When BMW’s revolutionary Megacity Vehicle hits the streets in 2013, closest rival Mercedes-Benz, with its current lineup, won’t have any true competitor for it.

Although Mercedes-Benz currently sells the Smart Fortwo Electric Drive, the Megacity Vehicle is expected to be a five-seater, with full carbon fiber construction and BMW levels of handling and dynamics.

Mercedes-Benz has realized this problem and is currently working on its own solution for congested urban mobility in the near future. The automaker is currently working on design studies for a new vehicle, grouped under the unoriginal project name of Mega City Mobility.

The project is being headed at the automaker’s design studio in Yokahama, Japan under the guidance of Holger Hutzenlaub. The Japanese studio was chosen because of the country’s expertise in developing compact urban commuters and crowded city living.

“We been looking outside the automotive industry, including the trend towards mini city houses, to generate new ideas on space utilization and packaging,” Hutzenlaub revealed during a recent interview with Autocar.

The new car will be based on the rear-engine platform being developed for the next-generation Smart Forfour, with Renault-Nissan also reportedly having a hand in its development.

[Autocar]