Quote:
Originally Posted by lemetier
Tariffs were a significant part when Lerma Motors (Bayerische Motoren Werke de México S.A. de C.V.) was established and the Toluca Mexico Assembly Plants opened in 1994. The 3 facilities produce BMW Motorrad, PKD and CKD assembly of X1, X3, X5, 3er, 5er, and 7er, and due to it's best in network quality control (it's Lean Six Sigma), a 3rd facility manufactures 5 Series Security for the world (exclusive to this location), X5 Security/Security Plus, and 760Li High Security vehicles. Only M GmbH in Germany and the recent JV with O'Gara Hess Eisenhart in Ohio (solely for the US Government exclusive special services Fleet Contract) have the expertise and ability to meet the strict demands these vehicles require. All vehicles assembled in Toluca contain 50% or more locally supplied parts content. Additional component capacity supports Spartanburg, China, and both Brazil Plants.
The big problem affecting manufacturers is the Divergent Regulatory Standards between the US and The UNECE 1958 Agreement Member States. It adds $5,400 in additional development costs and $1,200 in material costs per vehicle. TTIP is a clusterfuck, The US is no longer a member of TPP as of Jan 23, and NAFTA is in danger.
The change up in BMW Americas leadership is a signal. If additional tariffs are applied, all Production for the US market can be moved exclusively to Spartanburg. The new additional Mexico plant can pick up the export capacity and can be expanded to handle 3x's what Spartanburg could when needed.
I was sitting at the table with a nomination to the advisory board if I wanted it. The choice was easy. I declined, resigned from everything, and will enjoy watching this shit show unfold from someplace much more pleasant.
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I had no idea that the Toluca plant was six sigma; that's saying something. Are the Mexican sourced parts also produced lean six sigma or is it only the Toluca assembly line that is? (I would doubt that the Chinese source parts are six sigma, but it's possible.)
I did know that the M division is still GmbH; that's why I'm here and driving a M3.
I'm not questioning BMWs decision to meet US market demand while keeping cost low; it makes good business sense, and the agility afforded BMW by having Spartanburg and Toluca is important. I'd simply rather pay more for a genuine German vehicle, or at least have the option to do so. Sadly, with the way fleet vehicles are distributed, it would not make sense for BMW to offer a German 5 and a Toluca 5 for sale in the US with a price disparity; the German cars wouldn't sell well, on the whole, and would be marked down at year-end to make room for new inventory, resulting in lower margin and weaker sales figures on release.
It all comes down to tariffs. It's still amazing to me that Japan, and more recently South Korea, have been able to produce excellent vehicles that have a wide consumer demand in the USA, sell very well, outdo their domestic car counterparts, and all while still being made overseas (in some cases).
Edit: you're definitely right about one thing, BMW is sending a strong signal.