BMW Plans to Build a Facility in Mexico image

BMW is considering four locations to build a plant in Mexico where it will manufacture the 3-series sedan.

The auto maker is also in talks with the local governments for tax breaks or incentives. A decision concerning this issue will be made in 2013 and production is expected to begin in 2016 or at the beginning of 2017. An anonymous source said that the company might choose the state of Queretaro in north central Mexico.

Besides the 3 series, BMW also plans to build at its Mexico facility one of its new front-wheel-drive vehicles, which will be the next-generation 1 series in 2017. The plant’s capacity will get to 100,000-150,000 units annually, but initial production will not exceed 40,000 or 50,000 vehicles.

BMW chose Mexico as the country has agreements with South and North America and several Asian countries and because trade between Europe and Mexico, and Argentina, Brazil, Uruguay and Paraguay is duty-free. By transferring part of the 3-series production from Germany to Mexico, the company will be able to avoid the economically troubled euro zone.

This year Audi also chose to build a plant in Mexico, its first facility in North America, where it will build a SUV beginning 2016.