DaimlerChrysler Gets Mitsubishi's Agreement to End Production of Smart Forfour Model

FRANKFURT, Germany March 30, 2006; The AP reported that DaimlerChrysler AG said Thursday it has taken another step toward ending production of its poor-selling Smart forfour model to concentrate efforts on the more popular fortwo version.

The German-American automaker said it and partner Mitsubishi Motors Corp. had agreed upon the basis for their formal negotiations aimed at ending production of the four-seat flop by next year.

"The governing bodies of DaimlerChrysler AG have approved measures related to the company's focus on the Smart fortwo, including the intention to cancel production of the Smart forfour," the company said in a statement.

Mitsubishi builds approximately 40,000 forfour models a year at a Dutch plant for DaimlerChrysler.

The decision will result in the loss of at least 300 jobs, and cost the company approximately euro1 billion (US$1.2 billion).

Smart has not posted a profit since it was started in 1998. According to its latest figures, sales of Smart-branded cars fell to 124,300 in 2005 from 152,100 the previous year. Smart already ended production of its two-seat Smart Roadster last year.

DaimlerChrysler has been under pressure from investors to unload the Smart unit, citing its drag on overall earnings. The car maker has pledged to have the unit break even by 2007.