Sound Footing

The Smart brand may be struggling for profitability, and its product future in North America is in question.

But don't dismiss the marque that redefined Europe's minicar segment in the late 1990s, says Ulrich Walker, president of Smart GmbH.

The DaimlerChrysler AG board of management, impatient with the steady flow of red ink at the Smart business unit of the Mercedes Car Group, announced in March a new “business model” designed to help the operation at least break even in 2007.

The plan includes stepped-up development of the next Smart Fortwo city car, terminating the Smart roadster program by the end of the year and discontinuing the Smart SUV project.

Walker says Smart will meet its financial goals, and that the business unit has reduced fixed costs 26% and has identified additional cost savings.

“Today, I can assure you that we will reach our operating result target for 2005,” Walker says at the Frankfurt auto show.

In the year's first eight months, Smart says it posted an 11% increase in worldwide deliveries, to 93,400 units.

Smart entered the Canadian market in October with the turbodiesel Fortwo, and sales have exceeded expectations. The company says it sold 1,000 Smart cars in Canada in 2004 and has delivered 2,600 so far this year.

Plans to enter the U.S. market remain uncertain, but Walker says Smart is seeking regulatory approvals to sell the next-generation Fortwo in the U.S. That model is expected to launch in fall 2007.