Micro Compact Car AG (MCC), a wholly owned subsidiary of Daimler-Benz (formerly a joint venture of Daimler-Benz and Swatch), is the company behind Smart. Together these manufacturers have developed what they call a new mobility concept that relieves the heavy environmental pressure caused by present traffic while still ensuring continuous individual mobility.
MCC management could go back and look on numerous peaks: a completely new brand had been developed; a production site had been developed and constructed from scratch, pilot marketing of brand and product concept had raised high levels of customer awareness and interest in European markets; a dealer and marketing organization had been developed and was ready for product launch. Moreover, the supply-chain concept development went beyond existing practices in the automotive industry on a number of points: customers can contribute to the configuration of products; lead-times for cars are counted in weeks; suppliers have co-invested in the production location and have taken over shares of primary assembly beyond existing levels; the added value of
MCC during production is approximately only a remaining 10% of the production cost-price. Overlooking the development and installation of the supply chain, all of which had been done since the first feasibility study of Mercedes in 1993 and the foundation of MCC in 1994, the management team realized it was facing a new set of challenges. The supply chain are completely new in the market and go beyond such existing practices as supplier involvement, outsourcing and modular production in the industry. Modules such as complete frontor rear ends are pre-assembled on site and suppliers are involved in design and final assembly through co-ownership of the site, co-design and some major share in the manufacturing activities. Given the untraditional approach, MCC executives face some fundamental challenges including how to manage and control a supply chain in which MCC only adds some 15% of the operational value added. This question is not only relevant to MCC but to the Daimler- Benz Corporation as a whole, which has set Smart as a strategic learning project. Moreover, the concept being brought to practice by MCC is generally accepted by leading car-manufacturers as of key importance to future industry developments. Manufacturers and suppliers therefore monitor the successes and failures of MCC, as the results will mark the future organization of their companies and of the supply chain. Smart has now been an issue of concern as its sales performance has not met the company's expectations. Abandoning smart was also an option many considered ,yet some executives see it as an investment for the future unfolding potential for growth and profitability.
Smart cars made losses in the late 1990s and continued to do so in the early 2000s. In February 2005, Reuters reported that the Smart car had made a loss of...