BMW goes to Mexico

Many major car brands are looking at reducing manufacturing costs as well as logistics and distribution costs so that they can remain competitive in the market, and also add to their bottom line in terms of profit margins.

The trend is to move towards countries like China, India, and Mexico where labour costs are relatively cheaper, and it allows the company to sell into those markets. This double combination benefit of cheap labour as well as new market expansion has enthused BMW to step into Mexico and make investments in that country so that parts for its X5, X6 and the next-generation X3 can be made, to be used at its Spartanburg factory. As compared to either US or Germany, the production costs would be much lower at Mexico, allowing the company to price its vehicles better within the NAFTA region. The company is hoping that the volumes will take care of the profit margin they might have to compromise, in order to have a significant presence in these markets.

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