BMW SA will not benefit from a trade war
The manufacturer has begun production of the X3 at its plant in SA while internationally it is dealing with the US-China trade dispute
In the same week that things became heated in the trade war between the US and China, BMW SA began production of the new X3 at its plant in Rosslyn near Pretoria.
Its German parent has already halted all X3 production at its plant in Spartanburg in the US, but a trade war will undoubtedly affect exports of other X models from the South Carolina facility.
In a statement, the BMW Group said: "Our overall position on this issue is we stand for free trade worldwide: our company has a global production network and a global sales market. We also take advantage of purchasing markets around the world.
"Barrier-free access to markets is therefore a key factor not only for our business model, but also for growth, welfare and employment throughout the global economy. Free trade has also made the success story of the BMW Group in the US possible. Therefore, in our opinion, a further escalation of the trade conflict between the US and China would be harmful for all stakeholders.
"The Spartanburg plant exported more than 70% of its total production volume of 371,284 units last year to 123 countries. Around a quarter of the BMW X vehicles manufactured in 2017 in Plant Spartanburg were exported to China. This makes China the number one export destination for the X models produced in Spartanburg, followed by Germany. According to the US department of commerce, the BMW plant in Spartanburg is the largest vehicle exporter from the US in terms of value."
When it comes to the X3 however, BMW is moving much of the production for China to its new plant in that country.
Reports last week stated that BMW SA would benefit from the trade dispute, however this was quickly refuted by spokespeople at BMW SA who advised that as well as supplying the South African market, the company would be the main supplier of X3 models to Europe.
In 2015, BMW announced a R6bn investment in SA to prepare the plant for the X3 production which has replaced that of the 3 Series sedan. Demand for its X-derivative models has grown to more than 30% of worldwide sales since the launch of the first X5 in 1999.
BMW Group Plant Rosslyn was assigned production of the new X3 on the basis demand exceeds capacity of the group’s plant in Spartanburg.
Rosslyn was the first plant built by the BMW Group outside of Germany. The plant built the 3 Series for 35 years, manufacturing 1,191,604 units during the period and increasing production with every model. Current maximum capacity at the plant is 76,000 units a year.
"The allocation of production of such a crucial model to our plant is about as big a vote of confidence as it gets," says Tim Abbott, CEO of BMW Group SA and sub-Saharan Africa.
"Demand for the X3 globally is powerful, and ramping up on time and to the right standards is vital to its success. I have full confidence in our associates and plant management at Rosslyn. This is the team that won the coveted JD Power Platinum award in 2015, showing that a South African plant can lead the world in terms of quality."
The company says its investments in SA are made in terms of the Automotive Production and Development Plan, which expires in 2020.
Discussions about a post-2020 plan are ongoing and BMW says a plan is crucial for the long-term outlook, as well as the stability of the automotive sector and the company’s commitment to the country.