Introduction: With the successive launches of a series of high-end models such as the Denza Z9 GT, Denza N9, and FANGCHENGBAO Leopard 8, BYD is poised to undergo a transformation in the high-end market above RMB 300,000.

Lishi | Author Lishi Business Review | Production

1

In September, BYD sold a total of 419,400 vehicles, far ahead of the industry. However, BYD's performance in the high-end market has been somewhat unimpressive.

This skepticism is indeed supported by objective data. Currently, a price point of RMB 200,000 is a watershed between mass-market and high-end vehicles. Sales of vehicles priced above RMB 200,000 can to some extent represent a brand's position in the high-end market.

Among domestic automotive brands, those with better sales performance for models priced above RMB 200,000 include NIO, Lixiang ONE, and HUAWEI HiCar. All their models start at prices above RMB 200,000. According to the latest September sales data, monthly sales for these three brands were 53,709, 38,355, and 20,349 units, respectively.

Currently, most BYD models under the main brand start below RMB 200,000, with only a few high-end versions of models like Tang, Han, Sea Lion 07, and Song L EV priced above this threshold, but their sales volumes are negligible. The real mainstays supporting BYD in the market above RMB 200,000 are its three sub-brands: Denza, FANGCHENGBAO, and Yangwang, all of whose models start above RMB 200,000. In September, monthly sales for Denza, FANGCHENGBAO, and Yangwang were 10,299, 5,422, and 310 units, respectively, totaling 16,031 units, still lagging significantly behind NIO and HUAWEI HiCar.

However, the competitive landscape is dynamic. We should not only look at current data but also at future trends. So, can BYD achieve a reversal in the high-end market in the future?

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We won't have to wait long for BYD's breakthrough in the high-end market. In the recently concluded October sales figures, BYD's sales in the market above RMB 200,000 will see a significant boost, primarily driven by the newly launched Denza Z9 GT in September.

The Denza Z9 GT is a large flagship sedan with outstanding exterior design and Denza's exclusive e-Platform 3.0 technology, offering numerous differentiated features. Since its launch, it has received positive reviews and strong sales momentum. In September, it sold 1,172 units within just a few delivery days, and is expected to exceed 10,000 units in October. Combined with the Denza D9, which consistently sells over 10,000 units per month, Denza's overall monthly sales are expected to surpass 20,000 units for the first time in October.

Apart from the Denza Z9 GT, BYD has two more aces up its sleeve in the mid-to-high-end market: the FANGCHENGBAO Leopard 8, a mid-to-large flagship off-road SUV, and the Denza N9, a large flagship urban SUV. Both models are highly anticipated.

The FANGCHENGBAO Leopard 8 has been hyped for a long time. Besides its superior off-road performance, it boasts an impressive exterior design and Huawei's intelligent driving system as its other two highlights. After a recent price adjustment, the Leopard 5 has risen to the top of China's mid-size SUV sales charts, consistently selling over 5,000 units per month. Compared to the Leopard 5, the Leopard 8 is expected to be even more competitive in its segment and could easily capture the sales crown in China's mid-to-large off-road SUV segment.

Moreover, many industry experts predict that the Leopard 8 will also compete with mid-to-large and large urban SUVs. Currently, this segment is dominated by models like the Lixiang ONE L9, L8, and L7 from NIO, as well as the AITO M9 and M7 from HUAWEI HiCar. If the Leopard 8 can secure a share in the vast urban SUV market, its monthly sales could easily exceed 5,000 units, pushing FANGCHENGBAO's monthly sales above 10,000 units for the first time.

The Denza N9 is a flagship model with high expectations from Denza, representing the brand's current pinnacle of capabilities. Recently, Denza officially unveiled the stunning exterior design of this model, which, with its rugged and spacious body (nearly 5.3 meters long), immediately garnered industry-wide attention upon its debut.

Currently, the full-size large flagship SUV market in China remains a relatively untapped blue ocean. For a long time, this segment was dominated by international luxury brands like BMW, Mercedes-Benz, and Lincoln with models like the X7, GLS, and Navigator. Domestic automakers lacked confidence to compete in this market and, as a result, few ventured into it.

It wasn't until the advent of the new energy vehicle era that some new-energy vehicle makers bravely entered this segment. Among them, the most prominent entrants were the Lixiang ONE L9 and AITO M9. Surprisingly, these two high-end models, priced above RMB 400,000, achieved remarkable success. The AITO M9 once sold over 16,000 units per month for several consecutive months, while the Lixiang ONE L9 consistently sold over 10,000 units per month.

In the recently released September sales figures, while sales of both models declined somewhat, they still reached 15,207 and 7,597 units, respectively. These figures far exceed those of large urban SUVs like the BMW X7 and Mercedes-Benz GLS, as well as those of mid-to-large SUVs like the BMW X5, Mercedes-Benz GLE, and Audi Q7, which have long been bestsellers in the BBA lineup.

