Zetsche predicts new ForFour will help Smart make first profit

Renault-built 4-seat minicar will be a 'true Smart,' Daimler CEO says

The first-generation Smart ForFour (shown) was a weak seller during its 3-year production run. The ForFour was built on the same platform as the Mitsubishi Colt as part of a joint venture with the Japanese automaker at its plant in the Netherlands.

BRESCIA, Italy -- Daimler CEO Dieter Zetsche believes the all-new Smart ForFour minicar will be commercially successful and should help the money-losing brand make its first profit.

“The new ForFour is an extended ForTwo and has all the characteristics of the new ForTwo. These include a wider interior relative to the length of the car, a rear-mounted engine and several very smart ideas of benefit to customers. So the new vehicle has all the genes of a Smart,” Zetsche said after a media event here.

There are no current plans to bring the vehicle to the United States.

In a separate interview Annette Winkler, who heads the Smart brand, referred to the ForFour as “the station wagon version of the ForTwo.”

Launched in 1997, the Smart ForTwo quickly created a niche for itself as the only two-seat microcar, commanding premium prices in the process.

The original ForFour was not as successful. Launched in 2004, the ForFour competed in the ultra-competitive subcompact segment. Production of the ForFour, which was only available in Europe, ceased in June 2006 with just 133,000 sold.

“The new ForFour has all the genes of a Smart,” Zetsche says.

The new ForFour has been developed with Renault and shares many parts with the French automaker’s new third-generation Twingo. The ForFour and Twingo will both be made on the same platform at Renault's plant in Novo Mesto, Slovenia.

Despite the extensive sharing with Renault, Zetsche claims the ForFour "will be a true Smart offered at a competitive price" and that it represents a unique selling proposition "which you cannot get from competitors.”

The Daimler CEO admitted that the first-generation ForFour lacked proper Smart genes.

"Apart for some styling cues, the two vehicles had nothing in common,” Zetsche said. In fact, the ForFour's closest sibling was the 2003 Mitsubishi Colt, with which it shared most of its components, including chassis and suspension, and it was built at the Japanese automakers NedCar plant in Born, Netherlands.

Zetsche says he is confident that this time production of the ForFour is a feasible plan that will be executed properly. Declining to give specific sales target, he would only say that Smart had not set over-ambitious targets for the new ForFour.

Smart will unveil the second-generation ForFour together with third-generation ForTwo this summer. Sales of the two vehicles will start in Europe this autumn. Since 1998, Smart has sold more than 1.55 million ForTwos, although last year’s global sales of the five-year old second-generation vehicle fell by 7 percent to 98,000 units.

Daimler includes Smart in its Mercedes-Benz Cars division and does not disclose separate financial data for its minicar brand. Zetsche admits that "our balance sheet has not been strengthened by Smart" in the past, but now believes a successful ForFour could help Smart return its first profit ever.

"We have a feasible business case with our new generation” Smart vehicles, Zetsche said.

The Daimler CEO continues to see big opportunities for Smart in urban metropolitan areas. Had Daimler not invented Smart 20 years ago, it would have to do so today, he said. But Daimler still does not expect Smart to become a big profit earner within the group. Smart "will never be at the high end of the profitability range within our portfolio, but we think it’s playing an increasingly important role as far as [fleet average] carbon dioxide emission are concerned,” Zetsche said.

You can reach Luca Ciferri at lciferri@crain.com

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