Penske's Smart start: He'd like 15,000 more
Diana T. Kurylko
and Richard Truett
Automotive News | March 24, 2008 - 12:01 am EST
NEW YORK — Demand for the Smart microcar is strong enough that its North American distributor figures he could sell 15,000 more than he's likely to get from Europe this year.
But the Smart factory is running full tilt and can't produce any more cars because suppliers can't deliver more parts, said Roger Penske, CEO of Penske Automotive Group, which imports the cars. Smart is a brand of Mercedes-Benz and is sold only by an outside distributor in this country.
Penske said last week at the New York auto show that the United States is likely to get only 25,000 Smarts this year — all to be delivered to customers who ordered them on Smart's Web site. Penske figures he easily could sell 40,000 Smarts in 2008.
He said he hopes to hear from Mercedes soon about a production increase for the United States.
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The ramp-up of Smart sales in the United States, which began in January, has been slow but largely free of problems, said David Schembri, president of Smart USA. Schembri said Smart expects to deliver 3,000 cars by the end of the first quarter through the 67 dealers that are operating. By the end of the year, 74 dealerships will be open.
With Smart's order backlog, customers wanting a car may have to wait until next year in the hottest markets, such as California, said Schembri. But dealers are experiencing cancellation levels as high as 25 percent in some markets where customers have declined delivery of an ordered vehicle. Buyers only have to put down a refundable $99 deposit when ordering a car.
Schembri would not give the specific number of cancellations but said it's low. Dealers can resell those cars to other customers, but dealers have agreed not to mark up the cars and risk losing their franchise if they do so, said Schembri.
Penske said the company does not plan to expand beyond 74 dealerships. At that level, the average dealer investment of about $700,000 per store is protected, he said.
Most Smart stores in the United States are owned by Mercedes-Benz dealers.
Roger Penske: No plans to expand beyond 74 dealerships.
Entire contents ©2008 Crain Communications, Inc.
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