By Christoph Rauwald
RASTATT, Germany--Daimler AG (DAI.XE) said Monday it will invest an additional 600 million euros ($735 million) in its plant at Rastatt, Germany, by the end of next year for the new generation of its compact Mercedes-Benz A-Class.
It added that global demand for its premium cars remains strong despite declining markets in southern Europe amid tough austerity measures.
"Globally, demand continues to be very good, despite the difficult market situation in southern Europe," Daimler Chief Executive Dieter Zetsche told reporters at a press conference on the start of production of the revamped A-Class.
The new-generation A-Class model is a cornerstone of Mercedes-Benz's plan to ramp up its presence in the compact car segment and boost sales to catch up with German rivals BMW AG (BMW.XE) and Volkswagen AG's (VOW.XE) Audi brand.
The revamped A-Class features a more sporty design than its predecessor to lure younger customers to the brand. Many young car buyers have shunned Mercedes-Benz in recent years and opted for cars made by BMW or Audi, which made significant inroads into the compact-car segment with the BMW 1-series and the Audi A3 models.
Zetsche confirmed that a sport-utility version will be added to the product line-up of the A-Class, in addition to the hatchback and a four-door coupe. Daimler said earlier there will be five different versions of the A-Class in the future, but company executives have indicated that there might be more to come.
Write to Christoph Rauwald at [email protected]