Mercedes Prepares New Compact SUV to Replace A-Class and Undercut Premium Rivals
Mercedes-Benz is once again reshaping its compact car strategy, signaling a major shift in direction for the Stuttgart-based automaker. After years of uncertainty about the future of its entry-level lineup, the brand has confirmed plans to launch a new compact SUV that will eventually replace the A-Class while sitting below the CLA in the portfolio. Scheduled for arrival by 2028, this upcoming crossover will serve as the new entry point into the Mercedes world, positioned to compete directly with the likes of the Audi Q2, BMW X1, and Volvo XC40.
Rethinking the Compact Strategy
Initially, Mercedes had planned to slim down its compact range, with the all-new CLA—built on the MMA platform—becoming the sole gateway model. The CLA introduced bold new styling, advanced technology, and set the template for future compact SUVs such as the GLA and GLB. However, disappointing financial results have forced Mercedes to reconsider.
During the first half of the year, the brand’s profit margins fell to 5.3 percent, largely due to an overemphasis on high-end AMG and Maybach models. CEO Ola Källenius has since announced a pivot toward broader market appeal, higher production volumes, and more accessible vehicles.
A-Class Extension and the Rise of a New SUV
Although the A-Class hatchback and sedan were expected to end production sooner, Mercedes confirmed they will remain in showrooms until 2028 to “avoid a supply gap.” Mathias Geisen, Mercedes Board Member for Sales and Marketing, told Automobilwoche:
“Believe me: In the long run, there will be an entry-level model in the world of Mercedes-Benz.”
This new SUV, likely to use a cost-optimized adaptation of the GLA, will allow Mercedes to retain younger buyers who typically enter the brand through the A-Class.
Competitive Pricing and Market Importance
Affordability is at the heart of this strategy. The current A-Class starts at €34,252 ($40,400), while the electric CLA begins at a steep €53,066 ($62,527)—making it more expensive than the C-Class sedan (€42,265 / $49,800). With German dealers pushing for an accessible alternative, the new SUV could be priced closer to today’s A-Class levels, ensuring competitiveness.
The compact lineup remains vital for Mercedes. In 2024, it sold 534,800 compact models, accounting for more than a quarter of the company’s total 1.98 million global sales. In Germany, the A-Class represented 17,400 registrations out of 257,900 total Mercedes sales—figures that highlight its importance as a brand entry point.
Goodbye B-Class, Hello Expansion
One casualty of this restructuring will be the B-Class MPV, whose declining sales have sealed its fate. Production will cease in 2026, ending a 22-year run across three generations.
Mercedes is far from slowing down elsewhere. According to Geisen, more than 40 new models will be launched in the next two years, marking the largest product offensive in the brand’s history. Among them is the new GLC EV, a zero-emission counterpart to the best-selling GLC, designed to rival the upcoming BMW iX3 Neue Klasse.
With this new compact SUV, Mercedes is betting big on volume, accessibility, and a strategy that keeps younger customers tied to the brand—proving that even in Stuttgart, the definition of “luxury” is evolving.
