Exports keep BMW’s Upstate plant busy even as US car market falters – Charleston Post Courier
While some U.S. car manufacturers are taking extended production breaks this summer because of slow domestic sales, the BMW plant in Spartanburg County has continued to turn out vehicles at a near-record pace because of its export-driven customer base.
“I can tell you that the slow summer sales in the U.S. have not really affected our production,” said Steve Wilson, spokesman for BMW Manufacturing.
That’s true even though BMW’s X5 and X6 assembly hall is undergoing a 200,000-square-foot expansion — part of a $1 billion upgrade announced in 2014 that includes new and retooled equipment and new robots in the paint shop.
Wilson said the work, largely completed late last month, “will prepare us for next-generation X models, including the new BMW X7.” The large, seven-seat X7 SUV is expected to make its debut next year.
German-based BMW is in stark contrast to American carmakers, which are shutting down factories for three weeks or more this summer — instead of their typical one-week break around July 4 — to let supply shrink, according to the Journal of Commerce.
The BMW plant in Greer took its normal week-long break around the Independence Day holiday, but hasn’t halted production otherwise.
Still, Wilson calls the plant’s operations this summer a “unique situation.”
The company has had to work around the plant upgrades and equipment installations, and that has led to fewer numbers of some models being produced. Those numbers are expected to ramp up as the year proceeds.
The Upstate plant built 221,475 vehicles through July — on pace for about 380,000 vehicles by year’s end. That’s a little short of the record 411,171 vehicles that were built in 2016. There has been a corresponding drop this year in the number of BMW exports at the Port of Charleston, which are down about 4.5 percent. That also should rebound during the second half of the year.
While exports of completed BMWs are down slightly, more of the automaker’s SUVs are being shipped overseas in cargo containers as partially assembled vehicles that foreign factories will put together for customers. It’s expected more than 40,000 of those so-called knocked-down cars will be exported from Charleston this year.
“Although there is some conjecture that the U.S. auto industry has peaked, 70 percent of BMW’s flows are for other markets,” said Jim Newsome, president and CEO of the State Ports Authority. “So they are still on a good growth track.”
A report this year from the German-based Center for Automotive Research said global sales of BMWs and other luxury vehicles are growing faster than other brands largely because of their SUV lines, which are popular in China and other emerging markets. BMW’s plant in Greer, the automaker’s largest worldwide, builds four X-model vehicles described as sport-utility or sport-activity vehicles.
U.S. auto sales, meanwhile, are lagging. They were up just a half-percent last year and there have been year-over-year declines in all but one month this year. Imports of parts used to build new vehicles also are down, according to the Journal of Commerce.
On Tuesday, Ford said domestic sales in July slipped 7.4 percent from the previous year while GM and Chrysler recorded double-digit declines for the month.
The Big Three slowdown recently prompted Karl Brauer, executive publisher for Autotrade and Kelley Blue Book, to tell the Detroit Free Press that the U.S. car market has reached its plateau.
And a report Tuesday by TD Bank said that with the “peak in sales further in the rear view mirror, auto companies aren’t likely to ramp up production anytime soon.”
BMW’s sales in the U.S. also are down, by 4.6 percent through July, but overseas demand continues to grow. For example, global sales of the X5 are up 10.6 percent and BMW set a worldwide record for overall sales growth in the first half of this year at 5 percent.
“Even though the U.S. market may have slowed, Asia and Europe have seen sales increases during 2017,” Wilson said.
it’s the same story for Swedish automaker Volvo, which is building a $500 million manufacturing campus off Interstate 26 between Summerville and Ridgeville. Sales of its cars in the U.S. are down by 9.2 percent this year, but up 8.2 percent worldwide to trigger record profits.
Like BMW, Volvo will export most of its cars — about 60 percent — through the Port of Charleston once production of a newly designed S60 sedan and a second, to-be-named, car begins next year.
Unlike most of its U.S. counterparts, Volvo predicts an American sales resurgence with “solid full-year growth after a strong second half,” CEO Hakan Samuelsson told Automotive News Europe. Samuelsson blamed Volvo’s poor U.S. performance to date on delivery constraints experienced during the first quarter.