DETROIT – It isn’t very often that you see Roger Penske fail at anything, but selling smart cars in the American market even proved to be too much for Mr. Penske. Mercedes-Benz USA is going to take over the distribution of smart from the Penske Automotive Group, The Car Connection reported Tuesday.
Interestingly, Mercedes is not buying back the distribution rights, the PAG is essentially giving them to Mercedes, suggesting PAG really took a financial bath on the whole deal. It was easy to foresee that smart would not succeed. For one thing, it had essentially been a failure in Europe, where the cars never sold well, and the brand lost money ever since they started building cars.
Some background: back in the DaimlerChrysler days, when Tom Stallkamp, the president of Chrysler, suggested to the board that they drop smart because it was losing money with no hope of every making a profit, he was pushed out of the company. Worse, the cars themselves were not very good. They have a horrible automatic transmission, they don?t ride well, and their fuel economy, about 35 miles per gallon, isn?t that great considering how small they are. Penske brought in Jill Lajdziak, who had been running Saturn, to try and breathe some life into sales. Recently they?ve been hyping an electric version of the smart. None of that worked.
He also contracted Nissan to build a version of the Micra for smart to sell, but now that deal has been cancelled, too. Mercedes will soldier on with the brand, waiting for new models that will be based on a platform from Renault, because it needs small cars to meet U.S. fuel-economy regulations. Even so, it?s amazing to see how committed Daimler is to a brand that has lost money for its entire existence.
“We are very excited about working toward integration of smart into the MBUSA organization, and look forward to working with our dealer partners to exceed customer expectations for this unique vehicle,” said Mercedes-Benz President and CEO, Ernst Lieb. “The addition of smart, combined with our Autohaus dealer initiative, will help us build upon the tremendous momentum the Mercedes-Benz brand had achieved here in the U.S.”
The addition of the fuel efficient smart fortwo and smart fortwo electric vehicles to the Mercedes-Benz USA’s product portfolio underscore the luxury brand’s commitment to meet even more stringent fuel economy standards in the future, the company said in a press release. The smart fortwo achieves EPA estimated 41 mpg in highway driving. Manufactured by Daimler AG, smart is currently sold in more than 40 countries, and more than 1.2 million smart fortwo’s have been sold worldwide since 1998. Since then, smart has established itself as the think tank for urban and electric mobility for Daimler AG and plays an important role in the Corporation’s plans to make innovative future mobility concepts such as car2go available in Europe and the United States.
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