Eight loss-making years after it was created, Automotive News Europe reported, Smart has not found a successful niche in the market.

The quirky brand - and parent company DaimlerChrysler - must make strategic decisions on Smart's geographical scope, market positioning, and independence as a brand.

Will Smart attempt to crack the US market? Will it replace the ForFour or revert to just one model? Does Smart have a future within DaimlerChrysler?

Smart has never turned a profit for DaimlerChrysler since it was launched in 1998. Recent decisions have been ominous for the struggling brand. Last December Smart called off an imminent US launch. In the summer, it killed two models, the Roadster and the planned ForMore SUV.

In addition, the four-seat ForFour never reached the cult status of the original tiny Smart, the ForTwo.

But the brand is in the midst of a EUR1.1bn restructuring programme that is intended to make it profitable in 2007.

Analysts say DaimlerChrysler has lost about EUR2.6bn since it launched Smart. They estimate that the loss this year could be another EUR600m, which would be about EUR4,000 for every car sold. CEO Ulrich Walker set an ambitious goal of selling more cars this year than in 2004 and Smart seems certain to do so. To the end of November, it sold 133,000 cars compared with 140,000 in all of 2004.

To keep customers interested throughout 2006 without new product, Smart plans a flurry of special editions - especially for the ForFour - and some new marketing programmes. And the company will openly offer incentives, something it previously made a point of avoiding.

Executives are currently considering a 2007 launch on the US market with the second-generation ForTwo. Smart insists the decision - due next month - affects neither the promised business turnaround in 2007 or the profitability of the next-generation ForTwo.

"We will go there if we can make money," Walker said at the Frankfurt motor show in September.

Analysts are split on whether Smart should launch in the US.

"Smart would be sufficiently unique and there are sufficient applications and buyer types who would find it attractive," said analyst John Lawson of Citigroup in London.

But a Frankfurt-based analyst who requested anonymity recommended that Smart skip its US launch.

"The ForTwo is not well suited to North American roads and traffic," he said. "I doubt it would be popular outside very few urban areas in the US."

After the second-generation ForTwo is launched in 2007, Smart will decide whether to build a second-generation ForFour - or go back to being a one-vehicle brand.

"Customers don't even know the ForFour exists," said a Smart dealer in Bavaria. "There is a lack of marketing. Unfortunately, the brand is still solely associated with the ForTwo."

Smart's reorganisation of its dealer network indicates the company's commitment to the ForFour, said a company source.

This year Smart has added 196 sales outlets, bringing its global network to 1,120 outlets. But DC is closing some Smart dealerships and integrating the brand's sales in Mercedes' showrooms.

"If we wanted to keep just the ForTwo, our current network would be sufficient," said the source.

One vehicle is hardly enough to sustain a brand, said Arne Behlmer, an analyst at CSM Worldwide in Frankfurt.

Even if Smart does not share development and production costs with current ForFour partner Mitsubishi, a replacement could share its underpinnings with the next-generation Mercedes A class.

Said Citigroup's Lawson: "There is certainly a wait-and-see attitude on the ForFour."

DaimlerChrysler is currently pursuing Smart's integration into the Mercedes Car Group - including engineering, design and aftersales activities. This September, restructuring Smart was integrated as one of seven key elements of the Mercedes Car Group's CORE - Costs down, Revenue up, Execution - efficiency programme.

"At Smart, the new business model has taken off well. We must follow this path consistently and execute the plan until 2007," upcoming DaimlerChrysler CEO Dieter Zetsche told Headline, an internal magazine for executives, in November.

Also in November, Walker sent a strongly worded message to employees denying rumours Smart could be partly or fully sold off.