Daimler plans to offer a pilot Smart car rental program in Texas

With Smart's U.S. sales continuing to drop dramatically, Daimler AG is launching a pilot program in Austin, Texas, for short-term rental of the micro car.

The program, called car2go, would allow registered users to pick up an available Smart, use it for as long as needed, and return it to designated locations in the city. A pilot with 200 Smart ForTwo cars will be run with Austin city employees.

Daimler tested the program in Ulm, Germany, last year with Mercedes-Benz employees and opened the program to city residents in March. The cost is 19 cents per minute. A day costs 49 euros or $73.40.

Daimler CEO Dieter Zetsche says the car2go program could be expanded to other cities and that “many other big metropolitan areas around the globe are interested.”

Daimler hasn't given details on how the U.S. pilot would operate. A Webinar is scheduled for Tuesday in Austin where the program is being announced. The car2go program is being run by Daimler and does not involve Smart's U.S. distributor and importer, Penske Automotive Group Inc. of suburban Detroit.

Flagging sales

During a Webinar last week, Zetsche cited the program as a key way to expand interest in the Smart brand, whose sales took a 70.4 percent nosedive last month from a year earlier. Smart sales fell 36 percent through October compared with the same 10 months of 2008.

Smart went on sale in January 2008 and initially exceeded all expectations, Zetsche said. Sales reached a high of 2,695 cars in May 2008, and Smart boasted long waiting times. Sales hit 24,622 cars in 2008.

But sales have steadily been declining this year and fell to a record low of 661 cars in October. Smart only sold 13,082 cars through October, forcing it to offer a 1.9 percent finance rate for five years. The offer began Oct. 16 and runs through December.

Not giving up

Zetsche said Daimler isn't giving up on Smart in the United States. Low fuel prices drove Smart sales in 2008 when the car was launched, Zetsche said. He blamed higher fuel prices for the dramatic sales drop but also acknowledged that Smart “is a lifestyle vehicle as well” and a victim of the recession.

To broaden the appeal of Smart, Daimler is considering a second car larger than the ForTwo two-seat model -- the only car sold by the brand. Zetsche said the four-seat car hasn't been approved and would have to be as unique a concept as the original Smart.

According to press reports, Daimler is discussing development of a four-door Smart with Renault. Smart had a four-door called the ForFour but it was killed in 2006 after only two years of sales because of low orders. The car never came to the United States.

By Diana T. Kurylko- Automotive News