Report: Daimler to Decide Smart’s Future by Year-End

March 25, 2019 at 12:12 PM

Daimler AG is losing its patience with its Smart minicar unit and may decide to pull the plug on the chronically underperforming brand by the end of the year, Handelsblatt reports.

Such a decision will be easier for incoming CEO Ola Kallenius because he has no real history with Smart, the German newspaper notes. Kallenius, who currently heads research and product development for Daimler’s Mercedes-Benz unit, is due to succeed Dieter Zetsche as CEO in May.

Kallenius won’t hesitate to kill Smart if necessary, an unnamed Daimler insider tells Handelsblatt.

Smart's global sales fell nearly 5% last year to 128,800 units. Sales for the 20-year-old brand peaked at 150,000 units in 2004, never coming close to the original target of 200,000.

Daimler doesn’t break out Smart's financial results separately from the rest of the company. But analysts have long faulted the brand’s performance, characterizing it as a financial drain on the carmaker.

In 2017, Daimler announced plans to offer only all-electric versions of Smart’s two models—the ForTwo city car and ForFour sedan (pictured)—and discontinue conventional powertrains. But such a switch is proving too expensive, analysts say.

The task would become even more difficult if partner Renault SA, which co-developed the Smart cars with its Twingo city car, dropped out of the program as some recent reports have suggested.

Katrin Adt took over as president of Smart last October. She succeeds Annette Winkler, who headed the nameplate for eight years.