Mercedes-Benz is adding another production point to its European bus supply network just as demand for commercial vehicles is recovering across the region. Daimler Buses, Mercedes-Benz Türk and Otokar have officially started production of the Mercedes-Benz Conecto city bus at Otokar’s plant in Sakarya, Türkiye, turning a manufacturing agreement announced in 2025 into an operating production program.
The timing is significant. European Union bus registrations climbed sharply during the first half of 2026, while Daimler Buses entered the year after increasing both global unit sales and revenue in 2025. The Sakarya arrangement gives Mercedes-Benz additional capacity without replacing its established Hoşdere operation and provides Otokar with another major contract-manufacturing program at a plant already capable of producing thousands of buses annually.
Production Has Officially Started in Sakarya
Daimler Buses, Mercedes-Benz Türk and Otokar marked the start of Mercedes-Benz Conecto production at the Sakarya factory on September 22, 2026. The milestone came almost exactly one year after the companies announced their manufacturing agreement in September 2025. Before regular production began, the operation went through a pre-series phase designed to establish manufacturing processes, train personnel and ensure that vehicles coming off the Otokar line meet Mercedes-Benz quality requirements. Customer deliveries from the expanded production arrangement are scheduled to start during the first half of 2027.
The arrangement is more closely integrated than simply licensing Otokar to build a Mercedes-Benz vehicle. Daimler Buses supplies the major vehicle components and dedicated production equipment, while an experienced Daimler Buses team supports manufacturing at the Sakarya facility. Mercedes-Benz Türk is also closely involved in the program. That combination allows Daimler to add output while retaining control over critical components, processes and standards. For operators waiting for vehicles, the practical objective is straightforward: create more available production capacity without building an entirely new Mercedes-Benz factory from scratch.
The Deal Has a Multi-Year Production Target
The cooperation was structured as more than a temporary response to a few unusually strong orders. Otokar’s official disclosure to Türkiye’s Public Disclosure Platform states that the agreement runs through the end of 2029. When it was announced, the companies planned for production-line preparation during the following year, an initial production start in September 2026 and mass production during 2027. The agreement calls for a minimum target of 1,400 Conecto buses over its duration, although the final volume can change depending on market developments.
The financial structure also shows how the partners divided responsibilities. Daimler Buses and Mercedes-Benz Türk are responsible for supplying important parts and materials, while Otokar primarily provides manufacturing labour and production services. Otokar said the resulting service revenue would be reported within the company’s other-sales category. This makes the arrangement an example of contract manufacturing rather than a conventional vehicle-development partnership. For Daimler Buses, that can add capacity without duplicating every part of its existing supply chain. For Otokar, additional third-party production can put more of its industrial base to work while its own branded vehicle business continues in parallel.
Otokar Has Significant Capacity Available
Sakarya is not a small assembly operation being expanded for a single customer. Otokar’s 2025 annual report lists annual capacity for 6,000 buses and minibuses, along with capacity for 1,500 light trucks and pickups, 2,000 off-road vehicles and 950 tactical armoured vehicles. The company reported a production area of approximately 552,000 square metres and 3,659 employees at the end of 2025. Overall capacity utilization stood at 54%, giving some context to Otokar’s interest in attracting additional manufacturing programs.
That available industrial capacity helps explain why the Mercedes-Benz agreement can make sense for both companies. Otokar has more than six decades of vehicle-manufacturing experience and already operates across commercial and defence vehicle categories. Its annual report specifically described flexible manufacturing and joint-production agreements as tools for improving capacity utilization and expanding global market access. The Daimler agreement also follows another manufacturing collaboration with Iveco Bus. Rather than depending exclusively on sales of Otokar-branded vehicles to fill the factory, the company can use established production capabilities for outside manufacturers as well. For Daimler Buses, that creates access to an existing workforce and production infrastructure instead of requiring a greenfield expansion.
Hoşdere Remains Central to Mercedes-Benz Bus Manufacturing
Adding Conecto production in Sakarya does not mean Mercedes-Benz is abandoning its long-established Hoşdere operation near Istanbul. Mercedes-Benz Türk’s Hoşdere plant has operated since 1995 and remains a central part of Daimler Buses’ international manufacturing network. According to Daimler’s September 2026 production announcement, Mercedes-Benz Türk has produced more than 117,000 buses and roughly 400,000 trucks since the company was established. Hoşdere itself covers approximately 422,000 square metres and is described by Daimler Buses as its largest bus production site globally.
