Five Questions: Smart CEO On U.S. Details, Fortwo Electric Drive

January 21, 2015

Depending on where you live in the U.S., you might think of Smart as an oddity, a fashionable little city car, a car-sharing staple, or a common conveyance for urban commuters. In America, it's a brand with niche status.

That said, Dr. Annette Winkler, Smart’s CEO, points to plenty of room for sales growth here, despite that. Part of the strategy is focusing in on certain U.S. cities. And part of that growth has already come from the well-received Smart Electric Drive.

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There are several new products to look forward to. A fully redesigned second-generation Fortwo is on the way later in the year; a new-generation Fortwo Electric Drive is in the works; and an intriguing new Forfour is so far slated only for Europe—but a big question mark for us. We caught up with Winkler this past week at the Detroit Auto Show for five quick questions on all that and more:

When can we expect the new Fortwo in the U.S., and what’s the reason for its delay here versus international markets? Did safety or compliance have anything to do with it?

We will present it [the 2016 Smart Fortwo] at the New York Auto Show, and later in the summer it will come to dealerships. The reason why we are later here than Europe is quite simple: the double-clutch transmission. The U.S. is one of the markets where we decided to have a double clutch because of our customers. There were complaints about the transmission, and so we thought we have to come directly to the launch with it. This will come to Europe in April, around the NY Auto Show, and at present there are some months yet needed for testing.

Safety had nothing to do with it. I think the safety is already today at a very high level, with the tridion. We started with the tridion, but with even more high-strength steel. There are a lot of systems now—a cycling assistant, and a front collision, a lane departure—so the safety level is even higher.

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Looking ahead to the next several years, what are your sales goals for Smart? Or what would success look like?

We don’t report predictions in numbers, but we are expecting considerable growth specifically in certain U.S. cities where we know that Smart fits perfectly. It’s not only rational—like density and parking spaces—but it’s also the culture, that you have this open-minded culture. And those cities, like San Francisco or Portland—we have them in China, we have them in Europe—we have 80 percent of our U.S. sales in only four cities. And focusing on these four cities, we will accelerate.

In the U.S., that’s Portland, San Francisco, San Jose, and San Diego. Everyone understands why, directly, without saying more. And if I were to say for Europe: Barcelona, Munich, Vienna, Rome, Milano, Paris. Same thing; all these are cities with high traffic density and this ‘cultural’ approach.

Across all these cities, we see more saying, “I don’t need a big car to show them that I’m different; I want to show it with a smaller car.” All this fits together.

2016 Smart Fortwo - 2014 Paris Auto Show

2016 Smart Fortwo - 2014 Paris Auto Show

The Electric Drive has been making up about one quarter of all Smart sales in the U.S.—and a significantly greater proportion in some markets. With the debut of a new gasoline Fortwo that’s more appealing to Americans than before, do you expect the Electric Drive to maintain its share and remain as popular?

A new generation version [of the Electric Drive] will come in 2016, so in 2015 it’s very hard to predict what will happen. We will have the new car, but we will also still have the current generation with the Electric Drive this year. I think that Electric Drive is perfect for our cities here, perfect for urban mobility, where people go shorter distances. The acceleration is great; it’s very smooth.

Also in the States, there’s this environmental...feeling, that we need to contribute to a better environment, to a better nature. I receive letters from young people saying, “Thank you for offering that car, I feel better when I drive it.” And I like that very much.

This year we will build both generations in parallel, and it’s not just for the Electric Drive. We are not having the new generation yet for the U.S., or for China. In the factory, that’s amazing. On one line you see the current car, the new generation, and the Electric Drive. We are very proud of that.

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The price of fuel has fallen dramatically in the past six months. Does that at all influence how you position the Fortwo in the U.S.?

We felt in the past a direct impact on sales results. But last year was the very best year for Smart in the U.S., despite this. So there is something changing. We invested a lot in the brand... But there are more people understanding the concept, too.

2016 Smart ForFour - 2014 Paris Auto Show

2016 Smart ForFour - 2014 Paris Auto Show

What’s the status of the Forfour for the U.S., and will you be offering the next-generation Electric Drive in multiple body styles?

We will bring both an electric Fortwo and Forfour to Europe. In the U.S., we’ll bring the electric Fortwo. And then let’s see.

For the Forfour, we are investigating. That micro segment in the U.S. is rather small. Our job is to have profitable business cases. For the Forfour we’d need additional investment. We would like to if the segment evolves in a positive way...we could imagine bringing it.

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