• Apr 15, 2008

After the announcement last month that BMW was increasing U.S. production while cutting jobs in Germany, the CFO of the German automaker, Michael Ganal, told WirtschaftsWoche magazine that the automaker intends to make other significant changes as the dollar continues to depreciate against the euro. As of today, the volume of cars produced in BMW's Spartanburg plant contributes to about 22 percent of the company's overall sales. However, these vehicles only account for about 10 percent of the materials purchased volume. Over the next four years, the Bavarian car company intends to increase its purchases of parts and components from domestic U.S. suppliers, and Ganal hinted that BMW may also increase production to even higher levels than the 240,000 vehicles annually manufactured on our shores. The influx of manufacturing, supply, and administrative jobs (and tax revenue) may be one of the only upsides to the continuing plunge of the dollar.

[Source: Automotive News, subs. req'd]



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    • 1 Second Ago
  • 4 Comments
      • 6 Years Ago
      This move toward greater US supply and production is typical when the dollar depreciates. Not only does the rising Euro make business more expensive in Europe, it simultaneously promotes export growth in America over the longer-term. Expect to see this trend continue as the dollar declines.

      This trend also generally precedes the eventual appreciation of the dollar, as a growing export sector will create more jobs and opportunities in a down economy. While the deficit grows slightly, eventually the higher price of imports will level off and the economy will return to 'normal'. (called the J-Curve effect)

      It will be more interesting to see the comparative pressure by the Europeans to limit the rise of the Euro in response to a falling dollar. Inflation is already hurting a lot of European economies, so time will tell.
        • 6 Years Ago
        I hope you're right. The economy is tanking, we could really use this, 100X.
      • 6 Years Ago
      BMW needs to bring the 3-Series production to Spartanburg. That would prevent escalating MSRP from pricing out BMW's bread and butter product. Given that so many 3-Series are sold here, it makes perfect sense. They should also expand Spartanburg to begin manufacturing BWW engines to further lower costs given that importing engines from Euro-land is getting expensive.
      • 6 Years Ago
      yes but at the same time the downward pressure on the dollar also causes wholesale inflation on goods bought from other countries as much of US steel is bought elsewhere. There simply is not enough manufacturing in the US to retun the economy to normal, unless the definition of normal refers to normal as in wage levels of Mexico normal.

      Pretty soon BMW will have to charge double for a car made in Germany sold in the USA just to make the same profit from selling that same car in Europe. Producing the car in the US is the only option to keep BMW prices realistic.

      This also causes quality control issues though since a BMW made in the USA might not match a BMW made in Bavaria. BMW Germany could likely purchase higher quality parts from the US for use in Europe than it would be able to afford to buy and put in cars built here.