Smart's Success Leads to Caution
The smallest kid on the block is willing to stay that way for a while.
Smart, a Daimler-Benz subsidiary, has sold about 17,000 ForTwos since launching the tiny two-seater in the U.S. in January. Yet 30,000 potential buyers are still on waiting lists.
Even so, the automaker has no intention of boosting output to bring supply in line with demand, says Smart USA president Dave Schembri, who says auto graveyards are littered with companies that reacted too soon with too much.
"Only a year ago we didn't have a car or a dealer in the U.S.," he said. "We can grow volume, but we want to make sure we have everything in place first before we expand. Profit margins are relatively thin on a small car, so we always want to be one car short."
Essentially, a supply/demand imbalance allows dealers to sell each car for full list price.
If a consumer orders a car today, "it will be sometime in 2009 before he takes delivery," Schembri said, adding that in some cases customers may have to wait 12 months.
But, he said, even with 30,000 people on the "reservation list" after handing over $99 to order a car, anything can happen.
"Things change during the wait, and if you walk into a dealership you may be able to pick up a cancellation," he said. "About 20% cancel during the wait, so it's a good chance you can get one without waiting that long."
Schembri also says Smart has no plans to expand its lineup to add models other than the two-seat ForTwo, which is offered in coupe and convertible versions.
"The ForTwo is what makes Smart smart and unique, and we have no plans for more than a two-passenger car," he said. "If we add more seats, we'd simply be like a number of other cars in the market."
Smart used to offer a four-door in Europe, but it no longer does. It only markets the ForTwo in world markets.
That's not to say, though, that Smart is sitting on its hands.
"We do have plans to expand the lineup with fuel derivatives, and [we] have a plug-in electric that's undergoing testing in London now that we expect to produce in 2010," he said. "We haven't decided where to introduce it first, though at some point in the future we'd offer it in the U.S. We also have a gas/electric hybrid in Europe, but it's a mild hybrid that only shuts off at idle and then restarts again, and with the mileage we get on our gas car here (33/41 mpg city/highway), the added cost doesn't justify bringing the hybrid here."
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Diesel?
It exists. And it's sloooooooow...
Big 3...Take note on how to launch a new model...
To the previous commenter - maybe should read about the horrendous launch of the Smart brand in Europe before proclaiming it as the "how-to" for launching a new model.
people want high mpgs, not really this blender. even the big three can't learn much since smart can do anything and still sell the toy.
17,000 sold + 30,000 orders still = a disappointment to the big three. (toyotahonda etc.) Who knows how popular this car would be if built at the capacity of most of the popular vehicle from the top five manufacturers. I don't think it would be a huge success. Why would Ford be happy with sales of 47,000 autos when they've cancelled their van which sold more than that.they sell more Rangers than that and they want to stop making it and it hasn't been changed in many years.
"To the previous commenter - maybe should read about the horrendous launch of the Smart brand in Europe before proclaiming it as the "how-to" for launching a new model.
Posted by: watchdog | Sep 19, 2008 4:13:46 PM "
I think you may have missed the posters point. I understood the point being just because it selling well is not a reason to exceed capacity as often the Big 3 does when launching a high demand model. Smart is "smart enough" to know how fickle US car buyers are and by not producing more would keep the price at a premium and resale fairly decent.
WatchDog is right, this car was a huge failure when it was launched in Europe and it caused a lot of problems to Mercedes. Even the Swiss watch maker Swatch abandoned the project.
From the Wikipedia
"In 2006, after dwindling sales, Smart GmbH was liquidated and its operations were absorbed within the Mercedes-Benz automobile group. It was later revealed that Smart GmbH lost nearly 4 billion euros from 2003 to 2006. [1]"
I found ironic that the USA could save this small car brand. If Mercedes wasn't behind them, they would be automobile history long time ago.
It is just a niche car, designed for people with a lot of money who can afford another car.
If I were considering the purchase of this car, I would be comforted in the knowledge that the company was not trying to speed up production and crap out a car with questionable build just to meet sales demand.
As for the car itself, I'd never own one. Even with the titanium cage to protect the occupants, this car has nothing to absorb any impact.
Oops ... typing faster than I was thinking. "Tridion" cage ... not titanium. lol
guess kudos to them for not doing a toyota by producing too much too fast and let quality go down.
and yes, smart is nothing but niche car. it needs premiun fuel and for its size, get a yaris or aveo instead.
Yeah, there's alot of quality in a car that's already been recalled once. I know recalls happen but please spare me the win one for the little guy mentality. Yes everyone seems to hate the American manufacturers. Get over it already. They produced what Americans wanted for a long time. A car company that produces such a small number of cars and still can't avoid recall issues is not a company that I would be praising for it's quality.