Author | Lingyun
DENZA Motors, which has been lingering on the edge market for 12 years, has new developments.
Recently, Zhao Changjiang, the general manager of the DENZA Motors Sales Department, revealed on his personal social media platform that DENZA will release three new models in 2022, including an MPV, a mid-large SUV, and a medium-sized SUV. Among them, the MPV model will be available in both pure electric and plug-in hybrid versions, equipped with four-wheel drive and two-wheel drive systems, “so the price range will be wider”.
In fact, this is not the first time since this year that Zhao Changjiang has released news about DENZA Motors on social media. Public information shows that as early as February 23 this year, Zhao posted a group of spy photos of DENZA’s high-end MPV on Weibo. On March 20, Zhao revealed that a new DENZA app is under development, which will include sales, vehicle control, community and other functions. The logo is optimized, and there is a unique solution for the third row of DENZA’s high-end MPV folding and other issues.
At the beginning of April, Zhao Changjiang released a promotional video for DENZA’s high-end MPV. From the content that has been gradually released, the exterior of DENZA’s high-end MPV has been redesigned, with dual electric sliding doors and four doors with double-layer soundproof glass as standard. The interior is laid out in a 2+2+3 configuration and will be unveiled at this year’s Beijing Auto Show. “This year will be the first year of the outbreak of the mid-to-high-end MPV market,” said Zhao Changjiang.
What is worth mentioning is that since the end of 2021, the release of new products and planning information is only part of DENZA’s frequent actions.
On December 25, 2021, BYD announced that it and Daimler each planned to increase their capital by RMB 1 billion for DENZA. At the same time, the two parties also signed an equity transfer agreement for DENZA Motors, which stipulates that after the transfer of DENZA Motors is completed, BYD’s shareholding ratio in DENZA will increase from 50% to 90%, and Daimler’s shareholding ratio will decrease from 50% to 10%. The transfer is planned to be completed in mid-2022.
More than a month after the signing of the agreement, on February 14 this year, BYD established DENZA Motors Sales Service Co., Ltd. According to the data, the company is a wholly-owned subsidiary of BYD Auto Industry Co., Ltd., with a registered capital of RMB 50 million, and its business scope includes new car sales, new energy vehicle sales, and electric accessory sales.Changes in equity, frequent exposure of product information… All signs indicate that DENZA Motors is accelerating its return to the automotive market and wants to enter the high-end new energy vehicle market with high-end MPV models after operating independently.
Ten years of searching in vain
Although the recent series of actions prompt people to speculate whether “DENZA can become the new noble in the new energy era”, DENZA Motors did not have a good time before this.
Let’s go back to 12 years ago.
In 2010, Wang Chuanfu, the founder, chairman and president of BYD Group, led a team to Germany to sign a memorandum of understanding with Daimler. One year later, BYD and Daimler established Shenzhen BYD Daimler New Technology Co., Ltd. according to a 50:50 share allocation.
In 2012, DENZA, the first new energy vehicle brand targeting the mid-to-high end market in China, was born under DENZA. According to the agreement between BYD and Daimler, DENZA Motors provided the three electric vehicle technologies and Daimler was responsible for vehicle production and manufacturing.
In 2014 and 2016, DENZA Motors completed the launch of its first model, the DENZA 300, and the company’s name change, and Shenzhen BYD Daimler New Technology Co., Ltd. was renamed Shenzhen DENZA New Energy Vehicle Co., Ltd. (DENZA Motors for short). It is understood that the first mass-produced DENZA 300 model was developed based on the Mercedes-Benz B200 platform.
Subsequently, DENZA Motors not only launched its upgraded models, DENZA 400 and DENZA 500, but also merged into Mercedes-Benz’s sales system in July 2019, and launched the DENZA X (pure electric/hybrid version) with a new logo in November of the same year.
As the first new energy vehicle joint venture brand in China, DENZA Motors was highly regarded by the industry because of the strong backgrounds of its two shareholders. Wang Chuanfu once said, “As the child of Daimler and BYD, DENZA Motors is a brand born on the shoulders of giants.”
Why did BYD and Daimler establish DENZA Motors through joint venture? In the eyes of the industry, BYD at that time wanted to use cooperation to obtain Daimler’s advanced car-making technology, improve the brand image, and transform into high-end. Daimler, on the other hand, hoped to use the cooperation to enter the Chinese new energy vehicle market.
Perhaps it was precisely because of the “impure motives” of both sides of the cooperation that ultimately led to DENZA Motors’ “string of tragedies”.From 2010 to 2021, the production of new energy vehicles in China increased nearly 500 times. After experiencing a reshuffle in 2019, the industry entered a golden age. In 2021, domestic sales and production of new energy vehicles were 3.545 million and 3.521 million, respectively, a 1.6-fold increase on a year-on-year basis, and the market penetration rate was 13.4%, an increase of 8 percentage points.
In contrast, the performance of the first-comer, DENZA Motors, who came with a “golden key,” has been consistently poor. From 2014 to 2021, DENZA Motors had accumulated sales of less than 30,000 vehicles, of which only 4,708 were sold in 2021.
“Byd and Daimler did not attach enough importance to DENZA Motors, which is the main reason why DENZA Motors has been unable to seize the opportunity of China’s new energy vehicle market,” said an industry insider. This can be seen from the fact that DENZA Motors, which has been in existence for only 12 years, relied on only one product and had insufficient early brand promotion.
It is worth mentioning that the sustained poor market performance has also forced DENZA Motors to rely solely on its two major shareholders for survival. Public information shows that from 2012 to 2021, Byd and Daimler have invested in DENZA 12 times, with a total investment amount exceeding RMB 7 billion, while DENZA’s accumulated loss amount has exceeded RMB 4.39 billion (as of November 2016 to November 2021).
