Automotive News - May 6, 2019 - Retail - 12

12 * MAY 6, 2019

opinion

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COMMENT

Smart wises up in America

A
Investors shoved
into back seat as
transparency loses

I

t's been a rough stretch for investors. Not that the stock
market is in a terrible slump - it's not. But while market
indexes bounce around record highs, we're seeing new
lows in reliable information that helps stockholders -
and other stakeholders - make smart decisions.
First off, Tesla and CEO Elon Musk got a free pass on his
blatant violation of an agreement with the Securities and
Exchange Commission.
To recap: After Musk boasted falsely that he had "funding
secured" to take Tesla private, he agreed to consult company
lawyers to ensure he wouldn't tweet anything that was both
significant - what investment types call "material" - and
misleading.
Then the CEO tweeted that Tesla would make 500,000
vehicles this year - the top end of guidance - before
clarifying that it would probably be 20 percent shy of that.
Musk's defense: Production plans are not material to
shareholders. While that would seem absurd on the face of it,
the SEC failed to convince a federal judge that such
information is, in fact, fundamental to investors. Musk has
said he has no respect for the SEC, and no wonder.
So instead of a conviction for contempt of court, the SEC got
the electric vehicle maker to agree to a definition of the term
"material," which, of course, includes production forecasts
along with profit guidance, sales figures and merger plans.
Is this a unique case, in which the federal regulator is loathe
to prosecute the man who is effectively the private developer
of America's space program, or a general one, in which
shareholders have no one defending their rights?
The thing is, it isn't just Musk - the great disrupter -
redefining the status quo. Fiat Chrysler's decision to follow
the lead of General Motors and Ford in reporting sales only
quarterly instead of monthly is another setback for investors.
Automakers suggest there's little value in monthly reports
because they lack perspective and nuance. But the
companies themselves track sales very closely within each
month as well as at its end. That's because the pace of sales is
crucial to how the companies operate, including whether
they need to adjust prices or idle plants.
We can't blame FCA for not wanting to share information
that bigger rivals are now keeping secret. But we would sure
like it if the owners - and business partners - of America's
automakers weren't kept in the dark or flat-out lied to.

brand died in North America last
week, and if you didn't notice its
departure, it's probably because
you also didn't notice it in full
health - if it was ever truly healthy.
Smart, the little brand that couldn't,
now isn't.
And so closes the chapter on a story that
had too many twists and (down) turns,
consumed billions of neurons in
intellectual capital, contained an ocean of
ambition, toppled executive careers and
almost tarnished one of the most
successful business minds in auto history.
Yes, even Roger Penske felt Smart's sting.
And how could he not?
Smart changed its business plan as
many times as it changed the color of its
cars. Sales matched its segment: micro.
At its peak in 2008, Smart's first year on
the market, parent Daimler sold 24,622
units in the U.S. - then sales fell 41
percent a year later and never passed
10,500 vehicles again.
Last year, Smart sold 1,276 cars - a

T H E W E E K LY N E W S PA P E R O F T H E I N D U S T R Y

Keith E. Crain, Editor-in-Chief
KC Crain, Group Publisher
Jason Stein, Publisher
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stein
Jason Stein is publisher of
Automotive News. You may email him
at jstein@crain.com. Keith Crain's
column will return.
number that made the Fiat 500 (5,370
sales in 2018) look big by comparison.
And, despite entering the market
when gas prices were high, things never
got better. Its timing was ultimately as
flawed as its mission.
At 106.1 inches, it was too small for
America, but what really drove a drill
through the brand was fracking.
Like Fiat, Daimler needed $5-per-

LETTERS

Some of the arriving
EV models will fail
TO THE EDITOR:
Jason Stein wrote a nice piece on Tesla
and electric vehicles ("Tesla's jungle ride
gets wilder," April 15). What Tesla has
done with its image, using little
marketing and no PR team, is nothing
short of amazing.
Stein's points about the coming
competition are interesting. We forecast
more than 70 EVs in the marketplace by
the end of 2022. We also measure the
demand for EVs at about 1 to 2 percent
of the future market. While consumers
can't demand what they have not yet
seen or experienced, it is hard to predict
the demand for 70 EVs in the U.S. Some
of these models will fail. Perhaps many.
As Stein said, "There is no guarantee
that customers will follow with anything
near the velocity of Tesla buyers." The
current Tesla buyer is getting more than
an EV. They're getting a piece of jewelry.
Exclusivity.
This will all change soon. It will be fun
to watch.
DANIEL HALL
Vice president
AutoPacific
North Tustin, Calif.

