It’s a bold move. BYD launches its first model designed for the Japanese market. Targeting the only economic segment kei jidoshaof light vehicles limited to 3.4 meters in length, President Wang Chuanfu faces key rivals in its comfortable home market.
The company has just presented the Racco model, a square battery-powered vehicle, at the Japan Mobility Show in Tokyo. Sales will begin next year. The Racco stands out for several reasons: It’s one of only two cars produced by BYD that isn’t available in China. The stand where it was displayed was the only one organized by a Chinese automaker: Japanese brands, which account for more than 90% of deliveries in the domestic market, dominated the show. BYD hasn’t given them much cause for concern so far, having only sold about 7,000 full-size cars in the past three years, but it could have more success with kei.
According to Bernstein, these account for 40% of the country’s total car sales, and Suzuki and Daihatsu sell more than half of them. Buyers are price sensitive and kei Electric cars, which usually cost more than 2 million yen, around 11,000 euros, are more expensive than the average model, which costs around 1.8 million (10,000).
Wang could take advantage of BYD’s low-cost manufacturing in China to fill this pricing gap. It may also choose to sacrifice margins to gain a foothold in Japan, some two decades after establishing itself there.
The latest geopolitical tensions between Tokyo and Beijing don’t help, obviously. In similar diplomatic clashes, Chinese consumers have boycotted South Korean cars, so it’s easy to imagine the Japanese choosing to stick with local brands. But any level of success for BYD in such a welcoming market would make a strong statement. It could also lay the groundwork for selling minicars elsewhere: Europe is considering adjusting its regulations to support sales of smaller electric cars, taking inspiration from kei. BYD Vice President Stella Li says she is watching with interest and would consider bringing Racco to the region. The bold bet on tiny cars appears to be worth it.
The authors are columnists for Reuters Breakingviews. Opinions are yours. The translation, by Carlos Gomez belowit is the responsibility of CinqueGiorni
