Joint venture car companies, especially traditional luxury brands represented by BBA, are entering a period of pain.
On September 14, Mercedes-Benz's joint venture in China, DENZA New Energy, underwent industrial and commercial changes, and BYD acquired the remaining 10% of the former's shares and changed it to a wholly-owned subsidiary. So far, this joint venture brand established by Mercedes-Benz and BYD in 2011 has officially transformed into its own brand.
Three years ago, in 2021, BYD and Daimler signed an equity transfer agreement to adjust the structure of their joint venture company, Denza, and the shareholding ratio of the two parties was changed to 90:10. Prior to this, BYD and Daimler (5:5) had increased their capital for DENZA 12 times, with a total capital increase of more than 7 billion yuan.
In fact, as the first Sino-foreign joint venture company focusing on new energy vehicles in the Chinese market, due to factors such as Mercedes-Benz's insufficient investment in the field of new energy and BYD's early focus on low-end models, Denza, which is positioned as a high-end new energy vehicle brand, has performed far lower than expected.
According to public data, DENZA has been in a state of loss since the launch of the first-generation model. Among them, from 2014 to 2017, the losses were 260 million yuan, 570 million yuan, 1.3 billion yuan, and 480 million yuan respectively, with a total loss of 2.61 billion yuan. At the same time, the company has also been lacking in self-hematopoiesis and cash flow is tight.
Until 2021, BYD tried to seek changes while stabilizing the basic market of new energy. A comprehensive refresh of DENZA technology and products and the reform of independent operation of channels are on the agenda. A series of actions such as integrating internal resources, optimizing strategic layout, and enriching product lines have also become the "three fires" for BYD to try to seek breakthroughs in the high-end market.
In May 2022, DENZA launched the first luxury MPV DENZA D9 with a new product series, and with the precise product positioning and the comprehensive support of BYD's electrification and intelligent technology, DENZA D9 has become the annual MPV sales champion in the Chinese market in 2023, breaking the monopoly of Buick GL8 for many years.
Interestingly, at the 2024 DENZA Automotive Technology Day held this year, Wang Chuanfu, chairman of BYD, said, "Behind these achievements, first of all, we would like to thank Mercedes-Benz for its strong support, so that DENZA has a luxurious background and genes since its birth; It also allowed BYD to learn valuable experience in the establishment of luxury brands. ”
However, such results do not seem to dispel Mercedes-Benz's hesitation in the new energy market.
In February this year, Mercedes-Benz announced that it would postpone the achievement of the electric vehicle target, and it is expected that it will not be able to achieve the target of 50% of new energy vehicles in total sales by 2025. The company said that the continued sluggish demand for electrification means that this target will be postponed until at least 2030.
According to the data, Mercedes-Benz's pure electric model sales in 2023 will only account for 11% of total sales, and if you count plug-in hybrid models, the proportion is 19%. At the same time, the company expects that the proportion of new energy vehicle sales will remain roughly between 19% and 21% this year.
"I don't think the once-in-a-century change in the automotive industry will be a straight line," said Ola Källenius, chairman of the board of directors of Mercedes-Benz. In fact, this judgment has also been verified by the market.
China's new energy vehicle market continues to maintain growth momentum this year, but the competition between car companies continues to heat up. In particular, Mercedes-Benz's two new energy joint venture brands, Denza and Smart (a brand of the joint venture between Mercedes-Benz and Geely), are experiencing the embarrassment of declining sales.
In terms of Denza, due to the market performance of the N7 model after the D9 being much lower than expected, from January to June this year, the delivery volume of new cars of the DENZA brand in the Chinese market (excluding import and export) fell by 4.06% year-on-year; The model positioning is biased towards the niche market, Smart, which is down 47.44% year-on-year.
Sympatheticly, Beijing Benz's new energy models also showed a year-on-year decline of 20.98% in the same period. In contrast, in the same period, the Chinese market of new energy vehicles continued to maintain a year-on-year growth rate of about 40%, although compared with the previous years.
Coupled with the impact of factors such as the price war in the terminal market that began last year, traditional car companies that pursue profit margins (especially fuel vehicles still contribute good profits) simply cannot afford the price war to squeeze out profit margins, especially the long-term R&D investment and continuous loss-making electric vehicle business, which is under huge pressure on the management.
Another set of data is more illustrative of the current predicament.
According to the monitoring data of the Gaogong Intelligent Vehicle Research Institute, from January to June this year, the delivery volume of models with a price of more than 300,000 yuan for joint ventures and foreign brands in the Chinese market (excluding import and export) fell by 10.87% year-on-year, while the delivery of independent brands increased by 45.16% year-on-year.
