Yesterday, we wrote about how Dieter Zetsche needs to start earning his retirement. He took the suggestion to heart. Automobilemag.com has it that the long rumoured liaison between Daimler and Renault will finally bear fruits. Daimler and Renault will have baby twins!

Daimler and Renault-Nissan have at long last reached an agreement to jointly develop the next generation of veeeery small cars by 2014. The resulting car will be branded Smart by Daimler and whatever Renault-Nissan see fit. Apparently, the reason for why these talks kept stalling was that Daimler insisted on sticking to a rear-engine, rear wheel drive layout. Which was kind of, well, foreign to the usually very FWD folks at Renault.

According to the report, Renault will have the leading role in engineering, purchasing and production of the lilliputian-on-wheels. Daimler pretty much outsourced the production and engineering of their smallest offspring. Another development of this agreement is that electric powertrains will play a big role. Renault wants to use its knowledge from its electric fleet on the new car. Petrol engines will also be in the mix, with the choice of three cylinder, 1.0 litre, direct injection, turbocharged engine and a 1.3 & 1.5 litre four cylinder ones.

Busrep.co.za reports that Daimler and Renault (they call them “Peugeot” – those French all look alike, especially from South Africa, and when you copy something from the German edition of the Financial Times) will cross-share production at Renault’s plant in Slovenia (Peugeot don’t have a plant in Slovenia). The Financial Times says that the new version of the Smart car will share the platform with the Twingo, which is currently made in the Slovenian factory. By Renault. According to the FTD, the 4 door version of the Smart/Twingo will be made in Slovenia. The 2 door version of the new baby twins may be produced in the original Smart works in Hambach, France. “Before joint production in Hambach starts, there are many problems to overcome,” says the FTD. “The capacity of the plant is limited, There are numerous open details which must be solved between  Daimler and Renault.” Earn your keep, Dr. Z!