Get breaking news alerts via email

Click here to manage your alerts
People stand beside the new Smart 'fortwo' during its world premiere in Berlin Wednesday, July 16, 2014. The new version is the same length at only 2.7 meters, or 8 feet, 10 inches, but is slightly wider and has a short front hood where the old one had none. (AP Photo/dpa, Soeren Stache)
Daimler launches new version of tiny Smart car
Auto industry » German company is hoping car’s unusual design will pull in big profits.
First Published Jul 16 2014 06:39 pm • Last Updated Jul 16 2014 06:39 pm

Frankfurt, Germany • Germany’s Daimler AG unveiled a new version of its tiny, two-seat Smart model Wednesday in hopes the car won’t just get admiring glances with its unusual design — but make a bigger contribution to profits as well.

Daimler CEO Dieter Zetsche and Smart division head Annette Winkler introduced the new Smart Fortwo at Berlin’s Tempodrom event center.

Join the Discussion
Post a Comment

The new version is the same length as its predecessor at only 2.7 meters, or 8 feet 10 inches, and keeps its two-tone color scheme. It is slightly wider with a somewhat different silhouette; the new model has a short front hood where the old model had none, the front end sloping directly down from the windshield.

The company says the new Smart — the third version, and the first since 2007 — has stronger business prospects because it shares many parts with Daimler partner Renault’s Twingo. That should mean lower costs per vehicle due to higher purchasing volumes for parts.

The car, first sold in 1998, was conceived as stylish, high-tech urban transport. So small it can be parked nose-in to the curb in crowded European cities, the Fortwo had advanced features such as a turbocharged engine, computer-controlled gearbox, stability control and a safety cell that shielded the occupants in case of an accident.

Yet those features raised costs, while the lack of back seats limited demand among some consumers. A four-seat Forfour version bore little resemblance to the chic Fortwo, missed out on reflected cachet, and was cancelled. But on Wednesday, the Fourfour was brought back, this time with a recognizable resemblance to the Fortwo.

Daimler doesn’t break out separate earnings for Smart, which is part of its Mercedes division. The company said in a statement Wednesday that "even today, we are earning money with every Smart sold" and that cooperation on the new models with partner Renault means "we are going to achieve a significantly improved business case."

Analysts at Sanford C. Bernstein last year listed the original Smart among the top 10 lossmaking cars of modern times in Europe, saying the first version cost Daimler 3.35 billion euros, or about $4.53 billion at today’s exchange rate, in losses over its model cycle. At the time, they said "we’re not convinced the current one makes money either."

The new model "is a very, very important step," said Ferdinand Dudenhoeffer, director of the CAR-Center Automotive Research at the University of Duisburg-Essen. "Now they have the chance to make Smart profitable... If this attempt does not work, nothing will."

Tim Urquhart, principal analyst at IHS Automotive, said the common platform improves the car’s chances of commercial success. "They’re basically getting three vehicles for the price of one," he said. "You’re looking at huge improvements in economies of scale, a huge improvement in purchasing components, for example. All of that would point to a much more viable proposition than it was previously."

story continues below
story continues below

He added, "if this doesn’t work, the future for the brand will not be looking very good."

Urquhart forecast that by 2016, Daimler could sell 206,000 Smart models. That compares to 98,000 Smart Fortwos sold last year, a decline of 7 percent.

The cars will go on sale in November in Europe and next year in the United States.

Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Top Reader Comments Read All Comments Post a Comment
Click here to read all comments   Click here to post a comment

About Reader Comments

Reader comments on sltrib.com are the opinions of the writer, not The Salt Lake Tribune. We will delete comments containing obscenities, personal attacks and inappropriate or offensive remarks. Flagrant or repeat violators will be banned. If you see an objectionable comment, please alert us by clicking the arrow on the upper right side of the comment and selecting "Flag comment as inappropriate". If you've recently registered with Disqus or aren't seeing your comments immediately, you may need to verify your email address. To do so, visit disqus.com/account.
See more about comments here.
Staying Connected
Contests and Promotions
  • Search Obituaries
  • Place an Obituary

  • Search Cars
  • Search Homes
  • Search Jobs
  • Search Marketplace
  • Search Legal Notices

  • Other Services
  • Advertise With Us
  • Subscribe to the Newspaper
  • Access your e-Edition
  • Frequently Asked Questions
  • Contact a newsroom staff member
  • Access the Trib Archives
  • Privacy Policy
  • Missing your paper? Need to place your paper on vacation hold? For this and any other subscription related needs, click here or call 801.204.6100.