Daimler-Benz has decided to halt deliveries of its revolutionary new A-Class small car while sweeping safety modifications are undertaken.

Daimler-Benz, parent of Mercedes, said it was modifying the A-Class's chassis, which in addition to several previously announced upgrades of the car, meant it would stop deliveries for 12 weeks and that production would slow down.

The A-Class, which hit showrooms last month amid a massive publicity campaign, has become an embarrassment for Daimler after one flipped over during safety tests last month in Sweden, forcing the maker to admit the car suffered from a stability defect.

"We have to be in the forefront of safety. We are sorry, but we have learned something," Daimler-Benz chairman Juergen Schrempp told industry analysts.

The problems are a blow to Daimler's strategy of moving beyond its country-club image into a wide range of cars.

Schrempp said the cost of modifying the car and the slower sales will knock 100 million marks ($60 million) from the company's operating profit this year and 200 million marks in 1998.

The Daimler chief told analysts that the bad publicity had led to 1 to 2 percent cancellations for the A-Class, but that it still had an order book for around 100,000 A-Class cars.

Not the king of the road

Daimler, he said, would produce about 18,000 cars this year, down from an originally planned 28,000 and that production in 1998 would slip to 160,000 from 190,000 as had been expected.

The company plans to resume deliveries with the modified chassis to customers from February next year and said that the 2,600 A-Class cars already delivered will be converted in special service centres.

Peter Schmidt, an analyst at Automotive Industry Data, said: "It won't have a direct effect on the rest of Mercedes cars, but it might hit the Mercedes' reputation.

"They are doing something they have never done before, they have cut some corners and they will pay heavily for it."

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