Watch out BMW M3. Underneath the disguise, this is the forthcoming new Mercedes C63 AMG, and it's set to be the most focused AMG C-class yet.According to a senior Mercedes source, the new V8-powered car "has been designed from the ground up to make the best of the 6.3-litre engine."Among other refinements, that means it uses many components borrowed from the impressive new CLK 63 Black Series, including much of that car's front subframe."This isn’t just a case of slotting a big engine into the C-class," said our source, tacitly admitting that previous high-powered C-classes have been more about autobahn-storming than bowling along B-roads.The C63 is likely to benefit from Merc's new Advanced Agility Package, soon to be an option on all C-classes. This provides a 'Sport' mode, which firms up the dampers, speeds up the steering, attenuates throttle response and on automatic cars makes for more rapid gearshifts.Like previous AMG C-classes, expect the new C63 to be automatic-only, but with wheel-mounted paddles and a sophisticated manual mode.The C63's expected new agility doesn't mean that it will be short of grunt: our source said that it will pack 500bhp, making the M3's 414bhp seem almost weak.Mercedes is also facing a new type of competition from the M3, which is likely to be available as an estate for the first time. Traditionally Mercedes has only had to compete with Audi in the fast, compact estate market.Even if Mercedes has its work cut out to beat the M3 for agility it seems likely to beat it for boot space: the 3-series Touring will fit a maximum 1385 litres, within a litre of the old C-class. The new Merc wagon is said to have an even bigger load area.UK sales of the C63 AMG Estate begin in the second quarter of 2008, but we'll get behind the wheel in October, when it's launched along with the standard C-class estate. We can't wait.