BERLIN (Bloomberg) -- When Zenvo Automotive sought to promote its new ST1 supercar six years ago, the Danish company sent photos and performance details to auto journalists -- and was quickly rewarded with an outpouring of praise.
Bloggers deemed the car "a wonder of Nordic automotive engineering" and marveled at its 1,104-horsepower engine, more than a pair of Porsches. One commenter compared it to a stealth fighter.
It was so stealthy, in fact, that it didn’t even exist.
In the photos, “the only thing that was real were the clouds,” Christian Brandt, Zenvo’s chief designer, said at the company’s office and workshop, a single-story warehouse about 100 kilometers (62 miles) south of Copenhagen. The images were high-quality renderings of what at that point was little more than a chassis with “the odd body part,” Brandt said.
Zenvo’s journey shows how difficult it is to turn the dream of an ideal car into reality, and how it’s harder still to turn that reality into profit. Major luxury-car makers, able to generate interest with their names alone, usually don’t reveal a model until it’s almost ready to buy. An unknown startup like Zenvo, by contrast, needs to do more to generate interest -- even touting a car that’s years away from production.
For small independent producers, “the chances of success are relatively small,” said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany.
Zenvo says it’s trying to build a brand, not just a car. That’s something a long list of makers of exotic, powerful and unprofitable autos –- think De Tomaso, Spyker and DeLorean -- have failed to do.
Testosterone infusion
“My future plan is, of course, to survive,” Troels Vollertsen, Zenvo’s co-founder and chief technical officer, said surrounded by his cars late last year.
With just 20 employees, Zenvo is trying break into an arena dominated by the slinky, testosterone-infused likes of Ferrari, Lamborghini and smaller-scale producers such as Bugatti, Pagani Automobili and Koenigsegg Automotive. It’s a segment in which designers and engineers strive for an automotive ideal, then must market it to people for whom a $1 million car is just one toy among many.
“One of my customers has a Bentley, Lamborghini, Bugatti and McLaren,” said Saher Baaj, a Bugatti dealer in Qatar who dismissed Zenvo as lacking longevity. “People here want cars backed by a major brand.”
Zenvo will display two of its cars next week at the Geneva auto show, highlighting a new wheel design and gear-shift system, according to brand manager Lars Meller.
At the show, competitor Koenigsegg will exhibit its new Agera RS, Pagani will present a pair of Huayra supercars, and Bugatti will offer up the last of its 450-car Veyron production line.
Bugatti, a unit of Volkswagen, illustrates one of the reasons it’s so hard to be small and independent in the business. Despite a sticker price approaching $2 million for the Veyron, Volkswagen may have taken a loss of some 4.6 million euros on each one it sold, after factoring in development and tooling costs, brokerage Sanford C. Bernstein Ltd. estimates.
“From a business point of view, if Bugatti was a separate company that was not owned by Volkswagen, they would not be successful,” Brandt said. “They spend money every time they sell a car.”
Flaming gear
One of Zenvo’s main selling points is its scarcity. The company plans to build just 15 of the two-seat, cobra-faced ST1. Even so, with two deliveries and five orders, the 850,000-euro ($952,000) car isn’t in danger of selling out anytime soon. And an appearance last year on TV show Top Gear that ended, literally, in flames after brake, clutch and cooling fan failures, didn’t burnish its reputation for reliability.
Zenvo sold its second car through a distributor in the Middle East just after the New Year. If it sells all 15 ST1s, the company says it will break even. Vollertsen says concepts for an ST2 are in the works, though its debut is at least five years away.
The company had a profit of 256,236 kroner ($38,930) and 24.8 million kroner of debt commitments in 2013, according to its most recent annual report. It booked a capital increase of 7.45 million kroner in 2012, when Zenvo finally delivered its first car.
That year, Russian road contractor Valery Abramov bought a stake and a new CEO, Anzhela Kashina, joined the company. Kashina declined an interview request. Abramov is the only owner listed in the 2013 annual report, though Zenvo declined to disclose the size of his stake and said there are also Danish investors. Abramov didn’t return telephone and e-mail requests for comment.
On a cloudy day last November, two years after the first sale, the company had four cars -- maroon, green, silver and graphite -- lined up in various stages of completion at its concrete-floored workshop. Bluesy Irish songwriter Hozier was on the sound system, and skinny young men in black tinkered with the cars bound for far-flung points such as Moscow and Dubai.
Six and a half feet tall with a shaved head, Brandt, 42, is the city-bred half of the Zenvo team. He grew up in Copenhagen and studied at the Royal College of Art before spending three years at Alfa Romeo in Italy.
Fairytale visitor
Vollertsen, 49, is the reason the company is based in Praestoe, a farm town of 3,800 where 19th-century fairy-tale author Hans Christian Andersen vacationed. Vollertsen grew up on the other side of the fjord, where he says tractors turn more heads than supercars do. At age 15 he started fetching coffee for a race-car driver from his village, and he soon fixed up his first car, a beat-up Porsche.
Persuading Danish technology entrepreneur Jesper Jensen to front the money to start Zenvo “might have been a moment of insanity,” Vollertsen said. “I didn’t realize what a huge task it was.”
They wanted to make something pure and exciting, he said, and when he takes the company’s bright-orange demonstration car on the road, he feels it “is exactly as it should be.”
Nosing onto a two-lane Danish country road, Danny Woodham, Zenvo’s half-British, half-Danish test driver, keeps the car in “wet” mode, with a mere 650 horsepower. He passes a horseback rider and a bicycle on the way out of town, then kicks it into “sport” mode with 850 horsepower. In seconds he’s passing a 70kph speed limit sign at 200.
Woodham slows a bit, then accelerates to overtake two cars at once. Tailing a red Kia, he pushes the ST1 into full-power “race” mode. The back of the car pulls like an unruly stallion, and the Kia is soon a distant memory.
Running a supercar company isn’t always about speed and power. It’s about catering to buyers for whom, Vollertsen said, shopping for the car -- picking colors and designs -- is a large part of the pleasure. And daily driving isn’t a concern. The company says most of its potential customers already have 10 to 20 cars.
Flying doctors
No matter what color buyers choose, what’s beneath the carbon-fiber body stays the same: a 6.8-liter V8 engine hand- built by a U.S. supplier that Zenvo declined to name, Brembo brakes, a Cima transmission with a Zenvo-designed gear-shifting system, and wheels from a California company called HRE Performance.
And if the car needs repairs once it reaches its new home, Zenvo will dispatch a mechanic and parts. Sending a “flying doctor,” which the company has done once, is cheaper than shipping the car back to Denmark -- and it also helps make customers feel special.
The Zenvo team’s goal is to generate the kind of enthusiasm they did last April when they parked a dark-brown ST1 in front of a Monaco casino during a supercar show called Top Marques.
A potential customer “said to the guy we had taking care of the car, ‘Can you call these guys? I want this car, now,’” Brandt said.
Zenvo is still in talks with him to seal the deal.
