Smart USA is Dead – Mercedes Takes Over
In what’s being described around the internet as an “implosion”, Penske Automotive has announced its intention to relinquish Smart distribution rights in America to Mercedes Benz. Given the abysmal US sales and the reality of what a Smart car really is, we can’t say we’re shocked the whole house of cards finally came tumbling down. However, the story from Penske is that this was actually Merc’s idea. In a nutshell, Benz selling the Smart in-house is a shortcut to meeting the upcoming 2016 CAFE (Corporate Average Fuel Economy) standards. This is not unlike Aston Martin restyling the Toyota IQ to bump its terrible MPG fleet average up to something the feds won’t ding them for.
Included in the restructuring is the likely closure of 21 Smart-only dealerships (dealers who do not also sell Mercedes Benz vehicles) and probably Smart’s Michigan headquarters. Additionally, Smart will forego its planned four door model, based on the Nissan Micra, in favor of a FourTwo+2 currently in development. Mercedes-Benz USA President Ernst Lieb had this to say: “We are very excited about working toward integration of Smart into the MBUSA organization and look forward to working with our dealer partners to exceed customer expectations for this unique vehicle.”
Benz seems to think they can better handle the sales and marketing of the Smart, which is probably true. They’ve got plenty of cash to spend on marketing and advertising. In the end though, I can’t help but wonder if Benz really cares about the success of Smart itself, or if they will simply maintain the brand like a pet for the sake of better fleet MPG numbers.
And if you really want to know why Smart USA is dead, read our review from a few years ago.
[Source: WorldCarFans.com.]
<p>It’s not surprising about the Smart car. Why buy a Smart, when the MINI will match it in mileage, plus you get all the charm and fun of a MINI with a whole lot more space. Consumer reports stated in their annual car review, “The Smart Car that’s not so smart.”</p>
<p>On the island where I live in the Puget Sound there are three Smarts and well over 80+ MINIs. This sums up the market for these wee cars.</p>
<p>I like small cars. I was looking forward to the Smart car. Then I drove one and saw how “STUPID” it was. The salesman saw my MINI baseball cap and tried to brag, “We just had a guy trade his Cooper S on a Smart ForTwo.” “What an IDIOT!” I thought. Imagine my Horror of Horrors I experienced when I heard that my Dad purchased a Smart Car! People ask him if he likes his car, he pauses and then says “I am still deciding”. A year later and he is still deciding!</p>
<p>When I bought MINI in Black (2006 R50 Astro Black monotone, Anthracite interior, Sport, 5 Stars) I knew I liked the car. When I drove it home from D&R MINI in Indy I KNEW I LOVED the car! I never would hesitate to talk about MIB. I would drive it for the shear JOY of driving, Who cared about the price of Premium fuel! Sadly MIB is gone due to a divorce. But the memmory still lives on like a LEGENDARY moment in time.</p>
<p>IMHO, I honestly think now MBUSA cares more about having Smart around to meet CAFE requirements and less about sales volumes. Smart, however, needs to become smarter and develop new/more models quickly before ForTwo sales gravitate to 0 and the brand has to go bye-bye entirely.</p>
<p>I love small cars and have owned nothing but this type of car for more than 20 years. Waited patiently for Smart to arrive after admiring them while on trips to Europe. Ordered one, drove it home in March 2008 (1st customer car at CF Virginia Beach Smart Center) to park alongside my MINI. SOLD the Smart 3 months later and made $2000 profit when gas prices exploded!</p>
<p>The car itself (minus drivetrain) is quite good but the drivetrain is terrible, even by small-car standards. It did get 41 MPG on the first tank. The interior is comfortable, the quality is good, the brakes work fine, handling is decent, but that transmission……BAD. The car would be sooooo much better off as electric-only (a la ForTwo Electric Drive version) or with a peppy, zingy turbo motors like older models only better.</p>
<p>Smart was compromised in the US market from the getgo. Smart was doing fairly well in Canada with minor safety updates from the European versions. It used the diesel motor. The US market “demanded” using a gasoline engine which caused expense to develop such a motor for the US market and Canadian Smart cars were to use gasoline engines going forward. I suspect even sales of Smart cars in Canada went down with that conversion. Smart are sold in MB dealers here and even then, it is not MB’s biggest seller.</p>
<p>They do make sense for a city commuter car and downtown traffic enforcement or small item delivery vehicles.</p>
<p>“smart” move by MBUSA, if you ask me. They should have been the distributor since day 1, but they decided that they were not interested and let PAG deal with the work and investment necessary to get the brand off the ground in the US market. The financial terms of the transfer have not been released, but I’d bet that they are picking this up for a relatively small amount and it is turn-key for them. They’re going to close the non-dualled stores and they’ll be left with 58 stores attached to existing MB dealers. If gas prices rise, they can relatively quickly expand the franchise to other MB dealers. I’d bet that this was their plan all along– let someone else take the risk, if it totally bombs they don’t have the egg on their face, if it flounders along they can pick it up cheap, and if it does really well Daimler probably still had provisions in the agreement with PAG that would have allowed them to move it to MBUSA at a discounted value.</p>
