* BMW to make announcement in Mexico on July 3
* BMW declines to comment on nature of announcement
* BMW looking for locations for new factory
(Releads with confirmation of announcement)
MEXICO CITY/MUNICH, June 30 Germany's BMW AG
will unveil this week plans to build a new factory in
Mexico, a government official said, as the company seeks to meet
growing demand for premium cars.
News of the factory comes just days after BMW's German
rival, Daimler, announced similar plans, and adds to a growing
list of companies plowing money into car making in Mexico.
Speaking on condition of anonymity, the Mexican official
said the plant would likely amount to an investment of at least
1 billion euros ($1.36 billion) and would be located either in
Hidalgo state north of Mexico City or San Luis Potosi in central
A spokesman for Munich-based BMW said earlier on Monday that
"a decision will be made public" on July 3.
BMW declined to comment further.
A new factory in Mexico would come on top of BMW's plans to
invest $1 billion to expand capacity by 50 percent at its plant
in Spartanburg, South Carolina.
BMW Chief Executive Norbert Reithofer said last week that
the Bavarian carmaker was still deliberating about where to
locate a new factory and would reach a decision before the
Premium auto makers BMW, Audi and Mercedes-Benz are
expanding global production as their factories in Germany
struggle to meet strong demand for off-road vehicles and
limousines in the United States and Asia.
Supplier sources said BMW had already mapped out a
production timetable for Mexico, with a tentative plan to begin
assembly in late 2017, ramping up annual capacity to 200,000 by
On Friday, Daimler AG and Renault Nissan
said they would invest 1 billion euros ($1.36
billion) to develop small cars and build a factory in
Manufacturing in Mexico allows European car makers to sell
vehicles in the United States while avoiding some of the
currency and tariff costs that crimp profits on imports. Mexico
also offers lower labor costs than Germany and the United
Daimler's Mercedes-Benz, Nissan Motor Co, Honda Motor Co
, Mazda Motor Corp and Volkswagen AG
already have large auto plants in Mexico.
At around $2.50 an hour, manufacturing wages in the country
are nearly 20 percent cheaper than in China, according to a Bank
of America study. That study put U.S. manufacturing wages at
just under $20 an hour, on average.
German car makers' overall output is set to rise for the
fifth year in 2014, driven by overseas production, German auto
industry association VDA has said.
($1 = 0.7345 euros)
(Reporting by Luis Rojas in Mexico City and Irene Preisinger in
Munich; additional reporting by Edward Taylor; and Dave Graham.
Editing by Tom Pfeiffer and Andre Grenon)