200 BMW Group Locations
5.2
12.0
-3,785
-6.8
2,247,485
6.1
Production volume
BMW 5
MINI
Rolls-Royce
-1,440,315
-294,120
3,725
Total 5
1,738,160
-1,547,057
311,490
3,279
1,861,826
1,699,835
303,177
- 3,354
2,006,366
1,838,268
322,803
-4,495
2,165,566
1,933,647
342,008
5.2
5.9
3,848
2,279,503
-14.4
5.3
Motorcycles segment
Production volume6
BMW
Financial Services segment
New contracts with retail customers
1,905,234
338,466
1,811,719
302,183
- 4,063
2,117,965
-1,655,138
305,030
3,630
1,963,798
301,526
3,575
1,845,186
-2,247,485
6.1
Fleet emissions in g CO2/km³
145
143
133
130
127
-2.3
Motorcycles segment
Sales volume4
104,286
106,358
-110,360
-115,215
-136,963
10.9
Further non-financial performance figures
Automotive segment
Sales volume
BMW²
MINI
Rolls-Royce
Total²
-1,380,384
-1,540,085
285,060
-3,538
1,668,982
-123,495
-113,811
-110,127
-133,615
63,229
-70,208
EBIT margin
-% (change in %pts)
-11.8
-10.8
-70,630
9.4
-75,173
9.6
-85,536
-13.8
9.2
-0.4
ROCE
€ million
-% (change in %pts)
-73.7
63.0
61.7
-72.2
10.5
Motorcycles segment
ROCE
% (change in %pts)
-10.2
1.8
16.4
21.8
31.6
-77.3
2,117,965
Revenues
5.9
151,004
13.0
-1,196,610
-1,341,296
-1,471,385
1,509,113
-1,655,961
9.7
1 Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2011: 94,400 units, 2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units, 2015: 282,000 units).
3 EU-28.
4 Excluding Husqvarna, sales volume up to 2013: 59,776 units.
5 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2011: 98,241 units, 2012: 150,052 units, 2013: 214,920 units, 2014: 287,466 units, 2015: 287,755 units).
6 Excluding Husqvarna, production up to 2013: 59,426 units.
4
Automotive segment
BMW Group in figures
BMW Group
Profit before tax
2011
2012
2013
2014
2015 -Change in %
€ million
-7,383
-7,803
-7,893
-8,707
9,224
Key financial performance indicators
9.8
1,963,798
1,668,982
Financial and Non-financial Performance
Indicators
Review of Operations
Results of Operations, Financial Position and
Net Assets
Comments on Financial Statements of BMW AG
Events after the End of the Reporting Period
Report on Outlook, Risks and Opportunities
68
Outlook
Report on Risks and Opportunities
Internal Control System and Risk Management System
Relevant for the Financial Reporting Process
Disclosures Relevant for Takeovers
87 BMW Stock and Capital Markets in 2015
90-GROUP FINANCIAL STATEMENTS
90
90
92
94
Income Statements for Group and Segments
Statement of Comprehensive Income for Group
Balance Sheets for Group and Segments
Cash Flow Statements for Group and Segments
96 Group Statement of Changes in Equity
98
Notes to the Group Financial Statements
Accounting Principles and Policies
98
113
Notes to the Income Statement
121
Notes to the Statement of
General and Sector-specific Environment
88
83
81
THE NEXT
100 YEARS
M
B
MINI
Rolls-Royce
Motor Cars Limited
Contents
3- BMW GROUP IN FIGURES
6- REPORT OF THE SUPERVISORY BOARD
14 STATEMENT OF THE CHAIRMAN OF THE
BOARD OF MANAGEMENT
18-COMBINED MANAGEMENT REPORT-
18
General Information on the BMW Group
18 Business Model
Comprehensive Income
Management System
20
23
23
27
Overall Assessment by Management
27
29
29
49
59
62
63
63
Report on Economic Position
122 Notes to the Balance Sheet
147
163
198
BMW Group Ten-year Comparison
202
204
Index
206
Financial Calendar
207
Contacts
3
BMW Group in figures
2011
2012
198 OTHER INFORMATION
2013
2015
Change in %
Key non-financial performance indicators
BMW Group
Workforce at year-end¹
-100,306
-105,876
-110,351
-116,324
-122,244
5.1
Automotive segment
Sales volume2
2014
-1,845,186
197 Auditor's Report
196-Responsibility Statement by the
Other Disclosures
Segment Information
168-STATEMENT ON CORPORATE GOVERNANCE (§ 289 a HGB)-
168
169
(Part of the Combined Management Report)
Information on the Company's Governing Constitution
