10 Questions with the President of Smart USA

Read through any Smart car online forum and you're bound to come across a reply by Dave Schembri. Go to enough Smart owner events and chances are you'll meet Dave Schembri. Read up on the history of the Smart car's early development and you'll find Dave Schembri there too. Is Dave some type of Smart car super-fan? Yes, but that's not his official title. His official title is President of Smart USA, and like any Smart owner, he's more than willing to share with you stories and information on the brand, the car, and the culture around it. We recently had an opportunity to speak with Dave and here's what he had to say.

You know the Forfour was discontinued a couple years ago. There were two other variants of the Smart, one was a Forfour, and the other was the Roadster, which was a two-door sports coupe, very interesting car. Both of them were discontinued for different reasons. What makes the Smart a Smart is that it is so different from everything else on the road. When it became a four-seater four-door, it became very much like other vehicles in the segment. It was very difficult to differentiate the car. In the sports car category there were so many competitors -- again, it was hard to differentiate Smart from its competitors. Both of those cars were discontinued in favor of continued development on the Smart Fortwo. The car that came to the US is actually the second-generation Smart Fortwo.

If you look at the lineup in 2013, what you'll find is, in addition to the Brabus models we just introduced, there will also be an electric drive Smart that will go into full production in 2012. In fact, in the latter half of 2010 we'll have some Smart electric drive vehicles, about 300 of them, in limited markets throughout the United States, and then we'll go into full series production in 2012. Right at this minute there is not any development for a four-seater Smart.

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The program won't be activated until the date given by the Government, July 23rd, however on our website, www.smartusa.com, interested consumers can fill out a registration form and we'll get back to you and explain to you how the $99 payment program works, and how they can go about actually getting there name on one of the limited cars that we did reserve. There are probably around 1,500 of those cars available, and we can make more available depending on the demand. We don't know how long the program is going to go though, the CARS program that is, the announcement was it would end on November 1st, or until one billion dollars is used. If you take an average of about $4,000 on the voucher side, that's around 250,000 cars, and [the U.S. market] sells roughly one million cars a month, so you never no how long the program could last.

For us, what we said in our press release, is that if you apply the full value voucher of $4,500, which by the way the Smart Fortwo qualifies in every single case that a car is eligible for the program, then a customer can get their payments down to as low as $99 a month. That represents a car valued at $13,335, and that’s a Smart [Fortwo] Pure with air-conditioning and power windows, including destination, and there is a balloon payment at the end of three years for half that value, so $6,667.

What I would tell him is that it's probably exactly the opposite of where America is trending, and the rest of the world. In transportation choices, we're driving smaller, more fuel efficient, more environmentally responsible vehicles, and not just for reasons of fuel efficiency and environmental friendliness, but also in terms of urban congestion. We need to start getting smaller in our choices of vehicles. If you look around on any given day, you'll see 80-90% of people are commuting all alone. When you see somebody, especially when you start to drive a Smart Fortwo, and you look next to you and there is a nine passenger SUV with one person in it, you start to think if you were able to compare it to something else, maybe food, you wouldn't go into a restaurant alone and order dinner for nine! You start to think about that in terms of where we're going with our cars, and certainly I think most would agree we're getting smaller, not bigger for all the reasons I've mentioned.

There's a story that will stay with me forever. It was at our Smart Center Dallas, and the owner [of the vehicle] was a retired army colonel named Roger Thompson; very inspirational gentleman. He had seen the Smart Fortwo in Europe, he had been stricken with pancreatic cancer, and he had been worried, because we had a very long wait initially for the car, that he wouldn't live long enough to take delivery of his car. Well our dealership in Dallas heard about this story and was able to expedite getting him a car. It wasn't exactly what he wanted, but we found a vehicle available for him.

I went down to personally meet with him and he had become a local celebrity. His wife had told me he hadn't even driven in two years, and when he got his Smart Fortwo, his goal in life was to be seen by as many people as possible driving around in his Smart. The local affiliate, one of the major stations in Dallas, interviewed him, and they went driving around with him. Well the reporter started asking him questions about whether people would accept a car this small in the United States, and he was answering all the questions very well, better than I could have answered them. And then the reporter asked him one question, and his answer was just spectacular. The reporter asked him whether the one-liter engine had enough power to compete on the highways in Texas, and he answered "yes" and the reporter kept asking about acceleration times, and questions regarding acceleration, so he finally stopped the car, looked at the reporter, and answered, "This car is all about exhilaration, not acceleration." That's probably the story that stays with me still today, and probably will forever.

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It's interesting, when we were developing the philosophy of Smart USA and the retail concept, we actually didn't use any existing dealership platform as an example of how we wanted customers to feel when they shopped for a Smart. We took a look at three other business. Two are branded and one isn't.

