Weekly News Review | 23 January 2017 | Automotive Purchasing and Supply Chain Automotive Purchasing and Supply Chain

Talking Point

BMW snubs Trump for Mexico production

The German automaker plans to continue and finish the construction of its $1 billion manufacturing plant in Mexico, despite threats from President Donald Trump. Alex Kreetzer reports.

In 2019, BMW will begin annual production of approximately 150,000 units of the next-generation 3 series sedan in San Luis Potosi, Mexico. This decision comes after President-elect Donald Trump threatened automakers with a 35% import tariff on US vehicles from Mexico - enough to put off automakers such as Ford and Toyota in the region. The company made the decision to build its best-selling model in Mexico due to market demand, which will see BMW cease US imports from its South African plant and focus on manufacturing the X3 SUV crossover. It seems that BMW will stand its ground and, in this case, rightly so.

Over the last few weeks, in the run up to his inauguration, Trump has been notorious for targeting automakers for business practices he dislikes. Earlier this month, he continued to bully Ford and, although the automakers will not care to admit, forced the company to abandon its $1.6 billion Mexico plant in order to invest the remaining money into the US. "I would say to BMW, if they built a factory in Mexico and want to sell cars in the US without paying a 35% tariff, then they can forget it," Trump said in a statement.

What is unfair about Trump’s comments is that BMW, out of all the targeted ‘foreign’ automakers, employees a significant amount of personnel in the US. It employs around 70,000 people in the the region, illustrating its global manufacturing focus. Other automakers have ignored US production entirely, such as Audi, favouring Mexico exports into the US. BMW’s largest vehicle plant is located in Spartanburg, South Carolina, producing over 411,000 SUVs in 2016 alone, with 70% of the units exported. In addition to this, BMW is investing $1 billion in the facility, increasing capacity to 450,000 and introducing the X7 SUV into the plant.

We are not entirely sure what will happen once Trump begins his campaign as these are only threats, for now, however automakers will continue to be pressured to manufacture in the US. BMW has supported the region immensely, but Trump’s famously cut-throat approach to business will pin the automaker to the wall until the deal is confirmed.

Alex Kreetzer

Alex Kreetzer - Digital Editor

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