Upmarket German auto firm Audi will build its next plant in Mexico rather than Tennessee, US – as they look to future growth by Volkswagen.
The investment will be less than $2 billion, Audi Chief Executive Rupert Stadler said on Thursday, without providing a figure Reuters reports.
“We are talking about 150,000 units, that does not require $2 billion,” Stadler said.
The company, which is aiming to unseat BMW in terms of premium sales worldwide, said it will make a sport utility vehicle, reportedly the Q5, by 2016.
‘Good infrastructure, competitive cost structures and existing free trade agreements played a significant role in the choice of Mexico,’ said Mr Rupert Stadler.
Building cars in the North American free-trade area will significantly reduce Audi’s exposure to currency fluctuations between the euro and dollar. The U.S. is Audi’s fourth-largest sales region, after China, Germany and the U.K.
The decision comes about a year after Volkswagen opened a factory in Tennessee, the group’s only U.S. plant, to boost efforts to overtake General Motors as the world’s biggest carmaker. BMW produces vehicles in South Carolina, while Mercedes assembles cars in Alabama.
Mexico is the second main producer and top exporter of automobiles in Latin America, with most vehicles destined for the United States (US) market.
Audi also announced on Wednesday it would buy Ducati, the Italian maker of high-speed motorcycles.
The German automaker plans to deliver two million vehicles per year by 2020.