Electric C-Class and small G-Class enhance Kecskemét

With the start of production of the new electric C-Class, the Mercedes-Benz plant in Kecskemét is finally moving up from a compact car site to a strategically important plant for the core segment. Mercedes-Benz has more than doubled the area of the Hungarian site from 200 to 440 hectares and invested around one billion euros as part of its 2022 to 2026 business plan. Added to this are two halls for body construction and assembly, a second press shop, a new paint shop and an in-house battery assembly.

The industrial significance of the expansion, however, lies less in individual new technologies than in the future role of the plant within the European production network. Digital twins, camera-based quality controls, connected production data and virtual start-up safeguards now increasingly belong to the standard repertoire at major car manufacturers. What is more noteworthy, therefore, is for which models Mercedes-Benz is building this infrastructure in Kecskemét and how much flexibility the site will receive within the network in future.

In addition to the electric C-Class and models from the compact segment, the electric GLC is also to be built there in the future. The upcoming more compact version of the G-Class will even be built exclusively in Kecskemét. This gives the Hungarian plant not only additional volume, but also vehicles that are of great importance for Mercedes-Benz's future model and brand strategy.

From compact car plant to core site

Kecskemét opened in 2012 and for a long time was positioned primarily as a production site for compact Mercedes models. With the electric C-Class, the plant is now taking on a battery-electric vehicle from the core segment for the first time. This is a significantly greater strategic upgrade than the mere production start-up of an additional model might suggest.

Mercedes production chief, Michael Schiebe, backs AI and flexible EV strategy

Mercedes-Benz production chief Michael Schiebe outlines how AI, flexible manufacturing and localisation will help balance cost pressures, EV uncertainty and premium quality demands as the carmaker ramps up a wave of new models.

Within its passenger car portfolio, Mercedes-Benz distinguishes between the compact, core and top-end segments. While German sites such as Sindelfingen continue to play a central role in particularly high-quality and high-margin models, Kecskemét is increasingly expanding its range towards the high-volume core business.

“With the plant expansion in Kecskemét, we are increasing the resilience and flexibility of our global production network,” says Michael Schiebe, member of the Board of Management of Mercedes-Benz Group responsible for production, quality and supply chain management. The site makes it possible to produce models such as the GLB and the new electric C-Class competitively while at the same time strengthening the entire production network.

The decisive word here is “competitively”. The upgrade of Kecskemét comes at a time when German automotive plants are under growing pressure due to high labour, energy and location costs, weak utilisation of individual model series and intensified international competition. Mercedes-Benz itself points to increasingly tougher competition in technology, costs, speed and quality. According to the company, production costs in Hungary are around 70 per cent below the German level. According to media reports, the share of production in European countries with lower costs is set to rise from currently about 15 to around 30 per cent.

Against this background, the allocation of models to Kecskemét is also a location policy decision. With the electric C-Class, Hungary is receiving a central volume model. The exclusive allocation of the more compact G-Class goes one step further: A new vehicle with one of the brand's best-known product names will not be built in Germany, nor at the previous G-Class production site in Graz, but rather in a lower-cost Mercedes plant in Hungary.

Flexible platforms instead of rigid model allocation

Mercedes-Benz is increasingly relying in its production network on plants that can accommodate multiple types of drive and models. In the existing hall in Kecskemét, vehicles with internal combustion engines and battery-electric drive can be produced on one line. The new hall, by contrast, is geared towards fully electric vehicles.

This combination allows Mercedes-Benz to shift production volumes between drive types without committing the entire plant to a single market development. Particularly in view of regionally very different and only difficult-to-predict demand for electric vehicles, this so-called drive flexibility has now become more important for manufacturers than designing a plant as consistently as possible for only one technology.

Mercedes-Benz accelerates AI and robotics at Berlin-Marienfelde, transforming digital production with humanoid robots and next-generation automation technologies

At its Berlin-Marienfelde site, Mercedes-Benz is integrating artificial intelligence and humanoid robotics into automotive production. With new digital tools and axial-flux motor technology, the factory is setting new global standards for intelligent manufacturing.

At the same time, flexible production axes are emerging between individual sites. Kecskemét is already working with Rastatt in a European production network for vehicles based on the Mercedes Modular Architecture. In future, the electric GLC is to be manufactured both in Bremen and in Kecskemét. Mercedes-Benz can thus distribute the volume between both plants depending on demand, capacity utilisation, supply chains and costs.

For the production network, this increases responsiveness. For the individual sites, however, it also intensifies internal competition. If several plants are technically capable of building the same model, productivity, utilisation, start-up performance and costs become even more important in the allocation of additional volumes.

