Two of the most strategic markets for global automotive supply chains are that of China and the United States. That is especially pertinent in the premium model segment.
Thus, it was rather noteworthy that last week, German premium auto maker BMW AG announced plans to invest a $1 billion dollars to expand its existing sports utility production facility located near Spartanburg South Carolina. This plant currently produces all of BMW’s X3, X4, X5, and X6 sports utility models for global market needs and serves as the global competency center for BMW SUV’s. BMW had previously invested upwards of $900 million in Spartanburg.
When completed by 2016, this additional investment will make the U.S. based Spartanburg facility, BMW’s only manufacturing presence in the United States, the largest manufacturing plant for BMW globally, a significant milestone for a German based OEM. The added investment calls for increasing the production capacity of this facility by 50 percent to 450,000 vehicles. This expansion is further expected to add several hundred new jobs, making this facility one of the largest auto plants in the United States. The Wall Street Journal cites familiar sources as indicating that plans call for construction of a third body shop that would help produce the new X7 sport utility vehicle.
According to a published Bloomberg report, Audi, BMW and Mercedes-Benz are each planning at least a fourth consecutive record of volume deliveries in China and the U.S. as the European market continues to be weak. Demand for SUV’s continues to outpace other models.
Separately, Daimler AG, the parent of Mercedes-Benz announced plans to invest upwards of $1 billion to double capacity at its Beijing production facility, to increase capacity to 200,00 units by 2015. Mercedes currently produces SUV’s at its plant in Tuscaloosa, Alabama with plans to incorporate production of it C-Class sedan in June of this year. Mercedes CEO Dieter Zetsche further indicated that his company may set-up a new plant in North America to add more capacity.
Audi, a division of Volkswagen, is constructing a $1.3 billion factory in San Jose Chiapa, Mexico that includes plans to produce the Audi Q5 SUV in 2016.
One of our Predictions for 2014 (available for complimentary download in our Research Center), called for continued momentum in the resurgence of U.S. and North America based manufacturing. In the case of the premium automobile market, a favorable exchange rate, a lower-cost labor environment and a more productive workforce are all favorable trends that adding to these significant new investments.