Mercedes-Benz is reportedly planning to manufacture its upcoming compact electric G-Class in Hungary instead of Germany, as the automaker continues to reorganize its European production network and reduce manufacturing costs.
According to Automobilwoche, citing sources within Mercedes-Benz Group, the compact model is expected to enter production at the company’s Kecskemét plant in Hungary in 2027. The report said the Rastatt facility, which currently builds several compact Mercedes-Benz models, is not expected to receive the production assignment.
Hungary Plant Expected to Play Larger Role
The reported compact model is expected to be based on Mercedes-Benz’s Mercedes Modular Architecture (MMA) platform for compact electric vehicles and may be marketed as the “g-Class.” It would complement the larger G-Class lineup, one of the company’s most profitable vehicle families, although the fully electric version has reportedly experienced weaker-than-expected sales.
If confirmed, production of the compact G-Class would represent another major investment for the Kecskemét plant, which is already preparing to manufacture the electric C-Class and its high-performance AMG derivatives.
Mercedes-Benz is scheduled to mark the completion of the plant’s expansion and the launch of new production activities on July 13.
According to the report, the expansion has doubled annual production capacity at Kecskemét to between 300,000 and 400,000 vehicles, potentially making it Mercedes-Benz’s largest manufacturing facility in Europe. The site’s share of the company’s European production is expected to increase from about 15% to approximately 30%.
Production Strategy Supports Cost Reduction
Mercedes-Benz has invested around €1 billion to expand the Hungarian factory, with the workforce expected to grow by roughly 3,000 employees to about 7,500. The facility currently manufactures several models, including the A-Class and the battery-electric GLB.
The report also indicated that production of the A-Class successor is likely to take place in Hungary. In addition, some European production of the GLC could reportedly move to Kecskemét if Mercedes-Benz proceeds with plans to transfer part of GLC manufacturing from Bremen to its Tuscaloosa, Alabama, plant for global production optimization.
The reported production changes form part of Mercedes-Benz’s strategy to reduce manufacturing costs by 10% between 2024 and 2027.
Chief Executive Officer Ola Källenius has previously outlined plans to improve productivity at the company’s German manufacturing facilities, including measures aimed at reducing operating costs. Those proposals have drawn opposition from German labor union IG Metall, which has announced protests over the potential impact on employees.
Mercedes-Benz is also facing broader industry challenges, including increased competition in China and the impact of U.S. tariffs, while preparing to introduce around 40 new vehicle models by 2027. The automaker has not publicly confirmed the reported production plans for the compact electric G-Class.
