Smart Cars - Company History

Company History

Three co-directors were immediately named to head the new company: designer and engineer Johann Tomforde and financial administrator Christoph Baubin from Daimler-Benz, and marketing manager Hans Jürg Schär, who spearheaded the original Swatch marketing campaigns in the mid-1980s. Tomforde had been working on the Mercedes City Car (coincidentally abbreviated MCC) project at Daimler-Benz since 1990, which produced the aforementioned eco-sprinter and eco-speedster concepts as well as the Vision-A concept, which eventually became the Mercedes-Benz A-Class.

One of the first controversies at MCC was the name of the car itself. Nicolas Hayek insisted it retain 'Swatch' in some way: "Swatchmobile", or "Swatch Car". Daimler-Benz refused, and pushed for a neutral name. The final name settled upon was Smart, an acronym that had been previously used internally by MCC for Swatch Mercedes Art.

By May 1994 the co-directors had identified 74 potential sites for the assembly plant. The final site was announced on December 20, 1994: Hambach, France. The purpose-built factory quickly gained the nickname "Smartville".

Tomforde devised a modular system of assembly for the car, insisting suppliers design and assemble, and even install their own modules onto the final car, at the new plant using their own employees thus reducing the cost overhead for the parent companies and divesting MCC of the financial and legal liabilities for those parts. It also provided a fiscal framework whereby MCC could share the development costs with the suppliers, rather than having to fund the entire project themselves. MCC secured contracts with suppliers to design and supply almost all parts of the car: seats by Faurecia, interiors by VDO, chassis and door modules by Magna, door panels by Dynamit Nobel, and suspension by Krupp.

Despite offloading a substantial amount of the development on the suppliers MCC required more capital. Recapitalization by Daimler-Benz increased their share of ownership in the company to 81%, leaving SMH with only the remaining 19%.

The assembly plant opened October 27, 1997, with a ceremonial ribbon-cutting by then-French President Jacques Chirac and German Chancellor Helmut Kohl. Introduction of the new Smart city-Coupé was planned for March, 1998, however dynamic instability of the prototypes prompted Daimler-Benz to announce postponing the launch until October, 1998. Johann Tomforde was replaced as chief engineer by Gerhard Fritz. Fritz lowered the centre of gravity, widened the track, stiffened the suspension, changed the steering, and added ballast weight to the front of the car in order to increase its stability in emergency avoidance manoeuvres (notably the Swedish "moose test").

The car launched successfully in nine European countries in October 1998, however the final design did not fulfill Hayek's expectations. Hayek pushed for a hybrid drivetrain but the final product used a relatively conventional gasoline engine. Shortly afterward Daimler-Benz bought out SMH's remaining stake in the company. MCC was now a wholly owned subsidiary of Daimler-Benz (which soon merged with Chrysler Corporation to become DaimlerChrysler). The office in Biel was shut down and operations were consolidated at the MCC GmbH design centre in Germany. On January 1, 1999 MCC GmbH changed its name to MCC smart GmbH, and by 2000 it dropped the last vestiges of the association with SMH, becoming smart GmbH.

The model line was eventually expanded to include the Roadster a rear-engine, rear-drive and four-door, four-seat supermini aptly named Forfour (the original City-Coupé was rechristened Fortwo to fit the new naming scheme).

The ambitious expansion did not increase profits at the company: indeed, smart GmbH lost nearly 4 billion euros from 2003 to 2006. Plans were enacted to increase the company's profitability and integrate its operations with DaimlerChrysler.

In 2005 DaimlerChrysler decided against purchasing a 50% share in the Dutch NedCar plant used to manufacture the ForFour, ending its production. A planned SUV called Formore was terminated as the assembly plant in Brazil was being fitted with machines, and production of the Roadster was discontinued. In 2006, after dwindling sales and heavy financial losses, Smart GmbH was liquidated and its operations were absorbed by DaimlerChrysler directly.

Smart now operates under the Mercedes-Benz Cars division of Daimler AG, offering the Fortwo as its only product.