BMW is reportedly planning to contract out both the development and assembly of its planned small X3 sport utility vehicle.

The likely contractor is U.S.-based Magna International, according to a Financial Times report this week.

Siegfried Wolf, the chief executive of Magna’s Steyr operation in Austria reportedly told last month’s SAE World Congress that his company was considering a development and manufacturing project for a major North American vehicle maker but he would not say which one. BMW presently builds some models including its X5 SUV and the Z3 sports car in the U.S.

However, BMW chairman Joachim Milberg told the FT this week that Magna might build up to 60,000 X3s each year in Austria for the European market.

He added that his company has signed a memorandum of understanding with Steyr, marking the start of production for 2002 or early 2003, according to the newspaper.

Magna executives have reportedly said that the supplier is prepared to assemble whole vehicles and is waiting for a profitable contract.

Magna Steyr is no stranger to vehicle final assembly. It already builds a Saab convertible in Graz, Austria, and assembles the Chrysler Voyager minivan and Mercedes-Benz M-class in nearby plants. Chrysler PT Cruiser production is also scheduled for a July start when the Austrian plant will also become the sole source of right-hand drive models.

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BMW Strategic Review

Global Car Forecasts to 2005