Smart, the brand launched in 1998 to make fun city cars, is getting serious.
"We will break even in 2007," said President Ulrich Walker. "That is our chief target and a clear signal to engineers: Don't use your time for any fun project inside [the company]."
Walker noted that Smart has cut its fixed costs by 26 percent, without giving a euro amount, and is looking at more cuts. He also said Smart would reach its target for 2005 operating results. He didn't give details.
Walker has the backing of his new boss, Mercedes Car Group CEO Dieter Zetsche.
"There is a new business model, and it is only fair to give Ulrich Walker and his team the time to prove they can deliver," said Zetsche, who also takes over as head of Daimler-Chrysler on January 1.
"I am glad to tell you that year-to-date they are on track," Zetsche said. "It is too early for a conclusion but it is encouraging that they are on track. There is no reason to change the timetable."
Smart's Crosstown concept, a radical version of the ForTwo, debuted at the IAA. In the future, fun projects are out.
Smart has killed the ForMore SUV project and decided to end production of the Roadster by the end of this year.
It is also working on the next-generation ForTwo two-seater, which is expected to be launched in late 2006. Walker noted that the next ForTwo is being engineered to meet US regulations. He said the US market has the potential to sell 20,000 units a year.
It has not been decided if there will be a successor to the slow-selling ForFour. Smart has not made a profit since the brand was launched in 1998. HypoVereinsbank estimates losses this year will be about E600 million.