BMW to build next-generation X3 SUV in U.S. -paper

Mon May 14, 2007 4:15pm EDT

FRANKFURT May 14 (Reuters) - BMW (BMWG.DE) will build the next generation of its popular X3 mid-size sport utility vehicle in its U.S. plant in Spartanburg, South Carolina, German business daily Financial Times Deutschland reported.

"That was just decided," the newspaper quoted a company source as saying in an article to be published in its Tuesday edition.

The model, first launched in January 2004 and refreshed in September of last year, is assembled in Austria by Magna Steyr, a unit of Canadian car parts giant Magna International MGa.TO.

BMW currently builds Z4 roadsters and X5 SUVs in Spartanburg. It already has decided to build an all new coupe-shaped SUV crossover in Spartanburg that some in the motor press have dubbed the X6.

New Chief Executive Norbert Reithofer, who has initiated the first strategic review since 2001, has said the group needs to build up its production volume in Spartanburg to roughly 200,000 units or more in the next two to three years to help hedge against currency fluctuations.

It built just 105,000 vehicles in Spartanburg last year.

Partly as a result, the company suffered adverse forex headwinds of 666 million euros ($902 million) in 2006 and another 677 million in 2005.

BMW sold 31,291 units of the X3 in the United States last year, a marginal gain over the 30,769 delivered to customers in 2005.

Overall the group sold 114,000 units of the X3 last year worldwide, a gain of 3.0 percent. Originally management considered possibly building the coming X3 in Germany, the Financial Times Deutschland wrote.

A labour representative told the paper any such decision would be viewed critically since BMW is not fully utilising production capacity at its Leipzig plant, where it builds its mid-size 3 Series saloon and 1 Series hatchback.

BMW could not be reached for comment.

It is holding its annual general meeting in Munich on Tuesday.

((Reporting by Christiaan Hetzner; E-mail: christiaan.hetzner@reuters.com; editing by Carol Bishopric; +49 69 7565 1249))

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