BMW said on Wednesday it would boost annual production at its South Carolina plant by 50% to 240,000 vehicles starting in 2011 in response to ongoing worldwide demand for its SUVs.

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The company – which builds the X5, X6 SUV coupe and just added the second generation X3 [G1 was contract assembled by Magna STeyr in Austria]  – will hire 600 workers by the end of the year in addition to the 1,000 it has already hired to handle the increased production. The new recruits will push the total number of people employed at the plant to 7,600 by the end of the year, the Wall Street Journal reported.

“The US will remain the world’s largest premium market for the foreseeable future and we intend to participate in the expected growth with the expansion of our activities here,” BMW chief executive Norbert Reithofer said in a written statement. The company spent US$750m to prepare Spartanburg plant for the X3.

BMW has been growing steadily in the US by introducing variants and niche models, but now faces stiffer competition from a surging Audi and Mercedes-Benz, the WSJ noted. Its year to date U.S. sales rose 9.2% year on year to 157,464 vehicles to the end of September while Audi jumped 24%. BMW executives expect to finish the year with a 10% increase in US sales.

Over the past two years BMW has spent $1bn on its US operations which includes the expansion of the Spartanburg plant and its North American headquarters campus in New Jersey. The company also built two new regional distribution centres in the Northeast and Midwest in 2008 and 2009. More than 70% of the vehicles produced in South Carolina are exported outside Canada, the US and Mexico, the WSJ said.

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Separately, the automaker said it will use hydrogen fuel cells to power 85 pieces of material-handling equipment, such as forklifts, at the Spartanburg plant. The cells can be recharged in 20 minutes.