However, all that glitters is not gold. Apply the proverb to the real-world scenario and you will find it sitting perfectly with Germany’s crown jewel. Beneath so-called top rankings, lies weak consumer demand, slowing electric vehicle (EV) sales, intense competition from Chinese manufacturers, rising production costs, geopolitical uncertainty, and the expensive transition toward electrification, that are squeezing profits across the industry.

One after another, companies are announcing restructuring plans, only to meet opposition and scrutiny from labour unions. The current industrial downturn do not appear to be a cyclical one.

The issue reflects a painful structural transformation, that is forcing German automakers to rethink their business models, putting millions of jobs at risk.

An ongoing bloodbath

Let’s start with Volkswagen. The company’s operating profit fell 9.5% in the April-to-June period ‌to 3.5 billion euro (USD 3.98 ⁠billion). With revenues of 82.4 billion euro, the group was somehow able to keep its operating margin within the 4.0% to 5.5% target range for the full year, at 4.2% in the second quarter.

The group no longer expects revenue growth, and instead the automaker is bracing up for profit decline of up to 3% in 2026.

CEO Oliver Blume has been uncompromising on the need of the automaker becoming competitive against Chinese rivals, both at home and abroad, by large-scale cost-cutting.

Blume believes Volkswagen is facing more than 150 Chinese competitors right now, with some of them even challenging the German giant successfully in its home turf.

Blume’s restructuring plans have met with resistance from the powerful labour unions. They believe that, more than job cuts, ​progress on technology and product development will help the company stage a comeback.

Mercedes-Benz, another German major, has seen its core ​car business suffering an 8% fall ‌in the second quarter. In China, the sales drop ​was a whopping 30% compared to the ​same period in 2025.

The automaker posted a higher Q2 profit, as the figure rose 22% to 1.5 billion euro (USD 1.7 billion), thanks to its financial services and vans.

As per CEO Ola Kaellenius, Mercedes’ German factories are in need of ​an intense push for leaner production (read potential job losses). The automaker is already diversifying its operations to open up new profit streams.

It is boosting its production presence in cheaper Eastern European countries, such as Hungary and Poland. In Argentina, during May this year, the company inaugurated a USD 110 million industrial truck plant, with the goal of ​producing up to 10,000 units per ⁠year.

No one is spared

BMW too will cut ​several thousand jobs in Germany by 2027-end in response to a squeeze in profits and weak demand.

The automaker’s Q2 deliveries shrunk by 4.9% and following the loss-making patterns of its domestic peers, BMW saw heavy sales drop in China. A 30.2% downfall in the world’s largest auto market couldn’t be offset by the combined 19.5% growth seen in the American and European markets.

The automaker will now trim its product portfolio, reviewing model variants in certain markets as electric vehicle adoption diverges between ​countries such as China, where EVs ​dominate, and the US, ⁠where combustion-engine vehicles remain popular.

It has also signed a long-term deal with Qualcomm to acquire chips ​for its future digital ‌cockpit and advanced driver-assistance systems, that will come as built-in features for its next-generation vehicles.

The company has concluded a USD 1.7 billion investment in its ​production plants in South Carolina, gearing ‌up for the launch of EV production in the United States.

Luxury carmaker Porsche will cut around one in five jobs by 2035, ​with 9,000 positions to be axed in total (from the total workforce of 42,600), toeing the restructuring line of parent Volkswagen and its ‌brands.

⁠Michael Leiters, who became the CEO earlier 2026, has been ​tasked with overhauling the business, with sales in Porsche’s once highly lucrative China market collapsing and its EV strategy stalling.

Porsche has given its workers the guarantee of keeping sites open for another five years, until the end of 2035, as well as 2.1 billion euro (USD 2.39 billion) in investments in ​its main factory in ​Stuttgart-Zuffenhausen and its ⁠R&D centre in Weissach.

Things spill at supply chain front too

The automotive sector is the backbone of the German economy, with an estimated three million people directly and indirectly employed by household names, including Volkswagen, Mercedes and BMW.

