$1 billion investment will hike annual capacity to 450,000 units, add X7 crossover

BMW's Spartanburg plant will be company's biggest

$1 billion investment will hike annual capacity to 450,000 units, add X7 crossover

BMW's Spartanburg factory has begun building the new X4 crossover, which is to go on sale in June in the United States.
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SPARTANBURG, S.C. -- BMW will invest $1 billion in its factory here by 2016 to expand capacity by 100,000 units and add production of a fifth crossover, the X7 -- making the plant its biggest worldwide.

Norbert Reithofer, CEO of BMW AG, said Spartanburg’s annual production will top that of BMW’s Dingolfing, Germany, plant, which can build 350,000 vehicles a year.

BMW's current capacity has just been boosted to 350,000 units. Last year, the plant produced 297,326 vehicles.

Reithofer said building 450,000 vehicles  a year will mean the equivalent of "a whole new plant” of output beyond last year's total.

Reithofer: “These 150,000 additional cars is equal to a whole new plant.”

Photo credit: REUTERS

“This is the fifth expansion since production began 20 years ago and represents another major investment,” said Manfred Erlacher, president of BMW Manufacturing Co.

The plant has begun building the new X4 crossover, which is to go on sale in June in the United States. Spartanburg also produces the X3, X5 and X6.

Harald Krueger, BMW board member for production, said the group has 28 factories in 13 countries. More than 70 percent of the plant’s production is exported to more than 140 countries worldwide, he said.

“And we are really proud that this plant annually exports vehicles valuing over $7.5 billion -- which, according to the U.S. Department of Commerce, makes BMW the largest U.S. vehicle exporter by value to non-NAFTA countries. ‘Freude am Fahren’ -- made in America,” Krueger said.

Reithofer cited several other milestones:

• The United States is the second-largest market for the BMW Group worldwide.

• It is the largest market for Mini and Rolls-Royce and BMW M high-performance cars.

• The United States is expected to be a major, if not a leading, market for BMW’s new i electric and plug-in hybrid cars.

• The factory, dealers and direct suppliers employ nearly 70,000 people in the United States.

BMW executives provided no details on the new seven-seat X7 that is expected to go on sale in 2017 or 2018 in the United States.

Reithofer said cheap fuel was not the main driver of the company's plans to revive the X7, a project which had been mothballed a few years ago.

"It has nothing to do with the U.S. fuel prices," he said.

"It's the right product for us. It was pushed by our marketing and sales division, not the engineers. We think it will be a success in the U.S. and China, we cannot just ignore the market," he said.

The United States is BMW's second-largest national market, accounting for 19 percent of group sales in 2013, behind China with 20 percent of sales. Germany, BMW's home market, accounts for 13 percent of the automaker's sales.

BMW expects the U.S. car market as a whole to grow to about 16 million cars in 2014, almost rebounding to 2007 levels.

Reuters contributed to this report.

You can reach Diana T. Kurylko at dkurylko@crain.com. -- Follow Diana on Twitter


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