It can be said that without the support of Byd and Daimler, DENZA Motors, which has almost no presence, would have disappeared long ago.
May undertake a new mission
In the past, DENZA was in a game from the beginning.
Why is that? Because at the outset of the establishment of the DENZA brand, Byd and Daimler had an agreement that the core electric drive technology of the vehicle would be provided by Byd, and the vehicle design and chassis tuning would be done by Mercedes-Benz.
So, why did both parties come up with such an agreement? The reason is simple. At that time, Mercedes-Benz did not have a pure electric car on the market, while Byd’s new energy was still in its nascent stage. In other words, what Byd had was what Mercedes-Benz lacked, while what Mercedes-Benz had was exactly what Byd needed.
Therefore, looking back, the DENZA brand from its inception was carrying the “schemes” of Byd and Daimler respectively. It is more like a bridge than an automaker, allowing Daimler and Byd to come and go, meeting their respective needs.Now, 12 years have passed, and Daimler has gone through a lot of change while BYD is no longer the same company it used to be. Specifically, Mercedes-Benz’s new energy layout has gone from EQC to EQS, and from oil to large-scale production of pure electric architectures. Meanwhile, BYD has grown into a world-class new energy giant from its early stages of development.
According to expectations, the story should end here, and it seems that the mission of DENZA Auto should come to an end.
However, just as the industry was speculating on the future direction of DENZA Auto, in December 2021, BYD announced a surprising decision to continue to increase its investment in DENZA Auto and signed an equity transfer agreement with Daimler to obtain absolute control of DENZA Auto.
“BYD’s brand positioning is in the mid-end, and the Ocean series is mainly positioned for mass-produced models. Perhaps BYD is interested in continuing to develop DENZA Auto into a mid-to-high-end brand,” says Bai Yiyang, manager of Zhongyin International Research Department and automotive industry analyst.
It is worth noting that the views of the above industry insiders are not without reason. On the one hand, DENZA Auto’s product line is not extensive, with only the DENZA X product, and it is not complicated to “continue cooking on the fire” based on the existing foundation. On the other hand, because of Daimler’s endorsement, DENZA Auto is also a rare high-quality asset.
In addition, compared with Wei Pai of Great Wall, Lynk & Co of Geely, Avita of Changan, and Xingtu of Chery, BYD, as a leading Chinese brand auto company, is also time to launch a more high-end brand. Compared to creating a new brand from scratch, it is obviously more appropriate to let DENZA, which already has a high-end positioning, return and become one of the new paths and pivots for its own high-end development.
Public information shows that the highest-priced model in the current BYD product line is the Tang new energy, with a price range of around 300,000 yuan, while the highest-priced model under the DENZA brand has reached the 400,000 yuan mark.
Combining this with the information previously released by Zhao Changjiang that “the price range of the new MPV will be wide,” DENZA may have a new mission, which is to use its existing brand positioning to expand its product line, help BYD break through the current price ceiling, and prepare for the launch of even higher-end brands in the future.
There are still obstacles on the road ahead
“This year, three models will be launched: MPV, mid-to-large SUV, and mid-size SUV; the channel system will be rebuilt to meet the needs of mid-to-high-end users for automotive services and social services; we can look forward to intelligent and digital cockpit solutions with multiple scenarios and details…”From the information provided by Zhao Changjiang, it seems that both management and service system, as well as sales channels of DENZA under BYD’s control, have been renewed.
So, can these changes help DENZA play the role of the next “noble” in the new energy era? This is still a hard question to answer for now.
In my opinion, DENZA Automobile, which is so confident and determined at the moment, still faces some obstacles on its way forward. One of them is the pace of BYD’s product advancement. According to BYD, their focus in 2022 will be on three things: expanding the ocean series product line, improving the Wangchao series product matrix, and launching a high-end brand that will sell for nearly one million yuan.
Take the high-end brand that BYD will launch this year as an example. According to the introduction, the price range of the high-end brand will be from 500,000 to 10 million yuan, and it will be completely new and independent in terms of brand, product, sales service network, and operation team. The first model will be a tough off-road vehicle. This means that the new high-end brand will likely take up most of BYD’s resources and energy.
Given the determined focus of BYD’s work, how much energy will they still have to focus on DENZA in the near future? This is currently an unknown variable.
Therefore, in my opinion, although the DENZA brand will launch new models in 2022, this year will definitely not be its year of great products, at most it can be seen as a product attempt.
In addition, from BYD’s current product planning, the price range of DENZA’s models may be between 300,000 and 500,000 yuan. However, this price range seems to be firmly controlled by new energy vehicle brands such as Tesla, XPeng, Ideal, and NIO, which already have their own “online celebrity” effects. Facing such competitors, DENZA, which has been “down” for 12 years, is not likely to easily charge into the high-end market.
However, this does not mean that DENZA Automobile’s future is definitely bleak. “For now, the performance of domestic high-end independent brands is doing well, such as GAC, NIO, and XPeng. This also means that there is a certain market demand for high-end new energy vehicles. In addition, BYD has performed well in the electric vehicle market in recent years. With strong new energy technology and the support of Mercedes-Benz, DENZA still has the opportunity to charge into the high-end market.” Cui Dongshu, secretary-general of China Passenger Car Association said.In my opinion, to successfully transform into a high-end brand under BYD, DENZA Motors must use time, products, and stories to build the image that a high-end brand should have. Otherwise, even with good products, the brand power will find it difficult to support high prices.
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.