Though there has yet to be an official announcement, the Spartanburg Herald-Journal is reporting that BMW will move production of the Z4 roadster from Spartanburg, South Carolina to Regensburg, Germany. The report is based on information gleaned from BMW suppliers in the Spartanburg area.

But, this isn’t a loss for the American plant. Quite the contrary, BMW is expanding the plant, originally built to produce the Z3, from a capacity of 140,000 vehicles per year to 200,000 per year. It will devote the plant exclusively to production of the X series vehicles. The Spartanburg plant currently manufactures the X5 and BWM will shift production of the current X3 to Spartanburg from Austria, and is expected to add production of the X6 at Spartanburg when that crossover is introduced in 2008.

Moving production of the Z4, which has been selling poorly in the U.S., to Germany frees up plant capacity in the States for the X5, which has been a hot seller, with sales this year 22% above last year. The Z4 sells better in Europe, so it makes sense to build it there.

A BMW spokesman declined comment. Nonetheless, the logic of the move is inescapable. Producing vehicles closest to the markets in which they best sell better insulates the manufacturer from fluctuations in currency values, as well as saving transportation costs. 

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