Declaration of the Board of Management
and of the Supervisory Board pursuant to § 161 AktG
170
Members of the Board of Management
171
Members of the Supervisory Board
Company's Legal Representatives
174
181
182
184
188
Composition and Work Procedures of the Board of
Management of BMW AG and its Committees
Composition and Work Procedures of the Supervisory Board
of BMW AG and its Committees
Disclosures pursuant to the Act on Equal Gender Participation
Information on Corporate Governance Practices
Applied beyond Mandatory Requirements
Compliance in the BMW Group
Compensation Report
176
BMW
GROUP
Financial Services segment
% (change in %pts)
2,100
1,750
1,400
1,050
700
350
11 -12 -13 -14 -15
1,669.0 1,845.2 1,963.8 2,118.0 2,247.5
*Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
(2011: 94,400 units, 2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units,
2015: 282,000 units).
Profit before financial result
in € million
9,800
8,400
7,000
5,600
4,200
2,800
1,400
|||||
· 11
12 -13 14 -15
8,018
8,275 7,978 9,118 9,593
105
90
75
60
2,450
in € billion
Revenues
in thousand units
1,975
14.6
Other Entities
-168
3
-164
-154
211
37.0
Eliminations
-1,103
-937
-527
45
-163
Income taxes
Net profit
-2,476
4,907
Earnings per share in €
-7.45/7.47
-2,692
5,111
-7.75/7.77
-2,564
-5,329
-8.08/8.10
-2,890
5,817
8.83/8.85
-2,828
6,396
-9.70/9.72
2.1
10.0
9.9/9.8
5
BMW Group in figures
Sales volume of automobiles*
-664
30
15
Profit before tax
The main topics discussed at a two-day meeting of the Supervisory Board held during the second half of
the year were business and product strategy as well as long-term corporate planning.
During the first part of the meeting, the Board of Management reported on the results of the annual
Number ONE corporate strategy review. The Board of Management also provided information on the planned
further development of the Group's vehicle portfolio and its intention to continue its collaboration with
Toyota. In view of the increasing regulation of toxic emissions on key markets, the two boards discussed the
challenges facing the Group in the field of alternative drive technologies going forward and the strategic
importance of electric mobility. The Board of Management also reported in depth on topics relating to the
changing market environment and potential business opportunities emerging in connection with digitalisation
and vehicle connectivity, and provided an overview of its plans and activities in this field. The Supervisory
Board also gathered facts and figures on the BMW lightweight construction strategy.
As part of a series of vehicle presentations, members of the Supervisory Board took the opportunity to
drive selected BMW and MINI models on a test track, including the latest BMW 7 Series. Furthermore, the
current state of progress of selected vehicle development projects was presented and explained to the
Supervisory Board.
In the second part of the meeting, the Supervisory Board deliberated at length on the long-term corporate
forecast presented by the Board of Management for the years 2016 to 2021. The Board of Management also
described various crisis scenarios to the Supervisory Board. The Supervisory Board lauded the management
team's efforts to keep a tight control over fixed costs. After thorough examination and lengthy discussion,
the Supervisory Board; gave the plans its formal approval.
The performance and strategic direction of the Financial Services segment as well as risk management
in this area were also reported on. The consequences of stricter regulation of financial services were also
discussed.
The Supervisory Board deliberated on the annual budget presented by the Board of Management for the
financial year 2016, including the main external influencing factors identified.
