Confirmed: Ineos in talks with Daimler to build Grenadier at Smart factory

Britain’s newest car manufacturer, Ineos Automotive, has confirmed that it is negotiating with Daimler to take over the Smart factory at Hambach, eastern France, as a manufacturing base for its new Grenadier range of 4×4 vehicles.

The factory would be a replacement for both its proposed chassis manufacturing plant in Portugal and its final assembly plant in Bridgend, Wales.

In a statement released this morning, Ineos says it is “reviewing its manufacturing strategy for the new Grenadier in light of the Covid-19 pandemic – which has led to some delays in our development plans, but has also presented some new opportunities in terms of existing manufacturing capacity that were not previously available to us. 

“Specifically, Ineos Automotive has entered detailed discussions with Mercedes-Benz on the acquisition of its Hambach site in Moselle, France. We have therefore suspended the post-lockdown resumption of work at our sites in Wales and Portugal pending the outcome of this review. Further updates will follow in the coming weeks.”

It is understood that the possibility of doing a deal only arose over the past few days and a major attraction is the fact that Daimler has equipped the Hambach plant fairly recently to build a larger SUV model, alongside the Smart two-seat city cars that have always been its main output. This would suit the Grenadier manufacturing process, meaning the Hambach deal is the one most likely to be concluded.

Ineos cites “significant overcapacity” in the automotive production sector, made clearer during the pandemic, as being the main factor for the decision. 

Ineos Automotive CEO, Dirk Heilmann, elaborated: “Of course we considered this route previously, but as a result of the Covid-19 pandemic some new options such as this one with the plant in Hambach have opened up that were simply not available to us previously. We are therefore having another look – and reviewing whether the addition of two new manufacturing facilities is the right thing to do in the current environment.”

“Covid has had an impact on our build schedules,” added Heilmann, “with ground clearing works and construction held up by the social distancing measures that have been required. Safety is of course paramount, but we also have an obligation to do what is right for the business – and so need to assess these new opportunities in order to maintain or improve on our timelines.” 

Last week the first minister for Wales told BBC News that his team “remain in discussion with the company” over bringing the Grenadier manufacturing site to Bridgend, creating up to 500 jobs. However, there had been no formal announcement at that point, despite Ineos confirming last year its intention to base the 4×4’s finishing plant near the site of the soon-to-close Ford engine plant in Bridgend, going as far as rendering the finished building.