BMW is looking to set up shop closer to home in the wake of shifting global trade politics that are a threat to the Munich-based carmaker as well as other global manufacturers. The plant will produce 150,000 vehicles a year, according to the German manufacturer of luxury cars.
BMW Group has earmarked 1 billion Euros ($1.17 billion) for setting up a new manufacturing plant. The new facility is coming up in the town of Debrecen, Hungary. BMW is outfitting the plant in such a way that it will be able to produce both electric as well as conventional vehicles on a single assembly line. “In the future, every BMW Group plant in Europe will be equipped to produce electrified as well as conventional vehicles,” said Oliver Zipse, BMW Production Chief Officer.
The Hungary plant is BMW’s return to Europe after almost two decades. The last plant set up in Europe was in Leipzig, Germany, way back in 2000. BMW now owns and operates 31 production and assembly facilities worldwide excluding Debrecen’s proposed plant. Like other global carmakers, the company is facing immense pressure between shifting global trade politics that are rapidly weakening the conducive atmosphere carefully cultivated to lower barriers, and record spending on electric and autonomous vehicles.
Currently, BMW produces most of its X-series of crossovers from its South Carolina facility, from where they are exported to Europe. With looming tariff threats, this strategy could become problematic. Recently, China raised import tariffs for goods from the U.S., forcing the German company to hike prices of its crossovers in the Chinese market.
Hungary seems to be the best bet for BMW as it is on European soil automatically excluding import taxes from the sticker price of its cars. Big names like Audi, Mercedes-Benz, and Suzuki have manufacturing plants in Hungary while the PSA-Opel Group produces engines in the country. Additionally, the new plant is a boon for Hungary as it will open up a total of 1,000 new jobs in the country’s strained labor market. With an unemployment rate sitting at 3.6 percent, Hungary is welcoming of BMW’s decision to set up shop in Debrecen. The country has even more reason to encourage automakers to install production facilities within its borders as 21 percent of Hungary’s economic product was produced by carmakers, outputting goods to the tune of $29.45 billion last year.