Benz set to expand compact car production

MERCEDES-BENZ will spend €1 billion ($A1.44b) ramping up production capacity at its big Rastatt plant in Germany to help cope with expected demand for its next-generation of front-wheel-drive vehicles from about 2020.

Along with the investment in plant expansion and latest technologies, a new worker agreement for more flexible hours and other concessions will also be introduced, contributing to a lift in factory efficiency.

The German company is already under pressure to meet orders for its compact A-Class hatch, B-Class hatch, CLA sedan and GLA small SUV, but the prospect of the A-Class and B-Class being added to the North American showroom line-up the next time around means even more capacity will be required.

As well, prospective new variants such as a compact coupe might also have played a part in the expansion decision.

In Australia, combined sales of the Mercedes compact models – all on the modular MFA platform – are outpacing those of the long-time Mercedes champion, the C-Class, despite the latter running at record levels, up 90 per cent this year to 3967 units to the end of May.

Thanks to the arrival of the CLA and GLA in the past year, compact car sales have shot to almost 5000 units in the first five months of 2015.

Rastatt is the so-called lead plant for compact car production at Mercedes, setting the standard of production for other plants around the world, including those in Hungary, Finland, Mexico, India and China.

Mercedes has been rapidly expanding this overseas production for its rapid-selling compact cars, most recently adding the Chinese plant in league with its Chinese partner, Beijing Automobile Industry Corporation (BAIC), in April.

Last year, Mercedes-Benz sold a company record 463,152 compact cars, up almost 25 per cent on the previous year. In the first five months of 2015, it has sold 215,148 such vehicles.

Rastatt plant site manager Stefan Abraham said the transformation plan for the factory had been pivotal to secure production for next-generation compact cars.

“Our growth course will lead to significant improvements in economic efficiency and will secure employment at the location for the long term,” he said.