That doesn’t mean that the Tuscaloosa, Alabama plant will be losing work, as the U.S. operation will still produce the SUVs in kit form, known as Semi-Knock-Down (SKD) in the industry. These SKD kits will then be shipped to Asian plants for final assembly.
Local production is seen as a way to boost growth in emerging markets, and skilled labor costs are likely cheaper in India than in Alabama. We’re no experts on international taxation, but we suspect that parts of vehicles are cheaper to import than completed vehicles, further adding to Mercedes-Benz’s bottom line.
The first SKD kits will be for M-Class vehicles shipped to a final assembly point in India. Plants in Thailand and Indonesia will follow, and the GL-Class is expected to join the M-Class in kit form sometime next year.
SKD kits contain complete bodywork and most of the components needed for assembly except the engine and transmission. Mercedes’ Tuscaloosa plant will be responsible for provisioning the kits, preparing them for international shipment and arranging delivery, so a new SKD logistics center has been established within the Alabama plant.
While the SKD concept may be new to Tuscaloosa, it isn’t new to Mercedes-Benz: the German automaker has been using a kit assembly process on certain models since the 1950s.