China’s largest EV maker BYD targets Australian market

BYD – the biggest car company in the world that you’ve probably never heard of – is about to make a big splash in Australia, selling, and servicing, cars in an entirely new way.

Esma Voloder, Former Miss World Australia with a BYD electric hatchback. It is likely to be the first sub $30,000 electric vehicle for sale in Australia. Picture: Justin Lloyd.

BYD — the biggest car company in the world that you’ve probably never heard of — is about to make a big splash in Australia, and not just with its range of cheap, Chinese-built EVs.

Disruption is the buzzword of the electric-car industry and none have felt it more keenly than the traditional bricks-and-mortar car dealerships as EVs have, unexpectedly, helped to completely up-end the way people shop for and buy new vehicles.

Across the country, car dealerships are starting to disappear entirely as the digital marketplace exerts a stronger presence, energised by the growing public acceptance of the online electric car showroom.

BYD passed the million car manufactured mark in May 2021.

BYD, which announced this week that it has sunk tens of millions of dollars into a right-hand drive production line at one of its Chinese ‘mega factories’, and that it will soon start building 15,000 electric SUVs (called the BYD Atto 3) for the Australian market — is one company that will be selling, and servicing, cars in an entirely new way.

BYD's Yuan Plus is likely to be rebranded Atto for the Australian market.

Online new and used sales have existed for years but it took the arrival of a prominent new EV brand in Tesla, and the adoration of online Elon Musk acolytes willing to accept the pitfalls of the process, to push the metaphorical accelerator down.

Musk didn’t want Tesla to be seen as a car company but as a tech company that also happened to build cars. The brand was legacy-free, offering Musk the opportunity to shape its image on the whims of his digital musings.

A Tesla on display at a showroom in Miami, Florida. Joe Raedle/Getty Images/AFP

While Tesla shopfronts and shopping mall park-ups were sprinkled ever-so-lightly across the US so people could touch and feel the product, all the business of ordering and buying was pushed online.

Tesla’s first cars were premium priced so committing to a social-media-fed product that was essentially one man’s creative vision required a unique combination of fiscal courage and blind faith.

As it turned out, more than enough true believers were willing to put down their cash and hope the product turned up in the driveway. Wonky panel gaps aside, it’s been fairly clear sailing since.

What’s apparent now is that other major brands around the world had been watching the Tesla experience very closely indeed.

In the tradition-heavy motor industry, where dealers have been asked – or instructed, in some cases, under pain of losing their franchise — for decades to invest heavily in specifically branded, colour-coded and gleamingly presented infrastructure, any spanner inserted in the cogs of the time-honoured factory-distributor-dealer-customer process was always going to create a public fuss.

What was needed was a genuine catalyst, a product that could disrupt the distributor-dealer dynamic completely and allow a sledgehammer swung against the dealers’ bricks and mortar.

For many car makers, that catalyst has been the electric car.

The latest hammer blow to the industry in Australia was the announcement by the Mercedes-Benz dealer council that with the arrival of the company’s EQ EVs, all sales would be distributor-direct. Dealers were told they could handle the customer pre-delivery but the transaction, as such, was out of their hands.

Mercedes-AMG EQE 53

And the news has worsened since. The national Mercedes distributor has now introduced a fixed-price business model — which means no need for haggling with dealers, or essentially for car dealers at all — following on from a similar business decision by Honda in mid-2021, and the fallout is now headed for The Federal Court.

Sitting and watching in the wings are the newest EV players, poised to enter. One certain to be a major short-term player, aiming for 15,000-plus sales in its first year here, is Chinese electric car maker BYD.

BYD will launch in late February via a customer-facing online ordering platform, EVDirect. But mindful of the blunders of others in rolling out new brands – particularly given the leery view that many Australian customers have of Chinese-made cars — BYD has opted for a hybrid model.

Instead of dealerships, it will have “experience centres” with the first in Sydney and others to follow in other capital cities. These are the brand’s customer “touch and feel” points.

Rather than set up its own service network, which takes time and money, BYD has entered into a partnership with the former Kmart Tyre and Auto group, now rebranded as Mycar.

BYD will partner with Mycar locations, such as at this Shell/Viva Energy service station for customer handover.

Putting your product into another company’s hands is not without risks. Mycar will handle predelivery and handover to new customers at 30 specifically appointed outlets. It will also manage any warranty issues, as well as service the cars.

And as was the case when Tesla launched here in 2014, a raft of eager Chinese EV brands will be watching the Australian BYD rollout very closely.

The pain of transitioning to a digital-driven business model can be eased through the creation of a full EV sub-brand, as Volvo has done with Polestar. Building a fresh brand from scratch is a slow and expensive undertaking, bringing with it the risk of sowing buyer confusion in an already fiercely competitive marketplace.