The project, started by Swiss watch manufacturer Swatch, was nicknamed the "Swatchmobile". The name Smart is an acronym for Swatch Mercedes ART. Intended to use innovative features (such as a hybrid engine) and be affordable for young people, the Smart had similar design objective to the Citroën 2CV of the 1940s.
Swatch CEO Nicolas Hayek sought an established car maker to produce his Swatch car. After General Motors reviewed and rejected the project as potentially unprofitable, Hayek found a partner in Volkswagen. Due to VW's own financial weakness at the time, plans never reached a final stage so Swatch teamed up with Daimler-Benz. The purpose-built factory complex Smartville in Hambach, France, was established in 1994 as a joint-venture of Daimler-Benz and Swatch.
An Australian dealer web site provides the following summary of the beginnings of the product:
"How everything began: In 1993 Mercedes-Benz started a feasibility study on a subcompact car. Together with the Swatch Group Ltd. they founded the Micro Compact Car AG in 1994. The Smart city-coupé celebrates its world première at the IAA in Frankfurt (Germany) in 1997 and is one year successfully launched in nine European countries. By now, the Smart is available in 25 countries all over the world and was sold over 750,000 times.
The final car design proved to be far from Hayek's expectations: its engine eco-technology was outside of Mercedes' goal. The joint venture experienced heavy losses and dispute then Swatch pulled out.
In 2005, DaimlerChrysler decided against purchasing a 50% share in the Dutch NedCar plant used to manufacture the Forfour supermini. DC also halted development on the Formore and decided to discontinue production of the Roadster.
In 2006, after dwindling sales, Smart GmbH was liquidated and its operations were absorbed within the Mercedes-Benz automobile group. It was later revealed that Smart GmbH lost nearly 4 billion euros from 2003 to 2006.
Daimler AG and RWE AG have launched the world's largest joint project for environmentally friendly electric cars. Daimler will provide more than 100 electric cars from Mercedes-Benz and smart as well as the vehicle service.The new generation of smart ed (electric drive) and electric-battery driven vehicles from Mercedes-Benz will come in use within the "e-mobility Berlin" project. RWE is handling the development, installation and operation of the charging infrastructure". The new project is also benefiting from the experience gained by Daimler during the current pilot project involving electro-mobility in London. Since last year, there has been a test fleet of first-generation Smart Fortwo ed cars . The start of serial production of battery-powered vehicles by Mercedes-Benz and smart is in 2010 .
Older Smart cars equipped with engine sizes smaller than 660cc fit into the Kei car category of cars in Japan, and are eligible for a range of lower taxes. However, recent models with a larger engine do not meet the Kei qualifications. Because of high taxation on older cars in Japan, many older used Smart cars are exported to other countries with Right-hand drive, like Great Britain and South Africa; these are also called grey imports.
The Smart Fortwo was introduced in Canada in late 2004 and was sold through Mercedes-Benz dealers. Demand has been heavy with up to 6-month waiting lists in major urban areas in the spring of 2005. The vehicle has been especially popular for light errand running for small shops and businesses, with many carrying custom paint jobs or stick-on graphics boldly advertising the associated product or service. However, recently the demand seems to have tapered off, and some 2005 Smart Fortwos have popped up in the used car market. Canadian Smart CDIs cannot be registered in the US.
As of June 1 2007, 9,200 Smart fortwo cdis had been sold in Canada, and as of the end of the model 450 production run, 10,239 of these cars were in this country. This large stock is because as the model 450 ended production, after a run of 770,256 cars, Mercedes-Benz Canada built-up stock to tide dealers over until the successor model 450 arrived at the end of 2007.
The Canadian version of the Smart fortwo cdi sold to 915 customers over three months in 2004; 4080 were sold in 2005; and 3023 in 2006. Virtually all the deliveries in 2004 and many of the deliveries in 2005 were to long-time Smart fans who had been waiting for their car for years, which largely accounts for the higher numbers. Although sales tapered off in late 2006 and the first couple of months of 2007, they rebounded strongly in March 2007 and this trend continued through April, culminating with May 2007, marking the car's strongest sales performance ever in Canada, at well over 500 units. Sales are strongest (per capita) in Western Canada, with Vancouver Island and Vancouver being especially hot markets for Smart.
The 2007 (Europe) and 2008 (North America) Smart fortwo 451 saw an engine displacement increase to 1 full litre up from 700 cc with the attendant loss of fuel economy. Sales of the diesel engine was restricted in certain markets in favor of the Mitsubishi gasoline unit. Currently, in North America, Smarts are sold with the larger gas engine in the US and Canada, with the smaller, more fuel efficient diesel being sold in Mexico, Europe and other World markets.
In June 2006, DaimlerChrysler confirmed that Smart would be officially launched in the United States in the first quarter of 2008. The cars are offered through a dealership holding company Penske Automotive Group, which created a new U.S. dealership network for the brand under the name Smart USA. Initially, an updated gasoline powered Fortwo was offered, starting around US$12,000. The new model made its debut at European auto shows in November 2006.
"Hybrid Technologies" plans to sell an electric version of the Smart vehicle in the U.S. starting at US$35,000. It is being called a hybrid car even though the vehicle is all-electric. The electric Smart car will have a range of to , a top speed of , and charge in 5 to 6 hours using a standard 110V AC outlet. An electric Smart is currently undergoing testing in the UK and will only be offered to commercial clients as a trial for the time being.
A Forbes article has been critical of the stated reasons that Daimler-Chrysler gave for introducing the car in the United States. The Smart For-Two is the most fuel-efficient gasoline-engined car for sale in the US; however, according to the EPA, the Smart's fuel efficiency is lower than the fuel efficiency of some hybrids such as the Toyota Prius, the Honda Civic Hybrid, and the 2-seat Honda Insight (making it the fourth most fuel efficient vehicle in the U.S.), which achieve 45/48, 45/40, and 61/70 respectively while the Smart achieves 33 city and 41 highway, though the Smart ForTwo, which is not a hybrid, costs about half as much as a hybrid in the US.
The unique design of the Smart has received much attention in the U.S. In its April issue, Men's Vogue raised the question: in a nation where your supersized car is your castle, is the Smart too mini for a man?
The Smart cars were first introduced to the country in 2003, and were sold in department stores Sanborns and Liverpool, later Mercedes Benz dealers started to offer the car that although very attractive to the public it was considered very expensive and seen as a toy car only for young people.
Currently Smart cars are still offered in the country with little acceptance, the current models on sale as for July 2008 are: Smart Fortwo, Smart Forfour, Smart Roadster.
The Smart cars have fierce competition with Hyundai's Atos, Pontiac's Matiz and Chevrolet's Chevy which are compacts low gas consumption and less than half the cost of a Smart Car with more space for passengers.
Smart vehicles use a very small front crumple zone. The new Smart Fortwo has been awarded 4 out of 5 stars in the Euro NCAP Adult Occupant Protection, 2 out of 4 stars in the Pedestrian protection test but it was not tested for Child Occupant Protection as it has no rear seats. The original Smart was awarded 3 out of 5 stars for Adult Occupant Protection. In American tests using a five star rating, Smart cars received a four star safety rating for the driver from a front impact, and a five star safety rating for the driver for a side impact. It also received "Good" ratings (top rating) for front and side crash protection in Insurance Institute for Highway Safety (IIHS) tests.
The main structure of the car is a stiff structure called a Tridion Safety Cell, which is designed to activate the crumple zones of a colliding vehicle. This design creates a very strong safety cell around the passengers.
Some companies and individuals upgrade the original engine to Brabus spec, but these have been taken even further by some with many aftermarket upgrade options available.