BYD's strategic layout in the Japanese market is ushering in an important breakthrough.

On November 6th, according to the Wind Information Platform, JPMorgan Chase stated in its latest research report that BYD released the K-car model Racco at the Tokyo Auto Show, which is developed specifically for the Japanese market. It is expected t

Nick Lai, an analyst at JPMorgan Chase, pointed out that BYD's move shows its long-term commitment to the international market. This is the company's first new model designed and developed specifically for the unique needs of overseas markets. The K-

Meanwhile, analysts at the bank believe that although the direct profit contribution of Racco only accounts for 1-2% of BYD's expected earnings in 2026, its strategic significance is far beyond the financial figures. This model reflects BYD's localiz

Morgan Stanley maintains its overweight rating on BYD's A-shares and H-shares, with target prices set at RMB 140 and HK$150 respectively. The bank expects the stock to gradually bottom out and rebound driven by new model launches and overseas expansi

BYD's New Strategic Global Layout: Aiming at Japan's K-car Blue Ocean Market

According to a research report, at the recently opened Tokyo Auto Show, BYD surprisingly launched its first new model tailored for the overseas single market - the all-electric K-car Racco.

The bank believes that this move is in stark contrast to the approach of most Chinese car companies, which only make minimal modifications to their existing models before exporting them overseas, highlighting BYD's commitment to deep localization.

K-car is a unique type of vehicle in Japan, with strict regulations on vehicle size (length, width and height limited to 3.4m x 1.48m x 2.0m) and engine power.

In return, K-car owners enjoy lower tax incentives, while pure electric K-cars can also receive government subsidies of up to 550,000 yen. This segment of the market plays a significant role in Japan, accounting for 30% to 40% of total car sales year

According to JPMorgan Chase's analysis, the K-car market exhibits a highly concentrated oligopoly pattern, with Suzuki (38%), Daihatsu (22%), and Honda (19%) accounting for approximately 80% of the market share. K-car sales are expected to reach 1.2

BYD's new launch of Racoo is expected to have a price comparable to local competitors, around 2.5 million yen (around US$17,000). This 'In Japan and for Japan' strategy is an upgraded version derived from its experience in the European market.)

Previously, BYD's Dolphin-surf launched in Europe (based on the Chinese seagull model with extended wheelbase and enhanced power) has become a popular model with its competitive price of around 20,000 euros. The launch of Racco marks a more mature an

JPMorgan Chase predicts that the price of Racco is almost double that of BYD's similar compact cars sold in China, which provides the company with higher profit margins.

Profit contribution forecast: incremental value of annual revenue between 400 million and 1 billion yuan

JPMorgan Chase believes that entering the Japanese K-car market is not only a strategic announcement for BYD, but also a lucrative business opportunity. According to research reports, the potential benefits are considerable:

Market size: The annual sales volume of Japan's K-car market is stable at 1.2 million to 1.3 million vehicles. Considering that about two-thirds of Japanese consumers prefer domestic brands, BYD's target customer group is the remaining 30-35% of cons

Market share target: It is reported that after Racco is officially launched and its pricing is announced in the first half of 2026, BYD is capable of capturing 20% to 30% of the market share in the above-mentioned markets it can reach.

Profitability: Although Racco is a newly developed model with higher initial depreciation and production costs, its price of around 2.5 million yen (approximately RMB 114,000) is much higher than the same level of compact cars sold by BYD in China. T

Based on the above assumptions, after full production is achieved, the Racco model alone can contribute a net profit of RMB400 million to RMB1 billion each year to BYD. This profit will increase BYD's profit forecast for 2026 by 1-2%, which is consid

The analyst emphasized that the strategic significance of Racco is to prove BYD's long-term commitment to the international market. The company is further supporting this strategic layout by building overseas production bases in Brazil, Indonesia, Ma

Global Strategic Upgrade: From Product Export to Local Operation

Beyond the highlight of K-car, BYD also showcased its comprehensive strategic layout at the Tokyo Auto Show, which together supports its global ambitions.

New design language: BYD's exhibition of the Dynasty D (SUV) and Ocean S (Sedan) concept cars preview the design direction of its next generation of production models.

Balanced PHEV and BEV product line: BYD will shift from an export strategy based primarily on pure electric (BEV) vehicles to a balanced strategy that emphasizes both pure electric and plug-in hybrid electric (PHEV) vehicles.

Aggressive global channel expansion: BYD has expanded its sales network to about 70 countries using a model of authorized local dealers.

According to JPMorgan Chase's estimate, BYD has opened 900-1000 overseas stores. Thanks to higher prices in overseas markets (usually 1.5-2.0 times the domestic price), BYD can provide its dealers with a generous distribution profit of 8-13%, which g

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