Bayerische Motoren Werke AG (BMW), the German luxury car producer, announced on Thursday it will introduce a new efficiency program in order to fix its profitability problems as margins declined in the first half of this year. The program is expected to increase margins on turnover to more than 8 per cent from 6.3 per cent last year.

The Munich-based company estimated that by 2012 it will reach margins of between 8 and 10 per cent. By the same year BW plans to cut costs by 6 billion euros (11 billion dollars).

BMW’s new medium-term strategy, which will be put into practice over the next five years, includes a boost in vehicle sales from the currently 1.37 million to 1.8 million units by 2012. By the 2020, the parent company of the MINI and Rolls-Royce car brands plans to increase sales to well above 2 million vehicles.

BMW sales reached a record 1.37 million motorcycles and automobiles under the BMW, Mini and Rolls-Royce brands in 2006.

After the new efficiency program was made public, BMW’s share price rose more than 1 per cent up on the day at 47.19 euros.

Chairman Norbert Reithofer said at a press conference held in Munich that BMW was interested in acquisitions and it thought about buying a car brand from its rivals, but none raised to its expectations so far.

"Acquisitions in principle remain on our agenda," Reithofer added, though not for the next 12 months at least.

"For possible acquisitions in the future, we have clearly defined criteria in the strategy process. That way, we can act swiftly when needed," he said.

Reithofer said BMW also plans to boost production capacity at its US plant in Spartanburg, South Carolina to 240,000 units per year in an attempt to offset the euro's rise against the dollar.

Also the production capacity of the Mini plant in Oxford, Britain would be increased to 260,000 units per year and in China the capacity would be raised from 30,000 to 44,000 units per year.

The statement also announced a future introduction from the Mini brand, which would release a SAV (sports activity vehicle), while the parent group would produce the BMW X1 SAV.