Alabama's desire to keep out illegal immigrants may be running counter to its desire to attract international automakers.

Under the state's new immigration policy, which requires anyone stopped by police to show proper identification, a German executive with Mercedes Benz was arrested this weekend.

It played out like a scene sounds like it could come from a World War II Gestapo movie: 46-year-old Detlev Hager was driving down the road in a rental car, when a police officer noticed something amiss with the car – initial reports say it was missing registration tags, but Tuscaloosa Police Chief Steve Anderson insists the car was missing license plates. The officer pulled Hager over, and asked for his papers.

All Hager could produce was his German identification. His passport, which shows he was legally in the country on a visa, was back at his hotel room.

Hager was arrested and charged under the immigration law for not having the proper paperwork. He was released on his own recognizance after a colleague went back to his hotel room and retrieved his paperwork. He has a court date set in the next few weeks to determine his ultimate punishment.

The arrest has caught national attention to Alabama's law, which could be interpreted to require paperwork to prove immigration status for things like getting flu shots.

"I'm not surprised at the amount of attention this has drawn," Anderson said. "I expected it would take something like this to get attention."

Since the law was enacted in October, 66 people have been arrested in Tuscaloosa alone, Anderson said. He's unsure if any of those arrested were actually illegal immigrants: 33 were black males, 9 black females, 16 were Hispanic males, 1 Hispanic female, 3 were white males and 4 were white females.

Slade Blackwell, an Alabama state senator, told the New York Times that the law needs to be modified.

"The longer the bill has been out, the more unintended consequences we have found," he told the paper. "All of us realize we need to change it."

Mercedes' first full year of production in Alabama was in 1998, when it produced 68,800 vehicles. It was the first automaker to take a gamble on producing cars in the southern state, which had no history of auto production but threw tons of money at Mercedes to set up shop there.

In 1993, the state gave Mercedes tax incentives worth $253 million, or about $169,000 per job, to open that factory, according to the Alabama Automotive Manufacturers Association.

Now Alabama has two more auto assembly plants, also run by foreign automakers Honda and Hyundai. Toyota and International Diesel produce engines in the state. There are more than 90 automotive suppliers in Alabama that serve either Hyundai, Honda or Mercedes.

Which means Alabama gets its fair share of foreign business travelers.

Competition for foreign autos investment is intense – jobs at auto plants are a boon for any state and local government that can convince an automaker to build a plant in their region.

The auto industry accounts for 6.8% of Alabama's labor force, according to a report by the Center for Automotive Research. For comparison, the industry accounts for 4.4% of the nation's workforce. In Michigan, it's 21.8% of the workforce.

States often throw huge tax incentives at auto companies to get these jobs. States like them because they pay high wages to people who often don't have college degrees, the automakers take very good care of their employees and the plants attract scads of suppliers which also pay solid wages. People who work at the plants spend money at local restaurants, shops and even car dealerships.

The arrest "highlights the disastrous consequences of profiling, as well as the potential threat to foreign investment in the state that enacts and enforces laws that lead to arrests of anyone who doesn't speak, act or look in a 'non-suspicious manner,'" Rep. Charles A. Gonzalez, a Texas Democrat who chairs the Congressional Hispanic Caucus, told FoxNews.com.