The History of smart in the USA, a Catastrophe Hiding in Plain Sight

During 2018 the smart auto brand celebrated its 20 years in operation. It’s one of the few brands launched in the past couple decades that can say that it’s still around today. However, I fear smart may not be around much longer and surprisingly smart’s performance in the USA may be more telling than you’d think.

In 2017 smart sold 135,025 units in the entire world. The smartville plant can only churn out 100,000 cars a year and the Slovenia plant picks up the slack producing the forfour. 100,058 of those smarts were sold in smart’s home market of Europe. That means there are less than 35,000 units to be shared across the rest of the world.

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Back in 2014, Mercedes-Benz believed that China would be smart’s largest market. While China does love smarts, after four years the Chinese smart market has failed to become smart’s largest. In fact, Chinese sales are actually what smart’s USA sales were expected to be about every year. It appears worldwide interest in smart is fading. The first full year of the 453 generation (2016) netted smart relatively explosive sales. They finally (and just barely beat their all time sales record from 2004). Unfortunately for smart this doesn’t mean much. The sales reception of the third gen fortwo has been disappointing and sales remain to fall as smart edges closer to its EV-only 2020 master plan. EVs only make up a small fraction of smart’s sales and it’s not likely they’ll pick up the slack when the ICEs go away.

Looking at the US market can help us understand how we got here.

While smart officially launched in the States in 2008, this story actually goes back to smart’s infancy.

2000-2004

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Two years into smart’s existence and the fortwo continued to take Europe by storm with no stopping in sight. Dealers couldn’t keep them on showroom floors for three years straight.

Around this time importers in the US wanted in on this action and proposed to the federal government to allow the federalization of the smart fortwo. In doing so these cars would be exempt from the 25 year import rule with just a few modifications. Three importers were granted the ability to legally import smarts and all three offered different ways to do the federalization. Ultimately G&K Automotive was the only importer that did anything worthwhile, converting over well 1,000 smarts to US standards up until right before the US release of the 451 generation in 2008. Cars from the other two importers are exceedingly rare, but not impossible to find.

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Just about any 450 missing a “G&K” in its speedometer housing like this..

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...Or side marker lights like below, were certainly imported by someone else.

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It was here where a couple of smart’s core problems started to come to fruition. These converted smarts were expensive. When all is said and done you could have purchased a much nicer vehicle for the price that you paid for a converted smart. This was in part because the cars themselves were expensive for what they are. On top of this you were in the dark on service and maintenance. So when the car inevitably broke, you were on your own. And oh my did they break...

Part of the reason smart cost Mercedes-Benz billions of dollars in its first ten years is because of warranty issues. The 600cc engines that earlier models were coupled with were so unreliable that they required engine rebuilds every 40,000 miles. And you’d be lucky to reach that mileage because the transmission’s clutch actuator would be more likely to die first. And if none of those died, your windows certainly did!

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These problems were so bad that rebuilding smart engines and repairing smart transmission became profitable business ventures for many across Europe. The roadster continued this trend being so unreliable that smart had to kill it to keep from losing so much cash.

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Despite these issues, smart still wanted to break into the US...

2004-2006

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Continuing their quest for expansion, smart began to work on sport utility vehicles. Slated for a European release in 2005 and a United States release in 2006, the smart formore would have been smart’s answer to the giant lumbering SUVs of America.

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The bean counters over at Mercedes-Benz figured that the formore would have been smart’s best chance of success in America. Honestly I think they would have been correct, however - in hindsight - a 2006 release would have put smart in the crosshairs of not only the Recession, but the eventual takeover of crossovers.

2005 was a busy year for smart, in this time they also released their crosstown concept. Being a property of DaimlerChrysler, smart borrowed design elements from the Jeep Wrangler for the crosstown concept.

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Photo: netcarshow

The crosstown was a hybrid (similar to a Prius) convertible with a windscreen that folded down and doors that could be taken off. In person, it was described to be a micro-Jeep. The crosstown was originally intended to showcase a few design elements from the next generation fortwo and to try the waters on alternative propulsion. It was so popular that smart seriously considered producing it just like they did with the crossblade concept of 2001 that became a real car in 2002.

