Daimler to Halt 4-Seat Smart Car

DaimlerChrysler’s supervisory board Thursday approved a plan to scrap the four-seat Smart car model in yet another costly overhaul of the loss-making mini-car unit, it said.

The world’s fifth-biggest automaker had said Saturday that it planned to halt output of the Smart ForFour and focus on the two-seat model in a reorganization that would cost around 1 billion euros ($1.2 billion) and 300 Smart jobs in Germany.

That remains the plan, a spokesman said. It will book about 80% of the expected costs in the first quarter of 2006.

German-American DaimlerChrysler, which is based in Stuttgart, Germany, and Auburn Hills, Mich., has said pruning Smart’s model line-up once again would ensure that Smart swings to profit for the first time next year, when a new version comes out of the snub-nosed two-seater with which Smart debuted in October 1998. Smart has lost money ever since it was launched.

The governing bodies of DaimlerChrysler “have approved measures related to the company’s focus on the Smart ForTwo, including the intention to cancel production of the Smart ForFour,” a statement said.

Now it has to negotiate compensation for suppliers and Japan’s Mitsubishi Motors Corp., which makes the ForFour model at a plant in the Netherlands.

Mitsubishi Motors “will continue building its Colt B-segment car at its NedCar plant in the Netherlands,” Mitsubishi said, noting the model was its top seller in Europe.

Sales of the four-seat Smart fell by a quarter last year to 43,700 units.

DaimlerChrysler hopes that dropping the ForFour model will help its premium Mercedes-Benz division hit its target of a 7% operating margin next year.

DaimlerChrysler shares rose 67 cents to $57.65.