BMW to invest $1b to expand US production by 50%

An overall view of the assembly line where the BMW X4 is made at the BMW manufacturing plant in Spartanburg, South Carolina, the United States, March 28, 2014. [Photo/Agencies]

SPARTANBURG, SOUTH CAROLINA - BMW will expand production capacity in the United States by 50 percent and introduce another new offroad model, the German luxury carmaker said last Friday, in what amounts to a $1 billion bet on sport utility vehicles (SUVs).

BMW said that as well as the new X4 SUV, its US 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 US 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 US production with new models and greater manufacturing capacity increases BMW's bet on the US, 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 US plant," Chief Executive Norbert Reithofer said, explaining that customers had demanded such a vehicle from BMW.

Reuters previously reported BMW planned to build the X7 in South Carolina.

"We think it will be a success in the US 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 US vehicle sales last year, up from around 19 percent in 1999, statistics supplied by LMC Automotive show.

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