Cooperation of Swatch and Mercedes-Benz

Jul 12, 2007
  • 1992: First meeting with Nicolas G. Hayek
  • Micro Compact Car AG is founded
  • Production plant built in France
While the prototypes of the Mercedes-Benz city car drove their first test laps in America, the chairman of the Board of Management of Mercedes-Benz AG, Werner Niefer, welcomed a visitor. This meeting of Niefer and corporate consultant Nicolas G. Hayek on December 3, 1992 was to impact the development of the MCC decisively. This was because the American-Lebanese mathematician and physician Hayek had set his sights on building a visionary small car after his success with the Swatch wristwatch.
The man who had revitalized the Swiss watch- and clock-making industry did not dare to tackle this project alone, but Hayek was convinced that it would be a success together with the right partner in the automotive industry. His sure sense for trends had been borne out by the success of his Société de Microélectronique et d'Horlogerie (Swiss Corporation for Microelectronics and Watchmaking Industries, SMH). This stockholding company, today’s Swatch Group with headquarters in Biel, Switzerland, had initiated the comeback of the Swiss watch- and clock-making industry to world market leadership from 1984.
In early 1993, Hayek was convinced that the manufacturing strategies he had developed for the watch- and clock-making industry in the early 1980s could also be applied to the large-scale production of cars. Hayek dreamed of a small car for private transport in conurbations – a car that would stand out for its environmental compatibility and practicality as much as for its value for money.
Over and beyond this, the car was to feature wheel hub drive to ensure extremely low emissions and be integrated in networked systems for the safeguarding of politically opportune individual mobility in all regions – an explicit element of the MCC project team’s strategy since the 1980s.
The chairman of the Board of Management of Volkswagen AG, Ferdinand Piëch, had already reviewed Hayek’s ideas but wanted to go his own way in creating a small car for the future. In 1991, Piëch’s predecessor Carl Hahn had decided that VW should hold a 50 percent stake in an envisaged SMH Volkswagen AG for the production of a Swatchmobile, but Piëch withdrew from the project when he took over as chairman of the Board of Management in Wolfsburg.
Werner Niefer, by contrast, showed great interest in Hayek’s vision. After all he had positive memories of the MCC studies in California where he and Jürgen Hubbert had approved of MCC prototype manufacture five months earlier. He asked Jürgen Hubbert, at the time responsible for Development on the Mercedes-Benz Board, to take up the matter. Shortly before Christmas 1992, Jürgen Hubbert asked MCC project manager Johann Tomforde to pack up project photos and a video of the first tests with the electric MMC in California and come to the general aviation terminal at Stuttgart airport. He was not informed about the destination until he was onboard the aircraft: Grenchen near Biel in Switzerland. When Hayek saw the photos of the Mercedes City Car, he was absolutely thrilled with the progress already made at Mercedes-Benz. He promptly suggested a cooperative venture. The visitors parted with Hayek with the promise of seriously investigating his proposals.
Hayek had the right idea at the right time. In the late 1980s, the European motor industry was going through structural changes in large-scale production. New strategies were required to boost the value added despite the growing complexity and dynamism. The manufacturers were looking for the ideal approach to making the production of new cars both more flexible and more economically efficient. Among other things, this gave rise to new strategic alliances between motor manufacturers and suppliers. Those responsible were convinced that the manufacturing steps for variants had to be brought together in larger entities, in so-called modules: the automotive industry was heading towards the platform strategy. This structural change also affected the Mercedes-Benz brand. For Daimler-Benz AG, this period was characterized by realignment in many areas with the chairman of the Group’s Board of Management, Edzard Reuter, determined to transform the Stuttgart-based company, steeped in tradition, from a motor manufacturer into an integrated technology group.
1993: Electric drive for the Micro Compact Car?
In the second meeting on January 8, 1993, Nicolas Hayek presented development plans which documented the Biel Polytechnic’s research work on an electric drive system. Hayek had right from the start been intending to build an electro-mobile. Parallel to this, research projects at the watch-maker’s headquarters in Biel had been picking up momentum in investigating new ways of networking automotive electrics and electronics which would be suitable for hybrid drive at a later stage.
The Mercedes-Benz Passenger Car Board decided to travel to Biel with a small delegation to see for themselves what the Swiss were developing. In early February 1993, the delegation, including the new Chief Engineer Dieter Zetsche, found itself facing technicians in a workshop at SMH’s headquarters in Biel as well as a “stripped” Citroën AX which served as a test vehicle. Jürgen Hubbert described it as a “small vehicle, hammered together and fitted with a variety of electronic components plus four wheel hub motors.” Nicolas Hayek praised this contraption as an economical car concept with electric drive, brimming with refined drive components to be positioned as a competitor for the small Japanese cars. Adopting the example of his modular Swatch watches, Hayek wanted to use standardized and miniaturized assemblies – for instance the electronic control units for drive and suspension systems, which were jointly developed by SMH and Biel Polytechnic. Hayek suggested that the additional cost incurred in this way could be offset by cost reductions in bodywork manufacture.
