Industry Report: DaimlerChrysler to Shut Down smart?

Earlier this month, U.S. bank Morgan Stanley advised DaimlerChrysler to pull the plug on smart. Some of DC's internal staff are

U.S. bank Morgan Stanley has advised DaimlerChrysler to pull the plug on smart. (Photo: Shawn Pisio, Canadian Auto Press)

also urging DaimlerChrysler to follow in the footsteps of BMW, which saw an increase in share prices of thirty-five percent and a massive reduction of losses when it dumped Rover in 2000.

The issued report stated, "We believe the market will reward DaimlerChrysler for improved fiscal discipline." Morgan Stanley also stated that the closure of smart, despite the estimated 2.75 billion-Euro cost, would be

In order to break even, smart would need to sell 200,000 units, which is now the brand's 2006 sales target. (Photo: Shawn Pisio, Canadian Auto Press)

recovered in two year's time based on the firm's steadily increasing losses and general costs.

DaimlerChrysler estimates that about 140,000 smarts were sold in 2004. This figure, while admirable for a niche vehicle manufacturer, is some 30,000 units under target sales. In order to break even, the company would need to sell 200,000 units, which is now its 2006 sales target.

Last year, the company shipped 60,000 units of the forfour compact hatchback to its dealers, with sales projections of 80,000 units for 2005. Adding the first full year of sales in Canada, Malaysia and Norway should help the brand get closer to its goal.