New baby SLS will have a front-mounted V8 and is being developed together with Merc's AMG performance division.

Mercedes-Benz is planning a new model, possibly called the SLC, which will be a baby version of the SLS Gullwing and will rival the likes of the Porsche 911.

According to Autocar's Benz sources, the new sports car will be a two-seater with a front-mounted V8 and is being developed jointly with the automaker's AMG performance division.

The model will launch sometime in 2014 and will come with a price tag of around £75,000 (€86,221). The coupe version will be followed by a canvas-top roadster variant sometime in 2016.

AMG sources told Autocar that the 911 Carrera S is serving as a rough benchmark for the car. The car will be made from a lightweight aluminum structure similar to the SLS and its design will be a "contemporary retro" look that echoes the original SL model.

The SLC may come to use a normally-aspirated version of Mercedes-Benz's 5.5 liter V8 engine which should be able to produce an output of around 426 PS (313 kW / 420 bhp) and a very hefty and competitive 548 Nm (405 lb-ft) of torque.

"It is going to make the 911 seem old-fashioned," said one Mercedes-Benz insider.

Gallery: Mercedes developing SLC as a 911 rival - report