<p>…and I forgot to include in my previous post, the market responded very well to this news. PAG stock shot up significantly the other day and many analysts have upgraded their price targets now that the company does not have to deal with jump-starting smart.</p>
<p>I like the Smart – a lot. We run a pool car Smart at my office, and they are brilliant once you get your head around what they are supposed to do, and what they are capable of.</p>
<p>Overall, it’s not just a question of what the car consumes, its also about emissions – and the Smart is a perfect city car, with very very low tax and insurance costs in the UK.</p>
<p>My purchase two months ago of a Mini Cooper S Convertible was very hotly contested by a Smart Cabrio. I don’t regret the choice, but I would have been equally happy with either.</p>
<p>Don’t knock it until you’ve lived with it! ;)</p>
<p>The State-owned bank in New Zealand called “Kiwibank” uses Smart cars in their adverts…
<a href="http://www.ambientadvertising.com.au/media/9199/Kiwibank.jpg" rel="nofollow ugc">http://www.ambientadvertising.com.au/media/9199/Kiwibank.jpg</a>
<a href="http://www.youtube.com/watch?v=ozmvXy35gDY" rel="nofollow ugc">http://www.youtube.com/watch?v=ozmvXy35gDY</a></p>
<p>Also used by other businesses as mobile advertisements</p>
<p>In San Francisco, Benz and Smart already share the same location.</p>
<p>That is also true for SF-MINI & BMW. There are “stand-alone” MINI dealerships in the surrounding suburbs.</p>
<p>I’m one of the few on here that likes the smart as well… as a Canadian I see these everywhere so they have sold very well. I have a friend with one and I truly enjoy driving it. The fuel economy with the I3 diesel motor is truly incredible. Then along came the gen2, with the gasoline motor and not nearly so good fuel economy, and the car has lost a lot of it’s appeal from strict fuel conservation standpoint. And the truly dismal manumatic gearbox has not really improved – that is the Achilles heel of the car, incidentally.</p>
<p>However, even in the gen2 car much goodness remains: tiny footprint, good active and passive safety, fun and secure handling (RWD+short wheelbase, how could it not be fun!), genuinely forward-thinking exterior styling and overall packaging, whimsical but functional interior design, relatively low price.</p>
<p>A couple of my friends have looked at smarts and I always ask them how they plan to use the car. If doing a lot of highway driving and load-hauling, they are far better served spending the extra few thousand for a MINI Cooper Classic, for example. But if to run around the city most of the time on errands or to commute, it is a more compelling choice. In other words, if you buy a smart to meet a function it is not designed for, you will find it lacking – but this does not make the car look UN-smart but rather reflects on the buyer. It is as UN-smart as the SUV drivers who look at an R53 or R56 MINI and say “yo how can you carry plywood from HomeDepot?” or “how can you fit in that tiny thing?” or “what if you need to carry more than one passenger?”</p>
<p>I think that cars like the smart are in fact the future of private transportation in urban centres. Gordon Murray agrees. BMW agrees with the city car and the isetta-like cars coming down the pipe. If anything, the swatch/Mercedes smart was far ahead of its time… perhaps many Americans are still not ready for it or for cars like it… :)</p>
<p>One caveat to much of the above: the Fiat 500! It is launching soon in Canada and the reported pricing is incredible… thousands less than an R56 and essentially Mercedes smart car pricing. Given you could use the Fiat 500 for just about everything you could use a MINI R56 for (so a broader function envelope than the 2-seat smart) while having a notably more compact footprint and likely better fuel consumption than the MINI and close to the gasoline engine smart – I’d say both Mercedes and MINI need to take the Fiat 500’s challenge very seriously.</p>
<p>I like to pull for other small cars even if I’d never get a Smart. I’ve never driven one, but the thing that disappointed me is this 2nd gen smart does not have as nice lines to me as the first. I realize they revisited the structure for the US market, but whenever I approach one – usually coming up on it from behind – it always looks like its missing front wheels. The front track is disturbingly narrower than the rear and it just looks wrong.</p>
<p>@Dusty “Why buy a Smart, when the MINI will match it in mileage, plus you get all the charm and fun of a MINI with a whole lot more space.”</p>
<p>Because a fully (almost) loaded fortwo passion coupe is
$ 16,920.00. A Similarly spec’d Mini (non S) is: $24,400. A difference of almost $8,000 dollars.</p>
<p>Yes the MINI has more horsepower and has better handling but because MINI has decided to classify themselves as a “Premium Small Car” (which they didn’t call themselves in 2002-2005), they have priced themselves in the upper class and out of the range of many buyers.</p>
<p>Many people can’t afford almost $25, 000 for a car, though it would seem that many people who post on MF can and own multiple Mini’s or more than one car (as was noted on the last Whiteroof Radio podcast).</p>
<p>I own a 2004 R50 (my only car) with some options that was just shy of $23,000 and that was almost out of my price range. I had to forgo some options that I really wanted otherwise I couldn’t afford a MINI.</p>
