BMW may source transmissions in U.S.

GENEVA — BMW could decide as early as this summer whether to begin sourcing transmissions in the U.S. for its manufacturing plant in Spartanburg, S.C., the group's largest in the world.

Transmissions are a high-value and complex piece of automotive hardware that import brands often source from trusted suppliers in their home markets. But a further localization of key powertrain components could act as an insurance policy against possible U.S. tariffs, should the Trump administration act on the president's threat to impose duties on imported vehicles and parts.

More practically, resourcing transmissions to the U.S. also would serve BMW as a hedge against currency fluctuation, a critical issue in international supply chains.

"We are in discussions with one supplier for a transmission for the U.S.," BMW CEO Harald Krüger told reporters during the Geneva auto show this month.

Krüger did not mention the company by name, but BMW globally sources many of its transmissions from German specialist ZF Group.

Such a major localization decision can take a year or more to implement, especially if the supplier does not have the necessary production capacity immediately available.

For that reason, it is typically a long-term decision, based on BMW's growth outlook, rather than a reaction to short-term trade policies such as possible tariffs.

Krüger said BMW's U.S. production footprint has become so large that it is now economically attractive to think of using U.S.-built transmissions.

BMW opened the Spartanburg plant 25 years ago. Its early mission was for low production volumes, meaning the company has relied on imported engines and transmissions since then. The company also opted not to invest in stamping presses, turning to suppliers to deliver the metal parts it needs.

But Spartanburg has grown into a major force within BMW and has led the company into crossovers as those segments caught on in the U.S. and around the world.

"When you build more than 400,000 vehicles a year," Krüger said, referring to Spartanburg production, "then you can think about whether it's sensible to source a gearbox locally for the USA. Right now, we're in the middle of these deliberations, together with suppliers, and the decision could be made by this summer."