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Smart Sees Gold in Clunkers

Automaker betting it can reverse declining sales with the government's new Cash-for-Clunkers program.

by on Jul.01, 2009

Smart CEO David Schembri is betting the brand can bring on a burst of sales by taking advantage of the new Cash-for-Clunkers program tentatively scheduled to go into effect late this month.

Smart CEO David Schembri is betting the brand can bring on a burst of sales by taking advantage of the new Cash-for-Clunkers program tentatively scheduled to go into effect late this month.

Smart USA, the maker of the pint-sized fortwo 2-seater, is betting the new Cash-for-Clunkers program can kick-start sales.

Like the rest of the industry, Smart has been hit hard by the recession, a situation compounded by the decline from last year’s record fuel prices.  With fuel prices were racing towards their $4-a-gallon peak, sales of the little fortwo soared well past the company’s original forecast of 15,000 to 20,000 a year.  But since then, they have fallen sharply.  For the year-to-date, Smart is down 25%, and June volume plunged a whopping 56%, compared to the same month last year.

With fuel prices again on the rise, and with Congress finally approving the so-called “clunkers” legislation, Smart officials are hoping they can reverse that decline.  Because of the fortwo’s mileage rating, buyers who trade in a qualifying used vehicle should get the full $4,500 government incentive.  To further enhance the brand’s appeal, Smart has set aside a special batch of fortwo models, reducing their price to $13,335, including delivery charges.

“We think it will be a strong seller,” said David Schembri, president of Smart USA.

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