Reports Daimler plans new plant to set off tussle amongst CEE states

Reports Daimler plans new plant to set off tussle amongst CEE states
Daimler is not the first car giant to try to whip up competition in CEE.
By bne IntelliNews March 10, 2016

German car manufacturer Daimler is considering Slovakia as a location for a new plant, local media reported on March 9.

The report suggests the carmaker is hoping to spark competition for its favours across the region. It comes just a few days after the head of Daimler's management board, Dieter Zetsche, said Romania might be picked to host a factory. Meanwhile, the claim will have pricked up ears in Hungary, which already hosts a plant. The German firm has said in the past that it wants to expand the facility at Kecskemet.

Slovakia, which is the largest car producer per capita in Europe, is home to three large car assembly plants, run by Germany’s Volkswagen, France’s PSA Peugeot-Citroen and South Korea’s Kia Motors. Following months of speculation across Central Europe that the country was vying with Poland, Hungary and the Czech Republic, Jaguar Land Rover announced in summer last year that it will place a £1bn plant in Slovakia. Romania hosts plants run by Renault and Ford.

Daimler division Mercedes-Benz Cars, which last year produced 2mn cars, is looking to divisify its production in Europe and hopes to open a new plant to turn out cars and another to produce engines, Slovak media claims. A spokesperson for Mercedes said the company is constantly looking for the proper location for a capacity boost, but did not reveal any more detail, reports

Daimler acquired a 441-hectare plot in Hungary in 2008, of which it currently uses only 160 hectares. The company originally planned to to use the remaining area to build a second plant to double potential capacity to 300,000 units, but that was derailed by the financial crisis. Since 2012 the company has been suggesting it will reinvigorate the plan, but it now appears less certain.

“It is true that we are continuously examining the parametres of the local production in connection with market growth and sale potential," Mercedes-Benz Cars corporate spokesman Matthias Krust said. “This applies to all markets and regions." A final decision on the expansion plans will be made by the end of March, Slovak media claims.

Slovakia is reported to have offered JLR huge incentives to park its new investment in Nitra. Poland, Bratislava's final serious competitor, claimed to have dropped out in the final stages, claiming it could not compete with what Bratislava put on the table.

Slovak officials claim the investment from the Indian-owned JLR could boost economic growth this year to 4%. Suppliers are reportedly lining up to invest in the Nitra region to serve the new plant.