Before the Otokar cooperation, the Conecto had been produced exclusively at Hoşdere. The new arrangement therefore adds capacity alongside an existing production base rather than transferring the entire model away from Mercedes-Benz Türk. Hoşdere continues to produce multiple bus models, while Daimler’s broader European network includes specialized facilities in Germany, France and Spain. Mannheim, for example, serves as the competence centre for battery-electric city buses, while Neu-Ulm specializes in coaches. The Sakarya arrangement gives that network another source of Conecto output at a moment when the company says its European order situation remains strong.
European Bus Demand Is Rising Particularly Quickly
The production expansion comes during a notable upswing in Europe’s commercial-vehicle market. ACEA data show that new EU bus registrations increased 22.7% year over year during the first half of 2026, reaching 22,590 vehicles. Italy recorded a 51.6% increase among the largest markets, while Germany and France each grew 21.6%. Poland’s bus registrations jumped 78%. The wider commercial-vehicle market also improved, although less dramatically: EU van registrations rose 1.9% and truck registrations increased 9.8% over the same six-month period.
Those numbers strengthen the demand argument behind Daimler’s capacity decision. Bus registrations had already grown 7.5% across the EU in 2025, even while registrations of vans and trucks declined that year. Daimler Buses also entered 2026 with momentum of its own. The company sold roughly 27,000 vehicles worldwide in 2025, about 2% more than a year earlier. Revenue increased 14% to approximately €6 billion, while adjusted return on sales improved from 8.3% to 10%. Capacity expansion therefore comes against both improving industry volumes and stronger financial performance within Daimler’s bus operation.
Conecto Targets High-Capacity, Cost-Conscious Operations
The vehicle at the centre of the partnership occupies a practical part of the Mercedes-Benz bus range. The standard Conecto measures about 12.13 metres long and can accommodate as many as 101 passengers, while the articulated Conecto G is roughly 18.12 metres long and carries up to 150. The solo version has three double doors, while the articulated model uses four. Both are low-floor vehicles intended to move large passenger volumes efficiently through urban services, where rapid boarding, easy access and predictable operating costs are often more important than extensive customization.
Mercedes-Benz has also positioned the Conecto separately from the more configurable Citaro. In announcing plans for the German market in 2026, Daimler said the Conecto would suit comparatively straightforward applications such as school transportation, temporary replacement capacity and conventional urban routes. A 48-volt hybrid system is available on the solo model, with Mercedes-Benz stating that recuperating braking energy can reduce fuel consumption by up to 6.5% in urban use. German-market deliveries are planned from mid-2027, giving the additional Otokar capacity a direct role in expanding the Conecto’s geographic reach.
Conventional Buses Still Matter During the Electric Transition
The decision to increase production of a conventionally powered platform comes at the same time Europe’s bus market is rapidly electrifying. ACEA reported that registrations of electrically chargeable buses in the EU increased 56.8% in the first half of 2026, raising their share of new bus registrations from 21.6% to 27.7%. Diesel registrations nevertheless increased by 11% over the same period and still represented 58.2% of registrations. The market is therefore moving toward electric propulsion without eliminating immediate demand for conventional buses.
Daimler Buses is pursuing both realities. Its battery-electric Mercedes-Benz eCitaro has been in series production since 2018, and new NMC4 battery technology is being introduced during 2026. The company has also expanded electrification into intercity transport with the eIntouro. Its longer-term strategy calls for locally CO2-neutral vehicles across its major segments and for only locally CO2-neutral new city buses to be offered in Europe from 2030. In the meantime, operators still replacing conventional fleets need vehicles that can enter service using existing depot, fuel and maintenance infrastructure. The Conecto capacity expansion is designed to address that nearer-term requirement.
The Partnership Adds Flexibility to Both Manufacturers
For Mercedes-Benz, the biggest strategic advantage may be flexibility. Bus demand can be shaped by public procurement cycles, private fleet replacement, regional subsidies and infrastructure availability, making production requirements difficult to predict years in advance. Using Otokar as a contract manufacturer gives Daimler Buses another source of capacity that can respond to demand while Hoşdere and other factories continue handling their existing programs. Daimler has explicitly said increasing overall vehicle production through the cooperation should support both customer availability and profitable growth.
Otokar gains a different kind of flexibility. The company exports commercial vehicles to more than 60 countries and already manufactures buses, light trucks and other specialized vehicles. Its own annual report says the Daimler cooperation is intended to improve capacity utilization, expand production and deepen long-term international partnerships. The minimum 1,400-unit target also gives the Sakarya plant a defined workload extending through 2029, although actual volumes remain tied to market conditions. What began as a production agreement in September 2025 has therefore become a working example of how established manufacturers are using shared industrial capacity to respond faster to changing European vehicle demand.
