Mercedes-Benz to Shift GLC SUV Production to Alabama
Production Shift Details and Strategic Rationale
Germany’s Mercedes-Benz Group AG has officially confirmed plans to relocate production of its top-selling GLC sport utility vehicle from its Bremen and Tuscaloosa, Alabama, sites in Germany to a fully dedicated assembly line in Tuscaloosa, Alabama. The move, announced via Bloomberg sources, is scheduled to commence initial volume production in mid-2027. Mercedes-Benz North America CEO Jason Hoff emphasized that “when volume, logistics and market proximity align, local manufacturing delivers significant cost and delivery advantages.”
“If you see what we want to achieve with volumes on this model, it makes sense to bring it to the US,”
— Jason Hoff, Mercedes-Benz North America chief
Tariff Policy and Geopolitical Context
The decision comes in the wake of an additional 25% Section 232 tariff on automotive imports imposed by the US administration, layered atop the existing 2.5% base rate on passenger vehicles. Though Mercedes-Benz declined to explicitly attribute the shift to trade policy, industry experts note that the import duty differential can add up to $10,000 per unit in landed cost for higher-trim models.
- Section 232 automotive tariffs: Initiated in 2018 under national security grounds.
- Supply-chain realignment: Moves away from long-haul transatlantic logistics.
- US trade policy: Emphasis on local content and investment incentives.
Technical Specifications and Manufacturing Enhancements
The GLC SUV slated for US assembly is the hybrid model powered by Mercedes’s M256 2.0-liter inline-4 turbocharged engine combined with a 48-volt mild-hybrid starter-generator. Key metrics include:
- Peak output: 320 hp (237 kW) and 400 Nm of torque.
- Transmission: 9G-TRONIC nine-speed automatic gearbox.
- Fuel efficiency: EPA-rated at an estimated 28 mpg combined.
Plant upgrades will incorporate advanced robotic welding cells, digital twins for real-time quality control and an IIoT (Industrial Internet of Things) network to monitor line throughput and predictive maintenance.
Supply Chain and Workforce Implications
Localizing production is expected to increase US supplier content from roughly 40% to over 60%, fostering resilience against global logistics disruptions. Mercedes has not disclosed exact headcount figures, but analysts project the new line could create 1,200–1,500 direct manufacturing jobs, plus thousands of roles across the tier-1 and tier-2 supplier base.
Comparative Moves by Other OEMs
The White House has welcomed the decision alongside similar commitments:
- BMW is expanding capacity at its Spartanburg, South Carolina, facility.
- Stellantis plans to reopen its Belvidere, Illinois, plant for Jeep production.
- Honda will transfer Civic assembly from Japan to Ohio.
- Hyundai announced a $20 billion investment in US manufacturing over the next decade.
Market and Financial Outlook
Equity analysts at Bernstein estimate the capex for the new Alabama line at $1.2–$1.5 billion, with a tariff-savings payback period of roughly four years. Moody’s Investors Service commented that “localized production aligns with broader de-risking strategies, improving margin stability and reducing exposure to currency fluctuations.”