BMW chief says U.S. presence strategically crucial
MUNICH — BMW's chief executive officer told shareholders Thursday that maintaining the automaker's presence in the United States, South Carolina, specifically, was not a knee-jerk reaction to the strong euro but a long-term strategy.
"To be successful and respected in our industry, a company has to be active in the world's largest car market," Norbert Reithofer said.
Earlier this year, the automaker announced it would take advantage of the weak dollar by expanding production at its only North American plant, near Spartanburg.
The plan calls for spending $750 million on facilities for its X5 sport utility vehicle and the new generation of its X3 SUV to boost output from the current 160,000 vehicles a year to 240,000 annually by 2012.
By building the cars in the United States, BMW also can save money on wages, since its South Carolina workers earn less than German workers.
BMW imported about 100,000 German-made vehicles through the Port of Charleston last year and shipped out roughly as many South Carolina-made models.
"The outlook for the business year 2008 remains unchanged — provided that the financial crisis does not become worse," he said. "If, however, the situation on the car markets, particularly for pre-owned cars, does not ease over the course of 2008, there is a risk that this could have a negative impact on BMW group's earnings for the year."
Last month, BMW said that risk provisions related to a drop in used-car prices and that fears of possible defaults on leased cars in the U.S. caused it to shave the equivalent of $364 million from its first-quarter earnings of $751 million.
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