Car Industry

BMW announces $1.2 billion plant in Hungary as it deals with global trade shifts

It also hiked the price of two US-sourced SUVs built for the Chinese market.

BMW

Navigating global trade amid a tumultuous sea of tariffs and potential trade wars is tricky, but BMW thinks it's got a winning strategy as it continues to prep for electrification.

BMW announced this week that it will spend approximately €1 billion (about $1.2 billion) on a new assembly plant in Hungary. It's the first investment in the region in nearly 20 years, and the new plant will live about 120 miles away from Budapest.

In case you're having trouble visualizing where the plant will be (or where Hungary is...), here you go.

BMW

The Hungarian plant will create over 1,000 new jobs and will be able to handle a capacity of 150,000 cars per year when it comes online. It will be engineered to build both standard internal-combustion cars and electrified models on the same line. This is important, because it aligns with BMW's promise to begin electrifying large chunks of its lineup in the near future.

Building in Europe is a smart idea at this juncture. As the American government continues to hold its allies' feet to the fire in an attempt to gain more favorable trade concessions, the threat of import and export tariffs could make for an unpredictable European market -- not the best thing, since Europe still represents BMW's most important market. The automaker didn't say what models would be built at the new Hungarian plant, nor did it say whether or not it would be able to shift production from other facilities to this one, need be.

Most of BMW's current crossovers are made in the US. Reuters first reported that BMW will raise the price of its X5 and X6 SUVs destined for export to China in order to balance out newly applied tariffs from China, which were established in response to tariffs levied against Chinese-built goods earlier this year. BMW has not had to shift production or adjust pricing for other models in other markets yet, but it's always an option if it needs to make up for projected profit shortfalls.

BMW isn't just spreading its efforts out in Europe. The company also recently announced that it will build the forthcoming iX3 electric SUV in China, in addition to battery-electric Mini vehicles. In this case, though, BMW was quick to note that this decision was made well ahead of the current slate of retaliatory tariffs.