Smart's Last Card

But the second generation of the trendy get-about might be the last if the revamped ForTwo fails to drive back into the black after running up heavy losses for its parent company over the past eight years.

For the launch of the new ForTwo in front of nearly 600 invited journalists to Stuttgart on Thursday, Smart enlisted the help of former Formula One driver Niki Lauda and an impressive firework display.

"The ForTwo isn't just a car. It's an icon," said DaimlerChrysler chief Dieter Zetsche. "The new Smart does everything that customers have liked about this car from the very beginning. But it does it better."

At first glance, the Smart Mark II, which like is predecessor is built at the French assembly plant in Hambach in the Mosel Valley, looks almost exactly the same.

But comfort has been increased, by making the new model, which will be in the salesrooms from next April, 17 centimeters (almost seven inches) longer. Even at that length, drivers will still be able to park at right angles to the pavement, the makers claim, one of the big selling points in the traffic-jammed towns and cities where parking space is in chronically short supply.

There are changes under the hood, too, with the engine 10-15 percent more powerful, but just as low in carbon dioxide emissions -- 90 grams per kilometer, compared with 113 grams for the Peugeot 206 and 120 grams for the Renault Twingo.

Ambitious targets

For a model that has never yet made a profit, parent company DaimlerChrysler has set the new Smart ambitious targets: to break even by next year and turn in a profit in subsequent years.

But there lies the crux of the problem. Even though 750,000 Smart cars have been sold worldwide since the brand's launch in 1998, sales have fallen short of target given the relatively high starting price of 9,500 euros ($12,150) for a basic two-seater.

DaimlerChrysler does not publish separate earnings figures for its different brands. But analysts estimate the Smart has run up accumulated losses of more than three billion euros since the launch, a figure dismissed as "pure speculation" by Smart chief Ulrich Walker.

Nevertheless, last year, when DaimlerChrysler was faced with major headaches with its prestigious Mercedes brand, there was much talk that Smart might be sold off or shut down altogether. In the end, the parent company gave the unit a stay of execution.

But in the attempt to steer the unit back to profit, 700 jobs have been axed, most of them in the company's headquarters near Stuttgart. And the derivative four-seater (ForFour) and sports (Roadster) versions have been abandoned.

Smart chief Walker was confident that "with our fixed costs down 50 percent, we'll be able to break even, even in the worst-case scenario."

Furthermore, Smart is scheduled to be launched in the United States at the start of 2008.

"It's the right moment, with environmental issues and high oil prices increasingly in the spotlight in the US," said DaimlerChrysler chief Zetsche.