<p>The classic (original) Mini was not “classified” as a premium car and the new MINI wasn’t designated as such in the first 4 years, don’t understand why they decided to do so beginning in 2006/07. IMO, they are (have) priced themselves away from many people who can’t afford more than 19 or 20k max.</p>
<p>The unusual Penske connection probably worked against Smart to a degree, so maybe the Mercedes arrangement will help.</p>
<p>It seems that just the right mix is needed to sell small cars to anyone other than the first time buyer. If it’s to cost more than entry level, you need style, performance, utility, options, marketing and access to finance. The MINI does all of these well. Another premium small car, the Volvo C30, is doing OK, not great. When I talked to the head of Volvo USA about this, he said that they didn’t support the car with the right financing options (Volve had stopped all leases pretty much and sales were down across the brand). Smart had non-existant marketing. How many people know where a SMART dealer even is?</p>
<p>When they are co-located with MB, I’m sure that a lot of MB buyers will think it’s a good extra car for a kid or something…. Can’t do worse than what they have been doing lateley.</p>
<p>Matt</p>
<p>I’ve got to wonder – wouldn’t they have been better off bringing over the A or B class Merc’s instead of bothering with Smart?</p>
<p>I get that the Smart’s already been Federalized while the A and B Classes haven’t… But still given how poorly Smart is doing in the US why have that hanging over their heads?</p>
<p>I wish the Smart well and as stated, use it as intended and if the quality is there then happiness will be too. Imo it also is the edge of a coming wave. As for performance away from city streets I’ve seen more than one in the fast lane at 75+. Didn’t look like a good idea to me, but those drivers seemed ok with it. Maybe at speed the short wheelbase generates close attention and planning one’s next move; not a bad thing at all.</p>
<p>@R.O. – somewhat agree with you. The first Mini in ’59 was a “people’s” car, appealing to all classes of society, and in ’61 the “premium” Cooper was introduced. Not many people in my neck of the woods could get a Cooper let alone afford one. When MINI was introduced in ’02 there were two models – ONE and COOPER. Some countries (read USA) didn’t want to take ONE which is an entry price car albeit slightly higher than your basic run-of-the-mill car.
Whereas Smart aren’t a premium brand. Aren’t they rebadged Chevrolet in some countries?</p>
<p>I recently sold my smart after nearly 3 years of ownership. (I am a big MINI fan as well, but have never owned one.)</p>
<p>This is a win-win-win for Penske, MB, and smart owners. Penske likely made a profit by wildly exceeding sales expectations in the first year, and a nice tax write-off. MB gets to save millions on CAFE fines. And consumers will likely get the smart models we should have had in the first place; namely MHD (economy) and turbo (performance) models. (I doubt we will get smart diesels for the same reason MINI diesels won’t be sold here.)</p>
<p>Smarts are great fun to drive. However, MB will need to develop a smooth dual-clutch gearbox, a 6th OD gear, and a turbo motor to win over the masses.</p>
<p>Wow… CAFE has been around a very long time (mid-1970’s)… long before your current president. And it has always been “technology-forcing” in intent, but not always in execution (depending on the agenda of the government in session). Also FYI, the overall increases in average fuel efficiency by the OEM’s have been glacial over the past nearly 3 decades – even with CAFE. The USA hit its “best” national fuel economy average back in c.1987. That is not a good thing, from any of economy / innovation / environmental stewardship perspectives.</p>
<p>Jerry, please do us <strong>all</strong> a favor and take your blatant politicism elsewhere. This is an AUTOMOTIVE blog. There’s plenty of places elsewhere to take the political ranting.</p>
<p>+1 @goat “‘best’ national fuel economy average back in c. 1987”
That’s what happens when the population of a country falls in love with “bigger is better” mind washing. Plus the auto makers figured out that they could make a whole lot more money if they just kept producing low tech huge cars rather than investing in the future and developing new technologies. They made the huge vehicles and paid their advertising departments to sell them to the masses. You have to hand it to the advertising companies, they certainly did their jobs.</p>
<p>Back to the topic. What a Smart car is has never been properly defined for the US market. Every time I see a Smart car on the highway I know right away that whoever bought it did not understand what a Smart car is. The concept of a “city” car does not translate into USA terminology.</p>
<p>Good luck to MB.</p>
<p>When I was in Germany recently I could not get over all of the really cool, good looking small cars they have available. The A series MB are great.</p>
<p>I recall when the car first was being brought to these shores the reviews essentially questioned the existence of it at all. At the time a stripper Toyota Corolla cost the same amount of money, got the same fuel economy, and actually could sit 4 people, if somewhat cramped.. OTOH, I have known a few Smart owners who loved their cars. And yes, I see Benz absorbing the lineup to fiddle with CAFE numbers since they have nothing in the economy class. However, I’d guess they would need to sell a pretty good sized pile of these things to offset all the S Class tanks that get sold!</p>