Daimler will invest another 600 million euros ($734.6 million) by the end of 2013 in its Rastatt, Germany, plant to add a third shift starting in October to meet demand for its lineup of compact Mercedes-Benz cars.
The carmaker currently builds the A- and B-class models at the factory. A third model, a compact SUV, will also be built at the plant, Mercedes said in a statement on Monday to mark the production start of the new A class.
The investment will fund a second phase of expansion for Rastatt, bringing total capital expenditure to 1.2 billion euros, the automaker added.
"By 2020 at the latest we want Mercedes-Benz to be the No. 1 in the premium segment, also in terms of vehicle sales," CEO Dieter Zetsche said in a speech in Rastatt. "Our new compacts are among our best weapons in this product offensive. Over the next 10 years the global market for premium compacts will grow by almost 4 million vehicles."
According to a Daimler spokeswoman, that would lead to a premium compact market of about 10 million vehicles in 2021.
Running at full capacity
Starting in October, a third shift will be added to the plant in Rastatt, which is about 100km west of Stuttgart, and 21 additional shifts are planned, mainly in the first half of next year, Daimler said.
Mercedes production chief Wolfgang Bernhard said the plant would be running at full speed even after the second expansion phase is completed.
"I read recently that 40 percent of the car plants in the EU are operating at a loss. I can't confirm that figure but I can confirm that Rastatt definitely is not one of them," Bernhard said.
Mercedes plans a total of five compact models, including an SUV and coupe, which will be in built in Rastatt and at the automaker's plant in Kecskemet, Hungary.
Last year, the Mercedes brand sold 1.26 million cars and SUVs, behind rivals Audi with 1.3 million and the BMW brand, which sold 1.38 million.
Reuters contributed to this report