MUNICH, GERMANY - Bayerische Motoren Werke AG, the world’s largest maker of luxury cars, plans to raise prices in the U.S. by one percent because of the weak dollar. The increase for cars such as the X5 SUV and 5-Series luxury sedan will take effect on Jun. 1, Markus Sagemann, a spokesman for the Munich-based company, according www.bloomberg.com.
“It’s a moderate price increase that reflects the conditions in the market,” Sagemann said in a telephone interview with Bloomberg, adding that the last U.S. increase was in March 2007.
The dollar’s drop hurts BMW because the company gets fewer euros for every car it sells in the U.S. The dollar has fallen about eight percent against the euro this year. This means 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. The carmaker took a first-quarter charge of 236 million euros because of bad debts and 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 by about 3 percent on May 1. Higher new car prices typically boost used car values.
The first-quarter charge led to a 17-percent drop in BMW’s net income for the first three months. Four-month U.S. sales fell four percent to about 100,000 cars.