Back in Stuttgart and Sindelfingen, fierce discussions began in the Mercedes-Benz development departments, revolving first and foremost around occupant protection which calls for elaborate bodywork structures in a small car; this stood in stark contrast to Hayek’s wishes to cut costs in this area. Compact wheel hub motors for the electric four-wheel drive desired by Hayek were technically feasible but would be far from fitting into the cost frame of an inexpensive car, or so the verdict went. Irrespective of the contradictions, Niefer and Hayek agreed on another summit – a highly confidential session shielded from the media – at the Geneva Motor Show in March 1993. That’s where Niefer decided “Let’s do it!”
1994: Foundation of Micro Compact Car AG
The subsequent episode was a story all to itself. The negotiations on product features, drive system strategies and the wording of the contract between two partners, who couldn’t have differed more strongly in terms of their corporate cultures, extended over many months. Tomforde, at the time also responsible for the integration of the colleagues in in the Mercedes-Benz MCC project team in his capacity as MCC overall project manager, additionally shouldered the task of preparing the contractual framework for the joint venture, including a coordinated and approved specifications docket. In this undertaking, he was supported by an experienced negotiator, Daimler Benz lawyer Christoph Baubin, who was appointed MCC smart director with responsibility for Finance and Controlling at a later stage.
An important contribution to the realization of the joint venture was made by Helmut Werner, appointed chairman of the Board of Management of Mercedes Benz AG in 1993, a dynamic and eloquent man who knew how to take Hayek and saw MCC as a learning island for new product generation processes.
What today appears to be a legacy of Werner Niefer, who was about to retire as chairman of the Mercedes-Benz Board of Management, was institutionalized step by step by his successor Helmut Werner from July 1993. The MCC project was transformed into Micro Compact Car Development Company. The joint venture was announced to the press on March 4, 1994 – an event at which two show cars were also presented: the Eco Sprinter coupe with a 40 kW electric motor and the Eco Speedster cabriolet with a three-cylinder gasoline engine that was to power the smart at a later stage. The two show cars already featured rear-wheel drive and an underfloor engine-and-transmission unit – a similar concept was incorporated in the large-scale production of the smart at a later stage.
In April, Micro Compact Car AG was founded as a joint venture of Daimler-Benz AG in Stuttgart and Schweizerische Gesellschaft für Mikroelektronik und Uhrenindustrie AG (SMH) in Biel. Daimler-Benz held a 51 percent stake in MCC, SMH the remaining 49 percent. The long-range goal of the joint venture was the vision of translating a new generation of mobility systems into reality. Hayek dreamed of a fleet of miniature cars, produced at low costs and as colorful as his wristwatches. The engineers from Stuttgart, however, warned the watch producer. The standards to be applied in development were the brand’s requirements on the safety of its cars – a cheap car could not be realized at this level and was therefore not desirable.
Hence the first product to be developed to production standard was not the Swatch-mobile planned by Nicolas Hayek but a Micro Compact Car, later renamed smart, on the basis of the Mercedes City Car prototypes, the Eco Sprinter and Eco Speedster. The name of the new model stood for a cute, intelligent car for the 21st century as well as being an acronym reflecting the origins of the concept: Swatch Mercedes Art. This decision marked the end of the partners’ fundamental conflict of interests which among other things revolved around the choice of engine. Backed up by research at the Biel Polytechnic for Engineering and Information Technology (HTI), Hayek had been setting his sights on the electric city car. His Swatch cars were to derive their power from electric motors and hybrid drive systems. The Daimler-Benz engineers, by contrast, believed in the potential of gasoline and diesel engines, mainly because they were disappointed by the degree of maturity of the battery and control electronics. The conflict was to be resolved by an experiment. To demonstrate the advantages of wheel hub drive, the Swiss invited their counterparts from Stuttgart to a trial driving session in the ice stadium in Biel in mid-1994. A course had been marked out on the ice rink to test the agility and traction of all-wheel drive with electric wheel hub motors. But the demonstration failed, and the representatives of Mercedes-Benz were agreed that this car was far from being ready for operation by customers.
1994: Decision to create a new automotive brand
This removed the last hurdle on the way to smart development. Years of research work on an in-house small-car project culminated in a new automotive company. Once again, the project was headed by Johann Tomforde, the engineer and designer who had come up with such a concept as long ago as 1972. The smart was to become a novel vehicle for conurbations, a sub-compact two-seater which was to create a completely new market segment in the automotive industry: the smart class.
