Daimler AG is a German company and the eighth biggest carmaker. Daimler manufactures superior passenger cars, sport-utility vehicles, sports tourers, minivans and pickups, and commercial vehicles and it is the result of the division of former Daimler-Chrysler alliance. Thus, after Daimler sold Chrysler to Cerberus Capital Management of New York (a private equity firm thatspecializes in restructuring troubled companies) they kept the production of cars and trucks under the brands of: Mercedes-Benz, Smart, Maybach, and Mitsubishi-Fuso among others.
Daimler intends to achieve sustainable profitable growth in all of its divisions and increase the value of the Group. They aim to have a leading market position in each relevant segment and become one of the world’s leadingautomotive manufacturers. In order to achieve these targets they define a strategic framework following 4 strategic areas with a solid basis:
1. - Operational excellence and a high performance culture: develop, produce and sell superior products using processes with above-average efficiency.
2. - Expansion of core business in traditional market segments and utilization of new opportunitieson a regional basis: Superior products and customer services are crucial to continue growing in traditional core segments.
3. - Further development of innovative and customer-oriented services and technologies: Work intensively on the development of innovative, customer-oriented technologies along the entire automotive value chain.
4. - Development and innovation of new businesses in relatedareas: Make targeted use of the results of the work done by research and development departments, customer base and strong brands to utilize new Business potential in related areas.
About Smart and US market
Since the mid 1990s, in many European cities, free parking was hard to find, official parking was expensive, and illegally parked cars were fined. In such a scenario, Smart car wasintroduced to meet people’s desperate need for a very short car. The original idea behind Smart was that the vehicle could be parked back-in in parallel parking zones and was initiated by the Swiss watch manufacturer ‘Swatch’ so that they nicknamed the ‘Swatchmobile’.
Following their strategies of developing innovative and costumer-oriented technologies in March 1994 Swatch group and Daimlerannounced that they would create a joint venture for the purpose. With this new model Daimler intended to reach new target costumers as young people who are interested in useful, easy-handle, and efficient cars with a very good-looking urban style. They did so with a new car brand so that they didn’t want to harm the good image of the company as a company of a luxury, reliable and fancy cars.Thus, they had invested in a top quality car with very innovative features and they released the car in 1998 in Europe. However, the reception by customers it was not as good as they thought, in part because of its high price. Despite this, as a result of the overwhelming response at the presentation of the new model of Smart in North-America, they consider the potential of this market (the largestautomotive market in the world) appealing to its strategy of Global Presence & Network. Therefore, on June 31st, 2006, they announce that they will launch Smart in three models in the U.S. in 2008.
There may be two factors in order to support this decision. First, as the fuel price is increasing since early 2004 it may be thought that consumers will prefer small cars since they consumeless fuel. The second factor is the growing environmental concern among people in US that may lead people to buy Smarts due to the fact that the car a claims to be environmental-friendly, fuel efficient and emits less CO2 than other small cars. Besides this change in the mind of American people, there is also a rising trend in demand for small cars.
At first glance, this launching may seem...