GÖPPINGEN, Germany - The ForTwo will lead Smart into the world's biggest car market - if DaimlerChrysler's small-car subsidiary thinks the quirky two seater will be a success in the US.
"We will only bring the ForTwo to the US if it will be profitable there," said Ulrich Walker, president of Smart. "On the other hand, we do not need the US market to be profitable with it. So it is an add-on option."
But exporting the Smart ForFour small car to the US is not an option, said Walker during a press briefing here.
Smart was supposed to enter the US early next year with the ForMore SUV, but chronic losses forced a major restructuring of the brand and postponed its US debut.
Walker said a decision on entering the US will not be made until the end of 2006.
That decision fits nicely with the debut of the second-generation ForTwo, due in early 2007. Walker says the next ForTwo will be developed for the US as well as Europe.
DaimlerChrysler announced its turnaround plan for the unprofitable brand on April 1. As part of the plan D/C killed development the ForMore SUV, said it will stop making the slow-selling Smart Roadster and embarked on a series of cost-cutting measures.
Walker wants to reduce the brand's costs 30 percent by 2007.
To do so Smart's design, purchasing and aftersales departments will be integrated into Mercedes-Benz. Employees in those departments will move from Smart's headquarters in Böblingen to Mercedes-Benz's location in Sindelfingen. Both are suburbs of Stuttgart.
Smart is trying to figure out what to do with the space freed up in its Böblingen headquarters. Smart executives say merging staffs will save money, but they wouldn't say how much.
Too much integration is dangerous, warned Jochen Siebert, vice president Europe for consultants CSM Worldwide in Frankfurt.
"Smart needs to keep its identity and spirit if the brand wants to stay alive," he said. In contrast to Smart, Siebert notes that Scion, Toyota's US-only brand, which is directed at the same market segment as Smart, started out with rebadged Toyota models and is now rapidly gaining independence in research and development.
Other branches of the D/C organization are expected to absorb about 100 to 200 of the 700 employees Smart will cut.
Those who don't get new jobs within the company will keep a job with Smart until the end of the year, as long as they show up to work.
In addition, new job openings at Smart will, as a rule, be filled by former employees of the brand.
Smart has lost E2.6 billion since its launch in 1998, analysts estimate. Losses this year could be as high as E600 million.
The current restructuring plan will cost E1.2 billion.
But making the brand profitable is a top priority for Mercedes Car Group CEO Eckhard Cordes. Earlier this year he said: "We will be able to turn the business around."