Smart sellout

"The goal of the memorandum of understanding is to jointly draft a contract in the coming months that allows the British to redesign, build and sell the former Smart Roadster and Roadster Coupe models under a different brand," the unit said in a statement.

Smart also intends to sell production equipment for the two models that are no longer needed, it said.

The unit discontinued the Roadster and its coupe derivative last year as part of an initial broad restructuring of the brand, which has not made a profit since its creation.

It also scrapped plans to build a compact offroader, instead focusing its model range on just the brand's original ForTwo minicar and the subcompact ForFour.

Last week, Daimler Chief Executive and Mercedes head Dieter Zetsche told a conference call with analysts that Smart had narrowed its operating loss in 2005 from around $716.5 million in the year before.

While Zetsche has said he wants to give the unit time to achieve its target of breaking even next year, he has already tasked Goldman Sachs with the job of screening parties potentially interested in buying the brand.