Smart is a small division of a large automaker that builds tiny city cars. With a new range of Smart Fortwo models, the company is on an upward swing. We sat down with Dr. Annette Winkler, Smart Automobile Director and CEO, to learn more about the brand’s future.
How do you feel Smart is sitting at the moment from a global aspect?
You see me smiling. Smart is smiling. We just had a year with 33 percent growth. We had 72.5 percent growth in Europe. These are marvelous numbers and we are, of course, very happy. The outlook is good. With the Fortwo Cabrio, the Brabus version (Europe only), and the electric versions coming later this year, this gives us more momentum.
What about in the U.S.?
Well, we really only started in late 2015 with the new Fortwo. So it’s tough to say how we did last year. What we can say is that there have been many test drives and Portland is a market that’s doing especially well. We’re happy with the press reports on the new Fortwo. The criticism with the predecessor was the transmission (sequential manual gearbox) and the suspension, the comfort of the suspension. We really focused on the U.S. market when we developed the new Smart (Fortwo) with nearly 4 inches of added width… Plus, the new dual-clutch transmission. We think the customer should now really love the car.
Who is Smart’s competition, both globally and in the U.S.?
It’s a very difficult question. In Europe, we would never put Mini on our list of competitors. It’s too big. Mini is between the B and C segments. We are clearly in the A-segment. In the U.S. and China, it’s Mini and the Volkswagen Beetle. People are saying that Smart is the only real microcar in the USA. In Europe our competition is the Fiat Cinquecento, the Renault Twingo and the Volkswagen Up.
Smart had the ForTwo, the ForFour, the Roadster, and Roadster Coupe. The FourMore was coming. You were building up the brand. Then Smart did a reset. Now the global market is the ForTwo and ForFour but the U.S. battles on with just the ForTwo. What segments make sense for Smart, both globally and in the U.S.?
Our segment is the A-segment. The advantage and the message of the brand is that we are the space-saving urban mobility car ideal for increased urbanization. We’re ideal for a lack of space, a lack of parking. That’s why we are focusing on cities where this is very much true. This can be different because in Italy, in Germany, and the rest of Europe, all the big cities together are the market but in the U.S, it’s different. Our biggest market is, of course, San Francisco. Portland is big too, because it’s such a green city. It’s San Diego, it’s Austin, it’s San Jose. In the future, it could be Chicago. We will add more cities and focus on cities because it makes sense. The rural areas may want to smile, to have something special but that won’t be a big market for us. In the cities, our car sharing program is also successful. It fits together.
What products don’t make sense for Smart?
Well, the Monster Smart (Smart car monster truck) doesn’t make sense! More importantly for us in the future is the connectivity, and the interaction between a smartphone and a car makes the car more attractive than the last 5 hp or the last design element. This is very much the case for Smart. People drive Smart cars because they want to feel free, feel convenient, and they want to feel good in the city. How can we improve this feeling? By making it bigger or making it more like an SUV? Or is it more intelligent for us to add services around the car? Is it possible to share the Smart, as we are doing with car2go? We are also bringing more and more specific parking spots for Smart cars. In San Francisco we have something like 600 specific parking spots for Smart — spots where only a Smart can fit. This adds quality of life. All of this together makes Smart a smart product.
Does the Forfour make sense for America?
We decided to only start with the Fortwo. We feel the segment here in the States is not very big. Again, it’s for very specific cities. There is huge potential in many specific cities and it’s really only the cities (with the potential). I think that someone who wants to drive a Smart in the city prefers the Fortwo. We will observe for the moment and see what will happen with segment.
You have a manual transmission for the first time in the Fortwo. The manual transmission is a dying feature. Are people buying the Smart Fortwo with a manual? Why offer it?
In the U.S, not really. Even in Europe, not much. But you must remember that Smart is a premium car. The take rate for the dual-clutch gearbox and many of the other features are high — leather, navigation and the safety features. We needed the manual for the Forfour, so why not offer it on the Fortwo. It’s the same drivetrain. There is a group of people — particularly for the fleet customer (Europe) — who want the manual. They are looking at the price. We say, why not offer it if it’s available. We need it for the Forfour, for that segment. It’s for the people who like the sporty feel and also for the people that like to save money.
What is the take rate on the Fortwo Cabrio?
It’s historically 15 percent globally. That’s very high. It won’t be quite that high in the U.S.A. Certain cities like Miami, it will be high.
How much sharing can be done with Mercedes?
Smart is designed by Mercedes. The head of design for Smart belongs to Gorden Wagener (head of design Daimler AG), to his team. That’s very important and you can feel the premium aspects of the car — in the interior and the exterior. All the safety features are shared. That’s one chapter. The other chapter is that we also developed Smart with cooperation with Renault. Many elements are coming from Mercedes know how. And Mercedes know-how helps with cost improvements and that gives us a good price, along with the sharing with Renault.
Where do you see Smart in five years’ time?
An ecosystem of services around the car. I can’t go too much into detail as I have to protect my little secrets. We are quite advanced and we have some already and we talked about them — parking spots, etc. Another example is in Mexico. There is a popular drive-in movie theater with parking spots reserved only for Smart cars. These are services that make people smile and feel good being in a Smart. We have many more ideas which will be implemented. Again, Smart is a tool for the city. It’s an emotional one and this is what we want to continue into the future.
Talk to me about Smart and hybrids and EVs.
Again, a full-electric Smart Fortwo will be available at the end of 2016. We’ll start in the U.S. It will be available in both the coupe and Cabrio version. The Forfour will also be offered in Europe and China in full electric. An electric Smart is very important. Once you’ve driven electric in a city, you won’t give it up. It’s so convenient and so fun. Plus, the range of an electric car is perfect. Our customers are telling us that they are fully satisfied with the range they have today — about 85 miles. This helps us as we can decide how to use the technology and available space (battery size, etc.). Does the customer want more autonomy, better acceleration, or more comfort? There will be an improvement with the new car but that is not our main target. It’s astonishing to me in London that the congestion charge is so expensive and it’s free for electric yet there aren’t a ton of electric cars there. In the U.S. market, there was a time when 25 percent of our sales were electric. It’s going well in California because they have the infrastructure and there’s a market for that.
What about autonomous technology and Smart?
It’s too early to speak about it concretely but, of course, it would be fantastic if we could afford these features one day, but the prices are very high at the moment and if you at the price of the features, especially as a percentage on the price of a Smart, it’s extremely expensive. Let’s see how the development goes. Remember we have this idea of a car-sharing Smart and it would be great if the cars could go autonomously to someone’s home. Or even if it’s only for the car to autonomously pull out of a parking garage or parking spot. I don’t think that full autonomous driving will be our future. I think it will be the partial-autonomous features. What we have with Distronic (adaptive cruise control) and stop-and-go features for heavy traffic — the comfort-enhancing features — this I could imagine. But it’s the scale effect. The more cars that have the features the cheaper they get.