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.
The Fiat Stilo, Renault Laguna, Peugeot 1007 and Jaguar X-type are, they say, examples of cars that simply missed their intended markets and massively undershot sales estimates, by an average 70 per cent in the case of the Fiat, 88 per cent in the case of the 1007 and 74 per cent in the case of the Jaguar.
The Bugatti Veyron and VW Phaeton may be in the top ten, too, but the analysts point out that while the VW management knew that the Veyron would lose money, the car was a technical showcase for the VW Group. The Phaeton is, of course, personally backed by VW’s powerful chairman, Ferdinand Piech, arguably putting it outside normal financial considerations.
See below for the full results.
1997-2006: Smart Fortwo – £2.82bn
2001-2009: Fiat Stilo – £1.77bn
2001- : Volkswagen Phaeton – £1.68bn
2004-2009: Peugeot 1007 – £1.59bn
1997-2004: Mercedes A-class – £1.44bn
2005-2013: Bugatti Veyron – £1.43bn
2001 – 2009: Jaguar X-type – £1.43bn
2006 – 2012: Renault Laguna – £1.30bn
2000 – 2005: Audi A2 – £1.2bn
2001-2009: Renault Vel Satis – £1bn
Losses per unit
2005-2013: Bugatti Veyron – £3,887,051 per unit
2001- : Volkswagen Phaeton – £23,655 per unit
2001-2009: Renault Vel Satis – £15,751 per unit.
2004-2009: Peugeot 1007 – £12,947 per unit
2000 – 2005: Audi A2 – £6340 per unit