Although Mercedes-Benz will soon launch a hybrid version of its S-Class sedan - the S400 BlueHYBRID - the big sedan wasn't intended to be the company's first production hybrid vehicle. A hybrid version of the automaker's M-Class SUV was supposed to make production last June, but a supplier dispute ultimately derailed that plan. However, a new report indicates a hybrid M-Class is still in the works.

The M-Class hybrid will share the same hybrid drive system found in the S400 BlueHYBRID, but with one major difference - it will be diesel-powered. In fact, the hybrid M-Class with use the same 3.2L clean turbo-diesel found under the hood of the ML320 Bluetec.

According to Germany's DPA, the M-Class hybrid will generate a combined 340 horsepower - making it very comparable in power to the V8-powered ML550. But thanks to electric motors helping in acceleration and even propelling the SUV exclusively at low speeds, fuel economy should be improved by about 30 percent. The ML320 Bluetec already achieves 18/24 mpg city/highway, so expect a healthy boost over those figures, particularly in city driving.

The hybrid M-Class is expected to hit showrooms sometime during the fourth quarter of this year, just after the S400 BlueHYBRID rolls into dealerships. Although the first M-Class hybrid will use a diesel engine, a gasoline version could also be on the way.