PSA, Daimler Consider Building New Plants in Europe

VIENNA – PSA Peugeot Citroen is considering building an engine plant in Eastern Europe.

“It is clear that producing engines closer to the final assembly lines is something we are considering,” Yann Vincent, executive vice president and director-industrial and supply chain at PSA, tells WardsAuto. “Obviously, we are checking the possibility, based on the cost of investment, based on the savings we would achieve thanks to this localization.”

Vincent says emerging markets will become more important in the future and that is why it might be in PSA’s interest to grow its capabilities in such countries.

“So in that case it may be worth to have an engine plant in Slovakia or another country in the region,” he says. “We have not decided anything but, yes, it is something we are considering.”

The French automaker considered building an engine plant in Eastern Europe in the previous decade but the project never was realized.

PSA operates a car plant in Trnava, Slovakia, as a 100% subsidiary as well as two joint-venture car factories with Toyota in Kolin, Czech Republic, and with Mitsubishi in Kaluga, Russia.

Daimler, meanwhile, is planning construction of a new car plant as well as an engine plant in Europe, Markus Schäfer, head of production and supply chain management at Mercedes-Benz Cars, tells the German publication Automobilwoche. The car factory is to be completed by 2020.

The new facility is expected to be designed for maximum flexibility with a significantly lower degree of automation. It may be located in Eastern Europe.

Daimler CEO Dieter Zetsche acknowledges the automaker is mulling additional capacity in Europe.

“We are currently expanding our production capacity in Brazil and have already done it in South Africa and in China,” Zetsche told journalists at the Geneva auto show earlier this month. “That could soon be needed in Europe as well. However, it is very unlikely that we will create this additional capacity in Germany.”

Schäfer also announces plans for two new engine plants to be built in Europe and China. The European facility is expected to be constructed in Eastern Europe but Schäfer provides no details about a possible location or a timetable for the project.

In Eastern Europe, Daimler operates a car plant in Kecskemet, Hungary. The German automaker also owns Star Transmission, a Romanian subsidiary with plants in Cugir and Sebes that manufactures gearboxes and parts, as well as Starkom, a manufacturer of various parts including frames for the Mercedes-Benz G-Class, based in Maribor, Slovenia.