DaimlerChrysler has ended speculation that it will sell Smart and announced that it will invest EUR1bn in the division to launch a new Fortwo model in 2007, and scrap production of the Dutch-built Forfour.
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The cancellation of the Forfour is subject to negotiations with Mitsubishi, which produces the car alongside its own Colt (which shares platform parts) at its plant in Born, in the Netherlands.
In a statement the company said it expected to be profitable from 2007.
The Smart organisation would be integrated into the Mercedes Car Group with the loss of around 300 employees at Smart’s plant in Boblingen, Germany.
Smart sold around 143,000 cars in 2005, of which 43,700 were Forfour models, according to Reuters.
