US bank Morgan Stanley is urging DaimlerChrysler to dump the loss-making Smart brand. Its industry analysts have advised DC to follow BMW, whose share price rose 35 per cent after it jettisoned Rover in 2000.
‘We believe the market will reward DaimlerChrysler for improved fiscal discipline,’ they said, estimating that the £1.9bn cost incurred in closing Smart could soon be recouped At its current rate of production, Smart would cost its parent company as much in losses in just two years.
Just 155,000 Smarts were sold last year; by most independent estimates, Smart would need to sell more than 200,000 to break even – a target it had planned to reach this last year, but now hopes to achieve in 2006.
Despite hints from various company executives that an exit strategy was under consideration, Mercedes Benz boss Eckhard Cordes continues to stand by Smart. The cars are now being sold in Mercedes dealerships on the continent, and in a recent interview with Autocar’s sister title Auto Motor und Sport, Cordes said that ‘we… will present Smart anew.’