The Auto Writer

Rumors have been swirling for months that Mercedes would bring an all new car line to the US market, one smaller than the C Class. Today, the German automaker confirmed that it will introduce both a B Class sedan and a similar size sport utility vehicle to the North American market sometime after the new B Class rolls out in late 2011.

B Class Sedan

According to Automotive News, a hatchback, sedan and SUV as well as an undetermined fourth body style will be released late next year with the sedan expected to be sold on this side of the Atlantic. Like so many other car manufacturers, Mercedes believes that gas prices will be higher down the road which also means that demand for smaller cars will spike. Mercedes has never sold anything smaller than the C Class though Daimler’s Smart car unit sells the tiny ForTwo.

Introducing a smaller Mercedes to this market isn’t without its risks. Unlike in Europe, Mercedes is exclusively a luxury brand in North America. That sedan will have to have both the look and feel of a Mercedes in order to sell here with customers not simply satisfied with 40 mpg.

Nasty Exchange Rates

Currency exchange rates could make it difficult for Mercedes to build a B Class car over there and import it while still making a profit. Mercedes has been eying how the euro and dollar have been performing and has been looking at changing which cars are built at its Alabama facility. Nevertheless, if the company brings an electrified version of the B Class to the states or one with an alternative fuel source (diesel) federal tax credits may enhance that model’s appeal.

Not much is known about the proposed SUV which would come in smaller than the GLK Class crossover, currently the smallest and least expensive Mercedes utility model sold in North America.

Through February, Mercedes sales are up by 8 percent while BMW is up 16 percent. Audi is making the most in-roads of the three German luxury brands, enjoying a year to date increase by more than 33 percent. If Mercedes expands its product line right it could help Daimler stave off BMW while slowing down the Audi onslaught.