BMW is considering building engines in the United States or Mexico for the first time and expanding vehicle production in the region to capitalise on growing demand, sources have told a news agency.

Three people familiar with the matter told Bloomberg News BMW could potentially decide on the project in 2014.

BMW has kept tight control of its latest engine technology, only starting production of engines outside Europe last year with I4 units made in Shenyang, China, to supply the BMW Brilliance joint ventures's local car plants in Dadong and Tiexi.

"As part of our long-term growth strategy, we're frequently looking at different countries for possible locations of future production facilities," BMW spokesman Matthias Schmidt told Bloomberg. "No decisions have been made yet, though, for an additional plant."

BMW may expand vehicle production in North America beyond the new X4 already announced for the Spartanburg plant next year, the sources said.

Local engine production would alter the cost base and reduce exposure to dollar-euro currency fluctuations.

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