European automakers have been losing a great deal of potential revenue in the US market for almost a decade now due to the poor euro-dollar exchange rate. It is not surprising that some of them are considering moving more production to North America.
Now, Daimler has announced that it will be shifting about a fifth of its C-Class production to its plant in Tuscaloosa, Alabama by 2014. That plant currently produces the R, M and GL classes.
"From a strategic and economic point of view, this step is absolutely necessary for Mercedes-Benz to remain competitive in the future and utilize its chances for growth," said Daimler CEO Dieter Zetsche in a press release.
German production of the C-Class is also being moved entirely to the Mercedes-Benz plant in Bremen in the northern part of the country. The Sindelfingen plant, which currently has about a third of C-Class production, will get assembly of the SL-Class from Bremen as compensation while Mercedes-Benz will also be focusing production of vehicles with alternative powertrain systems at the plant.
It's obvious that Daimler doesn't believe the dollar is going to rise substantially against the euro any time soon. But investing in North American production is not cheap either. VW is currently building a new plant in Tennessee - an investment of billions. With US policies being what they are, though - both large budget and trade deficits that fuel a weakening of the dollar - European automakers really don't have much of a choice.
