FRANKFURT — Daimler will seek to sell its factory in Hambach, France, as the automaker pursues deeper-than-expected restructuring to overcome the fallout of the coronavirus pandemic.
Daimler, which owns the Mercedes-Benz and Smart brands, had used the Hambach factory to produce electric and combustion-engined variants of its two-seater Smart vehicles, making more than 80,000 cars in 2017.
The move will result in a negative one-time effect of about 500 million euros ($562 million) in the second quarter, the company said in a news release on Friday.
“The effects of the Covid-19 pandemic on the economy are creating new framework conditions,” Daimler CEO Ola Kallenius said in the release. “In this context we are optimizing our global production network.”
Production of the Smart will move to China from France after Daimler last year said it will build its next generation of Smart electric cars through a joint venture with Geely.
The move to sell the Hambach site comes as the auto industry faces overcapacity and plunging demand for new cars in Europe.
The plant opened 1997 and has about 1,600 employees. In 2018, Daimler said it would invest 500 million euros into Hambach to produce a compact electric car for Mercedes’ new EQ electric subbrand alongside the battery-powered version of the Smart ForTwo.
Kallenius earlier this week warned he will have to pursue more painful restructuring because of the fallout from the coronavirus. He said he is planning “drastic” salary cuts on top of an existing plan, announced in November, that includes eliminating more than 10,000 positions.
Bloomberg contributed to this report