Daimler is attempting to become the number one luxury car manufacturer again

Daimler’s Mercedes Benz brand opened its newest $1.07 billion Mercedes B-Class compact car manufacturing facility in Kecskemet, Hungary (about 56 miles southeast of Budapest). Daimler ceded its supremacy in luxury car manufacturing to BMW in 2005 and hoping to get back to the number one position soon.

Daimler expects to cut 1,480 Euros per car of production cost by moving into comparatively cheap labor market of Hungary. Manufacturing cost at the new facility will be 30 percent lower compared to a similar facility in Germany. This saving can be allocated elsewhere in the company to reach the goal of becoming the number one luxury car manufacturer again.

The new facility combined with an existing facility in Germany could produce 450,000 vehicles per year. This is equivalent to 35 percent of the total number of vehicles manufactured by Daimler. The new facility has the capability to manufacture other luxury lines produced by Mercedes Benz.

Sales of luxury vehicles are slowing year over year due to the worldwide recession. In order to compete with other industry leaders, manufacturers are looking for ways to cut cost and modernize manufacturing process and facilities.

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