Mercedes Weighs Second North America Plant to Keep Lead

Mercedes-Benz, the top selling luxury-car maker in the U.S., will likely decide by the end of next year on adding a second North American factory to boost capacity to meet rising demand.

The Daimler AG (DAI) brand is considering producing compact vehicles at a new plant in the region to complement an existing Alabama factory, which builds sport-utility vehicles, production chief Andreas Renschler said in an interview.

“Market demand is the key driver for the expansion of our production network,” Renschler said late yesterday at the North American International Auto Show.

Mercedes, Bayerische Motoren Werke AG (BMW) and Volkswagen AG (VOW)’s Audi are all adding production in North America to take advantage of sales-growth potential that contrasts with stagnating demand in their home market of Europe. Local manufacturing reduces the effects of the dollar’s moves on foreign-exchange markets on non-U.S. companies’ earnings.

Mercedes, which last year passed BMW in U.S. sales, already expanded in Tuscaloosa in 2013 and will add the next version of the mid-sized C-Class sedan at the factory this year. The plant will also assemble a new derivative of the M-Class SUV, Renschler said in the interview.

BMW, the biggest maker of luxury cars globally, is considering building engines in North America for the first time and expanding vehicle production in the region, people familiar with the matter said last month. BMW may establish a motor factory in Mexico or the U.S., and the Munich-based company could potentially decide on the project in 2014, the people said at the time.

The German company set up its only North American factory in Spartanburg, South Carolina, in 1994. The site, which produces all of BMW’s X3, X5 and X6 sport-utility vehicles, is one of the U.S.’s main auto exporters. BMW, which will start making the new X4 in Spartanburg this year, may expand vehicle-making in the region beyond that model, the people said.

Audi laid the cornerstone in May for a $1.3 billion, 150,000-car plant in San Jose Chiapa, Mexico, that will begin making the Q5 SUV in 2016.

To contact the reporter on this story: Christoph Rauwald in Frankfurt at crauwald@bloomberg.net

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

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