By on May 2, 2017

smart-fortwo

You’d probably never guess this from examining any parking lot in suburban North America, but Daimler’s microcar brand is actually doing exceedingly well. Despite the global trend toward crossovers, Smart saw record sales last year and increased its global volume 21 percent to 144,479 units. More amazing is that it’s still a brand that owes the entirety of its success to one niche market.

Smart doesn’t seem interested in changing course, either. While it’s abandoning internal combustion units to pursue a strict EV-only mentality in the United States, it will be business as usual for the the rest of the planet. But, with much of the industry offering spanking new compact crossovers and with fuel prices still so low, wouldn’t it be in Smart’s best interest to look beyond the limited microcar segment? 

Not according to Annette Winkler, head of Smart since 2010. In a recent interview with Automotive News, she said there was no need to branch out. “In this current generation of models, I don’t see the necessity for a crossover,” she said. “We should also stick to what Smart always wanted to be and was invented to be: the perfect city car with smart solutions that provide more quality of life in an urban environment.”

Instead Smart will pursue ways to integrate the ForTwo and overseas-only ForFour with smartphones. In fact, Daimler will likely continue using the brand as a testing ground for experimental services. Car2Go is a good example. Initially, the ride-sharing application was exclusive to Smart-branded vehicles — which I’ve seen encroaching on ZipCar’s territory all over New York City. Now, after a successful test run, Mercedes-Benz has begun inserting its own vehicles into that fleet.

Market research has also shown that urbanites, who are much more likely to own a Smart, are more interested in connectivity services and willing to pay for high-tech features — making them the perfect guinea pigs.

It is, however, a limiting segment in some markets. Smart sales dwindled in the United States, never again reaching the success of its rookie year — 24,622 units in 2008. Meanwhile, Canada has seen middling sales since the brand’s launch. This eventually resulted in Daimler’s decision to take combustion engined units out of the U.S. and focus entirely on electrics. A good case could also be made for the bad publicity surrounding the ForTwo’s tendency for engine fires having something to do with it.

“With the previous generation, in peak times electric variants were responsible for a quarter of our U.S. sales and more than 50 percent in Canada. We think that this openness to the electric drive from our customers is very important and my view is that the Smart EV is the smartest Smart ever,” Winkler explained. “Secondly, there is a business impact for us. The microcar segment in the U.S. is shrinking more and more, so it makes sense to focus on the variant that has the bigger potential. In the U.S., this is certainly the electric drive.”

smart-cabrio

While Winker says this isn’t a strategy the company plans to pursue in other markets, she asserts it’s all part of some original scheme to grow EVs in North America, citing the country’s superior electric infrastructure and describing the ForTwo Cabriolet as the perfect vehicle for eco-friendly states.

“There are no other battery-only open cars so it is a perfect proposition for states such as California and Florida,” she said. “Also, don’t forget that Smart was invented from the very beginning to become electric.”

Smart is likely to see continued success in other countries but, outside of major metropolitan areas, its appeal remains limited in the United States. That could always change if there were a sudden gas shortage, but as an EV-specific brand with only a two-seater on offer, it wouldn’t be inconceivable to see it relegated to ride-sharing services. With 2.2 million Car2Go users at the end of 2016 making 74 million trips, that might not big a terrible space to occupy.

[Images: Mercedes-Benz]

Get the latest TTAC e-Newsletter!

Recommended

9 Comments on “Smart Stays the Course in Europe as It Shifts Focus in the United States...”


  • avatar
    SCE to AUX

    It’s refreshing to hear the reasoning behind their approach.

    Sometimes it pays to play just one position well, rather than dissipate resources into development of every segment. Hummer did the same thing pretty well, until the GM ship sank.

