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BMW mulls new brand, tie-up

2008-03-07 12:15

Christiaan Hetzner

BMW expects to decide this year on whether to enter into a partnership with a rival manufacturer as the world's largest premium carmaker continues to sift through options in a bid to lower costs.

"There are cooperation talks but nothing has emerged yet. The talks are going well, above all with one manufacturer on a partnership that does not involve the BMW brand," Chief Executive Norbert Reithofer said.

"A decision must be made this year."

BMW's other brands are Mini and Rolls-Royce, but since the latter sold roughly 1 000 units last year it is unlikely that BMW would be able to generate significant cost savings in a partnership involving the super-luxury brand.

"We are more careful with BMW," he said, explaining the need to protect and not dilute the profile of its flagship brand.

Reithofer also said that the Euro's near record high against the dollar did not prevent BMW from making "good money" in the US market last year and he expected the group would earn more than a couple of hundred million euros there this year.

A spokesman clarified comments the BMW CEO made that suggested the company could change its controversial currency hedging strategy on March 18, saying Reithofer only meant to say the company would provide an update on its hedging position for the current year as is customary.

"We will address the topic of currency hedging very clearly at the annual news conference," the spokesman said.

BMW has taken fire for a policy that does not hedge currency fluctuations should the euro climb significantly higher than purchasing power parity, most recently seen at about $1.20.

The company has run up big losses on currencies by not hedging as the euro has continued to appreciate to record levels above $1.50. BMW also said that its aim to provide a mobility solution for megacities like Shanghai or Bombay could result in a technological concept that does not fit with its current brand portfolio.

Only then would it consider a possible expansion to a fourth passenger car brand.

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