Why Mercedes Decided to Build Its Next GLC SUV in the U.S.

When it comes to its plant in Tuscaloosa, Alabama, Mercedes-Benz has a growing list of boasts. It was the first foreign automaker to set up shop in Alabama, a decision it made back in 1993. The first Tuscaloosa-built model, the Mercedes M-Class, rolled off the line in 1997 and helped usher in a new segment: the premium SUV. The original plan was to build 60,000 vehicles a year.

Tuscaloosa now has the capacity to build 300,000 vehicles a year. It produces the GLE and GLS midsize and large SUVs there and has the flexibility to also make the electric EQE and EQS utility vehicles. This week marked the 5 millionth vehicle that rolled off the factory line: a new 2027 GLE.

This week the automaker also marked the global debuts of its new 2027 GLE and 2027 GLS-Class models with an event at the plant attended by Chairman and Mercedes-Benz Group CEO Ola Källenius and key members of the Board of Management. It was a homecoming of sorts for Källenius, who worked at the Tuscaloosa plant from 1995 to 1999. It’s where he got married and where his two oldest children were born.

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Mercedes-Benz CEO Ola Källenius working the line in Tuscaloosa in the 1990s.

Mercedes Spending Big to Make the GLC in the U.S.

Källenius provided more details on the future of the Alabama plant. Mercedes-Benz plans to invest $7 billion in the U.S. by 2030 and $4 billion of that will be spent in Tuscaloosa to add yet another SUV: the next-generation GLC (not to be confused with the also new, 2027 GLC EV). Källenius told MotorTrend that early prototypes of the compact luxury SUV should start running down the line in 2028, with production set to begin sometime in 2029.

Initially, all the GLCs from Tuscaloosa will be allocated for the U.S. market, but they could also be made available for export to other countries in the future, said Källenius. About 60 percent of the vehicles currently built in Alabama today are exported.

The plant will need to expand beyond its present 300,000-unit capacity to make room for the GLC, but Mercedes doesn’t need to acquire additional land; it has plenty of space. “Everything is planned and we just need to execute,” said Michael Schiebe, Member of the Board of Management for Production, Quality, and Supply Chain Management.

Mercedes has a strong local supply base to support the Alabama plant, but will need to expand it as well for the GLC. The automaker will work with existing suppliers but will also need to add new ones, said Schiebe.

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The present 2026 Mercedes-Benz GLC.

Tariffs Played a Role

The decision to build GLCs in the U.S. was partly, but not entirely, due to the 15 percent tariff that must be paid on vehicles imported into the U.S. While tariffs were an important variable in the decision, according to Schiebe, the move also made sense on a more practical level. Mercedes follows a local-for-local vehicle production strategy, which means it tries to build where it sells. “The U.S. is such an important market for us and the GLC is such an important car for the U.S. market, so it only makes sense to produce the car here in the U.S.,” he told MotorTrend. Ironically, when Mercedes first started making cars some 138 years ago now, there were also U.S. tariffs, according to Jason Hoff, the CEO of Mercedes-Benz North America.

Free Trade Agreement Implications

Beyond tariffs, Schiebe is hoping that the basic framework of the USMCA trade agreement between the U.S., Canada, and Mexico remains largely intact—it’s being reviewed this year. The agreement has fostered a strong North American manufacturing base, but U.S. President Donald Trump has threatened to abandon the trilateral deal in favor of separate agreements with each country, which could force automakers and their parts suppliers to redo their entire supply chains.

Regardless of how it shakes out, Mercedes has been in the U.S. for almost 30 years now and is planning to stay for many more, Schiebe said. The latest $4 billion pledge is a long-term investment in a plant that has grown from 1,100 employees in 1997 to about 5,800 today. The decision to build the GLC should only help solidify the future of its sweet Alabama home.