Detroit News - Will America wise up to the Smart?

Merc1 · 11-13-2007, 03:26 AM

SAN FRANCISCO -- One of the highlights of this week's Los Angeles auto show will be the diminutive smart two-seater, deliveries of which start in around six weeks time.

The cute smart fortwo has been on sale for several years in Europe but it's taken the commitment of Michigan's own leading entrepreneur, Roger Penske, to bring the Daimler AG microcar to American hands.

As with all his business activities, Penske is intimately involved in setting up the U.S. distribution network for smart. The 70-year-old magnate (whose dealer group last year sold more than 180,000 new vehicles and generated $11.2 billion in revenues) reaches for his Blackberry cell phone when asked about smart pre-sales action. "Do you know that 53 percent of internet buyers for the smart want leather seats?" he notes.

The head of Bloomfield Hills-based smart USA, Penske knows from his phone exactly how many people have signed up online for the car and how they want to configure their vehicles.

As well as the surprisingly high take on leather seats, Penske quotes another surprising statistic: only three percent of buyers want the cheapest version, the $11,590 Pure model. The majority are opting for the Passion coupe or cabrio, with an average transaction price, based on the options selected, of $15,500.

Although some car-savvy Americans had heard of smart, most knew nothing about the car. So rather like Toyota's launch of its youth brand Scion a few years ago, smart USA decided to start the promotion process with an Internet marketing campaign. This has attracted 35,000 potential buyers, who have all handed over $99 deposits. About 5,000 of these customers have gone further, configuring their smarts for purchase and giving the company a good start toward its overall goal of 20-25,000 sales in 2008.

More than 95,000 people have signed up as smart "insiders," which means they will be kept informed by e-mail on company news and developments.

And there has been no shortage of interest from car dealerships. Of 1,400 applicants, the company has whittled down the list to an initial network of 70 dealers who will start delivering cars in January 2008.

About two-thirds of smart "centers" will be existing Mercedes-Benz outlets, but Lexus, BMW and Porsche dealers will also sell the car, with the network concentrated on the east and west coasts and southern states. "We want to stress that this is a premium brand," notes Penske, who has personally supervised every detail of the smart showroom designs, which dealers will build as a separate facility, or as a "shop within a shop."

Along with the Internet, the promotional campaign to build interest in smart has included a summer road show touring 50 U.S. cities and providing 50,000 test drives. It was a chance for Penske's team to gauge attitudes toward the tiny two-seater. Apparently one of the biggest concerns expressed by consumers was not related to safety, but to size. People e-mailed smart USA with details of their body sizes and asked whether they would fit. Around the country the focus of interest differed. In the Midwest, there were a lot of questions about fuel economy (the car returns 40 mpg on the highway); in California some were clearly interested in the car's "star factor" and in northern cities like Minneapolis, people wondered if the smart would be suitable for driving to vacation cottages.

"There was very little concern on safety, which we thought would be a red light," says Penske. Still, smart USA's TV ad campaign emphasizes the strength of the car's structure and all dealers will have the car's so-called "tridion" frame on display.

Overall, notes Dave Schembri, president of smart USA, it's hard to categorize the typical smart buyer. "You can't really identify buyers by age or income," he says. "It's more about their attitude. There are baby boomers who want this as a second or third car, and some will have it as their only car, people who don't need a big car."

Schembri adds that Americans are being attracted to smart because there are very few other vehicles outside the luxury segment that have emotional appeal. Asked how the smart can compete with four or five seat cars like the Honda Fit or Nissan Versa in the same price range, Schembri says people do not seem to be cross-shopping those models. "We have the Mercedes-Benz association that others do not," adds Penske.

At the media launch in San Francisco I drove the coupe and cabrio versions around the city and on the freeways. First impressions were surprising: the 70-hp car performed much better among high speed traffic on the freeways than I expected. Cruising at up to 85 mph was no problem, although the car's short wheelbase made it sensitive to strong crosswinds. Also the automated manual gearbox takes some getting used to, as drive tends to sag between shifts, and the three-cylinder engine can be noisy under full acceleration.

Inside, the colorful trim combinations, comfortable seats and ample legroom take your mind off the obvious lack of a rear seat and limited luggage space.

The big question is whether the initial enthusiasm for the car can be maintained beyond the first year. To start with, there will be the "early adopter" buyers, especially in environmentally sensitive markets like southern California, who will want a smart to demonstrate their social awareness to others, just as happened with the Toyota Prius hybrid. And others on the east coast will see it as a handy urban car, especially in cities like New York and Washington D.C.

On the other hand, Americans' practical side may have a problem with the evident limitations of a very small, two-seat car. And though smart USA says safety has not been a big issue so far, that may change when people actually experience driving this tiny machine amidst a freeway full of hulking SUVs.

One thing is for sure: Penske and Daimler AG could not have chosen a better time to launch smart here. The recent precipitous rise in fuel prices, problems with the overall economy and rising concern over the impact of CO2 emissions have made a small, economical car more attractive to Americans than at any time since the 1970s oil crisis.

