MEXICO CITY/MUNICH (Reuters) - Germany's BMW (DE:BMWG) said it would make an announcement in Mexico on July 3, all but confirming a widely expected decision to build a new factory to meet growing demand for premium cars, shortly after its rival Daimler announced similar plans.
"A decision will be made public," a spokesman for the Munich-based auto maker said on Monday when asked if it would make an announcement about a factory in Mexico.
BMW declined to comment further beyond saying the announcement would be made in Mexico on July 3.
A decision to build a factory in Mexico would come on top of BMW's plans to invest $1 billion (0.58 billion pounds) to expand production capacity at its factory in Spartanburg, South Carolina, by 50 percent.
BMW Chief Executive Norbert Reithofer said last week that the Bavarian carmaker was still deliberating about where to locate a new factory and would reach a decision before the summer break.
Premium auto makers BMW, Audi and Mercedes-Benz are expanding their global production footprint as their German factories struggle to meet strong demand for offroaders and limousines in the United States and Asia.
In October, Reuters reported that BMW was looking at plant sites in Mexico, according to Mexican government officials.
Supplier sources said BMW had already mapped out a production timetable for Mexico, with a tentative plan to begin assembly operations in late 2017, ramping up annual capacity to 200,000 by 2020.
On Friday, Daimler (DE:DAIGn) and Renault Nissan (PA:RENA) (T:7201) said they would invest 1 billion euros (0.80 billion pounds) to develop small cars and build a factory in Aguascalientes, Mexico.
Building cars in Mexico allows European car makers to sell cars in the United States while avoiding some of the currency and tariff costs that crimp profits on imported vehicles. Mexico also offers lower labour rates than Germany and the United States.
Daimler AG's (DE:DAIGn) Mercedes-Benz, Nissan Motor Co (T:7201), Honda Motor Co (T:7267), Mazda Motor Corp (T:7261) and Volkswagen AG (DE:VOWG_p) already have large auto factories in Mexico.
At around $2.50 an hour, manufacturing wages in the country are nearly 20 percent cheaper than in China, according to a Bank of America study. That study put U.S. manufacturing wages at just under $20 an hour, on average.
German carmakers' overall output is set to rise for the fifth year in 2014, driven by overseas production, German auto industry association VDA has said.
(Reporting by Luis Rojas in Mexico City and Irene Preisinger in Munich; additional reporting by Edward Taylor; and David Graham; editing by Tom Pfeiffer)