Shulou(Shulou.com)11/24 Report--

The "hexavalent chromium" storm did not extinguish BYD's enthusiasm for marching into Japan.

On March 3, BYD Japan's official website said that it will continue to set up authorized dealers across Japan to provide sales and after-sales services for passenger cars, so as to build a service system to meet the needs of Japanese customers.

At present, BYD ATTO 3 model (BYD yuan Plus international version) has been sold in Japan. Since then, DOLPHIN (dolphin) and SEAL (seal) will also be listed in Japan this year.

Compared with other markets, BYD attaches great importance to the Japanese market. As early as 1999, BYD entered the Japanese market with its IT business. In 2015, BYD launched another electric bus to Kyoto, Japan, and was well received and now accounts for nearly 70% of Japan's electric buses. BYD's electric passenger car, the ATTO 3, went on sale in Japan on January 31.

ATTO 3 suggested retail price 4.4 million yen screenshot on BYD's Japanese website BYD also plans to open 100 stores across Japan by the end of 2025 to meet the needs of the Japanese market.

In fact, the sales of electric cars in the Japanese market are not ideal. Japan imported 14341 pure electric vehicles in 2022, exceeding 10, 000 for the first time, according to the Japan Automobile Import Association. Not only the sales base is small, but also the growth rate is not too high, only 66.6%.

BYD has seen this. Liu Xueliang, general manager of BYD's Asia-Pacific Automobile sales Division and president of the Japanese branch, once told the media that the absolute volume of Japanese auto consumption will decline in the future. To this end, he admitted at the beginning of the year that BYD "did not set specific sales targets" in Japan.

What does BYD intend to do when it is so "attentive" to the Japanese market, but does not set specific sales targets?

Focusing on the incident of BYD's entry into the Japanese market, this paper tries to answer the following three questions:

1. What is the process of BYD entering the Japanese market?

2. What is the purpose of BYD's strenuous efforts in Japan?

3. What is the future prospect of BYD going out to sea?

1. "restricted area for imported cars" as early as 1999, BYD started to set foot in the Japanese market with IT business and rechargeable batteries as the starting point, and has been involved in the Japanese market for more than 20 years. During this period, BYD has accumulated some customers, suppliers and other resources.

BYD electric cars first entered the Japanese market in 2015, the first stop is Kyoto, Japan, the product is electric buses. As a major automobile country, the Japanese media have taken a skeptical attitude towards electric buses from China. However, with its reliable quality and strong performance, BYD has gradually occupied nearly 70% of the Japanese electric bus market share.

With the good reputation accumulated by electric buses, BYD began the journey of passenger cars to sea in Japan.

In late July 2022, BYD announced its entry into the Japanese market and held a brand launch in Tokyo, unveiling three models, ATTO 3 (the international version of Yuan PLUS), dolphin and seal, which went on sale in January 2023 for 4.4 million yen. By the end of 2025, BYD plans to open 100 stores across Japan.

"the Japanese market is the overseas market in which BYD invested resources earlier after Europe, and its position is very important." When talking about the position of the Japanese market in the global layout of BYD, Liu Xueliang, general manager of BYD's Asia-Pacific Automobile sales Division and president of the Japanese branch, said.

How to occupy a place in Japan, BYD gives the purpose is "responsibility, do not rush to succeed, dare to precipitate."

In the history of car sales, Japan has never been so easy to enter. The Japanese market is known as a "no-go place for imported cars", with local brands accounting for more than 90 per cent of the market and the remaining 10 per cent for foreign cars. Tesla, the leader of electric cars, sold only 5200 vehicles in Japan in 2021, in sharp contrast to the 484100 sold in China in the same period.

Even Ford, the leader of American cars, has been in and out of the Japanese market in history, but failed in the end.

In 1923, Japan was hit by an earthquake and began to import Ford trucks in order to solve the transportation problem between the earthquake-affected areas. Ford took the opportunity to enter Japan and established the dominant position of the Japanese automobile market. However, in 1936, Japan introduced the Automobile Manufacturing Act, which promoted the development of domestic industry and eliminated its dependence on foreign automakers. Three years later, in 1939, all American car factories in Japan stopped production and were forced to move out of Japan.

