MUNICH -- U.S. orders for German luxury carmaker BMW's new 3-series car have got off to a better-than-expected start, Chief Financial Officer Stefan Krause told Reuters on Monday.

"The pre-launch orders are very, very good, far above expectations," he said on the sidelines of an industry conference. He did not give any concrete numbers.

The new 3 series -- BMW's top-selling model which has also beaten expectations in Europe since its launch in early March -- hits the U.S. market on May 6.

Krause reiterated BMW's target of boosting 2005 unit sales by 6 percent to 9 percent.

He said BMW remained positive about the U.S. market despite the sluggish sales from domestic heavyweights General Motors and Ford Motor Co.

"There is still enormous potential in the United States," he said, noting that BMW was not affected by the "American problems" weighing on GM and Ford such as health care and pension liabilities and Standard & Poor's downgrades of their debt to junk status.

He also suggested the premium segment of the overall U.S. car market was relatively underdeveloped and thus had upside potential.

The U.S. market is BMW's biggest, accounting for around a quarter of car sales. BMW is more than 50 percent hedged against its dollar exposure this year.

Krause said there was no target on how much to boost this level, adding it was continually making tactical hedging transactions but eschewing long-term strategic hedges given the unfavurable euro-dollar exchange rate at present.

PITTSBURGH -- The 2006 BMW 3 Series has been redesigned, and the standard equipment list has been lengthened. Yet, despite a weak dollar, the car's U.S. sticker price took only a small bump upward.

Sticker to sticker, the 325i sedan is $1,000 higher than the 2005 model at $30,995, including shipping. The 330i is a mere $600 more than the 2005 model. BMW executives say that on a comparably equipped basis, the 325i is $150 above the 2005 model's price, and the 330i is $100 less.

Wolfgang Epple, the 3 Series director, while not revealing specifics, said, "The cost target was a stiff one, a challenging one" because BMW added features such as a new family of higher-horsepower engines, run-flat tires and a six-speed manual transmission.

"It wasn't that easy," he said.

The magic formula? BMW's cost-cutting moves included:

>>> Sharing components and assembly processes with the 1 Series subcompact.

>>> Reducing production sites for subassemblies.

>>> Purchasing components from suppliers outside Germany.

The 2006 model is the first redesigned 3 Series since 1999. The model is a crucial product for BMW in the United States, accounting for 41 percent of sales last year with 106,549 units. The total includes sales of the performance M3 model. The 3 Series is expected to face credible competition from the 2006 Lexus IS 330, a redesigned sedan that bows this year. Setting the right sticker price is vital.

Competition intensifies

The competition is tougher than when the previous-generation 3 Series was introduced, says Jeff Schuster, director of product analysis for J.D. Power and Associates. "There is a lot of product out there now that is much more performance-oriented," he says.

The 3 Series "is already priced higher than most of the competitors," Schuster says. "So I think for them to keep it at least in line was extremely important because it already has a price premium associated with it." Other 3 Series competitors include the Mercedes-Benz C-Class, the Infiniti G35 and, to a lesser extent, the Cadillac CTS, he says.

Cost targets

Epple, who was interviewed on May 6 at a BMW 3 Series event here, said that currency hedging helps ease pricing issues for the German-built car in the United States. The weak dollar has made it hard for European automakers to avoid price increases here.

But BMW also increased part-sharing. It co-engineered the 1 and 3 Series to share a wide range of components and processes. Among the items shared are axles, the electrical system, steering column, steering system and the four-cylinder engine sold outside the United States.

"The chassis and suspension are identical except for the dedicated suspension settings and the weight of the car," Epple said. Also, the 1 and 3 Series models are produced on the same assembly line. "Now we get bigger volumes and economies of scale," Epple said. Subassemblies for the previous-generation 3 Series were created at two BMW plants in Germany.

Today, one plant handles the workload. "The tooling for the subassemblies, the cost of jigs and fixtures, is quite a few million in investment costs," Epple said. "So we have reduced it by 50 percent."

Relocating production

Some suppliers reduced costs by relocating production to Romania, Hungary, Slovakia and other eastern European countries, passing the savings on to BMW. "Labor cost is a fraction of what they pay in Germany," Epple said. "It is like the eastern part of Europe is (to Germany) what Mexico is to the United States."

The 325i and 330i sedans are larger and significantly more powerful than the 2005 versions. The cars are new from the ground up, with a redesigned frame that is 25 percent stiffer than the 2005 model, resulting in improved ride and handling. Sales of both sedans begin this month; the wagon goes on sale this fall.

BMW expects to sell about 106,000 units this year, a combination of 2006 and remaining 2005 models. The redesigned coupe and convertible are expected to be introduced next year.