Mercedes-Benz Takes Over U.S. Smart Sales, Scraps New Four-Door Model
Smart models have always been manufactured by Mercedes-Benz, but until now, they've never been sold in the U.S. by Mercedes-Benz. The company announced today that it is moving to take over the brand's U.S. distribution network from Penske Automotive in the second quarter of 2011.
When Penske partnered with Daimler in 2008 to bring the Smart to the U.S. market, the timing couldn't have been better. The ForTwo's compact size and impressive fuel economy lured buyers into showroooms once fuel prices crested the $4-per-gallon mark. In its first year of U.S. sales, nearly 24,662 ForTwos rolled off dealer lots. The novelty, however, seemed to wear off rather quickly. Sales dropped to 14,595 cars in 2009, and plummeted to 5927 in 2010.
Interestingly, neither Penske nor Daimler cite freefalling sales as a reason for the proposed hand-off, but Mercedes-Benz officials believe directly managing Smart's product planning and distribution network will allow the brand to significantly increase its deliveries. That's important, considering Smart's volume and EPA ratings are factored into Mercedes-Benz's Corporate Average Fuel Economy (CAFE) score, and the company will need all the leverage it can find to meet the forthcoming 2016 averages.
"Introducing the Smart brand to the U.S. has been a unique opportunity for us," Roger Penske, Penske Automotive chairman said in a released statement. "Aligning Smart distribution with Daimler, as it is worldwide, is the logical next step for the brand in the U.S. This alignment will enable the Smart brand to grow through the Mercedes-Benz dealership network and lead the way in conservation and meeting future fuel economy standards.
Both companies are currently ironing out terms of the takeover, and expect to have a finalized deal in place within the next few months. Currently, 79 Smart dealerships are scattered throughout the county, many of which are attached to existing Mercedes-Benz dealers. There are, however, 21 stand-alone showrooms that will be phased out as part of the hand-over.
Another victim of the deal appears to be the proposed four-seat Smart model, which was to be based off Nissan's new Micra subcompact hatchback. Although the Smart and Penske once viewed the idea as a means to reinvigorate the brand, Mercedes-Benz officials believe the model is superfluous.
"If Smart continued as a free-standing [brand], they would need a second model to make it viable," Mercedes-Benz U.S. CEO Ernst Lieb told Automotive News. "By integrating the brand into Mercedes-Benz, there is no need."