Supply and demand has always been the basis for business no matter what industry or country a company is in, and right now BMW Group is trying to keep up with the latter. Production chief Harold Krueger has noted that BMW Group is using a ‘production that follows the market’ mindset. Using that strategy, Mexico is a logical location for the new $1 billion plant that is currently in the works. The announcement of the new factory came in early July and has already led to a lot of buzz.
This year BMW USA news has centered around the amazing sales numbers. The German automaker is having its best year ever in the US, surpassing the competition from its fellow countrymen. In the first six months of 2014 BMW outpaced Mercedes Benz in sales with 886,347 and 783,520 units sold respectively.
As the number of sales continues to grow BMW stock figures are following suit. It appears that investors, like the manufacturer, are also expecting the 16 new BMW models to lift earnings even higher, keeping the record sales pace going for the remainder of the year. Based on the sales figures alone it’s clear US demand for new BMWs has increased, which is clearly an influential factor in expanding the company’s production operations. Currently BMW is the third largest car manufacturer in Germany, however the addition of the new plant in Mexico could change that.
While having a BMW US factory would be ideal for supplying cars for the American consumer, it isn’t the most cost effective option. Mexico is the next best location given it’s proximity to the US and the fact that the country enjoys tariff-free exports to both the US and Europe. But BMW isn’t the first car manufacturer to set up shop in Mexico. Both Mercedes Benz and Kia Motor Group recently announced that they too will be operating out of plants in Mexico soon.
Exactly which BMW luxury cars will be manufactured at the new Mexico plant has still not been confirmed though many insiders speculate it will be the popular 3 series. However, some details have been released.
Investment: $1 billion
Vehicle Assembly Set to Begin: 2019
Annual Production: 1,500 vehicles
Number of Employees: 1,500