Mercedes-Benz is to set up a second plant at its Hungarian site in Kecskemét to produce front- and rear-wheel-drive cars, creating around 2,500 new jobs.

"In the next few years, we plan to invest around EUR1bn (US$1.1bn) building a new plant at our site in Kecskemét," said Mercedes-Benz Cars divisional board member, production and supply chain management, Markus Schäfer.

"We will establish a [n] efficient production facility, in which different vehicle architectures will roll off the assembly line flexibly.

"With this 'flex-plant', we will create additional capacity along with the necessary flexibility according to Industry 4.0 benchmark approaches allowing us to react quickly."

The second plant in Kecskemét will have a body shop, a paint shop, a final assembly and a supplier park.

Preparatory actions will already start this year; the start of production is planned for the end of the decade.

The investment will create around 2,500 new jobs at the site as well as additional jobs at suppliers in the region and in German plants. The final decision and concrete realisation still depends on the implementation of various conditions.

The Mercedes-Benz plant in Kecskemét has been a producer of compact front-wheel-drive vehicles since 2012. Since then, (as of February this year) more than 500,000 vehicles have rolled off the assembly line.

At the end of April 2016, Mercedes-Benz announced it would invest around EUR580m in the expansion of capacity and the technological upgrade of the existing facility for the production of compact cars at the site.

The new generation of compact cars will also be produced in Kecskemét.