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Denza’s new “X” factor: Styled and sold by Mercedes-Benz, produced by BYD

SHENZHEN – It’s got elements of the BYD Tang, it’s styled by Mercedes-Benz and it looks nothing like its predecessor.

It’s the Denza Concept X from Shenzhen Denza New Energy Vehicle Co., Ltd., the joint venture between BYD and Mercedes-Benz parent company Daimler.

It’s about time.

Hubertus Troska and Wang Chuanfu

Previewing the next generation of a battery electric vehicle (BEV) and a plug-in hybrid electric vehicle (PHEV) for the first Sino-Foreign JV dedicated to NEVs in China, the Denza Concept X made its global premiere at the 2019 Shenzhen-Hong Kong-Macau Auto Show on June 1 in Shenzhen, where both Denza and Chinese partner BYD are based.

It was fitting that it came on International Children’s Day: Denza is just a little over 7 years old since the brand was officially unveiled in March 2012, two years after BYD and Daimler signed an MOU to create the technology-focused JV originally called Shenzhen BYD Daimler New Technology Co., Ltd. (BDNT)

The first Denza production model, which was launched to market in the fall of 2014 with a range of 300 km and later added 400-km and 500-km range variants, nearly flopped with a rather strange “two-and-a-half box” body style and a high retail price approaching nearly ¥400,000. The model sold less than 12,000 units from 2015 to 2018, during which time China’s overall NEV sales mushroomed from 330,000 to more than 1.25 million units. Last year’s mid-year recall of 10,064 Denzas produced from September 19, 2014 to December 5, 2017 for an airbag defect also gives an indication of approximate combined end user sales in those four years. From 2014 to the first quarter of 2019, Denza has racked up cumulative losses of more than ¥3.5 billion, according to BYD financial reports, and both partners have injected new capital into the JV seven times over the last seven years – the latest round coming last month – totaling more than ¥2 billion.

Nicholas Speeks

The Concept X, therefore, is the answer from BYD and Daimler to change all of that.

The seven-seater becomes the first SUV model from Denza, putting it into competition into a much wider but also tougher market segment. Its electric motors provide power up to 360 kW, helping it to go from 0-100 km/h in less than 5 seconds and the BEV version has an NEDC range of more than 500 km with the PHEV providing even more range, according to preliminary specs unveiled at a press conference. BYD will continue to provide manufacturing for the production of the new model as well as resources on battery, electric motor and electronic control. Deliveries are expected to commence in early 2020.

Daimler, on the other hand, has taken over styling and design of the model as well as distribution.

Nicholas Speeks and Gorden Wagener

The next generation of Denza is the first non-Mercedes model to be styled by Mercedes-Benz and use the “Styled by Mercedes-Benz” moniker on its body. The styling and design was led by Hubert Lee, chief designer at the Advanced Design Center of Mercedes-Benz Research & Development Center China. His boss, Daimler Chief Design Officer Gorden Wagener, personally came to Shenzhen for the first time for the unveiling to explain what he calls the organic connection between Mercedes-Benz and Denza aesthetics on the design of the Concept X.

To help rejuvenate sales, Beijing Mercedes-Benz Sales Service Co., Ltd. (BMBS) will integrate Denza into the Mercedes-Benz distribution channel starting July 1, according to Nicholas Speeks, president and CEO of BMBS. When the production model is launched in early 2020, it will be sold completely by the 600 or so Mercedes-Benz dealerships across China. The Denza 500 has been distributed at selected Mercedes-Benz dealers over the past year or so.

“This forward looking car emphasizes our continuous commitment to the Denza brand and to the Chinese EV market,” said Hubertus Troska, member of the board of management of Daimler AG with responsibility for Greater Chia. “With our new Denza product, we are very confident that we will contribute and participate even more in this dynamic market.”

“The Denza brand has tried to set the bar in terms of EV performance and safety,” said Wang Chuanfu, chairman and president of BYD Co., Ltd. “The global premiere of the Concept X represents not only a major step for Denza but also another milestone for the long-term and close cooperation between BYD and Daimler.”

In a first ever joint interview given to the media by Troska and Wang, both believed that the next generation Denza based on the Concept X will perform better on the market than its predecessor.

“Our confidence comes from our positive outlook on the Chinese NEV market. The new model is the first SUV from Denza, has better performance and a fresh new design. With support from both shareholders, I expect it to perform well on the market,” said Wang.

Troska, on the other hand, expects it to do much better than the previous vehicle.

“Together with the experience of BYD, with Mercedes-Benz attractive styling, plus distribution network that doesn’t come from scratch but based on the experienced Mercedes-Benz network, these are the ingredients for much more success in sales numbers than in the past,” said Troska.

The new model will be positioned below the upcoming locally-produced Mercedes-Benz EQC, but above the BYD Tang, which currently sells in the ¥200,000-¥300,000 price range.

Both Troska and Wang confirmed that it was after much discussion that the two partners decided to distribute Denza completely via the Mercedes-Benz network.

“It’s the best support that we can get and the most effective method,” said Wang.

“We are seeing in China, particular but also other countries, the start of new brands. One challenge is distribution network. How do you communicate? Online will be important, but physical retail is still important. We discussed with Chairman Wang the best way to sell the Denza and concluded that since it was designed by Mercedes-Benz, the best way to sell it is also by Mercedes-Benz dealers. This is the best way of selling it in the future,” said Troska.

Most of the existing Denza dealers are already Mercedes-Benz dealers with separate outlets, and they will be merged into the Mercedes-Benz dealer network, according to Troska.

Denza will continue to be an important piece of the puzzle for Daimler’s electrification strategy in China as future success depends on a range of NEV products in China.

“I’m very confident also about the range of Mercedes-Benz products starting with the EQC. We need to offer products in the entire price range of Chinese customer segments. Denza is a unique opportunity to add additional attractive products to the NEV range that we can offer,” said Troska. “From a Daimler perspective, we’ve got Mercedes-Benz, Denza and smart to cover the growing Chinese market.”

For BYD, it will be able to expand its battery, motor and control technologies and resources for products that cover a wider range of consumers. Can the two partners overcome their “seven-year itch?”

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