Daimler To Invest $894 Million In German Plant

RASTATT, Germany (AP) -- Car maker Daimler AG said Thursday it would spend euro600 million ($894 million) on upgrading a plant in southwestern Germany, part of an effort to strengthen its position in the small and midsized car market.

The Rastatt plant, with some 5,700 workers, builds the Mercedes-Benz A Class and B Class cars. Daimler has said it intends to increase the number of A and B Class models it produces.

Stuttgart-based Daimler, which also builds the compact Smart, said last week it would start building a new euro800 million production facility for the A and B Class in Kecskemet, near the Hungarian capital, Budapest. That plant is expected to employ some 2,500.

New A and B Class models will be produced at Rastatt at the end of 2011 and in Hungary in 2012.

"With this significant investment we are defining our future in the compact car segment and safeguard the plant Rastatt in the long term," chief executive Dieter Zetsche said Thursday.

Daimler said the upgrades at Rastatt will include a new production hall and a train line for parts delivery to the hall.

Zetsche said Daimler was investing a total of euro3 billion ($4.5 billion) in other German passenger car production locations this year and next. The company did not break down how much it was investing where.

Shares of Daimler were down about 1 percent at euro36.77 in Frankfurt afternoon trading.

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