At the 2025 Japan Mobility Show on October 29, BYD unveiled its electric K-Car custom-built for the Japanese market. (Photo/BYD)

Chongqing - At the recently opened 2025 Japan Mobility Show, BYD debuted a new electric K-Car model specifically designed for the Japanese market. The company plans to officially enter the Japanese market in the summer of 2026.

BYD presented its latest model lineup at the Japan Mobility Show 2025 on October 29. (Photo/BYD)

K-Cars are a distinct category of small vehicles in Japan, with strict size, engine, and performance limits. These cars are ideal for Japan’s narrow urban streets, high parking costs, and short commutes. As a result, K-Cars have become a popular and cost-effective transportation choice, holding a significant share of the Japanese auto market.

According to the Japan Automobile Manufacturers Association, from Q1 to Q3 of 2025, Japan's passenger car sales reached 2,922,497 units, with K-Cars accounting for approximately 33.8%, totaling 987,055 units sold—a notable figure in the market.

Japanese domestic brands have long dominated the K-Car market, with Suzuki and Daihatsu holding strong leadership positions. According to data from the Japan K-Car Industry Association, Zenkeijikyo, in the first three quarters of 2025, Suzuki and Daihatsu sold 350,376 and 260,363 K-Car passenger vehicles, respectively, capturing around 61.9% of the market share. Other Japanese brands, including Mitsubishi and Honda, account for about 38.1%, while the remaining brands sold just 73 units, a negligible share.

BYD challenges K-Car market with price Control edge

In this competitive landscape, BYD’s move into the K-Car market is undoubtedly a bold challenge, drawing significant attention from both Japanese media and industry peers. For example, the Asahi Shimbun commented that the development of K-Car is said to be unable to expand in other countries except Japan, and the profit margins are thin, making it unusual for foreign companies to handle it.

Japanese financial media Nikkei reported on its Chinese website that the President of Suzuki, Toshihiro Suzuki, welcomed BYD’s entry into the Japanese market, acknowledging that BYD would pose a significant competitive threat. He also emphasized the importance of avoiding price wars in the competition.

Price control has long been one of BYD’s key competitive advantages. For example, BYD’s compact sedan, the Qin Plus DM, is priced between 79,800 yuan (about 11,199.13 U.S. dollars) and 103,800 yuan in China. According to Cui Dongshu, Secretary General of the China Passenger Car Association (CPCA), the average price of new energy passenger vehicles in China from January to September 2025 was 160,000 yuan, which is higher than the price range for BYD's Qin Plus DM.

BYD’s ability to control pricing is no coincidence. As an automaker that has achieved full vertical integration across its entire supply chain, BYD reduces production costs by independently developing key components like batteries, motors, and electronic controls.

Furthermore, BYD has established its own logistics system, cutting out middlemen and reducing costs further. BYD claims it currently operates eight ocean-going car transport vessels, with an annual transport capacity exceeding one million vehicles.

K-Cars in China: from popularity to market exit

BYD’s entry into Japan’s K-Car market is not the first time Chinese automakers have targeted this segment. Although K-Cars are designed specifically for the Japanese market and are unlikely to expand widely internationally, they were introduced to the Chinese market in the 1990s, where they gained popularity.

In 1993, Suzuki partnered with Chongqing automaker Changan Automobile to form a joint venture, Changan Suzuki, becoming the only company authorized by Suzuki to produce the Suzuki Alto, a popular K-Car model in Japan. In 1995, the first Chinese-made Alto rolled off the production line, officially entering the Chinese market.

According to statistics, by the time production ended in 2008, Changan Suzuki had sold around 500,000 Alto models. The Alto became a popular taxi in cities like Chongqing and Chengdu, and even today, locals in Chongqing commonly refer to taxis by the Alto’s nickname in the local dialect.

After 2008, Changan Suzuki introduced a new version of the Alto, but by then, the market dynamics had already shifted. In the 2010s, China’s automotive market evolved, with growing demand for larger vehicles as consumers favored more spacious cars. This shift led to the rise of SUVs, which gradually dominated the market and pushed microcars out of favor.

However, Suzuki refused to adjust its K-Car strategy in China. At the time, Suzuki's president, Osamu Suzuki, insisted that the Chinese market still needed Suzuki's small cars, even vowing not to compromise with the evolving market demands. Ultimately, in 2018, Suzuki sold its shares in Changan Suzuki to Changan Automobile for a symbolic price of one yuan, marking its gradual exit from the Chinese market.