Mercedes-Benz announced that it intends to sell its smart car assembly plant in Hambach, France "to streamline its global production network".
The plant is quite new, as it launched operations on October 27, 1997 and was engaged to produce smart EQ fortwo and the smart EQ fortwo Cabrio. Cumulatively, more than 2.2 million smart fortwo were produced in Hambach, but soon around 1,600 employees will have to find a new job.
"Mercedes-Benz AG... will heavily invest in the transformation of the company in the coming years. The company is focusing on the electrification of its product range, as well as the digitalization of vehicles and company processes. At the same time, the company has taken numerous measures to sustainably improve its cost structure and become significantly more efficient. An important lever for this is the adjustment and realignment of capacity within its global production network. Against this backdrop, the company intends to start talks on the sale of its car assembly plant in Hambach, France."
The smart brand overall was unprofitable and has generated several billion in losses accumulated in the past 20 years. The switch to BEVs and retiring from North America did not make a difference. We guess it's still unprofitable.
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The German manufacturer decided to unload smart, at least partially, through the partnership with Geely in 2019. In Janurary 2020, the two formally established a global 50:50 joint venture “smart Automobile Co., Ltd.” for the smart brand.
The first joint product will be launched in 2022. The next-generation smart electric cars will be designed by the "worldwide Mercedes-Benz Design network", but engineered by "Geely global engineering centers", as well as produced at a new purpose-built electric car factory in China.
This means that the European manufacturing of smart is coming to an end anyway:
- smart EQ fortwo, produced in Hambach plant France
- smart EQ forfour, produced in at Novo Mesto in Slovenia
At some point in 2018 there was a chance to bring a new all-electric Mercedes-Benz EQ compact model to Hambach, but the €500 million investment was then canceled.
The next question is who may be interested in the Hambach plant these days, when the economy and the automotive market is more challenging than ever?
Maybe the new owner will utilize the plant to produce some new EVs?
Next stage in the transformation process: Mercedes-Benz AG intends to streamline its global production network and explores the sale of the car assembly plant in Hambach, France
- In the course of its transformation process, Mercedes-Benz AG plans to utilize the high flexibility of its global production network and adjust its capacity to current market conditions.
- Against this backdrop, the company intends to start talks on the sale of its car plant in Hambach, France, with the aim of giving the location the best possible future prospects.
- Associated valuation effects of fixed assets will lead to a negative one-off effect from restructuring measures in the middle three-digit million amount in the second quarter at Mercedes-Benz AG.
Stuttgart. Mercedes-Benz AG is on the road to the CO₂-neutral mobility of the future and will heavily invest in the transformation of the company in the coming years. The company is focusing on the electrification of its product range, as well as the digitalization of vehicles and company processes. At the same time, the company has taken numerous measures to sustainably improve its cost structure and become significantly more efficient. An important lever for this is the adjustment and realignment of capacity within its global production network. Against this backdrop, the company intends to start talks on the sale of its car assembly plant in Hambach, France.
Ola Källenius, Chairman of the Board of Management of Daimler AG and Mercedes-Benz AG: “We continue to drive the transformation of our company and our products forward with all due speed. In light of future high investments, especially in electrification and digitalization, we are consistently implementing measures to increase efficiency. This affects all areas of the company worldwide. In addition, the effects of the COVID 19 pandemic on the economy are creating new framework conditions in the market and in this context we are optimizing our global production network. That is why we intend to start talks on the sale of the Hambach plant.”
Associated valuation effects of fixed assets will lead to a negative one-off effect from restructuring measures in the middle three-digit million amount in the second quarter at Mercedes-Benz AG. Furthermore, the company does not expect the devaluation to have any impact on the Free Cash Flow of its industrial business. Additional burdens may arise in the course of negotiations.
Markus Schäfer, Member of the Board of Management of Daimler AG and Mercedes-Benz AG; responsible for Daimler Group Research and Mercedes-Benz Cars COO: “The transformation to the CO₂-neutral mobility of the future also requires changes in our global production network. In this phase of economic challenge, we are balancing demand and capacity and we are now adjusting our production network. These changes also affect the Hambach plant. An important goal for us is to secure the future of the location. Another condition: The current smart models will continue to be produced in Hambach.”
The next generation of smart electric vehicles will be produced by the joint venture smart Automobile Co., Ltd. in China. This is a joint venture of Mercedes-Benz AG and the Zhejiang Geely Group (Geely Holding).
About the Hambach plant
The Hambach plant launched operations on October 27, 1997. The plant has been producing the fourth generation of smart electric vehicles with the smart EQ fortwo and the smart EQ fortwo Cabrio since 2019 (consumption (combined): 16.5 - 14.0 kWh/100 km, CO₂ emissions (combined): 0 g/km)[1]. To date, more than 2.2 million smart fortwo have rolled off the assembly line in Hambach. Currently around 1,600 employees are working on the Hambach site.
[1] The specified values were determined according to the prescribed measuring procedure. The power consumption was determined on the basis of Regulation 692/2008/EC. Power consumption and range depend on the vehicle configuration. More information on the official fuel consumption and specific CO2 emissions of new cars is contained in the "Guide to the fuel consumption and CO₂ emissions of new cars", which is available free of charge at all points of sale and from Deutsche Automobil Treuhand GmbH at www.dat.de.