2,000,000th U.S. BMW comes off the line
When the 2,000,000th vehicle rolled off BMW’s Spartanburg, South Carolina, assembly line on January 12, it was upstaged by a car that doesn’t exist yet—and by the news surrounding that car’s development. The Vermillion Red Metallic X3 that hit the 2,000,000 mark will be kept on display at the factory—but the factory itself is being expanded again, in part to accommodate the introduction of the new BMW X4.
BMW invested $750,000,000 in plant expansion in order to take on production of the X3 with the introduction of its second generation in 2010 (the first X3s were built in Austria). That expansion laid the groundwork for even more expansion, should it prove necessary—and it has, in part due to the popularity of the X3—worldwide, more that 117,000 X3s were sold in 2011—along with continued popularity of the BMW X5. In 2011, the Spartanburg plant produced 276,065 vehicles for over 130 markets around the world—a 73% increase over 2010 production—making BMW America's greatest exporter of vehicles to non-NAFTA countries.
To handle X4 production, BMW plans to invest another $900,000,000 in the Spartanburg facility, bringing their total investment to around $6,000,000,000.
Since 1994, the plant has undergone four major expansions and produced six different BMW models and their variants, starting with the E36 318i. Then South Carolina was the home of BMW’s Z3 and first-generation Z4—the current Z4 is produced in Germany—before becoming something of an “X-car center” with the X5 and X6, neither of which has ever been built elsewhere, and finally the X3. Employment has grown from 500 in 1994 to more than 7,000 today. The company expects to add another 300 positions in 2012.
While the plant is being expanded primarily to produce the X4, based on the X3 platform, the facility retains the ability to produce any BMW model. The wildly popular X1 models, produced in Leipzig, Germany, have been in production for more than two years, but BMW has not yet committed to importing the “baby X” to the U.S. for several reasons. For one thing, they have no trouble selling all the X1s they can make in markets which provide a greater profit than the U.S. For another, because the X1 is built in a euro-cash market, selling it for U.S. dollars means the price goes up—almost to the point of the X3, which is built and in a US-dollar market.
However, if the U.S. plant is expanded beyond the needs of the X4—plus, perhaps, additional production of the X3—then it would make sense to add the X1 to “the X Factory” in Spartanburg, bringing its production costs into the US-dollar market in order to make it a more attractive economic decision for the U.S. consumer.
After all, according to Frank-Peter Arndt, the BMW Group Board member responsible for production, the expanded Spartanburg plant will have a production capability of 350,000 cars—plus room for further expansion if necessary. Given the popularity of the X1 overseas, if it could be produced and sold in the U.S., my guess is that it makes economic sense to add the X1 to its bigger siblings.—Satch Carlson
