As BMW rushes to sell record numbers of cars and fill every market niche, the Munich automaker needs more hands on deck to feed its worldwide yuppie fan club. (Yuppies are still a thing, right?) To that end, BMW will open its first assembly plant in Mexico within the decade.
German media reports cited by Reuters say BMW is expected to make an official announcement in July, and that the company is looking at two sites in Mexico that would produce at least 100,000 cars per year. The Mexican proposal aligns with BMW’s first-ever Brazilian plant that will churn out Minis, 1- and 3-series models, and the X1 and X3 crossovers starting this fall.
A similar strategy could be in the works as BMW tries to offset a sagging home market and avoid currency fluctuations against the euro, a critical measure for its upcoming lower-priced front-wheel-drive models. BMW’s U.S. division could also boost margins on the bestselling 3-series—all of which arrive by ship, some from as far as South Africa—if that car was built in Mexico. “If they do go ahead and announce a plant, they likely would build the 3-series there and the plant start date would be 2018 or 2019—the same time the next-generation 3-series is due,” said Haig Stoddard, an analyst with WardsAuto.
While BMWs tend to attract unwanted attention in Mexico, particularly among hijackers and kidnappers frequenting the capital, the country’s lower labor rates, free-trade agreements, and easy access to Latin American markets have caused a boom in auto manufacturing. By 2015, annual North American car production may top 17 million, a figure unseen since 2000, and Mexico is already leading the surge. According to WardsAuto, a record 17.8 million cars will leave North American factories by 2018, compared to 16.1 million last year. In that same time, Mexican car production is expected to jump 39 percent versus a modest 9 percent bump in the U.S. and 24 percent drop in Canada. BMW’s Spartanburg, South Carolina, plant that builds the X3, X5, and X6 will boost annual production by 150,000 cars, in part due to the new X4 and upcoming three-row X7.
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By mid-2016, Audi will have completed a Mexican plant for the next-gen Q5 and likely the next A4 on which it’s based. Earlier this year, Honda and Mazda opened new Mexican plants for their respective Fit subcompact and 3 sedan and hatch compact models, after Nissan did the same for its Sentra in November 2013. Honda also plans to open a transmission plant there in the second half of 2015, and Mazda said it would increase Mexican production once it begins making the next-gen subcompact 2 for itself and the next-gen Yaris for Toyota.