Daimler will decide on the future of its money-losing Smart brand by the end of this year, German business paper Handelsblatt reported.
Daimler, which sells the Mercedes-Benz and Smart brands, is losing patience with losses at its microcar brand, the paper said.
Daimler's incoming CEO, Ola Kallenius, who succeeds Dieter Zetsche in May, has "no history with Smart" and "no scruples about killing the brand if necessary," the paper quoted a company insider as saying.
Since its launch in 1998, Smart has racked up losses of billions of euros, financial analysts estimate. Daimler does not break out the brand's financial performance.
In the latest restructuring for the brand, Daimler is turning it into an electric urban-mobility marque selling only full-electric cars. But such a move may be too costly, Handelsblatt reported.
To cut development costs, Daimler co-engineered Smart's current lineup of two models, the ForTwo and ForFour, with the Renault Twingo minicar but Renault is considering pulling out of the partnership, reports have said.
Smart's global sales fell 4.6 percent to 128,802 last year.
Evercore ISI said it would welcome the discontinuation of the brand, which it estimates loses 500 million euros to 700 million euros annually.
"We can't see how a German microcar business can generate a profit, costs are simply too high," Evercore said in a note to investors.