Where next for Daimler’s problem child?
The 2007 second-generation Smart Fortwo got off to a disappointing start as it was generally regarded as not enough of an advance over its predecessor, and too expensive. For a similar price, one could buy a four-seater supermini that might lack the Smart’s distinctive style but would be more practical and less compromised dynamically.
Smart had been developing an electric version of the Fortwo since 2006 and this model(1) was launched in 2009. It was initially fitted with a 14kWh lithium-ion battery pack supplied by Tesla and a 30kW(2) electric motor, which gave it an official NEDC range of 135km (84 miles). Around 2,300 Smart ED (Electric Drive) models were produced and made available to lease in a number of European and North American cities as part of an extended field trial for the model prior to mass production, which was scheduled to start in 2012.
The third-generation Smart ED was unveiled at the Frankfurt motor show in September 2011. The battery capacity was increased to 17.6kWh and the car was fitted with a more powerful 55kW(2) motor. This gave an improved official range of 145km (90 miles). 0 to 100km/h (62mph) took 11.5 seconds and top speed was 125km/h (78mph). The ED was priced in Europe at €16k plus a €60 monthly leasing charge for the battery pack.
Returning to the regular Fortwo, it received minor revisions to the interior in 2011, introducing knee-level airbags and trim and equipment upgrades. The exterior received an even more modest facelift in 2013, comprising altered bumpers and a badge relocated from the bonnet to the grille.
The second-generation Fourtwo remained on sale until 2014, when it was replaced with an all-new model. Total sales over eight years were around 720,000(3). Its predecessor had sold around 770,000 units over the same period, so the Fortwo had failed to expand its market significantly and instead appeared to have lost ground(4). The Fortwo had faced increased competition from conventional but well executed four-seater city cars such as the 2005 Peugeot 107, Citroën C1 and Toyota Aygo triplets and Volkswagen’s 2011 Up! and its Škoda and SEAT siblings.
Daimler was again faced with the same dilemma: how to increase sales to justify further investment in Smart’s bespoke platform and drivetrain? This time it turned to another partner, Renault, with which it had signed a technical partnership agreement in April 2010, which led to co-operation on a number of powertrain and vehicle programmes.
Renault was seeking to develop a replacement for its 2007 second-generation Twingo city car(5). The two automakers agreed to co-develop a new rear-engined architecture that would underpin the Twingo, new Forfour and a shorter wheelbase Fortwo. It was hoped that the resulting economies of scale would help to turn around Smart’s fortunes.
The third-generation Twingo was launched at the Geneva motor show in March 2014 and its Smart siblings were unveiled in July of that year. The Forfour was mechanically identical to the Twingo and shared its 2,490mm (98”) wheelbase, although it was 95mm (3¾”) shorter at 3,495mm (137½”). Both shared the choice of Smart’s 999cc normally aspirated or Renault’s 898cc turbocharged inline three-cylinder petrol engines. The former produced maximum power of 70bhp (52kW) while the latter produced 89bhp (66kW).
Smart’s problematic automated manual gearbox was finally replaced by a choice of a conventional five-speed manual or six-speed dual-clutch automatic transmission(6). An electric version was also offered with a 60kW synchronous motor. The Forfour retained the Tridion safety cell of the Fortwo(7). It would be built alongside the Twingo at Renault’s plant in Novo Mesto, Slovenia.
The third-generation Fortwo was stylistically similar and mechanically identical to the Forfour. It had a wheelbase of 1,873mm (73¾”) and overall length of 2,695mm (106”), figures virtually identical to the superseded model. Width and front and rear tracks had increased by around 100mm (4”) for greater stability and an improved turning circle. Like its predecessors, it would be built at Daimler’s plant in Hambach, France.
Autocar magazine tested the new Fortwo at launch in 2015. The introduction to the review was downbeat: “the Fortwo has failed to emulate the phenomenal success of the original Mini and Fiat 500 [and] has stagnating sales of 100,000 a year, having been in decline since 2004.” It had failed “to present the benefits of ultra-compactness without also imposing too many undesirable compromises.” Perhaps the third-generation model would finally address these compromises?
The exterior styling was familiar, but the interior displayed a “pleasant enough return to the kind of funky look conveyed by the original Smart.” The “extra width is appreciated – especially if your companion has broad shoulders” as was a 40-litre increase in boot space to 260 litres (9.18 cu.ft.)
