BMW Ponders a Powertrain Plant in U.S.

BMW AG is studying a plan to build a second factory in the U.S., this one to supply engines and transmissions to its giant SUV/crossover plant in Spartanburg, S.C.

CEO Harald Krueger tells Reuters that its production volume in South Carolina, coupled with BMW’s plan to open a $1 billion carmaking factory in Mexico next year, would justify local powertrain production. Last year BMW built 371,300 vehicles in the U.S., nearly two-thirds of which were exported.

BMW currently imports the engines and transmissions used by the Spartanburg plant. Localizing those pricey components would provide a currency hedge and help the German carmaker meet the higher local content requirements of the tentative replacement to the North American Free Trade Agreement.

Reuters notes a second incentive to build the plant: President Donald Trump’s continuing threat to impose hefty tariffs on all imported light vehicles and related components.