The next-generation Mercedes A-class and B-class will abandon the sandwich floor and adopt conventional engines, Mercedes has confirmed.Mercedes will re-engineer the cars with new four-cylinder petrol and diesel engines, in an attempt to make the cars cheaper to build. It is also establishing a new low-cost factory for them in Hungary.It has confirmed that the line-up will “include characteristics that are already popular with customers today, such as generous interior space and an elevated seating position”. Mercedes is not revealing what format the new models will take. However Autocar sources have verified that styling proposals for three-door and five-door hatchbacks have already been signed off.The new models have been conceived to take on the Audi A3 and BMW 1-series at prices that are expected to start at around £16,500 in the UK. They will be accompanied by a new MPV, set to replace today’s B-class, that is expected to be of a similar size to the Volkswagen Touran and offer the choice between five and seven seats.Also planned is a new entry level off-roader based on the MPV, providing a rival for the upcoming Audi Q3 and BMW X1.“Mercedes-Benz is going to offer a wider range of cars with the high levels of comfort, safety and quality that are characteristic for the brand - particularly in the fuel-efficient, compact-car segment," said Mercedes chairman Dieter Zetsche.Also under consideration is an entry-level cabriolet based around the three-door hatchback as well as a four-door saloon similar in size to the VW Jetta. Autocar’s sources in Stuttgart talk about this car as a successor to the 190 – the car that kick-started Mercedes’s model diversification back in the mid-80s, eventually becoming the C-class in 1993. Unlike the original 190, though, the new saloon is front-wheel drive.Find out more about Mercedes' new plans here.