I’ll start with a confession. I love electric cars; I drive Tesla.
Nissan was one of the first legacy automakers to launch an EV. Today its pioneer brand Leaf is still around, although its tech is jaded. Nissan remains king in Japan’s EV market, its newest model, the wittily named Sakura (cherry blossom), tops the sales charts. (In January 24, Sakura accounted for 80% of Nissan EV 2,860 cars sold).
China’s BYD has set its sights on global expansion following its rapid growth at home. However due to current geopolitical tensions between the US and China, BYD has prioritised other markets for globalisation. Japan is one.
Japan is the world’s 4th largest auto market, yet EV penetration is lower than China, hybrids account for almost 50% of sales. None of the other big Japanese automakers except Nissan have gone heavily into EVs*. Significantly Japanese automakers have around 90% share. Drivers highly value safety, service and reliability.
Choosing the right route to market, RTM, is critical for all businesses, especially consumer brands. It’s important to have a RTM that delivers coverage and strong brand execution. The RTM must also be scaleable.
Dealerships have long been an established RTM in the car industry. New and used car dealerships are particularly prevalent in the suburbs. In Japan car ownership rates vary significantly by prefecture, the less populated the area, the higher is car ownership.
Yanase is one of Japan’s largest import car dealers. It is part of trading house Itochu, one of the big Soga Shosha Warren Buffett has backed heavily. Yanase is in a sweet spot handling a variety of competitors including Mercedes, Volkswagen, Audi, Volvo, Jeep and Chevrolet. Japan’s domestic brands have extensive dealer networks, Toyotas are sold in Toyopet and Netz for example.
To state the glaringly obvious, breaking into a dealer network is tough for any new entrant.
Tesla usurped tradition and does not use dealers. Instead Tesla has a few showrooms in major cities where you can sit in cars and arrange test drives. All ordering is done on-line. I found their process seamless with none of the tedious (paper) form filling encountered with legacy dealers.
Dealers are also an important part of the EV charging network. Almost all dealers have a charger running Chademo. Chademo is convenient as it’s widespread, but compared to Tesla’s superchargers, it’s very slow. As a Tesla owner I can also use the Chademo network as I subscribe to this service.
BYD launched here in January setting a target of 30,000 sales by 2025.
BYD is exploring different RTM options. BYD Japan’s President is ex-Volkswagen and appears to favour the dealership model. However BYD have also opened some experiential show rooms in shopping malls as well as online. This week I visited one in Expocity, Osaka.
Expocity is about 15km from the centre of Osaka and whilst it has a monorail station, most people drive there. Expocity also offers unlimited, free EV charging. Sounds like a good choice for a new car showroom, right?
BYD’s showroom was on the ground floor, close to popular import food store Kaldi.
When I visited there were no other shoppers in the BYD store, nor did I notice any slow down or stop.
The BYD sales staff were courteous but distant. They answered my questions but did not invite me to sit in either of the cars displayed. When I asked about charging, there was no mention of Chademo. I was told that the car could be charged quickly (from experience this depends entirely on the charger’s KWH not the car). The sales staff encouraged me to download the sales brochure. I did not get the impression the sales advisors had been well trained.
Can BYD break through in Japan? I’m passionate about EVs and more sales promotion will grow the category, and the charging network. Personally I’d like to see faster Chademo chargers.
Is BYD’s Dolphin going to win over Sakura customers? I’m not sure, it’s not as small or cute, attributes many Japanese rate highly.
*Honda has recently launched an EV, like Nissan’s Sakura, it’s targeted at Kei car users