Abstract

The case is about Daimler AG's Smart Fortwo car in the US market. Although the car was available in Europe since 1998, it never made a profit. The company redesigned the car and launched the second generation Smart Fortwo in the US in January 2008. The two-seater car was redesigned to offer consumers top quality and safety. It was marketed as economical and eco-friendly car. With rapid increase in fuel prices in the first half of 2008 and growing concern among the consumers about the environmental impact of fuel consumption, Smart Fortwo was able to generate interest among people. The car received good response from public as well as press. Sales started picking up and by the end of 2008, Smart Fortwo's popularity in the US was growing. However, the car attracted some criticism too. Analysts opined that the price of the car was too high for a two-seater car. Some analysts also questioned the safety of the car. Analysts were worried whether the car would maintain the initial momentum in sales, after other small, fuel efficient cars make their way into the US market. Decline in auto sales in the US due to financial meltdown was also expected to have an adverse affect on the sales of Smart Fortwo in the US. The case ends with a discussion on the challenges faced by the car.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Study the launch of Smart Fortwo car in the US
• Examine the unique features of Smart Fortwo car
• Understand the factors behind the initial success of Smart Fortwo car in the US.
• Explore the challenges the car is likely to face in the near future.
• Critically analyze the future prospect of Smart Fortwo car in the US

Keywords

Daimler AG, Smart Car, Smart Fortwo, Swatchmobile, Second Generation Smart Fortwo, Smart USA Distributor LLC, Entry Strategy, Differentiation Strategy, Environment friendly car, Smart Fortwo BRABUS, Smart Forfour, Competitive Strategy, Focus