BMW Shifts from U.S. to Emerging Markets

May 6, 2008
In what may be a sign of things to come, BMW AG plans to divert cars originally earmarked for the U.S. to more profitable emerging markets. The announcement came at the same time the automaker reported a hefty 17 percent plunge in its first-quarter earnings, which fell to $761.7 million.

The simple reality is that the weak U.S. dollar is clobbering foreign-owned brands, like BMW, which rely heavily on imports. It’s all the worse for those bringing in products from Europe, which already suffered from high production costs, even before the dollar collapsed against the euro.

In a conference call, BMW CEO Norbert Reithofer said the idea of shifting allocations was first raised last year. But with the dollar continuing to weaken, it has obviously become a critical move for the automaker as the American economy continues to flounder. How much of a shift U.S. buyers will see is unclear, and it appears that BMW may still try to beat last year’s sales numbers, a total of 336,000 BMW-, Mini-, and Rolls-Royce-branded vehicles. But the growth would be less than originally planned.

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