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However, the most common explanation as to why this didn’t happen is because Jeep did not like this idea.

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Ultimately the formore never saw the light of day. There was a show car, a production car, and 27 prototypes built.

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The prototypes were all crushed and the two remaining vehicles were shoved into storage at a MB warehouse with other concept vehicles and historic vehicles.

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The formore was literally days from starting production when the project was cancelled. In 2006 later smart would be liquidated and all assets fully absorbed into Mercedes-Benz. While the fortwos became relatively reliable cars, their losses with the first gen forfour (too expensive so sales failure), the formore, and the roadster cost them too much.

However, not all was lost...

2007

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Mercedes-Benz decided to bring back smart to its core model: The fortwo. Released in 2007, the 451 improved on the previous generation in almost every way. The engines would no longer be maintenance hogs and instead be variants of the engines used in the Mitsubishi i. It was here they decided to dive head first into the US market. Mercedes-Benz found a distributor to handle US operations (Penske Automotive Group) and they began to get the word out as much as possible.

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They started a $99 reservation program, hosted test drive events all over the nation, and set up dealerships that looked more like art galleries than places to purchase cars.

Their campaigns were wildly successful and smart got so many $99 reservations that even Elio would blush at it. Before smart knew it, they were sitting on more reservations than the number of cars they could import to the US in a year. When the next year rolled around smart would be an instant hit.

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But not everything good lasts forever...

2008-2009

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If you paid attention to smart in 2008 you would have thought that this was the second coming of the addictive iPod. These cars were celebrities everywhere they drove and people lined up to buy them. It seemed the nation just couldn’t get enough and that Mercedes-Benz had themselves a bit of an unicorn.

I fell in love with smart in May of 2008. My dad needed a new car and we decided to go check out these “smart cars”. I had my head filled with ideas of technologically advanced cars that were the future, but right here in my backyard. When we arrived at smart center Lake Bluff I had a dealership experience I’ll likely never get to see again. We were greeted by a gentleman named Alan who showed us his gallery of unique smarts accompanied by modern art adorning the dealership walls. He was dressed like he was going to a ball after his day of work was over. This salesman didn’t seem at all concerned if we got on the over a year long waiting list, he just wanted to show off the cars. I’ve never seen a car salesman have a smile like he had. When you walk into a Chevy dealership it’s like you’re in a wolves’ den. That’s not the case here, you felt like you were visiting an art gallery or museum. Even the financing area looked a bit funky:

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This was no mistake. PAG designed their dealership model to be the exact opposite of what you’d expect from a car dealer. PAG’s smartUSA was customer centric, even going so far as to send smartUSA’s then President - Dave Schembri (Elio’s President, should they decide to actually build cars) - to every regional smart event.

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Dave wanted to get to know every smart owner and he wanted to make sure they loved their cars and the smart experience. Never before have I seen the President of a car company so active in the communities of their owners. This is also where I slowly gained my celebrity status in the smart community. At some point Dave planned to launch an ad campaign where I’d get my dream car and be a promotional tool.

Sadly, it was not meant to be...

It seems one of PAG’s mistakes was expecting the sales momentum of 2008 and early 2009 to persist. However they forgot that the fortwo’s launch happened right as fuel prices were skyrocketing and we were diving into the Recession. After all of the reservations dried up smart sales fell off a cliff. Sales were in free fall and PAG didn’t know what to do about it. To make matters worse, a very significant chunk of sales in 2008 were impulse buys and it only took those people a few months to figure out that they really hated smarts. It didn’t help that the early 2008s were full of catastrophic transmission and computer issues and all panoramic roof smarts had a defect that caused the roofs to craze from the inside out at an alarming rate. The icing on this cake was the car’s pitiful 24 month/24k mile warranty that all but gauranteed these problematic 2008s and early 2009s were going to cost a lot of money.

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Starting in this year Tesla partnered with Mercedes-Benz to make the batteries for electric smarts. Tesla made their own prototypes featuring Tesla Roadster batteries and motors. If any of these still exist today they would be the only electric smart “Hayabusa” cars in the world.