According to a June 2026 report published by the Boston Consulting, “For decades, Europe’s car industry had underpinned the continent’s most powerful manufacturing networks with deep supplier systems, highly skilled labour, and scale-driven efficiency but that stability had been turned upside down.”

The study found that Europe’s production capacity now exceeded demand by ‘more than five million vehicles a year’, or the equivalent of ‘35 production sites’ across the continent.

Both Europe and China have one common enemy: overcapacity. However, China has found a solution, by exporting and selling cheap EVs on a global scale, including in Europe, while the continent’s automakers have failed to generate enough demand in their backyard, resulting in poor financials.

In Germany’s case, the mess has spilled over to the supplier level too.

Bosch, a global engineering and technology giant, that operates across mobility (auto parts and software) and industrial technology (factory automation), received a massive jolt in June as Volkswagen walked away from a 1.5-billion euro (USD 1.7 billion) investment in its automated driving partnership with the supply chain giant, citing a sweeping cost-cutting drive.

Since then, things have not gone smoothly for the supply chain giant. It has decided to cut roughly 13,000 to 22,000 jobs through 2030, due to a 2.5-billion euro cost gap, weak market demand, and intense price competition from Chinese EV and tech manufacturers.

The rubber and plastics division of Continental recently reached an agreement with German labour representatives on a cost-saving programme involving around 1,600 job cuts. Following ​the agreement, Continental will launch a ​voluntary programme offering eligible employees at the ⁠ContiTech business the option to leave under ​agreed conditions.

German ​machine and car parts maker Schaeffler has cut its ‌medium-term sales target, citing weaker market expectations, particularly for passenger cars and light commercial vehicles. The company now expects 2028 sales ​between 24 billion euro and 26 billion euro (USD 27.6 billion and USD 29.9 billion), respectively, down ⁠from an earlier range of 27 billion euro to 29 billion euro.

For Schaeffler, to make matters worse, major American ​customers have withdrawn component orders, something that the CEO Klaus Rosenfeld said was not included in the venture’s 2025 planning assumptions.

While Schaeffler, despite cutting its sales outlook, confirmed its 2028 group targets for an adjusted operating profit ⁠margin ​of 6% to 8%, and adjusted ​free cash flow of 400-600 million euro, it has decided to move ahead with its partial retirement programme in Germany to lower costs at its domestic sites.

The measure, expected to be taken up by ⁠around 1,300 workers, had been agreed with employee representatives, and would result in ​a one-off charge of about 51 million euro (USD 59 million) in 2026, with savings expected from 2027.

A financial analysis by Strategy&, PwC’s German consulting arm, found average interest expenses at ​Germany’s leading auto suppliers rising for a ​fourth consecutive year in 2025 to 102% of ⁠operating earnings, far exceeding levels in the rest ​of Europe and China.

Apart from severe debt loads, the study also discovered another pressing financial problem for these companies: lower ​average equity ratios than their competitors, leaving them more exposed to ‌financial ⁠stress.

Suppliers themselves are ​under pressure to compete, with Strategy& terming the ​cost ⁠gap between German and Chinese suppliers as a ‘widened one’ between 2019 and 2025.

“While German suppliers’ overhead costs worsened during that ⁠period, ​Chinese competitors became more efficient, reducing ​both overhead and manufacturing costs as a share of revenue,” the analysis noted.

China looms large

Europe’s auto market, especially the EV segment, saw sales growth in June 2026, offsetting a ​sharp decline in petrol and ​diesel sales, according to data from the European ⁠Automobile Manufacturers’ Association (ACEA).

While total car registrations ​rose 13.1% to 1,407,332 vehicles, battery-electric, plug-in hybrid and hybrid ‌car ⁠registrations climbed 51%, 22.7% and 17.1%, respectively, together accounting for almost 70% of all new vehicles.

