Weak Dollar to Squeeze New 3-Series Margins

NEW YORK – Unfavorable exchange rates likely will reduce profit margins on the new 3-Series cars, BMW of North America LLC CEO Tom Purves concedes.

Purves marks the auto show here by announcing U.S. prices for the new cars, which base at $30,995 for the 325i and $36,995 for the 330i. The stickers represent a $150 increase on the 325i and a $100 reduction for the 330i.

The BMW exec also reveals the refreshed 750i flagship, which gets a new 360-hp V-8, will base at $71,195 in the U.S.

As for the squeeze being applied by the unfavorable euro-dollar exchange rate, Purves says, “We might even suffer from currency values for a couple of more years, but eventually we’ll have more cars built in the U.S.”

New 3-Series starts at $30,995.

The 3-Series, which has been on the market for 30 years, represents 40% of BMW’s business and 30% of its revenue.

The newest generation is the largest 3-Series yet in nearly every dimension. However, use of lightweight materials has limited the amount of additional weight.

Purves says BMW will sell fewer 3-Series cars in March and April because of the run-out of the ’04s and downtime at the factory for model changeover.

“We won’t see growth in the 3-Series this year,” he says.

However, he forecasts an overall increase in sales, but not at the 16% pace BMW is running for the first two months of the year.

The BMW chief says residual values for BMWs are still good, but incentives are running high.

“We don’t see that reducing,” he says. “We’re in competition and we all want more of the (luxury) segment. In the end none of us wants to increase incentives, but we’re influenced by our own objectives.”

One of those objectives is to grow volume.

“We have a lot of opportunities to grow by expanding our portfolio,” he says. “We’ve already increased our volume by introducing derivatives.

“Each car we bring out slightly broadens our appeal,” he says.

He says he is not certain what niches BMW still might want to enter, but he emphasizes the importance to the brand of being consistent with its values in any new models it launches.