  • avatar
    CaliCarGuy

    I honestly don’t know why they are still trying. In 2016 they sold just 6211 cars here in the US. As of April of this year its just over 1400. Electrification isn’t going to help as it just makes their cars, which are already a niche, an even bigger niche if that makes sense. Not only are they going to be selling cars that are way to small for US roadways, but they are going to be EV’s, something that the majority of people still haven’t embraced. They need to pull out of the US. I pass by the Mercedes Vehicle Preparation Center out in Long Beach quite often. Its pretty much a huge building with Mercedes and Smarts parked around it waiting for, I guess preparation. There is always just a sea of Smarts there wasting away. That should tell Mercedes no one wants the things.

  • avatar
    eggsalad

    Interesting. I just test-drove a ’14 ForTwo ED yesterday. They’re coming off lease now, and Mercedes Financial is dumping them dirt cheap. The one I drove was $4200!

    Except here’s the rub. You don’t own the battery – Mercedes does. And if you don’t pay the $80/month “Battery Assurance Program” shakedown… I mean “lease fee”, they can and will send you to collections, remotely shut down the vehicle (via telematics), refuse to service the car, and refuse to sell you parts for the car. They can also physically repossess the battery.

    For $4200, it’s a neat car. But if you want to actually drive it, “leasing” the battery costs an additional $960+tax per year.

    I smell a lawsuit over this one.

    • 0 avatar
      dukeisduke

      I didn’t realize they were running a battery scam. When we searching Carfax a couple months back, for my 16yo daughter’s first car, there were tons of the Smart Electric Drive models out there, for around $5k. Most were on Carfax lots. There were also lots of electric Fiat 500s, but they wanted $6k-$7k for those. We ended up buying a 2010 Kia Forte Koup (5-speed manual), 103k, for $4750. It’s a nice car, but the 2.0 Theta II engine is a big agricultural (and only get 20 mpg around town).

  • avatar
    bumpy ii

    The separate battery lease was set up that way to juggle the available tax credits for EVs. There is a buyout provision for the battery, but it doesn’t make economic sense in most cases, and you lose the capacity guarantee if you exercise it.

    The only lawsuits that might be invoked are against the used-car dealers who don’t disclose the battery lease out of ignorance or deception. Most CL ads for smart EDs now have a notice in the ad about the battery lease, which wasn’t always the case last year.

    • 0 avatar
      eggsalad

      Yes, the ad to which I responded (on CarGurus, not CL) said, “must buy BAP”, but the salesman, also the owner of this small operation, told me it wasn’t necessary – which isn’t true.

  • avatar
    Richard Chen

    Remember when Smart had a GLK-based CUV in the pipeline over a decade ago?

    http://jalopnik.com/5239756/stillborn-smart-formore-suv-concept-found-in-shed

  • avatar
    threeer

    I was very excited when they decided to roll out a manual variant here in the US…until I saw the price tag for a new one. Yikes! Used first gen smarts are pretty cheap and I would “almost” consider one for a DD as my commute is a short 15 minutes and I am always the only pax in my car.

  • avatar
    slap

    Unless you have severe parking problems, a Prius is a better solution.


Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • JMII: “Like many CUV buyers, I was probably tricked into thinking I needed a third row when, in fact, I’d be...
  • mikey: How can we forget “Bewitched ” Darins 64 Malibu , drop top.
  • The Ryan: Didn’t Toyota offer the Tercel hatchback with a 4X4 option? Would that have counted as an early...
  • haroldingpatrick: The Edge is on the short list for my next ride. I’ve test driven the 2.0 ecoboost and 3.5 NA...
  • Zackman: I’d have to say the movie “Twister” as well for featuring the Dodge Ram. “Vanishing...

New Car Research

Get a Free Dealer Quote

Staff

  • Contributors

  • Matthew Guy, Canada
  • Ronnie Schreiber, United States
  • Bozi Tatarevic, United States
  • Chris Tonn, United States
  • Corey Lewis, United States
  • Mark Baruth, United States
  • Moderators

  • Adam Tonge, United States
  • Corey Lewis, United States