China’s BYD leverages partnerships to expand EV sales in Southeast Asia

BANGKOK/JAKARTA, Sept 19 (Reuters) – Chinese electric vehicle giant BYD (002594.SZ) has been hugely successful in Southeast Asia, beating rivals like Tesla (TSLA.O) take more than a quarter of the share of electric vehicles sold in the region.

Along with attractive pricing, BYD’s early success relies on a pattern of distribution partnerships with large local conglomerates that have allowed the automaker to expand its reach, test consumer preferences and navigate complex government regulations in the region, they said. officials from three partners and analysts.

This partnership model, similar to pursued by Japanese car manufacturers in some Southeast Asian countries decades ago, is helping BYD gain market share quickly and contrasts with Tesla’s independent distribution, although it comes at a cost.

“Currently, BYD’s main focus is on brand proliferation rather than optimizing profit margins,” said Soumen Mandal, senior analyst at Counterpoint Research.

“By offering local dealers more lucrative profit margins, BYD can cultivate trust and loyalty, paving the way for broader expansion.”

BYD did not respond to questions from Reuters.

The Chinese automaker sold more than 26% of all cars in the small but fast-growing Southeast Asian electric vehicle market in the second quarter of 2023 and its Atto 3 model, with a starting price of $30,000 in Thailand , was the regional best-seller, according to Counterpoint. Tesla prices the most basic Model 3 from about $57,500 in Thailand.

Electric vehicles made up 6.4% of all passenger vehicle sales in Southeast Asia in the second quarter, up from 3.8% the previous quarter, and the region could gain in importance for Chinese automakers after the European Commission last week announced an investigation into Beijing’s electric vehicle subsidies.

‘IT IS NOT AN EASY MARKET’

WORLD regional distributors include Sime Darby divisions (SIME.KL) in Malaysia and Singapore, Bakrie & Brothers of Indonesia (BNBR.JK)Ayala Corp (AC.PS) in the Philippines and Rever Automotive of Thailand.

BYD’s partnerships are helping it in a region where Chinese car brands don’t have an established track record, said Chee-Kiang Lim, China managing director at auto sales consultancy Urban Science.

“If buyers are unsure or have any concerns, partnering with established players like Sime Darby, Bakrie & Brothers or Ayala Corp will give them peace of mind, especially when it comes to after-sales support,” he said.

The Shenzhen-based automaker is invest almost 500 million dollars in Thailand to build a new factory that will produce 150,000 electric vehicles per year from 2024 for export to Southeast Asia and European markets.

For Ayala Corp’s AC Motors, which plans to open a dozen BYD dealerships in the next 12 months in the Philippines, the focus of initial spending is on brand building and getting more consumers to consider electric vehicles, its head said. automotive business, Antonio Zara.

“It’s about busting the myths about the shooting range,” he said. “It’s about breaking the myth about price and communicating the total cost of ownership.”

In Thailand, a wave of advertising is visible from small screens inside elevated trains in the capital, Bangkok, to huge billboards in provincial cities.

Rever, BYD’s Thai partner, did not respond to questions about its distribution and marketing strategy.

In Indonesia, BYD has been able to lean on Bakrie & Brothers’ VKTR unit to secure a government contract for 52 electric buses for Jakarta, its chief strategy officer Alex Kim said.

“Indonesia is not an easy market to do business on your own,” Kim said, adding that beyond government sales, VKTR was in talks with large domestic companies to sell BYD EV buses.

Taking on TESLA

Thai EV buyers contributed 24% of BYD’s overseas sales in the second quarter, making it the Chinese automaker’s largest overseas market, according to Counterpoint, while less than 1% of Tesla sales are made in Southeast Asia.

Tesla’s website currently lists just two stores in the region, both in the wealthy city-state of Singapore, although it is hiring for Thailand and Malaysia.

BYD’s playbook in Southeast Asia and its acceptance by dealers contrasts with Tesla, whose direct-to-consumer approach is difficult to replicate, since no other new electric vehicle brand has as much hype or the enormous media presence of its director executive, Elon Musk.

BYD and its partner Sime Darby Motors are experimenting with a new approach to attract young, tech-savvy consumers to the Chinese brand in Singapore.

The association has launched five “BYD by 1826” showrooms that function as white-tablecloth restaurants where dishes are named after BYD EV models.

“With BYD by 1826, we can reach more customers who want to know more about BYD or are new to the BYD brand,” said Jeffrey Gan, general manager of retail and distribution for Sime Darby Motors in Southeast Asia. , Hong Kong and Macau.

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