Friday, July 2, 2010

BMW May Invest $1 Billion in Mexican Auto Parts, Minister Says

This article was sent to me by one of Mexipreneur's loyal readers, Kyle.  Thanks Kyle!

By Jens Erik Gould

June 30 (Bloomberg) -- Bayerische Motoren Werke AG, the

world’s largest maker of luxury cars, may invest more than $1

billion in Mexico to prepare local auto-parts companies to boost

supplies to its U.S. plants, Mexican Economy Minister Gerardo

Ruiz Mateos said.

“They want to increase the production of auto parts here

in Mexico,” Ruiz Mateos said in an interview in Bloomberg’s

Mexico City office yesterday. He said he’s going to Germany in

the coming weeks to discuss the project with BMW.

BMW is purchasing more supplies outside Germany as part of

a goal to lower costs by more than 4 billion euros ($4.9

billion) by 2012 and to reduce the impact of foreign currency

swings on earnings. By buying parts in Asia and North America,

the company will cut currency risk by 1 billion euros by 2012,

Herbert Diess, BMW’s purchasing and logistics chief, said in a

May 4 interview.

For Mexico, the BMW initiative would help President Felipe

Calderon’s plan to increase foreign investment at a time when

the country’s share of North American auto production may rise

at a quicker pace as U.S. automakers seek lower labor costs.

Mathias Schmidt, a spokesman for BMW in Munich, didn’t

immediately have a comment.

Chrysler Group LLC, the U.S. automaker run by Fiat SpA,

said in February it would invest $550 million to begin producing

the Fiat 500 model at a plant in Toluca, Mexico. Last month,

Ford Motor Co. reopened an assembly plant in Cuautitlan to build

2011 Fiesta cars. The factory will generate 2,000 jobs and is

part of $3 billion in investments announced since 2008.

More Investment

Mexico’s share of North American auto production will rise

to 19 percent over the next decade from an average 12 percent in

2000 to 2009, said Dennis DesRosiers, president of DesRosiers

Automotive Consulting Inc in Richmond Hill, Ontario.

The U.S. is BMW’s second-largest market after Germany. In

the first five months, almost one in every five BMW vehicles was

sold in the U.S.

BMW is investing $750 million at its plant in Spartanburg,

South Carolina, to boost capacity by 50 percent. The factory,

which manufactures X3, X5, and X6 sport-utility vehicles as

BMW’s sole U.S. assembly plant, will have capacity to produce

240,000 vehicles a year by 2012.

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