November 20, 2007 in Business

Smart car turns heads in L.A.

Associated Press The Spokesman-Review
 
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People examine Daimler AG’s Smart Car at the Los Angeles Auto Show last week.Associated Press
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Car of the year

Motor Trend magazine has named the new Cadillac CTS its 2008 car of the year, saying it is proof that Detroit can build a world-class sedan.

» The award, to be announced today, is significant because it shows the world that Detroit is back in the car business after years of focusing on sport utility vehicles and trucks, said magazine Editor-in-Chief Angus MacKenzie.

» The car’s appearance, fit and finish, quality of materials and performance rival that of its German and Japanese competitors, MacKenzie said.

Associated Press

LOS ANGELES – The Smart car is certainly making a smart move: Hitting the U.S. market just as gas prices pass the $3-a-gallon mark.

The 8-foot, 8-inch Smart Fortwo micro car is one of the stars of the Los Angeles Auto Show, where it’s trying to drum up buyers before it goes on sale in January.

Europeans have been driving Smart cars for a decade, but the Smart is just now hitting U.S. roadways. Smart USA President Dave Schembri, who worked on a team that considered a Smart sport utility vehicle for the U.S. market in the late 1990s, said the country just wasn’t ready for Smart at the time. But fuel prices and increasing concern about the environment have changed that, he said.

“We need to get smaller in society in terms of our consumption,” Schembri said.

Subcompact cars made up 2.4 percent of the U.S. market in the first 10 months of this year, compared with 1.7 percent a year ago, according to the Power Information Network, a division of J.D. Power and Associates.

Smart is now contacting the 30,000 people who have plunked down $99 to reserve the two-seater, a group that includes college students and Baby Boomers, RV owners and multimillionaires, Schembri said. California, Arizona, Texas, Florida, and New York are among the top states for reservations.

“It’s a car that has all the rational reasons to buy it, it has all the social responsibility reasons to buy it, and in addition, you get an emotional kick with this car,” he said. “When you go up to any traffic light or stop at any store, you get reaffirmed that you made a great purchase. People are giving you a thumbs up or a smile or taking your picture. What other kind of product can you buy and get that immediate admiration?”

The Smart’s base price is $11,590, and a fully loaded Smart Fortwo Passion convertible goes for $16,950. The 1,800-pound car gets 40 miles per gallon.

The cars will be made in France and sold through 73 U.S. dealers, including Mercedes dealers and dealerships that are part of the Penske Automotive Group. Roger Penske, a racing icon and chairman of Penske Corp., also is chairman of Smart USA. Smart is a division of Daimler AG’s Mercedes-Benz brand.

Some industry analysts are skeptical about Smart’s chances in the United States, where trucks, sport utility vehicles and crossovers still command more than half the market and gas prices, while rising, still don’t approach Europe’s.

Schembri won’t say how many vehicles Smart hopes to sell in 2008, but Aaron Bragman, an analyst with Global Insight, said he doesn’t expect more than 20,000, and sales will probably fall off after that. By comparison, the Toyota Yaris – the most popular subcompact on the market – sold 73,874 units in the first 10 months of this year, according to Autodata Corp.

“I think it will be a novelty,” Bragman said. “It’s a very niche market, and I’m not very sure it has much staying power.”

Bragman said for the price, buyers could get a used car with a lot more space and practicality. Unless gas prices hit $5 to $6 a gallon, he said, it’s hard to picture Smart gaining much ground.

Even in Europe, Smart has never been profitable. Daimler announced a restructuring of the division last year, when sales fell to 102,700 vehicles worldwide from 124,300 in 2005.

Another issue for some consumers will be safety. Smart has a steel safety cage and four air bags, including two in front and two on the sides to protect the head and abdomen. It also has standard electronic stability control, which is designed to stop vehicles from swerving off the road. But the small size is off-putting to some drivers, particularly if they’re driving in the shadow of a hulking SUV.

Schembri said the Smart Fortwo is designed to get four out of five stars on U.S. crash tests and recently got four stars on an equivalent European test. The U.S. government will test the Smart car after it arrives on the market.


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