Ola Källenius
The Swede is consistently focusing Mercedes-Benz on its core again.
(Photo: dpa)
Munich More than a decade ago, Daimler and BYD started an ambitious project under the Denza brand. The noble goal of the two groups was to become the “most successful manufacturer of vehicles with alternative drives in China”. But at Denza, there has always been a wide gap between aspiration and reality. The electric car bodies developed by BYD and designed by Daimler are considered to be real slow-moving goods.
Since the first model was launched in 2014, Denza hasn’t even sold 23,000 vehicles. Among the more than one hundred car brands that sell passenger cars in the Middle Kingdom, Denza is currently ranked 80th – with a market share of 0.02 percent.
In view of such devastating numbers, Daimler is now distancing itself from its China flop. Specifically, the Mercedes manufacturer is cutting its stake in the joint venture Shenzhen Denza New Energy Automotive from 50 to ten percent, as the group has now announced. The remaining 90 percent of the voting rights are to be held by BYD in the future. The completion of the transaction is planned for mid-2022.
This step is by no means surprising. The Handelsblatt reported eleven months ago that Daimler boss Ola Källenius hardly felt any desire to continue burning a lot of money with a strategically irrelevant brand in China. On the contrary.
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The Swede is again consistently focusing Mercedes-Benz on its core: luxury cars with large margins. The mid-range cars from Denza, on the other hand, which hardly generate any profit margins, do not fit into his strategy at all.
Closer cooperation with BYD possible
It therefore seems a little surprising that Daimler initially refrains from completely getting out of Denza. One possible reason for this: The Swabians will “rather intensify” their cooperation with BYD, announced Hubertus Troska a few weeks ago. In this regard, Daimler’s China Board of Management pointed out that BYD is one of the largest battery manufacturers in the world and that it is also supplying more and more batteries to Mercedes.
One thing is clear: battery cells remain a scarce commodity. And with its “Electric only” strategy, Daimler does not want to scare off any supplier of the important component. This is one of the reasons why the Stuttgart-based Denza should remain as a minority owner.
The brand plans to introduce new models in 2022. That also seems sorely needed. After all, the sales figures for the Denza X power SUV are sobering. By the end of November, only 4,268 units of the series had been sold. Daimler and BYD had once hoped for ten times that.
More: Carolin Strauss becomes the new head of strategy at Daimler