Photographer: Mark Elias/Bloomberg

Daimler Plans $574 Million Engine Factory in Bid to Pass BMW

  • Site in Poland is further step in global production strategy
  • Plant to start operating in 2019 with several hundred workers

Daimler AG Mercedes-Benz is investing about 500 million euros ($574 million) to build an engine plant in Poland as the luxury-car brand expands to overtake rival BMW.

The factory in Jawor in Poland’s southwest will be Daimler’s second engine plant outside Germany. The facility, with a workforce of several hundred employees in its initial phase, will make four-cylinder gasoline and diesel engines for passenger vehicles starting in 2019, Stuttgart, Germany-based Daimler said Wednesday in a statement.

The Jawor plant will allow Mercedes to react more quickly to changes in demand across several production sites, Frank Deiss, head of Mercedes’s powertrain production, said in the statement.

Carmakers are pushing to improve profitability by shaving costs off production processes, fine-tuning delivery of car parts and developing strategies including use of the same parts in different model lines. One area of focus is being able to switch products from one factory to another, depending on demand. Luxury-vehicle manufacturers are increasingly equipping cars with smaller, more fuel-efficient four-cylinder engines as governments mandate cleaner-running models.

Mercedes is producing more cars in its bid to wrest back the global lead in luxury-auto sales from BMW AG’s namesake brand as early as this year. BMW outlined plans Tuesday to boost output of sport utility vehicles in the U.S. as low oil prices encourage consumers there to buy more of the large, high-riding vehicles.

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