Mercedes-Benz to Localize Production in Alabama by 2027

News Summary

Mercedes-Benz is set to localize the production of a core vehicle segment at its Tuscaloosa facility by 2027, enhancing its operations in the U.S. The facility, which has produced over 4.5 million vehicles since 1997, will invest approximately $1.2 billion to expand electric vehicle infrastructure in North America. The move aims to align production with regional demands while supporting the local economy and job market significantly. This strategic enhancement showcases the company’s commitment to the U.S. market and its intent to adapt to evolving consumer preferences.

Alabama

Mercedes-Benz has announced plans to localize production of a core segment vehicle at its Tuscaloosa facility by 2027, reinforcing its commitment to the U.S. market. This strategic move marks a significant enhancement to the company’s operations in North America, which has been a vital market for Mercedes-Benz for over a century.

Since its establishment in 1997, the Tuscaloosa plant has produced over 4.5 million vehicles and is expected to manufacture around 260,000 vehicles in 2024. The facility is responsible for several popular models including the GLE, GLS, GLE Coupe, and the EQ series, amongst others. The decision to introduce a new core segment vehicle is indicative of Mercedes-Benz’s intent to better align its production with local market demands and consumer preferences.

Significance to the U.S. Economy

The Tuscaloosa plant plays a crucial role in the company’s operations, employing over 6,000 workers directly and bolstering approximately an additional 60,000 jobs across local suppliers and service providers. This plant, considered a global hub for SUV production, exports about 60% of its output, contributing positively to the U.S. trade balance. Mercedes-Benz has made substantial investments in its U.S. operations, totaling over $10 billion in production, infrastructure, research and development, and dealership networks.

Ola Källenius, the Chairman of the Board of Management of Mercedes-Benz Group AG, underscored the importance of the Tuscaloosa facility, emphasizing its role as a key hub for nearly three decades. The focus on local-for-local production not only underpins the company’s commitment but is also designed to enhance customer relations as production is brought closer to the marketplace.

Future Plans and Investments

As part of the broader strategy, Mercedes-Benz is committing approximately $1.2 billion to expand its electric vehicle (EV) infrastructure in North America over the next 6-7 years. This investment will enhance the high-speed charging network across the U.S., supporting the growing demand for EVs. Additionally, the company operates around 385 dealer partners and 24 corporate locations throughout 13 states, indicating a substantial operational footprint.

In response to evolving market trends, such as the increasing popularity of SUVs over traditional sedans, the company is exploring new model production options. Speculation has emerged that the upcoming localized vehicle may be a variant of the C-Class or E-Class, with sources suggesting it could potentially be the GLC SUV.

Mercedes-Benz’s Market Position

In the competitive U.S. market, Mercedes-Benz has seen considerable success, selling 324,500 passenger cars and 49,600 vans in 2024 alone, making this region the company’s second-largest market globally. The production expansion in Tuscaloosa not only strengthens the brand’s presence but also demonstrates Mercedes-Benz’s adaptability in the face of challenges such as tariffs and shifting consumer preferences.

The Tuscaloosa plant was the first major facility established outside of Germany, highlighting its strategic significance within the company’s global operations. With these moves, Mercedes-Benz continues to evolve and respond effectively to the dynamic landscape of the automotive industry.