Daimler AG will begin producing its ML Coupe, a compact sport-utility vehicle, at its Mercedes-Benz factory here next year, increasing the plant's number of models built to five amid an expansion that would lift annual output to more than 300,000 vehicles by 2016.
Daimler AG Chairman Dieter Zetsche confirmed the plans Friday during a visit in Tuscaloosa to inaugurate the start of its first C-Class sedan built in the U.S. The sedan went on sale earlier in August. The auto maker, for the first time, is producing the C-Class sedan on four continents.
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The ML Coupe comes as the U.S. SUV market is to grow twice as fast as the overall market in 2015 and 2016, Mr. Zetsche said. The German luxury auto maker hasn't disclosed details on the ML Coupe's pricing or availability.
"We're calling 2015 the Year of the SUV for Mercedes and Tuscaloosa," Mr. Zetsche said. "The market for these vehicles is only getting stronger."
The expanded U.S. production highlights the turnaround Daimler--though its Mercedes-Benz brand--has experienced in the U.S. market. Mercedes-Benz posted a 9.4% jump in its August sales selling 27,078 new vehicles. The amount put it within striking distance in the U.S. of rival BMW AG which generated sales of 27,214 vehicles.
Last year, The U.S. was the biggest sales market for Mercedes-Benz with every fifth Mercedes-Benz passenger car sold going to a U.S. customer.
"This year we are expecting industry sales in the U.S. to grow 5% to 16.4 million vehicles," Mr. Zetsche said. "We also expect the premium market to continue to develop more strongly than the overall market. We want to profit over-proportionately from this."
The Tuscaloosa plant began production of the Mercedes-Benz M-Class in 1997. Its GL-Class and RL-Class SUVs were added later. The plant manufactured more than 185,000 vehicles in 2013 and is expected to top that level this year. Plant officials declined to provide a specific total.
Separately, talks about unionizing the Tuscaloosa plant continue as both sides look for some common ground, said United Auto Workers Secretary-Treasurer Gary Casteel. In July, Mr. Casteel also was elected vice chairman of Daimler's World Works Council. The council brings labor representatives from Daimler plants around the world together about once a year. Mr. Casteel said he has discussed the union goals with Mr. Zetsche.
"There is a growing interest among the workers at the plant, but we do have some history and we are still trying to work through that," Mr. Casteel said in an interview.
Daimler's works council, by law, gives some voice to the auto maker's employees regardless if there is a local union, and Mr. Casteel's presence on the council marks the first time an American union member has served in that capacity. In 2006, the UAW balked at giving Mr. Zetsche and Daimler's then-subsidiary Chrysler health-care cost cuts similar to what it agreed to provide Ford Motor Co. and General Motors Co.
The union's position was that Chrysler was more profitable than the others. Daimler sold Chrysler shortly after the UAW's snub.
"There was a different administration and it was probably a mistake," Mr. Casteel said. "We are trying to reach a level of understanding. We already represent Daimler workers through their Freightliner trucks. We have 10,000 workers there and just completed a fourth contract."
For years, the UAW has been working to crack foreign auto makers' factories in the U.S. South. The UAW lost a high profile unionization effort at Volkswagen AG's plant in Tennessee earlier this year. After a massive push by the UAW, workers voted 712 to 626 against unionizing the plant.
Mr. Casteel couldn't provide a timetable on when a union vote at Daimler's plant in Alabama might take place. Jim Spitzley, a 47-year-old supporter of unionization who works in the plant as a quality auditor, said the focus now is to educate before calling for a vote.
"We have people stopping by the office every day," Mr. Spitzley said in an interview. "The optimal goal here is to build a union and I believe that will happen."