Mercedes-Benz has officially finalized a €1 billion ($1.14 billion) expansion of its manufacturing facility in Kecskemét, Hungary. This capital expenditure is a key component of the company’s 2022–2026 business plan, designed to enhance the long-term competitiveness, operational efficiency, and technological viability of its global production network.
Strategic Capacity Growth
The expansion has significantly increased the site’s footprint, growing from 200 hectares to 440 hectares. This makes the Kecskemét location one of the largest facilities within the Mercedes-Benz global group. The infrastructure project included the construction of new bodywork and assembly halls, a press shop, a paint shop, and a dedicated facility for battery assembly.
Michael Schiebe, member of the Mercedes-Benz Group board of management for production, quality, and supply chain management, stated that the extension serves to increase the resilience and flexibility of the company’s international manufacturing capabilities. “This site defines the future of our manufacturing: intelligent, connected, digital and consistently focused on efficiency, quality and sustainability,” Schiebe noted.
Shift Toward Electric Vehicle Production
A primary objective of the investment is the integration of battery-electric vehicle (BEV) production. The plant is now configured to manufacture the electric C-Class, representing the first battery-electric core model to be produced at the Hungarian site. Additionally, the company announced that a smaller version of the G-Class will be manufactured exclusively at the Kecskemét facility.
To support this transition, the company is implementing a “local-for-local” supply chain strategy. By producing drive batteries and body components on-site, Mercedes-Benz aims to reduce logistics dependencies. The facility utilizes a flexible production model, maintaining existing lines for both combustion and electric vehicles while dedicating new halls specifically for EV output.
Digital Integration and Operational Context
The Kecskemét plant incorporates advanced digital production infrastructure, including the MO360 platform, which synchronizes data across the company’s global sites. Notably, the facility features a “Digital Factory Twin,” a complete virtual replica of an assembly hall developed on the NVIDIA Omniverse platform. AI-driven camera systems have also been deployed to automate quality control processes.
The expansion occurs against a backdrop of shifting global demand for the automaker. In the second quarter of 2026, Mercedes-Benz Group reported total vehicle sales of 417,800 units, representing an 8% year-on-year decline. While the company saw growth in its European and North American markets, these gains were offset by a 30% contraction in the Chinese market.
Moving forward, the Kecskemét plant will continue to operate in tandem with the Rastatt plant in Germany, allowing the company to adjust production volumes dynamically between the two sites based on regional and global demand fluctuations.