After the end of World War II, the Japanese government continued to protect its car market, enabling local brands such as Honda to grow rapidly. It was not until the 1970s that the country was completely opened. In 1974, Ford was able to re-enter the Japanese market, where it had 52 dealers by the end of 2015.

Due to the long-term car trade protection, Japanese people are used to buying their own car brands and do not have much interest in American or European car brands. Ford has only 1.5 per cent of the market, with sales of about 5000 vehicles in 2015. Ford withdrew sadly in 2016 because there was "no way to improve earnings and no reasonable profitability" in the Japanese market.

2. The market is small and "difficult" Japanese consumers have always preferred to buy local products, does BYD have the confidence to surpass Ford and gain a foothold in Japan?

At present, the automobile consumption structure all over the world is turning to new energy. Japan's Ministry of economy, Trade and Industry announced that the maximum subsidy for pure electric vehicles will be raised from 400,000 yen to 800,000 yen. Therefore, the Japanese pure electric vehicle market will usher in a larger room for growth. This is an important opportunity for BYD, which wants to enter the Japanese market.

The proposed price of ATTO 3, which BYD sells in Japan, is 4.4 million yen (about 228000 yuan), about 100000 yuan more than its domestic price, which makes BYD's sales in Japan profitable.

However, the situation of the Japanese electric car market is not very good.

According to statistics from the Japan Automobile Circulation Association, Japan sold 4.2013 million new cars in 2022, of which about 59000 were electric vehicles, accounting for less than 1.5 per cent. According to the Japan Automobile Import Association, foreign car companies sold 14341 new electric vehicles in Japan in 2022, exceeding 10,000 for the first time. Not only is the sales base small, but the growth rate is not very high, only 66.6%, which is lower than China's level of nearly 100%.

BYD is fully aware of this. For the future, Liu Xueliang, general manager of BYD's Asia-Pacific Automobile sales Division and president of the Japanese branch, has said that the absolute volume of Japanese auto consumption will decline. To this end, he admitted at the beginning of this year that BYD "did not set specific sales targets" in Japan.

Prior to this, BYD buses accounted for nearly 70% of the Japanese electric bus market share, but the total sales were only about 80 vehicles, which shows that the Japanese market is small.

BYD's entry into Japan, if only the pursuit of sales, investment and return, may not be equal. Therefore, BYD entered the Japanese market not so much to sell new cars as to verify and improve a methodology that had previously entered other countries' markets.

This methodology can be summarized as follows: first, through the public operating vehicles to take the lead in opening the market and situation, accumulating a certain reputation and business partners; second, the introduction of private models, that is, BYD passenger cars, to provide more personalized services.

In the Singapore market, BYD started selling bus-to-bus vehicles and launched e6 pure electric cars into the local taxi market in 2018. After several years of development, it was not until 2022 that BYD began to launch ATTO 3 models in Singapore and began to explore the private consumer market.

In the relatively closed and conservative Japanese auto market, compared with the public BYD bus, BYD's exploration of the private consumer market is even less likely to be achieved overnight. In order to be recognized by Japanese end consumers, there will be many experiences to explore and lessons to be learned.

At the same time as BYD's ATTO 3 model is being sold in Japan, BYD Japan has launched an one-month promotion campaign to recruit 100 drivers for free test driving. The first phase of 10 test driving places in the Tokyo metropolitan area has attracted more than 5000 applicants, according to BYD Japan's official website.

News report source of BYD's test drive in Tokyo: BYD Japan's official website for the Japanese market sales model, BYD Japan is also based on the Japanese market consumption characteristics, consumer mentality, industrial demand and other new choices, did not copy the current new energy vehicle market mainstream network direct marketing model, but choose the traditional dealer model. Although the direct selling model is efficient and low-cost, BYD Japan is more concerned about getting closer to consumers, making it easier for Japanese consumers who pursue "peace of mind" to accept.

