Despite decline in BMW’s U.S. sales, strengthening global demand for crossovers bodes well for the German automaker’s plant in Spartanburg County
For the first time since 2013, BMW this year might not experience record sales growth in the U.S., but there is a silver lining for the German automaker’s assembly plant in Spartanburg County and the nearly 9,000 workers it employs.
Global demand for the lineup of locally made BMW Sports Activity Vehicles (SAVs), including the X3, X4, X5 and X6, has continued to ascend.
As of November, BMW’s worldwide SAV sales for the year increased more than 22 percent compared with the same period of 2015.
The plant is expected to set a new production record this year, which could be somewhere in the neighborhood of about 410,000 vehicles, based on monthly production numbers provided by the plant.
It is also nearing completion of a $1 billion expansion that will increase production to 450,000 vehicles and add a new full-size crossover — the X7 — to the mix before its introduction to the market in early 2019.
With the global market, particularly in the U.S. and China, trending away from sedans and to crossovers, BMW officials believe the Spartanburg plant will play a crucial role in the future.
“The Spartanburg plant produces for the entire world, and 70 percent of its production is exported [via the Port of Charleston],” said Kenn Sparks, a spokesman for BMW of North America LLC. “It is now not only BMW’s largest production plant but the largest exporter of vehicles from the U.S. with an annual value of approximately $10 billion.”
BMW reported its year-end U.S. global sales this week. For the year, the company said it sold 365,204 vehicles, a 9.7 percent decrease compared with 404,537 during 2015. BMW is expected to release its global sales data in the coming days.
Throughout the past year, the automaker’s sales in this country have decreased, while the sales of the X models made in Spartanburg have varied.
As of November, BMW of North America reported sales of its BMW brand and MINI vehicles were down 10.2 percent for the year, compared with the same span of 2015. X model sales, however, were up 2.3 percent during the period.
Sparks said the company anticipates its SAV sales will account for more than 40 percent of its business in this country for 2016.
That is likely to be lower than some of BMW’s closest competitors.
In November, Mercedes reported its crossover lineup accounted for about 42 percent of its U.S. sales. The tally for Lexus was more than 58 percent, and almost 71 percent for Jaguar Land Rover. Meanwhile, it was only about 28 percent for BMW.
Sparks said there were two challenges that hampered the automaker’s American business in 2016.
The first challenge was the availability of popular SAV models in the U.S., despite the fact that the Spartanburg plant is building more vehicles than ever before.
“The U.S. market competes with our other markets around the world for those vehicles,” Sparks said.
In October, BMW of North America’s President and CEO Ludwig Willisch told Automotive News the company’s U.S. sales were likely to drop this year because BMW doesn’t have enough crossovers to meet the hot demand. He said the U.S. would need at least 15,000 more SAVs than it would be allocated this year in order to set a sales record.
According to Sparks, the absence of a large crossover in BMW’s SAV lineup has put the company at a disadvantage in the U.S. and other markets where they are popular.
“Minus the X7, we are down a model that both Lexus and Mercedes have,” Sparks said. “Until that one comes online, we’re always going to be a little behind the eight ball.”
The Spartanburg plant, which opened in 1994, has 40 suppliers in South Carolina. It supports roughly 30,000 jobs statewide, according to an economic impact study by the University of South Carolina’s Darla Moore School of Business.
Typically, its suppliers expand their footprint, technology and workforce whenever BMW invests in increasing the local plant’s output.
Spartanburg County Councilman David Britt believes what is good for the “golden goose” is also good for the gander.
“Reflecting on the success we’ve had over the last 20 to 25 years, the one thing that changed Spartanburg and South Carolina was BMW,” Britt said. “It saved us. It changed us from a textile and agricultural state to an industrial powerhouse.”
Britt said BMW’s presence has led other companies like Boeing, Toray, Volvo and others to build plants in the Palmetto State.
He credited the local workforce for continuing to adapt.
“When a car leaves the plant here in Spartanburg, it has our fingerprints all over it,” Britt said. “It’s the craftsmanship of the people who built it. When companies come here, they are not attracted by cheap labor, but high-tech labor. BMW has been a catalyst for all of the success we’ve had and continue to have as a community and state. They are the gift that keeps on giving … This is the new Spartanburg, and BMW helped create that.”