-- Rastatt plant to produce new Mercedes-Benz A-Class SUV
-- New-generation A-Class designed to attract younger
customers
-- CEO says global demand remains strong despite declining
markets in southern Europe
(Adds comments, detail)
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 and will add a third shift there
as of October amid encouraging order intake.
It added that global demand for its premium cars remains strong
despite declining markets in southern Europe due to economic
uncertainty and 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. Mr. Zetsche said
the company received more than 40,000 orders for the new A-Class
model since it officially went on sale in June.
Daimler faces fierce pressure from analysts despite enjoying
record car sales at its core Mercedes-Benz brand, because BMW and
Audi are selling more cars and reaping higher profit margins. Mr.
Zetsche, however, reiterated that Mercedes-Benz will fight back and
aims to regain the crown in the lucrative premium-car segment by
2020. The global luxury-car segment has been largely unaffected
from the woes embroiling the more price-sensitive mass-market
segment in western Europe as demand in China and North America
continues to surge.
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.
Mr. Zetsche confirmed that a sport-utility version will be added
to the product lineup 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.
Mercedes-Benz production chief Wolfgang Bernhard said that
preparing production of the new SUV, which is due to start at the
end of 2013, accounts for a large chunk of the additional
investment at the Rastatt plant. Rastatt will be the only plant to
produce the A-Class SUV.
Earlier this year, Mercedes-Benz opened a new plant in
Kecskemet, Hungary, for the production of its new generation of
compact A- and B-Class models to benefit from relatively low labor
costs. Daimler also plans to start production of its compact cars
in China as part of its expansion plan in this segment.
Write to Christoph Rauwald at christoph.rauwald@dowjones.com