Daimler to launch Smart car in US in 2008


DETROIT, June 28 (Reuters) - DaimlerChrysler AG (DCXGn.DE: Quote, Profile, Research) said on Wednesday it will launch its two-seater Smart minicar in the United States in early 2008, as fuel prices shift consumers' attention to more economical vehicles.

Smart Car
The world's fifth-biggest carmaker said it had selected UnitedAuto Group (UAG.N: Quote, Profile, Research) as its exclusive distributor for the quirky car, which is already established in European markets.

The sticker price of the car, which will be marketed for its hip, urban appeal, will be less than $15,000, Roger Penske, UnitedAuto's chief executive, said during a news conference. A convertible version will also be available.

Most of the sales effort is expected to be focused on big cities such as New York and San Francisco, where the companies are betting consumers will be drawn to the practicality of the car on crowded streets and its almost unmatched fuel economy.

"The time has never been better for this -- and I am convinced that the Smart ForTwo as an innovative, ecological and agile city car will soon become just as familiar a sight on the streets of New York, Miami or Seattle, as it is today in Rome, Berlin or Paris," Dieter Zetsche, chairman of DaimlerChrysler, said.

The money-losing brand's move into the United States represents an attempt to broaden DaimlerChrysler's market for subcompacts. Smart has lost money since the brand was launched in October 1998.

"They were looking at this several years ago, but gas was $1.50 a gallon, and there was very little interest from this market," Dave Cole, Chairman of the Center for Automotive Research said. "That, of course, has changed and a small car is a consideration."

"It's hard to say how well it will do, but small cars are doing very well here right now," Cole added.

The car, which gets an average of 40 miles per gallon, is made in France and will be imported. Zetsche said there were no plans to produce the vehicle in the United States.

UnitedAuto will build the dealer network and handle all the marketing, Zetsche and Penske said.

DaimlerChrysler's business plan calls for selling around 20,000 Smarts a year in the United States, especially to chic, urban consumers on the East and West coasts. That would be about half of U.S. sales for rival BMW's (BMWG.DE: Quote, Profile, Research) Mini.

Smart's ForTwo will also compete with a spate of new subcompacts that have been recently launched in the U.S. market, such as Honda Motor Co. Ltd's (7267.T: Quote, Profile, Research) Fit and Toyota Motor Corp.'s (7203.T: Quote, Profile, Research) Yaris.


The initial roll-out of about 30 to 50 dealerships is expected to start in mid-2007, with the official launch of the new version of the ForTwo planned later that year.

The current model is just over 8 feet long, allowing it to slip comfortably into half a parking space, and has a three-cylinder engine.
Ulrich Walker, head of the Smart division, when asked if the new version will be bigger to suit American tastes, told Reuters, "The overall concept is for a two-seater with a giant trunk."

He added there would be more storage room in the new version.

The car will also be engineered to meet all U.S. regulations.

The Smart is already sold in 36 countries. Italy is its biggest market with annual sales of around 40,000 units.

Daimler originally planned to launch the Smart brand in the U.S. market as a mini sports utility vehicle, but that strategy collapsed as mounting losses triggered radical surgery at the unit.

Smart is slated to post a profit only in 2007, even though the company has made sweeping job cuts and chopped the line-up to just the two-seat ForTwo model.

Smart sales in the first five months of 2006 fell 21.5 percent to 49,400 units.

Source: Reuters