“We will decide this in the next months,” BMW production chief Harald Krueger said in an interview for an internal publication for staff, obtained by Bloomberg, on the decision to open up a second North American factory to keep up with increased demand in the region. “On the North American continent, there’s still potential,” he added.
Sources told Bloomberg that BMW was still exploring its options for a new facility; two locations in Mexico are still being looked into, the news service reported. One of the sources said that BMW, which is based in Munich, may build its 3 Series vehicles at the new plant. That’s big news, considering that the 3 Series is BMW’s biggest-volume seller in North America.
“As part of our long-term growth strategy we’re frequently looking at different countries for possible locations for future production,” Mathias Schmidt, a BMW spokesman, told Bloomberg by phone. “No decisions have been made yet, though, for a new plant in North America.”
Last month, BMW announced that it would be spending $1 billion on expansion efforts at its Spartanburg, South Carolina, plant, where it is prepping to build the new X7 SUV. BMW’s push for more plants and production capacity comes at arguably one of the most competitive periods in the luxury market, as Daimler’s Mercedes-Benz and Volkswagen’s Audi unit have been scrapping with BMW for the leading position in the segment.
The race has been exceptionally close of late, and even the smallest of improvements can lead to an edge over the others. All three have committed to be the No. 1 luxury manufacturer within the next six years, so it’ll be an interesting race for sure. March proved to be the strongest one yet for BMW sales in the U.S., as it moved 32,107 units, 19 percent up year-on-year.
“Specifically for BMW it makes sense to widen production in North America, because it’s such a large market for them,” Juergen Pieper, an analyst at Bankhaus Metzler, told Bloomberg. “It helps to produce close to where the demand is. Currency fluctuations have increasingly become a problem.”
Bloomberg reported that by producing vehicles in North America, it helps European automakers alleviate their exposure to swings of the dollar-euro exchange rate, which recently have been fairly pronounced.
In addition to being healthier for BMW’s bottom line, a plant in the U.S. — should it come to fruition — would win over some goodwill with American consumers, as American manufacturing and American-made goods have become an increasingly positive trend for companies. Further, substantial production of the 3 Series would also be a boon for America’s economy, especially if the company uses its new North American digs as an an export hub, as Honda and others are doing now, as well.