BMW to Invest $417 Million in South Africa for X3 Production

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BMW AG (BMW) plans to invest over $417 million (R6 billion) in its South African operations. The investment will initiate production of the company’s newest model: X3, and sport-utility vehicle.

The company’s 3-Series sedan will now be produced in the Rosslyn plant near Pretoria.  This is the first time the SUV will be manufactured outside of the United States. The model will be exported and sold locally according to Tim Abbott, managing director of BMW South Africa.

The carmaker’s plant in South Carolina, which normally produces all of the companies X models, will reach full capacity in 2016. BMW expects demand for its new model to be a substantial in Africa, and wants to ensure that the company can meet demand.

South Africa has implemented an automotive-incentive program, which is attracting carmakers to the country, including Volkswagen AG (VOW3), Ford Motor Co. (F) and BMW.

BMW will invest over 3 billion rand in its Rosslyn factory and an additional 3 billion rand on training, startup costs and suppliers. The Rosslyn factory will continue to produce BMW’s 3-Series until the current model’s lifecycle has ended. At that point, the factory will then switch to building the X3. No timeline has been revealed for when production of the X3 will begin.

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