Hungary is to receive one of the biggest greenfield projects in its history after Mercedes-Benz, the German car giant, unveiled plans to launch a manufacturing plant in Kecskemét, a city located 88 kilometres southeast of Budapest. 

When finished, the project will create an estimated 2500 jobs and will cost about $1.1bn. The Hungarian Investment Promotion Agency (HIPA), the country's economic development entity, which trailed the news about the company's decision, states that it will collaborate with Mercedes-Benz on the project by 2020.

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The newly announced operation will be the company's second facility in Kecskemét. The company has had a presence in the city since 2012 and employs more than 4000 people. The first plant, which already produces an estimated 500,000 vehicles, will receive an upgrade at the same time, because in April Mercedes-Benz pledged to allocate $648m in the facility expansion and technological upgrade. 

The car giant's commitment to Hungary sits in line with the country's policy of re-industrialisation, supported by the government of Viktor Orban since 2013. “This investment decision proves it was worthwhile for the government to embark on an economic policy aimed at making Hungary the European centre of high value-added manufacturing activities,” Péter Szijjártó, the country's minister of foreign affairs and trade, said on the day of Mercedes-Benz's announcement.

Apart from Mercedes-Benz, other automotive companies to have invested in the country in the past three years are General Motors and Volkswagen. Both companies announced two projects in Hungary, with the former committing and estimated $258.1m and the latter $113.9m, according to fDi Markets, a greenfield investment monitor.

Mercedes-Benz's investment beats the record set by another German manufacturer – Audi. In September 2010 the company announced it would invest more than $1bn and employ an estimated 1800 people in a car manufacturing plant in Győr, a city located in north-west Hungary.