German Handelsblatt: Automotive industry: “A little later than 2027” – Mercedes wants to expand US production012230

Mercedes plant in Tuscaloosa: The company also wants to have the GLC manufactured there. Photo: Mercedes-Benz AG

Now Mercedes no longer wants to produce the current combustion engine version of the GLC in the USA, but rather the successor model. Apparently Mercedes is hoping for higher demand for the new vehicle. The current GLC was presented in June 2022. The successor is unlikely to come onto the market until the end of 2027 at the earliest, but company experts believe that 2028 or the beginning of 2029 is also possible.

Mercedes does not give an exact schedule. “We want to adapt the next generation of the GLC combustion engine for the USA even more closely to the wishes of local customers,” says Källenius. This can mean, for example, optical changes.

From the perspective of observers, Mercedes also wants to send a message to the US government by expanding production in the USA. Mercedes produces the large off-road vehicles GLE and GLS as well as their electric variants in the USA.

The decision comes at a time of new escalation in the customs dispute: US President Donald Trump threatened additional taxes against Germany and other European countries at the weekend. There is therefore growing concern in the auto industry about further burdens on US business: Hildegard Müller, President of the industry association VDA, warned that the costs of additional tariffs would be “enormous for German and European industry – in already challenging times”.

Mercedes has so far exported the GLC combustion engine from the plants in Sindelfingen and Bremen to the USA. However, this has become significantly more expensive. The GLC is already subject to tariffs of 15 percent; before August the rate was 2.5 percent.

The higher tariffs are depressing the group’s margins because the GLC is the model that Mercedes sells most often in the USA after its larger SUV sister, the GLE.

Mercedes delivered more than 301,000 new vehicles in the USA last year. Of these, almost 214,000 were shipped to the United States, primarily from European plants, or around 70 percent. This is shown by a Handelsblatt analysis of data from the service provider Marklines. Mercedes has exported no model to the USA as frequently as the GLC, namely around 57,000 vehicles.

The decision does not mean relocating production from Germany, says Källenius. “We will produce the number of units sold in the USA and imported today locally in the future.” Production of the GLC in Germany continues.

Mercedes is one of the largest car exporters in the USA

The USA is a growth region for Mercedes in the future. The US market remains highly relevant despite the trade barriers, as the world’s largest economy will continue to grow in the future, says Källenius. “By expanding production, Mercedes can expand its footprint in the U.S. despite tariffs.” According to company circles, Mercedes management does not currently assume that trade barriers in the USA will change under the leadership of a new president.

Mercedes does not want the production expansion to be seen as a reaction to US customs policy, but rather as a strategic decision. “We make investment decisions for decades and not as quick reactions to political changes,” says the German-Swedish manager. When making such decisions, certain “geopolitical volatilities” have to be taken into account.

GLC production in Sindelfingen: The vehicles in the USA are to be produced additionally. Photo: Mercedes-Benz AG

It is probably not without ulterior motives that Källenius will present the revised GLS and GLE combustion engine models in Tuscaloosa in the spring. The factory employs 6,000 people. According to the company, 260,000 vehicles rolled off the production line there in 2024. Since the factory opened in 1997, Mercedes has probably manufactured a total of around five million vehicles in the USA.

According to the company’s own information, every second SUV built in the USA is currently exported. This makes Mercedes one of the largest car exporters in the USA.

In addition to the car plant in Tuscaloosa, Mercedes produces the Sprinter and Metris van models near Charleston in South Carolina, mainly for the North American market.

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According to current group figures, Mercedes only delivered 284,000 cars to dealers in the USA last year. That was twelve percent less than in the previous year – and the lowest level since 2021.

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According to its own information, Mercedes increased stocks at US dealers in 2024 and reduced them last year. Despite local production, deliveries to US customers only increased by one percent compared to the previous year, according to the company. Mercedes does not give absolute numbers. According to Marklines, Mercedes sold around seven percent fewer vehicles to customers there in 2025 than in the previous year.

The weak sales figures are explained by the fact that Mercedes has to export important sedan models from Europe to the USA. Mercedes sold the C-Class, manufactured in Bremen, more than 29,000 times in the USA. There were more than 25,000 E-Class vehicles from Sindelfingen. Mercedes has to pay tariffs on these vehicles, which also depresses demand.

According to company circles, the brand with the star tried to pass on the increased burdens caused by trade barriers to customers through price increases. In order not to scare buyers away, these are said to have been less severe than the additional customs expenses. With this approach, Mercedes avoided sales falling even further, but it squeezed the margin.

Mercedes boss sees trend towards regionalization

When asked about US President Trump’s erratic policies, Källenius responded evasively: “Even in a world that has become geopolitically more complex, the customer comes first.”

Källenius says that world trade is “still very, very healthy”. However, the 56-year-old has observed an increasing trend towards regionalization – and not just since Trump took office. “After a quarter of a century of globalization, there is now this trend towards regionalization. This guides our action when we adapt our industrial structures.”

Ola Källenius: The Mercedes boss sees increasing regionalization. Photo: Bernd Weißbrod/dpa

Mercedes also wants to come as close as possible to 100 percent regional production in China. According to its own assessment, this is the only way the group can keep up with the Chinese competition in terms of costs and efficiency.

Mercedes plans to double the share of production in low-wage countries from 15 to 30 percent between 2025 and 2027. In Europe, the Mercedes plant in Kecskemét, Hungary, benefits from this, where costs are 70 percent lower than in the German production facilities.

Mercedes continues to rely on combustion engines

At the end of September 2025, Trump canceled the tax credit for electric cars introduced by his predecessor Joe Biden. Since the $7,500 bonus was no longer granted, demand for electric vehicles in the USA fell at the end of the year. At Mercedes, dealer deliveries also fell disproportionately in the fourth quarter, falling by 19 percent, even though the group’s more expensive cars did not benefit from the credits.

According to Marklines, only one in 10 new Mercedes vehicles sold in the United States was a fully electric car. The rate is therefore similar to the global average. The Swabians are lagging behind their competitors BMW and Audi. Källenius originally wanted to offer Mercedes’ entire new car fleet as electric vehicles by the end of the decade. He has long since buried his “electric only” strategy.

“We promised and kept that we would have an electric offering in all price segments and relevant Mercedes models by the end of this decade,” says Källenius. For example, Norway has a fully electric offering. 96 percent of newly registered vehicles in the country had an electric drive in 2025.

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At the same time, Mercedes has continued to invest in the development of combustion engines for markets such as the USA, says Källenius. In the USA, combustion engines are much more important; only ten percent of new registrations are pure electric vehicles, in the EU it is around 17 percent.