Meanwhile, Forbes sees the Smart car as a potentially lucrative model all things considered:
With gas prices on the rise and commutes not getting any shorter, many Americans are looking for some relief and they won't find it in the comfort of their huge sport utility vehicles. But drivers will have at least one new option on the road early next year.
The Smart Car is the minuscule car seen all over the streets of Europe and it's headed to America.
It's less than half the size of an SUV. Blink and you might miss the perky, pint-size two-seater — a car that could change the way America drives forever.
More than a quarter of a million of the $12,000 Smart Cars, made by Mercedes, have already sold in Europe. But some question whether the tiny auto will be accepted in the United States, where big cars still rule the roads.
"People like a design statement. People like things that are cute and say something about them," Auto Week editor Dutch Mandel said.
At 40 miles per gallon, the Smart Car nearly doubles the gas mileage of the popular Toyota Camry, which gets 24 mpg, and dwarfs the GMC Suburban's meager 15 mpg.
It's even three feet shorter than the other small sensation the Mini Cooper, but it's still three feet longer than a bicycle.
While the Smart Car may not be ideal for a family of four, the tiny size has its perks. Nothing beats easy parking and you can almost fit two Smart Cars in one average-size parking space.
But is safety compromised for size?
"It's something that you cannot deny. Physics will dictate a smaller object hits a larger object and the smaller object is not going to win that battle," Mandell said.
The manufacturer points out that the Smart Car is built with three layers of reinforced steel and four air bags.
Dave Schembri, head of Smart U.S.A., said, "At top speed of 90 miles an hour, the safety management is amazing, just like the car. This safety cell acts like a NASCAR roll cage."
DaimlerChrysler's diminutive Smart cars could see a big demand in the U.S., and become a lucrative line for their exclusive distributor.
Shares of United Auto Group (nyse: UAG - news - people ) were up 73 cents, or 3.5%, to $21.88, on excitement about the Smart car's American prospects. Last year, DaimlerChrysler (nyse: DCX - news - people ) tapped UAG to distribute its Smart car domestically. The vehicles are expected to hit the streets by the first half of next year.
UAG operates auto dealerships throughout the U.S. and the United Kingdom. DaimlerChrysler chose UAG over its own dealers because of its tighter focus on urban markets, where higher demand is anticipated.
The Smart is a tiny two seat roadster made by DaimlerChrysler's Mercedes unit. The car is just 8.8 feet long. For comparison, a Chevy Suburban is 18.5 feet long. One selling point is fuel efficiency. The car travels 40 miles per gallon under normal driving conditions.
"The vehicle is distinctive and its prospects only improve with higher gas prices," said Bear Stearns (nyse: BSC - news - people ) analyst Michael Geoghegan. Geoghegan also said the Smart should generate more buzz in the second half of the year with a planned tour of U.S. cities. The analyst upgraded UAG to "outperform" from "peer perform" Thursday.
UAG sells both new and used vehicles. A positive sign for the company is CarMax (nyse: KMX - news - people )'s first-quarter earnings. The chain of used car dealerships announced results Wednesday that pushed its shares up by over 10%. Investors had worried CarMax would disappoint because of leveled credit standards and high gas prices that discourage the purchase of bigger vehicles. (See "CarMax Moves The Merchandise").
The UAG Group, by the way, is run by the legendary Roger Penske. By all means, do visit the Smart USA site if you're further interested. Already they're trying to address natural safety concerns about this small car running alongside portly SUVs. Also, there is a Smart car of America site dedicated to news about this unique vehicle. I am still unsure of whether the Smart car's green credentials are that good for 40 MPG isn't too impressive. I suppose the Smart car is pitched at those who want to make a statement with a unique (for now) and stylish city runabout. I'll bet the Hollywood eco-set will soon be agog over this cutie...