STRUGGLING car maker smart has been handed a lifeline by its lords and masters at Daimler Chrysler ... and given another two years to turn its business round.
The firm, part of the Mercedes-Benz group, which made its name with the two-seater City Car micro car, has been losing money hand over fist and making a sizeable contribution to Daimler Chrysler's steadily worsening financial situation.
Many pundits had expected DC to close smart down, but instead the board of DaimlerChrysler AG has come up with a new business model for the smart business.
But while it's good news for the company's UK staff and dealers, smart isn't out of the woods yet - the new plan still needs to be approved by the company's supervisory board and a final decision is expected at the end of this month.
The new business model aims to put the small-car brand onto a financially sound basis, with the goal of breaking even in 2007.
And that means taking the axe to the smart roadster and roadster coupe models, production of which will be wrapped up at the end of this year.
The tiny two seater sports model only went on sale in Britain two years ago and its demise could spell big losses for those who have bought one. Residual values will almost certainly plunge at the outset - although, longer term, they could recover as the car will become a relative rarity on Britain's roads.
The DC board has also told smart to stop development of a proposed four wheel drive SUV version of the recently launched smart forfour in an attempt to save more money.
But the forfour hatchback will continue as part of the co-operative venture with Mitsubishi, which produces its Colt supermini on the same production line in Holland, and development of the next generation of the smart fortwo city car will be accelerated with a view to putting the car on sale in the USA for the first time.
And the company has said that the next version of the three-cylinder petrol engine which powers the fortwo will be sold to as yet un-named other manufacturers, with resulting economies of scale which will improve profitability.