FRANKFURT (AP) -- German carmaker Daimler AG started construction Friday on a new euro800 million ($1.2 billion) car production facility in Kecskemet, Hungary, near Budapest, the company said.
The new plant will produce A Class and B Class Mercedes-Benz cars starting in 2012, in conjunction with its Rastatt, Germany plant, which itself will be enlarged and upgraded for a "triple-digit" million euro sum.
"Our new location in Hungary will significantly boost our competitiveness in this price-sensitive compact premium vehicle segment, and will also contribute to tapping new markets," Rainer Schmueckle, the chief operating officer of Mercedes-Benz cars said in a statement.
The new location is expected to employ 2,500 people.
Shares of Daimler were up more than 2.5 percent at euro36.07 in Frankfurt afternoon trading.