Again in 2015, the Personnel Committee and the full Supervisory Board examined both the structure and
the amount of compensation that Board of Management members receive. In addition to reviewing trends
in business performance and board compensation on a multi-year basis, consideration was also given to the
development of the remuneration of senior management and employees of BMW AG within Germany over the
course of time. An external compensation consultant, independent of both the Board of Management and
BMW AG, was called upon to provide expert advice and assist the Supervisory Board in the evaluation of DAX
compensation studies. After a careful review, the Supervisory Board concluded that the level of compen-
sation of board members, including pension entitlements, is appropriate and that the compensation system
has proved its worth. The Supervisory Board therefore resolved not to propose any changes to the system of
Board of Management compensation in 2015.
9 REPORT OF THE SUPERVISORY BOARD
Further information on the compensation of Board of Management members is provided in the Compen-
sation Report (see section "Statement on Corporate Governance").
In 2015, the Board of Management and the Supervisory Board again conducted an in-depth review of the
corporate governance standards currently in place in the BMW Group as well as the rules set out in the German
Corporate Governance Code. In the most recent Declaration of Compliance issued in December 2015, both
boards decided that the BMW Group should comply with all of the recommendations issued by the German
Government Corporate Governance Code Commission on 12 June 2015, except for the disclosure of Board of
Management members' compensation in prescribed model tables, as the Supervisory Board is of the opinion
that these tables do not improve the clarity and comprehensibility of the Compensation Report. The wording
of the Declaration of Compliance is contained in the Corporate Governance Report.
Both the Personnel Committee and the Supervisory Board again asked the Board of Management to
describe the state of progress in implementing the BMW Group's diversity concept. This programme not only
relates to gender diversity, it also promotes both cultural diversity and a balanced mixture of age groups
among staff. The Board of Management also reported on the percentage of and development of female execu-
tives at various management levels within the Group and the targets determined by the Board of Management
for the two executive levels immediately below it. In addition, the Board of Management reported to the
Supervisory Board on measures to develop young talent for future strategic fields of expertise.
The Supervisory Board also consulted on the consequences of legislation relating to the equal participation
of women and men in management positions in Germany for the BMW Group's two boards. As its target for
the proportion of women on the Board of Management by 31 December 2016, the Supervisory Board
has stipulated that the Board of Management should continue to have at least one female member. Assuming
the Board of Management continues to comprise eight members, this would correspond to a ratio of at least
12.5%. The fact that the Supervisory Board considers it desirable to increase the proportion of women on the
board further supports the Board of Management's current raft of measures, which is also aimed at increasing
the proportion of women at the highest executive management levels of the BMW Group.
The legal minimum of 30 per cent of female and male members in the Supervisory Board that came into
force on 1 January 2016 is already being complied with, both in terms of the Supervisory Board in its entirety
and also for both shareholder and employee representatives.
One of the Supervisory Board meetings was held at the Landshut (Germany) site, at which the focus was
placed on purchasing strategy and the significance of BMW component-producing plants in terms of pur-
chasing and production. The Board of Management also elaborated on the requirements that result from the
distribution of sales volume and production sites across the world for the Group's purchasing team and
discussed with the Supervisory Board the measures necessary to establish a capable supplier base in growth
markets. During its visit to the plant, the Supervisory Board inspected the foundry as well as the production
facilities for electric motors and CFRP components.
The Supervisory Board decided upon specific appointment objectives for its own composition based on
a detailed composition profile, a description of which is provided in the Corporate Governance Report. In
line with a new recommendation contained in the German Corporate Governance Code, the appointment
objectives have been supplemented to include a maximum length of office on the Supervisory Board. Based
on a self-assessment, the Supervisory Board determined that its composition at 31 December 2015 complied
with its appointment objectives.
Apart from this matter, there were no indications of possible conflicts of interest on the part of Supervisory
Board members in the financial year 2015. Significant transactions with Supervisory Board members and
other related parties as defined by IAS 24, including close relatives and intermediate entities, are monitored
in the form of quarterly requests for relevant information.
