BYD establishes automobile sales and service company under Denza – Pandaily

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Chinese automaker BYD has recently increased its overseas investments, according to domestic trading platform Tianyancha. The newly invested company is named Denza Automobile Sales and Service Co., Ltd. with an investment rate of 100%. Just a day earlier, Zhao Changjiang, Director of BYD Auto High-end Brand Preparation Office, made the following announcement: “[BYD] obtained the business license of Denza Automobile Sales and Service Company. The rebuilding of high-end services and experiences is imminent!”

The information released shows that the new company was incorporated on February 14, 2022. Its legal representative is He Zhiqi, and the registered capital is 50 million yuan (US$7.9 million). The company’s business scope includes the sale of new cars, electric vehicles and electric vehicle accessories. The company is wholly owned by BYD Auto Industry Co., Ltd. controlled.

Denza is a joint venture between BYD and Mercedes-Benz Group and marks the long-term cooperation between the two parties in the Chinese market. In 2010, they signed an agreement to establish Shenzhen BYD Daimler New Technology Co., Ltd. and formed the joint venture company with a 50:50 ownership. The company then launched a new model under the brand name “Denza”, which was the first Sino-foreign joint venture company focused on new energy vehicles in China.

On December 24, 2021, BYD and Daimler AG jointly announced that they plan to raise their capital by 1 billion yuan in Denza. Upon completion of this capital injection, both parties adjusted Denza’s future equity – BYD owning 90% and Daimler AG owning 10% of the shares in the joint venture company. Relevant matters are yet to be approved by regulators, which is expected to be completed in mid-2022.

SEE ALSO: Daimler and BYD Agree to Form Future Joint Auto Venture DENZA

Denza expects to launch three new models in the Chinese market over the next two years, including MPVs and SUVs. BYD said it will devote more resources and core technologies to Denza and work with Daimler AG to advance its development, including product research and development, intelligent manufacturing, sales channels and after-sales service.

However, the equity-method confirmed investment income of BYD in Denza was -232 million yuan in 2017, -475 million yuan in 2018 and -539 million yuan in 2019.

BYD explained that as the new energy vehicle market has matured, other major automotive companies have successively launched products targeting various vertical markets, which has greatly affected the market share of Denza products. BYD also pointed out that Denza was only established in the last few years, so there is room for increasing brand awareness, plus the large investments in R&D in the early stages. This explains the annual increase in losses.

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