Tuesday, 21 October 2014

Daimler mulls plans for next Sprinter van

Daimler AG will invest a combined €450 million to produce the next generation Mercedes-Benz Sprinter in two plants at Düsseldorf and Ludwigsfelde, but the German vehicle maker will build more vans in the US to increase its competitiveness.

Part of the new investment will be used to modernize the body shop, paint shop, and assembly line at Düsseldorf.

Meanwhile, the company will build the next-generation Mercedes-Benz Sprinter van in North America at a location yet to be determined, and in increasing numbers.

Daimler now assembles Sprinters in Charleston, South Carolina, from kits shipped from Germany. The company did not say where future North American production will be.

"We can cover the growing demand for large vans in the the North American market economically only if we produce the vehicles locally in the NAFTA region," Volker Mornhinweg, head of the Mercedes' vans division, has said, noting that Daimler will decide on the exact location for the future production of the Sprinter in the NAFTA region during the coming months. The NAFTA region includes Mexico, the United States and Canada. "We will safeguard the long-term competitiveness of our German plants and make them fit for the fierce global competition in this segment," added Mornhinweg.

Daimler has been producing Sprinters for the US market in German plants at Düsseldorf and Ludwigsfelde where they are partially dismantled in a time-consuming process and reassembled. They are then re-assembled  in the US in Ladson, Charlseton, for the Mercedes-Benz and Freightliner brands to avoid high import duties. Düsseldorf, which will receive two-thirds of the investment, has been making closed models of the van since 1995 whereas the Ludwigsfelde plant did not start until 2006. 

According to Daimler, this results in a significant competitive disadvantage, leading to long delivery times and making the vehicle more expensive for US customers. "It is therefore not economical in the long term in view of the the expected growth in demand," added Daimler, pointing to an obvious restructuring of its North American van assembly operations. The company adds that Mercedes-Benz Vans has set itself the goal of more effectively benefitting from the "high growth rates" of the North American market in the large van market.

The US is the Sprinter's second-largest sales market after Germany, according to Daimler. It delivered some 23,000 to US customers last year and as the "vans go global" to use Daimler's terminology, more effort will be devoted to "systematically internationalize the division's business operations". Sprinter vans are also made in Gonzalez Catan, Argentina, Fuzhou in China and Nizhny Novgorod, Russia.

Daimler produces about 150,000 Sprinter vans a year in Düsseldorf, which is the company's biggest van production plant with about 6,500 employees; this is equivalent to 23 vans per employee. Ludwigsfelde has 2,000 employees and builds about 50,000 Sprinters a year or 25 vans per employee. Martin Kelterer is plant director of the Düsseldorf plant while Michael Bauer is managing director of Mercedes-Benz Ludwigsfelde GmbH, which will receive the remaining one-third of the planned investment.

Daimler is reorganising its light commercial vehicle business following the end of a partnership with Volkswagen. Daimler builds the Volkswagen brand version of the Sprinter, called the VW Crafter, but this project ends in 2016. VW plans to manufacture Crafter in a new plant in Wrzesnia, Poland.

If the company goes ahead with a new facility in the NAFTA region it will need to be at least the size of the Ludvigsfelde facility, or even larger and employ at least 2,000 people.

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