These data indicate that China's large urban SUV market is already substantial and is primarily dominated by NIO and AITO. Competition in this segment is relatively subdued. The Denza N9, as the third highly competitive model to enter this segment, is poised to become its most successful entrant. Backed by BYD's superior core technologies, the Denza N9 surpasses both the Lixiang ONE L9 and AITO M9 in terms of overall product strength.

This assessment is not baseless. Recently, the Denza Z9 GT has directly competed with the AITO Vision S9, a large sedan co-developed by HUAWEI HiCar and Beijing Automotive Group, and has emerged victorious. Once considered the Denza Z9 GT's biggest rival, the Vision S9 has struggled with sales, failing to report monthly sales figures for two consecutive months after its nearly three-month-old launch. In contrast, the Denza Z9 GT delivered 1,172 units in September and is expected to exceed 10,000 units in October.

Previously, NIO and AITO have achieved monthly sales of over 10,000 units in the market above RMB 300,000 with several SUV models. However, no Chinese sedan model has yet to achieve this milestone. Priced between RMB 334,800 and RMB 419,800, the Denza Z9 GT could set a new record for Chinese automakers in the high-end sedan segment if it achieves monthly sales of over 10,000 units.

Based on the sales data of the AITO M9 and Lixiang ONE L9, we conservatively estimate that the Denza N9's monthly sales will likely exceed 10,000 units. Together with the Denza D9 and Denza Z9 GT, Denza's overall monthly sales could potentially exceed 30,000 units. Adding FANGCHENGBAO's expected monthly sales of over 10,000 units, BYD's monthly sales in the market above RMB 200,000 would exceed 40,000 units. Even without considering future models, the established success of these disclosed models is sufficient to position BYD alongside NIO and AITO as a leading player in China's high-end market.

Moreover, in the ultra-high-end market above RMB 1 million, BYD holds a first-mover advantage with its Yangwang brand, which is currently the only successful Chinese automaker in this segment. BYD's success in the ultra-high-end market will gradually enhance its overall competitiveness in the market above RMB 200,000.

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Although BYD's models priced above RMB 200,000 are concentrated in its sub-brands Denza, FANGCHENGBAO, and Yangwang, it does not mean that the main BYD brand has no opportunities in this market.

Currently, BYD's mid-size models like the Han, Tang, Sea Lion 07, Sea Leopard 07, and Song L start close to RMB 200,000 and have performed well. As mid-to-large and large vehicles become increasingly popular in China, BYD plans to launch a series of competitive new models in these segments, many of which will start above RMB 200,000.

For instance, spy shots have surfaced of upcoming mid-to-high-end models like the Han L and Tang L from BYD's Dynasty sales network, positioned as mid-to-large flagship sedans and SUVs, respectively. The Ocean network will also introduce mid-to-large and large sedans and SUVs like the Sea Leopard 08/09 and Sea Lion 08/09. These models, which offer better value for money compared to Denza, NIO, and AITO offerings, will be BYD's true sales drivers in the market above RMB 200,000.

Judging from BYD's strategic capabilities, we need not worry about whether it will deploy more products in the high-end market or whether these high-end products can stand out in fierce competition. In particular, BYD has found a highly effective and proven model in the high-end market: "building high-end brands with high-end technologies." For instance, the core of Yangwang's success lies in its exclusive e-Four-Wheel Drive technology; Denza's success stems from its proprietary e-Platform 3.0; and FANGCHENGBAO's success is based on its dedicated DMO off-road platform. Coupled with BYD's ecosystem of core technologies like Blade Battery, DM-i 5.0, e-Platform 3.0, and CloudRide intelligent body control system, these brands offer differentiated performance that sets them apart from competitors, which is key to their success in the high-end market.

In contrast, other automakers targeting the high-end market do not follow the "high-end technologies for high-end brands" approach but instead rely on innovations in business models, product positioning, exterior design, and after-sales service as their core drivers. While these innovations have value, they lack technical barriers and are easily copied by competitors, quickly eroding their competitive advantages. For example, NIO's L9 and L7 have faced comprehensive competition and pressure from AITO's M9 and M7, leading to declining sales.

As everyone knows, BYD's scale economies and integrated supply chain advantages translate into significant cost advantages, enabling it to dominate the mid-to-low-end market below RMB 200,000, with virtually every new model becoming a bestseller upon launch. These cost advantages also apply in the high-end market, as the demand for value for money is universal across price segments.

In the market above RMB 200,000, BYD can offer "products of the same quality at lower costs and prices" or "products of the same price with higher performance and quality." The comparison between the Denza Z9 GT and AITO Vision S9 is a prime example. In terms of product strength, the Denza Z9 GT far surpasses the Vision S9, yet its starting price of RMB 334,800 to RMB 414,800 is significantly lower than the Vision S9's starting price of RMB 399,800 to RMB 449,800. This explains why the Vision S9 has struggled while the Denza Z9 GT has flourished.

Therefore, we need not worry excessively about BYD's performance in the high-end market. With the right strategy, leading technologies, superior products, and higher value for money, BYD will soon replicate its mid-to-low-end market success in the high-end market as well.