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Merc1 · 12-05-2007, 01:32 AM

WASHINGTON, D.C. — Daimler Chairman Dieter Zetsche confirmed on Tuesday that the Smart Fortwo will go on sale in the U.S. starting in January.

He also said he could "well imagine a large-scale project in cooperation with a partner city in the U.S. to test the electrically powered Smart Fortwo, similar to the project that is currently running in London," according to a statement by Daimler.

Previously, Smart had only said that the Fortwo would arrive in U.S. showrooms in the first quarter of 2008.

Zetsche formally introduced the Fortwo to the U.S. market at a press briefing here on Tuesday. The minicar makes its debut with a three-cylinder 1.0-liter gasoline engine. "Other engine types and sizes, including Brabus modifications, may become available in the next few years, though no specific timeline has been outlined," according to the Smart USA Web site.

What this means to you: Now you know exactly when you can get your hands on the Smart car. — Anita Lienert, Correspondent

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Seems like I've already seen a few around. The local Subway has one as a promo car.

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Merc1 · 12-05-2007, 02:02 AM

BRAINS OVER BRAWN: Daimler's Smart car set to go on sale next month

1,800-pound two-seat vehicle gives consumers an alternative to gas-chugging SUVs.

WASHINGTON -- Daimler AG's Smart car will go on sale in the United States next month with orders for more of the gas-sipping minicars than Daimler can build next year.

Daimler Chairman and CEO Dieter Zetsche said Tuesday that more than 30,000 Americans have paid a $99 deposit to buy one of the 1,800-pound two-seat vehicles that get 40 miles per gallon on the highway. The automaker expects to convert 90 percent of those deposits to sales.

"We were totally amazed by the kind of reaction we got," Zetsche said at a breakfast with reporters. "We will not be able to meet the demands here next year."

Smart, a unit of Daimler's Mercedes-Benz Cars division, is targeting the three-cylinder, 70-horsepower vehicle at consumers weary of rising gasoline prices, as well as environmentally minded motorists and urban dwellers. The car's top speed is 90 mph, and it is electronically limited by an on-board computer.

Smart USA will be headquartered in Bloomfield Hills and attached to the only Michigan Smart dealership on Telegraph Road, north of Square Lake. The flagship dealership and eight others will be owned by Roger Penske's Penske Automotive Group, Smart's sole U.S. distributor.

Smart USA President David Schembri said the company has seen strong interest in Michigan. More than 1,000 Michiganians have paid deposits, making the state one of the top 10 for Smart.

Smart will have 74 dealerships nationwide by the end of the year, including 33 attached to existing Mercedes-Benz dealerships.

Schembri said the reason for driving a small car alone around town is simple. "If I go out to dinner by myself, I don't order enough food for five people," he said.

A person ordering a vehicle now might be able to get one in late 2008 or 2009, but customers should check with dealerships to see if there are cancellations, Schembri said.

The Smart fortwo starts at $11,590 for a very basic model -- one without a radio, power steering or air conditioning. The top-of-the-line convertible model with options is $17,440.

David Healy, an auto analyst at Burnham Securities predicted there will be some initial demand for the Smart, but questioned how much sales would grow in the next few years, as other small cars enter the market -- including a potential Chinese-made small car.

"It's not going to be a financial disaster, but the exchange rate is an issue," Healy said.

Zetsche acknowledged that the expensive euro makes it harder to make a profit on the Smart, which is built in France, but he said the company would make money on the car in the States.

Since the Smart brand debuted in Europe in 1998, the company has sold about 850,000 vehicles. In Canada, the company sold more than 10,000 in the first 2 1/2 years; it expected to sell only 3,000.

Zetsche joked that at just 8-feet-10 inches, the Smart is only a foot longer than NBA basketball star Yao Ming is tall.

"When you just want to go from to A to B with a lot of fun and don't want to carry three persons, Smart gives you everything you can ask for," Zetsche said.

Zetsche said the only car he personally owns in Europe is a Smart that he uses to go shopping and downtown.

Daimler also announced Tuesday it is seeking to work with an American city to locate 100 plug-in electric Smart vehicles, similar to a test it is doing in London and is considering in France. British officials have waived the $17 congestion surcharge for drivers of the plug-in vehicles and have given them parking and access to recharging stations.

Adrian Lund, president of the Insurance Institute for Highway Safety, who test drove the Smart car Tuesday, said his group was looking forward to putting the car through its crash tests. Daimler expects the car to receive four star-crash ratings.

Several members of Congress and regulators also drove the car Tuesday.

Daimler's Smart timing

Daimler is preparing for the first Smart sales here as a bill is moving through Congress that would hike fuel economy mandates to an industry average of 35 mpg. Zetsche said that Daimler supports the legislation.

He said Mercedes-Benz is working to cut the weight of all its models by 5 percent and will eventually produce hybrid versions of all models. "We are part of the problem," Zetsche said, noting that passenger cars account globally for 12 percent of man-made greenhouse gas emissions

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