BMW to Build 1 Billion Euro Car Factory in Hungary

FRANKFURT/BUDAPEST: BMW will invest 1 billion euros (US$1.17 bln) to build a new plant in Hungary at a time when a rise in protectionism is forcing carmakers to curb inter-continental exports and to refocus production networks to serve regional trading blocs.

A trade dispute between China and the United States has already hurt exports between the two nations, forcing global carmakers including Daimler , GM and FiatChrysler to cut their profit outlooks.

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

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

The Munich-based carmaker said the plant will be built 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 said the new factory will help to expand its manufacturing footprint in Europe, a market where it sells 45 percent of its cars.

"Our new plant in Hungary will also be able to manufacture both combustion and electrified BMW models - all on a single production line," Oliver Zipse, BMW AG Board Member for Production said in a statement.

BMW has already beefed up production capacity in continental Europe by expanding its business with contract manufacturers VDL Nedcar in the Netherlands and Magna in Austria at a time when Britain is preparing to leave the European Union.

BMW joins Daimler and Audi , both of which already have car plants in Hungary...