DETROIT - Penske Automotive Group Inc. plans to end its agreement to act as the distributor for SmartUSA minicars, giving the responsibility back to Daimler AG of Germany, the companies said Monday.

Penske told owners of Smart franchises that they would no longer sell the Smart ForTwo minicar and that the inventory would be redistributed to Daimler, said Mickey Anderson, president of Performance Automotive Group in Omaha, Neb, reported The Wall Street Journal.

"They are pulling the plug," said Mr. Anderson, who owns the only Smart franchise in Nebraska. Mr. Anderson said that 77 Smart franchises existed at the agreement's height, but he added that there might be fewer today.

Daimler unit Mercedes-Benz USA is negotiating with Penske on the transition of sales and service and expects the process to be complete by the end of June.

"We are very excited about working toward integration of Smart into the MBUSA organization, and look forward to working with our dealer partners to exceed customer expectations for this unique vehicle," Ernst Lieb, president of the U.S. sales operation, said in a written statement. "The addition of Smart, combined with our Autohaus dealer initiative, will help us build upon the tremendous momentum the Mercedes-Benz brand had achieved here in the U.S."

Penske, which operates 173 franchises in 17 states and 152 others outside the U.S., began selling the Smart ForTwo in January 2008. The car enjoyed a sales surge when gasoline prices climbed to $4 a gallon. Sales totaled 24,622 cars in 2008.

But when gas prices slumped, so did Smart's sales. U.S. consumers bought 5,927 Smarts in 2010, down almost 60 percent from 14,595 in 2009.

Tony Pordon, spokesman for Penske Automotive Group, said the move was driven by a change in organizational structure in Germany for the Smart brand, not by declining sales.

Smart must terminate all of its dealership agreements, but about two-thirds of Smart dealers are also Mercedes-Benz dealers, Mr. Pordon said.

Former General Motors Co. executive Jill Lajdziak, who ran the Saturn brand, was hired to help increase sales, and Penske later reached a nonbinding agreement with Nissan Motor Co. to sell a Nissan-made small car in the U.S. market under the Smart brand name. Nissan was expected to assemble the vehicle for Penske at a plant in Mexico. That deal, according to a dealer briefed on the situation, is now dead.

The confusion within the Smart ranks could help Chrysler Group LLC dealers, which are beginning to introduce the new Fiat 500 subcompact car, which was seen as a competitor to both Smart and BMW AG's Mini Cooper. The Fiat arrives in showrooms in late February.