German automaker Mercedes Benz is bringing the R-Class SUV back to the United States for the first time since it left in 2012. The R-Class is hugely popular in China, where it has been sold exclusively since 2o13. Mercedes has awarded the American contract to South Bend, IN based AM General for production. The actual assembly will occur in the plant located in Mishawaka, Indiana, where AM General manufactures military Hummers, previously assembled the H2, and currently makes the MV-1 wheel chaired accessible van. Currently, AM General employs nearly 1500 workers across all of their plants.
According to the Associated Press, AM General will begin manufacturing the Mercedes Benz R-Class SUVs this summer. Both automakers have signed a multi-year contract, ensuring that the production remains in the United States, specifically in Mishawaka, Indiana, for at least the next few years. Although details of the deal are being kept under wraps, Mercedes expects the R-Class SUV to be quite popular in the United States. According to 2013 sales numbers for China, the R-Class sold 12,700 units that year in China.
Currently, Mercedes has a plant in Tuscaloosa, Alabama, that is equipped to manufacture the R-Class. However, they decided to move manufacturing away from the facility to make room for the new GLE Coupe, as well as increase production on other models. According to Bloomberg Business, Mercedes is attempting to regain the top spot in luxury vehicle sales. In an effort to do so, they will need space in the Tuscaloosa plant to increase production, which could reach over 300,000 vehicles this year, an increase of nearly 65,000. The agreement with AM General will allow the R-Class to be reintroduced to the United States and allow the company to remain flexible in its development strategy.
Markus Schaefer, head of Mercedes’ manufacturing, feels the move will help improve competitiveness.
“Within our growth strategy we are expanding our global production network. We are thus increasing flexibility and continue to improve our competitiveness.”
The strategy to move production from their Tuscaloosa plant, without building a new facility, makes sense from a monetary standpoint. During the last recession, many auto plants closed down to save money and production costs. Using the existing AM General facility will benefit both companies.
Workers at the AM General plant are union represented, unlike those that work at the Tuscaloosa plant. It is unknown whether there will be any discussions regarding the organization of a Union at the Tuscaloosa plant, although they have been trying for a few years.
[Photo Courtesy: Associated Press]