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By mid 2009 there was little reason to buy a new smart. If you wanted a smart there was a used market overfilling with cars of all configurations and options with very few miles. And since there were so many of them, the discounts cut deep. The used prices of US spec smarts never recovered from this, sealing in the car’s fate of awful depreciation.

Penske was running out of options to stop the fall...

2010-2011

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In early January Dave Schembri was replaced with Jill Lajdziak. PAG had hoped that Jill’s experience at Saturn would save smartUSA. The plan to give me my dream car and an ad campaign was back on, however Jill didn’t get far before being thrown a curve ball.

PAG ultimately decided to drop the smart brand not long after Jill’s appointment. Mercedes-Benz USA was to take over operations from PAG and save smartUSA. Jill would remain President through the transition. A critical failure of Penske Automotive Group is that while the dealership experience and the customer service were absolutely amazing, they failed to advertise smart and the first two model years were quite broken vehicles. To a degree they helped cause smart’s freefall.

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The smart communities thought Mercedes-Benz would be the saviour we needed. They have the resources to give us better warranties, more dealerships, and actual advertising.

As I still had connections at the highest levels at smartUSA, I knew what was on the horizon. Come 2011 smartUSA would introduce the fortwo’s facelift (my 2012 is a facelift smart) and in 2012 after MB’s takeover would complete we would get 4 year/50k warranties. Things were looking good.

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Later in 2010 Penske made a last ditch effort to save smartUSA. Their idea was to import the Nissan Micra, change a few panels, then call it a smart forfour. This project was reportedly close to the green light before PAG ultimately decided to simply give up on the smart brand entirely.

Unfortunately it became obviously apparent that Mercedes-Benz was not interested in maintaining PAG’s dealership experience and community involvement. Dealerships were being converted and unified with the rest of Mercedes-Benz, the salesmen were replaced by guys who didn’t know anything about smarts and actively tried to get you to buy a different brand, auto show involement became half-baked efforts, and at the worst...they stopped coming to owner events.

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Some of us had the hope that Mercedes-Benz USA would throw some money around and at least advertise the cars, right? Well they gave a small effort and gave up after it didn’t immediately pay off. Mercedes-Benz ads played during primetime everywhere, smart ads were few and far between and generally only played near major cities.

Sales did stop falling at around 600 units a month and they actually slowly increased, however it was clear that these cars would never be the volume sellers they’d need to be to justify their existence.

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The Tesla powered smart reached the public testing phases. The cars retained the Tesla batteries, however Mercedes-Benz replaced the Tesla Roadster motors with ones from their own supplier. The combination was a bit of a joke. Awful range, awful performance, and so heavy that the handling was chaotic. The public testing involved 250 units to be leased, returned back to smartUSA, then crushed.

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However, because the Tesla smart earned universally negative reviews smartUSA had a hard time finding just 250 people to lease them. Desperate dealers decided to try selling them outright. However, those Tesla batteries were crazy expensive and these cars were listed for $41k-$45k. Ultimately smartUSA never set up their disposal process and instead just sent the cars to scrappers who then parted out the cars. Because these cars were prototypes, they have one-off parts that smart only made for those 250. This is how I got my “OEM lift kit”.

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2012-2015

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Early 2012 would be the last time I had any connections with smartUSA. As Mercedes-Benz USA moved in, those who worked under Penske slowly moved out. And with the new MBUSA mothership not at all caring about their cars’ owners, this was the abrupt end of my relationship with smart USA. From this point forward my ownership/dealership relationship was sour. If you walked into a MB dealership wanting a smart (and by this time the smart center sections were all demolished) you were treated like you had the plague and getting even small warranty repairs fixed took multiple visits and fighting.


On the other hand of things the cars were better than ever. The relationship between Mercedes-Benz and Tesla was over and they managed to find suppliers for both the batteries and the motors that worked well with each other. Aside from range and top speed, the new smart fortwo Electric Drive was better than its internal combustion counterpart in every way. This marriage also netted smartUSA with the cheapest mainstream EV for sale in the US; these cars started at $25k before you could easily negotiate them down.

