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Smart's forTwo model was on display at the Chicago Auto Show last February. DaimlerChrysler's Smart line is not sold in the United States yet but that could change within the next two years.
By Miguel Llanos Reporter
updated 4/4/2005 9:51:47 AM ET 2005-04-04T13:51:47

In an about-face, DaimlerChrysler has dropped plans to introduce a small SUV in the United States under its Smart car line and will instead aim to bring in the tiny, high-mileage two-seaters seen throughout Europe.

A restructuring announced Friday means that the money-losing Smart line will eliminate a roadster model as well as the SUV project, which would have included a 2006 model sold in the United States.

Smart's new business plan, DaimlerChrysler stated, "calls for the intensified development of the successor” to the original two-seat car, “including fulfilling the requirements for the U.S. market.”

Smart just a year ago had ruled out bringing in the two-seater, saying it felt Americans would prefer a small SUV.

Smart is part of the German-U.S. automaker’s troubled Mercedes-Benz division, and its line includes the two-seat forTwo, the four-seat forFour and a two-seat roadster.

'Very positive response' in U.S.
Donna Boland, a Mercedes-Benz USA spokeswoman, noted a "very positive response" from Americans when the forTwo has been shown at U.S. car shows and other events.

Third-party importers are planning to sell forTwos in the United States as well, but the partners closest to market are still lining up distributors.

As far as official Smart imports go, Boland emphasized that plans could still change and that, even if a green light is given, the first Smarts would probably be 2007 models.

"We'll see if it makes sense to bring it to this market," Boland said, citing exchange rates as among the factors that could play a role.

The two-seat Smarts in Europe are rated at around 50 miles per gallon, Boland said, while U.S. certification would probably be slightly lower due to different testing standards.

If Smarts do come to the United States, there's a good chance they'll be sold via existing Mercedes dealerships. Under the restructuring, the Smart brand will become more close integrated into Mercedes-Benz to save money.

Diesel forTwos are being sold in Canada via Mercedes dealers, and Boland said interest there has been "very strong."

$1.6 billion restructuring
Smart has been losing money, but the company has not said how much.

DaimlerChrysler said the restructuring program would cost up to $1.6 billion this year and cost 700 jobs.

Mercedes-Benz chief Eckhard Cordes said DaimlerChrysler had even considered shutting down the Smart operation completely.

“We have considered different options, which theoretically would be available, among them also the complete closure of Smart,” he said. “The option we have decided upon is by far ... the best from a shareholder point of view.”

DaimlerChrysler chairman Juergen Schrempp told reporters that the line would continue.

“It is obvious with Smart that we have built a very strong brand and created tremendous empathy with many customers and admirers,” he said. “We have said repeatedly that we would continue with the brand.”

The Associated Press and Reuters contributed to this report.


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