Mercedes-Benz is widely recognized as one of the most successful global automotive brands. Despite the significant downturn experienced by the traditional automotive industry during the COVID-19 pandemic, the company demonstrated a strong post-pandemic recovery, with profitability rebounding to pre-crisis levels. In parallel, the global automotive sector is undergoing structural transformation driven by stricter ESG expectations, increased automation, and the transition toward electrification. Within this context, production systems are no longer evaluated solely on cost efficiency, but also on flexibility, sustainability, and long-term strategic resilience. This study therefore focuses on Mercedes-Benz’s global production layout and examines how the firm organizes and reallocates its manufacturing activities in response to these evolving pressures.
The analytical foundation of this research is based on Heckscher–Ohlin theory and product life cycle theory. According to the Heckscher–Ohlin framework, differences in factor endowments across countries lead firms to allocate production activities internationally in ways that exploit comparative advantages. Applied to Mercedes-Benz, the diffusion of German manufacturing technology to overseas production lines illustrates how advanced know-how is transferred across borders while remaining embedded in a structured division of labor. The cross-border mobility of R&D personnel and technical expertise enables the firm to combine factor abundance, specialization advantages, and skilled labor resources across regions, thereby strengthening its overall production efficiency and competitive position.
Product life cycle theory further explains how production locations evolve over time as products move from development to maturity. In early stages, when production processes are still being refined and costs remain high, manufacturing tends to be concentrated in advanced economies close to core markets. As products mature and production becomes standardized, cost reduction and scale efficiency gain importance, leading firms to shift parts of production to other regions. Mercedes-Benz’s global production layout aligns with this logic, with manufacturing responsibilities redistributed as products transition from innovation-intensive stages to more standardized mass production. Together, these theories provide a coherent explanation for the observed geographic distribution of Mercedes-Benz’s production activities.
Building on this theoretical perspective, the study analyzes Mercedes-Benz’s use of multiple production strategies, including centralization, vertical specialization, branching, horizontal investment, and OEM outsourcing. Different strategies are applied across countries depending on market size, cost structures, trade barriers, and strategic priorities. Rather than adopting a single dominant model, Mercedes-Benz combines these approaches to balance quality control, market access, cost efficiency, and risk management. This multi-layered production strategy allows the firm to tailor its operational presence to local conditions while maintaining overall coordination at the global level, illustrating how international production distribution functions as a core component of corporate strategy.