(Corrects to show Nissan plant assembling the car will be in North America, not necessarily the United States)
* US retail sales to start in fourth quarter of 2011
* Vehicle to be built at Nissan plant in North America
* Smart fortwo sales down 61.5 pct in 2010 through Sept
DETROIT, Oct 6 Smart USA said on Wednesday that it plans to begin selling a subcompact car in the United States in late 2011, the first vehicle for the U.S. market under an expanded Daimler AG (DAIGn.DE) and Nissan Motor Co Ltd (7201.T) partnership.
The five-door hatchback will give dealers a larger vehicle to sell than the Smart fortwo micro car that has struggled in the past two years after a brisk sales start when it was introduced to the U.S. market in 2008 amid rising gasoline prices.
"There were a lot of customer requests to offer a little bit larger vehicle," Smart USA President Jill Lajdziak said in an interview. "We're meeting the needs for what the consumer asked."
The new vehicle will compete with Honda Motor Co's (7267.T) Fit in the growing subcompact vehicle segment, Lajdziak said. Sales of the as yet unnamed car will begin in the fourth quarter of 2011.
Smart USA is a unit of Penske Automotive Group (PAG.N), the exclusive U.S. distributor for Smart and the No. 2 U.S. auto dealership group. Penske reported a loss on the Smart distribution unit in the first half of the 2010.
Through September, U.S. sales of the fortwo were down 61.5 percent in 2010 to 4,779 vehicles from the first nine months of 2009.
The new car will be built on a new global platform in one of Nissan's four assembly plants in North America, Nissan said. (Reporting by Deepa Seetharaman; editing by Carol Bishopric)