Getting Oz Smart

AUSTRALIA has been awaiting the official arrival of the Smart brand since 1997.

An earlier management team at Mercedes-Benz made tentative investigations as to the viability of offering the tiny turbo-engined city car in Australia, but was frightened off by potential ADR headaches, unknown market potential and a high price.

Even the stripped down business plan that suggested bringing in left-hand drive versions for non-public road use around holiday resorts was met with a red light.

Smart's early years in Europe looked shaky too, with the brand taking some time to make in-roads into the market and get its quality right.

There was also the tricky issue of ownership and management to resolve with the Micro Compact Car Company finally folded in within DaimlerChrysler's Mercedes-Benz Group. It was then subjected to Stuttgart's usual business strictures and forced to cut overheads by 35 per cent.

Six years on, Smart is established, has a larger engined, second generation model in production and is selling at the rate of about 122,000 units a year.

With a defined brand development in place, Mercedes-Benz Australia believes it is now a smart move to bring the brand Down Under, albeit under limited access conditions.

Another factor not to be overlooked is the small degree of success achieved by grey import operators who have sold up to 100 examples, according to some sources.

There are also a couple of unhappy grey market customers still waiting for delivery of their $45,000 Smarts.

While Mercedes-Benz owned dealers in Melbourne and Sydney have fashioned SmartCentres in corners of their dealerships, if you live in Brisbane you can't buy one until next year and don't even think of asking in Adelaide or Perth, let alone for scooting around tropical Darwin.

Independent Mercedes-Benz dealers asked the company's management for a cut of any profits from Smart leads provided to the two outlets, but when asked if they would also share the start-up debt burden, the dealers proved less enthusiastic.

Executives insist the Smart offers the same profit margin as regular Mercedes vehicles.

European resale values are also said to shadow those of the Benz brand vehicles.

According to the managing director of Mercedes-Benz Australia, Matthias Luehrs, Smart will break even at 300 vehicles a year, co-incidentally the number expected to be sold during the rump of 2003.

Sales are expected to rise towards 1000 next year with the addition of the $38,000 roadster from November, 2003, and ever upwards to 2000 units a year when the four-door, four-seater Forfour arrives from late 2004.

In the short term, the city-coupe is expected to outsell the cabriolet five to one, with as many as 100 roadsters finding homes in the final two months of 2003.

Although the marketing is heavily skewed to capture the attention of young, trendy buyers, most early adopters have been stubbornly from the more mature Benz-owning classes, according to sales sources.

Mercedes could easily meet its sales targets by slipping a Smart into a deal to purchase an up-market Benz, should the going get tough with teenage and 20-something buyers.

It's a move well used in the car industry.

While Smart claims a potential buyer audience ageing from 18-80, most buyers so far have been adding a Smart to a garage containing an S600 and/or an SL for use as a weekend toy rather than a serious eco-city runabout.

One of the key benefits of Smart motoring in Europe, apart from the low fuel consumption, has been the willingness of city councils to create smaller, cheaper Smart parking bays.

In some cities the vehicles can park nose in to the curb, but as yet Mercedes has not approached councils to offer reduce size/price parking facilities, though the task is on the menu for future action.