Munich It’s almost a miracle that Smart still exists. After all, the small car brand has weighed heavily on the balance sheet of the car manufacturer Mercedes-Benz for a good 24 years. Analysts estimate the annual losses at 500 to 700 million euros. Cumulatively, the minus is well over ten billion euros.
In view of such disastrous numbers, many managers would have preferred to stop doing business with the tiny ones. But in 2019, Dieter Zetsche put his protective hand over Smart one last time before stepping down as CEO of Mercedes. The saving idea: Smart should flourish in alliance with the Chinese vehicle conglomerate Geely. Its founder Eric Li (formerly called Li Shufu) is the second largest shareholder of Mercedes.
Now the first result of the alliance can be examined. The Smart #1 celebrated its premiere in Berlin on Thursday. The new model has little in common with the original brands, which also fit across parking spaces. The all-electric SUV is almost 4.3 meters long and 1.8 meters wide. Smart says goodbye to the small car segment and is now playing in the golf league.
“We are going out of the niche with the product portfolio,” said Dirk Adelmann, head of Smart Europe GmbH, the Handelsblatt. With five seats and an electric range of up to 440 kilometers, the brand will also be attractive for families for the first time. “This is much more than just a city SUV. We go beyond the purely urban environment and reach completely different target groups.”
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But even more important: The #1 will be produced in China in the future and shares a platform with several Geely brands. As a result, Smart is benefiting from economies of scale for the first time. The cost base is significantly lower than before in Europe. Mercedes has sold the former Smart plant in Hambach, France, to Ineos Automotive and only brings the brand, the design and its sales expertise into the cooperation with Geely.
Focus on China and Europe
Smart has given up its formerly global claim. For now, the focus is on China and Europe – the world’s two largest markets for electric cars. The German-Chinese joint venture wants to grow strongly here. Sales should increase as quickly as possible from the last 39,000 to more than 150,000 vehicles sold per year.
“We will not just swim in the compact car segment, but place ourselves among the five top vehicles in the respective market,” explains Adelmann. The manager goes even further and even introduces an expansion into the middle class. Geely’s SEA architecture, designed purely for electric cars, enables Smart to scale up and down. “This offers us a wide range of possibilities, such as in the C segment.”
One thing is clear: an entire model family is to be created over the next three years. “We are planning relatively specific further products,” confirms Adelmann. “Just this much: At the beginning of 2021, as part of a target group analysis, we asked potential customers how our ideas were received. In addition to the #1, we had another product with us that did at least as well.”
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For its product offensive, Smart uses the sales network of Mercedes-Benz in Europe and that of Geely in China. “That will help us to become profitable,” says Adelmann. In fact, the pressure from the parent companies is great. “Both of our shareholders dictated to us that we would definitely go into the profit zone in the first life cycle of the #1,” explains Adelmann. That means: Smart must be profitable by 2029 at the latest, but the owners probably want to be in the black much earlier.
Over-the-air updates, AI-based voice control
Either way, it’s the last chance for the controversial brand, which has been duped by Mini Cooper for years. Internally, of course, there is confidence. With the #1, Smart sees itself as technically up to date. Three quarters of the SUV’s control units could be updated wirelessly. The processor for the entertainment system comes from the US chip manufacturer Qualcomm. This enables, among other things, 3D maps, video streaming and an avatar that guides you through an ecosystem of apps using AI-based voice control, says Adelmann. “This is benchmark.”
Concealed door handles, a panoramic roof and a car remote control are other features that should inspire young families and the technology-savvy Generation Y. The 66 kWh battery of the new smart SUV should also be filled from ten to 80 percent within half an hour at fast charging stations. The maximum charging capacity is 200 kilowatts. The energy management system behind it is supplied by a subsidiary of Geely, which in turn purchases battery cells from the Chinese supplier CALB.
Panorama roof and many digital helpers are intended to attract customers.
Smart has a clear premium claim, says European boss Adelmann. This makes the brand an ideal addition to Mercedes’ luxury portfolio. In terms of price, the #1 should therefore be “below the EQA”, explains Adelmann. The smallest electric SUV from Mercedes starts at almost 48,000 euros. However, there is still a lot of room for improvement, says Stefan Bratzel, Director of the Center of Automotive Management (CAM). “Smart must not make the mistake of overpricing its models again.”
The competition never sleeps, says Bratzel. Smart competes with the ID.3 from Volkswagen, among others. The Wolfsburg offer their small electric car from around 37,000 euros. And the all-electric Mini Cooper from BMW is available from 32,500 euros – although its range is far less than that of the #1.
In any case, smart manager Adelmann looks less at the purchase price than at the monthly leasing rate. Because 85 to 90 percent of customers would lease the vehicles. “If we’re somewhere between 200 and 350 euros at the rate, we’re happy,” says Adelmann. Customers should be able to configure the #1 online within five clicks and conclude a leasing contract. The first vehicles should be delivered in December.
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