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Weekly Recap: Mercedes, Volkswagen spend big as import automakers invest in North America

Import automakers are on a building frenzy in North America as resurgent car sales have prompted companies to expand their manufacturing footprints to meet rising demand. That was evidenced this week when Mercedes-Benz announced plans to build a $500-million factory to produce the Sprinter commercial van, and Volkswagen confirmed a whopping $1-billion investment to expand its massive plant in Mexico. Meanwhile Jaguar Land Rover reportedly wants to build a factory in North America, but not for at least three years, and Hyundai is said to be expanding in the southern United States. The common thread in all of this expansion? Trucks, time and money. Mercedes wants to capitalize on the burgeoning work van segment in the United States and will break ground in 2016 on a 200-acre site in Charleston, SC, to build the next-generation Sprinter. The site will have a paint shop, body shop and an assembly line, and 1,300 people will be employed when production ramps up. Why do this, when Mercedes has immense van operations in Germany? It's cheaper to build in the US for the US market. Building locally allows Mercedes to avoid import taxes, forego a complex shipping process that involves partially disassembling German-built Sprinters and naturally, reduces the time it takes to deliver finished trucks to their buyers. "This plant is key to our future growth in the very dynamic North American van market," Volker Mornhinweg, head of Mercedes-Benz Vans, said in a statement. He was speaking about Mercedes and vans, but another German automotive giant, Volkswagen, had similar motives for its mammoth expansion plans in Puebla, Mexico. The added space and production capacity will allow VW to build a three-row version of the Tiguan, and provide another crossover for its US lineup that's light on SUVs. The current Tiguan has two rows. The factory will be able to churn out 500 units daily of the larger variant, and they will be sold in North and South America. It will arrive in the US in mid-2017, a spokesman told Autoblog. VW also plans to build another crossover, a midsize seven-passenger vehicle, at its growing Chattanooga, TN, site. "Localization has become key to safeguarding our competitive position on the global market, and manufacturing the Tiguan in Mexico will bring production closer to the US market," Michael Horn, CEO of Volkswagen Group of America, said in a statement.

McLaren Racing will return to Mercedes F1 engines from 2021

SOCHI, Russia — McLaren will be reunited with Mercedes engines from the 2021 season as the former champions go back to using the German manufacturer's power units in their bid to return to the top. The Woking-based team are currently supplied by Renault, having joined forces with the French company last year. They will see out that deal, which runs until the end of 2020, before making the switch back to Mercedes as part of a long-term agreement until at least 2024. "We are delighted to welcome McLaren back to the Mercedes-Benz racing family with this new power unit supply agreement," said Mercedes' motorsports head Toto Wolff in a joint statement with McLaren issued at the Russian Grand Prix on Saturday. "We hope that this new long-term agreement marks another milestone for McLaren as they aim to take the fight to the sport's top teams, including our Mercedes works team." The McLaren-Mercedes partnership initially ran from 1995 to the end of 2014. It turned McLaren, enduring a slump after their heady days of dominance during the late 1980s and early 90s with Honda, into a force to be reckoned with once again. The combination won 78 races, a constructors' title and three drivers' titles with Mika Hakkinen (1998, 1999) and Lewis Hamilton who raced to his first Formula One title with the team in 2008. McLaren find themselves in a similar phase now, rebuilding after three dismal years with Honda, the Japanese manufacturer they rejoined forces with at the end of 2014 in a bid to recreate their dominance from 30 years ago. Fielding a fresh driver line up of British rookie Lando Norris and Spaniard Carlos Sainz, they have made big strides this year and are currently locked in a battle for fourth in the overall standings with Renault's works team. But they haven't won a race since the season-ending 2012 Brazilian Grand Prix, when they were still powered by Mercedes. "Renault has been instrumental to our Formula One recovery plan and a fantastic partner to McLaren Racing," said Zak Brown, chief executive of McLaren Racing. "This agreement is an important step in our long-term plan to return to success in Formula One." McLaren's new deal with the German manufacturer, whose power units have set the benchmark in Formula One's turbo-hybrid era, coincides with a planned rules overhaul aimed at leveling the playing field and creating better racing. The shake-up could be just what a team like McLaren need to make that final jump up to the top.

Frankfurt Motor Show Notes: Why Jaguar decided to build an SUV

It was inevitable. Jaguar had to make an SUV, and that notion became reality this week with the debut of the F-Pace, an all-wheel-drive five-seater that will launch in the United States next spring. Some purists may cringe. But in an era when Porsche, Bentley, Lamborghini, Rolls-Royce, Aston Martin, and other traditional luxury brands are all building or (planning to build) SUVs, Jaguar had to evolve. While it seems like a leap for Jaguar to make an SUV, longtime design director Ian Callum said it's been in the works for years. "The first time I was asked the question was when I arrived 16 years ago," he said. So in 1999 (and probably well before that), Jaguar was already thinking SUV. What took so long? "It wasn't a priority," Callum said. Jaguar was concentrating on fixing its existing lineup, which was pockmarked with holes and poorly selling products, like the X-Type. Along the way, Jaguar and sister brand Land Rover were sold by Ford to Indian conglomerate Tata Motors. Flash forward several years, and Jaguar and Land Rover are both experiencing a resurgence in the United States and around the world. Jaguar's lineup is flush with the E-Type's modern successor, the F-Type, plus a new version of the XF. The XJ received a 2016 freshening, and the smaller XE sedan is on the way. Jaguar put its house in order as other factors conspired to make a crossover timely. Fuel prices stayed relatively low, and consumers in the US and China remained steadfast in their love for utility vehicles of all stripes. Making a Jaguar SUV became a priority. "The world was telling us in no uncertain terms this is what they wanted," Callum said. "Not to be in the sector would be a little naive for the sake of purity." Jaguar proved its intent two years ago when it revealed the C-X17 crossover concept at Frankfurt, and the final production model is close to the prototype's striking looks. "I thought we managed to maintain that spirit," Callum said. It's a true Jaguar, with cues from the F-Type, 1968 XJ, and other famous models. Who would have thought Jaguar would make an SUV? "I certainly didn't," Callum admitted. But the F-Pace is here. If Callum is okay with it, purists can be, too. Quick Hits Opel retrenches for 2016 and beyond Opel used the Frankfurt show to display its new generation of the Astra, a critical vehicle line for the German division of General Motors.