Although Smart reinvented itself around the booming SUV segment, sales have yet to meet expectations. With the recently appointed Wolfgang Ufer at the helm as its new CEO, the brand is bringing a Mercedes veteran to the role just as its most iconic model, the #2, is ready for a rematch. “It’s the best two-seater we could ever build,” says Ufer.

The ‘new’ Smart is on the brink of its most important launch since it was partly sold to the Chinese Geely group in 2019. At the Motor Show in Paris, the production version of the #2 will be launched, marking the return of the microcar with macro safety that single-handedly built the brand on its tiny wheel arches more than 25 years ago.

Despite brand building in China and tariff-related challenges, Ufer reveals that the price tag will be cut to under 22,500 euros. With that positioning, the brand wants to reconquer the bustling city centers of Europe. However, competition and customers’ minds have changed drastically since the original Lilliputian two-door disrupted the mobility field.

Mr. Ufer, you have reached your first 100 days as CEO of Smart Europe. You were previously the head of the German market, so you know the brand well. What have you identified in these first three months as the biggest challenge for the region?

For me personally, it is a continuation, but the identified priority is sales performance. We need to grow bigger and more relevant. We have fantastic products – the #1, the #3, and now even the #5 – and we need to realize their potential across Europe. In these 100 days, we have already achieved a higher sales volume than last year. My focus now is ensuring the launch of the two-seater (#2) is a success, as that is our DNA car.

Looking at the data, the performance is very uneven. Germany is growing, but Belgium has only sold 250 cars this year. In a market where 30% of sales are already electric, that seems weak. What is the explanation?

Belgium is definitely a relevant electric-car market, but it is heavily driven by B2B and company fleet sales. In our first chapter, we did not focus on that channel. I want to change that. I was even talking to Belgian investors about this recently. Our cars, especially the #5, are perfect for ‘user chooser’ corporate buyers. We want healthy fleet channels, and that is what was missing in Belgium.

Smart used to own its segment. Now you have entered the SUV market with the #1, #3, and #5. How do you differentiate in a crowded SUV space?

We want to be a compact-segment OEM with multiple products, not a one-car company. Our playfield is the range between the #2 and the #5. The #5 is our ‘dimension limit’; it is where a car stops being a Smart. We differentiate through high-tech and Mercedes-Benz design. We have already transformed our company structure; others are still struggling with it. Now we just have to grow.

How many owners of the original Fortwo are actually buying these new SUVs?

A classic Fortwo customer is normally not automatically changing into a #1. I would guess about 20% to 30% are existing customers. The majority are conquest sales: new customers from other brands who like the design and technology.

Smart is running 100% direct sales in Europe. Most other legacy brands are struggling with that model. Why is it working for you?

I compare it to a concert. The dealer model is like handing out the sheet music and hoping the orchestra plays. With direct sales, you have to be the conductor. If you don’t play, the music doesn’t happen. Newcomers often stop doing direct sales because they aren’t in a position to be the conductor. We are satisfied with it, though you can always improve the sales channels.

Let’s talk about the new #2. Is this a ‘retro’ play, similar to what Renault is doing with the Twingo?

Interesting question. It would be a mistake not to understand the DNA of the #2. It must be super compact, agile enough to turn on a spot, and very safe. But we don’t want to stick to history. It has to be modern, while the car needs to show familiarity with the #1, #3, and #5. It’s the best two-seater we’ve ever built because, for the first time in 20 years, we have our own purpose-built electric platform rather than a combustion-engine compromise.

The #2 arrives just as the EU is finalizing its city-car rules, and M1E while tariffs on Chinese-made EVs are at an all-time high. The timing could be better, no?

Regulations like tariffs hit us very hard. Still, we are here. If you always wait for governments, you will never finish a product. From a company perspective, you have to do what you believe in and deal with the rest when it’s on the table. We called this ‘project: two.’ We checked the business case four or five times, and every previous time, Smart said, “No, it’s not mature enough.” Last year at the IAA in Munich, the conditions were finally right to proceed.

Do you absorb the EU tariffs, or pass them to the customer?

They are absolutely part of the calculation. They need to be. At the end of the day, the customer wants a price for the car, and they either buy it or they don’t. Dealing with the tariff is the burden I have to tackle as a European. In a way, these tariffs are the best ‘fitness program’ you can do for an OEM.

To avoid the geopolitical issues, your predecessor, Dirk Adelmann, mentioned two years ago that European production for the #2 was on the table. Is that still the case?

We start with global production coming from China. Europe is the key zone for this car. If we succeed and build volume, we will definitely discuss European production. But it would be a mistake to start a production line now and become inflexible.

You’ve said the #2 has a positive business case, which is historic for this brand, as it has continuously lost money since it arrived. What volume do you need to be profitable?

We are a fully electric brand; it is not an easy environment. We cannot enter price wars. Our goal is to achieve the volumes we had in the past – the old combustion engine model volumes – and more. We don’t have a high hurdle to make money because we are a small, dynamic, and efficient company.

But a bespoke platform is much more expensive than a shared one. Where does that efficiency come from?

It comes from outstanding R&D. The platform is very special and very intelligently developed. We are looking at three big regions: China, Europe, and 41 markets ‘overseas’ worldwide. That scale allows us to make money.

You mentioned variants for #2. Does that mean a convertible?

I’ll return that question: would you do one?

I think so, yes.

Well then.

And what about the Roadster?

As for the Roadster, I’ll never forget driving one through the Alps when I was a young guy at Mercedes. It was super cool. But a Roadster is a volume discussion. We are still creative and can talk about it, but we probably have another idea before that.

Smart is a joint venture between Mercedes and Geely. How is the brand perceived in China today?

China used to be a top-three market for us, doing 25,000 cars a year. They are very emotional about the two-seater, you know. I wouldn’t say they have the ‘brand reading’ problem that other Western brands face there, but China is the most difficult auto market right now. The era where they specifically wanted a ‘shipped-in’ Western car is changing because their domestic technology is so strong. It is a huge challenge in terms of speed and costs.

If we speak again in one year, what number should I look at to see if your strategy is working?

You could write that Smart had a successful launch for the #2 and that we are growing as a brand. If this doesn’t work, I wouldn’t understand the European market. We will see each other in Paris.