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Daimler Sees High Demand for Micro Car

December 10, 2007

WASHINGTON — Thousands of motorists want to be among the first owners of the fuel-sipping Smart car in the United States, demand that is racing past production capacity, Daimler AG executives said.

Smart, which reaches U.S. dealerships in January, has received $99 deposits from more than 30,000 customers to reserve the two-seater and about 9 in 10 are placing full orders, said Daimler AG Chief Executive Dieter Zetsche. More than 50,000 motorists have taken the tiny vehicle for a test drive at road shows around the country.

"We were totally amazed by the kind of reaction we got," Zetsche said at a breakfast with reporters. He declined to release the vehicle's 2008 sales projections in the U.S. but said the orders are "going far beyond the production capacity we have available for next year."

The 8-foot, 8-inch Smart Fortwo, which can park nose-to-curb, is being marketed toward urban drivers, college students and baby boomers who no longer need a large vehicle. A spin aboard a Smart through a city neighborhood typically evokes stares and double-takes.

Smart USA President Dave Schembri said customers who order the vehicle now would likely receive it in late 2008 or early 2009 but some vehicles may be available for new customers prior to late 2008.

While 20 percent of the orders have been placed in California and the vehicle has drawn interest in East Coast cities, Schembri said the company has been surprised by the response in smaller markets such as Omaha, Neb., Jackson, Miss., and Tulsa, Okla.

The 1,800-pound car, which gets 40 miles per gallon on the highway, is about to hit the U.S. market as Congress imposes tougher fuel efficiency standards for new cars and trucks.Amid concerns over climate change, the company is testing a fleet of about 100 electric-drive Smart cars in London. Zetsche said the company hopes to develop a similar partnership with a U.S. city to study electric versions of the vehicle.

To address safety, Smart has placed a steel safety cage and four air bags in the compartment to protect motorists and provides standard electronic stability control to help prevent the vehicle from swerving off the road. "Safety has to be a given," Zetsche said.

The Fortwo is designed to get four out of five stars on U.S. crash tests and recently got four stars on an equivalent European test.

Zetsche was the chief executive of DaimlerChrysler AG before Daimler sold 80.1 percent of Chrysler to Cerberus Capital Management earlier this year. Zetsche said Chrysler is not expected to be profitable next year because of the tough sales conditions facing the auto industry.

Smart, which was first launched in Europe in 1998, will build the vehicles in France and sell them through 73 U.S. dealers, including Mercedes dealers and dealerships that are part of the Penske Automotive Group, led by Penske Corp. and Smart USA chairman Roger Penske.

Smart, a division of Daimler AG's Mercedes-Benz brand, has a base price of $11,590 for the Fortwo Pure, while a Fortwo Passion Coupe starts at $13,590. The Smart Fortwo Passion convertible starts at $16,950.

Smart is a division of Daimler AG's Mercedes-Benz brand.

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