The Supervisory Board endeavours to assess and continuously improve the efficiency of its work, including
that of its committees. Once a year, the efficiency examination is dealt with as a separate agenda point, at
10
which the members of the Board of Management are not present. Preparations for the examination are
facilitated by means of a questionnaire. As a result of the efficiency examination, suggestions for additional
topics of report were made during the year under report.
Each of the five Supervisory Board meetings in 2015 was attended on average by 95 per cent of its members,
a fact that can be corroborated by the analysis of attendance fees for individual members, as disclosed in the
Compensation Report. None of the members of the Supervisory Board took part in only half or less than half
of the meetings of the Supervisory Board, the Presiding Board or the committees to which the members
belong during their terms of office in the period under report.
Description of Presiding Board activities and committee work In order to work more efficiently and
prepare complex issues and decisions with greater thoroughness, the Supervisory Board has established a
Presiding Board and several committees. A description of the duties, composition and working procedures
of these committees is provided in the Corporate Governance Report.
The relevant chairmen reported at length on the status of Presiding Board and committee work at the
subsequent Supervisory Board meeting.
In a total of four meetings, the Presiding Board focused mainly on preparing topics for the meetings of
the full Supervisory Board, unless these fell under the remit of one of the committees. The treatment of more
extensive issues, such as the Long-term Business Forecast and the Annual Strategic Review, was prepared by
the Presiding Board on the basis of written and oral reports provided by Board of Management members and
senior department heads. The Presiding Board selected further topics of discussion for Supervisory Board
meetings and made suggestions to the Board of Management regarding items to be included in its reports to
the full Supervisory Board.
The Audit Committee held four meetings and three telephone conference calls during 2015. In those
telephone conference calls, the Audit Committee deliberated with the Board of Management on each of the
BMW Group's Quarterly Reports, prior to their publication. Representatives of the external auditors were
present during the telephone conference call held to present the Interim Financial Report for the six-month
period ended 30 June 2015. The report had been subjected to review by the external auditors.
The Audit Committee meeting held in spring 2015 was primarily dedicated to preparing the Supervisory
Board meeting at which the financial statements were examined. Prior to proposing KPMG AG Wirtschafts-
prüfungsgesellschaft for election as Company and Group auditor at the Annual General Meeting 2015, the
Audit Committee obtained a Declaration of Independence from the proposed auditor. The Audit Committee
also considered the scope and composition of non-audit services, including tax advisory services provided by
KPMG entities to the BMW Group. There were no indications of conflicts of interest, grounds for exclusion
or lack of independence on the part of the auditor.
The fee proposals for the audit of the year-end Company and Group Financial Statements 2015 and the
review of the six-month Interim Financial Report were deemed appropriate by the Audit Committee. Sub-
sequent to the Annual General Meeting 2015, the Audit Committee therefore appointed KPMG AG for the
relevant engagements and specified audit focus areas.
The Head of Group Controlling reported to the Audit Committee on the current risk profile and on risk
management processes and developments within the BMW Group.
The Head of Group Financial Reporting provided a description of various aspects of the internal control
system (ICS) underlying financial reporting and explained measures being taken to further improve the system.
Testing performed during the year under report did not highlight any material ICS weaknesses that could
jeopardise the system's effectiveness.
In the financial year 2015, the Personnel Committee took the decision to disburse any costs to current and
former members of the Board of Management that could arise in connection with a civil action brought by a
former supplier in the USA. As a former member of the Board of Management, I did not personally vote on
this resolution, which was taken as a precautionary measure.
1,723
At the first Supervisory Board meeting of the year, the Board of Management presented the new and
updated models scheduled for market launch in the course of 2015.
Furthermore, the Board of Management provided detailed information on both the ongoing status and
its plans for expanding capacities at various BMW Group production sites.
in € million
9,800
8,400
7,000
5,600
4,200
2,800
1,400
11 ―12 13 14 -15
68.8
76.8
76.1
80.4
8
92.2
-12 -13 -14 ―15
7,383
7,803 7,893 8,707 9,224
6
Norbert Reithofer - Chairman of the Supervisory Board
7 REPORT OF THE SUPERVISORY BOARD
Dear Shareholders,
Despite the volatile conditions prevailing on various markets, the BMW Group finished the financial year
2015 with another outstanding earnings performance, reaffirming its position as market leader in the
premium segment.
