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Mercedes-Benz has completed a EUR 1 billion expansion of its manufacturing facility in Kecskemét, Hungary, significantly increasing production capacity as part of its global efficiency and cost optimisation strategy. The upgraded plant will become the company's largest manufacturing site in Europe and its second-largest worldwide. Along with producing the new electric C-Class, the facility will also manufacture the electric GLC and the compact G-Class. The investment strengthens Mercedes-Benz's flexible manufacturing network while reinforcing Hungary's position as a key automotive production base in Europe.
Mercedes-Benz has invested EUR 1 billion (USD 1.14 billion) to expand its manufacturing plant in Kecskemét, Hungary, doubling its production capacity as the company strengthens its global manufacturing network amid increasing competition in technology, electric vehicles and production costs.
Following the expansion, the Kecskemét facility will become Mercedes-Benz's largest production plant in Europe and its second-largest globally. The company said the additional capacity will improve its ability to respond to changing market demand while making its manufacturing operations more flexible and resilient.
The upgraded plant will manufacture the new electric C-Class, while Mercedes-Benz also confirmed that production of the electric GLC and the compact G-Class will be added to the facility. The move is part of the automaker's broader strategy to expand electric vehicle production across its global manufacturing footprint.
Speaking during the inauguration of the expanded facility, Mercedes-Benz Chief Executive Officer Ola Källenius said the company was strengthening local production by manufacturing important components, including batteries, at the same location. He stated that localising key components would allow the company to respond to customer demand more quickly and efficiently, making the Kecskemét plant an important part of Mercedes-Benz's future production strategy.
The company also highlighted that producing batteries and vehicles at the same location would improve operational efficiency, reduce logistics complexity and support faster production cycles as demand for electric vehicles continues to evolve.
Hungary has become one of Europe's key automotive manufacturing centres over the past decade, attracting major investments from German luxury carmakers and Chinese battery manufacturers. During the previous government led by Viktor Orban, the automotive and electric vehicle battery industries emerged as major contributors to the country's economy, employment and exports. Despite strong wage growth in recent years, labour costs in Hungary remain among the lowest within the European Union, making it an attractive manufacturing destination for global companies.
Hungarian Prime Minister Peter Magyar, who attended the inauguration, said his government aims to provide a stable and predictable business environment for international investors. He said the administration intends to continue its strategic partnership with Mercedes-Benz and other companies investing in Hungary while expecting businesses operating in the country to comply with regulations, maintain safe working conditions and provide employees with salaries that support a secure standard of living.
Mercedes-Benz Board Member responsible for Production, Michael Schiebe, said the company plans to integrate the Kecskemét facility into flexible production systems alongside its German plants. He explained that this manufacturing approach would enable Mercedes-Benz to build different vehicle models across multiple locations based on market demand and changing external conditions, further strengthening the resilience of its global production network.
The investment comes as global automobile manufacturers continue restructuring production operations to improve efficiency, lower manufacturing costs and accelerate the transition towards electric mobility. Mercedes-Benz has been steadily increasing investments in flexible manufacturing systems that allow both electric and conventional vehicles to be produced on the same production lines, helping the company respond more effectively to changing customer demand.
Source Reuters
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