DaimlerChrysler do Brasil will not build the second generation Mercedes A-Class model in its plant in Juiz de Fora city, Minas Gerais state.

There are no plans to build another Mercedes in Brazil when production of the first generation model stops.

Suppliers said that the A-Class will be produced in Brazil until the Juiz de Fora plant starts to make the little SUV Smart formore at the end of 2005.

"We will produce the [current] A-Class as long as we have demand for the model in Brazil," said Luis Berea, cars sales director of DaimlerChrysler do Brasil.

Launched in 1999, the Brazilian-made A-Class will not have had a long life. In the first half of the year, DC sold only 2,399 units in Brazil, a drop of 26.3% compared with 3,256 units in the same period of 2003.

In 1998, when Mercedes started construction of the Juiz de Fora plant, it said it expected to sell around 60,000 units of the A-Class in Brazil and other South American countries. But in the first year of sales the model failed to hit the target of 15,000 and sales fell in subsequent years. In 2003, Mercedes sold just 6,667 A-class in Brazil.

Due to this, in 2001 DaimlerChrysler decided to assemble C-Class sedans from CKD packs in the Juiz de Fora plant to take up some of the spare production capacity. About 7,000 units were built a year from German-made kits exclusively for export to the USA and Canada.

But the Brazilian C-Class also had a short life. The CKD assembly operation ceased last February, when DC do Brasil's export contract with the USA ended.

Without successful sales of the Brazilian-made Mercedes cars, the company decided to invest in the Smart brand to support its $US820 million plant.

With the Smart formore, DC finally expects to reach the factory's production capacity of 60,000 units a year.

But most production will go to the USA rather than the brazilian market.

Rogério Louro