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The loss-making city car from Mercedes-Benz may finally be headed to America.
NEW YORK (FORTUNE) - You can see tiny Smart cars, those egg-shaped two-seaters, doubled up in parking spaces or sitting on city sidewalks all over Europe, where they have been sold since 1998. But Smart has never come to the United States.
The Mercedes-Benz unit has struggled to make money from the day it was conceived, and writeoffs to date run to the billions of dollars. With losses so steep, plans to sell the car here have been repeatedly delayed as Mercedes has struggled to find a profit-making formula.
Now, DaimlerChrysler chairman Dieter Zetsche is dropping hints that Smart will make its way to the United States. Speaking to reporters in Portland, Oregon last week at an event marking the 25th anniversary of Daimler's acquisition of Freightliner trucks, Zetsche said a final decision on Smart for the U.S. would be made this month, once a verdict was reached on how to distribute it.
He added in his German-tinged English, "The tendency is positive in this regard."
Translation: Consider it all but done.
Whether selling Smart in the U.S. is, in a word, "smart," is another question. Even with gasoline selling for $3.25 a gallon, how much demand is there for a car that can only carry two people and which would seem to provide little crash protection for collisions from any direction? (The Smart ForTwo earned a rating of three out of a possible five stars in a European front crash test. Frontal crash tests only apply to collisions with vehicles of similar size, however.) For a time, Mercedes contemplated selling a Smart sedan or SUV but discontinued both models in an effort in an effort to stem losses.
The ForTwo, the original two seat Smart, is being redesigned and will make its European debut in 2007. The version sold here will meet U.S. emission and crash standards. But it is hard to imagine that it will appeal to anyone living outside a major metro area. Its cramped interior and short wheel base don't lend it to long trips -- or even the 30-mile daily commutes that more Americans seem to be afflicted with.
There is room for a little optimism. Two other new small car brands, Mini and Scion, have done spectacularly well here in the last couple of years. They are in short supply and sell strongly without the usual incentives. Each has used sharply different pricing strategies. Made by Toyota, Scion is budget-priced -- starting at $13,320 -- to appeal to younger buyers, while Mini Cooper, which is owned by BMW, is positioned as a premium small car, and sells for $18,000 and up.
Smart prices will probably land someplace in the middle. Mercedes' lavish cost structure makes it unlikely that the car can be budget priced. At the same time, there will be an upward limit because Smart doesn't have the fun-to-drive or cute characteristics that Mini does either. It will likely sell on newness, stylishness (or lack thereof), and fuel savings.
As one might expect, the little ForTwo also gets excellent fuel economy. Smart claims fuel economy ranging from 46.3 miles per gallon in the city to 70.6 mpg on the highway.
Many industry executives are skeptical about Smart's prospects. "I think you can sell 20,000 or 25,000 a year at $12,000 apiece," says one veteran dealer. "But with exchange rates, and a platform, engine and transmission that aren't used by any other model, how is it possible for them to make money?" Another dealer says, "It is a great car for city commuting, but it is $4,000 more expensive than similar-sized cars you can buy in Europe that have a back seat. It will be very, very challenging."
Which is one reason why Zetsche is still wrestling with distribution. Mercedes dealers aren't going to want to sell a car that makes no money and dilutes their image of exclusivity, so a new independent network will have to be created.
"We want to work with a third party,'' Zetsche told a European business magazine recently. "We need a model that is very flexible and makes do with little investment."
He sure does. Zetsche has vowed to make Smart profitable by next year and keep it in the black thereafter. Given Smart's history and the cost of a U.S. startup, that will be a tall order.
I wouldn't commute in one but if I lived in NYC and really wanted a car, I'd get one.
I saw them all over Italy (they are VERY popular there) and at $15k for the Brabus Smart FourTwo it's a pretty good deal I think.
I don't think they work here. Our country is too spread out ... We are a country of mini-malls and suburbs and little inter-city public transportation ... Just as I couldn't see taking a FourTwo on the Autobahn, I can't see driving I-95 in one either.
