Mercedes sells French car plant to billionaire Ratcliffe's Ineos

[FRANKFURT] Jim Ratcliffe's Ineos agreed to buy a French car plant from Daimler, helping the Mercedes-Benz maker improve the efficiency of its manufacturing network and giving the chemical giant a factory for its debut SUV.

The Hambach plant will continue production of an electric two-seat minicar for Daimler's Smart brand, the manufacturer said in a statement Tuesday. Ineos plans to begin building its Land Rover-like Grenadier there late next year.

"We are investing heavily in our electric offensive and comprehensive digitalization," Markus Schaefer, Daimler's development chief, said in the statement. "In doing so, we must make the company even more efficient and, in this respect, the optimisation of our global production network is a very decisive lever."

Daimler chief executive officer Ola Kallenius mapped out a review of the company's operations last year and widened cutbacks after the Covid-19 pandemic triggered the deepest industry slump in decades. Mr Kallenius told Bloomberg Television last week the efficiency drive is progressing slightly ahead of schedule, and Daimler's stock has outperformed rivals Volkswagen and BMW this year.

For Ineos, acquiring the Hambach plant will replace a previous plan to build the Grenadier in Wales, with key parts coming from a factory in Portugal. Those efforts had been slowed by the Covid-19 outbreak. The company previously said the facility in Wales and the sub-assembly in Portugal would each employ 200 people initially.

The factory sale won't have a significant effect on Daimler's fourth-quarter earnings, as related charges were already booked over the past two quarters. The transaction will secure about 1,300 jobs at the factory and related suppliers, according to the company.

Daimler is folding the Smart brand into a China-based joint venture with Zhejiang Geely Holding Group, which is controlled by its largest shareholder, Li Shufu. Mr Kallenius plans to focus more on larger luxury vehicles including the flagship S-Class sedan, which generates higher margins than more affordable compact vehicles.

BLOOMBERG