| MEXICO CITY, July 3
MEXICO CITY, July 3 Luxury car maker BMW
revealed a $1 billion Mexican plant investment on
Thursday, becoming the latest in a line of major automakers 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 near San Luis Potosi,
central Mexico, in a move that will reduce the German company's
dependence on higher-cost plants at home.
The plant will begin assembling unspecified 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 and
Mercedes-Benz - are expanding overseas as their
domestic plants struggle to meet strong demand for off-roaders
and limousines in the United States and Asia.
The Mexican auto sector is gaining critical mass as more
global brands open production lines, strengthening the local
BMW's move comes days after Daimler announced new Mercedes
production in Mexico with partner Nissan Motor Co Ltd,
which already operates two plants in the country and had
recently increased capacity there.
"The premium brands are finally realizing that Mexico has
the capacity to build signature vehicles," IHS Automotive
analyst Guido Vildozo said.
"We are going to see all these plants starting with one or
two products at the very beginning, but they will gradually
become critical pillars of profitability for the premium
manufacturers," he added.
Mexico benefits from tariff-free exports to the United
States as well as Europe, while its factories are beyond the
reach of the United Auto Workers union, which has been
struggling to boost its influence in the Southern United States.
BMW's investment comes amid a domestic industrial cost
review that has some German unions worried about their
longer-term outlook, as the company reduces reliance on sluggish
European markets that still account for 44 percent of sales.
It also increases BMW's bet on the United States, where
demand is finally recovering to levels last seen before the 2007
recession. The United States is BMW's second-largest market
The world's biggest luxury carmaker in March announced a $1
billion investment to expand capacity by 50 percent at its plant
in Spartanburg, South Carolina, where it builds a range of sport
(Additional reporting by Gabriel Stargardter in Mexico City,
Edward Taylor in Frankfurt and Laurence Frost in Paris; editing
by Matthew Lewis)