STRONG TURNOVER INCREASE IN AN EXTREMELY COMPETITIVE MARKET ENVIRONMENT

  • Turnover increase to 1.35 billion euros
  • Slight sales increase
  • More than 20,000 smart roadsters and roadster-coupés delivered to customers in just eight months – second in the competitive segment in Germany
  • Product, market and efficiency drive to be continued in 2004
  • Plans for a fourth model range from the smart brand

smart, the manufacturer of premium small cars, notched up a considerable turnover increase of around 20 percent in 2003. Following a turnover of 1.1 billion euros last year, a turnover of 1.35 billion euros was made in the current business year which is nearing its end. A similarly positive trend can be seen in the company’s earning power: Following the record year 2002, in 2003 the brand\'s sales rose by a further percentage point to 123,500 cars (previous year: 122,300).

Great success for the smart roadster and roadster-coupé

The company\'s second series, the smart roadster and roadster-coupé which were launched in April, made a major contribution to the positive development of sales and turnover. In just eight months 20,200 cars of this series were sold worldwide, greatly exceeding the original target of at least 8,000 vehicles. The outstanding success of the smart roadster and roadster-coupé can also be seen in the market shares of this young product in smart\'s core European markets. At the end of the year the roadster and roadster-coupé had already taken second place in their competitive segment inGermany,FranceandSwitzerland, and they rank third in ItalyandSpain.

To continue this success next year, in March 2004 smart will present a further variant of the roadster and roadster-coupé:The exclusive, sporty BRABUS design and equipment line with a 74 kW (101 bhp) engine. This corresponds to a power increase of 20 percent as against the 60 kW (82 bhp) standard roadster.The new model can be ordered now.

A new name: smart fortwo coupé and fortwo cabrio increase market share

From January 2004 the smart city-coupé and cabrio will have new names.In line with the name given to the four-seater smart forfour, in future the two two-seater models will be called smart fortwo coupé and fortwo cabrio.

2003 was a double anniversary for this smart series. In June the 500,000th city-coupé was handed over to a customer at the smartville plant in Hambach,France.October marked five years since the launch of the first smart model series; five years in which a completely new product was established on the market and the leap was made from a single-product to a multi-product manufacturer.

Despite a difficult economic climate which has made itself felt throughout Europe, especially in the small car segment, but also in the market for second and third cars, the smart fortwo coupé and fortwo cabrio have been able to assert themselves on the market with annual sales of 103,000 vehicles. Both models have been able to win market shares.

In Germany the smart fortwo coupé and fortwo cabrio have improved their top position in the segment and have increased their share of the market to 18.2 percent (as at November 2003, previous year:17.9 percent). InSwitzerland, too, both models undisputedly come first in their segment, and they continue to take second place in Italy. The fortwo coupé and fortwo cabrio were also able to improve their ranking in Spain– from fourth place to first place, and in Great Britain, where they leapt to second place in the segment.

Product drive continues – fourth series in planning

For smart, 2003 was characterised by a product, market and efficiency drive.At the beginning of the year smart presented the completely reengineered 2nd generation city-coupé and cabrio which, among other features, come equipped with the electronic stability programme esp and new, even more powerful engines – offering a range of standard equipment that is unique in this segment.

The smart roadster and roadster-coupé followed in April.The smart forfour, the third models series of the smart brand and the company\'s first four-seater, received an enthusiastic response when it was unveiled to the public for the first time at the Frankfurt International Motor Show (IAA). The smart forfour can be ordered from 08 January 2004 and will be available to customers at smart centres inEuropefrom April 2004.  Right hand drive versions go on sale in autumn 2004.

"We will keep up this pace in 2004, too", says Andreas Renschler, smart President. "The smart forfour offers a combination of emotional appeal and high functionality which is unique in this segment, making it an attractive vehicle for customers looking for a small car. The smart forfour is also the basis for our fourth model series:A smart Sports Utility Vehicle, which we will offer for sale in the USAand our core European markets from 2006", Andreas Renschler adds.

