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Mercedes Oz could drop Smart sub-brand

That smarts: Sales of the Smart ForTwo are down by about 50 per cent this year, compared to the same period last year.

High prices and no profit could spell doom for Smart brand in Australia

Smart logo8 Jul 2014

MERCEDES-BENZ is considering discontinuing the Smart brand in Australia when stocks of the existing model are depleted, due to poor sales and a lack of profit potential.

With the third-generation ForTwo two-seater city car and all-new ForFour five-seater version set to be unveiled in Berlin next week, the company has yet to figure out how it can boost the popularity of the struggling sub-brand Down Under.

Speaking to GoAuto at the launch of the all-wheel drive variants of the GLA and CLA in New Zealand this week, Mercedes-Benz Australia/Pacific (MBA/P) senior manager of corporate communications David McCarthy revealed that discussions are underway right now, but the future of the all-new models is not looking bright.

With sales down 50 per cent in the first six months of this year, the on-line ordering experiment for the existing 451-series ForTwo launched in June last year has not helped boost sales, even though the car was discounted to $18,990 driveaway.

“We need to assess the business case on the car and see if we can make money on it,” Mr McCarthy said. “If we don’t make money on it we don’t bring it.

“Even though the current car is sitting at $18,990, it is very hard to move.

And at this point we don’t see a big change in price for the next car. And the price competition under that is really severe.

“And the new ForFour will be in the same situation.

“But it’s not a done deal. We’re still having discussions. You have to remember we are not a volume market.

Mr McCarthy said that MBA/P launched the first Smart City Coupe and Cabriolet in Australia during 2003 in order to have better control of the brand, since private imports were growing.

At that stage Mercedes-Benz had indicated that a whole range of Smart models were on their way, including the short-lived first-generation ForFour hatch (based on the contemporary Mitsubishi Colt) and Convertible released a year later, as well as a stillborn SUV.

“When we originally brought the first-generation car to market, we did it on the basis that we knew what was coming, and we wanted to retain ownership of the brand to stop people who were importing it,” he said.

“We also know what’s coming (now) and the ForFour is a particularly interesting car – but it’s got to be at a price that we can sell it at. And that’s the challenge.”

Mr McCarthy added that Mercedes' local arm would not make the decision on Smart’s future lightly.

“It’s a car that has a very loyal following people buy (into) the Smart – we don’t sell it,” he said.

“But it’s a big challenge for that car because of the pricing. And I can assure you we don’t make much money on it currently. That’s a challenge.”

The talk of Smart's local demise comes hours after parent company Daimler released a teaser video of the next-generation Smart ForTwo and ForFour on its official YouTube channel.

Just 126 ForTwos were sold in Australia last year, down from 142 in 2012.

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