The announcement comes amid upcoming legislation in Europe and the U.S. which is pushing manufacturers towards more CO2 friendly cars.
The European Commission will need all German auto-manufacturers to reduce their average fleet emissions from 178 grams per kilometre to 138 g/km by 2012. Those that fail to meet the target wilo pay hefty fines.
"All our vehicles will have turbocharged engines in series production by the end of 2010 at the latest," Thomas Weber, Daimler board member responsible for research and development said
Turbocharging petrol cars has till recently been a speciality of Japanese manufacturers, but demand for forced induction is growing as it provides a relatively cheap way to reduce fuel consumption without a performance loss.
Fans of BBC's TopGear would remember Jeremy Clarkson mentioning some time ago, that since the Mercedes-Benz S class is the epitome of modern automotive engineering, the fact that it's not a hybrid suggests that hybrids are not the way of the future.
Well, Clarkson may soon be eating his own words with the Mercedes flagship sedan expected to be offered as a full hybrid vehicle by end of 2009!
Mercedes says the final aim is to get to zero-emission driving which will require the use of fuel cells and electric-powered vehicles.
The company plans to build a full-electric variant of the Smart ForTwo from in 2010.