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First successes of the new smart business model


September 2005
 Filed under: SMART Car News | SMART Headlines
Böblingen -- Speaking at the Frankfurt Motor Show (IAA), smart President Ulrich Walker, took a confident view of smart’s future. smart’s new business model, he explained, is already bearing fruit: smart’s two mainstays, the smart fortwo and the smart forfour, are continuing to win market shares, the number of smart sales and service outlets is constantly on the rise, fixed costs have been reduced by 26 percent, and plans to launch the successor to the smart fortwo onto the US market continue to be developed. Thus the scene is set for a successful future for smart.

“We have been working long and hard over the past few months. However, it's not all just hard grind. We have also been achieving sustainable success,” explained Ulrich Walker at the smart press conference at the IAA on 12 September. “Our sales have increased by 11 percent compared with the same period last year – even despite the extremely challenging market situation within the small car segment. What is even more important is that our market shares are also growing – this is a claim that only very few manufacturers in the segment are able to make. In short, smart is facing up to the competition very well.”

In terms of costs, Walker says that considerable savings potential has already been realised. The company's product portfolio has been adapted to the difficult market situation. Consistent streamlining of the organisation has allowed the cost structure to be radically altered, and fixed costs to be reduced by 26 percent so far. Production costs are another area in which savings potential has been identified.

On the sales side, good progress is being made in terms of expanding the dealer network. Since the beginning of the year, smart has increased the number of its sales and service outlets by more than 20 percent. “In absolute terms that means 195 new outlets across Europe. This helps to make us all the more accessible for our customers,” explains Walker.

Walker stressed that he intends to implement a “controlled drive”, in order to tap into further potential in new markets. This strategy has already proved very successful in Canada, where sales of smart cars have so far been twice as high as planned. In 2005, this trend is continuing uninterrupted. As Ulrich Walker says, “That gives us confidence in terms of entering the US market.” Here he is referring to a market which, according to research by smart, could represent sales of some 20,000 additional vehicles per year. Walker says that the decision as to whether the USA is to become a new smart market is set to be made before the end of this year. Walker stressed that, despite this positive development, smart is staying realistic. “We are still dealing with a number of external and internal challenges, which will take some time to sort out.” He also emphasised that, for smart, one of the most important factors for ensuring its success is the positive development of the market segment. This segment is currently stagnating, thus leading to highly destructive price and discount wars in the small car market.

Nonetheless, as a permanent member of the Mercedes Car Group, smart can look confidently into the future. As Walker points out, “So far we have brought 800,000 smart vehicles onto the roads worldwide. And, listening to what customers have to say, it is clear that after just seven years on the market, people’s fascination with our brand is enormous, and very firmly established. This is a unique achievement in the small car segment!”

Walker sees the smart crosstown show car, which is being presented at the IAA, as proof of the potential of the smart brand. It is based on the smart fortwo – a car that Walker described as the “brand icon”. The smart crosstown has hybrid drive and, according to Walker, its smart-typical, innovative, fresh design also makes it highly attractive. This concept is further proof that the vehicle fulfils the claim to environmental-friendliness which all of smart’s current production models already satisfy. With sales of more than 120,000 units, the smart fortwo cdi is the most successful “three-litre” car in the world.

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