The stark reality of global economy keen on pushing a strong Euro against a comparatively weak American dollar has finally hit home among Germany’s luxury car makers, or so it would seem.
In a week when Mercedes-Benz made headlines on confirmation that its chariman, Dieter Zetsche, was looking to shift the production of a good chunk of annual C-class volume to its Tuscaloosa factory in North America, comes word that BMW boss, Norbert Reithofer, is also considering a similar move with the next-generation 3-series.
It wouldn’t be the first time that Mercedes-Benz and BMW have produced their most popular models outside of Germany, of course. Mercedes-Benz once assembled the C-class saloon for the North American market in Brazil and continues to build the C-class Coupe there in small numbers.
At the same time, many right-hand drive 3-series saloons, including those sold in the UK, hail from BMW’s sprawling Roslyn plant in South Africa.
What is interesting with these latest developments at BMW and Mercedes-Benz, however, are the parallels that can be drawn with those long apparent at Jaguar and Land Rover, which for decades now have had to endure the financial pain brought on by a strong pound and a burning desire to continue production in the UK.
In recent years, BMW and Mercedes-Benz have invested heavily in domestic manufacturing plants for the production of traditional models like the 3-series and C-class, in the process taking advantage of generous government hand outs aimed at retaining production in Germany and safeguarding tens of thousands of jobs.
But with the Euro continuing to increase in strength on the world’s currency markets – to the point where €1 now buys almost $US1.50, the reality now is that is no longer makes good financial sense to build cars for export to other countries in Germany – and certainly not for export to North America, where the average price of a 3-series or C-class is generally a good $10,000 below what is paid in Germany.
Unlike Jaguar and Land Rover which have fought tooth and nail to retain the traditional Made In England cache attached to their cars, BMW and Mercedes-Benz do not seem too concerned by the 3-series and C-class loosing their much cherished Made in Germany tag. As one Mercedes-Benz official told me, “We either diversify production or risk going under. It’s as plain and simple as that.”
While BMW and Mercedes-Benz are pursuing plans to build the 3-series and C-class in North America, the question arises: should Jaguar and Land Rover be doing the same?
On a broader front, does anyone really care where their next car will be produced? Would you buy an XF built in South Carolina? Or how about a Discovery out of a plant in Alabama? Production process are such these days that much of the assembly is automated, enabling similar levels of quality whether a car is produced in Britain or in North America . . . or even India!