BMW Eyes Costs In N. America

BMW of North America LLC says its operational costs must remain on par with year-ago levels, or there could be cutbacks.

The unit is under pressure from parent BMW AG to keep expenses in line as the weak U.S. dollar continues to reduce profits from the U.S. operations.

The news comes just hours after BMW in Germany announces pre-tax profits fell 2.8% last year to €3.2 billion ($3.9 billion) against 2002 returns, due in part to the currency fluctuation and a one-time charge related to changes in Germany's early-retirement laws. The U.S. dollar was 18.7% lower against the euro in January vs. year-ago.

BMW already has taken steps to offset the currency problems in the U.S.. In January, it announced it was increasing prices on its entire lineup (except for the new X3 SUV) by 1.5%.

Now, it is putting pressure on various departments to make sure costs don't get out of line.

“We think the profitability issue is a practical one for us,” Tom Purves, chairman and CEO of BMW of North America, tells Ward's during a media preview for the 6-Series in Los Angeles.

“We are not cutting but trying to make sure that we are not spending money this year we don't need to spend.”