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A BMW hood ornament logo is affixed to a new car

BMW to Expand European Footprint With $1.2 Billion Hungary Plant

July 31, 2018
The plant will produce 150,000 vehicles a year, making both electric and combustion engine vehicles,

BMW AG is investing 1 billion euros (US$1.17 billion) in a new assembly plant in Hungary, its first factory in Europe in nearly two decades as the luxury-car maker strengthens its European footprint amid growing protectionism.

The plant will produce 150,000 vehicles a year, making both electric and combustion engine vehicles, the Munich-based carmaker said Tuesday in a statement. It’ll be BMW’s first new carmaking facility since 2000, when it decided to construct a site at Leipzig, a spokesman said, declining to confirm which models it’ll produce in Hungary.

“We are now strengthening our activities in Europe to maintain a worldwide balance of production between Asia, America and our home continent,” BMW Chief Executive Officer Harald Krueger said in the statement.

Construction near the town Debrecen, about 124 miles east of Budapest, will start in the second half of 2019.

BMW, like other global carmakers, is under pressure to adjust to shifting global trade politics that are undermining a decades-long move to lower barriers, at the same time of juggling record spending on electric and self-driving cars. BMW exports most of its popular SUVs from South Carolina to Europe, a strategy that could become increasingly challenged if tariff threats become reality. The German manufacturer announced Sunday it had raised prices for SUVs imported from the U.S. into China after the Asian nation raised tariffs in a retaliatory move.

Picking Hungary as its latest production site, adding to 31 production and assembly facilities globally, makes the luxury carmaker the fifth major producer to start making vehicles in the central European nation. Daimler AG, Volkswagen AG’s Audi brand, France’s PSA Group and Suzuki Motor Corp. Carmakers’ output reached 8.08 trillion forint ($29.45 billion) last year, or about 21% of economic product, according to official data.

With unemployment at a record-low at 3.6%, many manufacturing companies are facing difficulties in filling jobs in Hungary’s strained labor market. The Debrecen factory will add about 1,000 jobs to BMW’s workforce, the company said in its statement.

By Oliver Sachgau and Marton Eder

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Licensed content from Bloomberg, copyright 2016.

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