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BMW will bring assembly of its next X3 back in-house. Production of the model at Magna Steyr’s Graz plant in Austria will cease in 2010.

Magna said the vehicle, which accounts for 45 per cent of its total vehicle assembly, will be produced in-house at BMW’s Spartanburg, US plant.

It would be logical; the plant is the sole producer of the larger X5 SUV.

The firm will still manufacture modules and components on other BMW vehicles and it hopes to win other manufacturing contracts with the OEM.

Louis Tonelli of Magna Steyr said: “We still have the contract for the next three years, but the BMW X3 will go to Spartanburg. We’re convinced that in the meantime we’ll find an alternative vehicle to produce with BMW.”

BMW has confirmed that production will move from Graz, but denies it has chosen a specific venue yet.

Spartanburg’s logistics and control manager Peter Hoerndlein said: “We haven’t decided on a production site for the vehicle yet.”

Magna hopes that despite the potential drop in assembly, it will not need to cutback staff at the Graz site.