DaimlerChrysler Will Begin Selling Smart Car In U.S. In 2008

Move could help generate more revenue for struggling Mercedes division.

DETROIT (AP) - DaimlerChrysler AG will begin selling its fuel-efficient, two-seat Smart car in the U.S. during the first quarter of 2008, the automaker's CEO said Wednesday.

The decision - announced by chief executive Dieter Zetsche during an appearance in Detroit - is a watershed moment for Smart, which has not posted a profit since it was formed in 1998.

The car will be distributed by auto retailer UnitedAuto Group Inc., which will be responsible for awarding potential dealers and developing and maintaining a Smart vehicle dealership network throughout the U.S. and Puerto Rico.

Zetsche, who personally oversees the company's Mercedes Car Group of which Smart GmbH is a part, had said repeatedly this year that a decision on whether to sell the tiny car - which measures less than 9 feet long from bumper to bumper - would come by the end of June.

The move likely could help generate new revenue for the ailing Mercedes group, which has dragged down the company's overall earnings as it restructures and reemphasizes its focus on quality.

Company officials at the German-American automaker conceded that with gas prices in the U.S. hovering above $3 a gallon in many places, the Smart fortwo could appeal to buyers looking to save money.

According to DaimlerChrysler specs, the fortwo can get up to 46 miles per gallon in city driving and as much as 69 mpg on the highway, but its speed is not like its Mercedes counterpart. The two-seater is powered only by a three-cylinder gasoline engine. A diesel variant is available in Europe.

Other automakers also have begun selling small, sporty small cars, including Toyota Motor Corp., which has the Yaris, and Honda Motor Co., which sells the Fit.

Smart launched the fortwo in Canada in 2004, and last year it sold about 4,000 models, or twice what it had initially forecast.

Last year worldwide, Smart sold 143,000 cars, a small increase from the 139,000 it sold in 2004. It produced 124,300 cars in the same period, down from 152,100 the previous year.

In March, DaimlerChrysler said it would spend nearly 1 billion euros on restructuring Smart, cut 300 of the 750 jobs at the unit's Boeblingen, Germany, headquarters and end production of its larger, four-seater forfour model.

Zetsche is a fan of the car, despite the fact that some shareholders have called for Smart to be closed.

More in Operations