Inside The Mind Of An Automotive Geek

Which do you prefer – a two-seater or a gas-guzzler SUV? Do you like brawn over brains?

Daimler AG is poised to offer its 1,800-pound Smart ForTwo for sale in the United States next month. But the German automaker said the orders of the much-anticipated car have gone beyond the production for next year. Is that a good sign or a bad omen?

Daimler Chairman and CEO Dieter Zetsche said Tuesday that more than 30,000 Americans have paid a $99 deposit to buy one of the 1,800-pound two-seat vehicles that get 40 miles per gallon on the highway. The automaker expects to convert 90 percent of those deposits to sales.

"We were totally amazed by the kind of reaction we got," Zetsche said at a breakfast with reporters. "We will not be able to meet the demands here next year."

Smart USA President David Schembri said the company has seen strong interest in Michigan. Over 1,000 Michiganians have paid deposits. The figure makes Michigan one of the top 10 for Smart.

He said the reason for driving a small car alone around town is simple. "If I go out to dinner by myself, I don't order enough food for five people," he said. “A person ordering a vehicle now might be able to get one in late 2008 or 2009, but customers should check with dealerships to see if there are cancellations.”

The Smart ForTwo starts at $11,590 for a very basic model - one without a radio, power steering or air conditioning. The top-of-the-line convertible model with options is $17,440.

David Healy, an auto analyst at Burnham Securities predicted there will be some initial demand for the Smart, but questioned how much sales would grow in the next few years, as other small cars enter the market, including a potential Chinese-made small car. "It's not going to be a financial disaster, but the exchange rate is an issue," Healy said.

Zetsche acknowledged that the expensive euro makes it harder to make a profit on the Smart, which is built in France, but he said the company would make money on the car in the States.

Since the Smart brand debuted in Europe in 1998, the company has sold about 850,000 vehicles. In Canada, the company sold more than 10,000 in the first 2 1/2 years; it expected to sell only 3,000.

"When you just want to go from to A to B with a lot of fun and don't want to carry three persons, Smart gives you everything you can ask for," Zetsche said. He added the only car he personally owns in Europe is a Smart that he uses to go shopping and downtown.

Adrian Lund, president of the Insurance Institute for Highway Safety, who test drove the Smart car Tuesday, said his group was looking forward to putting the car through its crash tests. Daimler expects the car to receive four star-crash ratings.

Daimler is preparing for the first Smart sales here as a bill is moving through Congress that would hike fuel economy mandates to an industry average of 35 mpg. Zetsche said that Daimler supports the legislation. He said Mercedes-Benz is working to cut the weight of all its models by 5% and will eventually produce hybrid versions of all models.

"We are part of the problem," Zetsche said, noting that passenger cars account globally for 12% of man-made greenhouse gas emissions.

via: DetNews