NYT: DaimlerChrysler to Scale Back Mini-Car Unit (Smart car)

[DeepModem Mom]

DaimlerChrysler to Scale Back Mini-Car Unit


Gerard Cerles/Agence France-Presse - Getty Images
Smart models on the assembly line at a plant in Hambach, France. DaimlerChrysler has announced cutbacks in its Smart division.

By MARK LANDLER
Published: April 2, 2005


FRANKFURT, April 1 - How did a pint-size car named Smart manage to make DaimlerChrysler look, well, dumb?

On Friday, the company announced that it would drastically scale back its troubled Smart division, eliminating two models and cutting 700 employees, at a cost of up to 1.2 billion euros ($1.55 billion).

The move came after DaimlerChrysler racked up years of losses, as it struggled with Smart's high production costs and cumbersome distribution network, which had been kept separate from existing Mercedes dealerships.

DaimlerChrysler's missteps, critics said, hobbled what should have been a car that is perfect for its times: fuel-efficient and tiny enough so that two could fit into the parking space of a single full-size American car....

***

DaimlerChrysler insisted that the cutbacks would not affect a possible introduction of the two-seat Smart in the United States. The company is developing a new version that will meet American road and safety requirements. Smart's problem, the company said, is its high cost, not lack of appeal....


http://www.nytimes.com/2005/04/02/business/worldbusiness/02daimler.html

[420inTN]

1. So, why the high cost for a small car? n/t

[earthside]

2. Big is Bad

Probably the huge size of the Daimler-Chrysler mega-corporation is why the cost was so high. Gigantic companies, like gigantic government, has a propensity to involve over-planning and over-pricing even simple things that they need to do.

Let's hope that Daimler-Chrysler gets this worked out because when gaoline hits $4 a gallon, we're going to need small cars ... and we know that Detroit will be ten years behind the curve on providing American consumers with what they need.

[420inTN]

3. I'm not sure about that...

Even thought it is a mega-corporation, unlike gigantic government, it has to worry about the bottom-line, so it will try to avoid over-pricing. And when it comes to automobile safety, I don't care if they over-plan.

I don't have a NYT subscription, so I've only read the posted excerpt. However, it was my impression that the car's high cost was due to:
1) construction costs
2) distribution costs

now, having it's own distribution channel is stupid and costly. However, my main question, is why are the construction costs so high?

[Cessna Invesco Palin]

5. Fewer produced = higher costs n/t

[arikara]

4. These cars are in Canada now

There's several of them tooling around the Victoria area. I had my name in for one until I lost my job, they are the ideal commuter car for an urban area. They get 80 miles to the gallon so they are very cheap to drive. They aren't that expensive, starting at around $15,000 Canadian. They don't feel like a small car on the inside, there's ample room.

[amandabeech]

6. What is their top speed? n/t

[arikara]

10. 135 km/hr

Which is around 80 mph.

[daleo]

7. I suspect they don't want to give people smart choices.

OK, I must be a conspiracy nut, but the bigger the car, the greater the profit margin. That is what really drives SUV marketing. Eliminating this choice means bigger profits.

[yorgatron]

8. because small cars have a small profit margin.

they make more money per unit with big cars.
the dealers can sell more options and accessories for big cars too.
big car companies are run by even bigger idiots.:mad::grr:

[happyslug]

9. Offical Web Site:

http://www.smart.com/-snm-0135145948-1110978385-0000016371-0000005315-1112469209-enm-is-bin/INTERSHOP.enfinity/WFS/smart-content-Site/-/-/-/Default-Start