Recently, Mercedes-Benz officially withdrew from the shareholder ranks of Denza Motors, with its shares in Denza Motors officially transferred to BYD. This signifies the end of a 14-year long car manufacturing partnership between Mercedes-Benz and BYD.
According to Tianyancha information, on September 14th, Shenzhen Denza New Energy Automobile Co., Ltd. (referred to as Denza Motors) underwent changes in equity and business registration, with BYD Automotive Industry Co., Ltd. increasing its shareholding percentage from 90% to 100%, while Mercedes-Benz (China) Investment Co., Ltd., which originally held 10% of the shares, exited the list of shareholders.
Simultaneously, the former Denza Motors director, Hans Georg Engel, also stepped down. This move signifies the end of the 14-year car manufacturing partnership between BYD and Mercedes-Benz, transitioning Denza Motors from a joint venture entity to an independent brand in the automotive industry.
In response to this, Denza Motors stated on September 16th in a statement to Southern Metropolis Daily that this transition will aid BYD in better integrating internal resources and optimizing strategic layout.
According to reports from China Fund News and Yicai, tracing back Denza’s inception, in March 2010, BYD and Daimler, the parent company of Mercedes-Benz, signed a memorandum of cooperation. In February 2011, BYD and Daimler jointly established Shenzhen BYD Daimler New Technology Co., Ltd., with each holding a 50% share, and introduced a new automobile brand – Denza (DENZA), aimed at creating high-end Chinese electric vehicles.
During the initial stages of its establishment, the market environment for new energy vehicles was not yet mature, leading to challenges in Denza Motors’ development. From 2014 to 2018, Denza Motors successively released Denza 300, Denza 400, and Denza 500, a total of three models, but their sales performance remained unsatisfactory.
In 2018, Denza only sold 1,974 vehicles, a 58.12% year-on-year decrease. Over five years, Denza relied on financial support from both shareholders to sustain its operations, with both shareholders collectively injecting funds through seven rounds of capital increases amounting to over 4 billion yuan.
At the end of 2021, BYD announced signing an agreement with Mercedes-Benz regarding the adjustment of Denza’s new energy structure through equity transfer. Following the transfer, BYD and Mercedes-Benz will hold 90% and 10% of Denza Motors’ shares respectively.
Throughout this year, the continuous price war in the Chinese automotive industry has not delivered the anticipated market gains to foreign car companies in China, but instead led to significant losses in brand value. Until July, the price war resulted in serious losses for luxury car market dominators such as Mercedes-Benz, BMW, and Audi, prompting them to withdraw from the price war one after another.
A salesperson at a Mercedes-Benz 4S dealership also mentioned that each sale of a C-class car incurred a loss of 70,000 yuan, a situation that is unsustainable. Currently, Mercedes-Benz prices remain relatively stable, but it is certain that prices will increase in the future.
Moreover, sales of other international luxury car brands in the Chinese market are also declining, with Porsche experiencing particularly noticeable downward trends. Porsche explained that this is mainly due to factors such as the price-driven nature of the Chinese market.
Behind the price cuts of luxury brands, there is a reduction in market demand, leading to greater inventory pressure on dealers. Surveys indicate that the inventory alert index of Chinese auto dealers is above the balance line, signifying significant inventory pressure on dealers.