BMW's $1 billion plant surfs Mexican investment wave

Thu Jul 3, 2014 7:16pm EDT
 
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By Alexandra Alper

MEXICO CITY (Reuters) - Luxury car maker BMW (BMWG.DE: Quote) revealed a $1 billion Mexican plant investment on Thursday, becoming the latest major automaker to take advantage of the country's growing industrial base and tariff-free access to the U.S. market.

BMW outlined plans to build a factory in the central Mexican city of San Luis Potosi, reducing the German company's dependence on higher-cost plants at home.

The plant will begin assembling models in 2019 with an initial workforce of 1,500 and annual production capacity of 150,000 vehicles, the company said.

"Mexico is an ideal location for the BMW Group," production chief Harald Krueger said in a statement. "We are continuing our strategy of 'production follows the market.'"

Germany's luxury car makers - BMW, Audi (VOWG_p.DE: Quote) and Mercedes-Benz (DAIGn.DE: Quote) - are expanding overseas as their domestic plants struggle to meet strong demand for new vehicle offerings in the United States and Asia.

"With this investment, Mexico is stepping up to premium-level production of global vehicles," Mexican Economy Minister Ildefonso Guajardo said as the plant was announced.

BMW did not reveal what type of vehicle it will build, and a spokeswoman for the company said no decision had been made. But several Mexican and European officials at the presentation said they believed the plant would produce 3 Series cars.

"At some point I heard that they were talking about the 3 Series," Guajardo told reporters after the event. "But I don't have the official confirmation."   Continued...

 
A BMW car is seen inside a BMW car dealership in Mexico City July 3, 2014. REUTERS/Carlos Jasso