"We continue to ... invest in our locations in Germany, around €3 billion ($4.5 billion) in the years 2009 and 2010 alone," Zetsche said at a press conference in Rastatt, southwestern Germany.
The Mercedes-Benz plant in Rastatt produces Class A and B cars, would receive €600 million in investment, Zetsche said, and produce autos jointly with a new factory in Hungary.
"With this significant investment we are defining our future in the compact car segment and safeguard the plant Rastatt in the long term," he said.
This week, Daimler unveiled better than expected third quarter results, and said Mercedes had swung back into profit.
Weaker sales stemming from the global economic slowdown had prompted Daimler to launch a broad cost-cutting programme that was initially expected to save €4 billion.