Mercedes Will Build Another SUV In America

Mercedes-Benz announced yesterday that it would add a new model to its plant in Tuscaloosa, Alabama. The automaker said that it would start building a “core segment” model for the US market at the plant. But while a company rep wouldn’t say if this was the result of tariffs, the company did say that it would take some time. Production of anything new is unlikely to start before 2027.

“We are getting even closer to the U.S. customer by localizing a core segment model in Tuscaloosa, strengthening our ties to the North American market where a range of Mercedes-Benz vehicles, including the GLE and GLS models, have their roots,” Mercedes-Benz North America CEO Jason Hoff said in a release.

Alabama Plant Could Expand Beyond Two Big SUVs

Currently, the Alabama plant, which is home to the GLE and GLS luxury crossovers, as well as the EQE and EQS electric SUVs, is largely an exporter. The plant builds around 260,000 vehicles each year, and approximately 60 percent of those are exported.

The plant opened in 1997, shortly after BMW brought German luxury production to the US in South Carolina. It was originally home to the Mercedes-Benz ML, and currently employs around 6,000 workers. The C-Class was built there until moving out a few years ago.

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While Benz didn’t say which model would come to the plant, it’s likely that it will be the GLC. That crossover was the second-best-selling Benz in the US last year, with the GLE slightly ahead.

The 25 percent tariff on imported vehicles has delivered a massive shakeup of the auto industry. Manufacturers are still reeling, with some raising prices, others lowering them, and some stopping imports completely.

New Benz Could Displace Existing Production

Mercedes-Benz moving production of a model to Alabama may not result in new jobs or new net production. Benz told CNBC that it planned a “local-for-local strategy” where vehicles are built in their intended market. That could mean moving GLC or C-Class production to Tuscaloosa, but some of the 60 percent of GLE and GLS models exported every year moved elsewhere to avoid tariffs bringing them into Canada, Europe, and China.

It’s also not clear if moving production would offer a great deal of savings to Mercedes-Benz. According to NHTSA documents that detail the makeup of what goes into every new model, the Benz SUVs made in the US have just 10 percent US parts content. Foreign-sourced parts include the German-made engine and Romanian-built transmission.

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Those foreign-built parts would still be subject to the 25 percent levies on auto parts that are set to go into effect this weekend.

Mercedes-Benz builds many of its vehicles for the US in Germany. Other models are built in Austria, Hungary, South Africa, and Mexico, while the Sprinter Van is made at a plant in South Carolina.

Source: CNBC