TORONTO – Recognizing the stronger appetite for small vehicles in Canada, DaimlerChrysler AG plans to introduce Smart vehicles here a year before the brand is scheduled to go on sale in the U.S.

Canada to get Smart vehicles this fall.

Mercedes-Benz Canada used the recent Canadian International Auto Show here to announce it will start selling the ’05 Smart Fortwo coupe and cabrio CDI diesel models this fall in Canada.

Smart does not go on sale in the U.S. until 2005 as an ’06 model. It will sell the Formore, a larger 4-seat cross/utility vehicle derived from a new platform.

The Canadian market gets a version of the current-generation Smart City Coupe already sold in Europe and elsewhere. The Fortwo is a 2-seater available as a coupe or convertible. It is powered by an inline 3-cyl. 0.8L common-rail diesel engine that delivers 40 hp and 74 lb.-ft. (100 Nm) of torque, for a top speed of 75 mph (120 km/h). The choice of diesel reflects the fact Canadians embrace diesels much more than Americans. Diesels make up about 40% of Volkswagen AG sales in Canada – about five times the rate as in the U.S.

The Fortwo is only 8.2 ft. (2.5 m) long but is equipped with such features as electronic stability control, antilock brakes and brake assist.

Smart will be sold through Mercedes-Benz dealerships in Canada. Pricing has yet to be confirmed, but the base coupe is expected to start at C$16,000 ($12,000) and the convertible will start below C$20,000 ($15,000).

Other auto makers used the Toronto show to continue a trend that started earlier this year in Montreal of showing vehicles for sale in Canada, but not the U.S.

Nissan Motor Co. Ltd. used the Toronto show to unveil the X-Trail compact CUV (already sold in Europe and Asia) that goes on sale in Canada this fall but is not earmarked for the U.S. market. Ford Motor Co. showed the Jaguar X-Type wagon – again no plans for an American version. Kia Motors Corp. premieres the Tuner, a sport version of the Rio.

General Motors Corp. unveils the Pontiac Pursuit that shares the Delta platform with the new Chevrolet Cobalt. GM also announces the Canadian version of the Buick LaCrosse will be called the Allure. The move was necessary as LaCrosse has a derogatory slang connotation in Canada.

As for small, entry-level vehicles from Chrysler Group, Wolfgang Bernhard, chief operating officer, says the auto maker continues to look at it, “but no one can get to the $10,000 pricepoint where you have to be.”

He says he knows the segment is important, especially for the Canadian market. And he says Chrysler has not given up on its Millennials, a group of entry-level concepts. While the Dodge M80 compact pickup has been ruled out, candidates for production still include the Jeep Compass (essentially a 2-door Liberty), Jeep Willys2 and the Dodge Razor 2-seat sports car, which is considered more of a longshot.

Bernhard would not comment on the effect of selling Smart vehicles in Canada – but his comments come days before it became public he is heading back to Germany to oversee the Mercedes car division.

Ford’s Phil Martens, group vice president-North America product creation, agrees there is a trend of Canada-only vehicles and says auto makers need to be in that game. He calls it a “growing niche, driven by affordability.”

Martens says the Canadian market is more like the rest of the world – it’s the U.S. that is different.

Because small vehicles tend to have lower margins, it is a difficult business case. “Made in the U.S. and shipped to Canada is difficult,” says Martens. “Made elsewhere and sold (in Canada) is easier.”

The trick is to find open capacity for these products elsewhere in the world and add Canada as a second market. Products made for the European or Asian markets can be more easily adapted to meet Canadian standards than U.S. regulations, especially in crashworthiness, Martens says.

But in the battle for share, “the next big growth segment in the U.S. is a B car with a 1.6L or 1.8L engine,” forecasts Martens.