Micro Compact Car Development Co., a joint venture between Swatch and Mercedes-Benz that spawned the Smart brand, is introduced March 4, 1994, with the unveiling of two show cars. The Eco Sprinter coupe with a 40-kilowatt electric motor and the Eco Speedster cabriolet with a three-cylinder gasoline engine featured rear-wheel drive and an underfloor engine-and-transmission unit — a concept that was used when large-scale production of Smart began.
The bulbous two-seater Smart debuted in 1998 in Europe, aimed at young city dwellers seeking an alternative to larger vehicles. But the car never caught on to the extent that Daimler envisioned, particularly outside Europe.
Nicolas Hayek, a Swiss-Lebanese engineer and industrialist, saved the Swiss watch industry from lower-priced Asian competition in the early 1980s with colorful, inexpensive Swatch timepieces pitched with colorful marketing. He aimed to do the same thing with the automobile through his engineering company, SMH.
Hayek dreamed of a fleet of miniature cars, produced at a low cost and as colorful as his wristwatches. Initially, he planned to collaborate with Volkswagen Group, but a deal fell through and he turned to Mercedes-Benz.
Mercedes engineers, however, warned Hayek that standard safety requirements made his proposal for a low-cost, low-priced car unfeasible.
So the first product developed to production standards was not a Swatch-mobile planned by Hayek but a Micro Compact Car, eventually badged Smart, on the basis of Mercedes City Car prototypes, the Eco Sprinter and Eco Speedster.