Smart cars finally roll past hurdles

By Chris Woodyard, USA TODAY
SANTA ANA, Calif. — Sometimes big headaches come in small packages.
That's what a California company called Zap (ZP) has discovered in trying to import the tiny, European-made Smart car.
Only now, after a three years of working to get the cars to meet U.S. safety and environmental regulations — and battling with giant DaimlerChrysler — is there a respectable batch of cars to dole out to dealers.
More than 100 cars have been shipped to sales lots. The remainder, about 250, fill a yard in an industrial area of this Orange County enclave. Here, the cars await their turn to be outfitted with myriad environmental and safety items — from stronger bumpers to better interior padding — to make them legal for sale in the USA.
Tiny as it might be, the National Highway Traffic Safety Administration found that Zap's version of the Smart car is up to snuff. "Just because it's small doesn't mean it can't meet the standard," says agency spokesman Rae Tyson.
While it juggled regulators' demands, Zap has had its own struggles. By last year, it had amassed $2.2 billion in orders for Smart cars that it hadn't won permission to sell. From $5 a share in late 2004, the stock price slid to 50 cents at the start of the year.
"Certainly, it would appear from a public standpoint we overpromised and underdelivered," says Zap CEO Steven Schneider.
Zap's stock was almost delisted. But now that it is delivering cars, the stock has rebounded, closing Tuesday at 67 cents a share.
Besides regulators, Zap has been at odds with DaimlerChrysler, which owns the Smart brand. Zap filed a lawsuit in November alleging that DaimlerChrysler has tried to destroy it and keep it from converting Smart cars for the U.S. market. Smart spokeswoman Bettina Singhartinger said the company, which has no business relationship with Zap, denies the allegation. "We consider the lawsuit to be unfounded," she says.

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