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 BMW said that as well as the new X4 SUV, its U.S. factory would make
a new X7 SUV. Ramping up production capacity at Spartanburg, South
Carolina to 450,000 cars by 2016 will make it BMW's largest factory,
the company said.
The red X7, which was rolled out from a cloud of white smoke before
a crowd of workers and dignitaries including U.S. Commerce Secretary
Penny Pritzker, is part of a strategy to help the German automaker
cut it's dependence on fragile European markets, which accounted for
44 percent of group sales in 2013.
Raising U.S. production with new models and greater manufacturing
capacity increases BMW's bet on the U.S., a market which is fast
recovering to levels seen before the 2007 financial crisis, helped
by the popularity of SUVs.
"With the BMW X7, we are developing another, larger X model, which
we will produce at our U.S. plant," Chief Executive Norbert
Reithofer said, explaining that customers had demanded such a
vehicle from BMW.
Reuters last week reported BMW planned to build the X7 in South
Carolina.
"We think it will be a success in the U.S. and China, we cannot just
ignore the market," Reithofer said. During the financial crisis, BMW
mothballed a previous generation X7 on the grounds that there was
little demand for it and that it may not sit well with BMW's image
as a maker of low-emission cars.
But SUVs have grown more popular in recent years, accounting for 32
percent of total U.S. vehicle sales last year, up from around 19
percent in 1999, statistics supplied by LMC Automotive show.
Spartanburg started out making BMW's 3-series sedans but today makes
mainly offroaders, producing 300,000 X3, X5 and X6 offroader
vehicles in 2013 of which 70 percent were exported.
Gas-guzzling offroaders have proved particularly popular in the
United States, thanks in part to the low fuel prices that have
resulted from its booming shale oil and gas industry, a trend that
is expected to continue.
In 2019, U.S. domestic production of crude oil will account for 63
percent of total supplies, according to the Energy Information
Administration, a significant increase from 2011 when it barely
covered 38 percent of the country's needs.
By contrast the International Energy Agency has warned that Europe's
high energy prices risk driving away a big share of its
energy-intensive industries.
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With sales of its BMW, Mini and Rolls-Royce branded cars climbing to
375,000 units in 2013, the United States has become the
second-largest market for the company, accounting for 19 percent of
its global sales.
China accounted for 20 percent of its sales while Germany, BMW's
home market, accounted for only 13 percent.
BMW said the U.S. will be a key driver of group sales in 2014,
expecting overall market to grow to 16 million cars, almost
rebounding back to pre-crisis levels last seen in 2007.
By contrast it sees only a slight uptick in Europe.
This year BMW aims to achieve a significant rise in sales volume to
2 million or more, after it delivered a record 1.96 million cars in
2013.
The latest investment will see the number of people employed at the
Spartanburg plant rise by about 800 to 8,800, BMW said, adding there
were no plans to create a German-style works council.
BMW's investment was welcomed by local dignitaries who were full of
praise for Reithofer's bet on America.
"He was on the ground floor of the decision making. If this plant
had failed, he wouldn't be chairman," South Carolina Republican U.S.
Senator Lindsey Graham said on Friday.
(Additional reporting by Ben Klayman; writing by Edward Taylor;
editing by Chris Steitz, Maria Sheahan and Mark Potter)
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