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Smart seeks a way to secure its future

The Smart is often used in Switzerland for advertising. swissinfo.ch

Smart – the small car that was launched with Swiss backing and high hopes in 1998 – is desperately looking to reverse its fortunes amid dwindling sales.

This content was published on February 3, 2006 - 10:32

The Smart has never made a profit and is far away from the dream of Swatch group chairman, Nicolas G. Hayek whose original vision was of an environment-friendly car with room for "two people and a crate of beer".

Hayek pulled Swatch out of the project years ago but has now seen the boss of the present owners, DaimlerChrysler, to explain how the project might be rescued.

Nicknamed affectionately the Swatchmobile at the outset, the Smart has lost up to €4 billion (SFr6.19 billion), according to auto sector analysts.

Project pioneer Hayek had sharp words for the new DaimlerChrysler management chairman, Dieter Zetsche.

Hybrid

"The Swatchmobile was intended to be an environment friendly, low-priced, small car with a hybrid engine.

"You have made a farcical small version of a Mercedes out of it," he mocked in an interview with the NZZ am Sonntag newspaper.

The entrepreneur said costs were a problem, and his former project partner Mercedes had made a number of mistakes.

"Mercedes buys too expensively, produces too expensively and so the price of the Smart is much too high for the low price segment. We originally foresaw a price of around €7,500."

Hayek also criticised the expansion of the Smart into other models - including the Roadster and the four-seater Forfour with a Mitsubishi engine - as further mistakes in brand strategy.

Courageous step

Hayek invited Zetsche to make a courageous innovation step with a "Big Bang" in the hybrid system.

"You can see that hybrid development is on the march around the world.

"We have several prototypes which you [DaimlerChrysler] know of and which have good market chances," he said.

In the meantime, the Japanese producer Toyota has made a name for itself in the development of the environment friendly hybrid engine, while sales of the Smart using conventional technology have never come up to expectations.

In Switzerland alone, sales fell by 23 per cent in the first 11 months of 2005 to about 3,000 cars. Sales in Europe as a whole showed a slender increase of 2.3 per cent to 143,000 but this is considered way off target.

When the first Smarts rolled off the production line in Hambach in eastern France, the media had a field day taking photos of Hayek with the then chancellor Helmut Kohl inside one. Now the harsh reality has set in.

Zetsche has promised Hayek that he will send Mercedes people for further talks with him at Swatch group headquarters in Biel.

But Hayek has commented that he knows that watches in the car industry don't tick particularly quickly.

swissinfo, based on an article previously published in NZZ am Sonntag

Key facts

Smart is short for Swatch Mercedes ART.
The original car is produced at a purpose-built Smartville complex in Hambach, eastern France.
In Switzerland, sales fell by 23% in the first 11 months of 2005 to about 3,000 cars.
Sales in Europe as a whole showed a slender increase of 2.3% to 143,000.

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In brief

The initial plan of Nicolas G. Hayek, the president of the Swatch group, was to team up with Volkswagen, but a partnership never came about.

Mercedes Benz filled the gap, taking a 51% stake. The Swatch group (then SMH) held the remaining 49%.

The joint venture experienced heavy losses and Swatch pulled out.

Hayek has never made it a secret that he still believes firmly in a hybrid-powered car for ecological reasons.

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