Daimler Smart Fortwo Car in the US
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Case Code: BSTR315 Case Length: 12 Pages Period: 2008-2009 Pub Date: 2009 Teaching Note: Available |
Price: Rs.300 Organization: Daimler AG Industry: Auto and Ancillaries Countries: US Themes: Entry Strategy, Competitive Strategy, Differentiation |
Abstract Case Intro 1 Case Intro 2 Excerpts
"The Smart Fortwo is a unique car that combines driving pleasure with lifestyle and exemplary fuel efficiency. The two-seater convinces customers worldwide, thanks to its outstanding safety features, the distinctive smart design, as well as top quality, reliability, and economy. The Smart Fortwo is a clever solution and fun to drive. Had we not invented it ten years ago, we would have to do so now."
-Dieter Zetsche, CEO of Daimler AG and Head of Mercedes-Benz Cars, in July 2008.
Introduction
In January 2008, Germany based automobile company Daimler AG (Daimler) launched its second generation Smart Fortwo, a small car, in the United States (US). Equipped with modern technology, the Smart Fortwo offered consumers premium quality and high safety. The small size of the car was an advantage in the dense traffic in the US. The car was marketed as an eco-friendly vehicle, with low fuel consumption and corresponding low carbon dioxide (CO2) emissions.
The second generation car attracted the attention of the press and consumers alike. In 2008, 24,622 units of the Smart Fortwo car were sold in the US.
According to analysts, the fuel prices touching new highs during the first half of 2008 and the rise in eco-image-consciousness contributed to the increase in the sales of the car. However, the price of the car, which ranged between US$ 11,590 and US$ 16,590, came in for criticism. Some analysts were of the view that at the price of a Smart Fortwo, consumers would prefer to buy other cars with more space. They also pointed out safety issues and lack of power as drawbacks of the car.
Analysts also felt that with more and more small cars being introduced in the US market, Smart cars would face tough competition. They were also apprehensive whether the Smart car would be able to generate growth in sales in the near future as the global financial crisis had hit the US automobile industry hard. They were of the opinion that at a time when auto sales were declining, it would be a challenge for Daimler to increase the sales of Smart Fortwo...
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