Positive response to the smart forfour

The activities carried out so far in preparation for the market launch and the reaction to the smart forfour in this connection confirm that the first four-seater from smart has good prospects in the competitive small car segment.For example the new product most recently met with great approval during the forfour "together on tour", roadshow which took place within the framework of Robbie Williams\' European tour."We are very pleased about the extremely positive reaction to our new car. So far, more than 100,000 potential customers have expressed serious interest in the forfour – a promising response which shows that many drivers are looking for a "classless" car in the small car segment that they can be proud of", says Philipp Schiemer, Vice President Marketing & Sales at smart.

Worldwide market presence further extended

Within the framework of its market drive, in 2003 smart increased the number of markets worldwide from 24 to 31 and the Points of Sale rose from just under 600 to more than 700. The most important new markets were AustraliaandMexico.Market entry in Mexicomarks the company\'s first step on the American continent and the economically significant NAFTA region.smart is gathering additional experience in this market which will be applied to the preparations for the planned entry to theUSmarket in 2006.

In 2003 the most important markets for smart continued to beGermanywith 43,600 vehicles delivered, Italy(32,000),Great Britain (12,900) and France(9,700).Whilst Germany and Italy kept the high sales level of the previous year, Great Britain and France saw a clear growth in sales with plus 34 and plus 14 percent respectively.

Efficiency drive forms the basis for reaching break-even

In 2003 the company resolutely continued its path towards improved efficiency.The first year at the new company headquarters in B̦blingen has further streamlined internal processes and speeded up decision-making."In the year that is drawing to a close our turnaround plan has resulted in further, important progress", says Andreas Renschler."We have succeeded in reducing our total overheads by 35 percent and our production costs by more than 15 percent as against 1999.In our Hambach plant productivity has increased from 117 to more than 140 cars per employee Рdespite the rising complexity of parts", the smart CEO adds.

The greater cost efficiency is above all due to optimised processes and work flows and the use of synergies within the Mercedes Car Group and the DaimlerChrysler group. The company is right on track for the target of reaching break-even in 2004. Already in 2003 every smart model sold achieved a positive contribution margin.

smart as a premium brand within the Mercedes Car Group

Since the beginning of the year, smart has been a member of the Mercedes Car Group comprising the premium brands Mercedes-Benz, Maybach and smart. As the manufacturer of small cars within this group smart represents an entry point to the product world of the Mercedes Car Group. Being part of this group has advantages – which also benefit the equipment of the new smart forfour.The smart forfour offers customers high-end technology components, andthe affiliation with the Mercedes Car Group is particularly apparent in the range of audio, navigation and telecommunication technology and the numerous comfort and safety functions.

Top priority in 2004: Successful launch of the smart forfour

Next year smart will be focusing on the successful launch of the smart forfour.With its first four-seater, smart is entering a new, competitive market segment.In terms of sales – as with the roadster and roadster-coupé - profitability of the series is decisive for smart.  Profitability will  be achieved with sales of around 80,000 cars in a full sales year.

"In addition to the launch of the smart forfour, in 2004 we will continue our market and efficiency drives and generate further, profitable growth", says smart President Andreas Renschler."Our aim is for smart products to be available in almost 40 markets by the end of 2004, to continue the success of the past few years and to see smart "grow up" a little more in terms of the products available to customers, but also as regards our processes and work flows", he adds.

Your contact:

Markus Mainka

Tel.:          ++49 (0) 70 31 / 90 – 6 02 09

Fax:          ++49 (0) 70 31 / 90 – 7 47 01

At http://media.smart.com you can download and use the following visual material:

-        Pictures of the new smart roadster BRABUS

-        Pictures of the whole smart model range

-        A picture of the smart tower in Böblingen

-        Further pictures of the companyheadquarters in Böblingen

-        General pictures of smart and smart products