BYD has not officially released the number of deliveries of the ATTO 3 in Japan. However, Nobe, a visiting professor at Nagoya University in Japan, has previously said that the choice of Japanese-made electric cars is limited, and ATTO3 sales in Japan will be significant as Japanese consumers pay attention to the electrification trend of overseas cars.

BYD's methodology, that is, buses and other public vehicles first, accumulate public praise, and then follow up, if it can proceed smoothly in such a conservative Japanese market where local car companies occupy an absolute position, then, the future of BYD passenger cars going to sea will be very much to look forward to. After all, as a forerunner, BYD pure electric bus has spread to more than 400 cities in more than 70 countries and regions around the world. These areas are likely to become sales areas for BYD passenger cars.

3. The "hexavalent chromium" storm was about to be delivered by ATTO 3 when BYD had an accident in Japan.

Around February 22, Japanese media widely reported that five pure electric buses sold by BYD in Japan used solvents containing "hexavalent chromium".

Hexavalent chromium is a chemical that is widely used in auto parts and other mechanical equipment to prevent metal surfaces from rusting. The International Agency for Research on Cancer (IARC) classifies this substance as a "class I carcinogen". However, Japanese law does not explicitly prohibit the use of hexavalent chromium, but the Japan Automobile Industry Association, a self-regulatory organization of the Japanese automobile industry, has implemented an one-size-fits-all approach since January 2008, banning hexavalent chromium completely.

In other words, BYD does not break the law, but violates the self-discipline rules of the Japanese auto industry. The head of BYD Japan said in an interview that the relevant parts of the electric bus do use "hexavalent chromium", but the normal operation of the bus will not affect the human body and the environment. The vehicle will also be disinfected before it is scrapped and will not cause harm to the environment.

Japanese media hype has led a number of Japanese car companies, including Toyota's Hino Motor, to suspend the sale of BYD-related models. Some Japanese companies that have already used BYD electric buses have suspended the bus operations. for example, the Beijing City Osaka bus Company has suspended the operation of four BYD electric buses and changed them to diesel buses since February 23.

On February 22, BYD shares fell 2.5% in the Hong Kong market. And it will also have an impact on BYD's plans to export to the European Union.

In this regard, China's industry insiders said: "BYD bus has been sold in Japan for eight years, 'hexavalent chromium' has not been detected, BYD opened more than 20 stores, began to sell C-end, this storm has been hyped up." This shows that Japanese society has the psychology of resisting Chinese electric cars to seize the Japanese market.

The "hexavalent chromium" incident does reflect that there are big loopholes in BYD's management, thus giving BYD a great lesson in going out to sea. In the process of going out to sea, the failure of a detail will often have a huge effect of ants breaking the dike.

At present, it seems that BYD has properly handled the "hexavalent chromium" storm and added a profound stroke to its methodology of going out to sea.

On February 23, BYD Japan said that pure electric buses newly launched at the end of 2023 would no longer use "hexavalent chromium". On the same day, BYD Japan officially opened its second store and first authorized dealer in the Kansai region of Japan.

On March 3, BYD's Japanese official website reiterated that it will continue to establish authorized dealers throughout Japan to provide sales and after-sales services for passenger cars, so as to build a service system to meet the needs of Japanese customers.

4. Higang and Toyota take a positive view on the future development of BYD in the Japanese market.

Keith Williams, a well-known Wall Street analyst and entrepreneur, believes that the Atto 3 launched by BYD in Japan is a model that can really challenge Toyota. The reason why Wang Chuanfu dares to be tough with Toyota in his hometown of Japan may stem from his previous entrepreneurial experience.

The opportunity for Wang Chuanfu to start a business in the 1990s came from Japan; the technology for starting a business came from Japan; and even his anger came from his Japanese counterparts. However, after Wang Chuanfu started his business, he was the first to defeat Japanese companies.

