BMW to construct 1 billion euro car factory in Hungary

BMW M2 M Performance Edition

BMW is going to invest 1 billion euros ($1.17 bln) to construct a new plant in Hungary at a time when an increase in protectionism is forcing automakers to curb inter-continental exports and to refocus production networks to serve local trading blocs.

A trade dispute between China and the United States has already harmed exports between the two countries, forcing global automakers including Daimler, GM and Fiat Chrysler to cut their profit outlooks.

As part of a strategic push to “build where you sell”, the automaker this year stopped exporting its X3 offroader to Asia from a plant located in South Carolina because it can prevent tariffs by making the vehicle at a plant located in China instead.

BMW refused to say whether the decision to construct the new Hungarian plant, its first new factory in Europe since 2005, was taken in response to increasing trade tensions.

The Munich-based automaker stated the plant will be constructed near the city of Debrecen about 230 kilometers east of Budapest and will have a production capacity of 150,000 cars.

BMW did not specify which models would be manufactured in Hungary but informed the new factory will help to increase its production footprint in Europe, a market where it sells 45 percent of its cars.

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