Penske Spends $25 Million to Rework Nissan Model for Smart Franchise

Last Updated Nov 1, 2010 1:58 PM EDT

Parent company Penske Automotive (PAG) disclosed that it's spending $25 million to help Nissan (NSANY.PK) develop a new four-door hatchback exclusively for the U.S. market, which goes on sale in the fourth quarter of 2011. The new car shares Nissan's global "B" platform under the skin with models like the Nissan Cube, the Nissan Juke and the Nissan Versa.

That's not much money by auto industry standards. Assuming there's not a lot more to come - and that seems unlikely, since the time from now until the end of 2011 is critically short by auto industry standards -- that implies the new Smart five-door is going to be pretty close to an equivalent Nissan. In photos, it looks a lot like the Nissan Leaf electric vehicle, and a little like the Nissan Juke.

One thing for sure, the U.S. Smart franchise sorely needs fresh product. Smart's sole model in the U.S. market, the Smart fortwo, is a two-seater, as the name suggests. That severely limits the audience for Smart. Two people with one overnight bag each are enough to test the current car's limits for passengers and cargo.

Not only that, the fortwo's styling is remarkably true in its outside appearance to the first Smart concept car, which was first conceived more than 20 years ago. It's a tribute to the late Nick Hayek, who founded Smart, that the styling is considered futuristic to this day.

However, the reality is nobody can sell the same-old, same-old for more than 20 years and get away with it. Even instantly recognizable icons like the Volkswagen (VLKAY.PK) Beetle, the Porsche 911, the Chevy Corvette and the Ford (F) Mustang have evolved over the years.

Smart can't stand pat, either. During the third quarter, Smart USA wholesaled 1,165 units, roughly only one-third as many as the year-ago quarter. In October, Smart USA introduced finance and marketing campaigns designed to sell out its remaining 2010 model year inventory.

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Photo: Smart USA