Audi will produce a compact SUV called the Q1 starting with the 2016 model year in a segment that has drawn Mercedes-Benz, Porsche and others in recent months.

The Q1, which will be built in Ingolstadt, Germany, gives Audi an entry-level SUV that's "part of our broad-based SUV strategy," said Rupert Stadler, Audi's board chairman.

"It is designed on the basis of the modular transverse engine concept and will round off our Q series at the bottom end," Stadler added.

Audi plans to expand the number of models offered to 60 from 49 by 2020. Audi hopes to sell 2 million vehicles a year by that time. At its Ingolstadt plant, Audi produces the A3 and A3 Sportback and the A4/A5 family.

The Q family now includes the Audi Q3, RS Q3, Q5, SQ5 and Q7. The Q5 is the leading seller and should account for more than half of all Q models sold in 2013, according to Audi.

Fleet buyers registered 1,461 Q5s in calendar-year 2012. The Audi A6 sedan barely edged out the Q5 as the top Audi fleet vehicle with 1,477 registrations.