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GERMANY: BMW mulls building new sports wagon in America

By just-auto.com editorial team | 26 November 2004

BMW is considering building its planned sports wagon at its US plant in South Carolina, Reuters said, citing German newspaper Die Welt.

Building the model in the United States would help protect the company from foreign exchange fluctuations without the use of expensive financial instruments, the news agency noted, adding that many analysts are forecasting BMW's earnings will drop by hundreds of millions of euros next year due to the continued slide in the US dollar, which fell to a record low against the euro on Friday.

Currently, the company builds the popular X5 offroader and the sleek Z4 roadster cabrio in Spartanburg, South Carolina, the report said.

"A final decision has not yet been reached," a BMW spokesman told Reuters on Friday.

The news agency noted that BMW has repeatedly stated it does not intend to use longer-term currency derivatives at current rates to protect its earnings from foreign exchange movements since it believes the US dollar is significantly undervalued to the euro.

Chief executive Helmut Panke reportedly said in late October that he expects the dollar to strengthen significantly by then end of next year.

He told Reuters in October that a decision would be reached by the end of 2005 over whether to build the sports wagon, which is seen as BMW's answer to the new Mercedes R-Class grand sports tourer.

DaimlerChrysler's luxury unit has said it would build the new R-Class in the United States, where the company currently manufactures the M-Class offroader, the report added.