Unlike previous models, which had “glacial” 0 to 60mph (97km/h) acceleration, on test the new Fortwo achieved this in a respectable 11.2 seconds, if not matching the “possibly rather optimistic” claimed time of 10.4 seconds. The throttle response was, however, rather uneven, “briefly stuck somewhere between a throttle flat spot and a winded turbocharger.” High gearing also “tends to leave the car rather breathless in its top cog [on] a standard 40-50mph A-road clip” but the compensation is that “motorway journeys previously dreaded by some Smart owners are now well within the new Fortwo’s capabilities.”
The ride quality was noticeably better than the previous model, but the Fortwo still felt “like a car engineered to produce only a limited amount of grip at the front end” and the steering was “still utterly uncommunicative beyond very low speeds.”
Once again, the case for the Fortwo disintegrated on the issue of pricing. The £11k entry price would buy “a very nice five-door Up! in pretty rich specification” which would be cheaper to insure. Even the claimed overall 67.3 mpg “would be extremely hard to achieve in the real world.” Hence, the Fortwo was awarded just three stars (out of five). The only crumb of comfort offered was that the Forfour cost only £495 more than the Fortwo and might make a more compelling proposition.
A Brabus version of the Fortwo and Forfour was introduced in 2016 with an uprated turbocharged triple producing maximum power of 106bhp (79kW). An electric version was also offered with a 60kW synchronous motor from 2017.
Smart sales over six years from 2015 to 2020 inclusive were around 565,000 and the company once again failed to sustain a break of the 100,000 sales per year barrier. Exports to North America were terminated in April 2019 after a decade of decline led to fewer than 2,000 sales in 2018.
Given that Volkswagen Group and Stellantis have openly questioned the future viability of sub-B-segment city cars like the Up! and 108, it is little surprise that Smart cannot achieve the sales volume to justify the investment required to sustain its unique rear-engined architecture. There are simply not enough customers who value the USP of the Fortwo highly enough to put up with its limitations, and the Forfour is pitched against more conventionally engineered, cheaper and more capable competitors.
Daimler does not publish separate financial statements for its Smart subsidiary, but one analyst, Evercore ISI Investment Bank, estimated in 2019 that Smart’s losses were between €500 million and €700 million (US $560 million and US $784 million) annually. As long ago as 2013, Sanford C Bernstein research estimated that the Smart Fortwo was the second biggest loss-making car line of the previous decade, with cumulative losses of €3.35 billion (US $4.53 billion).
In March 2019, Daimler announced that it was ending its Smart partnership with Renault and had formed a new 50:50 joint venture with China’s Geely Automotive. Future Smart models would be all EVs, manufactured in a new factory in China. They would be styled by Mercedes-Benz, engineered by Geely, and target the growing B-segment global market.
In December 2020, Daimler announced the sale of Smart’s Hambach plant to Ineos for production of the Grenadier off-road vehicle, reportedly safeguarding 1,300 jobs.
In September 2021, Smart unveiled the Concept #1, a four-seater B-segment crossover EV. It is a moot point as to whether or not this signals an abandonment of Smart’s traditional sub-B-segment market, but I would suspect that it does. The Fortwo was a brave attempt to offer something different to the market, but it has comprehensively failed to make a financial case for itself. With the move to China, all that will remain of the original vision is the name and whatever brand equity it has accumulated. Is it worth preserving? Time will tell.
(1) This was launched as the ‘second-generation’ ED. The ‘first-generation’ model was limited to 100 cars leased for field trials to users in London, one of which was the Metropolitan Police.
(2) Peak (not continuous) power output.
(3) Sales data from www.carsalesbase.com.
(4) While the second-generation Fortwo’s lifespan straddled the 2008 Global Financial Crisis, this had no discernible effect on its annual sales, which remained steady throughout the period.
(5) The Twingo was a wholly conventional transverse-engined FWD hatchback.
(6) It remains a mystery why Daimler persevered for so long with the automated manual gearbox, the car’s Achilles heel since its launch in 1997.
(7) The first-generation Forfour, which was a rebodied Mitsubishi Colt, did not feature this innovation.
Author’s note: My thanks to DTW Editor Eóin Doyle for his insights and contributions to this series.