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BMW AG has officially announced that the next generation BMW X3 SUV will be manufactured at its plant in Spartanburg, South Carolina. This will be built when its present contract of agreement is already used up in 2010 to 2011.

The move, though not entirely unexpected, is a surprising a blow for Magna International which currently assembles the X3 for BMW at its Magna Steyr factory in Graz, Austria.

First introduced in January 2004, the next generation BMW X3 will be released soon with added innovative features. In connection with this, Magna acquired its adjoining neighbor, Chrysler’s Euro star plant. The said plant was building minivans and PT Cruisers. Minivan production will be moved to Magna’s original plant once Magna owned the whole complex. At the plant in Toluca, Mexico, PT Cruisers were merged. And the space vacated by Euro star was prepared to set up Magna as the only source for the new BMW.

The X3 had an estimated 45 percent of Graz’s total automobile output in 2006. But the speculations began after BMW executives started suggesting that the next generation X3 could share underpinnings with the Z4 and both could end up having the new 3-series architecture and design.

To expand plant capacity in Spartanburg, BMW is spending $3 billion. The new plant capacity is expected to convert 140,000 units to 200,000 annually. It already fixed operations, substituting two separate assembly lines with a single flexible one that builds the Z4 and the midsize X5 SUV. Also to be sourced out next year from South Carolina is the new coupe-shaped X6 (based on the X5). BMW pointed several reasons for manufacturing more of the BMW lineup in the U.S, and one of the main reasons is the continued strength of the euro versus the dollar.

Magna, on the other hand, a manufacturer that is more focused in producing niche-vehicle, said that it is appealing to customers to fill the excess capacity that seems dismal in a couple of years. The said appeal or talking includes conference with BMW. This discussion will comprise an analytic study on whether to source a different automobile from Graz or not. At the Shanghai Auto show last month, the German auto maker was said to be mulling over something along the lines of the Concept CS and based on the 7-series. The smaller luxury sports tourer that is based on the 5-series could be considered.

Magna, a Canadian auto parts maker, also learned that it lost out on its bid to acquire Chrysler Group. Expected to close sometime in July to September this year, Cerberus Capital Management is acquiring an 80.1 percent stake in the automaker in a deal.

About BMW X3

A compact luxury crossover SUV, the BMW X3 is produced by the German auto maker BMW. The company, though, is advertising the vehicle as an SAV or Sport Activity Vehicle. The X3 is based on the auto mobile platform of BMW 3-Series. The X3 3.0i won the 2005 Canadian Car of the Year Best New Sport Utility Vehicle.

While the BMW X5 was being produced and doing a great job in the automobile market, the Bavarian car maker decided during the early period of the year 2000 that it would compete with vehicles like the Free Lander and other small luxury SUVs (like what the X5 had previously done in its respective classes). As a result of this decision, the X3, which is also known as E83 when talking about the interior, was delivered in the auto mobile market.

Resembles like an “X activity”, BMW, for the first time at the 2003 Detroit Auto Show, revealed to the public what a smaller SAV that is based on a 3 Series platform would look like. Though is has no windows, the car concept showed no roof for most part so that natural air can be experienced while driving. It also featured a sleek futuristic interior. However, only the primary shape of the vehicle would exist as the BMW X3.

The vehicle is a front engine, four-wheel drive with 3.0L 260 hp I6 engine. It has 6-speed automatic and manual transitions and a top of the line BMW header. In the entry level class, the BMW X3 is similar to Audi Q5, Land Rover LR2, and Volvo XC60.

Europe will see the rise of a new automobile empire. The much-anticipated conglomeration will be composed of Porsche, Volkswagen, and Scania.

Porsche Automobil Holding SE was given the green light by its board Monday to acquire majority stake in Volkswagen AG which owns Audi, Skoda, Seat, Lamborghini, Bentley and Bugatti brands. VW, meanwhile, said it will take a controlling interest in Scania, a Swedish truckmaker. This also means Porsche is in a position to absorb Scania with MAN AG, a German truckmaker which Volkswagen holds 29.9 percent, reported the Associated Press.

VW Chief Executive Martin Winterkorn said Volkswagen will focus on synergies with Scania AB, mainly in purchasing raw materials such as steel as well as research and development and electronic components.

Analysts in the industry said the deals are aimed at accumulating more wealth. The deals also strengthen the control held by the grandson of Porsche founder – Ferdinand Piech. He is the chairman of Volkswagen and MAN supervisory boards.

The maker of Porsche parts has been gradually increasing its stake in Volkswagen for more than a year and won a significant victory in 2007 when the European Union’s highest court promulgated a decision that the German government had to remove a cap on voting rights at VW.

“Volkswagen has announced that they’re taking a majority share of Scania. Next they could upgrade their stake in MAN to a majority stake, merge the two companies into a Volkswagen Commercial AG and sell that to Porsche SE. Then they could hand back to Porsche … or to their stock owners, a special dividend from the revenues of that sale,” said Christoph Stuermer, an auto analyst with Global Insight.

In a statement, Porsche said the reviews by the regulatory authorities are expected to take several months. And when requisite clearances are finally acquired, Porsche can take majority stakes in Volkswagen. The statement added that Porsche does not intend to merge the two companies.

“Our aim is to create one of the strongest and most innovative automobile alliances in the world, which is able to measure up to the increased international competition,” said Porsche Chief Executive Wendelin Wiedeking.

Were a tie-up happen, VW and Scania would effortlessly upstage giant rivals such as Volvo AB and Daimler AG, Europe’s largest truckmaker.

“It shows the trust that the people in Porsche AG have in Volkswagen,” Winterkorn noted at the Geneva Motor Show. “It means a lot of interesting things in the future.”