Chinese automakers are exerting increasing influence in the Japanese auto market, particularly in the compact-car segment where domestic brands have long been dominant. The entry of Chinese manufacturers such as BYD (OTCPK:BYDDF), Leapmotor, NIO (NIO), and Geely (OTCPK:GELYF) has coincided with a sharp decline in electric vehicle prices driven by fierce competition within China and excess production capacity.
The Guangzhou International Automobile Exhibition exemplified the trend, with several Chinese carmakers unveiling budget-friendly models planned for overseas sales, some priced as low as 100,000 yuan ($14,000). “Our mission is to make this car our flagship model for drivers all over the world,” stated Leapmotor Vice President Cao Li.
The growing presence of Chinese EVs in Japan is having ripple effects across the industry, with Japanese automakers being forced to accelerate their electrification plans, as seen in Honda’s (HMC) introduction of six new electric models and Suzuki’s (OTCPK:SZKMY) push into the compact EV market. Suzuki (OTCPK:SZKMY) executives recently publicly acknowledged that BYD’s (OTCPK:BYDDF) entry is acting as a catalyst for the growing popularity of small EVs in Japan, prompting domestic brands to rethink their product strategies and speed up new launches to stay competitive.
Notably, Chinese automakers are tailoring their vehicles to local Japanese preferences and investing in dealer networks and fast-charging infrastructure to overcome barriers like brand loyalty and range anxiety.
Despite the recent EV momentum, battery and plug-in vehicles account for a single-digit percent of new car sales in Japan. Yet, analysts think Chinese EVs could accelerate the transition, as their lower price points and advanced features address concerns held by price-sensitive commuters and second-car buyers. Additionally, some Chinese models are being adapted for Japan’s right-hand-drive requirements, making them more accessible for local consumers.