The 2014 Smart Fortwo will be the most agile city car available, according to the company.
Company boss Dr Annette Winkler told What Car that the aim is to make the two-seater Smart as appropriate as possible for an urban environment.
'The turning circle will set a new benchmark,' said Dr Winkler.
Although there are no official measurements available yet, What Car? has seen a video of the new Smart performing a U-turn on a road that would normally require a three-point turn.
Winkler said that the incredibly tight turning circle is possible thanks to the engine being positioned at the rear of the car, freeing up space at the front for more movement of the wheels.
Winkler also said that the next generation of Smart Fortwo will have all of the city-focused attributes of the current model, saying: 'The Fortwo will keep all the strengths the car has today: the compactness, the roominess, the agility.' It will still be able to park end-on at the side of the road, as the current model is able to, where permitted.
She also said that concerns about the current car will be addressed, saying: 'We will offer a double-clutch transmission and that is unique in the segment. There is no other car in the A segment with a double clutch.
The new Smart will be offered in Coupe and Cabriolet variants, and will come with both conventional and electric powertrains. A petrol Coupe will be the first to be offered, with the EV and convertible models due later.
Winkler also said that the high level of personalisation currently available on the Smart will continue, with no upper limit to what customers can request. 'You can have it covered in Swarovski crystals if you like,' she said.
The new Smart Fortwo is due to be revealed later this year, with a public reveal set to take place at the Paris motor show in September.