THE MICRO COMPACT CAR Smart will not make any profits in its first product cycle, said Daimler-Benz Chairman Juergen Schrempp. 'We will have to include the following cycle of the Smart in our calculation,' Schrempp told stockholders.
The Smart product cycle is likely to last six years, until 2004.
Sales were delayed from March 1998 to October 1998 after stability problems were discovered. Modifications cost about DM300 million ($16.9 million), bringing the total Daimler-Benz investment to DM1.5 billion. Yearly production of 200,000 units is planned.
Schrempp said that 300,000 customers have shown an interest in the car. Prices will begin at about DM16,000. Rather than try to recoup investment by raising prices, Schrempp said, 'in the first two to three years we will put pressure on the costs of the Smart production.'