DETROIT (AP) — DaimlerChrysler AG will begin selling its funky, two-seat Smart car in the U.S. during the first quarter of 2008, the automaker's CEO said Wednesday.
The decision — announced by Dieter Zetsche during an appearance in Detroit — is a watershed moment for Smart, which has not posted a profit since it was formed in 1998.
The car will be distributed by auto retailer UnitedAuto Group Inc., which will be responsible for awarding potential dealers and developing and maintaining a Smart vehicle dealership network throughout the U.S. and Puerto Rico.
Zetsche, who personally oversees the company's Mercedes Car Group of which Smart GmbH is a part, had said repeatedly this year that a decision on whether to sell the tiny car — which measures less than 9 feet long from bumper to bumper — would come by the end of June.
The move likely could help generate new revenue for the ailing Mercedes group, which has dragged down the company's overall earnings as it restructures and reemphasizes its focus on quality.
Company officials at the German-American automaker conceded that with gas prices in the U.S. hovering above $3 a gallon in many places, the Smart fortwo could appeal to buyers looking to save money.
According to DaimlerChrysler specs, the fortwo can get up to 46 miles per gallon in city driving and as much as 69 mpg on the highway, but its speed is not like its Mercedes counterpart. The two-seater is powered only by a three-cylinder gasoline engine. A diesel variant is available in Europe.
Other automakers also have begun selling small, sporty small cars, including Toyota Motor Corp., which has the Yaris, and Honda Motor Co., which sells the Fit.
Smart launched the fortwo in Canada in 2004, and last year it sold about 4,000 models, or twice what it had initially forecast.
Last year worldwide, Smart sold 143,000 cars, a small increase from the 139,000 it sold in 2004. It produced 124,300 cars in the same period, down from 152,100 the previous year.
In March, DaimlerChrysler said it would spend nearly 1 billion euros on restructuring Smart, cut 300 of the 750 jobs at the unit's Boeblingen, Germany, headquarters and end production of its larger, four-seater forfour model.
Zetsche is a fan of the car, despite the fact that some shareholders have called for Smart to be closed.
One award they took was England's least comfortable ride (can't remember where I saw that), because of the short wheelbase. I see them around Toronto, quite often, and always wonder how easily they'd roll, if hit. On the highway, they're always blocking a lane, because they don't have the power, and the autobox is reportedly alway seaching for the correct gear. And at something like $30,000 Cdn tax in, they're not cheap to own, aren't that much more economical than some other fuel misers, and as a two-seater, lack some carrying flexibility, but so does any two-seater. But where do you put the groceries?
A bare bones Smart ("pure" model) starts at C$16,700 ... start adding some options ... you're at C$20,000. Add frieght, A/C tax, sales tax, etc, you're talking about C$23,000 for a decent one.
And by the way, groceries go in the 'boot' (British for trunk). You can even option a 'luggage compartment cover' for C$86!
For that kind of money, a Honda Fit, Toyota Yaris or Nissan Versa would be a better buy. You're going to PAY for a Mercedes mechanic to service your car. Last time I checked, it was C$100/hr. No thanks. (The labour the Honda dealer in my city is only $90/hr).
DETROIT -- Roger Penske plans to duplicate Mini's strategy when he starts selling Smart cars in the US in 2008.
Penske thinks his UnitedAuto Group can profitably distribute DaimlerChrysler's stylish Smart ForTwo minicar by:
Signing 30 to 50 franchised dealerships in urban US markets
Setting modest sales goals
Relying on unconventional marketing techniques.
UnitedAuto Group is North America's second-largest dealership group.
Some Smart franchises will be assigned to dealerships owned by Penske's UnitedAuto Group -- but not to all of them.
"This will not be an exclusive UnitedAuto network," Penske said. "We need to pick the best partners."
Penske made his remarks after D/C Chairman Dieter Zetsche announced plans to introduce Smart to the US.
