Mercedes to Build New Baby G-Class Outside Germany to Cut Costs

Mercedes-Benz is set to produce its upcoming compact G-Class model outside Germany for the first time, opting for its expanded plant in Hungary instead.

The decision underscores the automaker’s cost-cutting strategy, leveraging lower labor expenses in Hungary compared to Germany.

The new baby G-Class, the smallest in the lineup, will debut next year with both hybrid and all-electric powertrains, marking a shift from the original EV-only plan.

Demand for electric vehicles has softened in the US following the removal of federal tax incentives, prompting Mercedes to reconsider its approach and introduce hybrid combustion versions of the compact SUV.

The Hungarian plant in Kecskemét, which will handle production, is undergoing a major expansion to nearly double its annual capacity to between 300,000 and 400,000 vehicles. The facility’s workforce is also expected to grow from 3,000 to roughly 7,500 employees.

In addition to the baby G, the plant will produce the new electric C-Class, the GLB, and the combustion-powered A-Class.

The all-electric version of the baby G is reported to feature an 85 kWh NMC battery paired with dual electric motors, offering a claimed driving range of up to 450 miles (724 km).

While power output remains undisclosed, the hybrid variant is rumored to share the CLA sedan’s 1.5-liter engine with electric assistance, delivering a combined 208 HP and 280 lb-ft (380 Nm) of torque, though these figures may be adjusted for the new model.

Mercedes is expected to unveil the baby G on July 13, coinciding with an announcement about the Kecskemét plant’s expansion.