Ineos buying Daimler's Smartville plant for new auto business

LONDON—Materials giant Ineos has agreed to buy Daimler A.G.'s auto assembly plant in factory in Hambach, France, where it will build a utility vehicle marking Ineos' move into becoming an auto maker.

Ineos plans to begin making its Grenadier 4x4 by the end of 2021 at the plant, which originally was developed to make the plastic bodied Smart car.

Terms were not disclosed, but Frankfurt-based Daimler will contract with Ineos to produce the Smart ForTwo electric minicar at Hambach until 2024 as well as components for Mercedes-Benz models, the auto maker said in a Dec. 8 news release.The deal had been in the works since this summer.

"Manufacturing at Hambach ensures that Ineos remains on track to meet its plans to deliver the Grenadier to customers in early 2022," Ineos said in a statement.

The agreement will preserve just over 1,300 jobs at the site, where about 800 people work in production and another 800 for suppliers and in other support positions.

Ineos is aiming for annual production of about 25,000 Grenadiers, a large SUV similar to the body-on-frame Land Rover Defender 110 that was discontinued in 2016. Ineos teams plan to start work at the site as early as January, Smart and union representatives told the French website Usine Nouvelle on Tuesday.

Unions at the factory approved the sale several weeks ago, despite concerns about the sustainability of building a large internal-combustion engine vehicle at a time when European emissions standards continue to tighten.

Ineos may turn to hydrogen power in the future, however, as it recently signed an agreement with Hyundai to "explore the use" of Hyundai's fuel cell technology in Grenadier vehicles.

The Hambach factory, known as Smartville in France, opened in 1997 in a ceremony attended by President Jacques Chirac of France and Chancellor Helmut Kohl of Germany. Production reached a high of about 140,000 in 2008; in 2019 about 70,000 vehicles were built there, according to research company Inovev.

The complex also included integrated injection molding and assembly lines that delivered doors and other plastic panels direct to Daimler's production lines.

Daimler said this summer that it would seek a buyer for the factory as part of a plan to reduce its industrial footprint. The auto maker said Dec. 8 that it had already recorded the effects of the sale in the second and third quarters. In the second quarter, Daimler booked impairment charges of around $605 million on the plant.

"No significant effects are expected in the fourth quarter which will weigh on the earnings of Mercedes-Benz," the auto maker said.

Markus Schaefer, a member of the Daimler board of management and chief operating officer of Mercedes-Benz, said in a statement that the sale of the Hambach plant was an "important step" in making Daimler more efficient to allow for increased investments in new technologies.

"We are investing heavily in our electric offensive and comprehensive digitalization," he said. "In doing so, we must make the company even more efficient and, in this respect, the optimization of our global production network is a very decisive lever."

The Smart brand is facing an uncertain future in Europe after Daimler said last year that would build next-generation Smart vehicles through a joint venture with Geely in China. The four-seater Smart ForFour, a sibling model of the Renault Twingo, is built at Renault Group's factory in Slovenia.

Ineos emerged as a potential buyer for the Hambach site this summer. It was also said to be looking at Nissan's pickup factory in Barcelona and a site in Wales.

"Hambach presented us with a unique opportunity that we simply could not ignore: To buy a modern automotive manufacturing facility with a world-class workforce," Ineos Chairman Jim Ratcliffe said in a statement.

Daimler had invested about 500 million euros to prepare the Hambach site to build larger electric vehicles for Mercedes-Benz such as the EQB crossover. Much of that work has already been completed, including a new body shop and a new paint shop.