UPDATED: 2/13/17 8:59 pm ET – new story
Daimler AG will stop selling gasoline-powered Smart cars in the U.S. and Canada later this year, converting the microcar brand to an electric vehicle-only endeavor.
The move reflects falling sales for the two-seat Smart ForTwo as low gasoline prices have fueled demand for SUVs and crossovers. Officials from Mercedes-Benz USA, which oversees Smart’s sales, told U.S. dealers about the decision in a call and with a letter late this afternoon.
“Developments within the micro-car segment present some challenges for the current Smart product portfolio,” Dietmar Exler, CEO of Mercedes-Benz USA, told dealers in the letter, which was obtained by Automotive News. “Therefore, with the launch of the fourth-generation Smart ForTwo electric drive this summer, the Smart lineup will consist exclusively of the zero-emissions Smart electric-drive coupe and cabrio in the U.S. and Canada.”
The change is only applicable for the U.S. and Canadian markets, Exler’s letter said.
The gasoline-powered Smart ForTwo coupe and convertible will be discontinued after the 2017 model year. The current plan is to stop production for North America in April with sales continuing until all units are sold, Mercedes-Benz spokesman Rob Moran said. A redesigned version of the gasoline-powered coupe went on sale in late 2015, with the redesigned convertible following in 2016.
Smart sales have fallen steadily since reaching 10,453 vehicles in 2014. The brand sold 6,211 vehicles in the U.S. in 2016.
Though the 2017 model coupe went on sale in early December, Smart still has 2016 models in dealer inventory. It is running a special promotion leasing 2016 coupes for $89 a month.
Moran didn’t provide annual volume expected for the electric-drive models. At their high point, electric vehicles accounted for 30 percent of the brand’s annual sales, Moran said.
Smart has 85 dealers in the U.S. It’s unclear whether that number will go down with the transition to electric only, Moran said.