On Thursday, BMW opened a manufacturing plant in San Luis Potosi, in Mexico and unveiled its plans to produce 150,000 units of 3-series cars every year. The German automaker invested $1 billion in the new factory.
But the company will manufacture the top-selling luxury cars at the Mexican plant, which is the second BMW plant in North America, in 2019. In the meantime, the auto maker will manufacture the cars designed for the U.S. in Germany and South Africa. Yet, according to reports, the company will cease operations in Africa when the production starts at the Mexican factory.
BMW picked Mexico for its cheap workforce, low taxes and free-trade pacts. BMW announced that 70 percent of the vehicles produced in Mexico will be shipped to countries that signed the NAFTA trade pact.
According to local sources, the Mexican state granted BMW $236 million to help open the plant and the auto maker agreed to open 1,500 job positions and pour into the facility $1 billion over the next eight years.
What’s more, the company will be exempted from state and local taxes for a decade. BMW vowed to make the new plant environmentally sustainable. While, the assembly, pain and body are made in Mexico, transmissions and engines will be produced in the company’s home country.
The plant will be powered by a solar system, while the water consumption per unit will be kept to a minimum, BMW officials said Wednesday. The plant will also recycle water in its paint operations and will produce zero wastewater.
Mexican workers will get trained by German professionals from the company’s Spartanburg and Munich plants. About 500 Mexican employees are expected to be hired at the plant through 2019.
BMW is not at its first attempt to run operations from Mexico. It built a purchasing and a parts provider network in Toluca city eight years ago. In 2015, the auto maker bought $2.5 billion worth of car parts from Mexican suppliers, which is a nearly 20 percent rise from a year prior. BMW now plans to open a supplier park outside the new plant.
Other European car makers also produce their luxury vehicles in Mexico including Mercedes and Audi. Volkswagen also produced cars in the country while Ford said that it would open a manufacturing plant in San Luis Potosi too.
Image Source: BMW