CUV Blitz

America will get its Smarts in 2006, says Paul Halata, president of Mercedes-Benz of North America.

Mercedes is setting up a new franchise to sell the Smart cross/utility vehicle, a larger vehicle than the current mini Smart 2-seater currently sold in Europe. The 4-door Smart CUV, which will be assembled in Brazil, is a bigger model designed to compete in the Mini segment.

Halata appointed Scott Keogh, current Mercedes public relations chief, to be the general manager of the Smart division. Keogh will report to David Schembri, a marketing vice president who will continue to oversee sales of pre-owned Mercedes.

The Smart CUV is slated to debut in the fall of 2006. Keogh says 50-60 dealers will be drawn from the Mercedes retail ranks to sell the Smart CUV and other models planned for the brand.

Mercedes is targeting sales of 25,000-30,000 Smart CUVs in a full calendar year, Keogh says. “We'll be aggressive in bringing out additional models.”

Eventual volume for the Smart franchise is forecast at 50,000-60,000 units per year. The Smart CUV will be built on an undisclosed new chassis, and Keogh predicts the vehicle's price will be less than $25,000.

Halata says two additional utility vehicles for the Mercedes brand will debut about the same time. They include the Grand Sports Tourer (similar to a Chrysler Pacifica) that is bigger than the present M-Class, and the smaller CST from the next-generation A-Class architecture. The GST will be built at Mercedes' Vance, AL, plant, where the M-Class also is assembled.

Meanwhile, Halata says Mercedes is hitting its highest volume in North America and enjoying its most profitable year ever in 2003.

That's despite the soaring value of the euro. Halata says hedging has protected Mercedes so far from the need to boost prices until at least mid-2004. But if the euro keeps skyrocketing next year, prices will have to increase, he says.

The Mercedes chief says 2003 sales should be 218,000 units, up from 213,000 in like-2002.

“We have not really pushed for volume,” Halata says. Even though competitive brands such as BMW and Lexus have widened their volume lead over Mercedes, Halata says he's chosen not to buy market share. “We strongly believe we should sell the vehicle rather than price,” he says. He notes Mercedes is achieving its goal of attracting younger buyers with the 1.8L C-Class models.

“Our incentives this year are about the same as last year,” says Halata. And most lost market share is in the entry-level segment. High-priced S-Class, SL and AMG models continue to sell without incentives.

“We're not putting much on the E-Class either,” he says.

Mercedes' most aggressive incentives are on Mercedes SUVs, necessary because the model is seven years old.