Smart starts recruiting U.S. dealers

Smart USA, which displayed the new ForTwo at the Detroit auto show, plans to begin sales next year. The ForTwo will sell for less than $15,000. Photo credit: JEFF KOWALSKY

Diana T. Kurylko | | Automotive News / DETROIT - Smart USA plans to begin sales early next year with a retail network of 50 to 60 dealerships. The company is requiring a dealer investment of about $300,000 apiece.

Smart USA executives are hitting the road this month to pitch the franchise to potential buyers. They will give priority to DaimlerChrysler dealers who wouldn't have to build separate showrooms, says Smart USA President David Schembri.

Smart is a unit of DaimlerChrysler. A Smart showroom in a Mercedes-Benz or Chrysler group store would have at least 2,000 square feet and a separate entrance, Schembri says.

UnitedAuto Group Inc., a public dealership group in Detroit, is the sole U.S. distributor of the Smart ForTwo minicar. UnitedAuto CEO Roger Penske said Smart USA will consider non-DaimlerChrysler dealers for Smart franchises, but such dealers would have to build stand-alone stores.

"We will not allow commingling of Smart with any non-DCX franchise," Penske told Automotive News at last week's Detroit auto show.

Quick profit

Schembri predicts most U.S. Smart dealers will make a profit in the first or second year of operation. He would not offer annual sales volume projections. But he said he expects the average Smart dealer to sell more than 200 vehicles in the first year.

SmartUSA displayed the second-generation ForTwo at the Detroit show. It plans to start selling the car in the first quarter of 2008.

UnitedAuto expects to select Smart dealers by May or June, Schembri says. Smart USA has invited about 400 dealers selected from more than 1,200 applicants, and all U.S. Mercedes-Benz dealers, to attend presentations starting this month in Las Vegas, Atlanta, Detroit and New York.

Ernst Lieb, CEO of Mercedes-Benz USA, says his company has the right to approve any of its dealers chosen to sell Smart cars.

Smart USA will tell dealer candidates that potential customers can reserve cars by putting up an undisclosed sum. The ForTwo will list for less than $15,000, Schembri says.

'Smile' strategy

Penske said Smart USA will look first for dealers in the "smile" states on the East and West coasts and in the Sun Belt. It also wants retail outlets in major metropolitan areas in the Midwest, he said.

Mike Jackson, CEO of AutoNation Inc., says his dealership group is applying for Smart franchises.

AutoNation operates 13 Mercedes-Benz dealerships.

"The product is dramatically improved over the first generation," Jackson says. "The first product was not fun to drive. In certain metro markets, (Smart) would make sense for us."

Kenneth Gilman, CEO of Asbury Automotive Group, says his dealership chain also is looking at signing up with Smart. Asbury has five Mercedes dealerships, Gilman says. "A couple of those markets would be well-suited to the Smart car," he says.

Smart USA seeks to build consumer awareness through event marketing. Starting in mid-May, three 38-foot tractor trailers emblazoned with Smart logos will make 55 stops in 37 large U.S. cities.

The trailers will have four Smart cars apiece. Potential buyers can test drive the ForTwo and gain "a mini-dealership experience," Schembri says.

He adds: "We will invade the United States with Smart ForTwos."