Submitted 9/28/09

As the U.S. dollar continues to fall against other currencies, many overseas manufacturers have moved more production to the U.S. to protect their profits and slow the price increases to U.S. consumers. The American South boasts affordable labor with little union interference, making it interesting to European automakers battling high labor costs back home. Mercedes may soon be continuing the trend by moving more production stateside.

Mercedes-Benz is considering moving some of its C Class production to its Alabama plant, which is significant because it would be the first time a German automaker built its highest volume car in America.

The Alabama plant currently produces the M, GL, and R Class Mercedes, and M-B recently set aside $290 million for a plant expansion without specifying which vehicle would be added to the Alabama lineup. A German magazine, Stuttgarter Zeitun, mentioned that Mercedes was considering moving some of the C Class production from Sindelfingen, Germany to Alabama. To avoid labor unrest, it could move some of the SL production from its Bremen plant to Sindelfingen and keep layoffs at bay. The Bremen plant would also be able to protect itself from future layoffs due to the possible move.

If the C Class gets produced in Alabama, the plant would produce two and four door variants for U.S. consumption and export wagons back to Europe. As the euro gains on most worldwide currencies, it has made it hard for Mercedes to keep selling its cars to U.S. consumers at a fair price, and this would help keep costs down. Prices could also fall in Europe as they would be buying C Class variants sold in dollars with their euros, benefiting from of a significant currency advantage. As worldwide exchange rates continue to fluctuate, manufacturing in multiple countries helps automakers smooth wild exchange rate swings and keeps them from having to pass it on to consumers.

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