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Daimler-Benz To Expand M-Class Production In Europe

13 August 1998

Daimler-Benz To Expand M-Class Production In Europe

                    M-Class Production to Commence in Graz

    -- Start of production mid-1999 at Steyr-Daimler-Puch plant in Graz,
       Austria
    -- Up to 30,000 units annually for European markets

    STUTTGART, Germany and TUSCALOOSA, Ala., Aug. 13 -- In
response to overwhelming market demand for its award-winning Mercedes-Benz
M-Class, Daimler-Benz will expand the availability for the successful sport
utility vehicle (SUV) in Europe with supplementary assembly in Graz, Austria.
    Up to 30,000 additional M-Class vehicles will be assembled at Steyr-
Daimler-Puch-Fahrzeugtechnik AG & Co KG, exclusively for European markets,
subject to final agreement with the Austrian Partner expected to be reached in
September.  Capacity at the core Mercedes-Benz M-Class facility in Tuscaloosa,
Alabama is already increasing from 65,000 to 80,000 units per year.
    Jurgen Hubbert, Daimler-Benz management board member in charge of
Mercedes-Benz cars, said: "With this expansion in Graz, we will effectively
and efficiently accelerate Mercedes-Benz production in a factory that has
proven to be a far reaching and successful partner.  We will be able to
increase our capacity in Graz with reduced investment and in less time and, in
cooperation with Chrysler, also create synergies in logistics."
    Daimler-Benz has had a long association with Steyr-Daimler-Puch in Graz,
Austria, in both the area of vehicle assembly and engineering development.
Since 1979, the Mercedes-Benz G-Class, or "Gelandewagen," has been produced in
Graz.  Well known for their all wheel drive expertise, Steyr-Daimler-Puch has
also assembled the new E320 sedan and wagon with the "4-Matic" option since
1996.  In neighboring Graz plants, Chrysler assembles the Grand Cherokee and
Voyager minivan for European markets.

    Capacity at Core M-Class plant in the U.S up 20 percent for 1999

   The Tuscaloosa, Alabama plant will remain the primary worldwide production
source for the M-Class.  Even with its own recent $40 million (DM 70 million)
expansion and its planned 20 percent increase in production for 1999, the
Tuscaloosa plant is unable to meet the anticipated worldwide demand for the
M-Class during the next few years.
    Current M-Class suppliers in North America and Germany will continue to
provide modules and components for the vehicles built in Graz, Austria.
    Since the M-Class was introduced in North America in September 1997, some
50,000 ML320s have been sold in the U.S. and Canada, and more than 3,000 have
already been delivered to Europe in the first three months on sale there.
    "Thanks to the hard work and flexibility of our entire American team, we
cannot keep up with the worldwide demand for the M-Class," said Dieter
Zetsche, Daimler-Benz management board member for sales.  "In fact, we can't
bring them to Europe fast enough, which is why we needed to find this
supplementary production source."

    Steyr-Daimler-Puch: a successful partner for Daimler-Benz and for Chrysler

    The Steyr-Daimler-Puch facility in Graz has been a successful partner for
Daimler-Benz.  Through June 1998, more than 107,000 Mercedes-Benz G-Class
vehicles and more than 14,000 E-Class vehicles with "4-Matic" have been built
there.  The Chrysler Jeep Grand Cherokee plant in Graz has an annual capacity
of 47,000 vehicles, while the minivan plant has an annual capacity of 60,000
vehicles, in two shifts.  Chrysler began production in Graz in 1991.