DaimlerChrysler AG plans to announce next week that it will launch its tiny, two-door Smart car in the U.S. in 2007, a bid to turn around the unprofitable small-car unit, people familiar with the matter said.

Making the Smart car business profitable has been an important task for Chief Executive Dieter Zetsche since he took the top post Jan. 1. The unit has been unprofitable every year since its first model in 1998.

several competitors have beaten Smart to the U.S. market. General Motors Corp.'s Chevrolet Aveo was introduced in 2004, and was followed this year by the Yaris from Toyota Motor Corp. and the Fit from Honda Motor Co. All three sell for $10,000 to $14,000. It may be difficult for DaimlerChrysler to make much money if the Smart is priced in that range because the car is made in Europe. The euro's strength against the dollar makes European exports to the U.S. expensive.

You may have heard in the news that it’s all change here at smart. And you’d be right. We are returning to our roots and plan to focus solely on the production of the smart fortwo – securing its status as the iconic small car brand.

We’re proud to say that smart has been the most successful automotive brand introduction in the past ten years. Here are a few snippets to show why we’re confident the smart brand will continue to flourish under the smart fortwo:
• Its unique design has helped the car and brand achieved cult status in many countries around the world.
• It is continuing to go from strength to strength, establishing an excellent market position despite the unfavourable current economic climate.
• The smart fortwo has been a hugely popular car for over eight years – this kind of lifecycle performance is almost unheard of in the automotive industry.
• 2007 will see the successor to the smart fortwo – so as for the future, we’re well and truly here to stay.

To achieve this focus we plan to discontinue production of the smart forfour. Approximately 100,000 smart forfours have been sold globally since the market launch in April 2004. It's been a popular car and the plan to discontinue is not because of the product itself. Unfortunately, the cut-throat competition and economic situation means staying in the segment is unfeasible. Customers should rest assured that we will continue to offer customers professional service for all models (including the smart forfour) at smart centres and many Mercedes-Benz retailers, as well as the long-term service and supply of spare parts.

So whilst we’re sad about the planned discontinuation of the smart forfour, we are definitely looking forward to the future. Keep an eye on the website, to be the first in the know about the new fortwo.