The idea, which would produce a rival for the Audi A1/Citroen DS3/MINI, was looked at and rejected a while ago but is now ‘back in the room’, said the head of the company, Dr Dieter Zetsche.

‘The question is, how can we do it and make a reasonable profit?’ he added. ‘The only way would be with a partner. But if we want to achieve the volumes we have in mind can we do it without being in that segment.’

The relationship that parent company Daimler has with the Renault-Nissan Alliance could provide a solution if the decision is taken to proceed with a Mercedes below the A-Class family.

The Alliance is already providing Mercedes with Renault's 1.5-litre turbodiesel engine for the A-Class and will in turn receive Mercedes V engines for Nissan's upmarket Infiniti range. The two groups are also co-operating on the development of a new small car platform for the next Renault Twingo and a new smart forfour. Mercedes will also get a Renault-developed van from the deal.

The A-Class family, which also encompasses the B-Class and will soon be supplemented with the CLA four-door coupe and at least two more variants, will soon be taking a quarter of all Mercedes global sales, said Dr Zetsche, but this will rise to ‘more than 30% by 2020’.