Smart’s Distribution Plan Unfolds

Special Coverage

NADA Convention & Exposition

LAS VEGAS – United Auto Group’s initial distribution rollout of DaimlerChrysler AG’s Smart brand includes approximately 50 to 60 dealerships spread across 44 market areas.

Smart is a division of UAG, a public dealer group run by Roger Penske, which is responsible for bringing the brand to the U.S.

Because no contracts with dealers have been signed yet, UAG officials decline to confirm specific markets, except for Los Angeles; Tampa, FL; and Austin, TX – three cities in which Smart will kick off a road show in May that will travel to each market in which dealerships are planned.

The shows will include a special event for more than 22,000 “insiders”who have signed up on Smart’s website to receive regular updates on the brand. There will be a ride and drive event for the public and extensive media outreach, including guerilla and street marketing.

In addition to building brand awareness, the road shows will allow Smart to build an extensive list of prospective customers, including e-mail addresses and driver-license information.

Smart also is close to announcing a reservations program in which prospective buyers can pay a nominal fee to be included on an “exclusive” list by which dealers can contact them directly about the vehicles.

Artist rendering of what Smart showroom could look like.

As part of the program, UAG will implement a customer care center, which will manage all leads that come into the brand through the Internet and marketing events.

The center will act as the exclusive lead provider for its dealers. Smart would like its dealers each to sell approximately 300 vehicles annually.

“It’s what every OEM is trying to do today,” Tony Pordon, UAG’s director-investor relations, says. “We’re starting with a clean sheet of paper. We want to create a brand new experience for the customer.”

Contrary to media reports, UAG has not hired advertising agency BBDO to handle the marketing, Pordon says. Whether the dealer group will hire an ad agency has yet to be determined.

Much of the marketing will stress the safety of the subcompact Smart vehicles, the perception of which is the brand’s No.1 risk, officials admit.

UAG expects dealerships to begin selling the Smart vehicles in January 2008. But there is a lot of work to do before that can happen.

In January, Smart’s brain trust held meetings with more than 1,100 prospective dealers in four cities: Las Vegas, Atlanta, Detroit and New York. Currently, no more meetings are planned. Nor will Smart exhibit here at NADA, mainly because it already has enough prospective dealers.

Smart officials provided guidance at last month’s meetings as to what dealership proposals should include, along with a dealership brand image that includes bright yellow desks offset with black and gray throughout the store.

Smart plans to allow dealers to determine their type of dealership. Some will have standalone stores, while others will have “shop-in-shops.” These are a dealership within a dealership, somewhat like Toyota Motor Corp. did with its Scion brand.

Although Chrysler Group and Mercedes-Benz dealerships will not be the only franchises to get Smart, they will be the only franchises allowed to co-mingle with Smart. In other words, other brands will have to have a standalone store should they obtain a Smart franchise.

Being a UAG dealership or a DCX dealership is not an inside track to getting Smart. Whether a dealership obtains Smart will depend on various market dynamics and what is best for the brand, officials say.

Dealers likely will spend anywhere from $300,000 to $1 million each in preparing their facilities to sell the brand.

Meanwhile, UAG is working to build the distribution channel within the next 12 months. Dealers will begin submitting proposals by the end of February, at which time UAG will begin choosing dealers immediately.

Then there is the navigation of local zoning requirements and the subsequent construction. During that time, UAG, partnering with Universal Technical Institute, will begin training dealership technicians to work on the Smart vehicles.

Choosing a dealer group to handle the distribution of a brand is a first for the industry.

“It will be interesting to see if anyone copies it,” Pordon says. “We’re retailers. We understand the challenges retailers face – the cost pressures, maintaining grosses and service.”

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