The uptick helped Chinese brands expand their footprint further across the European Union, Britain and the ​European Free Trade Association.

BYD, Chery and Leapmotor sold ​almost three and six times ​more ⁠than what they did in 2025. SAIC and Geely witnessed their sales rising more than 50% and 11%, ⁠respectively.

Registrations ​at Renault, Stellantis and ​Volkswagen rose between 3.6% and 7.3%, which are nowhere close to their Chinese rivals.

The EU’s tariffs on Chinese BEVs, which can add up to 45.3% in costs , have done little to blunt the cost advantage. BYD’s Dolphin Surf Boost is priced in Europe from 26,990 euro (USD 30,800), still 3% cheaper than the comparable Renault 5 E-Tech.

Closely following the European market trends, the automaker is increasingly leaning on plug-in hybrids (PHEVs), which escape the additional tariff altogether. The strategy change resulted in the automaker’s May sales growing by 140%.

Germany, in the beginning of the year, introduced a new incentive, worth up to 6,000 euro for BEVs and PHEVs, while Sweden and Italy have expanded their own policy support. The consumer response got reflected in the continent’s Q1 2026 sales numbers. Total electrified vehicle market share sat at 67.5%, with China emerging as the winner.

Given the intense pace of the global protectionism, local production is emerging as the new reality, and the Chinese are again aware of that. Leapmotor is set to assemble SUVs at a Stellantis plant in Spain. Chery recently opened a European headquarters in Barcelona.

Chinese players are consolidating their grip

Beijing hosted the world’s largest auto show this year too, amid the growing shadow of the global energy crisis in the backdrop of the Iran war and the Hormuz disruption. The 2026 edition featured 1,451 vehicles, including 181 world premieres and 71 concept cars, across a record-breaking 380,000 square metres of exhibition space.

Instead of competing with the Western carmakers on the internal combustion engine front, China decided to take the game to the next level: electric. In May 2014, the then Communist Party Chairman Xi Jinping (and now the President) outlined the goal during a visit to SAIC Motor. What followed was a series of priority state fundings and an international talent recruitment program.

During the Covid years, as international executives stayed away from China, the domestic industry made remarkable advances, both on the vehicle and the supply chain fronts. It resulted in CATL and BYD now dominating global battery supply chains, apart from leading in innovation and disruption fronts, with low-cost sodium batteries all set to come to market in 2026.

China excels in making small, affordable EVs, without compromising on the feature front. It has beaten its global peers on the innovation front. Every 18–24 months, a new vehicle emerges, against the global average of five–seven years. While Tesla developed a 48V architecture for its Cybertruck (up from 12V), Chery is believed to have put the vehicle’s Chinese counterpart under mass production.

Bugatti, which had held the all-time speed record for six years, with its W16 hitting 489 kilometres per hour, got beaten by BYD’s Yangwang U9 Xtreme, that did 496 kilometres per hour with four electric motors and a 1,200V lithium iron phosphate battery pack. The Xtreme was reportedly built in just 18 months.

BYD, ranked as China’s second-largest battery manufacturer, recently broke new ground by developing a car battery with what it calls ‘Megawatt charging technology’. In just five minutes of charging, this battery can travel up to 250 miles.

Chinese EV brands are now branching out into batteries, semiconductors, and other products related to their industry, to expedite their own vehicle manufacturing. Their global peers, including the Germans, are dependent on external partners. Vertically-integrated supply chains, or the lack of it, have become the make-or-break factors here.

China vs Germany: A statistical comparison

The harsher side of China’s rise as a global EV powerhouse has been its domestic front. As per Carscoops, apart from BYD, Xiaomi, and Leapmotor, no more than four additional companies are expected to break even by 2030.

The challenging earnings environment has pushed automakers to expand more aggressively into overseas markets. Data from the China Passenger Car Association showed that sales of BEVs and PHEVs, in the world’s largest car market, totalled 1.04 million units in June, down 7% from the same month in 2025.

