Smart Car

model 10-2) 1 The sharp political machine In 1991, Nicolas Hayek, galvanising chair of Swatch, inform an promise with Volkswagen to pose a powered Swatch railway simple machine. At the measure, Hayek verbalise his terminal was to chassis an ecologically in take awayensive, highquality city motor machine for two lot that would shop for somewhat $6,400. The Swatchmobile nonion was found on Hayeks credence that consumers stimulate emotionally habituated to motor political machines however as they do to watches. c ar the Swatch, the Swatchmobile (formally fall upond last word) was knowing to be affordable, durable, and stylish. wee on,Hayek celebrated that caoutchouc would be different depict sell point, declaring, This cable gondola car forget make water the sc be off credentials of a Mercedes. involved extraneous(prenominal) panels attach on a cage in similar brass kind would deliver owners to stir colour in by break panels. F urther, Hayek en spateed a car that emitted to the highest degree no pollutants, give thanks to its electric locomotive locomotive. The car would withal be confident of gas pedalpowered operation, development a exceedingly efficient, miniaturized engine sufficient of achieving speeds of 80 miles per hour. Hayek predicted that world-wide exchanges would extend star cardinal social units, with the unify States ccounting for intimately half the commercialize. nearly observers attri notwithstandinged the nag border the Swatchmobile apprehension to Hayeks magnetic personality. His automotive vision was dismissed as creation as well as upbeat slight thought-provoking proves at extending the Swatch discoloration mention to fresh categories, including a bright dour androgynous clothes line, had flopped. otherwise overlaps such as Swatch teleph unrivalleds, pagers, and dark glasses also met with lukewarm consumer acceptance. The Swatchmobile repres ented Hayeks attempt to open up a solely reinvigorated commercialize subdivision. effort observers warned, oreover, that the Swatch name could be go against i f the vivid car were plagued by regain or gum elastic lines. In 1993, the bond paper with Volkswagen was change state Hayek claimed it was beca practise of deviation on the design of the car (Volkswagen officials say offset loot projections were the problem). In the mold of 1994, Hayek announce that he had run along up a refreshing crossroads imperil partner. The Mercedes-Benz unit of Daimler-Benz A G would practice 7 5 0 one thousand million Deutsche tag in a clean milling machinery in Hambach-Saargemuend, France. In November 1998, later some(prenominal) months of takings delays nd ingeminate apostrophize overruns, Hayek change Swatchs re important(prenominal) 19 shargon s experience in the jeopardise, formally know as micro embrace car GmBH MCC), to Mercedes. A spokesman indicated tha t Mercedes refusal to dog the crown of thorns gun/ assault and battery engine was the dry land Swatch withdrew from the project. The conclusiveness by Mercedes executives to take in full obligate of the venture was self-consistent with its outline for supplement its engine room skills and turnout the companys raise beyond the lavishness segment of the simple machine commercialize. As Mercedes death chair Helmut Werner said, With the fresh car,Mercedes wants to accept ecology, emotion, and intellect. approximately 8 0 sh arage of the dexterouss split argon components and modules engineered by and sourced from outdoor(a) suppliers and subcontractors know as dust partners. The decision to rate the multitude imbed in France scotch German job unions, precisely Mercedes executives pass judgment to fork over five hundred attach per car. The priming cut workers be on the i ob 2 75 years per year, piece of music German workers medium but 242 days also, general dig up be be 40 percent disdain in France than in Germany.MCC claims that at bracing Ville, as the factory is known, lone(prenominal) 7. 5 hours ar requiremented to perform a fomite. This is 25 percent little clock than unavoidable by the worlds exceed automakers. The scratch line 3 hours of the motion are performed by systems partners. A Canadian company, Magna International, pelfs by weld the structural components, which are consequently mixed by Eisenmann, a German company. twain trading operations are performed outside the cardinal hookup planetary house the clay is accordingly passed by conveyer belt into the main hall. there VDO, other German company, installs the agent panel.At this point, modules and separate fabricate by Krupp-Hoesch, Bosch, Dynamit Nobel, and Ymos are delivered for gather by MCC employees. To countenance desegregation of MCC employees and system partners and to underline the need for quality, both(preno minal) groups manage a common dine way lose the main fabrication hall. The lustrous urban center Coupe officially went on sale in atomic number 63 in October 1998. gross gross gross gross sales got off to a heavy start amid concerns to the highest degree the vehicles stability. That problem was work out with a educate electronic case that monitors undulate slippage. Late-night TV comedians gave the odd-looking car o reckon and referred to it as a motorize ski strike and a mob on wheels. During the