It seemed logical. If your cost of production in Europe rises relative to the dollar, you have to either raise prices or eat the increased cost. Yet automakers moved cautiously, saying they didn't want to react too quickly to currency swings.
Now we see why.
Say you're Volkswagen, building an assembly plant in Chattanooga, Tenn.; or BMW, planning exports to Europe from Spartanburg, S.C.
Today it costs about .81 euros to buy a dollar. The 52-week low was .66 euros for every dollar. So if you're a German company and your bean counters count in euros, that swing raises your investment cost in a U.S. facility -- which you pay for in dollars -- by about 23 percent.
Think that doesn't put a serious crimp in your business case?