Mini and BMW Exploring Mexico

Recent, unconfirmed reports have said that BMW plans to open up a new plant to boost sales of the Mini in North America.  Although BMW executives have not shared any plans, the report opens up room for speculation.  If BMW were to build this new plant, it would likely be set up in North America.  This is because the Mini is very small car, and therefor has very low margins.  If it were to be built where they intend to sell it, BMW would be able to make greater profits than they do when producing Minis in their plant in England.

The report also says that the plant would likely be built in Mexico.  BMW already has a successful plant in Spartanburg, South Carolina, so this brings up the question of why they now plan to make the switch to Mexico.  It could possibly be because they already have a plant int the United States, so they think that the most room for North American growth would be in Mexico.  BMW would also benefit from NATO NAFTA (?), and would be able to sell to Americans as if their plant were in the States, except they would not have to deal with as many regulations from the government such as a higher minimum wage.  As long as American consumers are willing to look past the stigma of the car being produced in Mexico this will likely benefit BMW and Mini.  It is possible that it will come down to whether or not American consumers associate the Minis with their high quality, German parent company, or if they see it as more of a small, cheap car from Mexico.  However, it seems that if Mini is able to succeed in Mexico, it should continue a trend of more car production in Mexico, and it may even draw from other areas.

Source: http://www.autonews.com/article/20140515/COPY01/305159970/bmw-may-build-minis-in-mexico-report-says

6 comments to Mini and BMW Exploring Mexico

  • Kade Kenlon

    Mini has already made their mark in the car market so because they are a distinguished car producer, the move to Mexico should not hurt their image. If they were a new company just starting out, and producing cars in Mexico they would probably not do as well. Consumers will likely see this move as a smart business move rather than it changing their perception of the Mini cars.

  • Peter Wittwer

    I find it interesting they don’t try to expand into Brazil. Brazil is one of the fastest growing economies in South America as well as the world. However, I know it’s very cheap to produce goods in Mexico. Labor is much cheaper so it makes sense that BMW and Mini are making factories in Mexico.

  • heardd16

    I agree with Kade, I do not think the manufacturing location of the mini will do anything to hurt the BMW or Mini name. The cheap labor in Mexico must be appealing to an OEM.

  • Jier Qiu

    I am surprised Mini still has not been exported to Central American countries. I think it would be pretty competitive there because small coupe and sedans are very popular in Mexico. Brands such as Mitsubishi, Smart are very well sold. So I am glad BMW finally decided to enter the Mexican car market, it would be interesting to see how Mini is going to fight against brands like Mitsubishi.

  • Louisa Ortiz

    In addition to the cheap labor in Mexico, when comparing the benefits of Mexico and Brazil, as Michael pointed out, Mexico is much closer to the United States and has NATO [NAFTA!] going for it. The low profit margins of such a small car would be decreased significantly if BMW tried to import Mini’s all the way from Brazil. Though that is only if their goal is to increase their sales in North America.

  • Mexico is not only part of NAFTA so that firms there are effectively in the same market as Canada and the US, but it also has a network of trade agreements with Central America and South America that the US lacks [and Brazil, too?]. So you gain access to lots of markets by setting up in Mexico, particularly important for smaller cars as the US market is small and unreliable.
     
    Now the plant won’t necessarily be more profitable than expanding UK production. What it does is lessen foreign exchange risk and logistics costs.

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