BMW will produce its new small car in Bavaria and plans to start up a new facility to increase its capacity. Hungary is still in the running as a possible site, the Hungarian economics journal `Vilaggazdasag' reported on Monday [17th July].

The paper said that BMW managers held recent talks in Hungary, but a number of other places are also vying for the factory, including several regions in the eastern part of Germany, the Czech Republic and Poland.

`Vilaggazdasag' added that BMW will make its decision on the site by 2001. Since one condition is that it be easily and quickly accessed, only Hungary's western region can compete. Another factor will be the amount of local taxes, so Hungary's local governments are offering a tax holiday, as reducing unemployment is a more important consideration. The plant would employ several thousand people.