BMW gives a glimpse of its futureApril 10, 2013: 10:40 AM ET
Its new X4 SUV is intended to appeal globally, and it will be built in America.
By Doron Levin, contributor
FORTUNE -- BMW's Munich, Germany-based design center has conjured yet another variation of the Ultimate Driving Machine, this time an SUV that will be called the X4.
Underscoring the X4's global potential, BMW will introduce its latest "sports activity coupe" at the Shanghai Auto Show, set to open the week of April 21. BMW chose the People's Republic of China for the debut, not surprising given that country has grown into the single largest vehicle market in the world, passing the U.S. It is the key growth market for German luxury models.
For those familiar with BMW's X6, the X4 is a junior version of that model. It is built, however, on the same architecture as its 3-series sedan. BMW designates its X3 and X5 as SAVs, sports activity vehicles. "Think of it as an X6 at a more affordable price point," explains Matt Russell, a BMW spokesperson. The X6 starts at about $60,000; the price of the X4 hasn't been announced.
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Unlike the X3 and X5, which appear to be crossovers designed for families, the X4 and X6 are Teutonic hot rods for the young and well-heeled. Alec Gutierrez, an analyst for Kelley Blue Book, an automotive information service, said "there aren't a ton of sales in the luxury crossover segment—but also not a ton of competitors." Honda's (HMC) Acura ZDX, which has sold a mere 99 units in the U.S. this year, "isn't exactly setting the world on fire."
BMW's second variation of crossover for a particular vehicle architecture should allow it to keep growing in the luxury category as it battles Audi and Mercedes-Benz for overall sales leadership. The new model is slated to be built in the automaker's factory in Spartanburg, South Carolina, which has evolved into BMW's global exporter for all SAVs.
Last year, BMW's Spartanburg plant built 301,519 vehicles, 203,932 or 67.6% of which were exported. The dollar value of the exports last year was $7.4 billion, according to a BMW spokesman. BMW announced an expansion of the Spartanburg plant in January, 2012, costing almost $1 billion. The automaker has invested almost $2 billion in the complex since 2009.
For BMW, which opened the plant in 1994, the foray into the U.S. has been a success, allowing the automaker to expand in America while hedging against currency fluctuations and possible trade restrictions. Likewise for South Carolina, BMW was a shot in the arm that has provided employment and fueled economic growth in a place once known as a backwater dominated by agriculture and textiles.
After nearly twenty years in South Carolina, the BMW plant has reached a scale that will motivate planners to consider adding an engine plant to the complex. BMW has imported engines from Germany until now; an investment in engine manufacturing would reduce transportation costs, and provide more of a currency hedge. Not to mention, one more reason to the think of the southern U.S. as a legitimate automotive hotbed.