NEW YORK (CNNMoney.com) -- DaimlerChrysler will begin selling a redesigned version of the company's Smart ForTwo in the United States beginning in early 2008, according to the company. But it will be a tough sell: Its price is higher than other cars that offer more space, while its fuel mileage is only slightly better.

Optimists point to the Smart's unique - some say stylish - appearance. Another plus is its relationship to Mercedes-Benz, which brings with it a certain engineering legitimacy.

Smart ForTwo is expected to hit the United States in early 2008.

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Teeny cars Smart ForTwo Mini Cooper Toyota Yaris Base price <$15,000 $17,450 $10,950 MPG 40 31 37 Seats 2 4 4 Luggage space 5.3 cu. ft 5.3 cu. ft. 12.8 cu. ft.

Called a "city car," the ForTwo is almost two feet shorter than a Mini Cooper and 1,000 pounds lighter. As its name implies, the ForTwo is strictly a two-seater and storage space is limited. Its luggage space, at 5.3 cubic feet, is about the same as the Mini's.

The Smart ForTwo's big selling point is going to be fuel economy. For the current version, the company estimates a combined city/highway fuel mileage of about 40 miles per gallon, according to DaimlerChrysler. (The 60 mpg figure sometimes reported is for the diesel-engine version.)

The Toyota Yaris, which seats four and costs thousands less, gets an EPA-estimated 37 miles per gallon.

The ForTwo's impressive fuel economy is achieved, for the most part, through sheer tiny-ness. The current version is powered by a 0.7-liter, three-cylinder engine that produces a mere 60 horsepower and 74 foot-pounds of torque. In size and power, that's similar to a moderately powerful motorcycle engine.

Even with its small size, the current Smart's performance is truck-like. DaimlerChrysler estimates the current version's zero-to-sixty time at 15.5 seconds.

The 2007 redesign will not change the Smart ForTwo much in terms of its purpose or dimensions. But it will be improved in many ways while still having a starting price of "clearly less than $15,000," said DaimlerChrysler spokeswoman Bettina Singhartinger.

That price would place it as a competitor to considerably larger cars like the Ford Focus and Honda Civic. Cars like the Chevrolet Aveo and Toyota Yaris, which still offer considerably more space inside, sell for thousands less.

"I don't understand this decision," analyst Joe Barker of CSM Automotive said of DaimlerChrysler's decision to sell the ForTwo here.

The ForTwo's extremely small size may be an attractive feature in Europe, where many cities have ancient, narrow roads but here it's a mere curiosity at best, he said.

"If it were half the price they plan to sell it for, it would resonate with a wide range of buyers," he said.

For the price DaimlerChrysler is offering, car shoppers can get reliable Toyota or Honda cars with nearly the same fuel economy and far more utility, he pointed out.

But utility isn't everything, said Phil Reed, an editor with the automotive Web site Edmunds.com. Reed had just finished spending a day with a Smart ForTwo provided by importer Zap cars of California. (Zap already sells specially retro-fitted versions of the Smart ForTwo for U.S. buyers.)

The Smart's tall design makes it feel roomy inside in spite of its tiny dimensions, he said.

"You really kind of forget how little the car is when you're inside," he said.

In terms of price, he said, it's good to remember that you're talking Mercedes-Benz vs. Toyota.

'Why would you buy a Mini?" he said. "It's got BMW behind it."

Even in an American city, the car's maneuverability and ease of parking was remarkable, he said. Just to see if it could really be done, he parked the ForTwo nose-in between two parallel parked cars. It fit without sticking out into the road.

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