DaimlerChrysler is considering making Smart, its premium urban car brand, more competitively priced in a bid to increase the division’s profitability, a report claims.

DaimlerChrysler is considering making Smart, its premium urban car brand, more competitively priced in a bid to increase the division’s profitability, a report claims.


Smart’s presence on the South African market was recently increased when the ForFour subcompact joined the ForTwo and Roadster on showroom floors around the country. It can be argued that the ForFour, which costs R139 000 for the 1,3-litre Pulse and R159 000 for the 1,5-litre Passion, is more competitively priced than its siblings. Is this a sign of what’s to come?


A source at Mercedes-Benz’s European operations recently told that the option of making Smart more value-oriented - to boost sales - was being considered.


"We have to acknowledge that we are competing with cars such as the Opel Corsa, Volkswagen Polo and the Ford Fiesta," the source was quoted as saying.


Smart models carry premium prices because of the brand's "trendy" image aimed at young, affluent consumers, but the brand has already started offering better-value models on the European market. When the Smart ForFour was introduced there in April, a "Blackbasic" limited edition was offered for the equivalent of R9 000 less than an identically equipped base model.


To help boost sales, DaimerChrysler is apparently allowing European-based Mercedes-Benz dealers to add a Smart franchise. Future Mercedes-Benz dealers who want a Smart franchise will not have to re-tile the entire showroom area where Smarts are sold. A white podium will suffice, the report said.


Smart hopes the change will significantly expand the number of sales outlets, which currently stands at 840, worldwide.


DaimlerChrysler chief financial officer Manfred Gentz said all options for Smart’s future were open. Smart has not made a profit since its launch in 1999 and some forecasts say its losses for 2004 could be between R3- and R3,8 billion.


The ForFour was 25 per cent below sales projections, the ForTwo's sales continue to decline, and Smart executives have admitted the Roadster is selling at disappointingly low levels.


"Lowering the brand is dangerous not only to Smart but also to Mercedes’ brand image," a Frankfurt-based analyst said.