After a flurry of rumors, DaimlerChrysler chairman Dieter Zetsche announces on June 28, 2006 that the company’s urban-focused Smart brand—already popular in Europe—will come to the U.S. in early 2008.

Smart—an acronym for Swatch Mercedes ART—began as a joint venture between Swatch, the company known for its colorful and trendy plastic watches, and the German automaker Mercedes-Benz. The result of this collaboration was the Smart ForTwo, which measured just over eight feet from bumper to bumper and was marketed as a safe, fuel-efficient car that could be maneuvered easily through narrow, crowded city streets. The ForTwo debuted at the Frankfurt Motor Show in 1997 and went on sale in nine European countries over the next year. Despite its popularity among urban Europeans, Smart posted significant losses, and Swatch soon pulled out of the joint venture. Despite these setbacks, Mercedes maker DaimlerChrysler (now Daimler AG) made an initial foray into the North American market, launching the Smart in Canada in 2004.

On June 28, 2006, Zetsche announced Smart’s planned U.S. launch, declaring: “The time has never been better for this–and I am convinced that the Smart ForTwo as an innovative, ecological and agile city car will soon become just as familiar a sight on the streets of New York, Miami or Seattle, as it is today in Rome, Berlin or Paris.” Between 2003 and 2006, as reported by the German newspaper Handelsblatt, DaimlerChrysler (now Daimler AG) had taken a loss of some 3.9 billion euros (around $5.2 billion) on the Smart brand, and the company looked to the U.S. market as a way to bring the brand into profitability. It had initially planned a 2006 release in the United States, but pushed it back; the skyrocketing price of fuel gave the company the impetus it needed to introduce the Smart, which was designed to achieve 40 plus miles per gallon under normal driving conditions.

Marketed as “a small car with a big urban solution,” the Smart was inevitably compared to another small, odd-looking vehicle that had arrived in the United States from Germany nearly four decades before: the Volkswagen Beetle. Though early interest in the Smart resulted in more than 30,000 early registrations by September 2007, skeptics pointed to several factors that might hurt the Smart’s sales among American consumers, including the popularity of gas-electric hybrid cars like the Toyota Prius and that of another small (though much larger than the Smart) urban-friendly car, the Mini Cooper.