Baku, August 23, AZERTAC

China's BYD overtook Honda Motor and Nissan Motor to become the world's seventh-largest automaker by number of cars sold in the April-June quarter, buoyed by demand for its affordable electric vehicles, data from automakers and research company MarkLines shows, according to Nikkei Asia.

New vehicle sales by BYD grew 40% on the year to 980,000 units for the quarter, even as the majority of leading automakers, including Toyota Motor and Volkswagen Group, suffered a decline. Much of BYD's uptick stemmed from overseas sales, which roughly tripled on the year to 105,000 units.

BYD had ranked 10th in the world in April-June 2023 with sales of 700,000 vehicles. It has overtaken Nissan and Suzuki Motor since then, and beat Honda on a quarterly basis for the first time in the latest quarter.

The only Japanese automaker left with larger sales than BYD is Toyota, which led the global ranking in April-June with 2.63 million vehicles. The "Big Three" in the U.S. are also ahead, though BYD is fast catching up to Ford Motor.

China's Geely and Chery Automobile both ranked in the top 20 in global sales for the April-June period.

BYD's affordable EVs have gained momentum at home in China, the world's largest auto market, propelling a 35% jump on the year in its June sales there.

In contrast, Japanese players, whose strength is in gasoline-powered vehicles, are falling behind. Honda's China sales dropped 40% in June, and the automaker plans to reduce its output capacity in the country by around 30%. Even in Thailand, where Japanese companies hold a roughly 80% market share, Suzuki is ending production while Honda is halving capacity.

China exported 2.79 million vehicles in the January-June half, 780,000 more than Japan. BYD opened its first overseas full-scale vehicle assembly plant in Thailand, with plans for additional hubs in Hungary and Brazil. It is also considering production in Mexico.

Alarmed by the potential impact on domestic automakers, the U.S. has raised the tariff on Chinese-made EVs to 100%. Canada is considering introducing tariffs of its own.

The European Union in July began imposing additional tariffs on Chinese-made EVs, and proposed Tuesday to eventually raise the rate as high as 36.3%. BYD now plans to build a new factory in Turkey to avoid the tariffs.

For Japanese players that are lagging behind, the North American market -- where Chinese EV makers have gained nearly no traction due to high tariffs -- is becoming increasingly important. As EV demand slows there, hybrids from Toyota and Honda are proving popular, but whether this will make up for slumping sales in China and elsewhere remains to be seen.

Scale is crucial for automakers to keep costs down and develop profitable new models. Honda is partnering with Nissan and Mitsubishi Motors on electric vehicle development, and broader consolidation in the industry is a possibility as automakers look to survive competition with Chinese rivals.