Initially, Smart dealers will have one nameplate to sell: the ForTwo, a tiny, two-seat city car. Later, DaimlerChrysler may add the cabriolet variant of the ForTwo as well as the diesel and perhaps a hybrid-powered version.
Dave Schembri, a former Mercedes-Benz executive, will be president of Smart USA, a new, wholly owned subsidiary that UnitedAuto will set up to market and distribute the cars.
Schembri and Penske did not announce sales targets, but they have modest expectations. On a per-store basis, Smart dealers might expect to match the unit sales volume of US Mini dealers -- about 40 cars per month. If so, Penske could expect to sell 15,000 to 20,000 a year.
Because Penske will set up the dealerships, D/C can keep its costs low. The automaker's total investment in the US Smart network will be substantially less than $100 million (E78 million), estimates Arndt Ellinghorst, an analyst with Dresdner Kleinwort Wasserstein in Frankfurt. Thus, DaimlerChrysler can boost worldwide Smart sales a bit without much financial risk.
I think they will sell well initially just because they are an alternative, but the novelty will wear off quickly. If they couldn't sell them in Europe I don't see it happening in the USA either. I wouldn't mind being proven wrong though.
DETROIT - Smart USA plans to begin sales early next year with a retail network of 50 to 60 dealerships. The company is requiring a dealer investment of about $300,000 apiece.
Smart USA executives are hitting the road this month to pitch the franchise to potential buyers. They will give priority to DaimlerChrysler dealers who wouldn't have to build separate showrooms, says Smart USA President David Schembri.
Smart is a unit of DaimlerChrysler. A Smart showroom in a Mercedes-Benz or Chrysler group store would have at least 2,000 square feet and a separate entrance, Schembri says.
UnitedAuto Group Inc., a public dealership group in Detroit, is the sole U.S. distributor of the Smart ForTwo minicar. UnitedAuto CEO Roger Penske said Smart USA will consider non-DaimlerChrysler dealers for Smart franchises, but such dealers would have to build stand-alone stores.
"We will not allow commingling of Smart with any non-DCX franchise," Penske told Automotive News at last week's Detroit auto show.
Quick profit
Schembri predicts most U.S. Smart dealers will make a profit in the first or second year of operation. He would not offer annual sales volume projections. But he said he expects the average Smart dealer to sell more than 200 vehicles in the first year.
SmartUSA displayed the second-generation ForTwo at the Detroit show. It plans to start selling the car in the first quarter of 2008.
UnitedAuto expects to select Smart dealers by May or June, Schembri says. Smart USA has invited about 400 dealers selected from more than 1,200 applicants, and all U.S. Mercedes-Benz dealers, to attend presentations starting this month in Las Vegas, Atlanta, Detroit and New York.
Ernst Lieb, CEO of Mercedes-Benz USA, says his company has the right to approve any of its dealers chosen to sell Smart cars.
Smart USA will tell dealer candidates that potential customers can reserve cars by putting up an undisclosed sum. The ForTwo will list for less than $15,000, Schembri says.
'Smile' strategy
Penske said Smart USA will look first for dealers in the "smile" states on the East and West coasts and in the Sun Belt. It also wants retail outlets in major metropolitan areas in the Midwest, he said.
Mike Jackson, CEO of AutoNation Inc., says his dealership group is applying for Smart franchises.
AutoNation operates 13 Mercedes-Benz dealerships.
"The product is dramatically improved over the first generation," Jackson says. "The first product was not fun to drive. In certain metro markets, (Smart) would make sense for us."
Kenneth Gilman, CEO of Asbury Automotive Group, says his dealership chain also is looking at signing up with Smart. Asbury has five Mercedes dealerships, Gilman says. "A couple of those markets would be well-suited to the Smart car," he says.
Smart USA seeks to build consumer awareness through event marketing. Starting in mid-May, three 38-foot tractor trailers emblazoned with Smart logos will make 55 stops in 37 large U.S. cities.
