The History of Smart

Brand

From Microcar Vision to Global Icon

Origins and Founders

Smart, officially stylized as “smart,” is a German automotive brand best known for producing ultra-compact, fuel-efficient city cars. The company’s roots trace back to the early 1990s, with its conception driven by Nicholas Hayek, the Swiss entrepreneur behind Swatch, the world-renowned watch company. Hayek’s background was in precision engineering and consumer product innovation. After revolutionizing the watch industry with colorful, affordable, and stylish Swatch timepieces, Hayek turned his attention to automobiles. His vision was to create a “Swatch car” — a small, stylish, customizable vehicle, built with the same principles of design, efficiency, and affordability that made Swatch watches a success.

Hayek believed the future of urban mobility lay in microcars that could navigate crowded city streets, park in tight spaces, and consume minimal fuel. In 1989, he began discussions with major car manufacturers to turn his concept into reality. Mercedes-Benz (then Daimler-Benz AG) showed the most interest. By 1993, Hayek’s company SMH (Société Suisse de Microélectronique et d’Horlogerie) entered a joint venture with Daimler-Benz, forming Micro Compact Car AG. This new entity would later become Smart GmbH.

Early Development and Launch

The first prototype appeared in 1994, and after several years of refinement, the production model debuted in 1998. The brand name “Smart” was derived from “Swatch Mercedes ART.” The first Smart car, the Smart City Coupe (later renamed Smart Fortwo), was unveiled in October 1998 in Europe.

From the outset, Smart vehicles stood apart from traditional cars. Measuring just over 8 feet long, the Fortwo was designed for two passengers, featuring a rear-engine layout, high safety standards including a tridion safety cell, and interchangeable body panels for easy customization.

Years in Operation

Smart officially began selling cars in 1998 in Europe. The brand entered the U.S. market a decade later, in January 2008, under the distribution of Penske Automotive Group. It operated in the U.S. as a full retail brand until 2019, when it ceased gas-powered vehicle sales in North America, transitioning exclusively to electric models overseas. Globally, Smart continues to operate today as of 2024, but under different ownership.

Ownership Changes and Mergers

Micro Compact Car AG became wholly owned by Daimler-Benz in 1998 after Nicholas Hayek exited the project due to disagreements over design and engineering costs. Daimler-Benz merged with Chrysler Corporation in 1998, becoming DaimlerChrysler AG, and Smart was integrated as a subsidiary.

In 2019, Daimler AG (formerly DaimlerChrysler) entered a 50/50 joint venture with Chinese automaker Geely Holding Group to transform Smart into a fully electric brand. Geely, which also owns Volvo and Lotus, took over engineering and production responsibilities, with Smart’s headquarters remaining in Germany. This marked a major shift in Smart’s identity and market strategy.

Hardships and Struggles

Smart’s journey was far from smooth:

  1. Early Financial Losses (1998–2006) – Despite strong brand recognition in Europe, Smart struggled to achieve profitability. Production costs were high, and the microcar market was niche. In 2006 alone, Smart reportedly lost over $1 billion, prompting Daimler to cancel several planned models, including a Smart SUV and a Smart Roadster redesign.
  2. U.S. Market Challenges (2008–2019) – Initial reception in the U.S. was enthusiastic, particularly during the 2008 oil crisis when gas prices spiked above $4 per gallon. However, sales declined sharply as gas prices fell and consumer preferences shifted toward larger vehicles. Poor highway performance and limited cargo space were frequent criticisms. Smart attempted to boost sales with special editions and marketing campaigns, but by 2015, U.S. annual sales had dropped to under 10,000 units.
  3. Electric Transition Costs (2017–2019) – Smart announced it would become an all-electric brand by 2020, requiring significant investment in battery technology and manufacturing. This transition led to the discontinuation of the gasoline-powered Fortwo in the U.S. after the 2019 model year.

Notable Accomplishments

Despite its struggles, Smart achieved several milestones:

  • Pioneering Urban Mobility – Smart popularized the concept of ultra-compact cars worldwide, influencing later designs from other manufacturers.
  • Safety Innovations – The tridion safety cell, a reinforced steel shell, gave Smart cars crash protection levels comparable to larger vehicles.
  • Environmental Leadership – Smart was among the first global brands to commit entirely to electric vehicles, achieving a full EV lineup in Europe by 2020.
  • Marketing Creativity – Smart’s “Reduce to the Max” slogan and quirky urban advertising campaigns became iconic, often featuring cars parked in impossible spaces to highlight their compactness.

What Makes Smart Different

Smart’s defining difference lies in its extreme compactness combined with safety and style. Unlike other microcars, Smart vehicles were engineered by Mercedes-Benz, giving them a level of quality and safety unusual in their segment. Their modular body panel system allowed customers to change the exterior color without buying a new car — an approach borrowed from Swatch’s watch design philosophy.

Special Marketing Campaigns

In the U.S., one of Smart’s most memorable campaigns was its 2008 launch effort, which involved placing Smart cars in transparent display cases in major cities, including New York and San Francisco. Another campaign, “Big Ideas, Small Packages,” emphasized fuel savings and eco-friendliness, targeting urban millennials and environmentally conscious buyers.

Factory Operations

Smart vehicles were originally produced at the Smartville factory in Hambach, France, a purpose-built plant opened in 1997. The facility was designed for efficiency, with suppliers operating on-site for just-in-time assembly. The plant’s layout allowed for minimal transport between production stages, reducing costs and environmental impact. After the Geely joint venture, production shifted to China for new EV models, though Hambach continued producing some vehicles under other Daimler brands.

U.S. Consumer Reception

Smart’s U.S. reception was mixed. The Fortwo appealed to city dwellers, eco-conscious buyers, and those seeking a unique vehicle. However, mainstream consumers often criticized its limited seating, modest acceleration, and susceptibility to crosswinds at highway speeds. By 2012, sales had peaked at 10,453 units in the U.S., but fell to just 1,276 units in 2018.

First and Latest Models

  • First Model – Smart City Coupe (Fortwo) in 1998; U.S. introduction in 2008.
  • Latest Model – As of 2024, the Smart #1, a compact electric crossover developed with Geely, launched globally in 2022. It has not been sold in the U.S. as of yet.

Sales Figures

  • U.S. Peak Sales – 24,622 units in 2008.
  • Global Sales Peak – Over 130,000 units in 2012.
  • Latest Global Sales – Around 50,000 units in 2023, all electric.

Most Popular Model

The Smart Fortwo remains the brand’s most popular model, due to its iconic size and unique styling.

  • U.S. Peak Sales for Fortwo – 24,622 units in 2008.
  • Global Peak Sales for Fortwo – Approximately 105,000 units in 2012.

Current Status and Outlook

As of 2024, Smart operates as a joint brand between Mercedes-Benz and Geely, producing electric vehicles for Europe and China. The brand has shifted away from microcars toward compact electric crossovers, aiming to broaden its appeal while maintaining its urban mobility focus. In the U.S., Smart has no active sales presence, and a return is uncertain due to market preferences for larger electric vehicles.

While Smart is not defunct globally, its transformation under Geely marks a new chapter. The company’s outlook depends heavily on the growth of electric vehicle infrastructure and shifting consumer attitudes toward smaller, more efficient cars.


From an American perspective, Smart’s story is a tale of bold innovation, niche appeal, and the challenge of translating European urban mobility concepts to the sprawling roads of the United States. The brand remains an influential player in automotive history, proving that sometimes the smallest ideas can make the biggest impact.

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