Inside the ground-up, electric reinvention of Smart UK

That stacks up well against the competition in the predicted £32,000- £38,000 price band that the #1 will occupy (no official pricing has yet been given).

Smart is deliberately positioning itself as near premium to avoid too much overlap with Mercedes above, so rivals are anywhere from the ID 3 to the Hyundai Kona Electric and Kia e-Niro, says Smart UK’s management.

The SEA’s electronics, powered by a Qualcomm system-on-chip, allows lots of software features driven by the cloud.

According to Isabela Ribeiro, head of product management and market intelligence for Smart Europe, “70% of the car’s features” can be updated over the air, while the 12.8in central touchscreen is a riot of graphics and information, including an animated fox wearing wellies that responds to voice commands. Your kids will love it.

More features can be added over the air, too, including controversially the activation of hardware already built into the car. Ribeiro mentioned the heated steering wheel, which can be used only after payment via the Smart app, and hinted at more to come.

The other significant nod to the future comes with the sales model. All cars will be sold directly by Smart, with dealers acting as agents.

Customers might not see much difference, but they will be able to choose whether to buy online or at the showroom, experiencing no difference in pricing between the two.

“One of the benefits from a customer point of view is consistent, transparent pricing,” said Ribeiro.

Smart dealers often operate within a Mercedes showroom, but that might change as dealer groups agree or don’t agree to become Smart agents.

The new company may be half-owned by Mercedes, but it’s an entirely different entity, to the extent that any data generated by sales of the Fortwo and larger Forfour is held by Mercedes, not Smart.

Smart’s sales figures in the UK have yo-yoed dramatically since the original City Coupé arrived in 1998, twice peaking at 12,000 a year but falling to just 1581 in 2021.

The business model has always been rickety, given the two-seater’s combination of a tiny size and a high price (it currently starts at £21,870). The new business model should give more stability.

“We’re expanding into a segment that’s 10 times the size of the microcar segment,” said Adelmann at the FT summit. “There we were more or less a stand-alone solution, and it didn’t bring us the profitability we needed to expand into other segments.”

It probably doesn’t matter that Smart is currently having trouble redefining itself as a brand. A good design, a competitive electric offering and an easy buying experience could be enough to persuade customers, especially now that it’s playing in a core segment.

“Smart has sometimes been ahead of its time, and we paid dearly for it,” said Adelmann. “In a bigger segment, we think we have a better chance.”

The new mobility: flexible payment

Smart became one of the pioneers of car sharing via then parent firm Daimler’s Car2Go scheme in 2008.

While the new Smart said it hasn’t completely given up on the idea of pay-perminute urban car use, it has tempered its mobility ambitions by instead focusing on flexibility with longer-term payment. It has teamed up with French fleet leasing giant ALD (also the owner of Leaseplan as of January this year) to offer a range of finance options.

Here, that will mainly mean personal contract purchase, according to Smart UK CEO David Browne. “That’s the vast majority of customer demand. We expect it to be over 80%,” he said.

PCP charges a higher price for the option of buying later, compared with straight lease rental. “The UK is different from Europe, where leasing has a bigger share,” said Browne.

ALD is pushing into the subscription model with its acquisition last year of Germany’s Fleetpool and is keen to offer Smart customers more flexibility down that route in future, including bundling charger use into the payments.

However, Browne cautioned against expecting any quick solution.

“Not many people have made money in the last 10 to 15 years [with subscriptions], and we don’t dare to say we’re the ones who can do it,” he said. “Here, we’ve found the right partnerships, so then the customer can decide.”

Smart timeline

1998 Smart City Coupé launched, the name combining Swatch, Mercedes and art.

2006 First electric Smart unveiled.

2016 Smart becomes the first combustionengine brand to go all-electric.