Mercedes’ compact car strategy has taken yet another detour, proving once again that long-term plans in Stuttgart rarely stay fixed for long. The new CLA was originally intended to serve as the entry point after the planned phase-out of the A-Class. Those plans have now changed, with the automaker confirming development of a new compact entry. This yet-unnamed car will slot below the CLA and take over from the A-Class once it bows out of production in 2028.

Originally, Mercedes intended to slim down its small car portfolio, positioning the CLA as the gateway into the brand. Built on the new MMA platform, it introduced updated styling, cutting-edge technology, and a blueprint for the next GLA and GLB SUVs.

Chasing Volume Over Exclusivity

However, Mercedes recently decided to step back from its traditional luxury positioning, even phasing out the word “luxury” from its official strategy. CEO Ola Källenius signaled a shift toward wider appeal and higher production volumes, after profits plunged to just a 5.3 percent margin in the first half of the year. With insiders citing excessive focus on costly Maybach and AMG models, Mercedes is preparing a major product push with more attainable compacts and SUVs.

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At the same time, strong demand across Europe has convinced the brand to keep the current A-Class hatchback and sedan alive until 2028. Yet even that extension may not be enough, as Mercedes now hints at a fresh entry-level model to keep pace with customer appetite for smaller, more affordable cars.

Mathias Geisen, Member of Mercedes’ Board of Management responsible for Marketing & Sales, spoke to Automobilwoche about the upcoming model: “We’ll be introducing further models based on our new MMA architecture after the CLA. Believe me: In the long run, there will be an entry-level model in the world of Mercedes-Benz.”

Compact Reinforcements

Geisen acknowledged the strong customer interest in the A-Class, calling it a “highly relevant vehicle” for Mercedes that helps “bind many of our customers to our brand early on.” He said they extended production to “avoid a supply gap,” hinting that the new entry-level offering could arrive by 2028.

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Details remain scarce. Neither the name nor the body style has been confirmed, and powertrain options are still under wraps. German reports indicate the new car might be a modified and cost-effective version of an existing SUV rather than a completely fresh series. That could mean a reworked GLA or a slightly smaller crossover, but Mercedes is keeping its cards close for now.

Priced To Sell

In any case, the new Mercedes crossover is expected to be competitively priced, answering the calls of German dealers. The current A-Class starts at €34,252 ($40,400) in its home market. By contrast, the fully electric CLA begins at €53,066 ($62,527), which actually makes it more expensive than the C-Class sedan at €42,265 ($49,800). A more affordable hybrid CLA is on the way to help close that gap.

The numbers underscore why this lower rung matters. Mercedes’ compact lineup sold 534,800 units in 2024, making up an important chunk of its overall 1,983,000 passenger car sales. In Germany alone, the A-Class accounted for 17,400 out of 257,900 new Mercedes registrations last year. That customer interest is likely what prompted Stuttgart to rethink its strategy and decide against abandoning the lower end of the market.

Goodbye B-Class

While the A-Class lives on, the B-Class is nearing its final chapter. Sales of the compact MPV have steadily declined, and production is scheduled to end in 2026 after a 22-year, three-generation run.

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Speaking about upcoming launches, Geisen remarked, “We’re launching more than 40 new models over the next two years. We’ve never had such a large product offensive. Our cars will set new standards in their categories”. Mercedes recently introduced the new GLC EV, serving as a zero-emission alternative to the GLC and a direct rival to the all-new BMW iX3 Neue Klasse.