The BMW Group is now headed by Harald Krüger, who became the new Chairman of the Board of
Management on 13 May 2015. With this carefully planned generational change at the top of the Board of
Management, the Supervisory Board has not only ensured personnel continuity, it has also made an
important contribution to shaping the future strategy of the BMW Group.
Main emphases of the Supervisory Board's monitoring and advisory activities The Supervisory Board
performed the duties charged to it in accordance with the law and the Articles of Incorporation with the
utmost care. Throughout the financial year 2015, the Supervisory Board closely monitored the BMW Group's
business performance and macroeconomic developments on important markets, diligently supervised the
governance of the Board of Management and advised it on significant projects and plans.
In a total of five meetings, the Supervisory Board deliberated at great length on the current business and
financial situation of the Group. Further topics of particular focus and consultation at Supervisory Board
meetings were corporate strategy (including a whole range of key topics involving the future shape of
business), corporate forecasts and the strategy and management of the Financial Services segment. In addi-
tion, decisions were taken regarding personnel changes on the Board of Management and with respect to
corporate governance.
Furthermore, the Supervisory Board attentively monitored the BMW Group's business performance,
both at scheduled meetings and at other times, as the need arose. In particular, the Board of Management
provided regular reports on current sales and workforce figures. The Chairman of the Board of Management
kept the Chairman of the Supervisory Board well informed, both promptly and directly, on the progress
of important business projects and plans of strategic significance. In addition to scheduled meetings,
Dr Friedrich Eichiner, member of the Board of Management responsible for Finance, and Dr Karl-Ludwig Kley,
the Chairman of the Supervisory Board's Audit Committee, consulted with each other directly at other times.
In its regular reports on the financial condition of the Group, the Board of Management provided infor-
mation on sales volume developments, market competition issues relevant for the Automotive and Motorcycles
segments, and changes in the size of the workforce. The Board of Management also dealt with questions re-
garding economic developments and the prospects of the world's key regions. On the Financial Services side
of the business, the Board of Management provided regular updates on new business with retail customers
and changes in the portfolio of contracts with dealerships and retail customers as well as the total volume of
business. In its regular reports on the financial condition of the Group, the Board of Management also
reported to the Supervisory Board on any variances from budget.
Major transactions and projects were highlighted in the Board of Management's reports on business
developments, and deliberated on in subsequent discussions. For example, the Supervisory Board was kept
informed of the status of acquisition projects, such as the joint acquisition of the navigation data provider
HERE in conjunction with other partners as well as the purchase of a leasing company in China. Furthermore,
the Board of Management reported on the BMW Group's compliance with emissions limits and confirmed
that no distinction is made between “dyno mode" and on-road testing when measuring the exhaust emissions
of BMW Group vehicles. Over the course of the year under report, the two boards discussed at length eco-
nomic developments and business performance in China. Other subjects of discussion were progress in the
field of electric mobility, product quality and customer satisfaction.
