Such a thought is so gut-wrenching, they are prepared to look away and throw more money down the Smart black hole.

DC has tried several times to change strategy in the hope of finding profitability. After initially launching the tiny city Smart in only select European countries, they widened its availability. They re-engineered it to right-hand-drive, introduced it into the UK and dreamt of the balance sheet turning black. It didn’t.

Expand the range

The next brilliant idea was to increase the range to include other models. By adding a coupe-roadster, a four door hatch and (potentially) a 4wd SUV, they hoped the red ink would be banished. This may have been the right idea but just having the ‘brilliant’ idea isn’t enough. It has to be executed with enough intelligence to give it a fighting chance. The first car to be launched was the coupe. If this was to finally drag Smart into profitability it needed to appeal to large numbers of people and crucially its build-cost needed to be nailed down to allow a healthy profit margin. Soon after launch it was axed because its high build cost pushed up the selling price which further reduced its appeal. I use the word “further” here, because its quirky nature was already limiting its appeal. DC appears to have difficulty in understanding that the Mazda MX-5 wouldn’t be so popular if it was reduced in size, and its engine was stuck behind the rear wheels. In terms of build costs, I bet a MX-5 is cheaper to produce than the Smart Roadster. Simple maths killed the Coupe. The second part of this bright strategy was to add a family hatchback. Brilliant idea, such a big market segment, this would surely bring in enough sales to finally rid the red ink? Again, all the brainpower was spent on having the initial brainwave, so nothing was left to be used in its execution. They took a bog-standard Mitsubishi and tarted it up. And to really patronise the buying public, they added a few thousand to the price. Little wonder it bombed. It also has been withdrawn from sale By this time, DC was having second thoughts on the ‘range expansion’ idea. They aborted the SUV before even launching it.

Smart in the USA. Insane?

What now. The red ink is getting deeper, so time for a new strategy. This, I fear is also doomed to failure. Now they are left with only one car in its range, the stunted ForTwo. It will be replaced with a new model which will try and iron out some of its numerous flaws. Then they will introduce it into the US. Are they insane? If DC wants to emulate BMW’s success with the Mini, they need a try harder. Much harder. They need a better car, and one which is more in tune with the American car buying public. The ForTwo’s size is too small. Its size makes it small niche player in Europe, in America it’ll be off the map. And the sub-1 litre turbo engine just won’t cook it stateside. The final nail in the coffin is to market it like a white-good through Penske’s cheap’n cheerful dealership. Why not through Mercedes dealers, or even Chryslers’? DC have excelled this time, its bad idea and badly executed.

A Smart Idea.

I’ll tell you how to do it. Shut down the Smart factory and outsource its production. Look East for a cheap adaptable platform, and engine-gearbox. Possibly buy these from Honda. A shortened Fit (Jazz in UK) platform would be ideal. Honda already has a production line in China, build it there. Sure Honda is going to add a good profit margin but it will be cheaper than the build cost of the ForTwo. Or slightly modify the Mitsubishi iCar –increase the engine size and dump the turbo.

Death of Smart?

Toyota is entering this market segment with the Endo (see the pictures). It is slightly larger than the ForTwo, with 4 seats and a front engine. I can guarantee this will make a profit. Its slightly larger size and, crucially, 4 seats will mean it appeals to far more people than the ForTwo. Is this the car which finally helps DC’s bottom line? It will if it kills the Smart.

Update

Toyota showed a concept car call IQ which is wonderfully innovative. Very small sized with 4 seats (3 + 1 seating arrangement). It will be launched in Q4 2008. Lookout Smart.

Return to Amistad Home.

This article is sponsored by Proqul Ozone store who supply the Ozonology Sanitisation service.

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