Investment expected to be around USD1.36 billion

BMW AG has long been expected to announce plans for a new assembly plant in Mexico, with Reuters reporting yesterday (30 June 2014) that the company is set to make the announcement later this week (by 3 July). The newspaper cites a Mexican government official as saying that details of the plans would be made in an announcement scheduled for 3 July; BMW confirmed it will make an announcement in Mexico, but didn't confirm content, saying only, "A decision will be made public." Reuters says the government official said the investment is expected to be about EUR1 billion (USD1.36 billion), with site location either in Hidalgo state north of Mexico City or in San Luis Potosi in central Mexico. Parts suppliers have indicated they expect a tentative plan to begin production in late 2017, ramping up to annual capacity of 200,000 units by 2020.

Significance: The BMW announcement has long been in the works. The announcement would follow the Mercedes-Nissan joint-venture (JV) plant announcement on 27 June, as well as the beginning of construction on Audi's upcoming Mexican production facility. Mainstream brands have also increased their capacity in Mexico over the past year, including Mazda, Nissan, and Honda. Attracting production is the lower-cost, skilled workforce, Mexico's reasonably strong infrastructure, and its abundant free-trade agreements. The luxury brands are looking to keep costs down as they move into lower-priced segments, as well as protect against currency fluctuations. The first reports of BMW's possible investment surfaced in 2010. Initial reports lead IHS to believe the first products in Mexico will be the 1-Series and possibly the MINI Countryman.

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