STUTTGART, Germany (Reuters) - A global trend toward smaller cars and less powerful engines means DaimlerChrysler (DCXGn.DE: Quote, Profile , Research) could one day launch a Mercedes-Benz compact car in the United States, group research chief Thomas Weber told Reuters.

Mercedes-Benz does not sell any small cars in the United States now, in part because it does not want to dilute the brand's high-end image and also because the weak dollar complicates the business case for European-made exports.

But that could change if fuel prices stay high and U.S. demand swells for cars such as the Mercedes-Benz B-Class compact, which is a hit in Europe.

"At present, the U.S. market is only conditionally ripe for such a car. But we think that there is a basic global trend toward downsizing -- not just for motors but for vehicle size as well," Weber said in an interview this week.

"As a complement to the segments in which we are already active -- (Mercedes-Benz) S-Class, E-Class, C-Class and the SUVs -- we absolutely believe that a car in the A/B Class -- a C-segment compact -- has chances in the U.S. as well."

Given ferocious in-fighting in the U.S. compact segment, successor generations of current Mercedes cars would need to be "absolutely competitive," he said.

"That means we need corresponding volume, among other things. In the end I am convinced that there will be Chrysler vehicles in this segment and also Mercedes-brand vehicles."

Weber, who is also head of development for the group's premium Mercedes Car Group division, forecast a revival for petrol engines in Europe as their performance improves and new emissions rules make diesels more expensive.

"The petrol engine will see a renaissance after its market share in Europe fell under 50 percent given the success of diesel in Europe," he said.

"With turbocharging, emission gas recycling and direct injection, the petrol motor will catch up strongly. It will thus become dearer, but also offer tangible added value. The share of diesel in Europe will stabilize," he said.

Still, high energy prices make diesel first choice for people who drive a lot because of its better mileage.

DaimlerChrysler has led a push by German manufacturers to convince Americans to switch to diesel-powered cars now that low-sulphur fuel is widely available there, and Weber said he was encouraged by the response so far.

"Customers in the U.S. are reacting extremely positively to diesels. Since we relaunched diesel in the E-Class in early 2004 we have sold more than 14,000 diesel vehicles in the U.S. No one could have imagined that only a short time ago," he said.

DaimlerChrysler was in talks with other manufacturers about sharing BLUETEC diesel technology, he said.

Combined with a urea-based additive, BLUETEC will from 2008 let cars cut nitrogen oxide emissions and thus meet clean air rules in all 50 U.S. states.

Weber played down the importance for passenger cars of plug-in hybrid technology that is getting lots of attention in the U.S. market. These would have rechargeable batteries to power them over short distances, but standard engines as well.

DaimlerChrysler has presented plug-in hybrids in commercial vans that have enough room to store the batteries, but the technology is not quite ripe for cars, Weber said.

"All batteries at present are limited in their size, ability to take and hold a charge, their storage capacity and how rigorously you can charge and empty them. Plug-in hybrids make little sense in a car with current battery technology," he said.

But they may be relevant for use in certain areas, he added.