DaimlerChrysler has big plans for the new Mercedes-Benz model it will start building two years from now in Brazil, Dow Jones Newswires reported.

The German-US car maker aims to eventually produce up to 60,000 units per year of the new model, expected to look like something between a compact sports utility vehicle and a larger version of the new Forfour model from Mercedes’ compact Smart line, the report said.

“It’s going to be a bit higher, a bit wider and a bit longer than the Forfour, ” a Stuttgart-based spokesman for the Smart line told Dow Jones, adding that DaimlerChrysler intends to export the new Brazilian model first to the US and then to European and other markets.

The governor of Brazil’s Minas Gerais state, where the model will be built, is meeting with company executives in Germany to talk through final details and to offer guarantees that agreed terms will be upheld by the local government, a spokesman told Dow Jones Newswires.

Output should begin in late 2005 after DaimlerChrysler overhauls its existing Minas Gerais plant, equipped to produce 70,000 cars per year but currently operating at only 21% of capacity owing to a deep slump in domestic car sales, the report added.

According to Dow Jones, the governor’s office told local press that some 560 million reals will be needed to upgrade the plant – and that a government-backed loan of BRL150 million could be made available.

Dow Jones said that DaimlerChrysler, which declined to divulge investment data, has yet to decide whether the Brazil plant will keep producing A-class cars for the domestic market and [assembling] C-class model kits for export over the longer-term.

“Our experience has been very good with assembling the C-Class cars,” the DaimlerChrysler spokesman told Dow Jones, adding that the Brazil plant will keep operating as is, at least for now.

At present, the report said, DaimlerChrysler produces some 8,000 A-Class cars per year in Minas Gerais and another 6,000 to 7,000 C-Class [from] kits for export to North American markets. The company sold 5,000 cars in Brazil between January and August this year, Dow Jones said.