The Mercedes-Benz A-class should have been a benchmark car. After all, when the world's blue-chip automotive brand decides to play in VW Golf territory, you should expect something special.

On paper, at least, the front-drive, hatchback A-class lived up to expectations. Here was a car barely 3.5m long that boasted passenger safety levels equivalent to much larger cars. Yet in their quest to squeeze as much car as they could into the smallest possible footprint, Mercedes-Benz engineers designed in one fatal flaw - the A-class was fundamentally top heavy, as demonstrated famously in the pre-launch 'elk test' by Swedish journos.

It cost £120m to revise the suspension and fit stability control as standard equipment by the time the car finally went on sale in February 1998. Even then, the car was criticised for its relatively poor quality interior and choppy ride. But with more than a million sold, the A-class is a firmly established part of the Mercedes model range (although a fair proportion of this is rental business).

The next generation due for launch later this year will be a major improvement promise Mercedes insiders – in a totally different league as far as ride, handling and roadholding are concerned. What's more, it's going to be built to the same quality standards as a C- or E-class and be available in a wider range of styles.

The basic architecture remains unchanged – a tilted engine that slides under the sandwich floor in the event of a crash, and the high seating position – but the track is wider, the wheelbase longer, and, most importantly, the centre of gravity lower. There will be three bodies: C169, a three-door which will be marketed as the A-class coupe; W169, the five-door hatch version, which shares its wheelbase with the coupe, but has unique sheet metal; and CST245, which is a long wheelbase crossover variant, although still front-wheel drive. It will be badged the B-class.

Engines range from a 90bhp 1.5 litre petrol to a 193bhp 2.0-litre petrol turbo. Diesels will start at 82bhp and stretch to 140bhp.

Mercedes expects the coupe to help boost A-class volume from 150,000 to 200,000 units a year. The B-class will add a further 80,000 to the total.