DaimlerChrysler plans to double the size of its lone North American Mercedes-Benz plant. The expanded factory will assemble more sport-utilities and possibly another vehicle.
The automaker is expected to announce today, Aug. 28, that it will more than double its investment at its M-class factory in Vance, Ala., which opened in 1997, before Daimler-Benz's acquisition of Chrysler Corp.
The expansion means Mercedes-Benz will continue its growth in sport-utilities and keep its U.S. manufacturing arm separate from Chrysler group manufacturing in North America.
The Vance plant was Mercedes' first modest step into North American manufacturing, originally producing just 60,000 sport-utilities a year. An emboldened DaimlerChrysler now wants the Alabama project to take on more work.
The new investment probably will result in a total plant capacity of more than 150,000 vehicles a year.
Since the market arrival of the Mercedes M platform in late 1997, it has produced the ML320, ML430 and the high-performance ML55 AMG, using four-, six-, and eight-cylinder engine variations in both gasoline and diesel. The various versions now sell in 135 countries.
Two years ago, Daimler turned to the independent Austrian automaker, Steyr-Daimler-Puch AG, to also produce the M class to fill European orders for the truck.
Steyr, a unit of Magna International Inc. of Aurora, Ontario, is in year two of a four-year contract to build the M class under the direction of the Alabama management team. Last month, the Alabama plant began producing European diesel versions of the M class, a job that previously had been exclusive to Steyr.
With Vance expanding and the Steyr contract due to expire in two years, Alabama could take over all M-class production worldwide.
Mercedes declined to discuss the expansion plan last week or explain how Steyr might be phased out of M-class production.
Mercedes officials have alluded to their desire to put a second product into the Vance plant. Before the Chrysler acquisition, Daimler considered launching a Mercedes minivan, with Vance as its world production site. The merger with Chrysler - the industry's biggest minivan maker - caused Daimler to drop that proposal.
According to one DaimlerChrysler source in Germany, Mercedes was looking at a vehicle based on the E-class platform that would blend characteristics of the M-class sport-utility and a station wagon.
DaimlerChrysler management board members likely will avoid the future product issue in their announcement of the expansion this week, but a bigger Alabama plant is certain to eventually host a second product. Based on current sales volume, it does not appear that the market warrants production of dramatically more M-class vehicles than DaimlerChrysler is now getting.
In the first eight months of this year, Vance has built about 55,000 vehicles for the U.S. and other markets. Steyr has produced another 22,000 M-class vehicles, for a year-to-date total of 77,000.
On an annualized basis, that volume is likely to remain under 120,000 units this year.
Regardless of what Mercedes eventually does with its expanded capacity, the move sends a clear message that DaimlerChrysler still wants the Alabama operation to remain an independent Mercedes subsidiary.
At the time of the Chrysler acquisition, some in the industry wondered whether the small Alabama plant would fall under the direction of Chrysler group manufacturing management in Auburn Hills, Mich. But that has not happened.
This week's announcement indicates that the Mercedes-Benz brand wants a larger manufacturing presence in North America, separate from the resources of the Chrysler group.