DaimlerChrysler Will Revamp Smart Unit

DaimlerChrysler AG (DCX Quote - Cramer on DCX - Stock Picks) says it’s getting smart about its small-car brand.

The automaking giant announced Saturday it will cancel production of its weak-selling Smart forfour model and will focus on the fortwo, a tiny two-seater that’s become a fixture of European cities. DaimlerChrysler also said it would complete the integration of the Smart brand into the Mercedes organization

Cancellation of the four-seater depends on negotiations with partner Mitsubishi Motors Corp., which produces the vehicle in Born, the Netherlands.

Overall, DaimlerChrysler said the latest moves would likely lead to 300 job cuts at Smart’s Boblingen, Germany headquarters and cost about 1 billion euros, or $1.2 billion.

Whether or not the latest plan will cheer investors remains to be seen. Some have been pressing DaimlerChrysler to sell or shutter the Smart unit, which has failed to turn a profit since launching its first model in 1998, The Wall Street Journal noted on its Web site.

DaimlerChrysler said in a statement Saturday that the “profitability of smart will be confirmed, with positive results expected from 2007 onward.”

This is not the first time DaimlerChrysler has tried to revamp Smart. Last April, it said it would spend about 1 billion euros to restructure the unit by cancelling another model and cutting about 700 jobs, The Wall Street Journal noted.