Smart Stays the Course in Europe as It Shifts Focus in the United States

Matt Posky
by Matt Posky

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.”

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]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Threeer Threeer on May 02, 2017

    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.

  • Slap Slap on May 03, 2017

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

  • Probert A few mega packs would probably have served as decent backup.
  • Lou_BC Lead sleds. Now-a-days GM would just use Bondo.
  • Jrhurren This is a great series. Thanks Corey
  • Tane94 Not as stylish as the Soul which it is replacing but a practical shape and bonus points for EV only.
  • Ronin What is the magical white swan event in the foreseeable future that will suddenly reverse the trend?Success tends to follow success, and likewise failure. The perception, other than among true believers, is that e-cars are a lost cause. Neither government fiat, nor government bribery, nor even the promise of superior virtue among one's peers have been enough to push past the early adapter curve. Either the bust-out is right now for e-cars, or it doesn't happen. Marketing 101.Even subtle language-manipulation, such as deeming those possessing common sense as suffering from some sort of vague anxiety (eg, "range anxiety") has not been enough to induce people to care.Twenty years from now funny AI-generated comedians will make fun of the '20s, and their obsession with theose silly half-forgotten EVs. They will point out that, yes, EVs actually ran on electricity generated by such organic fuels as coal and natural gas after all, and then they will perform synthesized laughter at us.