Smart to survive Down Under
BY NEIL MCDONALD | 28th Apr 2005
To offset the loss of the low-slung, two-seater Roadster later this year, it has also flagged the possibility of adding the high-performance Brabus-tuned Forfour to the line-up.
DaimlerChrysler Australia spokesman Toni Andreevski said the success of Smart here was always predicated on low volumes, something which could adequately be handled with the two remaining models, the Fortwo and Forfour.
There were "definitely" no plans to withdraw the brand, Mr Andreevski said.
Last year, 149 Roadsters were sold and, after the first three months of 2005, a further 41 had hit the streets, with sales of the convertible and also the Fortwo and Forfour running up to 90 per cent ahead of forecasts – off a low base, of course.
Dealers were also anticipating more supplies of the Fortwo for the remainder of the year.
"In terms of projected sales numbers, we anticipate around 600 this year, so the loss of Roadster won’t have a very big impact," Mr Andreevski said.
"We’re already running above our target. We’ve done 179 cars year-to-date and our target for the first three months was 150."Mr Andreevski said the brand’s future here was still bright and the decision by DaimlerChrysler AG to pursue a new business model for Smart, which aimed to put the business on a sound financial footing and break even by 2007, as well as launch a replacement for the Fortwo by 2007, was good news.
The announcement brings to an end speculation DaimlerChrysler would sell or close Smart, originally developed in a joint venture between Swiss watch company Swatch Group and Mercedes-Benz.
DaimlerChrysler has now committed to spending 1.2 billion Euro on the poor-performing small-car brand, slashing 700 jobs and eventually launching the brand in the United States, where the Smart Formore 4WD was to have gone on salethis year.
It has also confirmed it will develop the next-generation three-cylinder petrol engine for the Smart Fortwo, which will be used by other manufacturers, including Mitsubishi. The company anticipates strong economies of scalethat will substantially improve the cost position of the engine project.
Mr Andreevski admitted the axing of the 4WD model and the Roadster was a blow but said the 10 Smart dealers in the major metropolitan areas would continue to sell the sleek two-seater Roadster for the remainder of the year.
However, he also said the loss of the Roadster could pave the way for the high-performance Brabus-tuned Smart Forfour.
"We’re looking at it and if possible we’d like to get a car out for the Sydney show in October," he said.
Before a go-ahead was given for Brabus, Mr Andreevski said the local operation would need to convince Germany it could sell about 30 or 40 units "before the factory would agree to build them".
Visually, the Brabus gains 17-inch alloys and a lowered suspension with a larger front spoiler, a chrome-plated dual exhaust, a rear diffuser and side skirts. A roof spoiler helps reduce lift on the rear axle and enhances the car’s sporty intent.
Mr Andreevski said Smart remained an important addition to the local line-up because it was bringing a younger buyer into Mercedes showrooms and helping tap into a market otherwise lost to the group.
The Smart buyer profile is young, hip and professional but quite diverse. "The actual numbers by volume are quite small but there’s a wide cross-section of buyers," he said.
"We’ve said all along it would be a low-volume brand and we were only going to meet customer demand."Smart’s emerging growth here may also benefit from the recent alarming rises in petrol pump prices, according to Mr Andreevski.
"The Fortwo has the second-best fuel consumption behind the Toyota Prius," he said.
"This may add a rational element behind the buying process but it won’t be the prime motivator."Smart originally launched here with the diminutive three-cylinder Fortwo at the Melbourne motor show in 2003. In its first full year of sales in 2004 it sold 479 vehicles.
Another issue hovering over Smart locally is the arrival of the new sub-$30,000 Mercedes-Benz A-class.
However, Mr Andreevski said he did not think this would have a detrimental effect on Smart Forfour sales, even though there may be some substitution between the pair.
The entry A-class is $29,900 for the A150 Classic three-door, which will be available with a five-speed manual only.
This latest Smart restructuring plan comes just two months after Mercedes Car Group announced measures aimed at improving Mercedes’ earnings by 3 billion Euro by 2007.
DaimlerChrysler is aiming to increase the division’s operating profit margin to seven per cent by 2007, more than doubling last year’s 3.4 per cent figure.
The new business model also includes fundamental organisational changes to integrate development, sales, procurement and after-sales and service within the Mercedes-Benz Passenger Car Group, allowing substantial cost savings andsynergies.
At the same time, DaimlerChrysler plans to explore additional sales and market potential.