11
RoE
-1,619
-1,790
- Financial Services
Other Entities
Eliminations
68,821
-76,848
-76,059
-80,401
-92,175
14.6
63,229
1,436
-17,510
5
-70,208
-1,490
-19,550
-70,630
1,504
-19,874
-75,173
-85,536
13.8
-1,679
1,990
-18.5
20,599
-23,739
15.2
5
6
.7
-7
Motorcycles
- Automotive
Revenues
25.6
29.4
21.2
20.0
-19.4
20.2
0.8
Further financial performance figures
in € million
Capital expenditure
3,692
5,240
-6,711
6,100
-13,359
5,890
Depreciation and amortisation
3,646
3,541
-3,741
4,170
4,659
11.7
Operating cash flow Automotive segment
-8,110
9,167
-9,964
-9,423
11,836
-3.4
-14,405
-15,955
-17,057
169
-1,248
-949
-437
-65
-575
Profit before tax
-7,383
-7,803
-7,893
8,707
9,224
5.9
-71
Automotive
-7,170
-6,561
-6,886
7,523
9.3
Motorcycles
41
6
-76
107
-179
67.3
Financial Services
6,823
1,561
44
-19
-19,097
-12.0
Profit before financial result (EBIT)
-8,018
-8,275
Automotive
Motorcycles
- Financial Services
Other Entities
Eliminations
-7,477
45
-7,599
-7,978
-6,649
58
-9,118
5.2
-7,244
-7,836
-8.2
9
1,763
-1,558
-79
1,643
-112
1,756
182
62.5
1,981
12.8
9,593
ANNUAL REPORT 2015
Glossary
-2014
2015
2014
Eliminations
(unaudited supplementary information)
2015
2014
(unaudited supplementary information)
Assets
54
424
445
285
30
34
48
313
Other Entities
2014
2015
59,078
35,386
33,769
Total equity and liabilities
172,174
154,803
83,352
79,131
- Motorcycles
(unaudited supplementary information)
2015
2014
93 GROUP FINANCIAL STATEMENTS
Financial Services
(unaudited supplementary information)
-41,148
65,591
35,366
-5,204
-367
-599
-2,596
-384
Financial assets
25
-20
-205
2,469
22,268
21,895
-27,129
386
359
86,396
1,913
287
-222
-1,751
2
5,966
5,808
-10,687
-10,516
41,865
- 37,438
Intangible assets
Property, plant and equipment
- Leased products
Investments accounted for using the equity method -
Other investments
Receivables from sales financing
-236
210
1,985
-6,183
Current provisions and liabilities
-18,794
20,111
- 3,777
Deferred tax
16
-2,116
-1,974
429
4,141
-421
38
-49,523
43,167
2,621
1,933
Other liabilities
Financial liabilities
4,268
4,621
36
37,220
Minority interest
Equity
Pension provisions.
34-
234
42,764
-217
37,437
33,460
31,045
35
3,000
- 4,604
-1,770
-2,741
Other provisions
39
4,559
-4,275
5,545
38
-42,160
37,482
3,211
3,250
Trade payables
40
-7,773
-7,709
6,856
6,929
Other liabilities
39
-9,208
-7,775
Financial liabilities
75,699
-1,050
-1,590
5,445
Non-current provisions and liabilities
63,819
58,288
14,506
14,317
Other provisions
36
5,009
-4,522
4,398
3,746
Current tax
37
1,441
810
42,530
30,425
-47,194
21
-18
-17
1
-7
-7
157
189
22
- Total
Foreign
Germany
Included at 31 December 2015
No longer included in 2015
-167
178
41 subsidiaries (2014: 43), either dormant or generating
a negligible volume of business, and four joint opera-
tions (2014: 4) are not consolidated on the grounds
that their inclusion would not influence the economic
decisions of users of the Group Financial Statements.
Non-inclusion of operating subsidiaries and joint opera-
tions reduces total Group revenues by 0.3% (2014: 0.3%).
Together with SGL Carbon SE, Wiesbaden, the BMW
Group is party to three joint operations that manufacture
carbon fibres and carbon fibre fabrics used in vehicle
production. The joint operations - SGL Automotive
Carbon Fibers GmbH & Co. KG, Munich, SGL Automo-
tive Carbon Fibers Verwaltungs GmbH, Munich, and
SGL Automotive Carbon Fibers LLC, Dover, DE - are
consolidated proportionately on the basis of the BMW
Group's 49% shareholding.
