Smart concentrates on Fortwo micro

DAIMLERCHRYSLER has confirmed it will continue with its Smart division, but its under-performing Forfour will be axed.

DC announced this week it would cancel production of its Dutch-built Forfour but invest 1 billion Euros ($A1.7 billion) in the micro-car brand to launch a new Fortwo model in 2007.

The slightly larger next-generation Fortwo is already undergoing testing in Europe but will maintain its compact rear-engined configuration.

DaimlerChrysler also expects to break even next year, having failed to make a profit since the brand was introduced in 1998.

The company said the cancellation of the Forfour was still subject to negotiations with Mitsubishi Motors Corporation and other partners. The measures are also likely to result in 300 job losses.