Daimler Is Spending $1 Billion on This New Mercedes Plant

Ausbau des globalen Produktionsnetzwerks: Mercedes-Benz plant neues Werk mit hochflexibler Produktion am Standort Kecskemét
Mercedes-Benz plant neues Werk im ungarischen Kecskemét: Luftbild des Mercedes-Benz Werks Kecskemét. ; Mercedes-Benz plans to establish a new plant in Kecskemét, Hungary: Aerial photo of the Mercedes-Benz plant in Kecskemét.;
Daimler AG

Daimler, the parent company of Mercedes-Benz, will invest one billion euros ($1.11 billion) to build a second manufacturing plant in Hungary. The factory, which will start producing vehicles by the end of the decade, will create 2,500 new jobs, the automaker says.

This is the second investment Daimler has announced this year for its Hungarian site in Kecskemet, a city approximately 56 miles from Budapest. In April, the company said it would invest around 580 million euros ($647.6 million) to expand and upgrade its existing plant, which produces compact cars.

The decision to build a second plant in Kecskemét suggests Daimler’s bet on Hungary, a country with lower wages than Germany and other European countries, is paying off. The company spent more than 800 million euros (at the time about $1.07 billion) to build the initial plant there—its first new factory in more than a decade.

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The second plant will be a so-called “flex-plant,” meaning it will be able to produce cars with different architectures, an industry term for different kinds of vehicles such as larger sedans as well as compact cars. The automaker doesn’t specify which models will be produced here except that they will be front and rear-wheel drive cars.

Mercedes-Benz currently has 32 models and plans to expand its portfolio of vehicles to 40 as well as electrify all of its passenger cars. This means the plant will likely handle new models, possibly electric vehicles.

The second plant will have a body shop, a paint shop, a final assembly, and a supplier park. Preparations for the site will begin this year.

The German automaker has ramped up its investment and commitment to electrified vehicles in the past year, although most are plug-in hybrids, not all-electric cars. The company’s Mercedes-Benz brand announced plans last year to introduce 10 plug-in hybrid models by 2017.

However, Mercedes is still committed to diesel-powered vehicles. Earlier this year, Mercedes unveiled its next-generation diesel engines. The new four-cylinder motor is now available for the first time in the E-Class sedan, which went on sale in March.

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The Mercedes-Benz plant in Kecskemét, which opened in 2012, already employs more than 4,000 people. The plant produces compact front-wheel-drive vehicles. Since 2012, more than 500,000 vehicles have been produced there. Last year, more than 180,000 compact vehicles were produced at the plant. The Mercedes-Benz B-Class, the four-door compact CLA Coupé, and the CLA Shooting Brake are all produced at this plant.

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