Sales for the first half of 2026 fell 13% year-on-year to 4.73 million vehicles. The reason? A dampened consumer demand due to economic uncertainty, expectations of further price declines, and the gradual withdrawal of government support.

Beijing has revised its subsidy programme, phasing out tax incentives for EV manufacturers, a process that will be completed in January 2027.

Analysts estimate the vehicle export tally to be around 10 million by the end of 2026, a 41% increase from 2025.

The removal of tax rebates has hit German ventures too. The sales share held by Volkswagen, Audi, BMW, Mercedes-Benz, and Porsche went down to just 1.6%. That is the lowest on record, with only 19,200 new EVs from these brands registered between January and March, a 55% drop year-over-year.

Volkswagen’s EV sales alone fell by more than 72%, while BMW dropped nearly 65%, and that of Mercedes-Benz slipped by around 14%.

However, it would be unfair to blame the lack of tax rebates alone.

Let’s take BMW as an example. The company is betting on its ‘Neue Klasse’ electric cars to revive its fortunes in China after two years of declining sales. But shareholders and analysts see the five-year development process as a slow one, against the break-neck R&D speed of its Chinese rivals.

Supporters of German cars may say their favourite brands excel on quality. So does China. Nio reportedly drove ​its flagship ET9 sedan over speed bumps with a tower of champagne glasses balanced on the bonnet, without spilling a drop, to showcase the vehicle’s ⁠advanced suspension system.

While Chinese premium brands are openly targeting customers of BMW, Audi, Porsche and Mercedes, only about 5% of BMW’s sales in the world’s largest automobile market have remained fully electric, according to Global Mobility data.

In a market where EVs account for 46% of vehicle sales, the stat is more than disappointing. And that has resulted in BMW’s China sales going down in both 2024 and 2025. Sales at Mercedes and ​Volkswagen’s Audi brand have also been down, dropping 28% and 19%, respectively, in the H1 2026.

According to Shanghai consultancy LandRoads, BMW’s average transaction price in China in 2025 was 341,000 yuan ($50,200), below local brands such as Nio, Aito and Denza. Among German premium brands, only Audi was priced lower, at 287,000 yuan.

Predicting the situation ahead

German brands are now tightening ties with Chinese automakers in an effort to steady the numbers. Audi launched its China-only AUDI brand with SAIC in 2025, and is currently preparing a third all-electric model. Volkswagen has teamed up with Xpeng and recently unveiled the ID. Aura T6 and ID. Unyx 09 at the Beijing Auto Show. Developing these cars locally has cut costs by at least 40%, a figure that explains much of the strategy.

Mercedes will sell its all-electric GLC EQ and the new electric C-Class in China, while partnering with a local company to produce models exclusively for the country. Similarly, BMW has gone it alone with the new iX3 and i3, both of which will be sold in China in long-wheelbase form.

Volkswagen, apart from its aggressive cost-cutting, now sees a revised product offering as a solution, including a new pick-up truck, an avenue for expansion in the United States. Pick-up trucks and large SUVs are in strong demand in the world’s largest economy. As per reports, while the automaker doesn’t offer pick-up truck in its line-up, it plans to bring one into the US market before the end of the decade.

While the American market remains attractive for sellers of combustion engine trucks and SUVs, Volkswagen will face stiff competition from Ford, Ram-maker Stellantis and General Motors.

As of now, it looks like collaboration with Chinese players and expansion elsewhere in the world have emerged as preferred survival options for German automakers.

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Knowing Cazoo In Detail

Cazoo’s portfolio has a wide range of used cars, be it high-end brands like Audi, Land Rover, BMW, and Mercedes-Benz or common names like Ford, Kia, Nissan and Volkswagen.

Cazoo’s ‘Car Finance’ programme helps its customers to tailor their vehicle finance plans as per their household budgets and then go for the used car fitting in that bill. The buyers can select the vehicles, apply for finance, pay their monthly deposits and complete the paperwork, all online, following which the cars will be delivered either to their doorsteps or they can receive the vehicles from ‘Cazoo Customer Centres’.

