Rising production costs and tighter margins are leading BMW to shift production of its vehicles to their most popular markets. Because BMW expects the X1 small SUV to sell primarily in Europe, and especially Germany, the company has announced it will produce it at the Leipzig plant.

The X1 small SUV is designed to slot below the X3 in BMW's line-up, powered by engines from the 1-series. The car is expected to get the X-drive 4WD system from the X3, however, which should make it a very capable vehicle for its size. BMW is expected to produce about 100,000 X1s per year, and will be priced to compete with Mercedes-Benz's GLK and the Audi Q3, putting it near the €30,000 mark, reports Automotive News Europe.

Other BMW vehicles like the X5 and X6 will be produced in the U.S. at the company's Spartanburg, Tennessee plant, since those vehicles sell most of their volume in America. That move shifts production away from Magna Steyr, the contract carmaker responsible for the X3's current generation.

BMW's V-series of sedan-based crossovers will be similarly sized and also based on the mechanicals of the X3, but so far only 3-series and 5-series based versions are planned, meaning the range will likely be targeted more upscale than the X1/X3 SUVs. The more car-like handling and efficiency of the V-series will also distinguish the line from the X-series. Production location and official details of the car are yet unknown, but both the U.S. and Europe are showing strong demand for crossovers as fuel prices rise and emissions restrictions tighten, so it is possible the cars could be built in both locations.

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