The trailers will have four Smart cars apiece. Potential buyers can test drive the ForTwo and gain "a mini-dealership experience," Schembri says.
He adds: "We will invade the United States with Smart ForTwos."
I think it was in 05 it was voted England's least comfortable riding car, largely a result of the choppy ride from the very short wheelbase. Jim Kenzie, The Toronto Star, did a review last year, and he wasn't impressed with the car's ability to keep up with highway traffic, citing some gearing/power issues. From what I see, they have a problem keeping up with city traffic. Plus they're expensive - you can buy one of several other cars PLUS a lot of fuel for $25,000.
I don't think anyone would buy this based on price/value - it's a niche car. The question is whether that niche is big enough to make it worth the investment.
So far the answer has been
I don't think anyone would buy this based on price/value - it's a niche car. The question is whether that niche is big enough to make it worth the investment.
So far the answer has been
That's my thinking. And not only that, but who would want to brave an accident in a Smart Car with a Suburban or other SUV? Not me. I don't think they'll have enough US buyers to make it worth it. The only place I can see this car working is in a city with tight parking.
More than two-thirds of U.S. Smart retail outlets have opted to stop selling Daimler AG's microcar brand after it switches this year to offering only electric vehicles here. The shakeout will leave Smart with just 27 dealerships, fewer than even Lamborghini and Lotus.
Mercedes-Benz USA, which distributes Smart in the U.S., asked dealers to decide by the end of June whether to continue selling the ForTwo two-seater, the brand's sole nameplate. Of Smart's 85 outlets, 27 said they would remain, while 58 said they would move to a service-only operation, said company spokeswoman Donna Boland. Those numbers are preliminary, she said.
The 27 remaining Smart dealerships are largely concentrated in states with zero-emission vehicle mandates and that give Smart "the highest market penetration potential," Boland said. Daimler executives had said they expected the remaining dealerships to be in cities such as San Francisco, New York, Los Angeles, Miami and Portland, Ore.
Penske Automotive Group, which launched Smart in the U.S. in 2008 as an independent distributor, is dropping sales at five of its six U.S. outlets, according to Tony Pordon, Penske's executive vice president of investor relations and corporate development. Penske will continue selling Smart in San Diego, which has higher EV sales potential.
The dealerships that end Smart sales will continue to provide service for Smart owners. They will transition to service only as they sell out of inventory, with the "vast majority" expected to have transitioned by year end, Boland said.
Smart announced in February it would drop gasoline-powered models in the U.S. and Canada and move exclusively to EVs this summer after exhausting inventory of the old models.
The decision reflected falling sales for the ForTwo as low gasoline prices fueled demand for SUVs and crossovers. In 2016, Smart sold 6,211 ForTwos in the U.S., down 17 percent from a year earlier, for an average of 73 per dealer. Sales this year through July are down 30 percent from a year earlier, to 2,165 cars.
Smart introduced an electric For-Two in the U.S. in 2013. The brand's peak EV year was 2014, when it sold about 2,600 of the cars.
Mercedes-Benz USA chief Dietmar Exler has predicted that some of the demand for Smart gasoline models will move to EVs and eventually push Smart's overall sales after the switch "quite a bit" higher than in 2014.
Meanwhile, new gasoline-powered 2016 and 2017 ForTwos remain in stock at dealerships, according to Smart USA's website.
The company is offering lease deals as low as $89 a month for 2016 models and $109 a month for 2017 models. Production of gasoline- powered vehicles for North America was to end in April.
Ken Schnitzer, chairman of the Mercedes-Benz Dealer Board and owner of Smart outlets in Dallas and Fort Worth, Texas, said both of his locations will end sales.
"I felt with Mercedes' introduction of five new electric vehicles in the next several years, that these products would be a better fit for Dallas than the electric microcar," Schnitzer wrote in an email.
