BERLIN (Reuters) - Daimler (>> Daimler AG) will invest billions of euros in coming years to upgrade a key plant as the German carmaker adjusts facilities to the growing need to assemble fuel-efficient powertrains - the mechanisms that transmit power from the engine to the axle.

Daimler will spend 1 billion euros ($1.06 billion) this year alone to modernise the factory at its Untertuerkheim-based headquarters which makes engines, transmissions and axles for Mercedes-Benz luxury cars, the carmaker said on Wednesday.

Steps agreed with top labour representatives will keep the plant's workforce stable at around 18,700 people and yield cost savings "in the range of hundreds of millions of euros until 2020," Daimler said.

"We are not only improving our flexibility and efficiency, but also developing a plant with a tradition stretching back over 110 years into a high-tech location for CO2 technologies," said Markus Schaefer, head of production at Mercedes-Benz Cars.

The Untertuerkheim factory has for years been running at a high level of utilisation, reflecting expansion of Mercedes's model lineup.

The world's No. 3 luxury-car maker by sales has pledged to further raise production between now and 2020 to eclipse German rivals BMW (>> Bayerische Motoren Werke AG) and Audi (>> Volkswagen AG).

Germany's three leading premium manufacturers are pushing efforts to develop alternative powertrains, including battery-powered and hybrid vehicles, to bring down carbon dioxide emissions and meet rigid CO2 limits in Europe and other regions.

Separately, the plant's works council chief Wolfgang Nieke hailed 150 additional apprenticeships on Wednesday to which Daimler committed.

(Reporting by Andreas Cremer; Editing by Harro ten Wolde and Georgina Prodhan)

Stocks treated in this article : Bayerische Motoren Werke AG, Daimler AG, Volkswagen AG