Large car makers need CAFE credits going forward as mileage standards increase.
Mercedes-Benz USA LLC and Penske Automotive Group (NYSE:PAG) today announced they have started discussions to return the distribution rights, management, and sales and marketing activities of Smart USA from Penske Automotive Group to Mercedes by the end of the second quarter of 2011.
Penske has sold more than 45,000 of the two seat Smart vehicles during the past three years through 75 Smart retail centers in the United States and Puerto Rico.
Smart had U.S. sales of 5,927 in 2010 compared with 14,595 in 2009, a -59.4% decrease. The tiny two-seat car, designed by Mercedes more than 20 years ago, is struggling in the marketplace. However, credits for the sale of small cars will be crucial going forward for makers of larger, gas guzzling luxury cars as regulations tighten.
“Aligning smart distribution with Daimler, as it is worldwide, is the logical next step for the Smart brand in the U.S. said Penske Automotive Group Chairman Roger Penske.
Smart USA is currently placing 250 Smart ForTwo electric drive vehicles across the United States with companies, municipalities, organizations and individuals interested in conservation and environmental awareness. The Smart EV will not be widely available until 2012 in the U.S. when a badly needed next generation Smart is due to appear.
“We are very excited about working toward integration of smart into the MBUSA organization, and look forward to working with our dealer partners to exceed customer expectations for this unique vehicle,” said Mercedes-Benz President and CEO, Ernst Lieb.
Mercedes reorganized Smart last year in Germany as an independent business subsidiary of Daimler AG.
16 February 2011 – The Penske Smart distribution business had after-tax losses of $5.8 million ($0.06 per share) and $15.9 million ($0.17 per share) in the three and twelve months ended December 31, 2010, respectively.
Results for the fourth quarter and full year include after-tax expenses of $2.7 million ($0.03 per share) and $3.6 million in ($0.04), respectively, relating to the development of the five-door vehicle previously designed for distribution through the Smart USA dealer network. This vehicle is now canceled.