The premium offering would be the first C-Class based hatch/coupe since a three-door version was dropped by Mercedes-Benz in Europe in 2011.
According to Germany’s Autobild, the new variant will combine the practicality of a station wagon and the look of a sports coupe - just as BMW claims of its 3 GT.
A Mercedes-Benz C-Class hatch would be the second rival to the BMW 3 Series GT arriving in 2016, with the recently rumoured Audi A4 Vario being the other.
The new Merc will reportedly feature the same engine line-up as the current C-Class Coupe, with options including petrol powered two-litre four-cylinder and three-litre twin-turbo V6 engines, along with a two-litre diesel and two hybrid options.
In comparison, the BMW 3 Series GT will launch locally with two petrol engines and one diesel engine, all of them turbo-charged. A third petrol option will arrive in the 335i model later.
Little else is known so far, but the new C-Class five-door coupe will reportedly be larger than the 2014 W205 C-Class, with more head and legroom.
The C-Class wagon is said to be unaffected by the decision.
Keep watching TMR for more news on a Mercedes-Benz C-Class hatch, and the local launch of the BMW 3 Series GT soon.
Pictured: The Mercedes-Benz C-Class Coupe.