The new factory would use a flexible work flow to produce 150,000 vehicles a year and create 2,500 new jobs
Mercedes opened its first plant in the Hungarian city of Kecskemet in 2012, producing 180,000 compact cars in 2015.
Markus Schafer, head of production and supply chain management for the luxury automaker, said the new factory would use a flexible work flow, allowing the assembly line to be quickly adapted to different manufacturing processes.
Hungarian Foreign Minister Peter Szijjarto said the government had offered subsidies worth 12.9 billion forints ($46 million) for the plant, which will produce 150,000 vehicles a year.
Szijjarto said the car industry was responsible for 31 per cent of Hungary’s industrial output in January-May this year.