Mercedes-Benz’s tiny Smart city car is the champion European money-muncher of all time, and electric cars are likely to be the next big loser, according to a report from Bernstein Research in London.
The little two-seat Smart has lost a total of about $4.6 billion over the lifetime of the project. That’s the equivalent of $6,100 per car, Bernstein analyst Max Warburton said in a report, published at the same time as a survey from Foster City, California-based CarInsurance.com pointed to the Smart as the most embarrassing car to be seen in.
Not so Smart.
“Our guess for the (future) most likely failures? We’d argue electric cars – from Renault to VW to BMW – look likely to qualify. Electric vehicle evangelists seem to be enjoying a Tesla-powered rush of blood to the head, after the American company’s sales success,” Warburton said.
Renault of France has committed to spending $5 billion to produce a range of electric cars, and once said global sales of battery-only vehicles would reach 10 percent of global sales by 2020.
“But we’re not convinced that these European electric products can make money – in fact for the ones with big volume hopes like Renault, they have the potential to lose a huge amount,” Warburton said.
Warburton compiled a top 10 of losers, with reasons for their failure.
The Smart, which started life as an idea from Swatch Swiss watches rejected by VW, was too expensive to build and sales never reached high enough during its first iteration. The semi-automatic gear box was a clunker too.
“We’re not convinced the current one makes money either, even with all its fixed costs written off,” Warburton said.
Mercedes is now collaborating with Renault to make small cars more efficiently.
After the Smart came the Fiat Stilo, which lost $2.9 billion and $3,700 each time one was sold. Fiat’s sales goals for the Stilo – beat the biggest selling VW Golf – were never met. Production was established for 400,000 Stilos a year but only reached about 180,000 a year in 2002 and 2003.
3) VW Phaeton – total $2.7 billion – $38,000 a car. Tried to match Mercedes without the brand power. A new Phaeton is coming. Some people never learn!
4) Peugeot 1007 – $2.6 billion – $21,000 a car. Small car with rear sliding doors.
5) Mercedes A class – $2.3 billion – $2,000 a car. Failed the “elk-test”, toppling over in Sweden during lane-changing test which destroyed both car and sales of it.
6) Bugatti Veyron – $2.2 billion – $6.2 million a car. VW owns Bugatti. “R&D costs to rival Concorde”. Total sales so far 369, with most in the Middle East.
7) Jaguar X-Type – $2.3 billion – $6,350 per car. Small Jaguar based on parent company Ford Mondeo. Lost out because it was seen as a Ford-based luxury car. Silk purse from a sow’s ear comes to mind.
8) Renault Laguna – $2.1 billion – $4,800 per car. Big car charged with competing with the German premium manufacturers, but failed.
9) Audi A2 – $1.8 billion – $10,200 per car. Small car, expensive aluminum body.
10) Renault Vel Satis – $1.6 billion – $25,400 per car. Another failed attempt to move upmarket.
