Niche is becoming the new mainstream. Before you think I’ve swallowed a marketer’s dictionary, let me explain. Ten years ago, SUVs were unusual enough to barely raise an eyebrow, let alone a stream of abuse – the mini-MPV was still a glint in Renault’s eye.

German luxury brands stood for conventional bodystyles and aspirational prices, in the days before the A-class, A2/A3, and 1-series.

Fast forward to 2005, and explosive growth has transformed those three niches. And two new vehicles, epitomising these trends, are on the way – the Mercedes X-class and Audi Q5.

Back in April Mercedes issued a low key industrial statement, confirming a new SUV would be built at its Bremen plant. Details were scant: “It’s an attractive vehicle, positioned below the M-class, in a very interesting and growing market segment.”

In translation – Mercedes is preparing a BMW X3 rival. Expected to be christened the X-class, the SUV is being readied for a 2007 launch. It conforms to the classic ‘soft-roader’ blueprint, by being based on a car platform without the off-road armoury of low range gears and locking differentials.

Rather than being mostly front-drive, like Japanese and Korean rivals, power is permanently split between all four wheels.

The hardware is shared with the all-new C-class, specifically the four-wheel drive 4Matic estate version. Expect a wide range of four and six-cylinder petrol and diesel engines (and maybe a V8 or two), and a versatile, five-seat cabin, clad in a pumped up SUV body that’s more show than go.

The X-class is on a collision course with Audi’s Q5, which is set for a late 2007 launch. It’s a baby brother to this autumn’s Q7 SUV, with five seats though. Audi’s contender ascribes to the same blueprint as the X-class: it’s based on the next-generation A4 platform and runs four, six and eightpot engines. Insiders say the all-wheel drive Audi will have air suspension to boost ground clearance and a hill descent control system.

Expect Q5 prices to kick off around £23,000, with the Merc wading in a few grand higher. Attainable enough to tempt yet more Vectra and Mondeo drivers to go ‘upmarket’.