All options remain on the table for Smart, including a closure of the brand altogether.
That;s is what DaimlerChrysler CEO Jurgen Schrempp told financial analysts this month, sources let slip to Automotive News Europe.
"We are known for unpopular decisions," Schrempp told the analysts.
Smart has lost €2.6 billion since the brand was launched in 1998, analysts estimates. Losses this year could be as high as €600 million.
Schrempp promised a final decision on Smart's future by the end of April, but insiders believe an announcement could come as early as DaimlerChrysler's annual shareholders' meeting on April 6 in Berlin.
During the meeting with analysts, Schrempp acknowledged that DC knows how to fix Mercedes-Benz's problems, but said there is presently no clear way to fix Smart.
Schrempp's comments contradict recent statements by two of his top lieutenants. Earlier this month, both Mercedes Car Group CEO Eckhard Cordes and Smart president Ulrich Walker said Smart was safe.
Schrempp identified the Smart ForFour small car as the brand's main problem.
Built at the NedCar plant in Born, Netherlands, alongside the Mitsubishi Colt, the ForFour has been a sales disappointment.
The original sales target for the car for 2005 was 80,000 units, but Smart sold just 9,153 ForFours in western Europe during the first two months of 2005, according to data firm Jato Dynamics.
Another setback for Smart came in December when DC halted development of the ForMore. The SUV was supposed to be the cornerstone of the brand's entry into the US [and the saviour of DC's underutilised plant in Brazil].
Smart executives said the development freeze is temporary, but suppliers and analysts polled by Automotive News Europe are sceptical.
Said a supplier who requested anonymity: "As far as we are concerned, the vehicle is dead."