"We have made this fundamental decision," Burkhard Goeschel, BMW board member responsible for research, development and purchasing, confirmed to Automobilwoche.
Company officials say the multipurpose vehicle will share its platform with the successor to the US-built X5, due at the end of 2006.
That means the MPV is likely to be produced alongside the next X5 in Spartanburg, South Carolina. BMW won't confirm where the car will be built, but it does expect the US to be the top sales market for new model.
Goeschel's demand for "maximum space" for the multipurpose vehicle meant that the platform for the BMW X3 SUV would be too small. The X3 is built for BMW by contract assembler Magna Steyr in Graz, Austria.
A decision on the multipurpose vehicle's final shape is expected before the end of 2005. The car's world premier is set for 2007 with sales starting in early 2008.