Name: The Smart Car Failed In The US, Now It's Betting On China
Uploaded: 2020-05-05T04:57:20.000Z
Duration: 10 min 3 s
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Created by a Swiss watch company and a German automaker, the

Basic passive voice

tiny Smart car was meant to be a revolutionary new idea in urban

mobility. But more than 20 years after its creation, the Smart

Its parent, the massive German automaker Daimler, doesn't report

Smart's finances, but analysts estimate the brand is losing

It is going electric and partnering with Chinese automaker,

Geely. The hope is the deal will help Smart slash its onerous

labor costs and give it exposure to the world's largest auto

market. Industry watchers say it might be the best chance to

save the Smart brand and let it live up to its potential.

The Smart car was the result of a collaboration between

Mercedes-Benz and Swatch, the watch brand which helped

revitalize the deeply troubled Swiss timepiece industry in the

1980s. In 1989, Swatch founder Nicolas Hayek

had an idea for a very small, very affordable and highly

efficient vehicle, that was, in his words, "big enough to hold

The car was meant to appeal to young urban buyers and had

features suggestive of the bright, colorful swatch watches Hayek

For example, the car was supposed to have swappable panels so

At first, Hayek tried to partner with Volkswagen, but that deal

fell through and then Hayek turned to Mercedes-Benz.

Mercedes had been working on similar concepts from micro cars

The first Smart model debuted in 1997 at the Frankfurt Auto Show

The company began selling cars later that year in nine European

countries. In 2008, a dealer group headed by mogul Roger

Penske began selling the smart car in the U.S.

based on success the group had seen selling the car in Europe.

The thinking was that at least some Americans would also want a

fuel efficient car at a relatively low price.

We went back and we sell these vehicles today, The United Auto

We're looking at the fortwo as really a very, very strong

Fuel economy is one, but residual value and low cost of

ownership and certainly urban friendly will make a huge

difference in this product in this marketplace.

Fuel prices rose to record highs in 2008 and the Great Recession

struck just as the first cars were making their way across the

That was right about the time that fuel prices were about to go

haywire. Also, it was right about the time that the economic

downturn in the US. So the Smart at the time seemed like a

very shrewd, very relevant, new brand and

Penske became the sole distributor of the brand for several

years before handing the business off to Daimler.

2008. There were larger industry trends working against the car.

As the U.S. emerged from the recession and gas prices fell from

consumers flocked to sport utility vehicles and crossovers to an

Consumers are a lot more interested in crossover, SUV type

vehicles right now, and modern crossover SUVs

have very, very little fuel economy difference compared to

People really like the ease of getting in and out of a vehicle

that sits up a little higher and has a higher roof.

You know, people really like having a hatch that is inherently

All smaller cars started to struggle in this new landscape, but

the Smart car seemed a particularly tough sell.

was the fortwo. As the name suggests, it had just two seats and

While this made it extremely maneuverable and easy to park,

these were big sacrifices customers didn't have to make buying a

subcompact car from another manufacturer with comparable fuel

The Smart was really pretty unsuited for the rest of the

country. This is a car that costs about the same as other

compact cars. In the end, the fuel economy ended up nearly not

being much better at all than other larger four-door

compact cars. This was a pretty out-of-step crop.

It only had two seats, it was perceived by many to be unsafe

just because of its small size, never mind what the marketing

told them. And the car was underpowered, it had this

It simply required way too many sacrifices that the consumer

from an American perspective, far too little benefit.

In early 2019, Smart said it would pull out of the U.S.

after years of increasingly dismal sales.

The brands sold just 1,276 units in the U.S.

Mercedes-Benz told CNBC it chose to pull the Smart brand from

North America for a number of reasons, including a declining

and Canada and high compliance costs for a low volume model.

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The Smart Car Failed In The US, Now It's Betting On China

potential

massive

decline

brand