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Smart car maker plans to cease US production amid sales struggles

The little cars are in BIG trouble.

Stefan Wermuth/Bloomberg via Getty Images

Whether one considers it an an icon, a punchline, or just incredibly easy to park, few automobiles on the American road have been as easily recognizable over the past 11 years as the notoriously small Smart car.

But, after struggling to make sales for years, there won't be any new ones rolling off production lines in the United States any time soon. Smart car maker Daimler announced plans to shutter all production of its famously tiny, two-door micro cars by the end of this model year, Car and Driver reported.

"After much careful consideration, Smart will discontinue its battery-electric Smart EQ fortwo model in the U.S. and Canadian markets at the conclusion of MY2019," Mercedes spokesman Robert Moran said in an emailed statement Monday. "A number of factors, including a declining micro-car market in the U.S. and Canada, combined with high homologation costs for a low volume model are central to this decision."

This may not come as a surprise to those who found the Smart cars' presence in the U.S. market (as well as their hallmark diminutive size), a little absurd, but the automaker has been struggling for a while now.

The subsidiary of Mercedes-owned Diamler already made the call to stop producing gas-powered micro cars in 2017, leaving only the battery-powered Fortwo models on the market. The remaining battery-powered offerings boast just 80 horsepower and 118 pound-feet of torque while enjoying a grand total of 70 to 80 miles of range off of a single charge.

And that decision was also unsuccessful. Sales of the Fortwo dropped to just under 1,300 in the United States last year, which Automobile Magazine notes is a "a precipitous 58 percent fall."

The company's financials aren't public, but analysts have estimated that the subsidiary loses somewhere between $550 million and $800 million annually.

The Financial Times recently reported that Daimler was set to selling off a 50 percent stake in the company to a Chinese automotive group.

"We can't see how a German microcar business can generate a profit, costs are simply too high," an analyst for investment researcher Evercore ISI said.

Initially dreamed up by Lebanese-born Swatch (yes, the Swiss watch company) CEO Nicolas Hayek, the first Smart car was released in 1998 and the company released its Fortwo model the United States a decade later in 2008. Hayek passed away in 2010.

MotorTrend noted that news of the discontinuation coincides with Mercedes' planned introduction of the EQC electric SUV to the North American market in 2020 and that the German automaker will focus its American efforts on the new release.

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