Smart Shrinks to Scooter in Last Chance for Daimler Brand

Photographer: Andrew Harrer/Bloomberg

The Smart bikes and scooters are also geared at underscoring the brand’s image as a city-transport specialist rather than just another car brand. Close

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Photographer: Andrew Harrer/Bloomberg

The Smart bikes and scooters are also geared at underscoring the brand’s image as a city-transport specialist rather than just another car brand.

After failing with four-seater and sporty roadster versions of its Smart car, Daimler AG (DAI) (DAI) is taking a new approach to extending the brand: smaller and slower.

Next year, Smart will bolster its lineup with an electric-powered scooter, a prototype of which clocked a top speed of 45 kilometers (28 miles) per hour. The scooter and a 2,849-euro ($3,716) electric bike introduced last year are intended to shore up Smart’s image as a city-transport specialist rather than just another automaker.

“Smart is Daimler’s answer to the challenges of today’s megacities,” brand chief Annette Winkler said over tea at the unit’s headquarters in Boeblingen, Germany. The goal is to make city life “a little more colorful, cheerful and healthy.”

Smart needs some cheer. The brand has racked up more than 1.5 billion euros in losses since its introduction in 1998, including a 120 million-euro deficit this year, Bankhaus Metzler estimates.

To jump-start sales, Daimler is also expanding Smart’s car lineup beyond the diminutive Fortwo, known for its two-tone color schemes and replaceable plastic body panels. The company last year introduced an electric version of the two-seater, and as soon as 2014 it may roll out a revamp of the basic Fortwo. Daimler has also teamed up with Renault SA (RNO) on a new Smart four-seater that’s likely to reach showrooms next year.

Photographer: Kristian Bocsi/Bloomberg

Brand Chief for Smart Annette Winkler reacts during an interview in her office at the company's headquarters in Boeblingen, near Stuttgart. Close

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Photographer: Kristian Bocsi/Bloomberg

Brand Chief for Smart Annette Winkler reacts during an interview in her office at the company's headquarters in Boeblingen, near Stuttgart.

Last Chance

Daimler, which doesn’t break out Smart’s earnings, has stuck to the brand because it can attract younger buyers and helps Daimler meet carbon-dioxide emission restrictions by offsetting bigger Mercedes-Benz (DAI) models.

Smart’s future will ultimately depend on the reception of the four-seater and the new Fortwo. With the new models in the lineup, IHS Automotive expects the brand’s sales to almost double to 190,000 vehicles in 2015.

Still, this latest push may be Smart’s last, cautions Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Science in Bergisch Gladbach, Germany, and a former marketing manager for the Smart brand.

“Smart won’t get another chance if they fail again,” Bratzel said. “They will do their utmost to prove that they can succeed.”

Daimler says it has no plans to abandon Smart. The brand helps the group with electric-vehicle technology, and the prices it charges for Smart cars more than cover the cost of the parts, spokeswoman Bettina Singhartinger said.

Burnt Fingers

The company has stumbled in earlier efforts to broaden the Smart brand. Daimler pulled the plug on a roadster in 2005 after just two years on the market because of disappointing sales. A four-seat version was also killed after two years, in 2006.

Photographer: Valentin Flauraud/Bloomberg

Two Smart compact automobiles, produced by Daimler AG, are seen on the company's stand ahead of the opening day of the Geneva International Motor Show in Geneva. Close

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Photographer: Valentin Flauraud/Bloomberg

Two Smart compact automobiles, produced by Daimler AG, are seen on the company's stand ahead of the opening day of the Geneva International Motor Show in Geneva.

“Smart has burnt its fingers before so they’ve probably been extra careful,” said Jonathon Poskitt, an analyst with researcher LMC Automotive in Oxford. “The intention to invest in expanding the product lineup is clearly positive.”

The brand started as a joint venture with Swatch Group AG (UHR), which sold its holding shortly after the brand was introduced. Late Swatch founder Nicolas Hayek, an adamant supporter of an electric version, lost interest after the concept was limited to a conventional-powered two-seater.

The conflict with Hayek and the unsuccessful expansion have overshadowed Smart as competition for urban drivers intensifies. Bayerische Motoren Werke AG (BMW) has expanded Mini into a seven-model brand. Fiat SpA (F) is adding derivatives to its 500 line, while General Motors Co. (GM)’s Opel last year introduced the Adam, a stylish mini car aimed at young buyers.

Pedal Power

The growing competition has pushed Smart to look beyond cars to set itself apart. A 2010 prototype of the e-Scooter was equipped with high-end features such as an airbag, anti-lock brakes and a blind-spot assistant that warns the driver of nearby vehicles when changing lanes. Smart declined to comment on details of the production model beyond saying there will be “substantial changes,” spokesman Joachim Kutscher said.

The electric-powered bike, a partnership with MIFA Mitteldeutsche Fahrradwerke AG (FW1), features a 250-watt electric motor attached to the rear wheel, a lithium-ion battery pack and a carbon-fiber belt instead of a chain for pedal power. Daimler says it’s pleased with sales of the bike, though declines to give figures.

The emission-free two-wheelers are also aimed at winning a new class of buyer for Smart, because scooters and e-bikes either don’t require a driver’s license or have looser requirements than cars and motorcycles in most countries.

The broader product offering and the renewed focus on urban transport brings Smart back to its original vision and give it new lease on life, said Winkler.

“We’re now in the position,” she said, “to implement the great ideas of the founders of the Smart brand.”

To contact the reporter on this story: Dorothee Tschampa in Frankfurt at dtschampa@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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