The future of Smart is not at risk, insists parent DaimlerChrysler, despite the small car brand failing to make a profit since its launch in 1998.

‘It is true that Smart is still not earning money, but the existence of Smart is not at stake,’ said Ulrich Walker, who was named head of the Smart division in late July.

Walker insisted he had been given personal assurances by DaimlerChrylser chief executive Juergen Schrempp and Mercedes Car Group boss Eckhard Cordes. Daimler said Mercedes’ operating profits, which include losses at Smart, fell by 62% to €304m (£211m), the lowest since before the takeover of Chrysler created the group six years ago.

The profit drop at Mercedes follows its admission earlier this year that their cars were prone to breakdown.

On Thursday, Manfred Gentz, finance director, warned that Mercedes profits for the full year would be ‘significantly below’ last year's €3.1bn (£2.15bn), and the costs of dealing with quality problems would continue next year. ‘The bulk of the problem will be resolved in 2004 and 2005,’ he said. But he insisted cars now rolling off production lines meet quality standards. (DaimlerChrysler: October 29).