The Smart Car
In 1991, Nicolas Hayek, chairman of Swatch, announced an agreement with Volkswagen to develop a battery-powered “Swatch Car”.
Hayek said his goal was to build “an ecologically inoffensive, high-quality city car for two people” that would sell for about $6400.
The Swatchmobile was designed to be affordable, durable and stylish.
In 1993, the alliance with Volkswagen was dissolved, Hayek claimed it was because of disagreement on the concept of the car (Volkswagen officials said low profit projections were the problem.
In the spring of 1994, Hayek announced that he had lined up a new joint venture partner. The Mercedez Benz unit of Daimler-Benz AG would invest 750 million Deutsche marks in a new factory in Hambach-Saargemuend, France.
In November 1998 after several months of production delays and repeated cost overruns, Hayek sold Swatch’s remaining 19 percent stake in the venture, officially know as Micro Compact Car GmBH (MCC), to Mercedes. A Spokesman indicated that Mercedes’ refusal to pursue the hybrid gasoline/battery engine was the reason Swatch withdrew from the project.
Mercedes chairman Helmut Werner said “With the new car Mercedes wants to combine ecology, emotion, and intellect”.
Approximately 80 percent of the Smart’s parts are components and modules engineered by and sourced from outside suppliers and subcontractors know as “system partners”.
The decision to locate the assembly plant in France disappointed German labor unions, but Mercedes executives expected to save 500 marks per car. The reason: French workers are on the job 275 per year, while German workers average only 242 days; also overall labor cost are 40 percent lower in France that in Germany.
The Smart City Coupé officially went on sale in Europe in October 1998. Sales got off to a slow start amid concerns about the vehicle’s stability. That problem was solved with a sophisticated electronic package that monitors wheel slippage.