Their ‘Car Finance’ programme has two solutions, Hire Purchase (the buyer can spread the car cost by making monthly payments over an agreed term) and Personal Contract Purchase (the buyer can make equal monthly payments over an agreed term. After the contract ends, he/she can decide on whether to hand the car back to the lender or change it for another one/buy the vehicle with an ‘optional final payment’).

Cazoo’s ‘Car Finance’ programme has been drawn in collaboration with European lending giants like Black Horse, Santander and Evolution.

The start-up’s ‘Car Care’ programme covers areas such as warranty extension, thorough car servicing and paint and fabric protection.

For those planning to sell cars, Cazoo states on its website, “You can drop your car off at your nearest Customer Centre for free and in as little as 48 hours, or we can pick the car up from your door with prices starting from £149. The pick-up fee will be deducted from the value of your car. Cars that are valued at £25,000 or more must be dropped off at a Customer Centre for processing due to their value.”

Not Every Vehicle Meets Cazoo’s High Standards

Cazoo doesn’t buy first-hand vehicles which have issues identified by a car history check, contain damages, stolen/scrapped, have mileage discrepancies, lack legal tyres, and have been used for rental and authority purposes/driving lessons. Also, 15-year-old cars, along with the ones with insurance issues and modified automobile parts, are not preferred either.

Cazoo’s Maintenance Check Involves
• To recondition the used cars before handing them over to the customers
• After reconditioning, it displays detailed images of the car on its website
• Cazoo technicians test drive every used car to check its engine performance, steering, brakes and other engineering parameters, before handing them over to the customers
• Executing oil and filter changes on every car with less than three months to go before its next service and listing for sales
• Valet the cars and thoroughly sanitise them before handing them over to the customers, while ensuring the vehicles are having 10 litres of fuel (or 75% of charge, in the case of an electric vehicle) during the deliveries
• During delivery, Cazoo also provides a 90-day warranty and RAC roadside assistance for these used cars
• Its ‘7-Day Money Back Guarantee’ gives the customers a week’s time to drive up to 250 miles, in order to know and get acquainted with the car. Cazoo’s customer care also gets in touch with the customers during the same timeframe to get feedback

Latest Developments Around Cazoo

The company, launched in December 2019, was valued at USD 7 billion (over £5.2 billion) when it was listed on the New York Stock Exchange in August 2021. However, it is facing a market test right now.

In June 2022, the company stated its intention to cut costs by £200 million by 2023 end, which would result in around 750 job cuts.

Cazoo has removed 15 of its 22 used car handover centres from its website, as part of its business restructuring. It has already withdrawn from the European market, apart from axing its car subscription services and selling its Cazana used car data business.

It intends to retail 40,000 to 50,000 used cars in 2023, in order to achieve profitability after delivering 65,000 sales in 2022, down on its earlier 100,000 unit target. Cazoo’s revenues in 2022 had risen to £1.25 billion from £668 million in 2021. The start-up won’t raise additional capital in the next two years, as it ended 2022 with a balance sheet of over £250 million of cash and other assets.

However, Cazoo is showing signs of a rebound in 2023, as its founder and CEO Alex Chesterman commented, “Our January and February retail sales volumes and revenues were in line with expectations and, as we focus on unit economics, we continue to notably improve our retail GPU which is tracking at ~£900 so far this year, up from ~£600 in Q4 2022. The fact that we have now sold well over 100,000 cars entirely online in the UK in the three years since launch demonstrates the continued consumer shift online as they embrace the transparency and convenience of our market-leading digital used car buying and selling experience.”

Jonathan Dunkley, a 20-year veteran in the used car industry, who was working as a strategic advisor to Cazoo since 2021, has been appointed as the company’s Chief Operating Officer, as the business now eyes ending 2023 with over £100 million of assets in its balance sheet.

