Europe may be facing troubles, but its luxury carmakers seem to be doing better than ever. Mercedes-Benz, for example, announced that it’s on its way to produce more than 1.25 million vehicles in 2011, beating last year’s best-ever sales record and setting a new all-time high in its 125-year history.

“Mercedes-Benz is going on the attack”, said Dr. Wolfgang Bernhard, member of the Daimler Board of Management. “We are securing our path to the top by extensively investing in the expansion of our high-performance production network.”

The German carmaker’s plants are currently operating at near full capacity, thanks to an increase in sales as well as the introduction of additional shifts, which were agreed with the works council.

Moreover, in order to meet demand, all of its plants around the globe continued their operation throughout the summer and in return, production lines will be shut down as briefly as possible during the end of the year holidays.

In order to ensure its expansion in the world’s number one market, China, Mercedes-Benz intends to invest about €2 billion (US$2.6 billion) in Beijing Benz Automotive (BBAC), its local joint venture with Beijing Automotive Industry Corporation (BAIC).

Apart from the recent start of local assembly of the GLK compact SUV and an increase in the production of the C-Class and the long-wheelbase version of the E-Class, Mercedes will gradually add three new premium compact models in its Chinese portfolio, starting from 2013.

In the same year, it plans to open a new Research and Development center at BBAC and a new engine plant that will manufacture four-cylinder gasoline engines.

The three-pointed star’s expansion plans do not stop in China. From 2010 until 2014, the carmaker will invest US$2.4 billion in its Alabama plant, which apart from the M-, GL- and R-Class will produce the C-Class from 2014 and another new model from 2015.

Moreover, in 2011 and 2012 the main German plant in Untertürkheim is scheduled to receive an investment of more than €1.5 billion (US$1.9 billion) for the modernization and expansion of its facilities, while €600 million (US$777.3 million) were invested in the Ratstatt factory, in which the new B-Class is manufactured, and another €800 million (US$1.03 billion) in a new factory in Hungary.

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