Editor's note
This article is the second in a three-part series analyzing the impacts of BYD's inroads into the Korean market. — Ed.
BYD Korea will ratchet up pressure on overseas carmakers here — particularly non-luxury brands with limited electric and hybrid lineups — as they are at growing risk of losing their identity as cost-effective carmakers amid the upcoming influx of ultra-cheap Chinese vehicles, experts and industry officials said Tuesday.
The Chinese electric vehicle (EV) maker is set to deliver its flagship Atto 3 electric SUV to Korean customers next month. Customers purchasing the vehicle will pay less than 30 million won ($20,800) after receiving subsidies.
The vehicle is lesser-known to local customers, but the model solidifies its position as a well-recognized EV around the world. It secured a strong track record as a top-selling EV in key markets in Europe and Southeast Asia.
Experts and officials from the industry expected BYD Korea to pose an immediate threat to mid-tier foreign carmakers here, unless the Chinese vehicle causes quality concerns.
"The so-called mid-tier three carmakers — Renault, General Motors (GM) and KG Mobility — will bear the brunt of BYD's arrival, as their position as price-competitive carmakers overlap that of the Chinese firm," Lee Ho-geun, an automotive engineering professor at Daedeok University, said.
Lee raised the possibility of BYD gradually engulfing the local business-to-business (B2B) vehicle market, such as rental and corporate cars.
"If BYD vehicles do not raise any serious quality issues, chances are Korea's B2B vehicle market — dominated by two home-grown carmakers, Hyundai Motor and Kia, is also being threatened by the influx of Chinese EVs," he said.
The auto expert also rang alarm bells on BYD's inroads here, saying the carmaker is likely to generate bigger success in Korea than Japan.
BYD made its Japan debut in 2023, and has since achieved noteworthy outcomes. The carmaker attained solid sales growth of 54 percent there last year from a year earlier, rising to become the country's fourth-largest EV seller by surpassing Toyota Motor.
"BYD will be able to make a bigger splash in Korea in that Japanese customers' preference for domestic brands remains much more solid than Koreans'," Lee said.
Other experts also shared similar outlooks, saying that mid-tier imported carmakers will be more vulnerable to BYD's arrival due largely to their scarcity of hybrids.
Hybrids gain popularity as an alternative to EVs at this period of the global EV chasm before their mass adoption.
"For instance, Renault Korea sells only a few hybrid vehicles with a heavy reliance on Grand Koleos, and GM Korea does not even sell any hybrids here," Kim Pil-soo, an automotive technology professor at Daelim University College, said.
More and more customers seeking to purchase affordable EVs will consider the Chinese brand, as they have few other choices in a similar price range, according to Kim.
"This is the case even for Hyundai Motor and Kia," he said. "Casper Electric and EV3 are two competitive models for the Atto 3, but in terms of price competitiveness, the BYD vehicle still has more upsides."
Other imported carmakers doing business here are also raising their vigilance to the upcoming arrival of BYD's EVs, as their position is being sandwiched between luxury carmakers and Chinese players, according to industry officials.
"It goes without saying that Korean customers' preference on luxury products remains strong, as was shown by solid sales of pricey vehicles from such brands as Mercedes-Benz and BMW," an official from the local automotive industry said.
Demand for EVs from those luxury brands will be steadfast, but other import brands, such as Jeep and Peugeot, will have to face tougher competition from Chinese EVs, according to the official.