OT- Edsel a Home Run (autos)

Backseat Driver Cute, Yes. Smart, No! Jerry Flint, 08.29.06, 6:00 AM ET

The worst traffic, the tightest parking that I have ever seen is in Paris. Compared to Paris, New York City is heaven, but I saw no road rage over there. Taxies actually stopped to let pedestrians cross the street. I didn't see obscene hand gestures or hear much honking. I suppose the French have not invented words for road rage yet, and they do not do anything they can't pronounce.

But what I did see were Smart cars, lots of them. Now they call the little two-seater the "smart" with no capital S. I will call it "Smart" in this article, to avoid confusion. These tiny cars were easy to navigate through the narrowest streets and squeeze into parking spaces fit for a kiddy bike. People tell me there are even more of these cars in Rome. Paris and Rome are Smart cities. In fact, DaimlerChrysler (nyse: DCX - news - people ) has sold more than 750,000 Smarts worldwide since its introduction in October 1998. Even the car's full name is cute: the Smart Fortwo.

But make no mistake. Smart is an automobile disaster. The Ford Motor (nyse: F - news - people ) Edsel of the late 1950s was a home run compared to the Smart. Several years ago, one of the highest-ranking Daimler executives told me that Smart losses had reached $3 billion. That was years ago, and they have just taken another $1 billion write-off. So I estimate that at this point the Smart project has cost DaimlerChrysler more than $5 billion.

Why? Because it was a dumb idea to begin with. You might recall the concept came from the Swatch watch people. A cute, little car with side panels that you could change to match your dress. Are you kidding? "Honey, do something for me. I am wearing red to Le Wal-Mart. Could you go out and change the body panels on the car to the black ones, s'il vous plaît?"

Daimler's board accepted the idea without doing an extensive study. What came out is an underpowered two-seat car. Smart also built a new factory, with capacity to build 220,000 units per year, surrounded by a supplier park with new factories. I figure the annual breakeven was 200,000 vehicles.

No two-seater in the world had sold anywhere near 200,000 units per year. Usually two seaters are sleek, romantic roadsters, and fast, too. That is not Smart. Since its introduction, Smart sales have hovered around 100,000 per year, half the initial production capacity.

In short, the Smart is a car that cannot carry more than two, cannot carry much and cannot go fast. This car is not good for a run down to the Rivera or on the super highways of Europe. True, the Smart is good to park, but people usually buy cars to go places and carry things, not to park.

The new DaimlerChrysler management, headed by Dieter Zetsche, considered killing the car. That has not happened. First, it is always embarrassing for management to admit to a mistake, and second, the factory in France was a symbol of German-French partnership, and it is unpleasant politically for Germans to lay off all those Frenchmen.

Now, instead of being canceled, Smart is coming to the United States. This is actually the second attempt to bring the car to this market. A few years ago, Mercedes set up an operation to sell the car in the U.S. but then cancelled the project. Now management is being smarter about it: Instead of selling the car through its Mercedes or Chrysler channels, they have picked United Auto Group (nyse: UAG - news - people ) as the exclusive distributor.

United Auto, which Roger Penske runs, will recruit dealers to sell the car. This is a good move. For starters, Penske is brilliant, knows how to hold down costs and how to sell cars. This also keeps any failure risk away from the parent company.

DaimlerChrysler is not looking for big sales; my guess is somewhere between

15,000 and 30,000 units per year, through 30 to 50 dealers, at first. Those are modest numbers and a tiny slice of a U.S. auto market of 16.5 million. For reference, BMW sells 40,000 Minis per year in the U.S.

No doubt, there will be lots of publicity in New York and Los Angeles, featuring celebrities in their politically correct little cars. But the Smart is too small for the U.S. The present model is just 98 inches long. In contrast, the Mini is 144 inches long; a Chevy Impala is 200 inches. I have driven a Smart, and it can get scary. Entering a freeway with a Smart is not a pleasant experience, and you don't want to be alongside a Chevrolet Suburban when the driver suddenly decides to change lanes.

Smart will have a new model when the U.S. deliveries start early in 2008, and it could be a few inches longer, but we are still talking about a tiny car. The present plan is to offer the standard coupe and a convertible. At one time, DaimlerChrysler had planned a larger four-seater and a small utility vehicle for the U.S., but that was a "journey that was not taking us anywhere," says Dieter Zetsche, who also predicts Smart will be profitable next year, meaning they have written off much of the cost.

Another problem: The price here for the French-built car could be as much as $15,000, thanks to the strong euro and mandated safety and emissions equipment. DaimlerChrysler currently sells the Smart in Canada, with a diesel engine, at a rate of fewer than 4,000 per year. For about the same money, you can buy a number of regular small sedans, with back seats, trunks and engines with at least 100 horsepower. In short, the alternatives to Smart are real cars.