We looked at Starbucks, and thought that was a wonderful example of how you could be in Berlin, Germany or Berlin, Ohio and basically have the same exact experience because of the quality of the product, the way you were treated, and the environment, that that experience not only would for the most part be the same, but you'd feel good. You'd feel good whether you wait in line 20 minutes and pay five, six, or seven dollars for coffee, or you're just there to go online on your computer and enjoy the environment. You feel welcomed either way.

Apple computer stores were another example we looked at. When you walk into an apple computer store, you're not necessarily always walking in there to shop for something specific, you're in there because you're curious about the different things that Apple may have to offer, and you know that one of the specialists that work there will calmly and politely explain to you how whatever you are looking at works, or how it may or may not fit into your life. This is exactly what we wanted to create here at Smart. People were going to be curious about this car, and we wanted them to feel welcomed coming into a dealership knowing that we're not going to shoehorn them into a car, that instead we're going to demonstrate how unique this car is for them, and how that car could or may fit into their lifestyle.

We also knew that customer advocacy was going to be a big part of how were going to market this car in the future. We took a look at family restaurants. If you go to whatever your favorite family restaurant is in Orange County, and you walk in, and they say, "Elliot welcome back, we have your table all set for you, and by the way, don't even look at the menu, or chef prepared something special just for you!", when all your relatives come out from Detroit down to Orange County, where are you going to tell them to eat? You're not going to tell them to go to Maestros in Laguna; you're going to tell them to go to Frankie's in Orange. That’s a wonderful place to be, to be able to have customers be the proponent for your business, and family restaurants were a terrific example. So hopefully when people walk in the Smart center today, they get some of the feeling of all three of those kinds of businesses that I described.

I'll tell you, the White House. One of our very early customers was a lady name Anita McBride. Anita was Laura Bush's chief of staff. Very early on she had put a reservation in, and she was one of the very first customers to take delivery of her Smart Fortwo, and she drove her yellow Smart to the White House every day. I was actually able to see it there, and it was very exciting to see the car in the White House. That was the most unique place to see the Smart Fortwo.

There are now actually 41 countries selling Smart, the United States was 37th, and since we went into business in January of 2006, these countries were added: China, Brazil, Denmark, Slavia.

There's never been a car in the United States that's been offered at the size the Smart Fortwo is -- it's 8.8 feet long -- so we knew this would be a car that needed to be seen, sat in, and driven for people to really understand it. We embarked on what we called a "discovery tour", and we took this car to 50 cities, this is pre-launch, and we stayed in each city seven days and allowed people to have this experience. When people take the time to go through this car, I have to tell you, there is a wow factor that even the most fervent detractors seem to be turned around in once they sit inside the car and they drive the car. So, you know, this is where society is headed: smaller, more fuel efficient, environmentally friendly cars. We think we are on the leading edge of that trend, and I would tell anyone that's a naysayer, go to your local Smart center and give it a look. Give it a chance, because you'll find that not only will it give you a different impression, but you'll find this car is just a heck of a lot of fun and will fit very well into your lifestyle.

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I would tell you very early on when we started to market this car, people wanted us to explain what it felt like to drive a Smart. We had an answer that was really true, and the answer was, if you want to feel like a rock star, drive this car. It is so unique, that wherever you go people are noticing you, talking to you, asking you questions about the car, and making you feel very special. Almost every light that you pull up to, someone is giving you a thumbs up, taking a picture of the car, doing something to re-enforce the fact that you made a great purchase, and that's a good feeling. Somehow in our society it became acceptable to ask people how much did you pay for a car, and it's usually met with a scowl or you could have got a better deal if you did this, but with the Smart you're always met with a, "Wow, that's great. Where can I get one?" In fact, it got to such a point that our owners asked us to send them cards that would answer the most frequently asked questions so that they could have more time on their own, because they were adding 10 to 15 minutes on every trip they took in order to answer everybody's questions. We sent out cards to people that listed the 10 or so most frequently asked questions, and we're also getting requests to refill that.

We're thrilled to have any competitors come into our segment. We welcome them. To us it's a validation that we read the tea leaves right, and that this is a viable segment that is growing. Whatever configuration somebody enters this segment, I think it adds more interest to the brand, and we're very excited about it. So, Aston Martin is welcomed, the [Toyota] IQ, the FIAT 500, come one, come all.

My proudest moment is the fact that it's not an individual proud moment, its pride in the fact that I think we have one of the most skilled teams in the industry. My proudest moment is being a part of the Smart USA team, and being a part of the Penske organization. It gives me a lot of pride to work with such skilled and talented people that we have here at Smart USA. We have a very small team, only 32 people, and we're agile, the people we work with are multi-talented, and I have to tell you it's just a lot of fun to come to work every day and have the opportunity to work with such terrific people, and also terrific dealers. We hand picked all 78 of our dealers, we think they're the best dealers in the United States, and its just a great experience to come to work every day.

The milestone is to be rated in number one in all categories of customer satisfaction.