PARIS — The French government has called for an independent report on the future of Daimler’s factory in Hambach, eastern France, which the German automaker is planning to sell.

Daimler said the move to explore the sale of the factory, which builds Smart minicars, was part of a deeper-than-expected restructuring in the wake of the coronavirus crisis.

Ineos, the British chemical company that will introduce a rival to the Land Rover Defender called the Grenadier, says it has entered into negotiations to buy the Hambach factory. The company had said last autumn it would produce the Grenadier at a new plant in Bridgend, Wales, with the car’s body and ladder-frame chassis built in a separate factory in Portugal. Those plans appear to have been shelved.

The plant in Hambach, close to the German border in northeastern France, opened in 1997 and has about 1,600 employees who build the Smart ForTwo. Production of the two-seat city car will move to China after Daimler last year said it will build its next generation of Smart electric cars through a joint venture with Geely.

Daimler had announced in May 2018 an investment of about 500 million euros ($562 million) to develop and produce a compact EQ full-electric model at Hambach. Instead, it booked a roughly equivalent one-time impairment charge in the second quarter after the bulk of the funds were spent on new machinery and equipment.

On Monday, the French minister for industry, Agnes Pannier-Runacher, said in a television news interview that the government was commissioning an independent report on the plant’s future from the consulting company Roland Berger. She also met with employee delegates from Hambach and will visit the factory this week on a fact-finding mission.

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Pannier-Runacher said that the government was not necessarily opposed to Ineos acquiring the factory, but said it raised questions about how many jobs would be preserved, what would happen to Daimler subcontractors in the area, and the wisdom of producing a boxy SUV powered by an internal combustion engine at a time when France and Europe were emphasizing electrified vehicles to meet tougher emissions standards.

“The first Ineos vehicle will have legitimacy because there is still a strong market for internal combustion vehicles, but on the other hand we need to look at the future,” she said in the interview on CNews. “What other vehicles does Ineos have in the pipeline?”

She also asked if Daimler was able to instead move production of electric vehicle components to the factory, or to consider a future hydrogen project there. 

Daimler CEO Ola Kallenius said last week that Daimler was seeking a solution for Hambach that would preserve the maximum number of jobs. About half of the workers at the plant are Daimler employees.



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