The Car and Truck Fleet and Leasing Management Magazine

BMW Plans to Raise U.S. Car Prices by One Percent to Counter Weak Dollar

May 30, 2008

MUNICH, GERMANY - Bayerische Motoren Werke AG, the world’s largest maker of luxury cars, plans toraise prices in the U.S. by one percent because of the weak dollar. The increase for cars such as the X5SUV and 5-Series luxury sedan will take effect on Jun. 1, Markus Sagemann, aspokesman for the Munich-based company, according www.bloomberg.com.

 

“It’s amoderate price increase that reflects the conditions in the market,” Sagemannsaid in a telephone interview with Bloomberg, adding that the last U.S. increase was in March 2007.

 

Thedollar’s drop hurts BMW because the company gets fewer euros for every car itsells in the U.S. The dollar has fallen about eight percent against the euro this year. Thismeans that for a car like the 5-Series, BMW gets more than 2,000 euros ($3,150)less now for each one it sells than it did at the beginning of the year. Thecarmaker took a first-quarter charge of 236 million euros because of bad debtsand lower values on cars it sells in the United States after leases expire.

 

BMW,which sold 22 percent of its cars in the U.S. in 2007, raised lease rates byabout 3 percent on May 1. Higher new car prices typically boost used carvalues.

 

Thefirst-quarter charge led to a 17-percent drop in BMW’s net income for the firstthree months. Four-month U.S. sales fell four percent to about 100,000 cars.

 

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