Falling dollar dents profits on imported cars

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.

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.

Besides G-8, he cited the same profit concerns with GM's German-made Saturn Astra sedan and South Korean-made Chevy Aveo subcompact.

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.

•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.