"We have started production of the C class as CKD (completely knocked-down) assembly at Juiz da Fora," Mercedes Car Group Production Chief Hans-Heinrich Weingarten told Automobilwoche.
About 1,000 workers are expected to assemble up to 16,000 units per year for the U.S. market.
"This will enable us to operate the factory at full capacity," Weingarten said.
Globally, Mercedes Car Group has five other assembly factories. Three are in Germany: Sindelfingen, Rastatt and Bremen. One is in Tuscaloosa, Alabama. The other is in East London, South Africa.
In 2004, the group built about 1.1 million cars. Production in 2005 will be "slightly above last year," said a high-ranking DaimlerChrysler executive, who asked not to be identified.
With a CKD assembly plant under construction in China, more growth is possible. Mercedes is currently in negotiations with Magna Steyr on a new CKD factory in Russia
"The talks are still underway," Weingarten said.
The general framework, such as import tariffs for CKD assembly components, is currently being discussed.
It isn't clear whether Mercedes will construct the St. Petersburg, Russia, facility with a west European or Russian partner.
"Magna Steyr is a potential partner, but we are undertaking talks with a number of interested parties," Weingarten said.
Worldwide, Mercedes employs 80,000 people in manufacturing, 77,000 of them in Germany.
"Between 2 and 3 percent of them are temporary employees," Weingarten said. "We want to temporarily raise that figure, in the case of a new model launch, for example. The works council has agreed to that."