Businessweek: MINI Wins Big Over Smart

Sections: In the Press | MINI Competitors Feb 4th, 2012 14 Comments

2011 was a banner year for BMW and MINI. MINI sales were up 22%, making for its strongest sales year ever. With sales, came profits. Smart on the other hand, not so much. Recently Businessweek did a comparison piece contrasting MINI’s success against the dismal, -$100M loser that is the Smart car. Even though the Smart debuted several years earlier, and at a much lower price point, the MINI has managed to out-sell the Smart three-to-one. In their analysis, Businessweek sites growing model diversification as a key part of MINI’s success over the Smart.

When Daimler (DAI:GR) introduced its tiny Smart two-seater in 1998, it was convinced that a high-end micro-car for crowded urban areas was an idea whose time had come. It had—just not for Daimler. Three years later, BMW (BMW:GR) rolled out its own diminutive model, an update of Britain’s vintage Mini, which soon surpassed the Smart and evolved into a family of roomier small vehicles. In addition to losing control of an urban car market it helped create, Smart has racked up more than €4 billion ($5.3 billion) in losses, according to estimates by Sanford C. Bernstein analyst Max Warburton. “Smart had the wrong strategy,” says Ferdinand Dudenhoeffer, director of the Center for Automotive Research at Germany’s University of Duisburg-Essen. “The niche for two-seaters isn’t that big. They lost a lot of time while Mini systematically expanded its model portfolio.”

With the MINI family set to grow to ten models in the next few years, their strategy of model diversity seems to be paying off big. MINI remains the only brand focused on being premium and small, while competitors continue to dabble in that combination hit and miss. MINI’s head start in the segment will continue to be a difficult lead for their competition to overcome. That, without even going into the character of the cars, which in my opinion, is the key factor of MINI’s winning formula.

[Source: Businessweek]

Written By: Nathaniel Salzman

Redracingmouse

Dumb car is more like it…
http://www.about.me/sohrabosati Sohrab O.

It would be interesting to see Smarts breakdown in the US vs. Europe as Europeans are far more open to that car then the us, State side people.
Ulrichd

Hard to believe that in 10 years Mercedes has not been able to fix the transmission issue. It’s been mentioned in just about review I have ever read. Why no real manual?
Dr Obnxs

Snart ha stow problems: A not that great car, and, at least the in US, really bad sales channels. The combo of the two meant that the car was cursed from the get-go.
http://www.mynameisjay.com/ Tendonin

I drove a smart for 2 years, and while the car does have it’s charm and a very loyal fan base, overall my experience with the car was not good. It was fun to drive for the most part, but impractical. I have to say the worst part about owning a smart was that EVERYONE made fun of my car. People would actually throw stuff out of their cars at me on the highway. You know it’s bad when you decide not to go to places where there are a lot of people because you’re afraid of what they might do to you or your car.
b-

I think that if they had kept the roadster in the lineup and had it here in the US the numbers might have been a bit better, but not really. There really is no comparison between the two cars, like the MINI and the Fiat 500.
Aurel

why does MB stubbornly still make the Smart if it has been a money pit for so long with no profit in sight?
- Anonymous
  
  Just a guess but does the Smart factor into MB’s CAFE ratings?
  - http://BimmerFile.com Gabriel Bridger
    
    Yes.
Anonymous

Comparing the Smart and the Mini is an exercise in stupidity. They aren’t competitors. BMW’s goal was to make the Mini an upscale, fun-to-drive small car (something they succeeded at, IMO, but then I’m admittedly biased). It was never intended to be a “city” car like the Smart. If you look at a city car’s defining characteristics (small, maneuverable, thrifty), the Smart does its job, but in no way would you have a good time on twisty back roads or on a track the way you would the Mini. Comparing their sales numbers makes as much sense as comparing those of the Toyota Tacoma with the Ford F-350 Super Duty. “Welp! They’re both trucks, right?”
fishbert

Three years ago, the girlfriend was looking ahead to a new car in a year or two. We were looking for something efficient (in space and fuel consumption), so we spent an afternoon and test-drove some candidates: the Honda Fit (inexpensive, great interior use of space), the Smart fortwo (new, and was getting good reviews), and a MINI Cooper (pricey, but I kept hearing they were fun to drive).

Fast-forward 6 months, and I had an order in for a new ’09 MCS for myself. =)

We had high hopes for the Smart fortwo, but left very disappointed. The ride was harsh, the transmission was awkward, the warranty only lasted for 2 years, and I would’ve expected a lot more than 40-ish mpg from a car that size. The only place it seemed to make sense was in a crowded urban environment where parking was a pain; that’s it, couldn’t find a reason for its existence anywhere else.
Bob Hayhurst

Shty cars equal Shty sales. It doesn’t take a Wharton MBA to figure that out. What is surprising is that Smart has logged (est.) approx. $5.3 B in losses and the plug on this beast hasn’t been pulled. Daimler should either admit failure and stop production or fix this vehicle’s shortcomings. Somethings can’t be polished and I think this vehicle is one of them.
Frank Granados

First of all, the MINI and Smart are two very different beasts from each other (The MINI being a real car). I don’t think I need to point out key differences between them. Second of all, the “Americanized” Smart was saddled with a mediocre gas engine and a terrible transmission. Huge mistake in part of Mercerdes was not too offer the high mileage diesel version, which to the best of my knowledge, was or is still sold up in Canada. The Smart in reality is a street legal golf cart. It is a 2-seater with limited practicallity and performance. Its reddeming qualities shine in high density urban areas (Think of Paris, Rome, NYC or San Francisco) where parking is a challenge. Other than that, the Smart offered nothing exceptional, be it performance, handling or the all imporant aspect in this segment, fuel economy.

Poor distribution network sealed its fate in the US. Tiny 2-seaters feared towards “economy” are not going to sell well unless you offer exceptional qualities in return (Perhaps Toyota/Scion has leaned from the Smart lesson book with their new IQ).

Some ideas look good in paper but are dismal out in the real world. The Smart car and dual mass clutch flywheels are two that come immediately to mind :).

I’d like to see a more direct comparison of MINI vs Fiat 500, Honda Fit, Ford Fiesta/Focus, VW Beetle, etc which are more direct competitors to our cars than the Smart will ever be.
Frank Granados

First of all, the MINI and Smart are two very different beasts from each other (The MINI being a real car). I don’t think I need to point out key differences between them. Second of all, the “Americanized” Smart was saddled with a mediocre gas engine and a terrible transmission. Huge mistake in part of Mercerdes was not too offer the high mileage diesel version, which to the best of my knowledge, was or is still sold up in Canada. The Smart in reality is a street legal golf cart. It is a 2-seater with limited practicallity and performance. Its reddeming qualities shine in high density urban areas (Think of Paris, Rome, NYC or San Francisco) where parking is a challenge. Other than that, the Smart offered nothing exceptional, be it performance, handling or the all imporant aspect in this segment, fuel economy.

Poor distribution network sealed its fate in the US. Tiny 2-seaters feared towards “economy” are not going to sell well unless you offer exceptional qualities in return (Perhaps Toyota/Scion has leaned from the Smart lesson book with their new IQ).

Some ideas look good in paper but are dismal out in the real world. The Smart car and dual mass clutch flywheels are two that come immediately to mind :).

I’d like to see a more direct comparison of MINI vs Fiat 500, Honda Fit, Ford Fiesta/Focus, VW Beetle, etc which are more direct competitors to our cars than the Smart will ever be.

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