FRANKFURT --- Daimler said it plans to invest about 500 million euros ($575 million) in a new engine factory in Poland to broaden its production footprint outside its German home market.
The plant will produce four-cylinder gasoline and diesel engines for Mercedes-Benz passenger cars starting in 2019 and will create several hundred jobs, Daimler said in a statement today.
The factory will be in Jawor, about 430km southwest of Warsaw, and will be Mercedes's first plant in Poland and second engine facility outside Germany after Beijing.
The implementation of the project is dependent on various investment conditions, including the granting of state aid, Daimler said.
The 500 million euros is planned for the first stage of its planned investment, the company said. Daimler has not commented on German media reports that it plans a car production factory in Poland instead of in Russia where the auto industry is in a prolonged slump.
Daimler's investments in central and eastern Europe include a car factory in Hungary and a transmissions factory in Romania.
The Jawor plant will allow Mercedes to react more quickly to changes in demand across several production sites, Frank Deiss, head of Mercedes's powertrain production, said in the statement.
Automakers are pushing to improve profitability by shaving costs off production processes, fine-tuning delivery of car parts and developing strategies including use of the same parts in different model lines.
One area of focus is being able to switch products from one factory to another, depending on demand. Luxury-vehicle manufacturers are increasingly equipping cars with smaller, more fuel-efficient four-cylinder engines as governments mandate cleaner-running models.
Mercedes is producing more cars in its bid to wrest back the global lead in luxury-auto sales from BMW's namesake brand as early as this year.
Reuters and Bloomberg contributed to this report