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BMW recently announced plans to cut 7.5% of its German workforce by the end of the year.

Since last September, the dollar has tumbled against the euro, hurting firms that pay their costs in euros but receive payment in dollars.

The euro touched an all-time high of $1.546 last week after punching through the $1.50 level at the end of February.

BMW is not the only European firm affected by the swings in exchange rates.

In December last year, the head of the European aerospace and defence company EADS Louis Gallois gave a strong indication that if the situation persisted, some of the manufacturing of the Airbus passenger jet would have to be moved outside Europe.

Changing gear

Analysts say that by building more vehicles in its South Carolina plants, Munich-based BMW can pay less wages in euros and will also save money by sourcing locally for parts used by its US factories.

This shift in production has resulted in planned cuts of 8,100 positions in Germany.

"This is completely driven by the plunge in the dollar", said Oliver Wyman, publisher of the Harbour Report on automotive manufacturing activity.

"Conceivably, as the volume increases and the manufacturing system at the Spartanburg, South Carolina, plant improves, costs may come down enough to cut prices of their cars.

The plant makes the Z4 Roadster and the X5 Sports Utility Vehicle.

(BBC)

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