SMART Mercedes Benz Group

Smart Automobile^[1] (stylized and marketed as “smart“) is a German automotive company and division of Daimler AG, based in Böblingen, Germany. It ranges in microcars and subcompacts, primarily the Fortwo and Forfour with its primary assembly plants located in Hambach, France and Novo Mesto, Slovenia. Marketed in 46^[2] countries in Asia, North and South America, Africa, Australia and Europe, production of the Fortwo had surpassed 1.7M units by early 2015.^[3]^[4]^[5]

The design concept for the company’s automobiles began at Mercedes-Benz in the early-70s and late-80s. After brief backing by Volkswagen, the first model was released by Daimler-Benz in October 1998. Several variants on the original design have been introduced, with the original being the “Fortwo”.

Smart derives from cooperation with Swatch and Mercedes: Swatch Mercedes ART.^[6] In its branding, the company lowercases its logotype and the logo incorporating a “c” and an arrow for “compact” and “forward thinking” respectively.

Origins

In late 1982, SMH (makers of the Swatch brand of watches) CEO Nicolas Hayek began developing an idea for a new car using the same type of manufacturing strategies and personalization features used to popularize Swatch watches. He believed that the automotive industry had ignored a sector of potential customers who wanted a small and stylish city car. This idea soon became known as the “Swatchmobile”. Hayek’s private company Hayek Engineering AG began designing the new car for SMH, with seating for two and a hybrid drivetrain.^[7]

While design of the car was proceeding, Hayek feared existing manufacturers would feel threatened by the Swatchmobile. Thus, rather than directly competing, he preferred to cooperate with another company in the automotive industry. This would also relieve SMH of the cost burden in setting up a distribution network. Hayek approached several automotive manufacturers and on July 3, 1991, he reached an agreement with Volkswagen to share development of the new project.^[8]

By 1993, Ferdinand Piëch had become CEO of Volkswagen and he immediately sought to terminate the project with SMH. Volkswagen had already been working on their own “three-litre car”: a car which would consume three litres of fuel per 100 km of driving (the eventual Volkswagen Lupo 3L). Volkswagen’s own concept was believed to be a better business proposition, featuring four seats and more cargo room.^[9]

Hayek had suspected that Piëch would seek to end the agreement with SMH upon his ascendancy to the CEO position; therefore, he discreetly began approaching other car companies with the Swatchmobile project. Rebuffed by BMW, Fiat, General Motors and Renault, he finally reached an informal agreement with Daimler-Benz AG, maker of Mercedes-Benz cars.^[10]

A deal was announced on March 4, 1994, at a press conference at Mercedes-Benz headquarters in Stuttgart that the companies would join forces in founding Micro Compact Car AG (MCC). 49% of the initial capital of 50 million Swiss francs were provided by SMH and the remaining 51% by Daimler-Benz. The company consisted of two subsidiaries: MCC GmbH based in Renningen (a suburb of Stuttgart) which would design the car, and the then-unnamed manufacturing plant. SMH Auto SA, owned by Hayek, would design a hybrid electric drive system for the car, while Hayek Engineering would audit the design and manufacturing.^[11]

The press conference also featured the debut of two concept cars: the eco-sprinter and eco-speedster, styled by Mercedes-Benz’s design studio in California.^[12] The cars were similar to the eventual Smart City-Coupé. No mention was made of the fact that SMH had no input in the design of these concepts,^[13] and they were badged as Mercedes-Benzes.

By the end of April 1994, MCC had set up a head office in Biel, Switzerland.

Company history

Three co-directors were immediately named to head the new company: designer and engineer Johann Tomforde and financial administrator Christoph Baubin from Daimler-Benz, and marketing manager Hans Jürg Schär, who spearheaded the original Swatch marketing campaigns in the mid-1980s. Tomforde had been working on the Mercedes City Car (coincidentally abbreviated MCC) project at Daimler-Benz since 1990, which produced the eco-sprinter and eco-speedster concepts as well as the Vision-A concept, which eventually became the Mercedes-Benz A-Class.^[15]

One of the first controversies at MCC was the name of the car itself. Nicolas Hayek insisted it retain Swatch in some way: “Swatchmobile”, or “Swatch Car”. Daimler-Benz refused, and pushed for a neutral name.^[16] The final selection was Smart, an acronym that had been previously used internally by MCC for Swatch Mercedes Art.

