Senior analyst Stephanie Brinley and principal analyst Tim Urquhart highlighted that the investment in Mexico follows $1bn being pumped into the company's Spartanburg, South Carolina (United States) facility, expansion to 450,000 units per annum (upa); the Mexico production will increase capacity to 600,000 in NAFTA by 2020. Investing in production in Mexico enables a lower-cost production base that benefits from free trade agreements.

BMW's announcement follows on closely from the major announcement made earlier by Daimler and Nissan that they would invest in a new joint venture manufacturing site at the location of Nissan's existing Mexican operation Aguascalientes. This plant will make compact premium vehicles for the Mercedes-Benz and Infiniti brands based on Daimler's MFA architecture and further confirms Mexico's burgeoning status as an automotive hub for the NAFTA region and wider global market.

With regards to BMW's investment decision, Mexico's other FTAs provide BMW with flexibility to export out of NAFTA or keep vehicles in the region, depending demand. The vast majority of the plant's output will of course be exported to North America and more specifically the United States. The company is developing its sales network in Mexico and there is no doubt the market represents an opportunity, although outright volumes are a fraction of the sales volume that BMW generates in the US. In 2013 BMW sold 13,992 units in Mexico, a healthy 18.3% y/y rise on the figure the year before. However, this compares with the 375,000 units that the BMW Group sold in the US in 2013, which itself was a rise of 8.1%.

According to the IHS Automotive production forecast, BMW's annual global production will increase to 2.59 million units in 2019, up from 1.84 million in 2013, setting NAFTA up to provide about 23% of BMW's global vehicle supply in the new decade. Of the global production figure, 86.4% is forecast to be of BMW-branded vehicles and 13.4% MINI products. Although the product range has not been confirmed, there are rumours that the new plant will build variants of BMW and MINI products, which would infer it be a home to vehicles on the company's new LU front-drive platform.