2014 DETROIT AUTO SHOW

High costs likely to keep Smart's 4-seater from U.S.

Steve Cannon: "Customers are not gravitating to those segments."
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DETROIT -- U.S. dealers aren't likely to get the new Smart ForFour four-seat car that goes on sale in Europe this year.

Although executives said a decision hasn't been made, the car has not been homologated for the United States, Smart boss Annette Winkler said here at the auto show.

Smart isn't sure there is a big enough market in the United States for the ForFour to warrant the cost of homologation, she said. Winkler said the redesigned ForTwo, which is wider and roomier than the current model, may be enough to increase U.S. sales.

"There are other regulations to comply with, and to achieve what is needed here costs extra money," she said.

Smart sales fell 7 percent in the U.S. market to 9,264 last year.

Steve Cannon, CEO of Mercedes-Benz USA, says Smart is more of a 10,000 unit niche player than a volume brand. Its fuel economy will help Mercedes-Benz meet tougher future corporate average fuel economy regulations, he said.

The microcar segment in the United States shrunk while the entire market grew last year, he said.

Even if the company decided to sell the ForFour in the United States, the bump in annual volume wouldn't be that significant, perhaps increasing from 10,000 units to 20,000 units a year. So why even keep Smart? Cannon says first of all, he'd have to pay the 92 Mercedes-Benz dealers who sell Smart if the network was shut down.

"We have allowed it to find its own level, and it has marketing and a $99 lease," Cannon said referring to the lease rate for the Smart ForTwo Electric Drive car.

Smart lowered the monthly lease rate, which included a monthly fee of $80 to rent the battery, from $199 to $99 for the 2014 model year. The battery-electric car went on sale last May only in the so-called CARB states with tighter emissions standards. Smart sold 921 of the electric cars in the United States in 2013. Sales in all 50 states begin in February.

"Customers are not gravitating to those segments," Cannon said.

The United States, unlike Europe, is predominantly a country of suburbs rather than cities, and people have to travel longer distances to work, he said. "We are spread out, and that is never going to change."

You can reach Diana T. Kurylko at dkurylko@crain.com. -- Follow Diana on Twitter


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