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Smart fortwo gets 33/41 city/highway

Ford Fiesta gets 29/40 city/highway
Smart global sales to drop below 100K for 2010

A few years ago, drivers across America went into panic mode as gasoline prices soared to nearly $4.00/gallon (or higher in some locales) in 2008. During that time, people started ditching their SUVs/pickups and bought more efficient cars.

As gas prices have started to level out below the $3.00/gallon mark, one car company has been especially hard: Smart. Smart, a division of Daimler AG, has seen U.S. sales free fall since hitting a high mark of 25,000 units for all of 2008 reports Automotive News Europe.

For the first seven months of 2010, sales are down 70 percent compared to the year before. Globally, sales are down over 20 percent and sales will dip to below 100,000 unit for all of 2010 compared to 114,000 in 2009.

There a number of possible reasons for the soft sales in the U.S. The Smart is a cramped two-seater with very little room for cargo. While this might have been acceptable to some U.S. customers when it seemed like the sky was limit with rising gas prices, many likely aren't willing to make that sacrifice today.

Another more likely scenario is that there are plenty of larger (yet still compact) vehicles available on the market for the same money or slightly more than the Smart and seat 5 people plus cargo. A standard Smart fortwo will cost you around $13,200 with A/C. Stepping up to the slightly more opulent Smart fortwo "passion" costs about $14,600.

For that price, you get 33 mpg in the city and 41 mpg on the highway in return (while requiring premium unleaded gasoline). For comparison, the $15,000 Honda Fit returns 28/35 while the $13,000 Toyota Yaris returns 29/36 -- both vehicles can seat five.

Another competitor, the $14,000 Ford Fiesta, achieves 29 mpg in the city and 40 mpg on the highway.

With competitors approaching the mileage of the Smart while offering vastly superior passenger/cargo room for roughly the same money, it shouldn't be too shocking that sales are falling.

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RE: Another reason
By JediJeb on 8/31/2010 6:04:18 PM , Rating: 5
They probably couldn't afford it 7 years ago either.

And that's why most consumers are in trouble with credit right now. If you could pay cash and trade cars every 3 years you might come out ahead, if you are financing for 5 years and trading every 3, you are probably throwing a lot of money away. If you were leasing and trading every 3 years you were definately throwing money away, unless you are a corporation and can use the lease for tax purposes.

People saving money and returning to as saving based economy instead of a borrowing based economy will hurt in the short run, but will make a stronger economy in the long term. If you think about it from the 50's through the early 70's the economy was fueled by people that lived through the depression and valued savings over credit. From the mid 70's until the early 2000's you had a swing towards more and more credit and less savings, and when the bubbles pop, the crashes are hard to take because there is no buffer with savings.

RE: Another reason
By Spuke on 8/31/2010 11:54:18 PM , Rating: 2
And that's why most consumers are in trouble with credit right now.
You're kind of right. Credit card debt is down from Sept 2008's 975 billion to 852 billion and dropping. That's about $2200 a person. Those are March numbers but as of early August, debt continues to fall although I can't seem to find the exact numbers, Transunion says that credit card debit is the lowest in 8 years. Interestingly, even though debt is going down, credit card spending has risen quite a bit and is only lower than the spending in 2008 right before the crash.

Credit card debt dropping


RE: Another reason
By ebakke on 9/1/2010 10:49:52 AM , Rating: 2
In my area, I keep seeing/hearing ads for "banks that have been given government money and need to clear there books once and for all. If you have over $[some ungodly amount] of credit card debt, call now!"

So it wouldn't surprise me if at least some of that $123B is from debt being written off as part of TARP.

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