BMW Expanding S.C. Production

Company will boost production of Z4 sports cars and X5 sport utility vehicles at its Spartanburg plant, bringing capacity to over 200,000 vehicles.

FRANKFURT, Germany (AP)- Automaker BMW AG said Tuesday it will increase production at a U.S. plant to shield itself from the weaker dollar and meet potential market growth in its biggest single market, the United States.

The company said it would raise the capacity of its plant in Spartanburg, South Carolina, from the current 140,000 per year to more than 200,000 annually.

''This is a part of our future strategy,'' Chief Executive Norbert Reithofer said at BMW's annual meeting. ''With this we're reducing our (foreign exchange) risks for the U.S. dollar.''

The euro has been particularly strong against the dollar in recent weeks, rising to an all-time high of $1.3682 on April 27 and hovering at or above $1.35 in recent days.

Last year, BMW said foreign exchange rates hurt its earnings by 666 million euros ($902.4 million).

Because of that, the company will increase the number of Z4 sports cars and X5 sport utility vehicles made in Spartanburg. BMW also plans to do some production of its planned X6 and next-generation X3 there as well.

The United States is BMW's single biggest market, and last year it sold 113,000 X3s, with 27 percent of those going to U.S. buyers. Currently, the X3 is produced at Magna Steyr in Austria.

Unfavorable exchange rates, particularly for the dollar and yen against the euro, can hurt manufacturers by making their goods more expensive in other markets. By making cars in the United States, where both costs and revenues are in dollars, the company insulates its U.S. sales from currency swings.

The weak dollar also fattens profits if those cars can be exported to Europe.

The announcement came as Reithofer also confirmed BMW's goal of exceeding last year's pretax profit of $5.58 billion.

BMW still expects car sales growth in the higher single-digit percentage range to more than 1.4 million vehicles and aims to reach around 1.6 million car sales by 2010.

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