Falling dollar dents profits on imported cars

By Chris Woodyard, USA TODAY
LOS ANGELES — The falling dollar is forcing automakers to scramble for ways to maintain profit margins on cars they import from Europe, Asia and Canada.
Some, like General Motors (GM), find themselves in the odd situation of limiting the number of models they bring in from overseas subsidiaries even though they might be able to sell more in the USA.

Foreign makers, meanwhile, are considering producing more models at U.S. plants or building new factories. Some even are increasing production here to ship more U.S.-made cars overseas.

"The pressure will be for the dollar to continue falling," says Joerg Dittmer, senior industry analyst for consultants Frost & Sullivan. The result will be "more domestically made cars."

Even as GM was introducing variants in its Australian-made Pontiac G-8 at the New York auto show last week, President Fritz Henderson told reporters in Los Angeles that the key to profitability is to make sure it "carefully controls the volumes" of such imports.

Facing the same quandaries:

•Volkswagen. The German automaker will announce by June if it will build a U.S. plant. "The dollar has really put the pressure on the (plant) evaluation," spokesman Keith Price says.

•BMW. The German carmaker is expanding its Spartanburg, S.C., plant to build the new X6 and the next version of the X3. The move "certainly helps" offset the dollar's weakness vs. the euro, BMW's Tom Plucinsky says.

•Volvo. The Swedish unit of Ford (F) is considering building one or more models at a U.S. Ford plant. "The dollar is having an impact," spokesman James Hope says. A possible candidate: the C30 hatchback, which shares components with Ford's Mazda3.

•Mitsubishi. The Japanese automaker is increasing exports from its Normal, Ill., plant to Eastern Europe and the Persian Gulf.

The USA exported 3,052 cars in January, up 46% from the month in 2007, according to the most recent Census Bureau data available. Imports rose just 2%, to 10,119 cars, in the same period.

Toyota (TM) credits its 10 U.S. assembly plants for helping it weather the dollar fall, though spokesman Xavier Dominicis adds, "Our decisions are not dictated by … currency exchange rates."