City car brand could be saved by Daimler's largest shareholder, and the announcement could come as early as next month.

Three sources have told The Financial Times Daimler, owner of Mercedes-Benz, is close to selling a 50 per cent stake in the Smart brand to Chinese automaker Geely.

A deal could be announced as soon as the Shanghai motor show, which takes place in the middle of April. If the sale goes ahead, it would fit both Smart's future vision for itself and Geely's acquisitive streak.

Smart has committed itself to being an electric-only car maker from 2020. While Europe is using a mixture of consumer incentives and emissions regulation to increase the take up of EVs, China has aggressively incentivised electric vehicles in order to tackle its serious air pollution problem.

Since 2010, Geely has greatly expanded its footprint, first by buying Volvo Cars from Ford, and then taking on the London Taxi Company and Lotus, as well as gaining a major stake in Proton.

A recent report in Handelsblatt stated Daimler would decide the fate of its city car brand by the end of 2019, with incoming CEO Ola Kallenius understood to be less enamoured with the marque than his predecessor, Dieter Zetsche.

The brand, which focuses on small city cars, has struggled to make money since it began producing cars in 1997. Industry analyst Evercore ISI estimates it could be losing up to €700 million ($1.1 billion) per year.

Last year, Geely's chairman, Li Shufu, bought a 9.7 per cent stake in Daimler, making him the largest single shareholder in the company.

Since then the companies have met to discuss possible partnerships, projects and a joint-venture ride hailing service in China.