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Smart hits the US

Stateside: Smart's new ForTwo hit US roads this month.

Daimler boss reveals Smart could expand into new market segments after the US in 2008

30 Jan 2008

DAIMLER AG is confident that its reborn Smart micro-car brand will be successful in the United States, and its chairman Dieter Zetsche has revealed that the line-up could expand into new market segments for global consumption. Having had its model line-up hacked back from three to one after losing several billion dollars, Smart was introduced in the US earlier this month – just prior to the Detroit auto show – with the second-generation ForTwo, which gets it power from an un-American-like 52kW 1.0-litre engine. Daimler hopes its expensive problem child will capture the imagination of the biggest market in the world, especially as global warming concerns and record oil prices force Americans to look at smaller, greener vehicles.

Dr Zetsche told GoAuto in Detroit that the introduction of Smart into the US was an important step for the company.

“We will start delivering the largest market in the world with the smallest vehicle in the world,” he said, adding that there were strong indications Smart would be a hit in the US. “All the signals are extremely positive, but it is not just signals, it is reservations and down-payments.” According to Dr Zetsche, building enough Smart cars to meet demand could be the biggest issue for the brand.

“We are convinced that 2008 will be exclusively defined by production capacity,” he said. DaimlerChrysler came close to launching Smart in the US earlier this decade, but shelved the plans just weeks before the 2005 North American International Auto Show.

37 center imageLeft: Daimler chairman Dr Dieter Zetsche.

The plan then was to launch the Smart brand with the ForMore, a four-wheel drive version of the ForFour. That was until DaimlerChrysler, stung by Smart’s mounting losses, decided to halt work on the ForMore project and axe all models bar the ForTwo, including the image-leading Roadster.

Dr Zetsche said the Smart brand had been “a big hole for money” but had now returned to profitability after the restructuring that cost the company $1.3 billion. The severity of the model pruning that took place at Smart might suggest Daimler would never consider adding any other models alongside the ForTwo, but Dr Zetsche told GoAuto that is not necessarily the case.

“As for expanding the line-up is concerned, we will not repeat doing what we did before, to do some, more or less, ‘me-too’ products in other segments,” he said.

“The only way to expand the Smart brand is to have ideas in other areas where we can be unique as well. This we would add to the ForTwo, otherwise (we would) not.” While Daimler has been battling to make its Smart brand profitable, its major rival BMW has been enjoying much more success with its affordable Mini brand.

While Dr Zetsche was quick to acknowledge the achievement of Mini under the control of BMW, he also suggested the operation was not as profitable as many experts had made out.

“There is no doubt Mini is a striking success and I congratulate them for that, but I don’t think it is their biggest money-making machine,” he said.

Daimler claims more than 30,000 people from across the US submitted $99 refundable deposits on Smart cars last year. Although it is yet to announce a total number at this stage, the German manufacturer said a “vast majority” of deposits should be converted into sales. Smart plans to have 74 dealerships operating across the country by the end of the year, with all but six in operation by the end of February. Around two thirds of the Smart dealerships will be aligned to existing Mercedes-Benz dealers.

The second-generation Smart ForTwo will go on sale in Australia next month. At this stage it will only be available with a petrol engine. There is a possibility that an even more miserly diesel engine could join the Australian range at some stage in the future, although for the time being Smart currently only produces the diesel model in left-hand drive.

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