Munich, Germany – The BMW Group has announced that it is taking steps to counter deteriorating conditions in the automobile industry, including reducing production volumes, raising prices, and reducing some employee benefits.

The company cited fuel and raw material prices, the weakness of the U.S. dollar, the impact of the international financial crisis and a weaker U.S. economy as reasons for the decision, along with a price level of used cars in the U.S. that makes it difficult for automakers to generate revenue on vehicles returned at the end of leases. The company said that its “good operating performance” in the current year is being overshadowed by the impact of a significantly less favourable environment.

The BMW Group said that sales volumes will be reduced in the U.S. on a targeted basis, with some of the vehicles originally intended for sale in that country switched to other countries with higher margins; production capacities worldwide will be brought more closely into line with major sales markets; production volumes will be reduced and selling prices will be increased; and the company will negotiate with employee representatives about “voluntary benefits beyond general pay.”

The company said that the situation in the automotive industry is unlikely to improve in 2009, and that benefits generated by the strategy should be significantly more perceptible in 2010.

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