I know you all love to talk about manufacturing plant logistics, so why don’t we stick to that for the second gear? Mercedes-Benz says it plans to build the upcoming “baby” G-Wagen at its plant in Kecskemét, Hungary – not in Graz, Austria, where the full-size G is hand-built by Magna Steyr. I’m sure this will upset some people, but it doesn’t make any sense. The Hungary plant is set to play a key role as a manufacturing hub for MB as it accelerates a cost-cutting program that is putting German factory jobs at risk.
The Baby G, which is scheduled to launch sometime next year, is based on the automaker’s compact MMA architecture, which underpins the new CLA and GLB. The decision to go with Hungary for production leaves the company’s Rastatt factory in Germany (which currently builds the CLA) without a new vehicle program. From automotive news: :
The move underlines Mercedes’ broader strategy to shift production from Germany to lower-cost locations in Eastern Europe. So far, the automaker had only confirmed the electric C-Class and its derivatives including the AMG Performance variant for the Kekskemet.
Following a €1 billion expansion, the Hungarian plant will become Mercedes’ largest manufacturing site in Europe, with annual capacity increasing to between 300,000 and 400,000 vehicles.
Hungary’s share of Mercedes’ European production will increase from about 15 percent to about 30 percent, according to a person familiar with the company’s manufacturing plans.
Germany’s three Mercedes plants – Sindelfingen, Rastatt and Bremen – will maintain a combined capacity of about 900,000 vehicles, about 100,000 less than before. Current production is around 200,000 units per plant.
The investment will add approximately 3,000 jobs, bringing the total number of employees in Cécskemet to approximately 7,500. The factory is already building the combustion-powered A-Class and electric GLB, while production of an electric C-Class is also planned.
The A-Class successor is also expected to be built in Hungary, people familiar with the plans said.
There’s also an American component to all this, as Mercedes looks to bring more production Stateside as President Trump has raised tariffs on new vehicles imported from Europe.
Mercedes is considering moving GLC production for North America from Bremen to Vence, Alabama. If this happens, European GLC production is expected to move to Hungary. The GLC is Mercedes’ best-selling vehicle globally.
Along with other initiatives, the production transformation aims to help Mercedes reduce manufacturing costs by 10 percent between 2024 and 2027.
The decision comes as CEO Ola Kallenius pushes a new cost-cutting program in Germany. In a message to employees, Källenius announced a “German productivity offensive”, warning that handing over new products to German factories further weakens the company’s relative cost position.
Mercedes says it plans to introduce 40 new models by 2027, but executives including Källenius are under pressure to make sure those launches actually translate into profitability rather than more investments that go nowhere. Some might argue that introducing the smaller G-Wagen would dilute the brand, but the company is clearly willing to bet that whatever loss the brand has lost in reputation will be compensated for by huge sales.
