Airbags May Fail in Some BMW Models

BMW has announced a voluntary recall of about 200,000 vehicles because a damaged sensor in the passenger seat may prevent the passenger air bag from deploying.

Affected models include some 2006 3-series and 2004-06 5-series and X3 vehicles.

BMW says owners can continue to drive the vehicles, but they should notify their local BMW dealer and stop using the passenger seat if the air bag warning lamp and the passenger air bag ”on-off” lamp light up simultaneously. Owners of affected models will begin receiving notices in early September with further information.

BMW Raising prices, Will Cancel X7 large SUV

Despite bright spots such as the X6 selling out its first year of production, like most automakers BMW has seen its sales decline recently and is looking to cut costs as raw materials become more expensive. Having already raised the MSRPs on U.S.-bound models in June, now CEO Norbert Reithofer says that as the changing American market forces further policy shifts, the company will implement additional price hikes for this year and the next, as well as cancel development of its X7 large SUV.

Rising costs and reduced sales are hurting automakers around the world, but European brands have also been hit by the declining value of the dollar against the euro. BMW CFO Michael Ganal says that if the current foreign exchange rates persist 2009 will be a “major challenge,” and according to Reithofer the company may cut production of vehicles sold in the U.S. by up to 40,000 units, or move them in other markets. Anticipating even slower sales here over the remainder of 2008, at first BMW’s new price increases will only be in America but could also move to Europe later, depending on each nation’s individual market.

In addition, despite the decent performance of some high-end SUVs, because of rising gas prices and the shift away toward smaller vehicles Reithofer says the Munich automaker is abandoning its X7, an ultra-luxury large SUV meant to compete against Range Rover. This leaves the X6 as BMW’s range-topping SUV, while the automaker’s lineup will instead expand downward when the 1-Series based X1 crossover debuts in 2010. With Minis sold out around the country and a new 7 and 3 Series due in showrooms soon, BMW looks set to rebound once the economy begins improving again. But in the meantime as costs rise and sales get harder to come by, it appears that even this enthusiast favorite will have to cut back to stay afloat.

Source: Automotive News Europe (Subscription required)