Mercedes-Benz to invest $1.3 bn to expand US production

Washington

German luxury automaker Mercedes-Benz said yesterday it would invest $1.3 billion to expand and upgrade SUV production at its Alabama plant.

Mercedes-Benz, a division of Daimler, said the improved facility in Tuscaloosa would support 300 new jobs and have end-to-end digitization of production processes as part of a "smart factory approach."

"In this way we can produce the next SUV generations even more flexibly, efficiently and in proven top quality," said Markus Schaefer, a Mercedes-Benz executive for cars, manufacturing and supply chain management, in a statement.

Hybrid versions will be among the future sport utility vehicle generations to be built at the plant, said US unit Mercedes-Benz US International.

The Tuscaloosa plant, established in the southern state in 1995, produced more than 232,000 vehicles in 2014 and is on track to top 300,000 this year, the company said.

Mercedes-Benz sold nearly 221,000 vehicles in the US in the first eight months of the year, up 7.3 percent from a year ago.

Daimler outlined plans in April to spend 25 billion euros($28.5 billion) worldwide through 2016 to develop new models and build factories. Chief Executive Officer Dieter Zetsche is pushing for the Mercedes brand to take the top spot in global luxury-car sales from BMW AG’s namesake marque by the end of the decade.

Models built in Tuscaloosa include the GLE SUV and C-Class sedan. Mercedes moved production of its R-Class wagon this year to a plant in Indiana owned by AM General LLC to free up capacity at the Alabama site for more SUVs. Demand for the off-road models will probably surge 61 percent by the end of the decade to 19.8 million vehicles as family buyers seek more carrying space as well as a sporty image, according to forecaster IHS Automotive.