Schnitzer: Both stores end sales.Among the holdouts is Germain Motor Group in Columbus, Ohio. Executives there went back and forth over whether to continue selling Smart and ultimately decided there was enough potential for EV sales in their market.
"Columbus has established itself as a leader in electrification with its 'Smart Columbus' initiative," Germain COO John Malishenko wrote in an email. "It's well funded and focused on making Columbus a leader in alternative transportation solutions, so for that reason, we've decided to stay put."
Losing 58 of its retail outlets would give Smart the smallest U.S. dealership network among brands tracked by the Automotive News Data Center. In 2016, Lamborghini sold 1,041 cars at 31 dealerships, Rolls-Royce sold 1,289 cars at 35 dealerships, Ferrari sold 2,300 cars at 37 dealerships and Lotus sold 12 cars at 41 dealerships.
One of our VP's wife has an older Fortwo, and was really hoping she'd be able to grab a Forfour, but I guess they aren't going to offer them here. Think she's considering a new Fortwo. Will have to see if they know about this change coming.
The decision reflected falling sales for the ForTwo as low gasoline prices fueled demand for SUVs and crossovers. In 2016, Smart sold 6,211 ForTwos in the U.S., down 17 percent from a year earlier, for an average of 73 per dealer. Sales this year through July are down 30 percent from a year earlier, to 2,165 cars.
Smart introduced an electric For-Two in the U.S. in 2013. The brand's peak EV year was 2014, when it sold about 2,600 of the cars.
Wait. They've sold more For-Two's than Acura has sold RLX's?
What is the future of city transportation going to be like in, say, 2030? Who knows? But smart, the maker of small electric city cars, thinks it’s going to include a lot of small, electric city cars.
“We are pacemakers for urban mobility,” said Dr. Annette Winkler, CEO of smart, just before they pulled the cover off the concept you see here.
The concept is called the smart vision EQ fortwo. It looks about like the current smart fortwo except for a pair of big, round doors and the missing steering wheel and pedals. Those differences are there because the vision EQ is autonomous. A theoretical future city dweller would summon something like this smart vision EQ fortwo using a smartphone, the car would come running to the summoner like a happy puppy, with the words, “Hi Fred!” (or whomever) on the front, and Fred would climb in and be whisked to his destination. Or, the user could indicate he or she was willing to share the ride and the system software would find a compatible co-rider.
When not carrying passengers, the car would find a place to recharge its batteries through wireless inductive charging. It could even drive itself to a service center when maintenance is called for, though maintenance on an electric car is minimal.
This is the future smart envisions for you.
The smart vision EQ fortwo is built around four assumptions about what will be needed for a city car in the future, and it incorporates all four of them in its design:
1. It will be shared. Unlike contemporary cars, which are owned by one person and are used only by him or her (and only for a small portion of the day), the vision EQ would be used by multiple riders each day. It would be similar to the operating model of car2go, which already has a presence in several cities around the world.
2. The transportation future will also be autonomous, something required for this car sharing model to work. As smart says, “… users do not have to look for the next available car -- it will find them.”
3. The cars will all be connected, as they would have to be to work with so many different passengers.
4. And, to keep the air in the cities they serve clean, vision EQs would have to be electric. These cars would have rechargeable 30 kWh lithium-ion batteries onboard, with access to inductive recharging stations.
In the future, driving in the city won’t be like it is today. In fact, it won’t even be driving, it’ll be riding. But how much enjoyable driving do you do in city centers anyway? It’s not like you’re carving apexes during rush hour as you commute to and from downtown wherever. For much of the time spent behind the wheel, you’re just sitting there. You might as well be sitting in a car that drives you and frees you up to do something else.
smart says that with enough cars like this they could cut the number of vehicles in cities in half. That’s something we can all get behind.
Smart CEO confirms brand will stop building combustion-engined cars in 2019
Three years from now, Smart will stop building cars with combustion engines. Starting in Europe and North America at the end of 2019, the Fortwo and Forfour will be sold only with full-electric drive. Asia and the rest of the world will follow ‘as soon as possible after’.
