Mercedes tiny Smart takes on big boys in China
July 21, 2011
Klaus Maier adjusts his lanky frame in a bright Smart. Reuters picBEIJING, July 21 Dong Han is an ideal customer for Mercedes Benzs booming car sales in China. A 27-year-old advertising agent with a double-income household and no children, shes upwardly mobile and highly conscious of style.But its not Mercedes SLK sports car or top-end S-class that strikes her fancy. Like a fast-growing number of affluent, hip Chinese, Dong is enamoured with Daimlers other brand, Smart, the tiny but nimble, colourful two-seater that looks almost more toy than transport.When I test drove the Smart, I loved it right away and made up my mind. Its special, said Dong, who goes by the English name of Kathy.Not many people drive this kind of car, so it gets noticed. People dont know much about the car and ask me about it, and I quite like that too.
Klaus Maier: Positively surprised Kobe Bryant could actually get in. Reuters picSmart, along with the compact A class and B class, is part of Mercedes drive to transform itself from a luxury car maker into a full-range producer.The division tallied 5,440 sales in China in the first half of this year, surpassing its entire 2010 total, and challenging sales in the United States, which have stalled after a promising start.That makes China, now the worlds biggest auto market, a must-win play for Smart, which currently counts Germany and Italy as its biggest markets.To be sure, the vast bulk of Daimlers sales in China are luxury Mercedes sedans with the distinctive three-point star. Mercedes sales have skyrocketed more than eightfold in the past five years to more than 147,000 units in 2010, mostly thanks to increasingly wealthy Chinese consumers who prize the big luxury cars for which Mercedes is best known.But small, quirky models such as B! MWs Mini and Volkswagens Beetle have been gaining ground, winning over well-heeled young professionals and entrepreneurs in big cities.Annual sales in China of the Beetle jumped tenfold from 2005 to 10,000 units in 2010. Deliveries of Minis came to 9,800 units, up from fewer than 500 in 2005, according to J.D. Power and Associates.These kinds of vehicles are typically targeted at people who want to distinguish themselves from mainstream car buyers, said Klaus Paur, managing director for Greater China at industry consultancy Synovate Motoresearch.They want to reflect their personality and make a statement to others: Look at me, I am modern, dynamic and trendsetting.With its diminutive size and plastic exterior, Smart has to overcome worries over safety, especially in wild Chinese traffic.The thought of a tiny car that looks like a small piece of candy crashing head-on with a giant, meandering cargo truck on Chinas rough-and-tumble highways is enough to make one shudder.Im not worried I saw theyve done lots of tests, said Dong, albeit a bit vaguely.Roger Ruan, a 28-year-old who runs his own business in Nanjin, had a more convincing experience.He wanted to buy a Smart for his wife but worried about the safety of the two-seater. Then he saw a news report about a highway pileup in which a Smart had slammed into a big truck in front of it, and was then rammed by a large car in the rear.The Smart car driver was a pregnant woman, he said. I was stunned; she wasnt hurt at all.He went to a dealer and ordered a white Smart immediately.The Smart ForTwo, the smallest car for sale in the US market that year, received the top rating of good by the Insurance Institute for Highway Safety for front and side crash protection for 2008-10. In an IIHS frontal crash test with another vehicle in 2009, however, the Smart fared poorly.The European New Car Assessment Programme, meanwhile, gave Smart a four-star rating out of five.Kobe Bryant factor
When Daimler brought the Smart to China in April 2009, it was no sure bet. The global vehicle industry was sputtering amid a steep downturn and the Chinese government had to resort to aggressive stimulus measures to keep its motor manufacturers afloat.Smart is cute, no question about that. But the two-seater, more than one metre shorter than a Mini and almost 152cm shorter than a Beetle, has little cargo space, cannot go particularly fast, and is not geared towards distance driving.When we made this decision, we were not 100 per cent sure whether this will work, Mercedes-Benz China president and CEO Klaus Maier said.And initial market reception was far from positive.Smart sold 1,800 units in 2009 a fraction of the 12,300 flagship Mercedes S-class models delivered in the same period.But sales took off after Maier got US basketball superstar Kobe Bryant, a household name in China, to do a commercial fitting his 198-cm frame into a Smart.We