The head of Mercedes Car Group, Eckhard Cordes, has described the Smart brand as a ‘disaster’ – but still insists it has a future. Smart has since its inception failed to perform as forecast with sales way below predictions (last year sales reached 152,000 globally; the target was 170,000). This is blamed largely on a poor dealer support. The policy of excluding Smart from Mercedes dealerships is to be reversed in the next three months.

Cordes predicts Smart will break even in 2007. Senior Daimler executives will meet in April to discuss a strategic review of Smart’s future. Chief executive Jurgen Schrempp has ruled out closure. There is speculation Volkswagen may become involved, although it denies interest.

Schrempp says Smart adds ‘sympathy’ to DaimlerChrysler and helps the group reach voluntary European emissions targets. ‘Smart is a great vehicle,’ he said. ‘We just have to get it right.’