When it comes to making vehicles in North America, BMW is moving south, not to South Carolina, but south of the Rio Grande. The automaker plans to build a $1 billion plant in Mexico that would begin producing an unknown vehicle by 2019.
BMW’s facility in San Luis Potosi, a city in central Mexico, is expected to employ 1,500 workers and build 150,000 vehicles annually. The company did not announce what vehicle it will build there, but a government official there suggested the 3-Series. General Motors also has a plant in San Luis Potosi.
While some suggest the move to Mexico helps BMW escape the higher wages of building the vehicles in Germany, officials suggest a simpler reason.
“Mexico is an ideal location for the BMW Group and will be another important plant within our production network,” said Harald Krueger, board member for production, in a statement. “The Americas are among the most important growth markets for the BMW Group. We are continuing our strategy of ‘production follows the market.'”
BMW has sold vehicles in Mexico since 1994. Last year, it sold 13,992 vehicles in the country: an increase of almost 18.3% over the previous year.
It marks the second announcement by the Bavarian company that it plans to spend a $1 billion to expand its North American production capabilities. Earlier this year, BMW said it would spend that on its Spartanburg, S.C. plant to increase its output by 50%. The company builds its X series of SUVs there.
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This will increase that plant’s annual production capacity to up to 450,000 vehicles by the end of 2016 and make Spartanburg the largest plant in the BMW’s international production network, the company said.
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The move also continues the trend of luxury automakers making plans to open plants in Mexico in the coming years. Earlier this month, Daimler and Nissan revealed plans to build luxury vehicles on the site of Nissan’s current plant in city of Aguascalientes: at a cost of $1.4 billion.
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The two companies will employ as many as 5,700 workers on two separate lines – one for a Mercedes vehicle and one for Infiniti – to put out 300,000 units annually by 2017. Audi’s also putting the finishing touches on its $1.3 billion facility in Puebla that will produce the maker’s Q5 luxury sport utility
By the time the newly proposed BMW plant opens in 2019, the country will be the fifth-largest producer of autos in the world. Last year, it produced more than 3 million vehicles and was the fourth-largest exporter of vehicles in the world. With the new plants and the expansion of other existing facilities announced by automakers, Mexico could rise to No. 2 in the next five years.