BYD’s premium Denza brand may set up its own car financing operation in Europe as soon as next year, potentially a big step to challenge premium brands such as BMW and Mercedes-Benz.
Setting up its own financial services unit would enable Denza to make more competitive financing and leasing offers on models like its €142,000 ($158,810) Z9 GT sports wagon. Leasing and financing arrangements account for the majority of premium-car sales in Europe, making competitive monthly payments crucial in winning customers.
Denza started sales in Europe in April. This limited local history means Chinese brands like it don’t have much evidence for lenders to judge what their cars will be worth at the end of a typical 48-month leasing contract. The used-car value forms the basis of calculating monthly rates.
Early feedback from companies that forecast residual values for Denza are encouraging, according to Alfredo Altavilla, BYD’s special adviser for Europe. Some estimates are even exceeding those of rival models, and Denza may accelerate plans for some form of captive-finance business next year, the former Fiat executive said during the Paris auto show.
Denza’s Z9GT is available for a monthly €899 leasing rate and upfront payment of €16,900 for private buyers in Germany. This far exceeds the Audi A6 Avant E-tron, available for €619 a month and no down payment, according to company websites.
Denza says it is not ‘chasing volume at any cost’
BYD, which launched its Denza brand in Paris with a lavish event featuring ballet dancers, currently uses third-party providers, including Ayvens in continental Europe and specialist leasing platforms in the U.K.
Altavilla said the brand has promised dealers it’ll avoid abrupt price cuts that can undermine the value of cars already on the road. “We are not chasing volume at any cost,” he told Bloomberg News on the sidelines of the Paris show. “We want to chase the right customer. And to do that, stable pricing is crucial.”
Chinese carmaker sales have surged in Europe this year, though deliveries have centered on mass-market models like SAIC Motor’s MG ZS compact SUV or Chery’s mid-range Jaecoo 7 SUV.
Taking on the premium segment in Europe would set up the likes of Denza for an extended battle with some of the most entrenched car brands. The advantage of BMW, the world’s top-selling premium marque, or Audi extends beyond engineering and prestige to vast dealer networks, captive-finance arms and decades of resale data that help keep lease payments competitive.
Other Chinese premium entrants in Europe include Volkswagen Group partner Xpeng, Li Auto and Geely’s Zeekr brand.