The two-seater was finally developed to production standard at MCC GmbH in Renningen near Stuttgart, a wholly owned affiliate of Micro Compact Car AG. Tomforde assumed responsibility for Development and Production. Lars Brorsen was appointed managing director of MCC smart in Renningen at a later stage, on January 1, 1997. Jürgen Hubbert acquired the title of President as chairman of the Supervisory Board of Micro Compact Car AG, with Nicolas Hayek as Vice President. From mid-1994, Supervisory Board meetings were held regularly, attended by Mercedes-Benz representatives Helmut Werner, Jürgen Hubbert and Dieter Zetsche. Their counterparts were Nicolas Hayek and his partners. While initiator Hayek exerted increasingly less influence on vehicle development, he produced a growing number of ideas in the planning of the smart’s innovative production. His experience in modular manufacturing technology gave rise to controversial discussions but ultimately also to “smart” solutions.
A committed design team headed by former Mercedes-Benz designer Jens Manske required just less than three years from the draft stage through to realization. What began with a lot of improvisation in a small office rapidly grew into the MCC design department. Modeler Martin Karl supervised the creation of the first 1:4 scale clay models. A full-size model for design approval was completed as early as September 1994.
Production of the smart in France
In December 1994, the Board of Management of Daimler-Benz AG decided to produce the new car in Hambach-Saargemünd in Lorraine, France. For this purpose, MCC France SAS was founded. This company started production of the smart in 1997, in a completely newly built industrial park in Hambach, Lorraine. The affiliate started with equity of 100 million French Francs. Daimler-Benz held a 38.3 percent stake in MCC France SAS, the SMH Group 36.7 percent. The third partner was SOFIREM (Société Financière pour favoriser l'Industrialisation des Régions Minières) with a 25 percent stake equivalent to 25 million French Francs – an investment rather than a subsidy. The state-owned company SOFIREM had the task of promoting the structurally vulnerable coal-mining regions of France. It acted in its capacity as a joint-venture partner of MCC France, was instrumental in the integration of MCC France in the industry of Lorraine, and helped in establishing valuable business contacts at regional and national levels.
1995: Design approval for the smart
The design approval was granted by the MCC Supervisory Board in April 1995. For Manske’s team, this was the most important step on the road to production standard and was stage-set accordingly: roller-skaters and acrobats performed on an improvised stage to the rhythms of loud music, and between dancing designers and modelers, Martin Karl walked across the concrete floor on his hands. The spectacle tuned the guests in to the presentation, taking them into the youthful world of those people for whom the MCC designers had created their new car. For the designers, the smart was not a “brainchild” but a car with a body and a soul: trendy but also polarizing – a car with a character all its own. When towards the end of the show, Jens Manske started the small electric motor and drove a couple of laps in the wooden model, the audience reacted with spontaneous enthusiasm. The designers interpreted the guests’ applause as all-out approval: their proposal had been accepted, the drudgery had been worth its while, and the smart had been set on its course.
The MCC design department had given the smart a character all its own. Its personality thrived on detail features many of which the young designers had gleaned from their personal lives, be that a predilection for motorbikes, a liking for strong or charmingly cheeky comic heroes, the preferences of fashion-conscious recreational sportsmen and -women, the Italians’ attention to detail or the Swabians’ restlessness. They breathed joie de vivre into the new smart – a quality that gave the innovative car a soul.
1996: Show cars in Atlanta and Paris
At the time of the Summer Olympics in Atlanta in 1996, the smart was just round the corner. On this occasion, MCC presented a show car which already featured the silhouette of the production model and even design elements of later versions, such as the double-elliptic headlights. This smart, however, granted an unusually generous insight into its interior – the designers had removed the doors to demonstrate the spaciousness of the interior compartment within such a small car.
The show car presented at the Paris Motor Show in September 1996 was a further development of the Atlanta study. With a similarly open design, this show car for the first time displayed differently colored structural elements: the Tridion safety cell (silver) and the “body panels” (copper) as the remaining bodywork parts were called. This design element was to become the identifying feature of the production model at a later stage.
1997: Daimler-Benz takes over MCC AG
As vehicle development and production facility planning progressed, investments became necessary on a scale which exceeded Nicolas Hayek’s financial scope. He sounded out Daimler-Benz’s readiness to take over additional shares in MCC AG. At the next Supervisory Board meeting in Biel, the Stuttgarters presented a pull-out offer to their partners. Hayek agreed in mid-February and sold all his shares.
The smart was officially presented at the Frankfurt International Motor Show in September. A few weeks later, on October 27, 1997, the first car from the pre-production series came off the assembly line. Production of the three-cylinder engines for the smart city coupe had begun at the Berlin-Marienfelde plant as early as June 1997.
In 1998, the then Daimler-Benz AG took over Micro Compact Car AG completely and renamed the company Micro Compact Car smart GmbH. When it was decided to give the first two models new names within the framework of the smart model drive in 2002, the company was also renamed and has since then been known as smart GmbH.