A Smart move requires a bold step

Edward Lapham Automotive News / June 29, 2006 - 11:03 am - - It's still not obvious that the off-again, on-again plan to sell Smart minicars in the United States will yield a bonanza for DaimlerChrysler.

But having Roger Penske's UnitedAuto Group as the exclusive distributor and landing Dave Schembri to run the Smart chain ought to increase the odds.Using a distributor as a middle man usually is an early step in the evolution of a retail network. When a manufacturer lacks a network in a new market, it's quicker and easier to outsource the distribution functions.

Generally, a manufacturer dumps its distributor once the brand is established and the retail network has taken root, though there are some notable exceptions.

Gulf States Toyota and Southeast Toyota prove that the distributor business model can churn big bucks for dealers, distributors and the factory. But DaimlerChrysler already has a well-established Mercedes-Benz network, so outsourcing Smart distribution is a bold stroke to prevent a buildup of overhead and allow the distributor to pick the best dealers to sell Smart, even if they don't sell Mercedes vehicles.

That might not sit so well with Mercedes-Benz dealers, especially in the Northeast, where Smart could do well in urban markets.Still, having Penske and Schembri running the show makes sense. They are savvy guys and part of the Mercedes-Benz extended family.

Not only that, but UnitedAuto has dealerships in England that already sell Smart vehicles, so the company has experience and institutional knowledge.

Yep, they seem to have almost everything going for them. What they need now is for the price of gasoline to go north of $4 a gallon and stay there.

They may not have to wait too long.