According to Autocar, Mercedes is working on a small crossover called the BLK, which will be part of the new A and B-Class range. It’s being prepped for a possible late 2011 launch and should compete directly with the future BMW X1 and Land Rover LRX in the small SUV segment.

Sources report that the BLK will receive four-wheel drive and possibly even a FWD eco version. The eco version might just be a micro-hybrid, if they opt out for a direct hybrid. The micro-hybrid has start/stop technology to improve fuel consumption when the car is not moving. A range of four-cylinder direct-injection petrol and diesel engines are being lined up, sized between 1.6 liters and 2.2 liters.

Mercedes is still in the process of finding a partner, if they find one at all, to co-develop the engine and platform for the new range of front wheel drive vehicles. Talks between MB and BMW should be concluded by November, and if successful, should open a new chapter for the German rivals.