BMW Group may build Minis alongside BMW 3-series and 1-series cars at a new plant in Mexico, a German newspaper reported.

BMW CEO Norbert Reithofer has said that the company will need an additional factory in North America to meet rising demand but so far the company has not said whether it favors Mexico or the United States for the plant. The automaker also has not said which vehicles it would build at a new factory.

Handelsblatt said BMW executives favor Mexico for the factory and the company is considering building Minis and its smallest BMW brand vehicles there because these are lower margin vehicles and building them locally would boost profits.

A decision on the plant will be made by the BMW supervisory board in the second half, the paper said in a report published Wednesday, citing company sources.

A BMW spokesman declined to comment, telling Automotive News Europe that the report was “mere speculation.”

BMW is keen to boost output in North America to save costs associated with importing smaller, lower-margin models under a strong euro.

The company is raising annual capacity at its plant in Spartanburg, South Carolina, by 50 percent to 450,000 vehicles as it adds a large SUV called the X7.

A plant in Mexico would raise North America production capacity to 600,000 vehicles, Handelsblatt said.

BMW currently builds Minis in Oxford, England, but the plant has reached its capacity of about 260,000 units per year. The company is adding additional Mini production in the Netherlands.