Smart Thinking a Headache for DaimlerChrysler

05 April 2005

Small is not always beautiful as German-headquartered car giant DaimlerChrysler has found to its cost.

Its struggling Smart brand - a city car defined by its very compact size and bright colors - is to be restructured in a bid to turn round its fortunes.

The changes involve axing the Smart Roadster model and cancelling development of a sports utility version.

Smart's hopes will then rest on its original and bestselling two-passenger model, ForTwo, and the (thus far) less successful four-door version, ForFour. The plan also includes cutting around 700 jobs in Germany and France.

The changes are expected to cost the company as much as €1.2 billion ($1.5bn, £823m)) this year.

DaimlerChrysler ceo Juergen Schrempp says soothingly: "We are making good progress, we are fixing the Smart issue, [and] we have fixed the quality issue of Mercedes."

The luxury car division has been beset by problems in recent months including a drop in quality, a weak US dollar and a recall of 1.3 million of its models. Operating profits plunged 97% to €20 million in the last quarter.

Data sourced from Wall Street Journal Online; additional content by WARC staff