US plant to build new Mercedes: Daimler-Benz plans pounds 300m investment

DAIMLER-BENZ will build a new assembly plant in the US to assemble and export a Mercedes four-wheel- drive sport vehicle, the company confirmed yesterday.

While a site has not been selected, the German car maker said it would spend dollars 300m ( pounds 123.5m) on the new plant, which is to begin producing 60,000 of the vehicles, known as Gelandewagen, in 1997.

Of that number as many as 40,000 are likely to be exported, Mercedes officials told reporters in Detroit. Few details of the car, which will cost between dollars 20,000 and dollars 30,000, were revealed.

Speculation on the location of the plant has focused on North and South Carolina, where another Daimler division, Freightliner, has manufactured heavy trucks for several years.

South Carolina - a relatively low- wage, anti-union state - is also the designated site of BMW's new US assembly plant, scheduled to open in 1995.

BMW outsold Mercedes last year for the first time, but both German car makers have seen US sales weaken in recent years because of the poor state of the American economy and increasing competition from Japanese rivals in the luxury market.

Mercedes sold 63,312 cars in the US last year. Although this was up 7.5 per cent from 1991 it was more than one- third down from the 99,314 cars it sold in 1986.

Locating a plant in the US could shield its American sales from currency fluctations and allow the Gelandewagen to be competitive internationally against rival products manufactured in the US and in higher- cost countries.

Daimler-Benz officials hinted yesterday they might acquire an existing US plant site. American car makers, notably General Motors, are in the process of abandoning several plants, most of them in the US Midwest.

Daimler-Benz made another concession to the importance of the American market last week when it announced it had reached agreement with US securities regulators to become the first German company listed on the New York Stock Exchange.

The listing will make the company more visible in the US and give it access to the huge American capital markets for a dollars 2bn global securities offering planned for this year.

Hamish McRae, page 23