Daimler has described Denza as a "disaster" and a "cooperation that is not strategic"
The author | "Phoenix WEEKLY Auto" Yu Shi intern Zhang Yue
Editor| Zhang Shuo
China's earliest new energy joint venture brand may usher in a turning point in its fate.
On December 24, BYD Co., Ltd. (hereinafter referred to as "BYD") issued the Announcement on Capital Increase and Related Party Transactions of Participating Companies, saying that the Board of Directors has deliberated and passed the "Proposal on Capital Increase and Related Party Transactions of Participating Companies", and its holding subsidiary BYD Automobile Industry Co., Ltd. (hereinafter referred to as "BYD Automotive Industry") and Daimler Greater China Investment Co., Ltd. (hereinafter referred to as "Daimler", "Counterparty") It is proposed to increase the capital of Shenzhen Denza New Energy Automobile Co., Ltd. (hereinafter referred to as "Denza New Energy" or "the associated person") by 1 billion yuan in monetary terms according to the proportion of shareholding.
After the completion of the capital increase of the shareholders of both parties, BYD Automobile Industry and Daimler will continue to hold 50% of the equity of Denza New Energy respectively.
BYD said in the announcement that the capital increase funds are mainly used for the daily operating funds of Denza New Energy.
Founded in 2010, Denza is China's first Sino-foreign joint venture focused on new energy vehicles. In 2012, the "DENZA Denza" brand was officially released, and the first model Denza 300 was launched in 2014, with a subsidy of 369,000 to 399,000 yuan. In 2017, the Denza 400 model was launched, and in 2018, the Denza 500 was launched. According to the official website, the only models currently on sale in Denza are dextile X's plug-in hybrid and pure electric models.
At the beginning of its establishment, both Daimler and BYD had high hopes for Denza. But the dismal sales figures poured cold water on Denza.
Since its launch in 2014, the Denza 500 has sold only 14,000 units. The latest Denza X model delivered only 4,175 vehicles to dealers in 2020, including all-electric and plug-in hybrid models, while expected sales are ten times higher.
It is reported that Denza's sales channels mainly rely on Mercedes-Benz dealers, and for Chinese consumers, The target user group of Mercedes-Benz is obviously not Denza's customer base. This is also one reason why Denza's sales are not satisfactory.
The German media even used the slang phrase "in the basement" to describe Denza's sales. In contrast, China's entire new energy vehicle market has ushered in explosive growth in recent years, and more and more new energy brands with monthly sales of more than 10,000 have been born.
Under the sluggish sales volume, Denza's revenue is not ideal.
ACCORDING TOD's announcement shows that as of December 31, 2020, Denza New Energy's total assets were 2.39 billion yuan and net assets were 490 million yuan; in 2020, the main revenue was 1.13 billion yuan and the net profit was -420 million yuan. As of November 30, 2021, Denza New Energy had total assets of RMB2.11 billion and net assets of RMB340 million, while in the first 11 months of 2021, Denza New Energy's operating income was RMB1.15 billion and net profit was RMB-150 million. (None of the above data is audited)
In fact, Denza can be regarded as a typical representative of "getting up early and catching up with a late set". However, BYD and Daimler officially support the electric brand. "Daimler and BYD will continue to work to build Denza into the future of high-quality pure electric vehicles as a local brand." In an interview with the Deutsche Zeitung in February this year, Daimler said that the market performance of Denza X has also "developed step by step" since its launch.
In addition to the capital increase, according to BYD, BYD Automotive Industry also signed an equity transfer agreement with Daimler on adjusting the structure of its joint venture Shenzhen Denza New Energy Automobile Co., Ltd., and intends to complete the equity transfer of the two parties in Denza. Upon completion of the transfer, BYD and Daimler will hold 90% and 10% of Denza's shares, respectively. The equity adjustment is subject to the approval of the relevant regulatory authorities and is scheduled to be completed in mid-2022.
If the equity transfer is completed, this means that Daimler basically no longer gives any hope for the joint venture project of "Denza".
Although BYD said in the announcement that in the future, both shareholders will strategically plan to accelerate the future development of the "Denza" brand in the fast-growing Chinese new energy vehicle market and tap the growth opportunities of the "Denza" brand.
The more realistic question is, is there still an opportunity for growth for the Denza brand?
According to the German Business Daily at the beginning of this year, Daimler has described Denza as a "disaster" and a "cooperation that is not strategic", and after burning millions of dollars, more and more voices within Daimler hope that the cooperation project will end as soon as possible.
German media also reported that Denza's "failure" led Daimler to no longer regard the alliance with BYD as the key to long-term success in China, but instead focus more on cooperation with other Chinese companies such as BAIC and Geely.
According to the plan, Denza expects to launch three new products in the Chinese market in the next two years, including MPV and SUV models. Whether Denza can enter the mainstream new energy vehicle market in the next two or three years will become the key to determining its fate.