AUTONEWS

Will Mercedes' new 'Little G' SUV come from Hungary?

Almost three years after Mercedes announced plans for a more compact and affordable version of the G-Class, new information has emerged about its production location. Contrary to previous expectations, the so-called "Little G" or "g-class" will probably not be built in Germany. In order to reduce costs, its production could be moved to Hungary.

After the announcement at the IAA in Munich in September 2023, it was speculated that the smaller SUV would be assembled at the Rastatt plant in Germany, alongside the CLA model. This was a logical assumption, given that the "g-class" is expected to use the same platform. However, Automotive News Europe, citing sources familiar with Mercedes' operations, claims that the smaller G will be assembled at the Kecskemét plant. The decision is apparently motivated by lower operating costs in Hungary compared to Germany.

Before it can make any savings, Mercedes plans to make a significant investment. The company is investing €1 billion in expanding its Kecskemét plant to increase annual capacity to 400,000 vehicles, making it the largest in the European production network.

The Hungarian plant is expected to account for as much as 30 percent of Mercedes’ total European production, double its current share. Around 3,000 new employees will be hired to achieve this goal, bringing the total workforce to around 7,500.

Regardless of location, the new model is expected to hit the market in 2027. The original plan was for the G-Class to be produced exclusively as an electric vehicle, but US dealers have convinced the company to also offer a petrol engine. Although the price difference between the petrol-engined model and the electric vehicle is narrowing, the mild hybrid GLB is still around €4,000 cheaper in Germany than its electric version.

Production in Hungary could result in a lower retail price, but only if Mercedes decides to pass on some of the savings to customers. In terms of capability, one shouldn't expect the off-road performance of the large G-Class, but logic dictates that it will handle more demanding terrain much better than the similarly sized GLB. The two models may not be that closely related after all, as Mercedes boss Ola Källenius once said that "the G-Class is a completely new development".

In terms of price, it is expected to be significantly more expensive than the GLB, which starts at 46,868 euros. At the same time, it will remain well below the large G-Class, which costs 127,591 euros. If it is indeed an all-new model, as Mercedes claims, this will likely be reflected in a higher price compared to the existing compact car range, but without entering the territory of the G-Class.

The decision to relocate production should not worry potential buyers. Namely, the full-size G-Class is not built in Germany either. It is not technically manufactured by Mercedes, but by Magna Steyr at its plant in Graz, Austria. That hasn't hurt the vehicle's success, which saw record sales last year with demand up 23 percent to 49,700 units delivered. Cutting costs is common practice in the industry, and taking advantage of lower operating costs is a logical business move.