Mercedes-Benz to manufacture electric C-Class and small G-Class at newly extended site in Hungary
Following the extension of its Kecskemét plant, Mercedes-Benz has positioned the site in Hungary as one of its most important European production sites. In addition to the electric C-Class, the electric GLC will manufactured in Kecskemét – as well as the compact G-Class, which will be manufactured exclusively at the site.
Production of the new electric Mercedes-Benz C-Class has begun in Kecskemét, Hungary
Mercedes-Benz
With the start of production of the new electric C-Class, the Mercedes-Benz plant in Kecskemét is finally moving up from a compact car site to a strategically important plant for the core segment. Mercedes-Benz has more than doubled the area of the Hungarian site from 200 to 440 hectares and invested around €1 billion ($1.1bn) as part of its 2022 to 2026 business plan. Added to this are two halls for body construction and assembly, a second press shop, a new paint shop and an in-house battery assembly.
The industrial significance of the expansion, however, lies less in individual new technologies than in the future role of the plant within the European production network. Digital twins, camera-based quality controls, connected production data and virtual start-up safeguards now increasingly belong to the standard repertoire at major car manufacturers. What is more noteworthy, therefore, is for which models Mercedes-Benz is building this infrastructure in Kecskemét and how much flexibility the site will receive within the network in future.
In addition to the electric C-Class and models from the compact segment, the electric GLC is also to be built there in the future. The upcoming more compact version of the G-Class will even be built exclusively in Kecskemét. This gives the Hungarian plant not only additional volume, but also vehicles that are of great importance for Mercedes-Benz's future model and brand strategy.
“With the plant expansion in Kecskemét, we are increasing the resilience and flexibility of our global production network,” commented Michael Schiebe, member of the board of management of Mercedes-Benz Group responsible for production, quality and supply chain management.
Localisation extends to the battery
Mercedes-Benz is not only expanding vehicle assembly in Kecskemét. Body parts and high-voltage batteries for the electric vehicles produced there are also to be made at the site. The company's own battery assembly supplies, among other things, the electric GLB and the electric C-Class.
In doing so, the manufacturer is continuing its local-for-local strategy. Battery assembly in the immediate vicinity of vehicle production shortens transport routes and reduces the logistical effort for a large, heavy and safety-relevant component. At the same time, variants and production volumes can be coordinated more closely with the vehicle plant.
Localised battery assembly is likewise not a special path taken by Mercedes-Benz. It has largely become established as the preferred structure at electric vehicle plants. The cost- and logistics-intensive transport of complete battery systems over long distances is rarely sensible for high production volumes. What is decisive, therefore, is less that batteries are assembled in Kecskemét, but that Mercedes-Benz is building there a largely complete industrial process chain for several electric model series.
Enhancing competitiveness
The site makes it possible to produce models such as the GLB and the new electric C-Class competitively while at the same time strengthening the entire production network.
The decisive word here is “competitively”. The upgrade of Kecskemét comes at a time when German automotive plants are under growing pressure due to high labour, energy and location costs, weak utilisation of individual model series and intensified international competition.
Mercedes-Benz has itself pointed to increasingly tougher competition in technology, costs, speed and quality. According to the company, production costs in Hungary are around 70% below the German level. According to media reports, the share of production in European countries with lower costs is set to rise from currently about 15% to around 30%.
Against this background, the allocation of models to Kecskemét is also a location policy decision. With the electric C-Class, Hungary is receiving a central volume model. The exclusive allocation of the more compact G-Class goes one step further: a new vehicle with one of the brand's best-known product names will not be built in Germany, nor at the previous G-Class production site in Graz, but rather in a lower-cost Mercedes plant in Hungary.
Flexible platforms instead of rigid model allocation
Mercedes-Benz is increasingly relying in its production network on plants that can accommodate multiple types of drive and models. In the existing hall in Kecskemét, vehicles with internal combustion engines and battery-electric drive can be produced on one line. The new hall, by contrast, is geared towards fully electric vehicles.
This combination allows Mercedes-Benz to shift production volumes between drive types without committing the entire plant to a single market development. Particularly in view of regionally very different and only difficult-to-predict demand for electric vehicles, this so-called drive flexibility has now become more important for manufacturers than designing a plant as consistently as possible for only one technology.
At the same time, flexible production axes are emerging between individual sites. Kecskemét is already working with Rastatt in a European production network for vehicles based on the Mercedes Modular Architecture. In future, the electric GLC is to be manufactured both in Bremen and in Kecskemét. Mercedes-Benz can thus distribute the volume between both plants depending on demand, capacity utilisation, supply chains and costs.
For the production network, this increases responsiveness. For the individual sites, however, it also intensifies internal competition. If several plants are technically capable of building the same model, productivity, utilisation, start-up performance and costs become even more important in the allocation of additional volumes.
The German plants remain important competence and lead sites. Bremen is preparing the ramp-up of the electric GLC, Sindelfingen is intended for new electric Mercedes-AMG models and Untertürkheim is taking over central components of the electric powertrain. At the same time, Kecskemét shows that high-quality and complex vehicles within Europe are no longer automatically tied to German plants.
