BMW commits to Mexico plant as Fiat Chrysler says it's ready to take the lead from President-elect Donald Trump's new rules

 
Francesca Washtell
Follow Francesca
BMW Inaugurates New Production Line in Leipzig
BMW will carry on with its San Luis Potosi plant (Source: Getty)

BMW has committed to plans to build a new $1bn (£814m) plant in Mexico, despite recent comments from President-elect Donald Trump that have spooked other car firms.

The German car giant's sales and marketing director, Ian Robertson, said the firm was "absolutely" committed to its plant in San Luis Potosi, where it will make its 3 Series Sedan cars from 2019 onwards. "I don't think there's any discussion that BMW is not at home in the US," Robertson told the BBC.

However, BMW's Mexican plant will produce cars for the global market, not just the US.

Read more: Range anxiety will soon be a thing of the past for electric vehicle drivers

"San Luis Potosi will build the BMW 3 Series Sedan from 2019 onwards," BMW said in a statement. "The production is planned for the world market. The planned capacity will be a maximum of 150,000 units.

"BMW Group is also the largest exporter of vehicles (by value) from the US according to the US Department of Commerce. The most recent numbers (year 2015) from commerce put the export value from our US plant at just under $10bn."

Trump has floated the idea of imposing a border tax on companies, such as Toyota, that make cars in Mexico for the US market.

Ford abruptly scrapped plans to build a $1.6bn plant in central Mexico last week in favour of a $700m investment in Michigan. The company said the move was unrelated to Trump, but the President-elect has tweeted criticism of both Ford and General Motors over their production in Mexico.

Today, Fiat Chrysler's chief executive Sergio Marchionne indicated the car firm may close its Mexican plants. "We are waiting for the new rules and will adapt to them," Marchionne said to reporters at the Detroit Motor Show.

Read more: BMW wants to accelerate sales of electric cars to 100,000 next year

"BMW is right to carry on with its plans in Mexico," said Christian Stadler, professor of strategic management at Warwick Business School.

"Although Trump has sounded very aggressive in his statements, especially on Twitter, we still do not know if this will translate into policy. Plus, once Trump looks at the details of the car industry, he will see that 40 per cent of the components of cars manufactured in Mexico are imported from the US, so imposing tariffs on car imports would also hurt the US economy.

Read more: Boris Johnson heads to New York for talks with the Trump team

"Finally, economically Mexico is just too good to give up on for car manufacturing. It has free trade agreements with 40 countries globally, so even if there is a downturn in the US there are plenty of other markets car companies can facilitate with production in Mexico."

Related articles