Schrempp May Axe Smart Car

DaimlerChrysler Co-chairman Juergen Schrempp will "turn off the money tap" if he doesn't see a dramatic climb in orders for the two-seat Smart Car within six months, reports the German newspaper Der Spiegel. DaimlerChrysler has already cut its production target from 140,000 units this year to 80,000 for the $1.1 billion project. If the program is shut down, analysts estimate closure costs would be another $1.1-$1.6 billion.

Officially, DaimlerChrysler says production of the Smart will continue, the Spiegel report as "speculation" However, well-placed sources within the Daimler ranks say the car may only last half that long and even if sales suddenly rise there is not a good business case for keeping it Plus, the quality of the highly modular car has been spotty and required a lot of repair time at the factor.

Earlier this year the company made management changes at Smart, lowered prices and launched a major ad campaign. But the project has been hit by safety fears, which caused major rental companies to withdraw the cars from their fleets.

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