Mercedes A-Class production shift: Mercedes-Benz isn’t ready to say goodbye to its smallest car just yet—but it is ready to move it.
In a surprising twist, Mercedes has confirmed that the A-Class will remain in production until at least 2028, even though earlier plans suggested it was on the chopping block. The catch? It won’t be built in Germany anymore.
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Instead, production is heading east—to Hungary—marking a major shift in how the brand handles its entry-level lineup.
A Big Move with Bigger Implications
The A-Class hatchback has long been Mercedes’ most reasonably priced entry point. Even while it might not have the same reputation as an S-Class, it is quite important in drawing in younger consumers and first-time luxury shoppers.
Mercedes is now moving A-Class manufacturing from its Rastatt facility in Germany to Kecskemét, Hungary which is roughly 62 miles outside of Budapest.
Why the relocation? Cash. Simple and uncomplicated.
Because labor and operating expenses are much cheaper in Hungary Mercedes is able to maintain the profitability of the A-Class while maintaining a competitive price.
Part of a €5 Billion Cost-Cutting Strategy
This isn’t just about one car.
Mercedes is in the midst of a significant cost cutting initiative that aims to save €5 billion (about $5.9 billion) by 2027. The objective is to maintain competitiveness as Chinese automaker flood international markets with more affordable, technologically advanced car.
One of the quickest ways to preserve margins is to move A-Class production east, particularly on a model that already has narrow earnings.
Production Starts Soon — And at Scale
Manufacturing at the Hungarian plant is expected to begin in the second quarter of this year, with annual production estimated between 300,000 and 400,000 vehicles.
That’s not small scale production—that’s a serious commitment.
What Happens to the German Factory?
Moving the A-Class out of Germany isn’t a downgrade—it’s a reshuffle.
By freeing up space at the Rastatt plant Mercedes can focus on next-generation models built on its new MMA platform including the upcoming CLA.
The MMA architecture is especially important because it supports:
- Gasoline engines
- Hybrid powertrain
- Fully electric versions
That flexibility gives Mercedes room to adapt as markets shift toward electrification at different speeds.
Mercedes intends to add some 3,000 more workers to the plant’s current workforce of 4,500 in order to support this growth. Hungary is rapidly emerging as a key hub for the brand’s future.
A Confusing Past — And an Unclear Future
This decision follows months of mixed signals.
In an effort to streamline its small-car inventory Mercedes hinted earlier in 2025 that the A-Class will be completely eliminate. Subsequent sources suggested that the brand’s new entry-level model will be a small SUV.
The A-Class continues to exist today although it’s uncertain what will happen beyond 2028.
Will Mercedes:
- Launch a new-generation A-Class?
- Replace it with a small SUV?
- Or go fully electric at the entry level?
For now, Mercedes is keeping its options open.
The Bottom Line
The A-Class isn’t dead it’s just relocating.
By shifting production to Hungary, Mercedes gets:
- Lower costs
- Higher efficiency
- More room in Germany for future EVs
And buyers still get one of the most accessible ways into the Mercedes-Benz brand—at least for a few more years.
FAQs
Q: Why is Mercedes moving A-Class production to Hungary?
A: The move is primarily for cost saving. Lower labor and operational expense in Hungary make the A-Class more profitable.
Q: Will the quality of the A-Class change?
A: Mercedes has not indicated any drop in quality. The Hungarian plant already build Mercedes vehicle to the brand global standard.
Q: What happen to the German Rastatt factory?
A: Rastatt will focus on next generation MMA-based model including the upcoming CLA and future electric vehicles.
Q: Will there be a new A-Class after 2028?
A: Mercedes hasn’t confirm this yet. A successor is expect but it could be a new hatchback a compact SUV or an EV-focused model.
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