I'm red, I'm really, really red. Not orange, red. That's right RED!
Daimler Sees High Demand for Micro Car
By KEN THOMAS
WASHINGTON (AP) — Thousands of motorists want to be among the first owners of the fuel-sipping Smart car in the United States, demand that is racing past production capacity, Daimler AG executives said Tuesday.
Smart, which reaches U.S. dealerships in January, has received $99 deposits from more than 30,000 customers to reserve the two-seater and about 9 in 10 are placing full orders, said Daimler AG Chief Executive Dieter Zetsche. More than 50,000 motorists have taken the tiny vehicle for a test drive at road shows around the country.
"We were totally amazed by the kind of reaction we got," Zetsche said at a breakfast with reporters. He declined to release the vehicle's 2008 sales projections in the U.S. but said the orders are "going far beyond the production capacity we have available for next year."
The 8-foot, 8-inch Smart Fortwo, which can park nose-to-curb, is being marketed toward urban drivers, college students and baby boomers who no longer need a large vehicle. A spin aboard a Smart through a city neighborhood typically evokes stares and double-takes.
Smart USA President Dave Schembri said customers who order the vehicle now would likely receive it in late 2008 or early 2009 but some vehicles may be available for new customers prior to late 2008.
While 20 percent of the orders have been placed in California and the vehicle has drawn interest in East Coast cities, Schembri said the company has been surprised by the response in smaller markets such as Omaha, Neb., Jackson, Miss., and Tulsa, Okla.
The 1,800-pound car, which gets 40 miles per gallon on the highway, is about to hit the U.S. market as Congress imposes tougher fuel efficiency standards for new cars and trucks.
Amid concerns over climate change, the company is testing a fleet of about 100 electric-drive Smart cars in London. Zetsche said the company hopes to develop a similar partnership with a U.S. city to study electric versions of the vehicle.
To address safety, Smart has placed a steel safety cage and four air bags in the compartment to protect motorists and provides standard electronic stability control to help prevent the vehicle from swerving off the road. "Safety has to be a given," Zetsche said.
The Fortwo is designed to get four out of five stars on U.S. crash tests and recently got four stars on an equivalent European test.
Zetsche was the chief executive of DaimlerChrysler AG before Daimler sold 80.1 percent of Chrysler to Cerberus Capital Management earlier this year. Zetsche said Chrysler is not expected to be profitable next year because of the tough sales conditions facing the auto industry.
Smart, which was first launched in Europe in 1998, will build the vehicles in France and sell them through 73 U.S. dealers, including Mercedes dealers and dealerships that are part of the Penske Automotive Group, led by Penske Corp. and Smart USA chairman Roger Penske.
Smart, a division of Daimler AG's Mercedes-Benz brand, has a base price of $11,590 for the Fortwo Pure, while a Fortwo Passion Coupe starts at $13,590. The Smart Fortwo Passion convertible starts at $16,950.
Smart is a division of Daimler AG's Mercedes-Benz brand.
I wonder if I should reserve another smart and hope for a diesel?
A PHEV Smart. The state governments may even be tempted to buy ICE Smarts for hauling their state workers around in their states performing their duties. Let JQ Public test them first, though, before committing to a fleet of them.
There are too many political footballs to toss around trying to get the CDI rules changed for the Smart....as Fish has aluded to.....stupid rules that put the dinky little CDI Smart into the same class as a F350 Turbodiesel..... very dumb but that's bureaucracy.
An full EV Smart I think will be alittle further off due to development of Li Ion battery packs' present position in the race for that developing technology...but it is not too far away. I wish they would do a test of an EV SMART in Albany....not likely though, I don't think....not a large enough city.
I would volunteer to help test it in a heartbeat.
Let's face it, for years, the US car companies pushed the bigger mussel cars on the US market. OK, but when it came to smaller high MPG cars, sorry, but that was mostly ignored.
The Prius became popular, because of the high mileage, even with the higher cost. So now car makers are about to get a dose of reality in 2008 when a largely untaped market finds what they want...
Not producing cars hen the demand is there is insane!
