Daimler is betting on the revamped ForTwo and the new ForFour vehicles to turn in profits for the Smart brand.
Smart will be releasing the ForFour vehicle, a new four-seater car, and upgrading its two-seater ForTwo for this year's lineup, hoping to boost the brand's languishing sales.
The first Smart car by Daimler was released in 1998, but has since struggled to find its place in the automobile industry. With its main selling point being its ease of finding space to park, demand for the two-seater car never took off. Paired up with high production costs, Bankhaus Metzler estimates that the brand has lost a total of about $4 billion.
However, Smart's fortunes may soon be turning around, as IHS Automotive has released expectations that city car sales, which includes Smart cars in addition to Fiat 500 and GM Opel Adam, will increase by 35 percent by 2020 to 6.2 million units.
"Since the market for small cars is expected to grow, the scope for Smart to be successful is also expanding," said LBBW analyst Frank Biller. "Smart is moving into a very competitive segment."
To ensure success in the growing segment and avoid repeating mistakes that have been made in the past, Daimler is teaming up with Renault to cut costs. The new ForTwo and ForFour cars were developed together with Renault's Twingo, with the vehicles sharing up to 75 percent of the parts used.
Both the ForFour and the Twingo will be assembled at a Renault Slovenian factory, while the ForTwo will continue to be the only car being assembled at Daimler's factory located in Hambach, France. Renault decided not to create a sister model for the ForTwo because there is a limited demand in the market for two-seater cars.
The ForFour, which is 31 inches longer than the 11.5-foot ForTwo, will not be sold in the United States. It will be sold for €11,000 once it is launched for sale in Nov. 22 later this year.
The upgraded ForTwo will be launched for sale on the same day as the new ForFour, and will have a price of €10,400. The ForTwo is looking to break away from the low sales that it experienced in the past, as it never met its target of selling 200,000 units in a year. The highest sales ever made for the Smart ForTwo was in 2008 at 140,000 units, with sales going below 100,000 units last year.
"Following a restructuring seven-eight years ago, Smart hasn't had a considerable negative influence on our overall business and we now want to turn this into a positive influence," said Daimler CEO Dieter Zetsche.