BMW considers setting up engine production in Mexico to comply with new trade rules
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In an effort to comply with the rules of the new trade deal between the United States, Mexico and Canada (USMCA) that will take effect in 2021, the premium carmaker BMW considers producing on Mexican soil the engines of the 3 Series sedan that it will start producing next year at the San Luis Potosi plant, national media revealed.
“Several changes have been made and we have to comply with new rules of origin, hence suppliers are being evaluated,” said Maru Escobedo, CEO of BMW Mexico, interviewed in the 2018 Auto Summit of IPADE, a private business school.
Among the strategies that are analyzed, she added, is the development of engines in the country, which is one of the most expensive components of a vehicle and which are currently manufactured at a plant of the German group located in Austria.
It should be noted that the government of San Luis Potosi provided to the automaker 40 hectares to carry out additional projects, so the availability of space would not be a problem for the company.
“We want to be ready by 2021 to comply with the rules of origin and if that does not happen, to see what adjustments we will make. So, I think it will take a year or a year and a half to evaluate options,” Escobedo added.
In March 2019, the automaker will start production with 62% of North American content. However, the new trade deal establishes that the regional content must be 75% and that 40% must be manufactured by workers who earn at least US$ 16 per hour.
The plant will have an initial production capacity of 150,000 units per year, of which 5% will be for the Mexican market, approximately 25% for the United States and Canada and the remaining 70% will be for other countries, taking advantage of the multiple trade agreements that Mexico has.