BMW to reveal Mexico factory plans this week: official
Reuters
Published Jun 30, 2014 03:59PM ET
Updated Jun 30, 2014 04:20PM ET
BMW to reveal Mexico factory plans this week: official
MEXICO CITY/MUNICH (Reuters) - Germany's BMW AG (DE:BMWG) 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 Mexico.
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 summer break.
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 2020.
On Friday, Daimler AG (DE:DAIGn) and Renault Nissan (PA:RENA) (T:7201) said they would invest 1 billion euros ($1.36 billion) to develop small cars and build a factory in Aguascalientes, Mexico.
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 States.
Daimler's Mercedes-Benz, Nissan Motor Co, Honda Motor Co (T:7267), Mazda Motor Corp (T:7261) and Volkswagen AG (DE:VOWG_p) 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.
Get The News You Want
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.
(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)
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.