Living in Michigan, I keep reading how much the auto industry is currently hurting since demand for new cars is way down, so the best solution only seems to be to cut back on supply so that they don't continue to 'overproduce'.
Then I read that Daimler won't be able to produce enough for the demand of the Smart car. Don't they realize that if they cannot fill the demand that buyers will seek other cars in the sub-compact category, whether they be Honda Fits, Yarises, or whatever flavor is economical and relatively inexpensive. They may want a Smart Fortwo, but when gas prices get way up there and they can't afford the vehicle that gets 12 miles per gallon, they will buy whatever economical car IS available at the time. I don't think they will politely sit by and wait another year or two to get the Smart when they can get more seats and almost as good of mileage NOW! I think Daimler better strike while the iron is hot rather than talk later about how they missed an opportunity.
Agreed. I'd be finding a way to get those cars out there to who wants them and make that money. I'm sure they will do all they can at the factory to try to produce as many of them as possible, but as it usually works out, it's either "everyone wants one now" or "no one wants one anymore".
While we all have our frustrations regarding our place in line, lack of info on production and delivery schedules etc, etc and all would like to get their car ASAP I disagree that demand greater than supply is a bad thing for PAG or for MB.
Long term pent up demand is exactly what a manufacturer wants. Look at Harley Davidson 10 years ago, look at limited editions of anything, look at the commodity markets and how supply and demand work and look at the current housing crisis.
Pent up demand allows for Price escalation, buyers fever etc, etc. Even though 2008 pricing has been announced and will apparently be enforced at announced levels significant pent up demand will allow for price increases in 2009 if PAG chooses to increase them.
10 years ago did some Harley wannabees walk away to other makes? Absolutlty! But this had no negative impact on HD's profitability or stock price.
The experience of the car companies is clear. When supply exceeds demand the price falls go shop for a PT Cruiser and you will see this clearly.
The best situation for everyone is when supply essentially equals demand but it is terribly difficult to accurately determine future demand and an error can be very costly.
Some would say that 30,000 deposits clearly indicates current demand for the US Smart but keep in mind those 30,000 people have made no significant committment to purchase---the $99 is fully refundable.
We all want what we want when we want it and those of us that feel committed to purchase a smart will be frustrated if we have to wait a year however this does not translate into ignorance or foolishness on the part of either PAG or MB.
Living in Michigan, I keep reading how much the auto industry is currently hurting since demand for new cars is way down, so the best solution only seems to be to cut back on supply so that they don't continue to 'overproduce'.
Then I read that Daimler won't be able to produce enough for the demand of the Smart car. Don't they realize that if they cannot fill the demand that buyers will seek other cars in the sub-compact category, whether they be Honda Fits, Yarises, or whatever flavor is economical and relatively inexpensive. They may want a Smart Fortwo, but when gas prices get way up there and they can't afford the vehicle that gets 12 miles per gallon, they will buy whatever economical car IS available at the time. I don't think they will politely sit by and wait another year or two to get the Smart when they can get more seats and almost as good of mileage NOW! I think Daimler better strike while the iron is hot rather than talk later about how they missed an opportunity.
As for the "big car makers", very likely they have cut back on production, but there are fixed costs like the plant and equipment that they have to deal with. Worse yet is the personal costs... If they lay off employees, that looks bad for the company. Also, there are contracts for purchases of supplies that they are required to buy. So, it's a bit more complicated than just cut back on production.
As for Smart, I believe that production will be increased and very likely they are trying to ramp it up now, BUT there are limits. The factory has only so much equipment and you can't build a bigger factory overnight. The dies and tooling takes time to make and personal has to be trained.
IF production is not running 24 hours a day and 7 days a week. They could increase production by adding an extra shift of people. However, this takes time to hire and train the people.
This is not unlike the Prius when it first caught on. People were waiting for months to get a Prius and paying top dollar (above the list price) for the car.
Bob Diaz
Last edited by BobDiaz; 12-05-2007 at 09:44 AM.
Reason: Typo...
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very dumb but that's bureaucracy.
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