Daimler's Mercedes-Benz AG said on Friday it would start talks to sell its Smart car plant in Hambach, France, "with the aim of giving the location the best possible future prospects".
Valuation of fixed assets would lead to a negative one off effect from restructuring measures in the middle three-digit million euro amount in the second quarter, the automaker added.
As it focused on electrification of its product range, as well as the digitalisation of vehicles and company processes, it was taking steps to improve its cost structure and become more efficient with "adjustment and realignment of capacity" within the global production network. Against this backdrop, the assembly plant in Hambach, France, is surplus to needs.
Ola Kaellenius, chairman of Daimler AG and Mercedes-Benz AG, said: "The effects of the COVID 19 pandemic on the economy are creating new framework conditions in the market and in this context we are optimising our global production network. That is why we intend to start talks on the sale of the Hambach plant."
Associated valuation effects of fixed assets will lead to a negative one-off effect from restructuring measures in the middle three-digit million amount in the second quarter at Mercedes-Benz AG. Furthermore, the company does not expect the devaluation to have any impact on the Free Cash Flow of its industrial business. Additional burdens may arise in the course of negotiations.
Mercedes-Benz Cars COO Markus Schaefer added: An important goal for us is to secure the future of the location.
"The current smart models will continue to be produced in Hambach."
However, the next generation of Smart electric vehicles will be produced by the joint venture Smart Automobile in China, a joint venture between Mercedes-Benz and the Zhejiang Geely Group.
Hambach started operations on 27 October, 1997 and has produced the fourth generation of Smart electric vehicles since 2019.
To date, 2.2m cars have rolled off the assembly line.
Around 1,600 employees working at Hambach.