Chinese electric vehicle leader BYD looks to quickly build out its Japanese sales network by launching a multitude of tiny dealerships with just one or two cars on display.
BYD has already opened dealerships in major cities and prefectural capitals. Starting in 2026, the company will speed up its expansion elsewhere by thinking small.
“We intend to cover small, regional commercial areas in order to sell mini EVs,” said Atsuki Tofukuji, president of BYD Auto Japan.
The sites will be in outlying cities of fewer than 500,000 people. Each will have a couple of vehicles on display at the most, and the openings will be completed quickly.
Car dealerships are usually built large to fully convey their brands’ unique identities. BYD is taking the opposite tack because of the Racco mini EV, which launches this summer and was developed specifically for Japan.
The Racco’s spacious interior was inspired partly by the Honda N-Box, Japan’s bestselling minicar. Even though BYD is known for its cost-competitive infrastructure in China, developing a vehicle dedicated to the Japanese market carries risks for any global company.
The mini-dealerships will put the Racco front and center. Such minivehicles account for roughly 40% of new car sales in Japan and are in demand in rural areas.
By focusing on the Racco, BYD aims to break into Japan’s minicar market.
BYD entered Japan’s passenger vehicle market in 2023. Japanese consumers have been known to turn a critical eye toward Chinese brands. From the start, increasing dealerships was a key priority for BYD in boosting brand recognition and gaining trust.
BYD had called for expanding to 100 locations by the end of 2025. The company aims to cut costs by occupying such vacant properties as former convenience stores—a step that halves the time to open a dealership.
Foreign automakers typically design their dealerships with materials and furnishings sourced from their home countries so that they can present the desired concepts for their brands. BYD has instead prioritized speed in Japan. With permission from corporate headquarters in China, BYD Auto Japan is sourcing most of its dealership design materials locally.
BYD had 69 locations, including sites with planned openings, covering 38 prefectures by the end of 2025, more than twice the 29 locations that Tesla has opened since entering the Japanese market in 2014.
BYD missed its target partly because of such issues as the difficulty of finding properties. Tofukuji feels a strong sense of urgency at the slower-than-expected progress as the Racco’s launch looms.
“The number of vehicle models will increase, but this number of stores will result in lost sales opportunities,” Tofukuji said.
In 2025, BYD sold 3,731 EVs in Japan after excluding commercial vehicles, up 68% on the year. It now ranks fifth in the segment among automakers, but sales have grown more slowly than hoped. This owes partly to lingering consumer concerns about Chinese cars.
BYD’s pricing strategy hints at a sense of desperation. Last September, the company discounted all models sold in Japan for a monthlong period. The price cuts ranged from JPY 500,000 to JPY 1.17 million or about USD 3,200–7,500, making BYD’s models the cheapest compact EVs in the country.
While this gambit did increase sales in September, discounting is not a sustainable strategy.
Tesla sold some 10,600 units in Japan in 2025, up 90% or so from the previous year. The record sales volume surpassed 10,000 vehicles for the first time ever.
Tesla’s strategy of focusing on customer service at directly operated stores, on top of online sales, has proven successful. The American automaker is also expanding its network of locations in Japan.
“With the launch of electric minicars, we have to increase our sales” volume, Tofukuji said, adding that moving 10,000 units annually is “a major goal.”
To achieve this, BYD would need to sell over 6,000 more vehicles this year than in 2025. Tesla took 11 years to break the 10,000 mark.
There are reasons why BYD needs to reach this ambitious goal quickly.
Japanese automakers are rolling out electric mini vehicles of their own. Daihatsu Motor has launched mini commercial EVs developed with partners including Toyota Motor. Top mini vehicle maker Suzuki Motor plans to come out with electric passenger minicars starting in fiscal 2026.
Japanese players have far larger dealership networks in Japan than BYD. Daihatsu has around 700 nationwide, rising to 6,000 when including both full-fledged dealers and such smaller local outlets as auto repair shops.
BYD has been expanding its sales channels in other ways. It has set up shop on the Rakuten Ichiba e-commerce website—a rarity for an automaker—and has run limited-time campaigns at malls operated by Aeon, Japan’s largest retailer.
BYD’s growth has suffered in China amid intensifying price competition and new rivals. It sold about 3.3 million vehicles weighing less than 6 metric tons there in 2025, down from 3.65 million in 2024, according to S&P Global Mobility.
The automaker is looking to exports as a solution to its challenges. Given this strategy, Japan is an increasingly important market.
Tofukuji has declared 2026 “the first year of the new energy vehicle era,” reflecting both BYD’s determination to expand its Japanese sales and concern that if it does not do so now, it will be hard-pressed to catch up.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.