Daimler stops construction of Mercedes plant in Hungary
Billion investments cancelled
In the summer of 2018, Daimler announced an investment worth billions for Hungary. A second plant was intended to be built in the city of Kecskemét to manufacture cars for the Mercedes-Benz brand.
But now the Stuttgart carmaker has put the plans on ice. A spokeswoman explained: “On the basis of the continuous optimization of our production network, we are postponing the further construction of the factory”. This was reported by the news agency Reuters. The magazine Handelsblatt refers to insider circles and speculates on a postponement of at least one year. In the long term, however, the company plans to continue to build on the site.
No statement on the reasons given
The weak sales forecasts for the European automobile market are cited as the reason for the investment freeze. However, Daimler has not yet commented on the reports or the reasons. The company regularly reviews its growth prospects and adjusts its market strategy accordingly.
A second factory was planned to be built in Hungary, and it was scheduled to go into operation at the end of 2019. The investment of one billion euros was intended to create 2,500 new jobs, among other things. The so-called “full-flex” principle was supposed to be used in the plant. This would allow all Mercedes-Benz models to be produced flexibly on a single line, regardless of the type of drive.
So far, the car giant is building the A- and B-Class as well as the CLA series in Hungary. The plant has employed over 4,000 people since 2012. In 2018, more than 190,000 vehicles rolled off the production line there.
Daimler result slumps
However, the Group confirmed that the plants worldwide were operating at high capacity. Despite the weak economy and the weak forecast for the automobile market, Daimler intends to increase car sales. In the first quarter, the company sold only 743,000 vehicles. This is about 5.5 percent less than in the same period last year.
In the period from January to April, the operating result for the passenger car segment in the USA and Mexico slumped by around 1.3 billion euros. Daimler expects a downward trend for the USA and China, and a stagnating market for Europe.