BMW: Ramping Local Production, Strong Sales Results

With 30 years of experience in the Mexican market, the BMW Group has built a strong presence in the country which has recently been reinforced by the establishment of a new plant in San Luis Potosi. The company’s brands remain among the favorites of the Mexican luxury segment and they are now taking the local industry toward an electrified future.

In its early beginnings back in 1916, Bayerische Motorische Werke (BMW) emerged as a motorcycle company in Germany. Over the years, the entity evolved to manufacture iconic models such as the 507. It was in 1994 when the group purchased UK's Rover Group, home to the Land Rover, Rover, MG, Triumph and MINI brands. In 2000, the group sold all those brands but MINI. In 1998, BMW also purchased Rolls-Royce from Volkswagen, a deal that became effective at the beginning of 2003. From that year on, the group holds three legacy car brands: BMW, MINI and Rolls Royce, as well as BMW Motorrad, the group's motorcycle division.

In the 1990s, BMW was also starting to take its very first steps in the Mexican market. Early in 1995, one year after one of Mexico's most serious economic crises, the group arrived with the motto: "We are here to stay." The brand did not only open its first dealership in Mexico City but also a manufacturing plant in Lerma, State of Mexico for the production of the Series 3, Series 5 and other models in small volumes. The plant remained functional until 2004. "BMW decided to open an assembly plant in Lerma but when the frontier opened in 2004, BMW no longer needed an assembly plant and transformed it into an armored vehicle plant," said Eduardo Henkel, former Director General of the Rolls-Royce dealerships in Mexico, to Mexico Automotive Review back in 2015.

In 2019, the group celebrated 25 years in the country as it kicked off the production lines at its US$1 billion manufacturing facility in San Luis Potosi. The plant started production of the BMW Series 3 in April 2019 and by August 2020, the factory reached the 50,000th unit milestone. The company also announced the production of plug-in hybrid models which would start soon. In July 2021, the group also announced the introduction of the Series 2 Coupé to the Mexico plant: "a wonderful car with Latin essence," as described by Harald Gottsche, President and CEO of the BMW plant in San Luis Potosi. Notably, the Series 2 Coupé model was designed by Alberto Casas, a Mexican that serves as Senior Designer at BMW.

BMW plant is the group's newest venture with a production capacity of up to 175,000 units. In 2020, despite the pandemic and with the ongoing chip shortages, the group manufactured 55,832 units, according to INEGI. The plant has Gottsche as its President and CEO since November 2020, who is member of the board of the BMW Group and responsible for BMW Group's global production network.

The company has conducted a thorough dual education program that started prior to the plant’s opening. The program began in 2015 and by 2020 – with its fourth generation – more than 350 students had completed their courses in mechatronics, production or automotive mechanics. According to the company, 36 percent of its graduated apprentices are women.

BMW Group Plant San Luis Potosi has also created a spillover effect due to the opportunities for local suppliers to enter the OEM’s supply chain. "The arrival of new OEMs will lead to the construction of new auto parts plants and the expansion of production lines. Companies that came to San Luis Potosi and Aguascalientes to cater to BMW, INFINITI or Mercedes-Benz are already working on prototypes and components to start supplying these OEMs," said Oscar Albin, Executive President of INA, to Mexico Automotive Review prior to the plant's opening.

Manuel Guevera, General Manager of Brose, confirmed Albin's statements two years later. "BMW is one of Brose’s most important customers, so being able to supply the company locally is a great opportunity for us. Brose’s El Marques plant is already producing components for BMW’s local operations," he told MBN in 2020.

Production Results Translate to Sales Success

The group is not only about manufacturing capacity and the upstream supply chain. BMW Group brands have also shown strong sales performance. In the latest J.D. Power rankings from 2020, MINI and BMW ranked third and fourth, respectively, in the Automotive Performance, Execution and Layout (APEAL) index for luxury brands. As for the customer satisfaction in aftersales services for luxury brands, MINI ranks first and BMW third.

The group's performance has been solid, following a high in Mexican luxury vehicle sales between 2009 and 2018. Audi beat yearly sales for seven years in a row, while BMW, Mercedes-Benz and MINI beat yearly sales from 2009 to 2018, all three almost beating their own sales records year after year.

BMW Group brands have kept their market share in the luxury segment steady between 9 and 12 percent since 2015, reaching their peak in 2020 with a 14.56 percent share, according to INEGI. That being said, INEGI's does not take into account SUVs as it separates them in a category of their own. For the luxury segment, INEGI considers brands with similar car prices, between MX$700,000 (US$35,000) and MX$2.5 million (US$125,000), including Mercedes-Benz, BMW, Audi, MINI, Volvo, Porsche, Acura, Lincoln, Land Rover, INFINITI, Alfa Romeo, Jaguar and Lexus. J.D. Power, on the other hand, only considers MINI, BMW, Audi and Mercedes-Benz in the same category.

Considering the 12 brands previously mentioned, BMW ranked second in market share in the luxury segment in 2020 with 24 percent, only behind Mercedes-Benz with 31.21 market share. MINI has a solid market share of its own with 7.90 percent, ranking fourth behind Audi's 20.75 percent. Both BMW and MINI account for 31.9 percent of the market, just above Mercedes-Benz.

Thinking forward, the Group's Next 100 strategy involves the transformation of the automotive industry into a connected, autonomous, shared and electric mobility in all markets including Mexico. BMW has already announced its plans to manufacture hybrid vehicles in the country. Moreover, it announced its goal to sell 7 million green vehicles by 2030. In Mexico, BMW offers some i models like the iX and iX3, as well as some hybrids. In fact, BMW has collaborated with Nissan in the ChargeNow project that has created EV charging corridors from Mexico City to the Bajio and the central Mexico area.