Background
It was the early 1980’s and a consortium of Swiss banks turned to management consultant, Nicolas Hayek, to oversee the liquidation of their clients ASUAG and SSIH. Former behemoths of the Swiss watch industry, these longstanding luminaries had been pummelled by competition from Japanese makers such as Seiko, Orient and Citizen. Hayek had different ideas, however. He could see that some shrewd restructuring, automation and standardisation could put Swiss watchmaking back in charge. He was, ultimately, not wrong and today the Swatch Group, as his venture would become known, is the largest watch company in the world and employs over 31,000 people in 50 countries. Other than Swatch the group owns luxury brands including Longines, Rado and Omega.
It wasn’t long into his watch industry career that Hayek felt he could teach the automotive industry a trick or two. He started to develop an innovative city car with seating for two and a hybrid drivetrain. Initially named the “Swatchmobile,” Hayek feared his new car would be seen only as a threat by existing manufacturers and so, sensibly, sought a collaborator on the inside. By 1991 he had signed an agreement with Volkswagen to share the inevitable and expensive burden of development. This seemingly great match was short lived, however. With Ferdinand Piech’s assent to VW CEO in 1993 he terminated the agreement, and Hayek was back hawking his concept around the industry. After being rebuffed by Fiat, BMW, General Motors and Renault Hayek found a friend in Stuttgart – none other than Mercedes-Benz AG.
With Hayek’s clearly the junior partner in this arrangement, the deal was structured accordingly. The new joint venture – Micro Compact Car AG (MCC) – was majority owned by Mercedes and Hayek had to drop his initial demand of “Swatch” being included in any brand name used. Mercedes, instead, plumped for “Smart” derived from Swatch, Mercedes and Art. By the time the first Smart Fortwo was successfully launched in 1998, Swatch’s financial interest in the venture had dropped to just 19% through recapitalisation. Shortly after this Mercedes-Benz would buy the remaining stake to make MCC a wholly owned subsidiary.
Much like the Swatch had done in the 1980s, Smart revolutionised an underdeveloped market sector by bringing innovative style and value to an otherwise stagnant and conservative niche.







