Smart, the car brand that tried to make a virtue of being small, is getting bigger.

To broaden its appeal with the growing ranks of urban drivers, Smart is doubling its lineup with a new model that has space for four passengers, two more than the only model currently offered. The Daimler AG unit unveiled the new ForFour alongside a redesigned version of the ForTwo today in Berlin.

Daimler brought out the first Smart car in 1998 and has struggled ever since to find a vibrant market for a two-person vehicle whose main selling point is that it’s easy to park. Tepid demand and high costs have caused the brand to lose about 3 billion euros ($4 billion), Bankhaus Metzler estimates.

Smart’s fortunes may now be about to change. Sales of city cars, like Fiat SpA’s trendy 500 and General Motors Co.’s Opel Adam, are set to surge 35 percent to 6.2 million vehicles by 2020, according to IHS Automotive.

“Since the market for small cars is expected to grow, the scope for Smart to be successful is also expanding,” said Frank Biller, an analyst with LBBW in Stuttgart, Germany. “Smart is moving into a very competitive segment.”

At 11.5 feet, the ForFour will be 31 inches longer than its two-seat stablemate. That still makes it 6 centimeters shorter than the Fiat 500, which also has space for four passengers. The Smart four-seater will start at about 11,000 euros, almost 1,000 euros less than the Italian model, when the hatchback goes on sale Nov. 22 in Europe along with the ForTwo.

Second Attempt

The ForFour, which will not go on sale in the U.S., is Smart’s second attempt at a four-seater. The first version was based on a car from Mitsubishi Motors Corp. and bore little resemblance to the iconic ForTwo. It was dropped in 2006 after about two years on the market.

To avoid the mistakes of the past and cut costs, Daimler teamed up with French manufacturer Renault SA. The new ForTwo and ForFour as well as Renault’s Twingo were developed together and share as much as 75 percent of their parts.

The ForFour will be assembled alongside the Twingo at Renault’s factory in Novo Mesto, Slovenia. The two-seater will remain the only vehicle rolling off the assembly line at Daimler’s factory in Hambach, France, after Renault decided against making a sister model because of limited demand for two-person cars.

Smart’s revival is key to Chief Executive Officer Dieter Zetsche’s strategy to make Mercedes-Benz, a fellow Daimler unit, the leading luxury-auto maker in sales and profit, overtaking Bayerische Motoren Werke AG and Volkswagen AG’s Audi. With regulators evaluating manufacturers on total sales, higher Smart deliveries would help Mercedes sell more high-margin models like the S-Class sedan by offsetting the carbon-dioxide emissions of those bigger, less-efficient vehicles.

“Smart is an integral part of our growth strategy,” Zetsche said in Berlin. “It will have a positive influence” on Daimler’s business.

Rear Engine

The new Smart models have their engine tucked into the rear to save space. The lack of area to absorb a crash at the front end has caused injury concerns by some consumers. To counter that, Daimler tested the Smart’s Tridion frame by crashing the car into the top-of-the-line Mercedes S-Class.

“Safety is a top priority at Daimler,” Rodolfo Schoeneburg, head of passive safety at Mercedes, said in an interview before the Berlin premiere. “We don’t only want to achieve good crash results in laboratory-like situations but also in real-life accidents.”