From watch to car - The story of Smart - Part 1 - #Blogpost by Smart Roadster

In late 1982, SMH (makers of the Swatch watches) CEO Nicolas Hayek began developing an idea for a new car using the same type of manufacturing strategies and personalization features used for Swatch watches. He believed that the automotive industry had ignored a sector of potential customers who wanted a small and stylish city car. This idea soon became known as the “Swatchmobile”. Hayek’s private company Hayek Engineering AG began designing the new car for SMH, with seating for two and a hybrid drivetrain. Yep, you read that correctly: a hybrid drivetrain.

While design of the car was proceeding, Hayek feared existing manufacturers would feel threatened by the Swatchmobile. Thus, rather than competing, he preferred to cooperate with another company in the automotive industry. This would also mean SMH wouldn’t have the cost of setting up a distribution network. Hayek approached several automotive manufacturers and on July 3, 1991, he reached an agreement with Volkswagen to share development of the new project.

But by 1993, Ferdinand Piëch became the new CEO of Volkswagen and he immediately terminated the project with SMH. Volkswagen had already been working on their own small economy car, the Lupo 3L. Volkswagen’s own concept was believed to be a better business proposition, featuring four seats and more cargo space. Hayek already suspected that Piëch would end the agreement with SMH when he would become CEO, therefore he already began approaching other car companies with the project. Being rejected by BMW, Fiat, GM and Renault, he finally reached an agreement with Daimler-Benz AG.

A deal was announced on the 4th of March, 1994, at a press conference at the Mercedes-Benz headquarters in Stuttgart that the companies would join forces in founding Micro Compact Car AG (MCC). 49% of the initial capital of 50 million Swiss francs were provided by SMH and the remaining by Daimler-Benz. The company consisted of two sub companies: MCC GmbH based in Renningen (a suburb of Stuttgart) which would design the car, and SMH Auto SA, owned by Hayek, which would design the hybrid electric drive system for the car.

The press conference also featured the debut of two concept cars: the eco-sprinter and eco-speedster, styled by Mercedes-Benz’s design studio in California. The cars were similar to the eventual Smart City-Coupé. It was not mentioned that the designs were made without any input of SMH, and that they were badged as Mercedes-Benzes.

Three co-directors were immediately named to head the new company: designer and engineer Johann Tomforde and financial administrator Christoph Baubin from Daimler-Benz, and marketing manager Hans Jürg Schär, who spearheaded the original Swatch marketing campaigns in the mid-1980s. Tomforde had already been working on the Mercedes City Car (also shortened to MCC) project at Daimler-Benz since 1990, which produced the eco-sprinter and eco-speedster concepts as well as the Vision-A concept, which would become the Mercedes-Benz A-Class.

One of the first discussions at MCC was the name of the car itself. Hayek insisted it retain Swatch in some way: “Swatchmobile”, or “Swatch Car”. Daimler-Benz refused, and pushed for a neutral name. The final selection was Smart, an acronym that had been previously used by MCC for Swatch Mercedes Art. Another problem was the site of the factory where the cars would be build. The co-directors had identified 74 potential sites where the new factory could be build. On 20 December 1994 they decided that the factory would be built in Hambach, France. The purpose-built factory quickly gained the nickname “Smartville”.

In 1995, a system was set up where MCC would reduce the cost of production. Part suppliers would design and fit their parts themselves at the factory. But despite reducing costs, MCC still required more money. Daimler-Benz helped out by increasing their share to 81% by 1996, leaving SMH with the remains

The assembly plant opened on October 27, 1997. Introduction of the new Smart City-Coupé was planned for March, 1998, however dynamic instability of the prototypes prompted Daimler-Benz to announce postponing the launch until October, 1998. In the meantime Tomforde was replaced as chief engineer by Gerhard Fritz. Fritz lowered the centre of gravity, widened the track, stiffened the suspension, changed the steering, and added ballast weight to the front of the car in order to increase its stability in emergency avoidance manoeuvres (notably the Swedish “moose test”).

The car launched successfully in nine European countries in October 1998, but the final design did not fulfill Hayek’s expectations. Hayek pushed for a hybrid drivetrain but the final product used a relatively conventional gasoline engine. Shortly afterward Daimler-Benz bought the rest of SMH’s remaining shares in the company, which meant MCC was now a subsidiary of Daimler-Benz. The office in Biel was shut down and operations were moved to the MCC GmbH design centre in Germany. On January 1, 1999, MCC GmbH changed its name to MCC Smart GmbH, and by 2000, it dropped the last vestiges of the association with SMH, becoming Smart GmbH.

The model line was subsequently expanded to include the Roadster, a rear-engine, rear-drive sports car and a four-door, four-seat supermini named the Forfour. The City-Coupé was now named the Fortwo to fit the naming scheme. However, the expansion did not increase the profits of the company; Smart GmbH lost nearly 4 billion euros from 2003 to 2006. Plans were enacted to increase the company’s profitability and integrate its operations with Daimler (at that time DaimlerChrysler).

In 2005, Daimler decided against purchasing a 50% share in the Dutch NedCar plant used to build the ForFour, thus ending its production. A planned SUV called the Formore was terminated while the assembly plant in Brazil was being fitted with machines, and (sadly) production of the Roadster was also discontinued. In 2006, after dwindling sales and heavy financial losses, Smart GmbH and its operations were absorbed by DaimlerChrysler directly. They now operate under the Mercedes-Benz Cars division of Daimler AG, offering the fortwo coupe, fortwo cabrio and forfour hatchback.

End of part 1 and the end of my first blogpost. Hope you guys like it! Meanwhile I’m gonna be busy making a part two