Mercedes’ baby G-Class may skip Germany, head to Hungary for assembly

Mercedes-Benz is reportedly preparing to build its upcoming compact G-Class—dubbed the “Baby G,” “Little G,” or “Junior G”—at its Kecskemét plant in Hungary rather than the German factory in Rastatt. The move is part of a cost-cutting strategy, as operating expenses are lower in Hungary, and the brand aims to maximize efficiency at its expanding European facility. The Hungarian plant is undergoing a €1 billion expansion to increase annual production capacity to up to 400,000 units, which would make it Mercedes’ largest factory in Europe. The expansion will also nearly double the site’s current share of the brand’s total European output to as much as 30 percent, supported by the hiring of around 3,000 new employees, bringing the workforce to approximately 7,500. The compact G-Class is expected to launch around 2027, though Mercedes has not confirmed the production location or an official model name. The vehicle will share its platform with the CLA and its shooting-brake sibling, positioning it as a smaller, more affordable alternative to the full-size G-Class. While initially planned as an electric-only model, U.S. dealers pushed for a gasoline-powered version, so the new G will offer both internal combustion and electric powertrains. Mercedes has not disclosed pricing, but the compact G is expected to sit well above the GLB’s starting price of €46,868 and far below the full-size G-Class, which starts at over €127,591. Despite the shift to Hungary, the compact G will likely retain a premium positioning compared to other compact Mercedes models, reflecting its status as an all-new development rather than a derivative. The full-size G-Class is not built in Germany either; production is handled by Magna Steyr in Graz, Austria, yet it achieved record sales last year with a 23 percent increase to 49,700 units. The move to Hungary underscores Mercedes’ broader strategy to optimize costs across its global manufacturing network while maintaining strong demand for its iconic lineup.