Daimler Plans $390.6 Million Romania Transmission Factory

Daimler AG (DAI), the third-biggest maker of luxury cars, will invest more than 300 million euros ($390.6 million) adding transmission production in Romania after reaching full capacity at its main German plant.

Daimler will begin assembling five-speed automatic transmissions in mid-2013 at a new plant in the town of Sebes, close to an existing parts factory in Cugir, the Stuttgart-based company said in a statement today. The new site will start production of front dual-clutch transmissions in 2014 and add capacity for the next generation of drivetrains in 2016.

The German company, which has been producing parts for engines and transmissions in Romania at a joint venture since 2001, is adding capacity across eastern Europe as the Mercedes- Benz brand expands its line-up of compact cars. Daimler opened an 800-million-euro car factory last year in Kecskemet, Hungary, where it makes the Mercedes B-Class and CLA compacts.

Chief Executive Officer Dieter Zetsche has vowed to regain the top spot in global luxury-vehicle sales by the end of the decade and plans to boost the operating margin at the carmaking unit to 10 percent of sales. First-quarter earnings before interest and taxes at the Mercedes-Benz Cars division, which also includes the Smart city car brand, dropped 63 percent to 460 million euros, resulting in a 3.3 percent margin, the company said today.

Further development of the Sebes plant is subject to backing from the Romanian government, Daimler said. The carmaker isn’t able to expand transmission production at its Stuttgart site because of space limitations, it said.

To contact the reporter on this story: Dorothee Tschampa in Frankfurt at dtschampa@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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