Convention catches up with the Smart

Slow sales have seen DaimlerChrysler rethink the Smart’s positioning, from fun and fashionable to a more upmarket brand. John Stones reports

The Smart may look like it was inspired by 2001: A Space Odyssey, but it has landed on Earth with a bump. Relatively disappointing sales mean that DaimlerChrysler will roll out new models, including a sports car and a four-seater, creating head-on competition for the first time.

DaimlerChrysler was forced to write off $486m (£302m) in 2001 to compensate suppliers after lower-than-expected worldwide sales, while anticipated production of 200,000 units was reduced to 130,000. Last year, 122,300 cars were sold worldwide, of which the UK accounted for 7,900, double its 2001 figure. The diminutive two-seater Smart was officially launched in the UK in 2001 as the City-coupé and Smart Cabrio models, although imports were available previously. Prices start at £6,500.

Smart UK head of marketing Sam Bridger accepts that the brand is at a critical juncture and is reviewing the £2m advertising account, held by Maher Bird Associates since launch (MW last week). She says the main customers are urban, affluent males, with relatively few models going to businesses. There has been a limited take-up of the Smart by hire companies Hertz and easyCar for their most fashion-conscious central London outlets.

While the car’s innovative design has won plaudits, the jury is still out on whether the venture can become a success. Experts say the cost savings of producing a small car are minimal, restricted mainly to material costs, while savings in other areas have been hard to find. John Lawson, automotive industry analyst at investment bank Smith Barney, adds: “The brand has been a disappointment from the start in terms of price and the cost of distribution.”

But he agrees the Smart has help-ed DaimlerChrysler’s image and gained plenty of coverage for the company. He says the idea of a cheap and fashionable urban runabout has been eroded and the car now appeals to the well-heeled. The concept was first dreamed up with original partner Swatch, maker of the ubiquitous funky watch brand, but Swatch sold out to the German car maker in 1998 when the Smart went on sale.

Professor Garel Rhys, of the Institute of Automotive Industry Research at Cardiff Business School, suggests that the Smart brand has functioned as a laboratory for DaimlerChrysler to experiment at arm’s length from its conservatively positioned Mercedes brand.

He says DaimlerBenz was stung by criticism of its conservatism in the early Nineties and the claims that arch-rival BMW appealed more to younger buyers. He notes that BMW’s fashion brand, the Mini, is now marketed conventionally, albeit successfully, to the mass market. He believes the Smart, if it becomes an undisputed success, could eventually carry the Mercedes badge.

In Continental Europe, retail outlets store the cars in glass multi-story towers before delivery. Bridger says these are distinctive enough to feature as local landmarks and is looking to introduce them to the UK once the towers have been re-engineered to accommodate the new, larger models.

At launch in the UK, consumers were encouraged to buy their Smarts online. Now, as part of the overhaul of the brand, the UK website is being updated, but online purchase has been discontinued.

DaimlerChrysler is tight-lipped about how many purchases took place via the internet and is reviewing whether to reintroduce the facility. Other marketing channels include being the first car brand to use SMS text messaging in the UK and trials of talking petrol pump ads, later abandoned.

Smart UK has only four dedicated outlets, in London, Manchester, Birmingham and Milton Keynes. But another 40 franchises have been awarded to Mercedes dealerships, a move Bridger describes as simply the most expedient way of increasing distribution.

“We don’t attract conservative buyers,” she says, adding that the Smart is bought as part of a stable, rather than an all-purpose vehicle. As things stand, the Smart is predominantly sold alongside Mercedes cars, still quintessential icons of bourgeois respectability and conformity, and at odds with the self-consciously confrontational Smart.

The original model has no direct rivals but this will change when the range is extended this autumn with a roadster – an open-top sports car – followed by a more conventional Smart Forfour, four-door next year.

The roadster will face competition from the similarly priced Ford StreetKa and will also be perilously close to Mazda’s best-selling MX5, which is only £2,000 more expensive at £15,500.

Smart UK is now considering its first terrestrial TV campaign based on creative work by Springer & Jacoby in Germany, which holds the European account.

Other brands have been eager to leverage off the Smart’s strong image. NCP offers cheaper parking for Smarts, and some ferry and train operators are also offering discounts, ostensibly to reflect the cost savings of the Smart City-coupé’s small size.

EasyGroup chairman Stelios Haji-Ioannou squeezes his larger-than-life personality into an (orange) Smart for the narrow streets of Mon-aco. The question is whether Smart can overhaul marketing and distribution to entice more conventional consumers into its cars.


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