Germany's BMW broke ground on its new Mexican plant on Thursday, pledging to invest a total of $2.2 billion in the region through 2019.

BMW follows a wave of carmakers that have sought to take advantage of the country's growing industrial base and tariff-free access to the US market. Mexico's low wages also help reduce the German automaker's dependence on higher-cost plants at home.

The $1 billion plant is located in San Luis Potosi, a state in central Mexico that is close to the country's industrial heartland and the US border, and is expected to produce 150,000 cars a year. Ford Motor Co is also planning a plant in the same state.

Elizabeth Solis, a spokeswoman for BMW, said the plant would complement production in Spartanburg, South Carolina, and would produce the cars in the popular 3 Series.

BMW sold approximately 20,000 vehicles in Mexico in 2015, a 17-per cent jump from the previous year. – Reuters