The German plants remain important competence and lead sites. Bremen is preparing the ramp-up of the electric GLC, Sindelfingen is intended for new electric Mercedes-AMG models and Untertürkheim is taking over central components of the electric powertrain. At the same time, Kecskemét shows that high-quality and complex vehicles within Europe are no longer automatically tied to German plants.

Digital twin is not a unique selling point

As the technological basis of the new production, Mercedes-Benz uses its production ecosystem MO360. Via the MO360 Data Platform, information from production, quality and the supply chain is brought together across plants. This is intended to enable more consistent control and make deviations along the production processes visible more quickly.

For the new assembly hall in Kecskemét, Mercedes-Benz has also created a complete Digital Factory Twin in Nvidia Omniverse. Production facilities, material flows and individual assembly steps can thus be planned, tested and adjusted virtually. Validation takes place earlier, so that changes are ideally made before facilities are installed or processes in the real hall have to be changed.

For Mercedes-Benz, the complete virtual representation of an assembly hall is an important scaling step. Across the industry, however, the use of digital twins is no longer a fundamentally new development. As part of its iFactory, BMW has captured all production sites in three dimensions and is now scaling applications via the digital twins of more than 30 plants. The new BMW plant in Debrecen, Hungary as well, was already planned virtually and tested in the digital factory before real production started.

Other manufacturers also use virtual factory models, networked production platforms and AI-based quality applications to safeguard ramp-ups and convert existing plants more quickly for new models. The Digital Factory Twin should therefore be understood less as a unique technical selling point. Rather, it is a prerequisite for standardising model ramp-ups across several sites and for being able to shift production volumes between plants at shorter notice.

This is precisely where the strategic relevance for Kecskemét lies. The plant is not intended to operate as an isolated factory, but rather to share processes, data models and production standards with Rastatt, Bremen and other sites. Here, digitisation serves above all to increase interchangeability and collaboration within the network.

Localisation extends to the battery

Mercedes-Benz is not only expanding vehicle assembly in Kecskemét. Body parts and high-voltage batteries for the electric vehicles produced there are also to be made at the site. The company's own battery assembly supplies, among other things, the electric GLB and the electric C-Class.

In doing so, the manufacturer is continuing its local-for-local strategy. Battery assembly in the immediate vicinity of vehicle production shortens transport routes and reduces the logistical effort for a large, heavy and safety-relevant component. At the same time, variants and production volumes can be coordinated more closely with the vehicle plant.

Precision at scale: inside Mercedes-Benz's axial-flux motor production in Berlin-Marienfelde

Mercedes-Benz has started large-scale production of its axial-flux electric motor in Berlin-Marienfelde, using advanced manufacturing processes, AI-driven quality control and precision assembly techniques to bring high-performance EV technology to automotive-scale production.

Localised battery assembly is likewise not a special path taken by Mercedes-Benz. It has largely become established as the preferred structure at electric vehicle plants. The cost- and logistics-intensive transport of complete battery systems over long distances is rarely sensible for high production volumes. What is decisive, therefore, is less that batteries are assembled in Kecskemét, but that Mercedes-Benz is building there a largely complete industrial process chain for several electric model series.

Efficiency becomes the central site criterion

The energy supply and the new paint shop are also designed for lower operating costs. A photovoltaic park with 27.4 megawatt peak was built on an area of 240,000 square metres. Together with the roof-mounted systems on battery assembly, body shop and assembly, the plant has an installed photovoltaic capacity of 42.3 megawatt peak. According to company information, this can cover around a quarter of the annual energy requirement.

In the new paint shop, energy consumption is intended to fall by about 20 per cent compared with the existing facility. Mercedes-Benz puts the reduction in the associated CO₂ emissions at around 80 per cent. Alongside the climate impact, such improvements are increasingly also a factor in ongoing production costs in view of high and volatile energy prices.

Kecskemét thus combines low structural location costs with a new production infrastructure designed for high efficiency. It is precisely this combination that makes the plant attractive for Mercedes-Benz. The investment is therefore not only part of electrification or digitalisation, but an expression of a broader reorganisation of the European manufacturing landscape.

German plants will not become superfluous in the short term as a result. They remain development, ramp-up and production sites for numerous core technologies and particularly complex models. But they must assert their position within a network in which plants in Hungary are catching up technically while at the same time operating with significantly lower costs.

The start of production of the electric C-Class makes this shift visible. With the electric GLC, Kecskemét is linked directly with a German plant. With the exclusive compact G-Class, the site ultimately receives a model that underlines its strategic upgrade particularly clearly. Mercedes-Benz is thus not only building up additional capacity in Hungary. The Group is also shifting the balance of power within its European production network.