The UK-based Project Kimber group will revive the Smart Roadster and Roadster Coupe using the name of one of England's oldest independent car marques.
Kimber plans to use the AC brand name when it unveils its redesigned roadster and coupe at the Geneva auto show next year.
The AC Cars Group has produced cars in some form since 1903. The company was known as Autocarriers until 1911 when the logo AC was used for marketing purposes.
AC-badged roadsters and coupes in Wales.
Kimber and DaimlerChrysler signed a memorandum of understanding in February to allow Kimber to build the roadster and coupe. The two companies are in talks to make the deal official.
The group selected the AC name for its sports cars after it failed to obtain permission to use the names of two traditional British sports marques, MG and Healey.
Financial backing from three investors for the project is not yet secure, a Kimber source said. The source declined to say how much money Kimber needs to get started.
If final plans are approved, production will start in mid-2007 and up to 8,000 units will be built in the first 12 months of operation, the company said in a statement.
By the third year, the company hopes to increase annual production to 11,000 cars, the source said.
Smart stopped building the two-seat Roadster and Roadster Coupe in December 2005, according to J.D. Power Automotive Forecasting.
Kimber will obtain parts from nearly all of the cars' former suppliers, the source said. The front and back ends of the Kimber-built cars will be styled by former Jaguar designer Keith Helfet, who worked on the Jaguar XJ220.