Automotive News Europe — 2026-01-20
Automotive Industry
Mercedes-Benz has started production of its full-electric GLB compact SUV in Hungary as the threat of further tariffs and competition from China intensifies the fight to cut costs.
The electric version of the model, available to order for around €59,000 ($68,570), will be assembled at the automaker’s plant in Kecskemet. Mercedes is concentrating output of the GLB in Hungary, shifting from Mexico, while it ceased production of the B-Class at its Rastatt plant in Germany at the end of last year.
The company will also move some production of the mid-range C-Class sedan to Hungary later this year to tap a cost base executives have said is less than half that of Germany.
“The batteries we put in this car come right from the battery facility we have here on site,” Mercedes production chief Michael Schiebe said at a press conference, referring to its facility making battery packs. “This reduces the transport times, the routes. This gives us big, big advantages.”
Mercedes is seeking to bolster its business as demand for high-end vehicles in China slows and more tariffs loom. Over the weekend, U.S. President Donald Trump reignited fears for fresh tariffs blows with a threat of additional levies on products from eight European countries, including Germany, as part of a standoff over Greenland.
Mercedes and German automaker peers slumped Jan. 19 after Trump blindsided Europe with a plan to slap additional duties of 10 percent on imports from February, rising to 25 percent in June. German automakers rely on the U.S. as a major source of sales and profits and import models such as Mercedes’ S-Class to the country.
Additional U.S. tariffs, in place since April, are already cutting into Mercedes’ bottom line, with returns sliding also because of growing competition in China from local automakers including BYD, Nio, and Xiaomi.
The challenges have undermined CEO Ola Kallenius’ luxury-first strategy, unveiled in 2022, which targeted a carmaking margin of at least 8 percent even under adverse conditions. In its latest third-quarter earnings report, Mercedes’ carmaking returns fell to 4.8 percent amid a bruising price war in China and U.S. tariffs.
Mercedes has also fallen further behind BMW in electric-vehicle sales following a series of product missteps, putting pressure on Kallenius for fresh sales momentum from new EVs like the GLC, CLA and GLB.
In addition to the GLB, Mercedes plans to shift more model derivatives outside of Germany, including the electric version of the C-Class sedan, currently built at its Bremen plant, to the Hungarian site later this year. Expansion in Kecskemet will make it Mercedes’ second-largest plant worldwide, behind only its facility in Beijing, which it operates with China’s BAIC.