Daimler has started production at its new €800m passenger car plant in Kecskemét in Hungary for production of the Mercedes-Benz B-Class supported by rail logistics links with its German plant in Rastatt, which also makes the model.
The rail links are part of the Daimler Rail Net network, which recently saw the opening of an east-west link supplementing its existing north-south links between the company's powertrain and vehicle plants in Germany.
The Kecskemét plant was connected to Hungary's public railway network with the opening of a new railway section in October last year. The new section connects the plant to the national main railway line Cegléd-Szeged.
Body parts, engines, transmission systems and other components are now delivered from Germany to the Hungarian plant by rail and from 2013 most of the vehicles produced at the plant will be transported by rail in the opposite direction. The company said that, when completed, the rail service will save up to 60,000 tons of CO2 per year.
At a press conference held last week at the opening ceremony Dr Dieter Zetsche, chairman of Daimler's board of management at head of Mercedes-Benz Cars talked about the additional capacity provided at the plant. "With the production network of the Rastatt and Kecskemét plants, we now have the capacity to meet the demand from many existing - and new - customers in the premium compact segment," he said.
Zetsche went on to announce that a four-door coupé would be added at Kecsemét but did not announce a date.
Also speaking at the opening ceremony, Frank Klein, managing director of Mercedes-Benz Manufacturing Hungary, said the company was making history. "Less than four years after the location decision was made, 'Mercedes-Benz Made in Hungary' has become a reality. From now on, we can show that we are a key pillar of the Mercedes-Benz production network. Our intensive preparations have enabled us to produce the established Mercedes-Benz quality right from the very first vehicle."
According to Frost & Sullivan's Automotive and Transportation Consultant, Vitaly Belskiy, Daimler's plans for the new plant are part of its push to rebuild its presence in the A/B-class category.
Data from the analyst shows that Mercedes' share of A/B-class sales has dropped from 20% in 2008 and 2009 to 18% in 2010 and to 14% in 2011.
Belskiy said that opening a new plant for successors of compact A and B-class cars in Hungary and offering four instead of two models was the clear long term aim as the carmaker strengthened its position in a relatively price sensitive compact car segment.
Given the lower labour rates the move to Hungary could help Daimler meet its profitability target of 10% by 2013 and its ambitious 1.6m sales mark by 2015 (compared to 1.27m in 2008).
"The question is, however, will Daimler manage to keep production flexible as the European auto industry is facing challenging times in terms of demand for new cars," said Belskiy. "Increasing the share of temporary workers in Eastern Europe can become a viable solution, which will allow adjustments to changing demand for new orders.
Belskiy went on to say that local production will also help Daimler to grab a stronger foothold in the promising Eastern European market.