Lueg dealer group may dump Smart

Essen, Germany. The balance sheet for the Lueg dealer group shifted between massive losses for the Smart brand and a doubling of revenues for Ferrari and Maserati during 2004.

Lueg revenues totaled 774 million euros last year ($921.4 million at current exchange rates), compared with 662.8 million euros the year before. A total of 25,782 vehicles were sold in 2004, up from 18,647 in 2003.

The company has 41 stores in the Ruhr region and in western Saxony, selling Mercedes-Benz, Smart, Chrysler, Jeep, Ferrari, Maserati, Opel, Saab, Suzuki, Hyundai and Volvo vehicles.

With sales of 2,410 vehicles and 28.4 million euros in revenue, Smart came in 16 percent behind the previous year.

The Roadster and ForFour models trailed the optimistic expectations expressed during their launch stage, board spokesman Alexander von Gizycki said.

That is why the group shut down Smart stores in Muelheim and Gelsenkirchen. Lueg still operates two centers in Essen and Dortmund, plus four satellite stores. But it's still not clear that Lueg with stay with the brand.

"We wanted to cancel the Smart contract, as we can't accept losses indefinitely," he said. Lueg dealerships can only hang on to the DaimlerChrysler subsidiary if "the manufacturer identifies a business solution that takes into account our investment in the brand," von Gizycki said.

Decision on Smart still ahead

Dealerships can't be blamed for the cancellation of the Smart Roadster or ForFour pricing that is "too demanding," von Gizycki said.

Still, DaimlerChrysler is showing signs of movement: "Margins are being changed and prices for the ForFour are being trimmed," he said. Time will tell if the changes are enough.

In July, the Lueg Group wants further discussions with the carmaker. "Then the decision will be made as to whether there is a future for Smart in the Lueg Group," Von Gizycki said. Lueg's strong expansion also has left its mark on the balance sheet.

The Van Eupen Group, acquired in late 2003, accounted for a sales boost of 38 percent compared with the previous year. Without Van Eupen, Lueg would have sold 4 percent fewer vehicles in 2004. But expenses related to restructuring Van Eupen took their toll in 2004.

Lueg sees 2005 as a year for consolidation. By May's end, it sold 10,268 vehicles, down from 10,573 for the same period in 2004. Revenues so far are 297 million euros ($353.8 million at current exchange rates), down 5 percent.

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