2014 Mercedes-Benz CLA250

Mercedes-Benz has been profiting mightily from compact cars recently. Its Kecskemét, Hungary, factory added a third shift to keep up with demand, and company's US arm called the CLA-Class, its "best launch in 20 years." However, Daimler boss Dieter Zetsche says the Mercedes brand won't be getting any smaller, subcompact models; they will be reserved for the Smart brand.

Last year, Mercedes was rumored to be working on a X-Class subcompact model to sit between Smart's vehicles and the A-Class. The new vehicles would have been positioned against cars like the Audi A1. However, Zetsche told Automotive News Europe that those plans were seriously debated but finally nixed. The segment was decided to be too difficult to reach profitability in, and the competition too tight.

Instead, he said to ANE: "There is a possibility that Smart could expand into the subcompact segment, but we have not decided that yet." The brand launches the new Fortwo and Forfour later this year, but they don't quite carry the premium cachet that a Mercedes product does.

Even if a subcompact Mercedes is out of the question, the brand doesn't seem ready to give up on diminutive models. The GLA-Class compact crossover is on the way, and both a CLA Shooting Brake and GLA coupe are rumored.