BMW CEO Harald Krüger has revealed the company is considering building a second plant in the United States.
Speaking to Reuters at the Los Angeles Auto Show, Krüger said: “we’re at the range where you could think about a second location” in America. Nothing has been decided, but BMW’s boss commented that the plant could build engines and transmissions.
If plans for a second facility were to be approved, it would likely produce powertrain components for vehicles built in Spartanburg, South Carolina. The plant builds an assortment of different crossovers including the X3, X4, X5, X6 and all-new X7.
While Krüger billed the possible engine and transmission plant as a natural hedge against currency fluctuations, it would also other benefits. One of the most obvious is lowering shipping costs, as BMW wouldn’t have to import heavy components from overseas.
That brings us to the plant’s biggest advantage: a hedge against U.S. tariffs on automotive imports. The Trump administration kicked off a national security investigation into imports of automobiles and automotive components back in May and the President has threatened to hit EU-built vehicles with a 20 percent tariff.
The administration hasn’t followed through on its numerous threats, but reports have suggested the tariffs could be announced next week. As we have previously reported, if these are indeed enforced, then the repercussions would be felt throughout the auto industry, as they would also impact vehicles built in the United States.
Unsurprisingly, the story was welcomed by President Donald Trump, who has been frustrated by the recent developments with GM’s planned layoffs and factory closings. But, as you can see, the U.S. President’s tweet was premature in declaring that BMW had already made the decision, when in fact, the German company’s boss said it was under consideration only at this point.
General Motors is very counter to what other auto, and other, companies are doing. Big Steel is opening and renovating plants all over the country. Auto companies are pouring into the U.S., including BMW, which just announced a major new plant. The U.S.A. is booming!
— Donald J. Trump (@realDonaldTrump) November 29, 2018