In Its First Year, 25,000 Americans Get Smart (Cars)

The Smart car franchise is off to an excellent start for 2008, with everything most other brands lack, in today’s terrible market for U.S. auto sales: a backlog of orders, customers willing to pay sticker price, and dealers asking for more inventory.

That’s according to Roger Penske, chairman of Penske Automotive Group, which has the U.S. distributorship for the Smart franchise. Mercedes-Benz parent Daimler builds the Smart. U.S. sales began in February.

“Every vehicle, we’re getting MSRP,” for manufacturer’s suggested retail price, Penske said in an Oct. 30 conference call. Discounts on virtually every other vehicle in the U.S. market mean almost no one pays sticker price. Other manufacturers are offering brand-new 2009 models with discounts on them, right out of the box.
 
If anything, Penske said his company has to discourage dealers from charging more than sticker. The industry calls that “gouging.” Dealers are more likely to call it supply and demand; the alternative to which is, “leaving money on the table.” Besides its cute-as-a-button apperance, the key to Smart’s appeal is an EPA-estimated 33 mpg city/41 mpg highway.

Penske said he expects 2008 Smart sales of about 25,000 to 27,000 units. The sole U.S. model is the tiny fortwo (Smart itself doesn’t capitalize anything, including the Smart brand). Sticker prices start at $11,990 for the stripped-down “Pure” variant, to $16,990 for the “Passion Cabriolet” convertible.

For next year, Smart is adding higher-performance variants tuned by Brabus, which has been modifying the current Smart car in Europe for a couple of years now. Turbocharging boosts the little three-cylinder engine from 70 hp to 98 hp in European editions. The Brabus edition also gets fatter tires, alloy wheels and sportier styling.

Penske said the Brabus version will cost an extra $3,000 to $4,000. That’s a huge premium for a car with such a low sticker. Yet customers put down $99 reservations for 1,800 Brabus cars recently, on the very first day Smart made reservations available, Penske said.

He added that in the planning stages, Smart thought about 10 percent of the customers would order base model fortwo, but in fact Penske said the cheapest car only accounts for about 4 percent of the mix.

Smart is, “the right car at the right time,” Penske said.