BMW to invest more than $1 billion in Mexico

Article by Christian Andrei, on August 27, 2010

An investment worth more than $1 billion is what BMW AG is planning in its efforts to set up local auto-parts companies to increase supplies to its US plants, according to Mexican Economy Minister Gerardo Ruiz Mateos.

In an interview at Bloomberg's Mexico City office, Mateos said that BMW intends to raise the production of auto parts in Mexico.

In the next few weeks, he will visit Germany to talk about the project with BMW. As part of a plan to reduce costs by over 4 billion euros ($4.9 billion) by 2012, BMW plans to buy more supplies outside Germany. BMW also wants to lessen the impact of foreign currency swings on earnings.

In a May 4 interview, Herbert Diess, BMW's purchasing and logistics chief, said that the carmaker will be able to cut currency risk by 1 billion euros by 2012 if it buys parts in Asia and North America.

This move is definitely good news for Mexico as this would increase foreign investment at a time when the country's share of North American auto production could increase at a faster pace as US automakers aim for lower labor costs. 

It can be recalled that in February, Chrysler Group LLC, the US automaker run by Fiat SpA, is investing $550 million to start building the Fiat 500 model at a plant in Toluca, Mexico.

Last month, Ford Motor Co. reopened an assembly plant in Cuautitlan to produce 2011 Fiesta cars. Reopening this factory, which is part of $3 billion in investments revealed since 2008, will provide 2,000 jobs. 

Topics: bmw, investment, mexico

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