The highly anticipated Mercedes-Benz A25 AMG has been spotted testing in minimal camouflage just outside the AMG headquarters in Germany.

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The A-Class, which is set to take on the popular Volkswagen Golf, will be given the special AMG treatment to go head to head with the Golf R.

Although the full aerodynamics and body kit is yet to be officially revealed and that this prototype looks pretty much like a normal A-Class, the AMG variant is certain to bring a significant performance upgrade.

Powering the Mercedes-Benz A25 AMG will be a 2.0-litre turbocharged four cylinder engine delivering around 250kW of power. Unlike the rest of the A-Class range, the AMG variant will be all-wheel drive with power to be transmitted via a dual-clutch gearbox.

Expect to see upgraded brakes and wheels as well as a pair of square shaped exhaust pipes on the production model.

The new A-Class is more a conventional-looking hatchback rather than the previous model’s tall-body/MPV styling. It sits 409mm lower and 160mm longer than the old model and represents the first hot-hatch from the German manufacturer.

The A25 AMG is sure to give the Audi RS3 Sportback, BMW 1M and the Volkswagen Golf R a scare. We suspect it will be priced lower than the $100k 1M but above the $52,490 Golf R. Expect to see the A25 AMG in Mercedes-Benz local showrooms in 2013.