Wang Chuanfu, a battery materials expert and deputy director of the 301 Institute of Beijing Nonferrous Metals Research Institute, discovered the commercial potential of Ni-CD batteries a long time ago. In 1994, International Battery Industry Trends announced that Japan would abandon the traditional nickel-cadmium battery industry for environmental reasons. Wang Chuanfu believed that at that time, China was able to undertake this part of Japan's industry, so he resigned and went to sea and founded BYD.

Wang Chuanfu confidently went to Japan to buy a nickel-cadmium battery production line with the millions of yuan raised. Japan not only asked for tens of millions of yuan, but also banned the export of the entire production line in order to protect technology.

Wang Chuanfu imported some key equipment from Japan, and some of the production lines were replaced by manual labor. At a cost of only more than 1 million yuan, Wang Chuanfu built a production line for 4000 nickel-cadmium batteries per day, which is 40 per cent lower than that of Japanese manufacturers. As a result, it won a battery order from Daba Electronics, Taiwan's largest cordless phone manufacturer, and replaced Sanyo of Japan as the official battery supplier the following year.

Coinciding with the financial crisis in Southeast Asia in 1997, global battery prices plummeted, Japanese companies could not stand it, and global battery customers, such as Philips, Panasonic, Sony and even GM, turned large purchase orders to BYD. As a result, BYD achieved an annual growth rate of more than 100%, successfully beating Japanese enterprises. Afterwards, Wang Chuanfu said proudly: "in the battery field, BYD beat Sony and Sanyo with only a 30% cost advantage."

BYD's involvement in the auto industry is based on "reverse research and development", imitating Toyota's ninth-generation Corolla and launching its first car, the F3, in 2005. Compared with Toyota Corolla, F3 has high performance-to-price ratio, spacious space, fashionable appearance and rich configuration of high-end models, but the price is only 73800 yuan.

BYD, which has such a history with Japan, will not give up the opportunity to enter the Japanese market when it becomes the king of global electric car sales. In a sense, there is Wang Chuanfu's personal "selfishness". He is the Chinese man who has defeated the established Japanese enterprises Sony and Sanyo.

In short, BYD's entry into Japan is not so much a "greed" for the Japanese market, but rather to use the Japanese market as a training ground to sum up sales experience and lay the foundation for its global strategy. Japan, which can nibble away from the "automobile founding", is it worried that it can not gnaw down the markets of other countries?

Looking to the future, through the good reputation of electric buses going out to sea and accumulating in various countries, BYD officially announced the plan of "passenger cars going to sea" in 2021, accelerating the expansion of new energy passenger vehicles in the global market. In 2022, BYD's new energy vehicles have entered Japan, Germany, Australia, Brazil, Singapore, Thailand and other countries, exporting a total of 55900 vehicles, further accelerating the pace of going out to sea.

At present, BYD has begun the strategic layout of six continents around the world, and it is reported that BYD has set a sales target of 4 million vehicles in 2023.

Huaxi Securities judged that BYD's going out to sea is expected to usher in rapid development in Europe, Southeast Asia and Australia, and the company's exports are expected to exceed 300000 in 2023, which will open up the company's long-term growth space. Keith Williams believes that in the future, the stage of the global automobile industry will be handed over to China, one of the important reasons is that China has BYD.

For the future, BYD is confident. Wang Chuanfu once said that the diligence and hard work of the Chinese nation determine that we will become the first in the world.

[full text reference]

[1] Wang Chuanfu Zhuan: BYD Myth, China overseas Chinese Publishing House

[2] "Di Wang" needs to export "sea" and "broad sky" upward, Huaxi Securities

[3] "BYD Atto 3 faces the international market, analysts say the automotive industry stage will be handed over to China", BT Finance

[4] "BYD passenger cars" compete for "Japan", China Business Daily

This article comes from the official account of Wechat: che Bai think Tank (ID:EV100_Plus). Author: Chen Zhongshan.

Welcome to subscribe "Shulou Technology Information " to get latest news, interesting things and hot topics in the IT industry, and controls the hottest and latest Internet news, technology news and IT industry trends.