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Why Daimler Dumped Penske Over Smart

But after years of dithering, can the Germans do better at selling microcars to Americans?

by on Feb.18, 2011

Roger Penske and his team - including Smart boss Jill Lajdziak - appear to have been blindsided by Daimler's announcement about the brand's future.

After dithering for years over the future of Smart, Daimler AG is about to take a make-it-or-break it gamble on the long-struggling brand.

In a surprise move, the German maker – which also builds the high-line Mercedes-Benz brand, announced it would pull Smart’s U.S. distribution operations away from the Detroit-based Penske Auto Group and operate the American franchise on its own.  Penske had been given the distributorship, in 2008, after years of delay by Daimler, which wasn’t sure how to sell small cars in a market that normally equates bigger with better.

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Roger Penske, chairman of the eponymous Penske Auto Group and one of the most respected figures in the U.S auto industry, says the German automaker’s decision to cancel its distribution agreement with PAG was shaped by a desire to integrate Smart more closely into the Mercedes-Benz marketing organization.

“Going forward, Smart is seen as an integral part of the Mercedes-Benz network,” Penske said, adding Mercedes-Benz also needs the efficiency credits generated by Smart to meet future fuel-economy standards in both Europe and North America.


Daimler Under Pressure as Costs Soar

Maker says it needs to pump cash into R&D.

by on Feb.18, 2011

Daimler's turnaround was "impressive," asserted CEO Dieter Zetsche, but some disagree.

Despite major league improvements in earnings during 2010, analysts fear Daimler AG’s turnaround is looking ragged around the edges. Analysts fear the company’s newly-announced earnings before interest and taxes fell well short of expectations and Daimler’s ability to control its costs is growing suspect.

Dieter Zetsche, chairman of Daimler’s management board, said part of the reason for the poor shape of the so-called EBIT number was the big increase in spending on research and development.

Part of the reason for the rather dramatic rise in research and development spending is Daimler desire to maintain a strong position.  And a big part of that has to do with maintaining a strong presence in the Chinese market – which means honoring the Chinese government’s desire for electric-powered vehicles.

Up until recently, Mercedes-Benz has consistently turned up its nose at EVs and countered that it was a leader in diesel technology.  Not surprisingly it’s also been something of a laggard in battery technology.

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Daimler’s management, however, has undergone a conversion on the road to Beijing and is now scrambling to catch up to mollify China’s gatekeepers.

The price tag, though, is bound to increase dramatically in the near future.  And adding to the R&D budget pressures is the need to retool the long-struggling Smart car brand.  (Daimler moves to take the Smart brand’s U.S. franchise away from Penske Automotive. Click Here for details.)


Mercedes-Benz Pulls Smart Franchise from Penske

Move likely to scuttle plan for a Nissan-made Smart four-seater.

by on Feb.15, 2011

Roger Penske's auto group will lose the Smart USA franchise by mid-2011 to Mercedes-Benz.

Days after officials from the Penske Automotive Group expressed their commitment to stand by the struggling Smart brand, they’ve been given their walking paper by Daimler AG, which produces the minicars.

Operation of the franchise, which has seen its sales in the U.S. collapse since a briefly successful 2008 launch, will be taken over by Mercedes-Benz USA by the middle of the year.  MBUSA said it has already begun negotiations to end Penske Automotive Group’s management, sales and marketing activities of the Smart car in the United States.

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The announcement also appears to spell the end of Penske’s efforts to rebuild the Smart brand in the U.S. by turning to Nissan, which was expected to begin providing a new four-seat model that was to be introduced wearing a Smart badge, later this year.


Can Smart Reinvent Itself?

U.S. distributor may teach the Germans what’s needed to save smart brand.

by on Jan.14, 2011

With the brand's sales off another 60%, last year, Smart USA boss Jill Lajdziak can only hope and wait for the distributor's planned 4-seat model.

It was the hit of 2008, its U.S. launch inadvertently timed to take advantage of the record run-up in fuel prices.  But since then, things haven’t gone nearly so well for the little Smart USA brand, which reported a nearly 60% drop in sales, last year alone, even as most makers reported double-digit gains.

In a bid to stave off disaster, the U.S. distributor, which is operated by Detroit entrepreneur Roger Penske, plans to introduce an all-new model later this year that will be built for it by Nissan, rather than Daimler, the German parent of the Smart brand.

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Might even more products be added to the U.S. line-up that aren’t available to Smart buyers in other parts of the world? That’s not out of the question, according to various company officials who are betting that Smart can rebound from its disastrous tumble.

“We’ve got a business to run,” and that means that Smart USA may have to make some critical moves that aren’t necessarily what the folks at Daimler AG headquarters, in Stuttgart would like,” acknowledges Jill Lajdziak, the U.S. distributor’s boss.


Penske Profits From Clunkers

Entrepreneur’s auto group makes big Q3 gains.

by on Oct.30, 2009

On or off the track, Roger Penske has a reputation for turning things to his advantage.

On or off the track, Roger Penske has a reputation for turning things to his advantage.

Roger Penske has a way of turning things to his own advantage.  And the recently-concluded Cash-for-Clunkers program provided him yet another opportunity to work that corporate magic.

The Penske Automotive Group, run by the Detroit-based entrepreneur and motor sports legend, posted a solid 23% increase in third-quarter profits with the federally-funded program, designed to drive up domestic car sales, providing a significant boost.

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The group’s net income came to $27.4 million, or 30 cents per share, up from $22.2 million, or 24 cents per share, the year before.  Excluding one-time charges, earnings came to 34 cents a share, a bit ahead of analyst forecasts.  Revenues fell 13%, to $2.6 billion.