BMW’s new vehicle site in Mexico could produce up to 150,000 units per year, a source told Reuters. A government official in Mexico remarked that BMW would likely invest at least EUR1 billion ($1.36 billion) on the site, adding that it would be located either in Hidalgo state or in San Luis Potosi. BMW is considering building its new front-wheel-drive vehicles in Mexico, according to a report by Automotive News in 2013.
One of the models underpinned by the fwd platform will be the new Mini and the next 1 series due in 2017. Handelsblatt reported in May that BMW may produce 3-series and 1-series cars and possibly Mini models at a new plant in Mexico.
Mexican production of the 3-series would enable the German luxury carmaker to price the sedan more competitively against the Mercedes-Benz C class, which is being built at Mercedes’ in Vance, Alabama, for the US market.
Producing the 1 series compact model and Mini in the Mexican site will allow the carmaker to offset lower margins typical of smaller vehicles, Handelsblatt said.
Daimler and the Renault-Nissan Alliance recently announced a EUR1 billion ($1.36 billion) for development of small cars and for constructions of a plant in Aguascalientes, Mexico.
BMW rival and fellow German carmaker Audi is currently building a site in San Jose Chiapa, Mexico, which will have the capacity to build 150,000 vehicles annually. It will be tasked to build the Q5 SUV starting 2016.
Mexican production allows carmakers from Europe to sell cars in the US while effectively escaping from some currency and tariff costs that usually eat into profits on imported vehicles. Likewise, Mexico boasts of having lower labor rates than Germany and the US.