Retailers claim DaimlerChrysler UK has between nine and 18 months’ stock held in compounds because sales have failed to match orders. One says: “This is old-fashioned pre-registering caused by the list price being too high. We’re given the chance to order 50 cars at a time, with a discount of £1,000 on each unit, and then sell them as used with nominal mileage.”
Several dealers have told AM that the practice is working – sales look good and demand for used Smarts is strong because the parc is relatively small in the UK. According to CAP, ForTwo and ForFour residuals hover around 40% for three-year/30,000 miles.
However, many are concerned that it is damaging the Smart marketing strategy, which is based on exclusivity and a cult image. “DCUK has been ordering too many cars,” says one dealer.
“Either someone in has over-estimated demand, or the cars have been forced on us by the factory. The cabriolet is particularly difficult to sell at list price.”
Not all Smart dealers are having problems. “We have taken the franchise fairly recently, and are doing well,” says one. “Maybe we’re being rewarded for our caution and have learned from the mistakes of some who went with Smart early on.”
Peter Cooke, of Nottingham Business School, says: “The whole concept of Smart is to be niche and a little different, but DCUK is trying to force the market. Smart is popular in Paris but UK buyers have not taken to it as quickly – in part, that’s because they were slow producing a right-hand drive version.”
Smart refutes claims that it plans to reposition the brand from premium to value by reducing pricing. It says sales will strengthen by improving the retail network and it is urging more Mercedes dealers to take on the franchise. Currently 65 of 157 sell Smart in the UK.