FRANKFURT -- Mercedes-Benz plans to launch a subcompact car range with the help of Renault-Nissan, a German magazine reported.
The cars, badged as X-class models, would be priced below 20,000 euros and compete with BMW's Mini brand and the Audi A1, AutoBild said. The models would fill a gap between the Smart brand and the Mercedes A- and B-class compacts.
Daimler, Mercedes' parent company, called the report speculation and declined further comment.
AutoBild said the first vehicle would be an SUV-styled crossover that would be a rival to the upcoming Audi Q2. It would be based on the Renault Captur subcompact crossover and could launch in 2018.
The next model would be a roomy subcompact minivan that would be a smaller version of the Mercedes B class. It would be based on the next-generation Renault Clio subcompact hatchback.
With five years to develop the models, Mercedes will seek to design a completely new vehicle and will not simply face lift one of Renault-Nissan's existing vehicles, the report said. Mercedes currently sells the Citan car-derived van, which is based on the Renault Kangoo.
Both models will be powered by three- and four-cylinder gasoline and diesel powertrains.
Auto Bild said Mercedes had initially considered shrinking and decontenting the A class to produce the crossover, but ruled this out on cost grounds. The next-generation rear-engine Smart was also considered as a base for the project, but its architecture was not considered flexible enough.
The low pricing of the model will likely mean that the X-class vehicles will be front-wheel drive, the report said, adding that Mercedes is aiming at global annual sales of between 100,000 and 150,000 units of each model.
Daimler and Renault-Nissan have been seeking ways to expand the partnership they announced in 2010 to pool development and production of small cars and engines.