By Jiahui Huang

Mercedes-Benz Group unwound a bet on China's electric-vehicle market, selling its remaining 10% stake in premium EV and hybrid maker Denza to BYD in the wake of disappointing sales locally.

The decision adds to challenges facing Mercedes, which has struggled to make inroads in what for years had been one of the world's fastest-growing auto markets. Luxury spending in China has taken a hit from the downturn in its property sector and a lackluster economy.

At the same time, an intensifying price war among Chinese EV makers has led to a loss of market share for foreign automakers, with Porsche, Ferrari and BMW all reporting reduced sales in China earlier this year. There are also signs that the technological edge enjoyed by foreign automakers in China is being blunted, with Chinese EV producers spending more on developing in-car software and autonomous-driving systems that have proven to be popular with mainland consumers.

Against this backdrop, Mercedes in July cut the outlook for its mobility business, citing its difficulties in China and higher costs of charging infrastructure. The company has faced headwinds elsewhere, including trade tensions between Europe, China and the U.S., which have driven profits lower in recent quarters.

Denza was established by BYD and Mercedes in 2010 with a mission to create a leading premium brand of EV and hybrid cars. Each company initially held a 50% stake, but Mercedes lowered its interest to 10% in 2021 in a transaction with BYD.

"Denza has officially started the new era of fully owned by BYD," the Chinese company said Tuesday.

BYD has emerged as a national champion within China's auto manufacturing sector, expanding to several markets overseas where it competes with companies including Mercedes and Tesla.

BYD has signaled that it is committed to Denza, which has sold more than 200,000 units of its D9 model in the period after Mercedes first cut its stake in the venture. Denza's new four-door EV and hybrid Coupe Z9 GT is scheduled for a Sept. 20 launch. List prices for the new vehicle range between 339,800 yuan and 419,800 yuan, equivalent to $47,800-$59,180.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

September 17, 2024 02:20 ET (06:20 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.