By Christoph Rauwald
RASTATT, Germany--Daimler AG (DAI.XE) said Monday it will invest
an additional 600 million euros ($735 million) in its plant at
Rastatt, Germany, by the end of next year for the new generation of
its compact Mercedes-Benz A-Class.
It added that global demand for its premium cars remains strong
despite declining markets in southern Europe amid tough austerity
measures.
"Globally, demand continues to be very good, despite the
difficult market situation in southern Europe," Daimler Chief
Executive Dieter Zetsche told reporters at a press conference on
the start of production of the revamped A-Class.
The new-generation A-Class model is a cornerstone of
Mercedes-Benz's plan to ramp up its presence in the compact car
segment and boost sales to catch up with German rivals BMW AG
(BMW.XE) and Volkswagen AG's (VOW.XE) Audi brand.
The revamped A-Class features a more sporty design than its
predecessor to lure younger customers to the brand. Many young car
buyers have shunned Mercedes-Benz in recent years and opted for
cars made by BMW or Audi, which made significant inroads into the
compact-car segment with the BMW 1-series and the Audi A3
models.
Zetsche confirmed that a sport-utility version will be added to
the product line-up of the A-Class, in addition to the hatchback
and a four-door coupe. Daimler said earlier there will be five
different versions of the A-Class in the future, but company
executives have indicated that there might be more to come.
Write to Christoph Rauwald at christoph.rauwald@dowjones.com