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A Little Car with Big Ideas

Marty Bernstein From Business Week| December 20 , 2007

The smart saga reads like a Hollywood script: Swatch, the Swiss watch manufacturer, has a design concept for a new automobile, but knows zip about automotive manufacturing; nevertheless, creates a startling model that is shown in modern art museums and generates buzz in ladeda art circles.

Make that a circle with a star, as in the Mercedes-Benz logo. The sages of Stuttgart saw the concept and thought it could sell as a little car. After discussions, some intense negotiating, the deal was sealed and followed by an infusion of money. Now, there's a deal, but there are two issues: One, could they really take a distinctive design and turn it into a car? And, two, the name Swatch is for watches, not cars.

But what should they call it? Channeling to that time, allow me to translate the discussion, "Let's see… if we take the "S" from Swatch, the "M" from Mercedes and the art from art museums… why we've created an acronym and a name -- smart! Add the word car and there's our new trademark." Or at least that's the apocryphal urban legend of how the brand name creation goes.

After a reasonable time has passed and countless million deutschmarks are invested, the smart was introduced to the automotive avatars at the Frankfurt Auto Show in 1998 to a thunderous roar of… Huh? Was ist es? Qu'est-ce que c'est? Along with: "cute," "ugly," "demonic," "charming," "tiny," "diminutive," "dumb," and "nuts." These were some of the complimentary terms used in reviews.

Undaunted Mercedes would not give up on the little car, pouring more millions (euros this time) to ignite consumer interest in Europe. Result? Ten years after the launch, the company has sold over 700,000 smart cars with lackluster, if indeed, any profits.

Then, the corporate decision was made to sell smart in the U.S. through the Mercedes division, but that plan was scrubbed. Was hope abandoned? No. Just 18 months ago, Dieter Zetche stood with Roger Penske to announce Penske Automotive Group would become the official distributor of smart cars in the U.S. [Note: Zetche told Khoahocxaydung just a few days ago that the only vehicle he privately owns is a smart].

Recently, along with many other journalists, I flew to the city by the bay to see, drive and hear all about the second generation of smart -- an urban vehicle engineered, designed and manufactured just for the United States market. Not unexpectedly, this was the launch of launches.

Barely 24 hours on the ground from take-off to landing to takeoff again (8+ hours in the air with 4,158 frequent flyer miles) those hours were filled with a nonstop infusion of smartness -- the who, what, where, when, why and how of smart. All because starting in January the smart car goes on sale in the U.S.

smart is arriving: Big Deal! or, Big Deal?

The last time I had sat behind the wheel of a smart was six years ago in Rome, a city well known for its maddening, macabre, and malevolent traffic. After getting the feel of the car, how it handled and maneuvered, it was fun and enjoyable, although a bit frightening at times dodging the other small cars and scooters. I did not drive on the Auto Strade, especially not then when the primary road to Florence was like the Auto Bahn in Germany -- no speed limit.

Coming to these shores for the smart, even with Penske behind it is a major undertaking. So, the first part of my answer is...smart is a Big Deal!

Earlier in the summer, smart announced the car to be sold in the U.S. was specifically designed, engineered and built for the demanding requirements of all other vehicles sold here. "It is going to meet and even exceed expectations!" noted Dave Schrembi, president of smart USA.

Back at the bay, the assembled writers were given a fairly detailed overview including, some of the safety features, amenities, the powertrain and gear shift (or paddle) shifters, and other comforts of the smart. It was smooth and efficient.

The ride

Our ride and drive was broken into three parts, with my partner taking the wheel for the first stage -- down the 280 to the Computer Museum near San Jose for lunch and more info.

Getting out of the parking lot was easy for my partner, finding the proper road on a pasta bowl of interchanges was a bit more complex -- the map was a tiny bit confusing -- but then we were about to enter the 280. "Opps! or a another four letter word," said the driver, who is an amateur racecar driver. "This thing seems to stall or nose-dive and lose power just when you need it to merge!" This is not really a good thing and for many will be a big deal.

After merging, the ride was pleasant, comfortable and smooth. We exited near Google's headquarters and made our way to the museum for the luncheon repast. Well, repast was interesting: everything from the appetizers to entrees to the deserts were small, make that very small, and actually, quite good too. There was more than enough to settle the rumble in our stomachs; it was 3:30 p.m. back home. There were various displays of the history of smart, pictures from films in which it has appeared, designs of other smarts, etc. There were one-on-one conversations with engineers, tech-speak-people, designers and marketers to answer any of our questions.

Now, it was my turn behind the wheel and I too experienced the loss of power nose-dive, when I used either the automatic drive or the paddle shifters when trying to merge onto a freeway. But driving in Northern California from the collegiate and corporate burbs to the hills and tiny streets of San Francisco was simply great.

smart fits in your hotel room

This is a city car. Sure it works on freeways, but it's made for big cities -- think Boson, New York, Philadelphia, Washington, D.C., maybe Atlanta, but certainly Chicago and San Francisco, among others. It's peppy when it should be peppy, agile when called upon to deliver, and it's small when it should be small -- like finding a parking space. Two smarts can easily fit into the space allocated for larger vehicles. There's sufficient room inside for two adults with lots of head room. The seats are comfortable and adjustable.

Or...Big Deal?

A question everyone asks after a test drive is, "Did you feel safe?" There was an extensive safety components review and information session. The safety engineer was the same man who designed safety for the big Mercedes S Class. Mercedes has built safety as a key component of the smart fortwo which has the airbags, construction materials, crumple zones, and a unique safety cage like a Nascar racecar to protect the driver and passenger.

smart officials showed us videos of crash tests, rollovers, crumple zones that demonstrated the extensive safety features of the vehicle. And they are truly impressive. The question is: Will Americans accept the fact that the smart fortwo is as safe as their big gas guzzling SUV? It's going to be a tough sale for some. Everyone's going to love the miles per gallon the smart gets from a little 3-cylinder engine that puts out 70 hp and earns a top speed of 90mph -- not that I drove it that fast.

In just a few weeks the smart makes its retail debut in America, bringing anticipation to the thousands of potential owners who have already put down a deposit on the car in waiting. Penske is one of the smartest, most successful auto execs in the world and has established a new business model for a new vehicle to America without the necessity of a major investment in infrastructure, warehousing, financing, dealer networks and service. There's no doubt in my mind that auto execs in China and India are going to study this new business model very carefully.

If one enjoys drawing attention to themselves and feeling like a celebrity, the smart fortwo is the ideal car. Driving or seated in the little car drew attention everywhere we went. Heads turned. People took pictures. Kids said, "That's so cute." Cops waved hello. Even BMW owners gave us a wave of the hand.

The smart fortwo is a little car with very big, bold and ballsy ideas. Everything seems right: It's cute, small, fun, economical, fuel efficient, well-made, has safety built-in, and is priced right. I predict it will sell well the first year -- it's the time beyond the initial sales period that will tell the tale. I'm looking forward to the Big Deal!

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