Daimler AG, the owner of smart, is taking over US distribution of smart cars. According to Penske's press release, this "marks a further step in implementing the future growth strategy of the smart brand." That's one way of interpreting these events.
Another, more critical, interpretation is that Penske is cutting its losses. Smart has never been a profitable venture for Daimler. Even before bringing the brand to the US, sales of smart in Europe were decreasing rapidly, causing Daimler to spend billions of Euros to rescue the brand.
The model line-up has remained almost identical for years. And the benefits of having such a tiny vehicle did not extend to a correspondingly high fuel economy. The smart fortwo coupe and cabriolet EPA numbers suggest 36 mpg combined. That's not bad, but a 2010 Honda Fit, which by all accounts is a much superior car, achieves a combined 31 mpg. To make matters worse, the upcoming Fiat 500, which will probably sell in reasonable amounts due to its looks alone, should achieve 30/38 mpg. Most hybrids achieve even better mileage.
That Daimler decided it needed a partner to distribute smart vehicles in the US is telling. Elsewhere in the world, Mercedes distributed smart vehicles. Presumably, the company felt the need for a partner to decrease the financial risk associated with bringing these vehicles to market. That appears to have been a sound assumption.
As for the future, the company is expected to debut an electric fortwo in 2011. Apart from that, there are no additional models scheduled for three years. We will see if this will be enough to save the brand in the US market.
Not disclosed, but very interesting, are the details behind this transaction. I seem to remember John McElroy advising Penske to sell the franchise once the brand takes off. It looks like they took his advice, only a little too late.
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