TORONTO -- Mercedes-Benz Canada Inc. will broaden its product range by selling A-class compact cars in Canada in 2005 and is determined to bring in the Smart micro-compact two-seater, president Ernst Lieb says.
But even as Mercedes-Benz prepares for the new products, Mr. Lieb is cleaning off his desk as he departs after a stretch of almost eight years as president and 17 years over all at Mercedes-Benz Canada. He becomes president and chief executive officer of DaimlerChrysler AG's Australia-Pacific group.

Managing the furious growth in sales, employees and the dealership network that has marked Mr. Lieb's reign in Canada falls to new president Markus Breitschwerdt, who leaves his post as director of marketing strategy for Mercedes in Germany to head up the Canadian operations starting April 1.

Mr. Breitschwerdt has another hat that will come in handy as the arrival of A-class approaches because he's also head of product management for A-class and C-class vehicles.

Mr. Lieb thinks Mercedes can sell about 6,000 A-class compacts a year. That's almost half the 14,500 vehicles the company sold in Canada last year, which was its best year yet.

"It's going to be fantastic for our dealer network," he said.

The real splash, however, will come from Smart, a two-seater that -- for lack of a better description -- looks a bit like a golf cart with doors and a windshield. But this European city car has a 600cc engine that will generate speeds of up to 140 kilometres an hour and comes as a coupe, a convertible and, soon, a roadster.

"We're really pushing very hard to get this product here in two years," Mr. Lieb said.

The key roadblock, he said, is the cost of several technical modifications that are necessary to meet Canadian standards and a decision about whether the number of vehicles that can be sold here will allow the auto maker to overcome those costs.

"It's always the same question," Mr. Lieb said. "How many can you sell?"

His preliminary estimate is that Canadians might buy 500 to 1,000 cars a year, when the Smart first goes on sale.

"I always thought Canada -- especially Toronto and Montreal -- is a lot more European than the U.S.," he added in explaining why Smart should succeed here. The price of gas in Canada is also closer to European prices than U.S. gas is.

Broadening the company's product range has been a successful strategy in recent years. Sales were just 4,000 units a year when Mr. Lieb started as president in 1995.

A wave of new products since then has been the key reason for the growth, he said, because there were no SLK roadsters or CLK class cars then and the M-class sport utility vehicle didn't arrive until the late 1990s.

"The M-class was the big, big push for us," he said. It's now the company's second-biggest seller behind the C-class.

But Mr. Lieb doesn't regard the boost in sales, growth in employment at the company to about 750 people from 330 people, or even a more than doubling of revenue to $1.1-billion from $400-million seven years ago as his greatest accomplishment.

Instead, he's happiest about restructuring the Mercedes-Benz Canada dealership network.

In 1995, the auto maker had 57 or 58 dealerships, but fewer than 10 of those were exclusive. The rest shared space with Jaguar dealers, or Volvo outlets, or Subaru.

That has changed dramatically. Now just 10 are non-exclusive and the other 42 sell only Mercedes vehicles.

"We have owner-operators who know this business and live and breathe it every day," Mr. Lieb said.

He points to the company's new Mississauga outlet as an example of what new dealerships -- including several in the next two years -- will offer.

"You can walk into the shop and you can talk to the technician. If he's changing something, you can ask why. You can see him do it."

The growth in dealerships includes a new one in Toronto at the site of the company's current head office, whose distinctive mirrored facade has been a landmark on the east side of the city for years.

A new head office is being constructed behind the current building, which will then be renovated and turned into a dealership.

It will also serve as the site where purchasers of two of the company's elite new vehicles will see their cars for the first time later this year.

The handful of Canadians who have purchased the $300,000 (U.S.) Maybach limousine or the SLR sports car will be flown to Toronto when their cars are ready.