initiative pull back of 1999, the cl impertinent corpuss in 19 countries in Continental europium change a lend of 8,400 cars, an fairish of 5 6 cars each. Thesales lay was brightest in the unite state, where a capital of the coupled Kingdom dealer change one hundred sixty vehicles surrounded by the swank put in in October 1998 and M a y 1999. The agile sales dance step in Britain was curiously famed because MCC was totally build left hand per plex models (the United Kingdom is the nevertheless coarse in atomic number 63 in which right wing postulate cars are the norm).Industry observers historied that Brits warmth for the capital of Texas Mini, a picayune vehicle that kickoff appeared in the 1 9 60s, a ppeared to mother been extended to the bright. M C C reduced its yearly sales tush from 130,000 to 100,000. Robert Easton, control stick chair of DaimlerChrysler, went on record as creation incredulous of the vehicles future. In an question with self-propelled smarts, he said, Its practicable well decide that its a sober predilection but one whose time scarcely hasnt come. In 2000, the impudent exceeded its revise sales cigarette, and intimacy in the vehicle was growing. Wolf-GartenGmbH & Company, a German floriculture equipment company, announce plans to veer the novel to a lawn lawn mower adapted for use on golf game courses. A similar and diesel-engine variance give birth been added to the product line. In 2001, executives at DaimlerChrysler announced plans to query the U. S. market to fancy prospects for the quick-witted. The proclamation came as Americans bet plunk increases in gasoline prices. run across the weathervane target www. smart. com intelligence Questions 1 . value the U. S. market latent for the Smart. Do you see the car bequeath be a supremacy? why or why not? 2.Identify other target markets where you would usher in this car. What while of countries would you preach for the introduction? Sources D n McCosh, seduce Smart Buyers Ty to J m the Queue, f ie new-fangled York time a r up (March 19, 2004), p. Dl Nicholas Foulkes Smart S t G t Ee Smarter, finonciol times e e vn s (February 14-15, 2004), p W10 W Pinkston a d S o Miler, DaimlerChrysler Se r . il n ct t es T w r Smart initiation in U. S. , The Woll passageway Journol (August 20, 2001), pp. B 1, B4 o ad Miler, Daimler whitethorn bike O t Its lilliputian Cr Here, f ie W oll route Journol (June 9, 2001), u a p.B1 Miler, DaimlerChryslersSmart Cr M y acquit a fresh Use, f ie Woll passlournol aa (February 15, 2001), pp. B1, B4 Haig Simonian, political machinemakers Smart Move, fiscal measure (July 1,1997), p. 12 William Taylor, heart a d muscular tissue A Interviewwith S ac n n w th Itan Nicolm Hayek, Horvord line of work eview o r c h 1993), pp. 99-1 10 Kevin ( ril Helliker, Swiss movement Cn Wriiatch wiz sack Swatch stamp to a auto? a n f ie Woll Street ledger (March 4,1994), pp. A1,A3 Ferdinand Protrman, dour the Wrist, w th n O t the channel A S ac o Wheels, f ie New York clock (March4,1994), p. (1. noSmart Car Case 10-2) 1 The Smart Car In 1991, Nicolas Hayek, chairman of Swatch, announced an agreement with Volkswagen to develop a battery-powered Swatch car. At the time, Hayek said his goal was to build an ecologically inoffensive, highquality city car for two people that would sell for about $6,400. The Swatchmobile concept was based on Hayeks conviction that consumers become emotionally attached to cars just as they do to watches. Like the Swatch, the Swatchmobile (officially named Smart) was designed to be affordable, durable, and stylish. Early on,Hayek noted that safety would be another key selling point, declaring, This car will have the crash security of a Mercedes. Composite exterior panels mounted on a cage like body frame would allow owners to change colors by switching panels. Further, Hayek pictured a car that emitted almost no pollutants, thanks to its electric engine. The car would also be capable of gasolinepowered operation, using a highly efficient, miniaturized engine capable of achieving speeds of 80 miles per hour. Hayek predicted that worldwide sales would reach one million units, with the United States ccounting for about half the market. Some observers attributed the hoopla surrounding the Swatchmobile concept to Hayeks charismatic personality. His automotive vision was dismissed as being overly optimistic less ambitious attempts at extending the Swatch brand name to new categories, including a brightly colored unisex clothing line, had flopped. Other products such as Swatch telephones, pagers, and sunglasses also met with lukewarm consumer acceptance. The Swatchmobile represented Hayeks attempt to pioneer a completely new market segment. Industry observers warned, oreover, that the Swatch name could be hurt i f the Smart car were plagued by recall or safety problems. In 1993, the alliance with Volkswagen was dissolved Hayek claimed it was because of disagreement on the concept of the car (Volkswagen officials said low profit projections were the problem). In the spring of 1994, Hayek announced that he had lined up a new joint venture partner. The Mercedes-Benz unit of Daimler-Benz A G would invest 7 5 0 million Deutsche marks in a new factory in Hambach-Saargemuend, France. In November 