Mercedes-Benz to shift output of R-Class to AM General in Indiana

Article by Andrew Christian, on January 30, 2015

Mercedes-Benz is planning to transfer this summer the production of the R-Class crossover from Alabama to Indiana, with AM General – maker of the Humvee – as the contract manufacturer. Mercedes cited the need to free up production capacity at its Alabama site near Tuscaloosa.

Jason Hoff, chief executive of Mercedes-Benz U.S. International, said in a statement that the Tuscaloosa site needs more free capacity for SUV production and the output of the new GLE Coupe.

The freed capacity will be used to produce other Mercedes models like the GLE class and the GL class. Markus Schaefer, member of the divisional board for Mercedes-Benz cars, manufacturing and supply chain management, said in the statement that the use of a contract manufacturer is within the carmaker’s growth strategy.

As part of the shift, Mercedes is moving production tools to AM General’s production site near South Bend, Ind. Mercedes launched the R class in 2005 but pulled it out from the United States in 2012.

Mercedes-Benz has been selling the R class in China since 2013. AM General in a statement that said it has inked a multiyear deal to become Mercedes' "first and only" contract manufacturing operator in the US.

AM General expects the first R class to roll off its production lines this summer, adding that it plans to hire and train hundreds of new workers for R-class production.

Mercedes’ parent Daimler AG opted to produce the R class in the US instead of China due an existing supplier network. Moreover, it is easier to move the tooling to another U.S. site, the source said.

The production run is indefinite and demand is strong enough to justify several more years of production. A source told Automotive News that Mercedes will produce around 10,000 units of the R class annually.

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