After A Few Years, Smart Proves It Isnt

With fuel economy on everyone’s mind in 2008, the pint-sized Smart Fortwo brought its eccentric styling and European flair to the United States looking to tackle a new market. The Fortwo was designed for crowded urban driving and its ability to squeeze into parking spaces and maneuver through dense traffic was unchallenged. Sure, it may have seemed out of place on American roads, but the Fortwo had qualities that many drivers found valuable. Gray-market importers had managed to sell enough Smarts earlier in the decade that it forced DaimlerChrysler’s hand to officially import the vehicle into the U.S., and it looked as though Smart had a promising life ahead of it in America.

Just two years later, however, Smart’s outlook is gloomy. According to some staggering data compiled by CNW Research, drivers of the Fortwo are dissatisfied with their cars. In fact, CNW says that a mere 8.1 percent of New York City owners -- essentially the Smart’s target market -- claim that they would purchase a Fortwo again.

To put that statistic in perspective, the next lowest vehicle charted by CNW is the Chrysler Sebring -- at 37 percent. And the current-generation Sebring is arguably the biggest automotive disaster since the Pontiac Aztek. Given that brand loyalty is one of the most important and cost-effective ways to generate sales, the future of Smart in the U.S. looks uncertain at best.

Driver Discontent

According to Art Spinella of CNW Research, the company compiled its data after sending out surveys to consumers.

“[The] data comes from our monthly Purchase Path surveys (about 18,000 phone interviews per month) as well as brand specific mail surveys. In Smart's case, we used a combination of both, receiving over 1,200 Smart owner responses. One of the standard questions in the brand surveys and most of the Purchase Path interviews is if the owner would replace the current vehicle with another of the same brand.”

So what has motivated so many Fortwo drivers to grow unhappy with their cars in these surveys? There have been a few factors working against Smart, led by declining gas prices. But poor ride quality and the impracticality of the two-seat Fortwo also play into owner dissatisfaction. According to John Neff, editor-in-chief of AOL Autos’ partner site Autoblog, the Fortwo forces owners to make serious compromises, something they’re increasingly unwilling to do.

“With gas prices relatively stable and larger vehicles coming to market with better fuel efficiency, not many buyers are willing to accept the Fortwo's size and quirky driving manner,” Neff said.

The Smart Fortwo has also been panned for having an unrefined “automatic manual” transmission and not delivering the extraordinary fuel economy that some expect.

Spinella echoed Neff’s sentiments, adding that “the vehicle of choice as a replacement was the Mini or a conventional small car, such as [the Chevy] Aveo, [Honda] Fit, [or] Scion xB, which has far more interior space for passengers and can generally be driven on longer trips at highway speeds with more comfort.”

Perhaps the most important force working against the Fortwo right now, however, is the fact that the novelty seems to have worn off. According to CNW data acquired from consumer surveys between 2006 and 2010, the majority of drivers of the Smart Fortwo actually bought the car because of its looks and uniqueness, which they deemed more important than its fuel economy, friendliness to the environment, or fun.

But apparently eccentric looks are not making up for the widespread driver dissatisfaction. Smart did reprogram the transmission of early models that gave car reviewers so much grief, but that’s essentially the extent of the changes made to the car since its introduction. Given that Smart doesn’t have much to add to its sales pitch, sales numbers will continue to fall.

“Without new products or even significant upgrades, existing customers have no reason to re-up with the brand, and if their wants or needs have changed to require a different type of vehicle, Smart doesn't have anything to sell them. Simply put, the novelty has worn off the Fortwo,” said Chris Paukert, executive editor at Autoblog.

The Future

It is widely believed that since its initial launch in Europe in 1998, Smart has never turned a profit for corporate parent Daimler, making the brand’s weak performance in the U.S. particularly troubling. Smart USA has recently undergone a management shake-up, with new president Jill Lajdziak, the former general manager of GM’s now-defunct Saturn brand, taking over at the beginning of the year. In an effort to boost sales, a new leasing program was launched in January. Smart plans to deploy a pilot fleet of electric Fortwos in October, with a stated goal of retail sales in 2012.

“While the new EV model will generate some buzz, its limited range and practicality will still rule it out from consideration among most consumers. Further, it remains to be seen if the electric model will be priced where Daimler can turn a profit -- or even break-even,” Paukert explained.

There is another short-term ray of hope, at least according to Neff: “Another spike in fuel costs, which is likely to happen at some point, could see Fortwo sales in the U.S. quickly rise again.”

After all, the Fortwo did enjoy its only measure of success while gas prices were high. Another shock to the system could have people flocking back to Smart dealerships, potentially buying time for the company to right its ship.