This would be the first time any brand has fully transitioned from combustion to electric drive.
Because they’re urban, the electric Smarts won’t have big range. At the moment the Fortwo electric has a real-world range of about 70 miles and the Forfour a couple of miles less.
Smart CEO Annette Winkler says this isn’t a problem. “Price is more important than range for our buyers. If we put in a bigger-capacity battery the price goes up. What matters is there will be supermarkets and car parks where you can charge up quickly.”
But isn’t it sales suicide to just stop building petrol cars? “We have prepared the factory and the dealers to be flexible,” she says, in a diplomatic admission that the result might be a big drop. But she doesn’t make a prediction. She goes on to compare the arrival of big electric-car sales to pouring ketchup. “You know it will come. It’s just a question of when, and of how fast.”
To be fair on Smart, this brand has been good at pushing new ideas, albeit often far too soon. The Smart was the first car to be designed especially for cities. The first to offer big customisation in a cheap car. One of the first to integrate personal devices onto the dash. And, in the gen-1 Smart EV in 2009, the very first EV in many European markets.
For years, Smart stood on the sidelines as rivals turned a blind eye to tradition and jumped in the highly lucrative crossover segment. The company is done watching; it's allegedly preparing its own high-riding model for 2022.
Smart is aware that its entry into crossover territory is drenched in substantial irony. It was founded to give motorists a right-sized alternative to big cars. That's where the money is, however, and co-owners Daimler and Geely can't justify their investments into the brand if they don't see a return. Viewed in this light, putting a Smart on stilts seems as inevitable as the Chevrolet Impala's demise after 10 generations and millions sold.
Don't expect Smart to put its name on a Cadillac Escalade-sized SUV. Italian website Motori Online learned the yet-unnamed model will stretch about 160 inches long, a figure that, if accurate, will make it approximately as big as a four-door Mini Hardtop and a full 54 inches longer than the tiny ForTwo no longer sold in the United States. It will ride on a platform developed specifically for it, likely with input from Geely. The Chinese brand purchased half of Smart in 2019; it also owns controlling stakes in Volvo, Lotus and Polestar, among others.
Power will come from an electric drivetrain built around a 78-kilowatt-hour lithium-ion battery pack. Motori Online expects its maximum driving range will check in at about 250 miles. Additional technical details (like whether it will be front-, rear-, or all-wheel drive) haven't been released yet. All three configurations are possible, however.
Another point with a big question mark hovering over it is what Smart's definition of a crossover looks like. It might arrive as merely a hatchback on stilts with plastic cladding over the wheel arches, a solution that would satisfy the greatest number of motorists. Or, the company could take a more creative approach to entering the segment by launching something along the lines of the ForStars concept (pictured) introduced in 2012. What's certain is that motorists hoping for a pocket-sized car with Jeep Wrangler-like off-roading skills will be sorely disappointed. Smart's upcoming crossover will be designed primarily for urban use, not for the Rubicon Trail.
The soft-roader will reportedly make its debut by the end of 2022, meaning it could go on sale in early 2023. We're not sure if it will be sold in the United States, where the brand threw in the towel in 2019, or if it will exclusively be available in markets like Europe and China, where small cars continue to sell relatively well.
Somewhat better than previous efforts, but now has crossed into Chevron Techron car territory. I liked those toys as a kid, so maybe that explains a bit of it.
06-11-2006, 08:40 AM
Yeah, whenever I see one on the highway it looks so out of place.
You're going to PAY for a Mercedes mechanic to service your car. Last time I checked, it was C$100/hr. No thanks. (The labour the Honda dealer in my city is only $90/hr). 
I hope so... when the novelity fades and prices go down on used ones, I think it would be a fun "in town" car to have...
it should cost around $11g's if they want it to sell. I think this is the type of car and benifits a lot from a manual tranny.
