In the midst of trade woahs and tariff drama, BMW is opening a brand new, billion-dollar auto assembly plant in San Luis Potosi, Mexico. This, BMW’s second North American assembly plant, could not be opening at a more turbulent time.
What you need to know:
BMW is opening a new plant in Mexico with no indication of changing plans due to short term political drama
The new plant is meant to take over production of 3-series sedans for North America but is designed to be flexible to meet future needs.
BMW feels it is important to sustainability and efficiency to spread their production and supply chain out over a larger geographical area.
The full story:
In the weeks leading up to its opening, United States President Donald Trump announced via twitter a plan to place tariffs on all Mexican goods as a means to motivate Mexico to better enforce their own border security. If you want to read up on how these tariffs could negatively impact the auto industry here in the US, check out our previous story here.
Despite this uncertainty, BMW remains optimistic about their new plant. This plant has, without a doubt, been in the works for years so it is no shock that recent political events are not enough to derail the plan; it does however add uncertainty to the supply chain and financial outlook.
BMW sites benefits of moving production closer to where the vehicles are sold as the main strategic benefit of this new plant. The ever popular 3-series sedan will be the main focus here with a capacity of 175,000 vehicles a year. BMW even expects to have the vehicle up and running to produce 20,000 vehicles yet this year. By moving a good amount of North American 3-series orders to this plant, they free up room at their other plants for their other lines.
Specifically regarding these tariffs, BMW says it would be “very speculative to change plans on some short-term announcement”. They plan to keep the status quo for now and continually readers as the situation changes. BMW also mentioned that by spreading out their production across a wider geographical area, they are making their supply chain stronger and more robust; and they believe that this will serve them well in the future regardless of short term concerns.
Looking towards the future, BMW remains extremely bullish on demand for this plant as well as overall growth of the brand. They mentioned that they currently have sufficient capacity to meet demand for their engines, but if growth continues, they would consider adding on a engine production facility to the plant in Mexico. Finally, BMW also designed this plant with the future in mind ensuring that the assembly lines were verify flexible so that they could be easily adapted to handle future hybrid or full-electric drivetrains and new models.
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