'Mercedes-Benz might move some C-class production to the US'

Mercedes-Benz might move some C-class production to the US

10/09/09 06:14

To further reduce its operating and manufacturing costs, Daimler AG could move out some of the production of its Mercedes-Benz C-class units to the United States from its old plant in Germany, according to a report by a German newspaper.

According to the Stuttgarter Zeitung, the automobile company could possibly move some of C-class production to Vance, Ala., from its plant Sindelfingen, near Stuttgart, as part of a global production cost reduction plan. Production of other units have been transferred from place to place to optimize costs.

The newspaper further mentioned that int he future, the company might produce the C-class units three locations: Bremen, Germany; Vance, Ala.; and in China.

If 80,000 units of the Mercedes-Benz C-class were produced in the Vance plant every year, the company will be able to save $95 million (64 million euros) because the hourly rate in Vance, which include overhead costs like insurance and health benefits, stand at only $44 (30 euros), as compared to Germany's prohibitive labor costs that stand at an hourly rate of $74 (50 euros).

The move will also make the company less affected by fluctuations of the dollar-euro exchange rate and save import duties and freight costs.

The freight savings is of high importance because the C-class model is the best-selling Mercedes-Benz model in the United States, with sales of 34,432 units sold in the first eight months of the year, down from 50,593 units during a year before.

The Vance plant, which produces M-, GL- and R-class models, still has room for additional production after reducing its annual car production by around half to 66,000 units this year.

Company representatives said that German automobile manufacturer still hasn't made a final decision on the fate of the C-class production.

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