DETROIT – Smart USA had a startlingly bad 2010, selling only 5,927 Fortwo city cars in the U.S., down 59% from 14,595 in 2009.

Sales of the 2-seater have fallen off a cliff since it first arrived in 2008, when 24,622 buyers stepped forward. The German division of Daimler AG operates in the U.S. as a subsidiary of the Penske Automotive Group.

On the floor of the North American International Auto Show here, PAG President Roger Penske tells Ward’s he remains confident the brand is positioned for growth as fuel prices rise, along with discretionary income in a rebounding economy, and that there is no plan to pull the plug.

“We haven’t had any wind in our sails,” Penske says of Smart’s recent struggles. “But we’re fully committed to the brand. We had a decent month in December, almost 600 units.”

The target for 2011 is for Smart USA to sell 7,000 vehicles, and Penske says the stretch goal is 8,400.

“We’re in much better shape now with the product enhancements we’ve made,” he says, referring to the addition of an all-new interior with improved entertainment features, as well as more airbags for safety.

Smart was in dire shape one year ago, when the brand had 3,000 ’09 models in inventory, partly because the auto maker didn’t slow production fast enough. It took several months to clear out those vehicles. “We were in a perfect storm,” Penske says.

Today, Smart still has more than 700 ’10 models to unload, which Penske considers manageable. Smart USA President Jill Lajdziak says ’11 models are shipping to dealers now.

Helping move the metal for the time being are 2.9% APR financing, lease deals and cash-back offers of up to $1,500.

Both Lajdziak and Penske are upbeat about two new models – an electric vehicle and a 4-door joining the Smart lineup in the U.S. The 4-door, B-segment model is expected to go on sale in the fourth quarter and will come from a new partnership with Nissan Motor Co. Ltd.

The Fortwo EV actually is overdue. The auto maker previously had said it would arrive for testing in the U.S. by last October.

Lajdziak tells Ward’s the Smart EVs are just starting to arrive from the plant in Hambach, France, and that the allocation remains at 250 vehicles. She says the first EV could be delivered by month’s end.

The 77 Smart dealers in the U.S. and Puerto Rico each will get one of the EVs, and the remainder will be concentrated in five target markets: Portland, OR; Seattle; San Francisco; Orlando, FL; and the I-95 corridor from Washington, D.C., to Massachusetts.

Lajdziak knows the trend toward EVs will require a new mindset for drivers. “Everyone’s on a learning curve, from public utilities to municipalities to consumers to dealers,” she says. “We’re all collectively going on this march to the electrification of transportation.”

The EVs are being distributed for 48-month lease agreements, at the price of $599 a month. Baked into that tab is a $7,500 federal tax credit. The lease limits customers to 10,000 miles (16,093 km) per year.

The Fortwo EV places an advanced lithium-ion battery under the floor in between the axles that delivers up to 16.5 kWh (22-hp) of electricity. California-based Tesla Motors Inc. developed the battery.

Full charging for a depleted battery takes eight hours with a 240V dedicated outlet. With a household 120V line, full charging takes between 12 and 14 hours.

The current Smart EV has a range of 98 miles (158 km) based on the urban-intensive LA4 driving cycle. The Environmental Protection Agency gives the car a combined fuel-economy rating equivalent of 63 mpg (3.7 L/100 km).

The next phase of Smart’s EV brings the current-generation Fortwo but with next-generation battery technology from Daimler, due in mid-2012. The new battery is expected to deliver longer range and more horsepower, but actual specs are not being divulged yet.

With or without an EV in the lineup, Smart has some heavy lifting ahead in reviving sales. Penske is confident Lajdziak is up to the task. “I think Jill’s done a great job,” he tells Ward’s. “We just need to do the blocking and tackling with what we’re doing.”

tmurphy@wardsauto.com