Smart Integrated into Mercedes-Benz USA

The smart car will final be integrated into Mercedes-Benz USA and their parent company, Daimler AG. Mercedes-Benz USA taking over distribution is a logical leg forward, after many involved in the smart project had made major illogical choices. Mercedes has already selected its own committed smart team to jump-start the transition. The United States was the only market where smart, the manufacturer and Mercedes operated separately. After a rocket start for the French manufactured Smart 'fortwo,' the bottom fell out and sales plunged. The little car that everyone wanted soon became the car no one wanted.

That is, no one--but its parents. Daimler, the parent company of smart, GmbH launched the first smart car in 1998. They labeled it the MCC smart short for Mercedes City Car. Happier Day! Better smarter times ahead?

Here's how its going to go!

The initial Smart centers (79) that hadn’t already ceased selling the smart, will continue conducting business as usual until late summer. After that, Mercedes-Benz USA anticipates taking the lead in the distribution and sales from Penske Automotive Group. Assimilating the Smart 'fortwo' into its own Mercedes-Benz dealer network will be the next logical step forward.

Once this comes to light, 21 Smart centers (as the Penske Automotive Group called their smart dealerships) not affiliated with Mercedes-Benz will shutter indefinitely. It has been reported that stand-alone smart centers or smart franchises not associated with a Mercedes store will close at Penske’s expense. The Penske Automotive Group controls 326 retail automotive franchises.

Four of the 21 smart center franchises belong to smart USA, a division of the Penske Automotive Group, who managed distribution thru PAG. Penske will handle termination of the 17 non-Mercedes, non-Penske dealers as part of the deal. Penske Automotive CEO Roger Penske said the closings will include the buyback of signs, equipment and cars -- as per the agreement with the franchise arrangement.

Once the dust settles there will be approximately 58 smart dealership centers across the country. Some Mercedes dealerships will be capable of offering service for cars and you can be sure many others will follow suit. Nevertheless, places where you can purchase a Smart or have it serviced could change. Mercedes-Benz could give Smart franchises to any of their Mercedes-Benz dealers, since they will now not be required to build stand-alone facilities.

Since the smart's 2008 U.S.A. launch, Penske has been the sole U.S. distributor and setup the smart brand network of dealers. Penske sold nearly 25,000 smarts in its first year, but sales fell to 5,927 2010--down nearly 20 percent. Roger Penske admitted they lacked the muscle required from a marketing perspective based on the volume.

Mercedes said the new arrangement wasn’t because of a loss of sales, but simply a smart business move for the entire company. Even so, the smart GmbH division has been making smart cars for over 13 years and have yet to made a profit ever. Automotive experts say continuing with a model that has never tuned a profit for this length of time is uncharacteristic for any automotive manufacturer.

Daimler AG a Masterful Strategy

By incorporating the 'fortwo' into Mercedes-Benz, there is no need for a second smart model to make the brand more feasible. Thus, a smart forfour concept being developed by Nissan, for Penske Automotive Group and smart USA was trashed. Its would have been a Mexican-built car and was christened 'Project Quattro.' Incidentally smart, GmbH had already created 3 additional models. These included the Smart Crosstown, Smart Roadster, and the Smart Forfour a car that was very similar to Quattro they planed to build for Penske. It was made for 2 years before being cancelled.

Smarter Motivation Change

Mercedes-Benz always had the marketing effectiveness that Smart required for their preliminary strategy and as far back as 2000, the smart fortwo was to be sold through their Mercedes-Benz dealer network. Many dealers who opposed the primary strategy now view the Penske buy back deal as an opportunity for their dealerships, as well as for the vast network of Mercedes dealerships, perhaps propelling the 'smart fortwo' in a new and diverse direction. All of this while still providing new and welcomed traffic for their dealers.

Combining Smart and Mercedes is good business, especially because of CAFE requirements. Daimler needs smaller, fuel efficient vehicles to compete with newer constraints from corporate fuel economy standards, which must be accomplished by 2016. the 'Smart fortwo' is an essential element for meeting this goal. Daimler's U.S. business strategy involves using the 'fortwo's' 36MPG EPA rating to assist them in these impending and stringent CAFE ratings. Many believe that Daimler's Mercedes will augment Smart's sales numbers, consequently having a much larger influence on the company's overall CAFE score.