Image Credits: Cazoo

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According to the company statement made on June 4, these cars might have compromised braking systems.

The company will contact the owners of the vehicles and recall 993,407 vehicles, including 70,000 in Germany.

It is not the first time this issue has arisen. In 2021, Mercedes recalled a similar number of cars over a safety issue with the emergency call system. This system helps alert emergency services of an accident and transmits the vehicle’s location. The Mercedes call system began relaying the wrong vehicle location to emergency services. According to the European Union, the eCall system has been mandatory for all the cars sold since 2018.

The recall affects vehicles built between 2004 and 2015. They are from the ML and GL series of SUVs and R-Class luxury minivans. The process to rectify this issue would involve inspecting the faulty vehicles and replacing the parts if needed.

Mercedes said that they found the function of the brake boosters in these cars could have been affected by advanced corrosion in the joint area of the housing.

The company has further asked its customers not to drive their vehicles until inspection.

The company also plans to launch a new entry-level electric vehicle architecture by 2024. It will be called the Mercedes Modular Architecture (MMA).

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Mercedes-Benz luxury SUV portfolio comprising the GLA, GLC, GLE, GLC Coupe, GLE Coupe and the GLS grew in double digits Q1 2017. The comprehensive SUV portfolio continued to drive growth for Mercedes-Benz as it reiterated its increasing popularity among the Indian customers. While the growth in the SUV portfolio was primarily led by the GLC, which emerged as the highest selling SUV, the bigger GLE, GLE Coupe and the GLS also witnessed strong customer preference in the January-March 2018 period. The luxury sedan segment comprising the C-Class, E-Class and the S-Class performed very well. The all-new Long Wheelbase E-Class continued its sales momentum and sustained the customer interest across markets and supported the growth of the sedan portfolio. The E-Class’ success was closely matched by that of the C-Class Sedan, which remained an important volume contributor in Q1 2018. Apart from the sedans, the New Generation Cars continued to attract younger customers to the brand, while the AMG and Dream Cars portfolio made the fascination for the brand more visible than before.

Roland Folger, Managing Director & CEO, Mercedes-Benz India commented, “2018 began with a positive note for the brand, though the spike in Q1 sales can be attributed to the advancement of sales due to the impending price correction, triggered primarily by the increase in basic custom’s duty. It might be a challenge to sustain this momentum in the coming quarters and we are cautiously optimistic. As the luxury industry volumes are comparatively low, the focus should remain on helping the industry grow by creating demand. A rise in demand would translate in increased production and thus, lead to significant revenue generation, and would support the ‘Make in India’ initiative.”

Mr Folger added: “We are extremely excited to witness the strong performance of our mainstay models, the C-, E-, S-Class and the SUVs. Particularly the success of the Long Wheelbase E-Class underlines the aptness of our decision to launch the car in India. We will continue with our product offensive and introduce a host of new products across segments and body shapes, to keep the consumer’s interest. Qualitative expansion in our network spread, coupled with service differentiation driven by our cost of ownership measures and availability of tailor made financial programmes, will continue to add value to our efforts of creating delightful customer experience. It is assuring to witness growth across the portfolio which reiterates that luxury car buyers’ in India continues to appreciate our ‘Best Keeps Leading’ initiatives.”

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Mercedes Benz, the subsidiary of Daimler, quoted Dalai Lama in one of their Instagram posts on Monday. The advertisement showcased a car with the words: “Look at situations from all angles, and you will become more open.”

The company apologised on Tuesday for the first time on one of China’s one of the top social media platform called Weibo.

Although China has no access to Instagram, but the post went viral as Chinese internet users started reposting it and that created a lot of turmoils.

Xinhua, the official news agency of People Republic of China, said that the car manufacturer in a letter had apologised to China’s ambassador in Germany and stated that the company didn’t make the post to raise any controversy about Beijing’s sovereignty over Tibet. The company also stated that it provides ‘no support, assistance, aid or help to anyone who intentionally subverts or attempts to subvert China’s sovereignty and territorial integrity’.

