BMW is investing 1 billion euros ($1.17 billion) in a new assembly plant in Hungary, its first factory in Europe in nearly two decades as the automaker strengthens its European footprint amid growing protectionism.
The plant will produce 150,000 vehicles a year, the Munich-based carmaker said Tuesday in a statement.
The factory will be able to produce both combustion and electrified BMW models on a single production line, BMW production chief Oliver Zipse said in the statement. "In the future, every BMW Group plant in Europe will be equipped to produce electrified as well as conventional vehicles," he said.
It will be BMW’s first new European carmaking facility since 2000, when it decided to construct a site at Leipzig, Germany, a spokesman said, declining to confirm which models the company will produce in Hungary.
“We are now strengthening our activities in Europe to maintain a worldwide balance of production between Asia, America and our home continent,” BMW CEO Harald Krueger said in the statement.
Construction near the town Debrecen, about 200 km (124 miles) east of Budapest, will start in the second half of 2019.
BMW, like other global carmakers, is under pressure to adjust to shifting global trade politics that are undermining a decades-long move to lower barriers, at the same time of juggling record spending on electric and self-driving cars.
BMW exports most of its popular SUVs from South Carolina to Europe, a strategy that could become increasingly challenged if tariff threats become reality. The German manufacturer announced Sunday it had raised prices for SUVs imported from the U.S. into China after the Asian nation raised tariffs in a retaliatory move.
The Hungary production site will add to BMW's 31 production and assembly facilities globally. Daimler's Mercedes-Benz, Audi and Suzuki have car plants in Hungary, according to Automotive News Europe's Guide to European Assembly Plants, while PSA Group's Opel builds engines in the country, according to ANE's powertrain map. Carmakers’ output reached 8.08 trillion forint ($29.45 billion) last year, or about 21 percent of economic product, according to official data.
With unemployment at a record-low at 3.6 percent, many manufacturing companies are facing difficulties in filling jobs in Hungary’s strained labor market. The Debrecen factory will add about 1,000 jobs to BMW’s workforce, the company said in its statement.