A CONSORTIUM led by company doctor David James is in talks with the German car giant Daimler Chrysler about buying the rights to sporty versions of the Smart car.

Project Kimber, which is chaired by James, earlier this year made an unsuccessful bid for MG Rover, the defunct Birmingham-based car group. Kimber executives had planned to revive the MG Midget name, and now plan to do something similar using the Smart car.

They are negotiating with Daimler Chrysler, Smart’s parent company, about acquiring the rights to the Smart Roadster and Roadster Coupe. Neither car has a future with Daimler — in April the German group announced that production of the baby sports cars, which use the mechanical units and 700cc turbocharged engine of the more familiar Smart ForTwo, would stop this summer. Daimler said it couldn’t sell enough of these cars to make a profit.

The Smart Roadster was seen as the spiritual successor to the 1970s MG Midget and Austin-Healey Sprite, and Britain has been its biggest market. When its demise was announced, Smart UK persuaded the factory in Hambach, France, to make a last batch of 400 Roadsters to sell here through next year.

Project Kimber could restart production in 2007. If it is successful in its bid — and Daimler Chrysler’s decision is expected early in the new year — it will transfer assembly to one of three locations that qualify for EU grants: greenfield sites at Bridgend in South Wales, Erfurt in eastern Germany and the former Daewoo factory in Poland.

The £13,000 two-seater cannot be called a Smart or, indeed, an MG. It will have new bodywork, styled by Keith Helfet, designer of the 1980s Jaguar XJ220, and be sold under the marque AC, Britain's oldest existing car company.

Project Kimber has linked with AC Cars, owned by South African entrepreneur Alan Lubinsky, and will present the latter-day Smart as a modern AC, while the original firm continues producing its “heritage” cars based round the famous AC Cobra in Malta and the United States. A new dealer network will be established to sell the AC “Midget”.

The Kimber team, which consists of some 30 motor-industry managers with experience in all aspects of car production and marketing, stayed together after the MG Rover debacle. A leading light is Barrie Wills, a start-up specialist who was formerly at Jaguar, Reliant and DeLorean.

They aim to establish a “virtual” car company in which design, development and some elements of manufacturing are devolved to external suppliers. This would enable the business to expand beyond the new AC to contract-build for larger carmakers, in the way that Magna Steyr in Austria and Valmet of Finland are operating.