The letter added saying: “Daimler deeply regrets the hurt and grief that its negligent and insensitive mistake has caused to the Chinese people. Daimler fully and unreservedly recognises the seriousness of the situation, which the company has caused and sincerely apologises for.”

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Luxury companies are of opinion that with the implementation of the Budget and new duty rates, prices may jump by USD $1,560- 15,600 (Rs 1-10 lakhs).

However, deals at pre-Budget prices are available for existing stocks at dealerships. Car companies like Mercedes-Benz and Audi have already started offering ‘pre-Budget deals’ to their potential buyers. Increased prices are expected to be announced over the next few weeks, after companies clear inventories and fresh imports arrive or get assembled.

A soar in prices will be expectedly announced in the next couple of weeks when luxury car manufacturers clear their existing stock and new stock of cars and parts arrive.

Silver Arrows, one of the dealers for Mercedes-Benz in Delhi-NCR, has approached its probable buyers saying: “Hurry and buy your favourite car at pre-Budget prices, till stocks last. Prices will likely increase by 5%.”

A senior functionary with Mercedes said, “This is the right time to buy, as prices are yet to change. We are also doing aggressive follow-ups with customers.”

Mikey Todd, one of the top dealers for Audi in India, said that there are chances that the price of the brand may raise by 3-4 percent in the new stock. He also added: “It depends on model-to-model, but this is the kind of inventory that we hold.”

“People are still absorbing the fact that prices are going up. In any case, there have been quite a few instances of unexpected rush this fiscal, especially due to duty and price changes at the time of GST rollout. That rush is missing.”

The post Luxury cars are offering pre-Budget deals in India appeared first on International Finance.

The post Mercedes-Benz India continues its strong growth momentum appeared first on International Finance.

“We are excited to celebrate 20 years of production in Tuscaloosa by expanding our operations in the region and by bringing our electric initiative to the United States. With this one billion dollar investment, we are significantly growing our manufacturing footprint here in Alabama, while sending a clear message to our customers across the US and around the world: Mercedes-Benz will continue to be on the cutting-edge of electric vehicle development and production,” said Markus Schäfer, Member of the Divisional Board of Mercedes-Benz Cars, Production and Supply Chain. “With production locations for EVs and batteries in Europe, China and, now, the US, our global network is ready for the era of electric vehicles. Thanks to our plant modernization in Tuscaloosa, we will be able to quickly ramp up US production of EQ models, while also being more flexible to our customers’ demands for innovative vehicles that live up to the excellent quality that is synonymous with the Mercedes-Benz brand.”

In addition to the electric initiative, the logistics activities in the US will be expanded with a new Global Logistics Center and a new after-sales North American hub, exporting car-kits to global assembly plants and spare parts from the US and North America to worldwide markets.

“With the addition of electric SUVs to our future fleet, we will provide discerning drivers with a new, high quality automotive option that will marry performance, luxury, and environmental stewardship,” Markus Schäfer said. “As a result of our investments in Alabama, Mercedes-Benz customers will soon be able to enjoy advanced technology coupled with a luxury driving experience.”

The plant in Tuscaloosa exclusively provides worldwide clients with the SUV models GLE, GLS and GLE Coupé that continue the proud tradition of quality associated with Mercedes-Benz. With the upcoming production of the next SUV generation the plant will enhance its proven production portfolio with modern plug-in hybrids, responding flexibly and efficiently to market demand. With the additional integration of electric vehicles, the plant is shaping the future of electric mobility worldwide. The announcement was part of the 20-year celebration at MBUSI. Dignitaries attending the event included Alabama Governor Kay Ellen Ivey as well as other local and state officials.

