DaimlerChrysler cancels plans for Georgia plant

DaimlerChrysler AG has scrapped plans to build a $1 billion van factory near Savannah, Ga., citing softening demand in U.S. and European markets, as well as the weak dollar, the Detroit News reported. The decision marks the Stuttgart, Germany-based company's second retrenchment this year in the cutthroat North American market. Five months ago, DaimlerChrysler's struggling Chrysler Group reversed its decision to build a state-of-the-industry small truck factory in Windsor, Ontario. DaimlerChrysler's commercial vehicles division studied plans to produce 50,000 to 60,000 Sprinter vans in Georgia. Equipped with Mercedes-Benz engines and drivetrains, they would have also been badged as Dodge vans. "It would involve close to $1 billion in investment and we don't see that we can justify that right now," said Othmar Stein, a spokesman for the commercial vehicles division. Because of the euro's strength, imported components to be used in the van had become too expensive. Demand for commercial vans is down about 6 percent in Europe and nearly 4 percent in the United States this year. "These vans are very sensitive to the economy," Stein said. "They're economic barometers because they're purchased mostly by small and medium-sized businesses." Given the soft market conditions, DaimlerChrysler's commercial vehicles division said its Sprinter plant in Duesseldorf, Germany, can supply global demand in the meantime. It produces around 180,000 vans a year and can produce 20,000 additional units annually if needed. The automaker will continue to assemble cargo versions of the Sprinter vans in Gaffney, S.C., from kits imported from Germany, the company said. DaimlerChrysler's decision to cancel the plant comes in marked contrast to other foreign automakers rushing to build or expand manufacturing operations in the American south. But analyst Richard Hilgert said DaimlerChrysler doesn't want to get caught with a flood of new vehicles that take huge rebates to sell.