Daimler share price up, to expand Mercedes plant in North Carolina

Daimler AG is set to invest $500 million in the expansion of its manufacturing facility in South Carolina, according to people familiar with the matter.

The factory is set to assemble Mercedes-Benz Sprinter, or one of the German carmakers popular mid-size cargo minivans, only using parts that were made in the U.S.

Currently the Charleston plant employees around 140 workers but the expansion is set to increase that figure by at least 1 200 non-union workers. Additionally boosting the states economy, Daimler has asked car-parts providers to move more of their operations closer to its factory.

Daimler makes the Sprinter in Germany, then partly disassembles it and ships it to its facility in Charleston. Once the parts arrive there the minivans are made hole again and send to the market.

The whole exercise is aimed at avoiding high import taxes on ready-for-market products, but increased North American demand for the vehicle has prompted the company to move the entire manufacturing process locally.

Daimlers Volker Mornhinweg, who is in charge of Mercedes-Benzs vans business, has previously said that the carmaker could cope with the higher demand only if it relocates the manufacturing process.

The Charleston factory, which opened its doors for the first time in 2007 and in 2010 started reassembling the Sprinter, has become an important part of the minivans future as North America is its second-largest market with 26 000 vehicles sold last year.

The Sprinter, which could also by used for work by installing additional features, is a direct competitor for Chevrolet Express and Ford E-Series and Transit.

The minivan is being sold for around $43 000 and it is quite popular among people who need working vehicles or better transportation capacity, with some modifications the Sprinter can carry up to 10 people. According to researcher Autodata, sales of light-duty vans are up 27% for the first two months of 2015.

South Carolina is already home of many car manufacturers, including more than 100 located in the Charleston area, with companies like Cummins Turbo Technologies, IFA Rotorion North America and Robert Bosch.

BMW is the largest carmaker in the state with its factory in Greer, which employees more than 8 000 people and has a annual production rate of 450 000.

Daimler gained 1.32% on Thursday and closed at €89.15 in Frankfurt. On Friday the stock edged up 0.13% to €89.27 at 08:53 GMT, marking a one-year increase of 29.31%. The company is valued at €94.14 billion.

According to the Financial Times, the 27 analysts offering 12-month price targets for Daimler have a median target of €90.00, with a high estimate of €100.00 and a low estimate of €61.00. The median estimate represents a 0.95% increase from the last closing price.