Amid President Donald Trump’s high tariff policy on imported cars to the U.S. shaking up the automobile market, Mercedes Benz is finally joining the ranks of Made in the USA.
Mercedes-Benz, which has been relying on import sales in the U.S. market, plans to start full-scale production of new flagship models at its Tuscaloosa plant by 2027.
Localization Strategy Emerges in the Tariff Storm
On May 1, Mercedes-Benz announced through an official press release that it would expand local production of its flagship models at its Tuscaloosa, Alabama, U.S. plant.
Jason Hoff, CEO of Mercedes-Benz North America, explained that localizing their flagship models in the U.S. would allow the company to get closer to American consumers. However, he did not specify which model he considered part of the Core Segment.
The industry believes that the GLC is likely to be the target production, given the characteristics of the Tuscaloosa plant, which has a production lineup centered on SUVs such as the GLE, GLS, EQE, and EQS. The best-selling Mercedes-Benz model in the U.S. was the GLC, with over 64,000 units sold last year.
From SUVs to EVs
The Tuscaloosa plant, which began operations in 1997, boasts an annual production capacity of approximately 260,000 units, mainly off-road vehicles and SUVs. Now, this place is being reorganized as a strategic hub for Mercedes-Benz.
Mercedes-Benz’s decision to localize is not simply for the purpose of avoiding tariffs. Last year, Mercedes-Benz’s new car sales in the U.S. increased 9% year-on-year to 324,528 units.
In particular, the transition to electric vehicles is also an undeniable driving force, with plug-in hybrid electric vehicles increasing 470% year-on-year in the fourth quarter.
High-performance models also contributed. Mercedes-AMG sales increased 50%, and Maybach and G-Class sales also showed double-digit growth rates.
Since the launch of the new GLE 450 Coupe, overall GLE sales have increased 12%, and GLC sales have increased by a whopping 58% thanks to inventory replenishment. This solid growth in the SUV market has further convinced Mercedes of the need for a localization strategy.
European Automakers Head to the U.S. for Survival
Along with Mercedes-Benz, other European automakers are joining the Made in America strategy. Audi, a subsidiary of the Volkswagen Group, is considering local production in the U.S., as all vehicles are subject to a 25% tariff without a production base in the U.S.
Volvo, a leading Swedish vehicle brand, is also carefully weighing the introduction of its next U.S.-produced model. It has already expanded its investment in its South Carolina plant and established a production base.
For European automakers, production in the U.S. is no longer an option, but a strategic necessity for survival.