By May 1994, the co-directors had identified 74 potential sites for the assembly plant. The final site was announced on December 20, 1994: Hambach, France.^[17] The purpose-built factory quickly gained the nickname “Smartville“.

In 1995, Tomforde devised a modular system of assembly for the car, insisting suppliers design and assemble, and even install their own modules onto the final car, at the new plant using their own employees thus reducing the cost overhead for the parent companies and divesting MCC of the financial and legal liabilities for those parts. It also provided a fiscal framework whereby MCC could share the development costs with the suppliers, rather than having to fund the entire project themselves.^[18] MCC secured contracts with suppliers to design and supply almost all parts of the car: seats by Faurecia, interiors by VDO, chassis and door modules by Magna, door panels by Dynamit Nobel, and suspension by Krupp.^[19]

Despite offloading a substantial amount of the development on the suppliers MCC required more capital. Recapitalization by Daimler-Benz increased their share of ownership in the company to 81% by 1996, leaving SMH with only the remaining 19%.^[20]

The assembly plant opened on October 27, 1997, with a ceremonial ribbon-cutting by then-French President Jacques Chirac and German Chancellor Helmut Kohl.^[21] Introduction of the new Smart city-Coupé was planned for March, 1998, however dynamic instability of the prototypes prompted Daimler-Benz to announce postponing the launch until October, 1998. Johann Tomforde was replaced as chief engineer by Gerhard Fritz.^[22] Fritz lowered the centre of gravity, widened the track, stiffened the suspension, changed the steering, and added ballast weight to the front of the car in order to increase its stability in emergency avoidance manoeuvres (notably the Swedish “moose test“).^[23]

The car launched successfully in nine European countries in October 1998, but the final design did not fulfill Hayek’s expectations. Hayek pushed for a hybrid drivetrain but the final product used a relatively conventional gasoline engine. Shortly afterward Daimler-Benz bought out SMH’s remaining stake in the company.^[24]MCC was now a wholly owned subsidiary of Daimler-Benz (which soon merged with Chrysler Corporation to become DaimlerChrysler). The office in Biel was shut down and operations were consolidated at the MCC GmbH design centre in Germany. On January 1, 1999, MCC GmbH changed its name to MCC Smart GmbH,^[25]and by 2000, it dropped the last vestiges of the association with SMH, becoming Smart GmbH.^[26]

The model line was subsequently expanded to include the Roadster a rear-engine, rear-drive and four-door, four-seat supermini aptly named Forfour (the original City-Coupé was renamed Fortwo to fit the new naming scheme).

The expansion did not increase profits at the company; Smart GmbH lost nearly 4 billion euros from 2003 to 2006.^[27] Plans were enacted to increase the company’s profitability and integrate its operations with Daimler (at the time DaimlerChrysler).

In 2005, Daimler decided against purchasing a 50% share in the Dutch NedCar plant used to manufacture the ForFour, ending its production. A planned SUV called Formore was terminated as the assembly plant in Brazil was being fitted with machines, and production of the Roadster was discontinued. In 2006, after dwindling sales and heavy financial losses, Smart GmbH was liquidated and its operations were absorbed by DaimlerChrysler directly.

Smart now operates under the Mercedes-Benz Cars division of Daimler AG, offering the fortwo coupe, fortwo cabrio and forfour hatchback.

Models

Apart from the original Smart Fortwo, a sporty Smart Roadster, a limited production of 2000 erstwhile concept Smart Crossblade and a supermini Smart Forfour were also offered. These have now been discontinued. There were also plans to introduce the French made cross-over based on the body of the ForFour and the AWD hardware of the Mercedes C-class with the name of Formore but industrialization of this was cancelled at the 11th hour (even as tooling was being installed in the assembly plant) due to unfavourable exchange rate swings and spending cutbacks driven by losses elsewhere within Smart.