Der Spiegel Speaks: MB Smart Small Car Big Loss

FRANKFURT, Feb 12, 2005; Reuters reported that DaimlerChrysler's Smart minicar business made a loss of about 600 million euros ($771.6 million) last year, taking total losses since its launch in 1998 to 2.6 billion, a German magazine reported on Saturday.

Der Spiegel cited a senior DaimlerChrysler manager as its source for the article released ahead of publication on Monday.

A spokesman declined to comment on the scale of the losses at Smart, part of DaimlerChrysler's Mercedes Car Group.

Chief Executive Juergen Schrempp said in an interview with the Frankfurter Allgemeine Sonntagszeitung that the group was working on a "long-term business model" for Smart.

"That includes reviewing possible partnerships for Smart," Schrempp was quoted as saying. A restructuring plan should be ready in April, he added.

Fourth quarter operating profit at the Mercedes Car Group collapsed to 20 million euros in the fourth quarter, against a market forecast of 374 million, due to quality problems, the weak dollar and significant losses at Smart.

The group said it was launching a new efficiency drive in a bid to boost profit at Mercedes Car Group by over 3 billion euros. It has not ruled out job losses but has pledged to respect last year's deal to preserve jobs in Germany until 2012.

Der Spiegel said DaimlerChrysler was most likely to opt to reduce the scale of the Smart project, dropping plans for a sports utility vehicle (SUV) while continuing with development of the next generation of its original 2-seater ForTwo.

Mercedes chief Eckhard Cordes said earlier this month that he was looking hard at Smart's model range after putting development of an SUV version on hold.