ESSEN, Germany - The Lueg dealer group has closed two of its Smart sales outlets in Germany and may dump the struggling brand completely.
"We wanted to cancel the Smart contract, as we can't accept losses indefinitely," board spokesman Alexander von Gizycki said.
He said Lueg dealerships can only retain the DaimlerChrysler subsidiary if "the manufacturer identifies a business solution that takes into account our investment in the brand."
Lueg still operates Smart dealerships in Essen and Dortmund, in northwest Germany, plus four satellite stores in the country.
Last year Lueg sold 2,410 Smarts giving it revenues of E28.4 million, both numbers were down 16 percent compared with 2003.
DaimlerChrysler announced a E1.2 billion turnaround plan for the unprofitable Smart brand on April 1.
As part of the plan, D/C killed development of the ForMore SUV and said it will stop making the slow-selling Smart Roadster. D/C also embarked on a series of cost-cutting measures at Smart such a staff reductions.
Don't blame dealers
Von Gizycki said dealers shouldn't be blamed for poor sales that led to the cancellation of the Roadster or for a price structure on the ForFour that is "too demanding."
Lueg and D/C will talk again later this month about the future of the dealer's Smart contract.
"Then the decision will be made as to whether there is a future for Smart in the Lueg group," Von Gizycki said.
Smart has lost E2.6 billion since its launch in 1998, analysts estimate. Losses this year could be as high as E600 million. Making the brand profitable is a top priority for Mercedes Car Group CEO Eckhard Cordes.
Lueg has 41 stores in Germany. Its other brands include Ferrari, Maserati, Opel, Saab, Suzuki, Hyundai and Volvo plus Smart siblings Mercedes-Benz, Chrysler and Jeep.