Automotive News reports that BMW is considering building vehicles at the NedCar facility in Born, Netherlands. The deal would be for third party assembly of BMW Group vehicles.

The report indicates that they’re interested in having some of the expanding Mini range of vehicles assembled at the NedCar works, whose contract to build Mitsubishi vehicles runs out at the end of this year.

What’s interesting is that this is a contract, lease if you will, to have cars built for BMW, not an outright purchase of capacity. And that makes sense, because in these uncertain times, with overcapacity a threat if the Euro collapses, not buying a factory is the smart bet.

Third party contracts to assemble cars is something that BMW has experience with (of course). The first generation X3 was assembled by Magna Styer. This will be a ‘final assembly’ facility most likely without a heavy investment in presses and/or foundry. To look for a model within BMW of how this may work the Kaliningrad operation may be close (but without the tax benefits, since Born is inside the EU).

Don’t look for a brand new product to be assembled at the NedCar facility. BMW is likely to build an existing model there and use the capacity relief in England for new product. Building a new vehicle in a ‘new’ facility leads to too many variables for good quality control. It’s better to build something that has been built successfully previously to ensure initial quality is at the state desired. (And that’s why the 3 series is often the first vehicle built in a new plant.)

The beauty of this arrangement is the nearness of Born to the existing works in England and Germany. Logistic costs are well managed subsequently. Born is within a 300 mile radius of the bulk of BMW’s European facilities. And guess what? Trollhatten’s not. But this story bolsters, in my mind, the notion that BMW was seriously looking at Saab’s Trollhatten facility, but it’s hard to see how the terms would have been favorable for BMW. Oh well, water under the bridge . . .