New Mercedes Plant May Go to Poland, Not Russia

Daimler AG is likely to scrap plans for a new Mercedes-Benz factory in Russia and build the facility in Poland instead, according to multiple media reports.

They say Daimler is studying Jawor, a site Jaguar Land Rover once considered before opting to erect a $1.5 billion factory in Slovakia.

The Mercedes facility would be tooled to build cars that ride on Daimler’s new MRA modular rear-drive chassis, according to the reports. The platform eventually will carry all Mercedes crossover vehicles and C-, E- and S-Class sedans.

Daimler needs more capacity to keep pace with surging global demand for Mercedes models. The brand’s volume is up about 16% so far this year.

Daimler reiterated as recently as January that it would build an assembly plant in Russia, where Mercedes continued to outperform a shrinking overall market. Last year overall car sales in the country plunged 36% to 1.60 million units, but Mercedes deliveries fell a relatively mild 15% to 41,600 units, according to the Moscow-based Assn. of European Businesses.

But the Russian market contracted another 21% in January-February, as Mercedes sales fell 11%. Media reports say the fading prospects of a market turnaround is driving Daimler's decision to look elsewhere for a plant site.