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PARIS MOTOR SHOW: smart's local future unclear
The new ForTwo and Forfour promise to be better cars – but can they be cheaper too?The third generation smart range made its motor show debut in Paris overnight, but the chances of the new ForTwo and reborn ForFour making it to Australia hang on "robust" negotiations that should be resolved one way or another by the end of 2014.
The Mercedes-Benz-owned city-car brand has been financially problematic globally and a misfire in Australia, where just 67 have been sold to the end of August 2014.
However, the new triple-cylinder, rear-drive, two and four-seat smarts, which were first shown to media in Berlin last July, shape up as a significant improvement compared to their predecessors, which is a key reason Mercedes-Benz Australia/Pacific is still trying to make a difficult business case work.
"The cost of bringing the car to market is the factor," M-B A/P communications chief David McCarthy told motoring.com.au. "The current car at $19,000 drive-away hasn't driven volume and I can tell you there isn't much money in it.
"The new car to us is more expensive although it is a much better car. Making the business case work you have to do around 1000 cars (per annum) and we have never got close to that.
"We are fighting really hard and there are a number of people in the company working every avenue to get that car at a price that we can make work and if we can do that we will get more buyers."
McCarthy said there was sufficient stock of the current car to see smart through to the launch of the new car in Australia at the end of 2015 – if the green light is given.
"We have to make the decision by the end of this year," he added. "We want it but we have to make the business case work.
"We are in robust discussions [with Mercedes-Benz HQ]."
Mercedes-Benz global sales and marketing chief Ola Kallenius acknowledged the challenge facing both head office and its Aussie outpost in trying to make the smart proposition work down under, but struck a positive note.
"The Australian situation [with smart] is something we have to see. I realise obviously that V8 AMGs is where the main passion lies in the Australian automotive market, but smart can also be successful and we will see how we develop now we have two great products.
"Let's not speculate about that [closure of smart in Australia]," he added. "We have upped the ante in terms of product so let's see where that takes us."
McCarthy revealed the optimum pricing position would be to have both the ForTwo and ForFour priced under $20,000, reducing the dollar disadvantage per seat the smarts faced against entry-level city cars that are thousands of dollars cheaper.
For instance the 1.0-litre triple-cylinder Suzuki Alto starts at $11,790, while the competition could soon get stronger with the highly touted Kia Picanto back on the consideration list for Australia.
"You look at $13,000 and $14,000 cars they are four and five seats, which makes them $3500 to $4000 a seat. We are $9000 per seat for the ForTwo," said McCarthy.
While it would seem difficult for the smart business plan to be viable, M-B A/P is clearly loath to give up on the brand, having invested heavily in it since launching here in 2003, including an internet-based retailing scheme for the brand.
The silver lining in that so-far unreclaimed cost is that the software developed for Smart could be used to retail other models in the Mercedes-Benz range.
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Written byBruce Newton
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