Mercedes Benz is yet to decide whether the Smart brand has a future in Australia beyond its current generation of models.
The business case to import new versions of the ultra-niche city cars has not yet been established with head office in Germany.
Mercedes Car Group Australia Pacific managing director Horst von Sanden, has revealed a combination of factors – namely the high starting price of its wares – meant Smart had failed to gain the requisite traction here since it launched in 2003. The company has sold just 38 cars this year, down from 75 at the same point of 2013.
When asked to discuss a recent report from industry publication GoAuto that says the Smart brand is on the ropes in Australia, von Sanden says the company has not made a firm decision, but concedes a removal from the market was a possibility.
Australia is one of the most competitive markets in the world on a brand-per-sale basis, and the micro- and light-car segment is both hard-fought and shrinking in market penetration. The high starting price of Smart’s products and their polarising styling has made them a hard sell.
“At the moment we are obviously in early runout of the current model and talking to Germany about the future of the new model,” von Sanden says.
“How many do we need, what will the market absorb, basically all scenarios from how can we continue successfully with Smart and grow our volumes to the most extreme discussion of does Smart have a future in this country [are on the table].
“It is not a secret [that] Smart has not provided the volume which we hoped it would with the current model, and there’s a few reasons for that… maybe not enough marketing, but also maybe the marketplace when we first launched Smart was not ready for it.”
The new-generation Smart Fortwo and Forfour models premiered in Germany July 16. Germany’s Daimler AG unveiled a new version of its tiny, two-seat Smart models powered by a three-cylinder engine which is mounted between the rear wheels.
The new model is due on sale in Europe later this year priced from €11,000. In Australia, the current Smart ForTwo starts from $18,990 drive-away but Mercedes-Benz is yet to confirm the model for introduction Down Under.
Just 3500 Smart cars have been sold in Australia over the past 12 years and sales have been in free fall over the past five years while the overdue new model was being developed.
The new Smart – the third version, and the first since 2007 – is expected to do better at dealerships because it shares many parts with Daimler partner Renault’s Twingo, which should mean lower costs per vehicle due to higher purchasing volumes for parts.
Mercedes-Benz is also hoping the new Smart will find more appeal as cities and inner suburbs become more congested and parking spots become harder to find. The new model has the smallest turning circle of any car. The new smart fortwo sets a new benchmark: at 6.95 m (from kerb-to-kerb) and 7.30 m (from wall to wall) it makes turning manoeuvres extremely simple. And the new Smart forfour turns almost as compactly as the previous fortwo (wall to wall: 8.75 m). Its statistics are 8.65 m (kerb to kerb) and 8.95 m (wall to wall).
Renault already declared its new Twingo, which shares a platform with the Smart, a non-starter for Australia, while Volkswagen has already made the decision to axe the Up! from Australia, showing just how tough it is to crack such a price-sensitive part of the market here without cut-throat pricing.
“It is a very price conscious segment, and if you look at the competition they all sit at $15k and below, and it is hard to justify the extra premium. The consumers view on that will not change, they are prepared to pay a certain premium but the premium is certainly not 25, 30 or 40%,” Von Sanden adds.
Autotalk contacted Mercedes-Benz Australia for further commentary for this article, but this was not available at the time of publication.
Join the conversation