Mercedes-Benz’s 21st century vision for urban mobility, the Smart Fortwo, has now reached its difficult teenage years.

Entering its third model generation and closing in on its third decade on general sale, the car is approaching a crucial stage in its history. It’s time to mature, to deliver, or risk deletion.

Despite being probably the most daring exponent of compact car design in the past 40 years, the Fortwo has failed to emulate the phenomenal success of the original Mini and Fiat 500 – the cars whose standards of compactness, space efficiency and urban manoeuvrability it sought to better back in 1998.

Now available in nearly 50 countries, the Fortwo has stagnating sales of 100,000 units a year, having been in decline since 2004.

There’s evidently a limited supply of customers willing pay a premium for a 2.7-metre-long two-seater, and this explains why Daimler has broadened the Smart line-up to include a successor to the four-door, four-seat Forfour.

There’s also a lingering feeling that the Fortwo still hasn’t tapped that seam of supply as well as it should have, failing to present the benefits of ultra-compactness without also imposing too many undesirable compromises.

This time, things may be different – and not least because, this time, Daimler isn’t the only firm putting its cash on the line. The third-generation Fortwo has been developed in an industry-standard joint venture with Renault and is closely related to the latest Renault Twingo.

However, whereas the Twingo and its Forfour sister are built at Renault’s Novo Mesto factory in Slovenia, the shorter Fortwo stays on at Smart’s production base in Hambach, France.

The same length as the old Fortwo, the new version is faster and wider and has standard power steering, an overhauled chassis and a normal manual gearbox. Could that be all it needs to make the world truly appreciate it?

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