Yesterday evening, Avant/Garde Diaries festival “Transmission LA: AV CLUB curated by Mike D” opened at The Geffen Contemporary at Museum of Contemporary Art in Los Angeles. Those attending got a special treat: the world premier unveiling of the Mercedes-Benz Concept Style Coupé, a foretaste of the new midsize four-door coupé scheduled for market launch next year. The car is making an appearance at the LA creative exhibition before being whisked off to the Orient, where it will make its official debut at Auto China 2012, which opens in Beijing on April 23.

The new Concept Style Coupé is actually a four-door sedan with the flowing lines of a two-door coupé, a design trend Daimler originated six years ago with the CLS that’s become popular with several automakers. It also shares styling cues with the Concept A-Class shown last year at the Shanghai Auto Show. The resemblance is more that skin-deep: the Concept Style Coupé, also called the CLA, is likely very similar to a sibling to the next generation A-Class line scheduled to hit the U.S. in about two years. The new cars will be priced below the C-Class to give Mercedes-Benz a vehicle line with which they can compete with the BMW 1-Series and upcoming versions of the Audi A3.

“The Concept Style Coupé is expressive and powerful in its design”, said Dr Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars. “We are staking our claim very clearly here. This is the model against which sporty vehicles in the executive segment will have to measure themselves in future.”

The new sedan is a smaller car: it’s nearly a foot shorter and 7.3 inches narrower than the current CLS550. And instead of a 402-horsepower, 4.6-liter, twin-turbocharged V8, there’s a 211-horsepower, 2.0-liter four working through a seven-speed, dual-clutch transmission to deliver power to Mercedes’ 4MATIC all-wheel drive. It’s targeted at the European executive vehicle market. The engine, though smaller, doesn’t want for power- and mileage-boosting technology. It has its direct-injection with exhaust gas turbocharging, an enhanced combustion system and extended stratification ranges for lean-burn operation using fast-acting injectors for the multiple fuel injections, and multi-spark ignition on demand.

“The almost production-standard Concept Style Coupé sets a new benchmark for avantgarde design in the executive segment”, emphasised Gorden Wagener, Head of Design at Mercedes-Benz. “Its breathtaking proportions, sinewy fluid surfaces and sculptural lines are the physical expression of our dynamic design idiom.”

Interesting features of the concept that may not make it to a production vehicle include innovative headlamps intended to be reminiscent of a predatory animal. In standby mode, they shine red. The turn signal indicators are another special feature: when activated, the individual elements light up sequentially for a wave effect. As was true of the original CLS, the CLA has center-opening doors with no B-pillar.

The four-seat interior includes a center console that is almost organic in its lines. The instrument cluster features carbon-fiber tubes. When the turn signals are actuated, a ring lights up in the appropriate tube. Being a show car, there’s lots of leather: even the instrument panel upholstered in hide and the steering wheel is covered in suede which might provide a better grip but is going to require some serious upkeep. The seats are from the new A-Class and have an electroplated insert in the upper part of the seat is illuminated.

The air vents in the instrument panel were inspired by a jet engine and are similar to those used in the A-Class Concept. They are backlit and change color depending on the temperature selected.

There’s the usual plethora of electronic toys to ensure that everyone is “always on,” as the Mercedes press release says. Mercedes-Benz developed applications specifically to for use and control while on the move, but forget about surfing the net while blasting down the Interstate; in teh CLA, it works only when the vehicle is stationary. One interesting twist is the software: it’s not stored in the vehicle. Mercedes-Benz has fallen in love with cloud computing and all apps run off the Daimler Vehicle Backend. Daimler says this is an advantage because the system can be updated with new applications wirelessly through a mobile phone connection instead of returning to the dealer for upgrades.

While Daimler executives bask in bright lights and the reflections from highly polished paint jobs, Reuters reports there’s trouble brewing back on the ranch.

Two unnamed sources familiar with the situation told Reuters that oil-rich Abu Dhabi, Daimler’s largest shareholder is going to unload its nine-percent stake in the German carmaker. This could put some serious pressure on Daimler CEO Dieter Zetsche, who has been fighting investor demands to sell Daimler’s truck operations and ffocus on the luxury car market. Since Daimler is a major player in both the European and North American markets, this sounds like some major short-term thinking but the consensus is that Mercedes-Benz is not performing up to par and has been playing second fiddle to BMW for too long.

Aabar, Abu Dhabi’s sovereign wealth fund, became Daimler’s largest investor in March 2009 when it paid $2.6 billion for a nine percent piece of Daimler pie.

As recently as October of last year, Aabar said it remained “fully committed to its position in Daimler and continues to be supportive of Daimler’s management and strategy.” However, one of Reuters sources said that the move to shed the shares has been under consideration for a while.

In addition to its stake in Daimler, Aabar is looking to offload its portion of a joint stake in Mercedes’ Formula One team and its holdings in Elon Musk’s Tesla electric car company.

Aabar could not be reached for comment and a Daimler spokesman said the company had no knowledge of the plan and that there have been no discussion of such a plan with Daimler management.

Daimler shares fell 2.5 percent, underperforming the group’s European auto peers. An exit by Abu Dhabi could fire up the rumor mill about a possible breakup of the company.

One German analyst, who requested anonymity, told Reuters, “Daimler now effectively lacks an anchor investor and the discussion over the undervaluation of the trucks business hasn’t gone away. Look at the recent regulatory filings over options positions in Daimler held by Goldman Sachs, Morgan Stanley and Deutsche Bank – they could very well be the counterparties for Aabar.”

Daimler’s share price has doubled since Aabar bought into the company, meaning the stake now has a market value of just over $5.26 billion.

Analysts said it was not unusual for an investor to cash in after such a run-up. They also said that, while Daimler is too big to be a takeover candidate, the stock sale could create an opportunity for new investors to push for change.

“I don’t think this puts Daimler in play, but it will be an added incentive for management to drive its top-line and earnings growth,” said Adam Hull, analyst at banking group WestLB.

“A sale of the trucks business is a definite possibility, but I wouldn’t expect that to happen at least until it resolves its margin underperfomance,” Hull said.

“What I find so interesting is that they are considering a complete and total withdrawal from everything connected to Daimler,” the Frankfurt-based analyst said. “Which does suggest there were strategic differences with management behind the scenes.”