Published on July 6th, 2020 | by Subhash Nair0
Daimler to Move Smart Car Production from France to China
The Smart brand was envisioned as far back as the 1980s, but the project only gained real momentum when Daimler-Benz AG decided to sign on as a 51% partner with the makers of Swatch under the Micro Compact Car company. Speed bumps on the road to a product launch meant Daimler-Benz had to increase its stake in Smart to over 80%. Soon a factory was opened in France and the brand started selling in many markets around the world.
It’s unclear if Smart ever turned a profit for Daimler, but it’s likely the blame lands solely on Daimler for their handling of the brand. After all, BMW Group has found a way of turning a profit on the MINI brand despite inheriting a tonne of baggage.
The signs have been bad for Smart as of late. Last year Smart left the North American markets of the United States and Canada. Back in 2015, they left the Australian market too. Daimler offloaded half the ownership to Geely back when they wanted a slice of the Mercedes-Benz pie.
That deal has yet to produce any concrete results. But as Smart starts to reinvigorate itself as a mostly-electric car brand, Daimler wants to sell off the Smart plant in France and concentrate on moving production to China.
The factory is Hambach, France and it produces electric and combustion-powered vehicles under the Smart brand. Back in 2017, it made just 80,000 Smart cars.
The plant currently employs 1600 people and would have been where a potential Mercedes-Benz EQA would have been produced, had Daimler’s initial plans come through.
Here’s the press release with more.
Mercedes-Benz AG is on the road to the CO₂-neutral mobility of the future and will heavily invest in the transformation of the company in the coming years. The company is focusing on the electrification of its product range, as well as the digitalization of vehicles and company processes. At the same time, the company has taken numerous measures to sustainably improve its cost structure and become significantly more efficient. An important lever for this is the adjustment and realignment of capacity within its global production network. Against this backdrop, the company intends to start talks on the sale of its car assembly plant in Hambach, France.
Ola Källenius, Chairman of the Board of Management of Daimler AG and Mercedes-Benz AG: “We continue to drive the transformation of our company and our products forward with all due speed. In light of future high investments, especially in electrification and digitalization, we are consistently implementing measures to increase efficiency. This affects all areas of the company worldwide. In addition, the effects of the COVID 19 pandemic on the economy are creating new framework conditions in the market and in this context we are optimizing our global production network. That is why we intend to start talks on the sale of the Hambach plant.”
Associated valuation effects of fixed assets will lead to a negative one-off effect from restructuring measures in the middle three-digit million amount in the second quarter at Mercedes-Benz AG. Furthermore, the company does not expect the devaluation to have any impact on the Free Cash Flow of its industrial business. Additional burdens may arise in the course of negotiations.
Markus Schäfer, Member of the Board of Management of Daimler AG and Mercedes-Benz AG; responsible for Daimler Group Research and Mercedes-Benz Cars COO: “The transformation to the CO₂-neutral mobility of the future also requires changes in our global production network. In this phase of economic challenge, we are balancing demand and capacity and we are now adjusting our production network. These changes also affect the Hambach plant. An important goal for us is to secure the future of the location. Another condition: The current smart models will continue to be produced in Hambach.”
The next generation of smart electric vehicles will be produced by the joint venture smart Automobile Co., Ltd. in China. This is a joint venture of Mercedes-Benz AG and the Zhejiang Geely Group (Geely Holding).
About the Hambach plant
The Hambach plant launched operations on October 27, 1997. The plant has been producing the fourth generation of smart electric vehicles with the smart EQ fortwo and the smart EQ fortwo Cabrio since 2019 (consumption (combined): 16.5 – 14.0 kWh/100 km, CO₂ emissions (combined): 0 g/km). To date, more than 2.2 million smart fortwo have rolled off the assembly line in Hambach. Currently around 1,600 employees are working on the Hambach site.