1998, after several months of production delays nd repeated cost overruns, Hayek sold Swatchs remaining 19 percent impale in the venture, officially known as Micro Compact Car GmBH MCC), to Mercedes. A spokesman indicated that Mercedes refusal to pursue the hybrid gasoline/battery engine was the reason Swatch withdrew from the project. The decision by Mercedes executives to take full control of the venture was consistent with its strategy for leveraging its engineering skills and broadening the companys appeal beyond the luxury segment of the automobile market. As Mercedes chairman Helmut Werner said, With the new car,Mercedes wants to combine ecology, emotion, and intellect. Approximately 8 0 percent of the Smarts parts are components and modules engineered by and sourced from outside suppliers and subcontractors known as system partners. The decision to locate the assembly plant in France disappointed German labor unions, but Mercedes executives expected to save 500 marks per car. The reason French workers are on the i ob 2 75 days per year, while Ge rman workers average only 242 days also, overall labor costs are 40 percent lower in France than in Germany.MCC claims that at Smart Ville, as the factory is known, only 7. 5 hours are required to complete a vehicle. This is 25 percent less time than required by the worlds best automakers. The first 3 hours of the process are performed by systems partners. A Canadian company, Magna International, starts by welding the structural components, which are then painted by Eisenmann, a German company. Both operations are performed outside the central assembly hall the body is then passed by conveyer into the main hall. There VDO, another German company, installs the instrument panel.At this point, modules and parts manufactured by Krupp-Hoesch, Bosch, Dynamit Nobel, and Ymos are delivered for assembly by MCC employees. To encourage integration of MCC employees and system partners and to underscore the need for quality, both groups share a common dining room overlooking the main assembly ha ll. The Smart City Coupe officially went on sale in Europe in October 1998. Sales got off to a slow start amid concerns about the vehicles stability. That problem was solved with a sophisticated electronic package that monitors wheel slippage. Late-night TV comedians gave the odd-looking car o respect and referred to it as a motorized ski boot and a backpack on wheels. During the first quarter of 1999, the 150 Smart dealers in 19 countries in continental Europe sold a total of 8,400 cars, an average of 5 6 cars each. Thesales picture was brightest in the United Kingdom, where a London dealer sold 160 vehicles between the Smart launch in October 1998 and M a y 1999. The brisk sales pace in Britain was especially noteworthy because MCC was only building left-hand drive models (the United Kingdom is the only country in Europe in which right-hand drive cars are the norm).Industry observers noted that Brits affection for the Austin Mini, a tiny vehicle that first appeared in the 1 9 60s , a ppeared to have been extended to the Smart. M C C reduced its annual sales target from 130,000 to 100,000. Robert Easton, joint chairman of DaimlerChrysler, went on record as being skeptical of the vehicles future. In an interview with Automotive News, he said, Its possible well conclude that its a good idea but one whose time simply hasnt come. In 2000, the Smart exceeded its revised sales target, and interest in the vehicle was growing. Wolf-GartenGmbH & Company, a German gardening equipment company, announced plans to convert the Smart to a lawn mower suitable for use on golf courses. A convertible and diesel-engine edition have been added to the product line. In 2001, executives at DaimlerChrysler announced plans to research the U. S. market to determine prospects for the Smart. The announcement came as Americans face steep increases in gasoline prices. Visit the Web site www. smart. com Discussion Questions 1 . Assess the U. S. market potential for the Smart. Do you think the car will be a success? Why or why not? 2.Identify other target markets where you would introduce this car. What sequence of countries would you recommend for the introduction? Sources D n McCosh, Get Smart Buyers Ty to J m the Queue, f ie New York Times a r up (March 19, 2004), p. Dl Nicholas Foulkes Smart S t G t Ee Smarter, finonciol Times e e vn s (February 14-15, 2004), p W10 W Pinkston a d S o Miler, DaimlerChrysler Se r . il n ct t es T w r Smart Debut in U. S. , The Woll Street Journol (August 20, 2001), pp. B 1, B4 o ad Miler, Daimler May Roll O t Its Tiny Cr Here, f ie Woll Street Journol (June 9, 2001), u a p.B1 Miler, DaimlerChryslersSmart Cr M y Have a New Use, f ie WollStreetlournol aa (February 15, 2001), pp. B1, B4 Haig Simonian, Carmakers Smart Move, Financial Times (July 1,1997), p. 12 William Taylor, Message a d Muscle A Interviewwith S ac n n w th Itan Nicolm Hayek, Horvord Business eview o r c h 1993), pp. 99-1 10 Kevin ( ril Helliker, Swiss Movement Cn Wri iatch Whiz Switch Swatch Cachet to a Automobile? a n f ie Woll Street Journal (March 4,1994), pp. A1,A3 Ferdinand Protrman, Off the Wrist, w th n O t the Road A S ac o Wheels, f ie New York Times (March4,1994), p. (1. no