2009 Smart ForTwo – Click above for high-res image gallery

In the first year that smart fortwo's were available in the U.S., the company sold about 30,000 units. After that first heady period, though, sales dropped off dramatically. In June 2009, the company sold just 1,116 fortwos and in May the number was 1,169, for an annual rate of just over 13,000. This is below the company's earlier predictions of 25,000 sales in 2009. smart USA president Dave Schembri told AutoblogGreen that his company's new $99/month financing deal might be just the thing to turn the numbers around. smart USA is offering the deal as part of the new Car Allowance Rebate System (CARS, aka "cash for clunkers"), which officially started today. Read on after the jump to see what Shembri thinks about why fortwos are the right car right now, when the first all-electric smarts will come to the U.S. and why you should be able to trade in your dad's clunker.

Photos Copyright ©2009 Sebastian Blanco / Weblogs, Inc.

Schembri believes that the fortwo has, well, two big things going for it that make it a good choice for someone looking to get rid of their clunker. First, every fortwo qualifies for the maximum $4,500 CARS voucher, because all of them have a high enough mpg rating (he called them the most fuel efficient non-hybrid vehicles available in the U.S. today). These fuel efficiency numbers lead to his second point, which is that the intent of CARS was to get cleaner air, and so the cars should appeal to people who are buying a new vehicle with the environment in mind. Thus far, he said, "We've had an extremely positive reaction."

Negative reactions, though, could result from people discovering that the $99 a month loan plan has a bit of a shocker at the end of the three years: a balloon payment of $6,667. Schembri said this isn't a "gigantic" payment and that customer would have a positive equity at the end of the three years because of the relatively conservative residual value of the fortwo. In terms of conventional financing, he said, customers can get a more standard 72-month loan at roughly $150 a month with no balloon payment at the end. He's confident that the deal is a good one, and that sales could grow as a result. In fact, Daimler ramped up production in anticipation of more sales. "Right now, in the environment that we're in, it's very difficult to compare yourself to any particular point in time," he said, adding that he would like to at least see a sales increase compared to last month. Given the success of similar clunkers legislation in Germany, this isn't an unreasonable hope.

Of course, CARS isn't a perfect system. Schembri said that he favors expanding the program.

We think this is a great program. It will be an indication that when you put money into the hands of the consumer, you stimulate the economy. Any time that something works, you want to keep it in the system. There are a lot of eyes on the start of the program.

Aside from simply increasing the funding (currently set at $1 billion) or the time limit (currently set to expire on Nov. 1), Schembri said that some rules should be changed, including that the car needs to have been registered to the person buying the new car for the past 12 months, that it needs to have been insured for 12 months and that it needs to be in running order. By changing these rules, he said, more environmentally sound purchases could be made. For example, cars that were driven until they were dead, instead of just sitting somewhere, would be recycled. Also, it would help more people buy new cars if a clunker that belongs to someone else in the family could be traded in as if it belonged to the buyer.

Schembri is also called the 18 mpg limit "a little bit restrictive" and said he favors making the important factor the change in mpg instead of from one set point to another. "If you're improving by 10 mpg, that's a big improvement and certainly going to help us out form the environmental perspective," he said.

Lastly, we asked what the status is with Daimler's all-electric smart eds that are being tested in Europe. Schembri explained:

We're right there with it. We're going to have 300 full electric vehicles available in the latter half of 2010 and will go into full series production in 2011. Haven't figure out exactly how to do the distribution, but they will be for general consumer use.

So, if you don't get your name on the list of the first 300, take heart. Your smart ev should be waiting for you just a few months later.

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