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Mercedes Hints at New U.S. Plant

February 18, 1993

BERLIN (AP) _ Mercedes-Benz AG may follow the lead of archrival BMW and build its first passenger vehicle plant in the United States, a company spokesman said Thursday.

Mercedes said it will decide within six months where to build the new factory, which will produce a recreational vehicle similar to Chrysler Corp.’s Jeep line.

A Mercedes spokesman, Christian Dau, said Thursday that the United States has a ″high priority″ because of the potential market there for a four-wheel drive utility vehicle.

The spokesman, speaking from the automaker’s Stuttgart headquarters, would not comment on a locations under consideration in the United States.

Mercedes chairman Werner Niefer told German reporters late Wednesday that sites under consideration for the new plant are the United States, Portugal and eastern Europe.

But he also said ″We have to build where there are customers who buy.″ Mercedes’ officials confirmed Niefer’s comments on Thursday.

Klaus-Juergen Melzner, an analyst with DB Research Gmbh, a divison of Deutsche Bank, said he believes the odds were heavily in favor of Mercedes choosing the United States for the plant.

The interest in the United States by Mercedes, a division of the giant Daimler-Benz conglomerate, follows similar moves by its German competitors.

Bayerische Motoren Werke (BMW) in June broke ground on a $625 million assembly plant near Spartanburg, S.C., after an intense lobbying effort by several U.S. states to lure the plant.

Audi AG, the luxury automaking arm of Volkswagen AG, also is considering whether to build a plant in the United States.

Mercedes already operates truck manufacturing operations in both the United States and Mexico through its Portland, Ore.-based Freightliner Corp.

Even though Mercedes has significant unused capacity in Germany, some analysts believe it may be compelled to build in the U.S. because of the new political climate.

The new Clinton administration already has criticized the European Community on some trade disputes, and German car companies fear they may face new barriers to one of their prime markets.

Mercedes, like other German manufacturers, also is looking for ways to cut costs by fleeing the powerful unions and high labor costs in Germany. German luxury car makers also are facing an assault by less-expensive Japanese luxury cars such as Toyota’s Lexus.

The new recreational vehicle being planned by Mercedes also is part of a significant shift in philosophy by the company to broaden its exclusive line of passenger cars to include more populist vehicles, such as minivans and a small urban commuter car.

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