Smart never had it easy in truck-loving U.S.

Daimler's ambitious effort to sell a microcar to truck-loving Americans proved to be the wrong product in the wrong market at the wrong time — too small, too expensive and, in the end, too quirky.

After years of sliding sales here, Daimler has thrown up its hands and is giving up selling Smart in the world's second-largest auto market.

In a letter to the 26 U.S. Smart stores dated April 2, signed by Mercedes-Benz USA CEO Dietmar Exler and Vice President of Sales Adam Chamberlain, the automaker said it will discontinue the Smart brand in the U.S. and Canada at the end of the 2019 model year. The news came just days after Mercedes' German parent, Daimler, announced it had created a joint venture with Zhejiang Geely Holding Group to build a new generation of larger Smart models in a purpose-built electric-car factory in China.

In its letter to the dealers, Mercedes pinned its decision on a "declining micro-car market" in the U.S. and Canada, combined with the high cost of U.S. certification of a low-volume product. Essentially, Smart volumes did not justify the investment.

The product "is simply unfit for American tastes," said Ed Kim, analyst at AutoPacific.

The diminutive Smart failed to find traction in a market that prefers its vehicles super-sized. U.S. sales of the two-seater plunged 58 percent last year to just 1,276 cars. In fact, sales peaked at 24,622 when Smart was launched in the U.S. in 2008. In 2018, Daimler discontinued selling gas-engine variants of the Smart in the U.S.

The smaller the car, the harder it is to sell in the U.S., which put Smart at a major disadvantage, said Karl Brauer, executive publisher of Autotrader and Kelley Blue Book.

"The market for small cars is stronger in China, making Daimler's shift out of North America and into China a wise move," Brauer said.

Small volume or not, some American consumers liked the marque. Ash Zaki, principal of Mercedes-Benz of San Francisco, is sorry to see Smart leave.

"We are going to miss it," Zaki said. "It worked great in San Francisco; it's a perfect city car. Maybe it's just a little bit ahead of its time for the U.S."

The brand accounted for about 20 percent of the Mercedes store's new-car sales. And those sales were a cornerstone of Smart's U.S. volume.

"We did, depending on the month, between 20 and 25 percent of Smart's U.S. business," Zaki said. "We're going to have to substitute it — not quite sure with what."

Mercedes-Benz of San Francisco was among the first Smart dealerships to open in the U.S. "We were early believers," Zaki said. "Almost half the sales team owns Smart cars."

Zaki said he was surprised by the timing of the decision to pull Smart from the market. "I expected maybe a couple of more years," he said.

The battery-electric microcar also helped Mercedes meet fleetwide emission standards by offsetting the emissions of high-margin SUVs and luxury sedans. "Maybe they don't think they need Smart because of the efficiency of the gasoline engines now," Zaki said.

Smart's petite cars were originally conceived in partnership with Swiss watchmaker Nicolas Hayek, founder of Swatch Group. They were aimed at young urbanites in parking-strained major metros in the 1990s.

The brand arrived years later in the U.S. at what seemed like a promising moment. Fuel prices were rising and the discussion of new mobility was beginning. But while high fuel prices made many shoppers open to the idea of driving a smaller car, the ForTwo simply pushed the envelope too far for American drivers, AutoPacific's Kim said.

"This was a car developed for really tight European urban centers with very narrow streets and hard-to-find street parking," Kim said.

American cities, with their expansive parking lots and fixed-size parking spaces, eliminated the advantage the microcar offered, leaving only the compromises.

The car was too small and impractical for most Americans, said Jeff Schuster, president of global forecasting at LMC Automotive. The brand also never expanded beyond a two- or four-door model, limiting its customer pool.

Falling fuel prices then accelerated Smart's demise.

"As Americans tend to equate size with value, small, premium-priced vehicles can be a tough sell in this environment," Kim said. "Fuel is still cheap enough for premium customers that there is no perceived advantage in downsizing to a small premium model."

Fiat, another European-focused small-car brand, is also struggling in the U.S. Through April this year, Fiat sales have fallen 42 percent to 3,145.

Smart competitor Mini also appears to be grappling with the same existential challenge. The BMW brand's U.S. sales in April tumbled 30 percent from the same period a year ago.

To overcome a meager product pipeline and stem dealer losses, BMW of North America has let some Mini dealers downsize their stores and allowed others to consolidate operations into their BMW stores.

Mini, which went on sale in the U.S. in 2002, had early success‚ thanks to its retro styling and association with BMW. The brand also offered a wider portfolio of models that were well-designed, fun to drive and more practical, with a usable back seat and expandable cargo area.

"For years, Mini was one of the few brands with consistently high residual value and minimal incentive spending," Brauer said. "It was like the Subaru of the early 2000s."

But by 2012, the novelty and appeal of small cars in the U.S. was waning as fuel prices ticked downward.

"All the charts on Mini, with regard to residual values and incentive spending, reversed," Brauer said, "making it one of the weaker brands."

The challenges facing Mini proved too much for Smart. Said LMC's Schuster: "I don't believe there is a viable market for microcars in the U.S."