Smart is looking like an increasingly dumb decision for Daimler and it appears the company could be ready to pull the plug.
Handelsblatt is reporting Smart has never been profitable and it’s about to lose its biggest fan, Daimler CEO Dieter Zetsche, who is retiring in May. He’ll be replaced by Ola Källenius who is said to have “no scruples about killing the brand if necessary.”
The publication goes on to say Källenius is under pressure to cut costs and Smart is a prime target due to its continued loses. A decision on Smart’s future will reportedly be made later this year.
There’s no word on which way the company is leaning, but Smart boss Katrin Adt reportedly has big plans for the brand. There’s no word on specifics, but the executive is said to want a new and expanded product lineup to boost sales.
Smart sales have plummeted in the United States and the company only sold 1,276 units last year. The dramatic drop is being blamed on the company’s decision to only sell electric vehicles, but Smart sales have been dropping continuously since 2015.
The picture is better in Europe where Smart sold 97,346 vehicles in 2018. However, Handelsblatt notes the company has never been able to achieve its original sales target of 200,000 units globally.
While Smart’s future looks bleak, that might not necessarily be the case. The publication suggests Daimler has been talking to BAIC and Geely about a potential partnership. If the company could strike a deal with another automaker, it could help to justify Smart’s continued existence.
Auto News Europe says Evercore ISI believes Smart loses between $565 – $792 (£428 – £600 / €500 – €700) million annually. The firm has also previously told investors “We can’t see how a German microcar business can generate a profit, costs are simply too high.”