By Shawn Langlois
MarketWatch
September 27, 2007
Pet rock or the next step in the greening of America?
When it comes to the Smart ForTwo, a little bit of both could amount to a big U.S. debut for Daimler's extra-tiny-micro-compact car next year.
Measuring just over 8 feet in length and capable of squeezing into a parking spot nose to curb, Smart is slated to arrive in January with a sticker price starting at under $12,000
The company said it has already received more than 30,000 registrations from potential buyers, setting Smart up for a rosy start.
Dave Schembri, president of Smart USA, has spent the summer touring U.S. cities to help build a buzz and dispel the notion that Smart might be a little too niche-oriented.
"First time buyers will be attracted to its price tag. Urban dwellers, because of its urban applicability. Baby boomers who want a second or third car. Empty nesters will want it, they don't need a back seat," he told MarketWatch last month in New York.
George Hoffer, economics professor and auto analyst at Virginia Commonwealth University, doesn't doubt that the car will garner plenty of attention, at least initially.
"Smart is reminiscent of the freakish cars from the late 1950s, like the BMW Isetta and the Goggomobil," he said.
But questions remain as to whether the cuddly cousin of the golf cart can transcend the quirk factor and find a long-term home on the country's open roads, long the domain of hulking trucks and sports utility vehicles.
Smart launched in Europe about a decade ago and the ForTwo hit the Canadian market in 2004. Owner DaimlerChrysler is now looking to the lucrative U.S. market to bring the brand to profitability, status it hasn't enjoyed since it was formed in 1998.
"With all the pent-up demand, we should see strong sales in the first year, but I'm not convinced it has staying power," Jack Nerad, market analyst at Kelley Blue Book, said. "It could turn out to be a flavor of the month car. Might be more of a fad than say the Mini."
Certainly, the Mini, a massive sedan by comparison, is no passing fancy. BMW's iconic small car ridden years of growth in the U.S. Just last month, Mini sold 4,077 cars, up more than 25% from a year earlier.
And Smart's price tag is about half that of the Mini.
Then again, there are bigger, just as fuel-friendly, four-seater subcompacts out there that cost roughly the same or even less. The Chevy Aveo, for instance, starts under $10,000. A well-equipped Smart will likely cost upwards of $15,000, which puts it up against the Toyota Yaris and Nissan Versa.
And with the growing popularity of the small car segment, more competitors are on the way.
Hence, Art Spinella, head of CNW Marketing Research in Bandon, Ore., said the price point is key in the increasingly crowded "urban X model" lineup.
"While the most success for Smart will be in urban environments, there seems to be fairly strong interest in both semi and rural areas," he said. "Expect a very quick sales start."
This at a time when overall industry sales are in the tank. Oddly enough, that could provide a tailwind to Smart as it looks to make it's name in the world's most important car market.
"Smart is almost playing to the strength of a recession."
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