Stuttgart-based automaker Mercedes has announced a new factory in Hungary, in the town of Kecskemet, south of Budapest. The new facility is expected to cost €800 million and create 2,500 jobs. This announcement comes after the marque revealed plans to enlarge its "subcompact premium" offerings, and the new plant will be able to produce up to four different models. This will help Mercedes compete against the Audi A1 and Mini, while lowering its average fleet CO2 emission levels. Mercedes' plant in Rastatt, Germany, where the current A and B Class are made, is also getting a €600 million investment, which could mean that the Hungarian-built models could be completely new. Recent rumors say that Mercedes could make the A and B Class rear-wheel drive (BMW 1-Series anyone?), while the new Hungarian modes could keep the FWD configuration (again, BMW's Mini anyone?).