The smallest Mercedes-Benz will remain the A-class compact, although the Smart brand could expand into subcompacts, Daimler CEO Dieter Zetsche said.

"We had a long debate about whether we should expand Mercedes into the B [subcompact] segment and we decided this is not going to happen," he said last week after a media event here. "There is a possibility that Smart could expand into the subcompact segment, but we have not decided that yet," Zetsche added.

The Daimler CEO, who is also head of the Mercedes brand, said it would have been difficult for Mercedes to be profitable with a subcompact model. The highly competitive segment already features products such as the A1 from Volkswagen Group subsidiary Audi and a range of vehicles from BMW Group's Mini brand.

This summer Smart will unveil the third-generation two-seat ForTwo microcar and the second-generation four-seat ForFour. At about 3500mm long, the new ForFour will compete against near-premium minicars such as the Fiat 500 and Opel/Vauxhall Adam.

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Mercedes-Benz Decides It Will Not Chase MINI or Other Subcompact Brands

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