MUNICH, Germany (AP) -- Higher sales and more hedging on foreign-exchange rates will help BMW AG post a higher pretax profit in 2008, the luxury automaker said Tuesday.

Chief Executive Norbert Reithofer said BMW was "well on course" to achieve its goal of selling 1.8 million cars in 2012, a confirmation that sales of its BMW, Mini and Rolls-Royce brands will continue growing.

Last year, the Munich-based company sold a record 1.5 million cars, with demand rising for its Mini and X5 sport utility vehicle. For 2007 it posted a pretax profit of 3.8 billion euros ($5.99 billion), down 6.1 percent from 4.1 billion euros in 2006.

The outlook pushed shares of BMW up 4.9 percent to 32.63 euros ($51.47) in Frankfurt.

"The BMW Group expects another record number of deliveries in 2008," Reithofer said at the company's annual news conference.

"We remain well on course to achieving our strategic sales volume target of 1.8 million vehicles in 2012."

He said BMW would keep striving to improve its performance, despite what he called major challenges -- the record-high euro, a U.S. economic slowdown and rising prices for raw materials, such as steel and oil.

Reithofer also said that the automaker was hedged against the rising euro and that BMW will boost its purchasing in dollars to reduce its exposure to the strong common currency.

The euro, which hit a record $1.5904 on Monday, has weighed on European exporters and BMW's own exposure is wide given the number of cars it sells in the U.S., but the company said that its has hedged itself completely this year with "all of the main currencies." Last year, the negative effect from currency fluctuation dropped to 517 million euros ($815.3 million) from 666 million euros a year earlier.

Many euro-zone companies engage in currency hedging, or purchasing financial contracts to lock in exchange rates to avoid pitfalls in the event of big swings.

BMW's Chief Financial Officer Michael Ganal said the company had already started moving to hedge its exposure to currency fluctuations in 2009.

The automaker is also taking advantage of the weak dollar by expanding production at its plant in Spartanburg, S.C., with plans to spend $750 million on facilities for its X5 sport utility vehicle and the new generation of its X3 SUV, expanding production from its current 160,000 a year to 240,000 cars annually by 2012.

By building the cars in the U.S., BMW also can save money on wages, since its South Carolina workers earn less than German workers.

The company also said it seeking out lower prices for raw materials, including oil, which has soared to record levels.

As for future development, Reithofer said a "new organizational unit called 'Project i' is working on a completely new car and mobility concepts for megacities."

He said the company had not yet decided whether that would mean the creation of a fourth brand, and added that BMW will decide later this year whether to launch a battery-powered car.

The automaker also hopes to buy back as much as 10 percent of its stock, pending approval from its shareholders, over an 18-month period.

------ On the Net: http://www.bmw.com

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