Narrator: It was supposed to be the future of mobility.
Tiny and fuel-efficient yet cute and stylish,
the Smart car was the perfect solution
to congested city-driving.
But in just two decades, the Smart company went from
selling almost 200,000 vehicles a year
to losing an estimated half a billion dollars annually.
In 2019, owner Daimler stopped selling the brand
in North America and nearly axed the company altogether.
So, just what happened to everyone's favorite microcar?
The idea for the Smart car
came from Swiss businessman Nicolas Hayek,
founder of the Swatch Group watch company.
Hayek wanted a fashionable, compact city car
that was both easy to park and customize.
After over a decade of looking for the right automaker
to develop the car,
Hayek convinced Mercedes-Benz's
parent company, Daimler, to partner with him.
The deal was made official in 1994,
and they named the proposed vehicle Smart,
short for Swatch Mercedes-Benz art.
Daimler debuted the Smart City Coupe in 1997
at the Frankfurt Motor Show.
The car went into production the following year
and was sold in nine European countries.
After a slow start,
sales skyrocketed by almost 900% in 1999.
By 2000, annual sales reached over 100,000 cars.
In 2004, Daimler released the four-door Smart Forfour.
The slightly larger model helped Smart's overall sales
in Europe peak at nearly 135,000 cars for the year.
Unfortunately, the Forfour's sales couldn't keep up,
and after just a few years Daimler axed the mini SUV.
But the original Smart car, now renamed the Fortwo,
was finding an audience in urban Europe.
For green drivers,
its average CO2 emissions of 117 grams per kilometer
were less than the first Toyota Prius,
making it more environmentally friendly
than a hybrid.
And it still got better gas mileage.
American automotive mogul Roger Penske
noticed the popularity of the Smart Fortwo in Europe.
In 2007, Penske partnered with Mercedes-Benz
and purchased the US distribution
rights to Smart sales.
But while Penske had counted on
the Great Recession's record-high gas prices
to make the Smart car appealing, it wouldn't last.
The economy bounced back, fuel prices fell,
and even the microcar's novelty suddenly wore off.
In 2008, almost 25,000 Smart cars were sold in the US.
Three years later, annual sales fell around 5,000 cars,
and Penske quickly sold
all US distribution rights to Daimler.
It turns out Americans weren't over
their love of SUVs.
specifically crossovers.
These small SUVs got the same gas mileage as sedans,
but had twice the cargo space.
As Hayek himself had originally said,
the Smart car was designed with just enough room
to fit two people and a case of beer.
The Smart Fortwo was also widely perceived
by buyers as unsafe, even though its safety ratings
were just as good as most compact SUVs.
That's because the car's body was built around
a high-strength steel safety shell.
Still, consumers didn't feel safe inside a car
that was much smaller than anything else on the road.
By 2015, Smart sales in the US were on a sharp decline.
Once Daimler removed gasoline models
from the US in 2017,
leaving only the electric Fortwo EQ available,
sales plummeted further.
In 2018, Smart sold just 1,276 cars in the US.
The following year, the company pulled the plug
on all North American operations.
Despite these failures,
Smart sales have remained steady in Europe,
where there are more congested city streets
and stricter emission laws.
With only one factory and high-cost labor,
the Smart car is expensive to make.
Daimler doesn't report Smart's finances,
but experts estimate Smart cars lose Daimler
over $500 million annually.
In 2019, Daimler was on the cusp
of dropping the Smart brand altogether.
Instead, the company decided to take it
where all struggling car brands seem to go
in search of a new audience: China.
Daimler partnered with Geely, the parent company of Volvo,
and invested to build a Smart car factory in the country,
beginning worldwide sales by 2022.
The goal is to transform Smart
into a China-based all-electric brand.
Smart even has an SUV scheduled for 2023.
Whether moves like these can save the Smart brand
remain to be seen.
But as an EV company, China could be its best option,
with more electric cars sold there
than any other countries combined.
Between lower manufacturing costs
and some of the world's most congested roads,
the country could be exactly what the brand has needed
all these years.