were not so sure he would really fit into the car, but we were positively surprised, chuckled Maier.The success of the campaign featuring Kebi, as Bryant is known in China, is part of whats fuelling Smarts surge in the worlds most populous country.A low sticker price, high fuel economy, and small parking profile also add to the allure.At 115,000-225,000 yuan (about RM53,300-RM104,300), Smart is a cheaper alternative to a Mini or Beetle, which go for as much as 410,000 yuan and 300,000 yuan respectively.Shanghai resident Afei Yan and his wife only drive their Buick Regal to important business meetings after the couple bought two Smart cars last month.The beauty of Smart is that its so small, but you dont feel that way once you get in, said Yan, a 30-year-old entrepreneur who runs his own machinery manufacturing business. Also, for one Mini we can get two Smarts.My wife and I now drive our Smart every day to work, to visit friends and even for shopping trips to Carrefour over the weekends. It saves us a lot of trouble finding a parking place and our f! uel bill is also getting a lot smaller.Their monthly fuel cost for the Smart is about 1,500 yuan a month now, half of the amount when Yan drove the Buick.Maier wants to make the two-seater available in up to 60 Chinese cities within 24 months, including third-tier cities, unlikely locations for showrooms when he brought the car to China two years ago.But third-tier cities in China are 2.5 million people, quite large for Europe, Maier notes.At present Smart has 32 sales outlets in 25 cities in China.Maier expects China will be one of the top global markets for Smart down the road along with Germany and Italy where 16,000 and 14,000 of the micro cars were sold, respectively, in the first half.I could imagine in four or five years we will come up to a level like Germany and Italy, he said. Reuters
When Daimler brought the Smart to China in April 2009, it was no sure bet. The global vehicle industry was sputtering amid a steep downturn and the Chinese government had to resort to aggressive stimulus measures to keep its motor manufacturers afloat.Smart is cute, no question about that. But the two-seater, more than one metre shorter than a Mini and almost 152cm shorter than a Beetle, has little cargo space, cannot go particularly fast, and is not geared towards distance driving.When we made this decision, we were not 100 per cent sure whether this will work, Mercedes-Benz China president and CEO Klaus Maier said.And initial market reception was far from positive.Smart sold 1,800 units in 2009 a fraction of the 12,300 flagship Mercedes S-class models delivered in the same period.But sales took off after Maier got US basketball superstar Kobe Bryant, a household name in China, to do a commercial fitting his 198-cm frame into a Smart.We were not so sure he would really fit into the car, but we were positively surprised, chuckled Maier.The success of the campaign featuring Kebi, as Bryant is known in China, is part of whats fuelling Smarts surge in the worlds most populous country.A low sticker price, high fuel economy, and small parking profile also add to the allure.At 115,000-225,000 yuan (about RM53,300-RM104,300), Smart is a cheaper alternative to a Mini or Beetle, which go for as much as 410,000 yuan and 300,000 yuan respectively.Shanghai resident Afei Yan and his wife only drive their Buick Regal to important business meetings after the couple bought two Smart cars last month.The beauty of Smart is that its so small, but you dont feel that way once you get in, said Yan, a 30-year-old entrepreneur who runs his own machinery manufacturing business. Also, for one Mini we can get two Smarts.My wife and I now drive our Smart every day to work, to visit friends and even for shopping trips to Carrefour over the weekends. It saves us a lot of trouble finding a parking place and our f! uel bill is also getting a lot smaller.Their monthly fuel cost for the Smart is about 1,500 yuan a month now, half of the amount when Yan drove the Buick.Maier wants to make the two-seater available in up to 60 Chinese cities within 24 months, including third-tier cities, unlikely locations for showrooms when he brought the car to China two years ago.But third-tier cities in China are 2.5 million people, quite large for Europe, Maier notes.At present Smart has 32 sales outlets in 25 cities in China.Maier expects China will be one of the top global markets for Smart down the road along with Germany and Italy where 16,000 and 14,000 of the micro cars were sold, respectively, in the first half.I could imagine in four or five years we will come up to a level like Germany and Italy, he said. Reuters 
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