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Daimler to Set up Second Plant in Hungary for Mercedes-Benz

Hungary: The German automobile multinational is poised to invest USD1.1 billion for establishment of Mercedes Benz plant to be based in Kecskemet, Hungary. This is the second time company is setting up plant for Mercedes in Hungary. The plant is expected to produce both front and rear wheel drive cars, and will also be capable of producing alternative powertrain models.

Establishment of this plant is expected to provide employment to around 2,500 people in Hungary, and the investment is believed to be completed by 2020, claims the company. The new set up is likely to be enabled with a production capacity of around 150,000 as per the statement of Hungarian foreign minister Peter Szijjarto. Additionally, the government has also offered incentives worth USD45.9 million.

Currently, Mercedes Benz has a product portfolio consisting of 32 models, however, in the coming years, the company is believed to offer 40 models. Moreover, it is expected that all the passenger car models will go through electrification in future.

"In the next few years, we plan to invest around USD1 billion in building a new plant at our site in Kecskemet. We will establish a state-of-the-art and efficient production facility, in which different vehicle architectures will roll off the assembly line flexibly. With this highly modern 'flex-plant', we will create additional capacity along with the necessary flexibility according to Industry 4.0 benchmark approaches allowing us to react quickly and future-oriented to the market needs. Our company strengthens its competitiveness," said Markus Schafer, Member of the Divisional Board Mercedes-Benz Cars, Production and Supply Chain Management.

As per TechSci Research, with successful completion of this plant, the company is believed to strengthen their product portfolio in the country. Further, with this move, the country’s tire market will also be supported by the increasing demand arising from the OEM segment, thereby, crafting an opportunity to leading tire manufacturers in Hungary.

According to a recent report published by TechSci Research,Hungary Tyre Market Forecast and Opportunities, 2020, the country’s tire market is projected to grow at over 8% CAGR during 2015-2020. In 2014, the replacement tire segment in Hungary accounted for more than 50% of market share. The passenger car tires segment accounted for more than 90% volume share in the Hungary tire market, followed by light commercial vehicle tire, medium & heavy commercial vehicle tire, two-wheeler tire and OTR tire segments. Hankook, Bridgestone and Michelin operate their tire manufacturing plants in the country, while global tire companies like Goodyear, Pirelli, Continental, Vredestein, etc., operate through their sales offices in Hungary.

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