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Tiny Smart car will soon arrive in the U.S.

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The Smart car is certainly making a smart move: Hitting the U.S. market just as gasoline prices pass the US$3-a-gallon mark.

The Smart Fortwo micro car is one of the stars of the Los Angeles Auto Show, where it's trying to drum up buyers before it goes on sale in January.

Europeans have been driving Smart cars for a decade and the vehicle has been sold in Canada since 2004, but the Smart is just now hitting U.S. roadways. Smart USA President Dave Schembri, who worked on a team that considered a Smart sport utility vehicle for the U.S. market in the late 1990s, said the country just wasn't ready for Smart at the time. But fuel prices and increasing concern about the environment have changed that, he said.

``We need to get smaller in society in terms of our consumption,'' Schembri said.

Subcompact cars made up 2.4 per cent of the U.S. market in the first 10 months of this year, compared to 1.7 per cent a year ago, according to the Power Information Network, a division of J.D. Power and Associates. Total U.S. vehicle sales were down three per cent this year, indicating that small cars are gaining fans.

Smart is now contacting the 30,000 people who have plunked down $99 to reserve the two-seater, Schembri said. He said that group includes college students and Baby Boomers, RV owners and multi-millionaires. People from all 50 states have reserved Smart cars, he said, defying conventional wisdom that the car is only for urban dwellers. California, Arizona, Texas, Florida, and New York are among the top states for reservations.

``It's a car that has all the rational reasons to buy it, it has all the social responsibility reasons to buy it, and in addition, you get an emotional kick with this car,'' he said. ``When you go up to any traffic light or stop at any store, you get reaffirmed that you made a great purchase. People are giving you a thumbs up or a smile or taking your picture. What other kind of product can you buy and get that immediate admiration?''

Smart is a division of Daimler AG's Mercedes-Benz brand. It will be made in France and sold through 73 U.S. dealers, including Mercedes dealers and dealerships that are part of the Penske Automotive Group. Roger Penske, a racing icon and chairman of Penske Corp., also is chairman of Smart USA.

The Smart's base price is US$11,590. A fully loaded Smart Fortwo Passion convertible goes for $16,950. The car gets about 40 miles per U.S. gallon.

Some industry analysts are skeptical about Smart's chances in the United States, where trucks, sport utility vehicles and crossovers still command more than half the market and gas prices, while rising, still don't approach Europe's.

Schembri won't say how many vehicles Smart hopes to sell in 2008, but Aaron Bragman, an analyst with Global Insight, said he doesn't expect it will more than 20,000, and sales will probably fall off after that. By comparison, the Toyota Yaris _ the most popular subcompact on the market _ sold 73,874 units in the first 10 months of this year, according to Autodata Corp.

``I think it will be a novelty,'' Bragman said. ``It's a very niche market, and I'm not very sure it has much staying power.''

Bragman said for the price, buyers could get a used car with a lot more space and practicality. Unless gas prices hit $5 to $6 a gallon, he said, it's hard to picture Smart gaining much ground.

Even in Europe, Smart has never been profitable. Daimler announced a restructuring of the division last year, when sales fell to 102,700 vehicles worldwide from 124,300 in 2005.

But Schembri said Smart is determined to be a player in the United States. He said the brand isn't doing any advertising so it can plow its revenues into product development, and he envisions a hybrid Smart in the next three years along with special editions like a sporty Smart. Smart also is testing a fleet of 100 electric vehicles in London, he said.

Another issue for some consumers will be safety. Smart has a steel safety cage and four airbags, including two in front and two on the sides to protect the head and abdomen. It also has standard electronic stability control, which is designed to stop vehicles from swerving off the road. But the small size is off-putting to some drivers, particularly if they're driving in the shadow of a hulking SUV.

Schembri said the Smart Fortwo is designed to get four out of five stars on U.S. crash tests and recently got four stars on an equivalent European test. The U.S. government will test the Smart car after it arrives on the market.

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Tiny Smart car will soon arrive in the U.S.
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