Magna Steyr will not build next-generation versions of the four-wheel-drive Mercedes-Benz E class and G class.
The loss is a bump in the road for the rapidly growing Austrian contract assembler. Another will come if BMW decides to shift production of the X3 SUV from Magna Steyr to one of its own factories.
Mercedes-Benz plans to build the next 4wd
E class in its own factories. In Europe, it builds the E class at its Sindelfingen plant near Stuttgart.
"We will have a further integration of four-wheel-drive technology and a common vehicle floor structure" for the new E class, says Hans-Heinrich Weingarten, director of production at Mercedes-Benz.
The next-generation E class is expected to be launched in 2009 or 2010.
When the current E class was launched in 2002, Magna Steyr's plant in Graz, Austria, helped Mercedes-Benz meet the initial high demand. Graz is the sole source for the 4wd version, which must be modified to make room for the drivetrain.
Magna Steyr's contract for the project runs until 2010.
Last year, Magna Steyr built about 25,000 units of the 4wd E class, and 6,000 units of the G class.
The G-class replacement, named GL, will be built solely at Mercedes-Benz's plant in Vance, Ala., alongside the new M-class SUV and R-class sport wagon. The three models share a common platform.
The launch of the GL class early next year won't mean an immediate end for the G class. Magna Steyr's contract to build the vehicle runs until the end of 2006, but it may be extended.
Magna Steyr developed the G-class SUV for Mercedes and launched production in 1979. The rugged but pricey SUV, also known as the Gelaendewagen (German for off-road vehicle), has developed a cult following.
BMW is mulling whether it will build the second-generation X3 in-house, sources say. The SUV has reached a high enough volume that it now makes sense to add it to a BMW plant. Magna Steyr built 112,800 X3s last year.
Magna Steyr has seen production soar to 227,000 units last year from about 80,000 units in 2001.