DaimlerChrysler AG (DCX) will begin selling its fuel-efficient, two-seat Smart car in the U.S. during the first quarter of 2008, the automaker's CEO said Wednesday.

The decision -- announced by chief executive Dieter Zetsche during an appearance in Detroit -- is a watershed moment for Smart, which has not posted a profit since it was formed in 1998.

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The car will be distributed by auto retailer UnitedAuto Group Inc., which will be responsible for awarding potential dealers and developing and maintaining a Smart vehicle dealership network throughout the U.S. and Puerto Rico.

Zetsche, who personally oversees the company's Mercedes Car Group of which Smart GmbH is a part, had said repeatedly this year that a decision on whether to sell the tiny car -- which measures less than 9 feet long from bumper to bumper -- would come by the end of June.

The move likely could help generate new revenue for the ailing Mercedes group, which has dragged down the company's overall earnings as it restructures and reemphasizes its focus on quality.

Company officials at the German-American automaker conceded that with gas prices in the U.S. hovering above $3 a gallon in many places, the Smart fortwo could appeal to buyers looking to save money.

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