Audi plans to join Europe’s booming subcompact SUV/crossover segment with a new model called the Q1, according to a report in Germany’s AutoBild magazine.

If built, the Q1 would launch in 2016 and would be the first premium entry in the segment. Mercedes-Benz is working on a subcompact SUV that could go on sale in 2018 code-named X class, according to reports.

An Audi spokesman told Automotive News Europe that the automaker wouldn’t comment on ”rumors.”

Europe’s automakers are launching subcompact SUVs to capitalize on their growing popularity. Recent launches have included the Opel Mokka, Renault Captur and Peugeot 2008. VW is planning to join the segment with the Taigun.

AutoBild said the Q1 will sell for about 20,000 euros in Europe. It would be the smallest offering in Audi’s Q range, which includes the large Q7, the mid-sized Q5 and the compact Q3.

The Q1 would be based on the Volkswagen Polo and would use engines from the Audi A1 subcompact hatchback. Despite off-road features that include raised ground clearance, the Q1 will not be offered with four-wheel drive, AutoBild said.

A plug-in hybrid variant of the Q1 is also planned to launch in 2018, the magazine said. It would be powered by a 1.2-liter gasoline engine coupled with an electric motor.

IHS Automotive forecasts that annual sales of non-premium subcompact SUV/crossovers will rise to 582,790 units in Europe by 2016 from 307,300 this year.