Don't accept false
choice on AV safety
Established in 1925, published every Monday by Crain Communications Inc.

jason

gallon gasoline to make the economics
work. Only, even then, it didn't really
work right. Drive one of the early models
and one couldn't get past the two-speed
transmission. Look at one and it was
hard to describe the styling as inviting.
In Europe's city centers, it became
common to spot a Smart parked
sideways, sandwiched between two
vehicles, or placed on a sidewalk. But U.S.
cities and roads aren't European, and
Smart didn't have the cache to compete
with the cool Italian heritage of Fiat.
But Daimler isn't giving up. In March,
it said it was creating a joint venture with
Zhejiang Geely Holding Group to build
a new generation of Smart models in a
purpose-built electric-car factory in
China with sales to begin in 2022 -
which makes perfect sense, except the
Chinese prefer long-wheelbase vehicles
with room for a driver. Hmm.
So the story continues somewhere else.
A Smart story, but a wise ending in
America.

TO THE EDITOR:
My commentary on using safety as the
critical enabler to bring autonomous
vehicles more rapidly into reality was
both praised and panned ("What's the
acceptable death rate for autonomous
cars?" March 30). The latter mostly
asserted the refrain that the large
number of future lives saved are worth
the trade-offs of deaths and injuries
now.
That's a false choice.
When first-generation airbags entered
the fleet, they caused unintended

injuries and deaths, triggering a national
crisis. No one tried to explain to the
public that the potential benefits were
worth those deaths. Instead,
automakers, suppliers, government
agencies and safety organizations came
together to publicize the risk, identify
the underlying design issues and
redesign the airbags. Together, they
owned the problem and solved it.
This shared focus on the safety of the
consumer rebuilt public trust, improved
airbag effectiveness and smoothed the
path to greater benefits from airbags,
which accumulate every day.
The current Boeing 737 Max debacle
and its new software-driven technology
illustrate this well.
Deemed unsafe, all the planes in the
U.S. remain grounded, damaging trust
in the new technology and Boeing's
reputation. Rebuilding that trust will be
based solely on Boeing's commitment to
safety.
RICARDO MARTINEZ, M.D.
Irving, Texas
The writer is an emergency-room
physician and former NHTSA
administrator.

Online buyers need
F&I presentation
TO THE EDITOR:
Regarding "Dealers, spread the word
about online tools" (Hannah Lutz,
autonews.com, April 24): As front-end
margins continue to shrink, back-end
profit is becoming the last opportunity
for dealerships to maximize revenue on
the variable side of the equation. While
it seems inevitable that the finance and
insurance process will become
automated and available as a self-serve
component of the online buying
process, it will also herald the inevitable
end of the F&I manager. My question is:
at what cost?
There is no way back-end per vehicle
retail can be sustained at current levels if

there is no live presentation by an F&I
professional that can sell the value of the
protections available. There will need to
be some kind of hybrid approach to
presenting protection products to online
customers. I'm not sure exactly what
that would look like, but we need to get
creative quick!
ALAN HARVEY
Customer financial services director
Jaguar-Land Rover Spokane
Spokane, Wash.

What made Smart
great is gone
TO THE EDITOR:
The current Smart is the issue
("Mercedes to end Smart sales in U.S.,
Canada," autonews.com, April 29). It's a
Renault Twingo clone, and it shows.
With awkward forms, reminiscent of a
brick, the current Smart has little visual
charm.
The vitality, energy and superb design
of the first Smart is lost. It's no wonder
sales have dropped. Getting close to an
idea is through refinements and
evolution, not sticking an idea onto
something else.
The original captured the fun and
quirky qualities that as children we are
naturally drawn to. With dreary
uncreatives as the face of the brand, the
electric Smart is an embodiment of
those running Smart now. What a great
big shame!
Smart needs to be "electrified," and
not just by adding a battery. Smart is the
perfect city car, but the lure of the
original is gone, and competitors using
its formula are racing up to gain
position.
ROBERT ERSKINE
Senior European correspondent
Autolab Broadcast USA
Wortham, England
Autolab is a live weekly automotive
radio broadcast.
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Automotive News - May 6, 2019 - Retail

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