DETROIT, Oct 25 (Reuters) - Penske Automotive (PAG.N: Quote, Profile, Research) Group expects to sell up to 25,000 two-seat Smart cars in the United States next year, as the dealership chain remains on track to launch the car in the first quarter of 2008.
Penske Automotive Chairman and Chief Executive Roger Penske said on a Thursday conference call the retailer had 35,400 reservations for the Smart car, produced by the Mercedes division of German automaker Daimler AG (DAIGn.DE: Quote, Profile, Research).
"We currently expect to sell between 20,000 and 25,000 vehicles in 2008," Penske said on the call.
Sales and service will be handled by Smart USA, a division of the Penske Automotive Group, which is distributing the car in North America.
"We've had tremendous interest in this vehicle," Penske said. He added that there is capacity to make 130,000 to 140,000 cars annually, but the retailer is only making cars after taking orders for them.
The basic Smart car will start at $11,590, while the convertible's base price would be $16,590, Penske said. The first cars will be in U.S. showrooms in December.
Penske said customers, when reconfirming their order, are asking for more options than the company had originally expected.
"People are buying a car with more content," Penske said. "In fact, the reconfirmation reservation is adding another $1,000 (to their order)."
Bear Stearns in June upgraded Penske Automotive Group to "outperform" from "peer perform," saying the company's shares would benefit from broader consumer and market awareness of the Smart micro-car.
The company said target customers for the Smart car include: first-time car buyers, urban sophisticates, baby boomers looking for a second car, and "empty-nest" parents.
The Smart car is less than nine feet long, has a fuel economy of 40 mph, and is designed to make a 6-foot, 5-inch driver and passenger feel comfortable, the company said.
So far, the Daimler unit has been unprofitable since its launch in 1998. Despite about selling 750,000 cars in 36 countries, the company has lost billions of dollars.
Sales fell to 102,700 units in 2006 from 124,300 vehicles in 2005. Daimler Chief Executive Dieter Zetsche has made profitability at Smart one of his priorities.
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