"Chinese car brands have a lot to offer in the luxury market." In Wang Chuanfu's view, "the explosive growth of new energy vehicles has ushered in a once-in-a-lifetime development opportunity for Chinese luxury brands. "Last year, BYD first proposed the concept of vehicle intelligence, especially in the chassis control part, with the help of intelligence to catch up with traditional luxury brands.
Previously, Yu Chengdong, chairman of Huawei's car BU, said bluntly, "The automatic control capability of the Tuling chassis has far surpassed that of traditional luxury brands." "In particular, the accumulation of a large amount of driving data and the enhancement of the perception ability of the vehicle have greatly lowered the threshold of traditional chassis tuning.
For example, the self-developed XCU central domain controller is also the brain of the entire air suspension to achieve intelligence, which adjusts the air suspension in real time through the data collected by the sensors, and realizes the drawbacks that the traditional air suspension cannot be updated OTA.
At the same time, with the help of rich sensor configurations, the NIO 4D Comfort Pilot + Adaptive Suspension Predictive Control Solution is launched by NIO to accurately estimate (distance) and predict bumps (lift) on the road surface through the fusion of signals at the algorithm end, so as to achieve intelligent real-time control of the chassis.
"Dynamically adjusting the chassis is an optimization and upgrade of the driving experience." In the eyes of industry insiders, this is also the last line of defense for traditional luxury brands to be captured. The tuning of the chassis system and the mechanical performance have always been the proud foundation of BBA.
Nowadays, the two-way attack of price war and performance war has put Mercedes-Benz, which is still trapped in traditional fuel vehicles, under pressure. Focus (resource investment and model planning) may become the only choice for Mercedes-Benz.
On September 4, Mercedes-Benz announced that it plans to invest more than 14 billion yuan in China with Chinese partners in accordance with the Group's business plan to further enrich the local product lineup of passenger cars and light commercial vehicles. Beijing Benz and Fujian Benz have become the footholds of this new investment.
Among them, from 2025, Beijing Benz will start production of new models based on the new Mercedes-Benz Modular Architecture (MMA) platform, including a new all-electric long-wheelbase CLA model tailored for Chinese customers. At the same time, the new long-wheelbase GLE SUV exclusive to China will also complete local development and production.
In addition, Mercedes-Benz's self-developed new architecture MB.OS will be launched in 2025 with the new model on the MMA platform, providing a new MBUX virtual assistant powered by large language models, and the first "no map" end-to-end all-scene intelligent driving system (Momenta provides a localized solution).
In the view of the Gaogong Intelligent Vehicle Research Institute, the "gap" between China and other markets in terms of electrification and intelligence has not yet fully adapted to most foreign car companies. Whether it is localized R&D investment or seeking localized cooperation, the progress is less than expected.
According to the monitoring data of the Gaogong Intelligent Vehicle Research Institute, in 2023, 12.3806 million passenger cars in the Chinese market (excluding import and export) will be delivered with standard ADAS, of which the standard delivery of L2 and above intelligent driving systems increased by 36.97% year-on-year, while the high-end intelligent driving market represented by NOA increased by 189.02% year-on-year.
In addition, in 2023, the actual standard configuration of NOA in urban areas (including unreleased software) will account for 36.89% of the overall NOA, and it is expected that it will have the opportunity to exceed 50% by 2025. And this part of the players is almost all Chinese car companies.
At the same time, the change in demand in the end market is a fatal blow.
According to the latest monitoring data of the Gaogong Intelligent Vehicle Research Institute, from January to July this year, the proportion of new car deliveries of independent brands in the Chinese market (excluding import and export) (the total total market delivery) has reached 56.78% (an increase of about 6.5 percentage points over the same period last year), and the proportion in July exceeded the 60% mark for the first time, reaching 60.32%.
Among them, the proportion of new energy vehicle deliveries (the total delivery of the overall market) has reached 43%, of which the proportion in July has been close to 50% (49.99%). From January to July, domestic brands contributed 86.37% of the delivery of new energy vehicles.
In addition, with the hot sales of the M9 model, the number of new car deliveries in the market of more than 500,000 yuan from January to July closely followed BMW and Mercedes-Benz; In terms of monthly deliveries, starting from May, only one model of the M9 has achieved the lead in the total delivery volume of many Mercedes-Benz brand models (excluding imports) for three consecutive months.
That's why, Volkswagen Group CEO Oliver Blume, recently publicly admitted that "China's EV market is so competitive that we can't keep up." In his view, if the Volkswagen Group can maintain a market share of more than 10%, it will also be a "very attractive goal".