06/26/2006

DaimlerChrysler Gambles on New Market

Smart Car to be Launched in the US

Suffering from flagging sales of the Smart car in its traditional market, the German automobile producer plans to launch its small model in the United States for the first time.

The new Smart "ForTwo" model will be launched in the US.

DaimlerChrysler is to launch its Smart car in the United States for the first time. The company is expected to announced on Tuesday that the new two-seater ForTwo model, due for release in 2007, will go on sale across the Atlantic.

But, DaimlerChrysler boss Dieter Zetsche doesn’t want to use the company's existing Mercedes-Benz or Chrysler dealer network to sell the fuel-efficient Smart cars. Instead he plans to use one of the biggest car distributors in the US, which sells models from a range of manufacturers. Zetsche hopes that this strategy will broaden the brand's sales potential. Smart cars have been sold in Europe since 1998 but the car has never made a profit for the company.

DaimlerChrysler has already stopped production of the four-door ForFour model following disappointing sales. This year alone restructuring charges, along with losses from its Smart business, have cost the company around €1.3 billion.

The Smart ForTwo is just eight feet long by five feet wide, and fits into half of a typical parking place. It is hoped that the model may be able to exploit concerns in the US over rising fuel prices, where gasoline is approaching $3 a gallon. The price rise has sparked a new interest in smaller cars with more fuel-efficient engines.

spiegel/reuters

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