Mercedes’ tiny Smart Fortwo city car project made the biggest losses of modern times, according to figures from the automotive analysts at BersteinResearch.
The analysts say that although ‘catastrophic losses are rare’ in the auto industry, they have complied a list of which they think uncovers the biggest product failures of recent times.
Perhaps the two themes running through these results are, firstly, the risks associated with making big technological leaps (and the accompanying big investments) and, secondly, the risks associated with rolling out a vehicle that seriously fails to convince buyers in its market niche.
The Smart project is a good example of the former. Mercedes took over a project developed by Swatch founder Nicholas Hayeck and turned it into a technological tour de force. Smart got a brand new platform, brand new three-cylinder engines and a new factory at Hambach, near the French-German border.
Berstein’s analysts estimate that Mercedes sank nearly £3 billion into building Smart from scratch, a huge risk on a car at the cheaper end of the market. In the event, it also undershot its sales targets by over 40 per cent.