Daimler AG has signed a deal with AM General to use an Indiana
plant to build Mercedes-Benz R-Class models, a move coming in
response to growing demand among U.S. buyers for luxury vehicles
and SUVs.
The agreement, announced Tuesday, will enable Daimler to expand
light-vehicle production activities beyond its plant in Tuscaloosa,
Ala. AM General, known for its military vehicles, has built
vehicles for other auto makers in the past, including General
Motors Co. and Ford Motor Co. Its assembly plant is in Mishawaka,
Ind.
Mercedes plans to expand production in its Tuscaloosa plant to
about 300,000 vehicles this year. The deal with AM General allows
the Stuttgart, Germany-based auto maker to move production of its
R-Class crossover to a contract manufacturer and free up capacity
for other SUV models.
"With the introduction of the new GLE Coupe and the continuing
strong demand for SUVs, Plant Tuscaloosa needs all available
production capacities for this segment," said Jason Hoff, President
and CEO of MBUSI, the company's U.S. sales division, in a
statement.
Mercedes will use the additional capacity in Tuscaloosa to
produce its M-Class, GL-Class, and the new GLE Coupe, which is due
out in the summer.
AM General expects to start producing R-Class crossover wagons
this summer in Mishawaka, and said in a news release it will hire
and train hundreds of new workers. The workers likely will be
represented by the United Auto Workers union, which doesn't
represent Mercedes workers in Alabama.
It is not the first time Mercedes has used a contract
manufacturer. The company outsources manufacturing of its A-Class
compact car to Valmet, a Finnish manufacturer. Mercedes has also
contracted manufacturing of its E-Class models to Magna Steyr AG,
the Austrian unit of Canada-based Magna International Inc.
"We are thus increasing flexibility and continue to improve our
competitiveness," said Markus Schafer, a Mercedes-Benz Cars board
member in charge of manufacturing and supply chain management, in
the statement.
Write to John D. Stoll at john.stoll@wsj.com and William Boston
at william.boston@wsj.com
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