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The internal combustion smarts were hitting strides as well. The fatal issues of the earlier cars were things of the past. The cars had more features and looked better than ever. Owner communities were still going strong.

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In 2013 the car got another facelift. This was MB’s half-baked attempt to make the smart fortwo look like other Mercedes-Benz vehicles. The effort resulted in a Frankenstein monster of mid 2000s design mixed with mid 2010s design.

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The boogeyman in the room was always sales and the dealership network. If you didn’t live near a city you still had to drive hundreds of miles to a dealership and even if you did live near a dealership, smartUSA had a hard time getting Americans to spend $16+k for a car with fewer seats and worse fuel economy than a larger car with the same price tag. In fact, throughout much of the fortwo’s run there were a handful of sedans that actually cost quite a bit less.

By this time, Mercedes-Benz was able to recover sales enough that dealerships were combined pumping out about a thousand cars a month, give or take 100 of them EVs.

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As the 451 platform began becoming long in the tooth, worldwide sales began slumping. Mercedes-Benz and its USA divisions were prepping to put all their eggs in a next generation basket.

2015

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This year saw the “collapse” of the used smart market. Car2Go bought a lot of new smarts and decided not to use them. They flooded the used smart market with brand new cars (many with fewer than 100 miles) for absurdly low prices ($5k).

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Shady used car dealerships and new smart owners alike collected them at an alarming rate. At the same time non-Car2Go smarts had their values hit hard. If you can get a basically brand new smart for $5k, there’s suddenly a lot less incentive to get some rando’s 50k mile smart for more money. It’s like 2009 all over again.

Late that year smart released the 453 generation.

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Fans of the brand were hoping the 453 would look like the popular fourjoy concept.

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Unfortunately, while the production 453 shared most styling elements with the fourjoy, the front end ended up being mostly square instead of raked like the concept. In person this made the car look a bit “off”. The official explanation is that they wanted to give the fortwo a two-box design to appeal to Americans and others who felt smarts looked too small.

The immediate effect was polarization, even among smart fans. Some people liked them, some people hated them. However, as smart put all their eggs into the 453 twins they had no choice but to keep going.

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Deliveries in the USA would start with the Edition #1. This car looked exactly like the preproduction cars used in the press shots.

It was supposed to be sort of a rebirth of the fortwo. Almost every complaint had been fixed. The car was fast, the car shifted smooth, the car had an upscale interior, and it even had the much desired turbo. It was also saddled with a $20k price tag. It was also revealed that smartUSA would not import the much requested forfour, ensuring that this rebirth would stall out before even taking off. On the global market, smart also revealed that the diesel would not return, meaning the car would remain saddled to an engine that would have been considered fuel efficient a decade ago, but not today.

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2016

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The first full year of 453 production was disappointing. Interest was waning in their home markets. Despite being a better vehicle than the 451, the 453 failed to surpass the 451 in Europe despite having two models. Global sales were their best yet by a small margin, propped up by sales in China. So far as I can tell, the 453 came too late and was too expensive. The lukewarm response to the vehicle’s price and front end design beat out the car’s praise from auto journalists. For the first time ever smarts were getting near universal praise from reviewers, however it seemed the car came too late and people were already turned off from smart.

Meanwhile, smart in the USA was reliving some of the horrors they faced back in 2008. Where owners of 2008s had roofs that disintegrated at record pace, 2016 owners were physically incapable of filling their tanks to anywhere near the advertised number. Some people were able to fill in several more gallons than the tanks capacity while most couldn’t even get near the advertised number. MBUSA had no fix for this and simply decided to just ignore customer complaints as they piled up more and more.

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This year was the last year smartUSA would see anything resembling stable sales, for 2017 would bring winds of change...

2017

With the fuel tank fiasco still ongoing smartUSA announced that come the second half of the year they would no longer sell internal combustion smarts in the USA. This was a slap to the face of a community already fractured by the events of the past nine years.

