BMW South Africa Sees X3 Production Boosting Volumes to Record

(Bloomberg) -- BMW AG sees this month’s start of production of the X3 sports-utility vehicle in South Africa boosting the car maker’s output in the country to its highest-ever volumes as capacity increases.

The German company is among several international automakers including Toyota Motor Corp., Volkswagen AG and Ford Motor Co. to be investing in South African production to take advantage of government incentives. BMW is producing the X3 at its Rosslyn plant north of Pretoria, the first time the SUV has been built outside the U.S.

The factory’s potential annual output will rise to 76,000 vehicles after an investment of 160 million rand ($13 million) announced in February. That level may be reached at some point over the next two years, according to BMW South Africa Chief Executive Officer Tim Abbott. He sees sales outpacing the market average in the country, though the majority of the vehicles are built for export.

“The maximum is 76,000, and at the moment that’s the plan in terms of the investment that we’ve done so far,” he said. “But like all things, we’ll be reviewing our volumes.”

BMW has invested more than 6 billion rand in the Rosslyn plant to date, and this week officially opened a 260 million-rand distribution center in Midrand, between Johannesburg and Pretoria. It plans to add a 270 million-rand office complex in the same area next year.

“We’ve had three or four years where the car market has declined in South Africa on the back of economic conditions,” Abbott said. “This year, if you look at what the economists are saying, they see a growth of about 3 percent across the whole car industry.”

©2018 Bloomberg L.P.