering this market also demonstrates BYD's confidence in its overseas strategy," said Liu.

Should BYD successfully penetrate the Japanese market, known for its advanced automotive industry, it stands to gain global support, said Takeshi Miyao, CEO of industry research firm Carnorama Japan, in an interview with Nikkei Asia.

Additionally, the experience gained in the Japanese market, especially the service requirements in Japan, can be extended to the development of surrounding markets.

The development of Japan's EV market has not yet entered a truly competitive track, Liu said.

Japanese automakers have introduced EVs, but the variety is limited, and market attention is not very high. Foreign brands, whether German or Korean, have also launched electric cars in Japan.

"With BYD's arrival, everyone, through their respective efforts in enriching product lines, is aiming to generate more consumer interest in electric cars and encourage people to consider owning an EV. Only then will genuine competition emerge," he said.