Mercedes-Benz to Produce Smart in China and Sue Shuanghuan

SHANGHAI - October 31, 2007:

Mercedes-Benz is weighing a plan to produce Smart in China following its launch in the U.S market, Chinese media reported today.

Citing a Mercedes-Benz official under the condition of anonymity, auto industry Web site Cheshi.com.cn reported that the company is considering producing Smart either in its existing joint venture in southeast China's Fujian Province or in a new plant.

Last month the Associated Press reported that Daimler AG sees Asia, especially China, as a potential new market for its Smart fortwo.

"It makes sense to market the brand in China, where we already have a profound production base there, though primarily for the domestic market," said Rainer Schmueckle, chief operating officer of Daimler AG. He added that the Smart unit also is poised to break even this year as it readies for the car's U.S. launch in early 2008.

Smart, part of the Mercedes Car Group, has lost money consistently since it was formed. DaimlerChrysler spent nearly 1 billion euros ($1.38 billion) on restructuring Smart, cut 300 of the 750 jobs at the unit's headquarters and ended production of its larger, four-seat forfour model, along with its two-seat Roadster, in 2006.

Separately, Mercedes-Benz confirmed that it will take legal action to stop European sales of China's Shuanghuan Noble mini-car similar to the Smart ForTwo. The Noble has a design very similar to the ForTwo, except that it has four seats, while Smart only has two currently.

For more information about the burgeoning auto industry in China please visit http://www.gasgoo.com/Autobiz/list/7/China-News.html