BMW, As In "Brazilian Made Wagen?"

During the recent annual shareholder meeting in Munich, BMW’s prez Norbert Reithofer confirmed the Bavarians are seriously considering starting production in Brazil. “We are studying new places for production, such as an assembly line in Brazil and in another BRICT country”, he said. This comes on the back of another of BMW’s top honcho’s declaration. Back in March, BMW’s head of production Frank-Peter Arndt commented: “We believe Brazil has a great future ahead. The country’s development over the last ten years has been impressive”.

BTW, the new T in the BRIC acronym stands for Turkey, which is being included (by some) into that “club” of high-growth, high-potential countries.

However, details are not forthcoming. Due to the fact BMW already assembles CKD motorcycles in the Special Economic Zone (import-tariff free) in Manaus, in the heart of the Amazon forest, speculation abounds that BMW will use that site to do more of the same, albeit with their cars this time. Herr Arndt himself alluded to that possibility. There are problems though. That industrial site though doesn’t belong to BMW. It belongs to a Brazilian group that assembles Dafra motorcycles (with Chinese technology and parts) right alongside the BMW models. How’s that for globalization? BMW bikes assembled in the same plant as ultra-cheap Chinese ones? In Brazil? In the middle of the jungle?

More likely, BMW will find a more suitable place in Brazil’s southern region. There it would be closer to suppliers. To open up shop quickly though, the CKD idea has its merits. However, the Brazilian government doesn’t heart this kind of operation. Until today, it doesn’t allow Mercedes Benz to sell in Brazil the cars fashioned at its Juiz de Fora, Minas Gerais state plant. Daimler has to export those cars to Germany then bring them back. Backstage negotiations then are already being initiated with Brazil seeking BMW’s firm pledge to “nationalize” parts as quickly as possible and BMW seeking to get as many tax (and other) breaks as humanly possible.

So, right after my last post on Brazil cracking down on imports, a maker is already studying the possibility of playing along to the new rules. Maybe the Brazilian government does know how to play ball after all.