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.

  • ToolGuy This might be a good option for my spouse when it becomes available -- thought about reserving one but the $500 deposit is a little too serious. Oh sorry, that was the Volvo EX30, not the Mustang. Is Volvo part of Ford? Is the Mustang an EV? I'm so confused.
  • Mikey My late wife loved Mustangs ..We alway rented one while travelling . GM blood vetoed me purchasing one . 3 years after retirement bought an 08 rag top, followed by a 15 EB Hard top, In 18 i bought a low low mileage 05 GT rag with a stick.. The car had not been properly stored. That led to rodent issues !! Electrical nightmare. Lots of bucks !! The stick wasn't kind to my aging knees.. The 05 went to a long term dedicated Mustang guy. He loves it .. Today my garage tenant is a sweet 19 Camaro RS rag 6yl Auto. I just might take it out of hibernation this weekend. The Mustang will always hold a place in my heart.. Kudos to Ford for keeping it alive . I refuse to refer to the fake one by that storied name .
  • Ajla On the Mach-E, I still don't like it but my understanding is that it helps allow Ford to continue offering a V8 in the Mustang and F-150. Considering Dodge and Ram jumped off a cliff into 6-cylinder land there's probably some credibility to that story.
  • Ajla If I was Ford I would just troll Stellantis at all times.
  • Ronin It's one thing to stay tried and true to loyal past customers; you'll ensure a stream of revenue from your installed base- maybe every several years or so.It's another to attract net-new customers, who are dazzled by so many other attractive offerings that have more cargo capacity than that high-floored 4-Runner bed, and are not so scrunched in scrunchy front seats.Like with the FJ Cruiser: don't bother to update it, thereby saving money while explaining customers like it that way, all the way into oblivion. Not recognizing some customers like to actually have right rear visibility in their SUVs.
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