Germany’s BMW broke ground on its new Mexican plant on Thursday, pledging to invest a total of $2.2 billion in the region through 2019.
BMW (BMWG.DE) follows a wave of carmakers that have sought to take advantage of the country’s growing industrial base and tariff-free access to the U.S. market. Mexico’s low wages also help reduce the German automaker’s dependence on higher-cost plants at home.
The $1 billion plant is located in San Luis Potosi, a state in central Mexico that is close to the country’s industrial heartland and the U.S. border, and is expected to produce 150,000 cars a year. Ford Motor Co (F.N) is also planning a plant in the same state.
Elizabeth Solis, a spokeswoman for BMW, said the plant would complement production in Spartanburg, South Carolina, and would produce the cars in the popular 3 Series.
BMW sold approximately 20,000 vehicles in Mexico in 2015, a 17-percent jump from the previous year.
(Reporting by Natalie Schachar; Additional reporting by Luis Rojas; Editing by Sandra Maler)