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The fortwos of 2017 received a few new options and interior quality upgrades, but the cars were otherwise the same.

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Over in Europe, sales were already decreasing with the projected trend of falling sales expected to continue throughout the 453's run. While smart may have become profitable in 2008 and remains profitable even with slower sales, it’s clear the 453 wasn’t the hit Mercedes-Benz and smart wanted it to be. And that’s a shame, it’s a wonderful car and I think it deserves better.

2018

Hopes for smart’s future in the USA were dashed when smart announced that come 2020 they will no longer sell internal combustion vehicles anywhere in the world. Further, Mercedes-Benz’s plans for smart include integrating it into their EQ line of vehicles and potentially turning smart into a clone of Google’s koala self-driving car with a little Car2Go mixed in.

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2018 is smart’s ten year anniversary in the USA and instead of a celebration it feels like we’re getting smartUSA’s affairs in order, though we did get a neat looking 10th Anniversary Electric Drive.

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Events have a significantly smaller number of participants and smart communities across the country have dried up. The excitement, the novelty, the ownership experience...it’s all gone. Unless you live in California the smart you’re living with today is much different than ten years ago.

To add fuel to the fire, over the ten years dozens of 2008s and 2009s have caught themselves on fire and burned to the ground. It took ten years for the NHTSA to do anything and even when they did they only resolved one source of fire. And if you have been lucky enough that your car didn’t burn to the ground, it’s more likely that your car’s clearcoat is peeling like the car has a skin disease. These are defects originating in the very first generation cars and have been ignored for all this time.

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As of current smart is lucky to sell 100 cars a month in the USA.

The Future

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Owners in the USA got front row seats to the consequences of smart’s mismanagement. PAG complained of poor sales, however they refused to advertise. MB complained of poor sales, however they too refused to advertise, priced the cars too high, failed to innovate the engines, and failed import models people actually desired. People wonder how smart got here and all they have to do is look at how they handled the US market. While they treated other markets much better, they are no stranger to what we in the US have experienced. A perfect example is with the fires. While the NHTSA has launched a recall on the 2008s and 2009s, smart owners all over the world know that pretty much all 450s and a decent chunk of 451s are prone to catching fire. If the fire isn’t caused by a defective engine mat, it’s the SAM unit overheating or the oil filter being taken out by debris. These are extremely well documented issues that Mercedes-Benz simply pretends do not exist.

They could have avoided much of the hardship they’ve had in 20 years of operation had they done things right the first time.

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Mercedes-Benz’s future for smart is to initally make the cars all EV by 2020, then a longer term goal to turn smart into a self-driving Car2Go pod. Considering EV sales make up less than a quarter of smart’s yearly sales, I doubt these will be enough to sustain the brand and its two factories. Further, as we’ve seen in the US, the cancellation of the internal combustion smarts further harmed our already fragile enthusiast communities. I fear the same may happen to Europe, however it seems their fandoms out there may be strong enough to survive. Well over 1,000 cars attend smarttimes every year from dozens of countries. These events are massive festivals of people from all over the world celebrating a lineup of little city cars and a plucky roadster.

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At any rate, I predict that once Mercedes-Benz gets their EQ line of vehicles in full swing smart will cease to exist as a car brand.

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MB will sell the “EQ fortwo” through MB dealerships and the cars will be smart, but in name only.

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Where does this leave me, smart’s biggest fan? Well, I’ll be here until I’m physically incapable of collecting these things. What has changed is my attitude towards my namesake car brand. They’ve handled smart with complete disregard for logic and their US divisions are even worse. I will forever love the cars, but not so much with the brand that brought them to the world. Hopefully one day I can open a museum of smart and keep Nicolas Hayek’s dream alive in the United States...

(Photo Credits to their owners).

About The Author

Mercedes is fighting the daily battle trying to decide whether she loves smart cars more or motorcycles more. As her collecting ultimately spirals out of control you will probably see her on a Hoarders show buried under a tower of smarts and motorcycles of questionable origin.

email: the_smart_car@yahoo.com / the1transmission@gmail.com

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