“This is an exciting day for MBUSI and our entire team here in Alabama,” said Jason Hoff, President and CEO of Mercedes-Benz US International during the “All Team Member” meeting. “Looking back on 20 years of production, the Mercedes-Benz plant in Tuscaloosa has been a success story from the beginning. We are now continuing this story with a clear vision for the era of electric mobility. We are proud that Tuscaloosa will be an integral part of our company’s evolution to electric vehicles contributing to the long-term success of Mercedes-Benz Cars.”

“The fact that Mercedes-Benz continues to expand its operations in Alabama makes a powerful statement about the quality of the global automaker’s workforce in the state, and underscores that we are achieving our goal of ensuring businesses in Alabama don’t just survive, but thrive,” Governor Kay Ivey said. “For the past two decades, MBUSI has been a tremendous partner in the growth of our state, and we look forward to strengthening those bonds in the years to come.”

Tuscaloosa is home to Mercedes-Benz’s SUV production for the world market, having started production of the former M-Class (today the GLE) in 1997. As the first automotive manufacturing location in the State of Alabama, the plant also served as the catalyst for additional OEMs, automotive suppliers and supporting businesses to come to the area, creating thousands of jobs in the region and leading to Alabama’s strong position as one of the key automotive business clusters in the United States. Mercedes-Benz exports more than 70 percent of its SUVs to markets around the globe. With an earlier investment of $1.3 billion announced in 2015, the plant is currently being expanded to prepare for the production of the next SUV generation including plug-in hybrid models. The plant expansion comprises a new Body Shop, major enhancements to the SUV Assembly Shop as well as upgraded logistics and IT systems.

Electric vehicles from the family of EQ branded products

Mercedes-Benz will start producing SUV models of the EQ brand in Tuscaloosa at the beginning of the next decade. EQ models will be integrated into the series production at the plant. This is possible because of the early investments in flexibility and technical equipment at the plant that offer trailblazing Industry 4.0 technologies. With the Tuscaloosa plant, Mercedes-Benz will have electric mobility hubs on three continents serving customers’ demand around the globe.

By 2022, the company will electrify the entire portfolio of Mercedes, offering customers at least one electrified alternative in all segments from smart to large SUVs. The company is planning to offer more than 50 electrified vehicle variants. At the same time, Mercedes-Benz will be continuously supporting the development of plug-in hybrids and the introduction of 48-volt-systems. The first EQ series model, EQC, will go into production in 2019 in Bremen, Germany. Technology and product brand EQ is an integral part of CASE, which stands for the intelligent combination of the strategic pillars of connectivity (Connected), autonomous driving (Autonomous), flexible use (Shared & Services) and electric drive systems (Electric).

Fifth Mercedes-Benz factory to produce batteries

The battery factory near plant Tuscaloosa will be part of the global battery production network of Mercedes-Benz Cars for local demand and export. In total, Daimler will invest $1.18 billion (more than one billion Euros) in the battery production network, which will also include production facilities in Germany and China. As in vehicle production, the battery production network will react flexibly and efficiently to market demand. This strategy ensures the ongoing availability of modern battery technology through local production hubs in Europe, China and the US and puts Mercedes-Benz in a highly competitive position for its electric initiative. Construction work for the new one million square-foot facility in Tuscaloosa is expected to begin in 2018, with operations planned to start at the beginning of the next decade.

Expansion of logistics activities

Expanding its industrial footprint, Mercedes-Benz is also building a new Global Logistics Center and a new after-sales North American hub in Bibb County, five miles from the plant in Tuscaloosa.

The Global Logistics Center will support worldwide logistics operations connected with products “Made in Tuscaloosa” and will supply oversea assembly plants with car-kits, where Mercedes-Benz produces vehicles for local markets. Operations including brand new IT systems to support lean logistics processes in the new warehouse are scheduled to begin in 2019.

Additionally, Mercedes-Benz is consolidating the three existing after-sales warehouses at a new location. The new after-sales North American hub will be co-located with the new Global Logistics Center providing markets abroad with spare parts. This allows the company to meet rising market demands amid the growing variety of models. The new hub is scheduled to start its operations at the end of 2020.

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