You have heard the expression, "rich man's toy"? The Smart is it.

Reply to
Kevin Wolford
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Wanna see one hit a wall at 70 MPH ?

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Kev> Backseat Driver

Reply to
John Poulos

I'd probably prefer a Smart to a Trabant, but a Yugo would be better, and far more affordable.

-- Barry'd in Studes

58 Packard Hawk 40 President 39 Coupe Exp. 59 DeLuxe 1/2 tn. 56 Packard "400"
Reply to
Barry

Who Cares? I don't and I doubt anyone on the NG cares either. When we have a choice it is usually whether we want the champion six or the lark six to drive for economy. Smart Cars SO WHAT.

Or a Goggomobil.....Studebaker was seriously considering importing the

2-seater from Germany back in th late fifties!! And it wouldn't be anywhere near as safe!

Craig

Reply to
Craig Parslow

Reply to
Brian Scott

Brian Scott wrote: Not such as found here

I suspect it will do well in locations like Hawaii, Southern Florida, and maybe in Las Vegas; especially as rent-a-cars.

Craig.

Reply to
studebaker8

As an avid reader of everything automotive from the Postwar era of Studebaker production, I became a big fan of "Uncle" Tom McCahill. Old Uncle Tom was known for his blunt one liners and frank reviews. He had quite a following in the 50's and 60's, and kept Mechanics Illustrated afloat as a magazine through that period as far as I can tell. Even if you didn't like what he had to say, you kept reading the article for Uncle Tom's pure entertainment value. And you knew his endorsement couldn't be bought.

Anyway, I never thought Uncle Tom had a modern day equal. Until I found Jerry Flint. Jerry writes for Forbes Magazine and the Detroit News. Jerry started writing in 1957. He had to be a student of the craft during the height of Uncle Tom's career.

There are facts in this article other journalists will likely skim over in their articles about Smart. GM can pay $1 Billion to get out of a bad Fiat deal and receive scathing reviews and barbs from todays journalists. Daimler can lose $5 billion in the Smart fiasco and be made out to look like a hero. Proves that few in "automotivedom" care to even try to learn from the Studebaker and Edsel chapters of automotive history.

Reading this article is like having Uncle Tom back from the 50's to tell us the story.

Reply to
Kevin Wolford

For those of you not familiar with Uncle Tom:

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Reply to
Kevin Wolford

Again I say SO WHAT. Nobody here or anywhere else apparently is going to buy one of the blasted things. There is no law against stupid decisions old and in the past or failing to learn from the mistakes of others. The entire automotive industry cannot seem to learn that as it will continue to make the same mistakes again and again and again....... The sad fact is that millions of people that put their heart and soul in to there job are affected by the stupidity or outright stealing of those in the higher management. Enron anyone?

Bob Miles Tucson AZ

Reply to
bob m

Just think. Studebaker held exclusive rights to distribute Mercedes-Benz in the 50's and early 60's, and Studebaker Corporation formed the Mercedes-Benz Sales Division of the Studebaker Corporation to sell the cars here in the UP.SO. Some Studebaker dealers also carried Mercedes-Benz during the period Mercedes-Benz was distributed by the Studebaker Corporation. Studebaker dealers, if they still existed, would have been considered to sell the Smart today. Maybe the post is not off topic, as I clearly labeled it?

Reply to
Kevin Wolford

Maybe not, but much as I love the Studebakers and Packards, clearly the company that produced the cars has been dead as a dodo since 1956 for the Packard, and 1966 for the Studebaker. AMC left the business in 1984 when they started producing the FrancoAmerican Alliance. The Lark was the last hurrah; company diversified after that. What did GM, Ford, D-C do after the huge profits they made in the 80's after several lean years? Invest in the company product? No, they bought other companies not related to the core business then shed the companies when times got tough. Toyota is having QC issues now. What did they do? Delay the introduction of new models until the problem is under control. Ford introduces a new diesel big truck. Jeep is producing it's version of the PT Cruiser. GM--Who Cares. Maybe dusting off the Camaro again.

If you core product does not catch on, all the niche products will not help. Avanti Hawk GTO SS Cobra Suburban Explorer Durango might help for a bit, but the average person wanting a reliable comfortable everyday work horse 4 door sedan that is economical will probably buy from a company that has invested in that core product, which is probably going to be an import.

Bob Miles Tucson AZ

Reply to
bob m

Okay, that's fun to watch ;) Sure is an ugly little thing, though.

Reply to
showbizkid

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