113 Notes to the Income Statement
121 Notes to the Statement
98-Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
90
90-GROUP FINANCIAL STATEMENTS
Income Statements
100
No entities were consolidated fully for the first time in
the financial year 2015. LARGUS Grundstücks-Verwal-
tungsgesellschaft mbH & Co. KG, Munich, was merged
with LARGUS Grundstücks-Verwaltungsgesellschaft
mbH, Munich, and therefore ceased to be a separate
consolidated company. BMW Services Italia S.p.A., San
Donato Milanese, was merged with BMW Italia S.p.A.,
Milan, and ceased to be a separate consolidated com-
A "List of Group Investments" pursuant to § 313 (2)
HGB will be submitted to the operator of the electronic
version of the German Federal Gazette. This list, along
with the "List of Third Party Companies which are not
of Minor Importance for the Group", will also be posted
on the BMW Group website at www.bmwgroup.com/ir.
As in the previous year, seven participations are not
consolidated using the equity method on the grounds of
immateriality. They are included in the Group balance
sheet in the line "Other investments", measured at cost
less - where applicable - accumulated impairment
losses.
The joint ventures, BMW Brilliance Automotive Ltd.,
Shenyang, DriveNow GmbH & Co. KG, Munich, and
DriveNow Verwaltungs GmbH, Munich, are accounted
for using the equity method.
Included for the first time in 2015
of Comprehensive Income
Included at 31 December 2014
trusts (almost all used for asset-backed financing
transactions).
The Group Financial Statements comply with § 315a of
the German Commercial Code (HGB). This provision,
in conjunction with the Regulation (EC) No. 1606/2002
of the European Parliament and Council of 19 July
2002, relating to the application of International Finan-
cial Reporting Standards, provides the legal basis for
preparing consolidated financial statements in accord-
ance with international standards in Germany and
applies to financial years beginning on or after 1 January
2005.
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (BMWAG Group Finan-
cial Statements or Group Financial Statements) at 31 De-
cember 2015 have been drawn up in accordance with
International Financial Reporting Standards (IFRS) as
endorsed by the EU. The designation "IFRS" also in-
cludes all valid International Accounting Standards (IAS).
All Interpretations of the IFRS Interpretations Commit-
tee (IFRIC) mandatory for the financial year 2015 are
also applied.
1-Basis of preparation
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
113 Notes to the Income Statement
121 Notes to the Statement
98-Accounting Principles and
Policies
The BMW Group and segment income statements are
presented using the cost of sales method. The Group
and segment balance sheets correspond to the classi-
fication provisions contained in IAS 1 (Presentation of
Financial Statements).
98-Notes
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
90
90-GROUP FINANCIAL STATEMENTS
Income Statements
96 Group Statement of Changes in
Equity
In order to improve clarity, various items are aggregated
in the income statements and balance sheets presented.
These items are disclosed and analysed separately in the
notes.
A Statement of Comprehensive Income is presented at
Group level reconciling the net profit to comprehensive
income for the year.
The BMW AG Group Financial Statements include,
besides BMW AG, all material subsidiaries, one spe-
cial purpose securities fund and 21 special purpose
The scope of the consolidated financial statements is
based on the application of IFRS 10 (Consolidated
Financial Statements) and IFRS 11 (Joint Arrangements).
2-Consolidated companies
The Board of Management authorised the Group
Financial Statements for issue on 18 February 2016.
tronic version of the German Federal Gazette and
can be obtained via the Company Register website.
Printed copies will also be made available on re-
quest. In addition the Group Financial Statements
and the Combined Management Report can be
downloaded from the BMW Group website at www.
bmwgroup.com/ir.
The Group Financial Statements, drawn up in accord-
ance with § 315a HGB, and the Combined Manage-
ment Report for the financial year ended 31 December
2015 will be submitted to the operator of the elec-
All consolidated subsidiaries have the same year-end as
BMW AG with the exception of BMW India Private Ltd.,
Gurgaon, and BMW India Financial Services Private
Ltd., Gurgaon, both of whose year-ends are 31 March in
accordance with local legal requirements.
99 GROUP FINANCIAL STATEMENTS
Bayerische Motoren Werke Aktiengesellschaft has its
seat in Munich, Petuelring 130, and is registered in the
Commercial Register of the District Court of Munich
under the number HRB 42243.
The Group currency is the euro. All amounts are dis-
closed in millions of euros (€ million) unless stated
otherwise.
In addition to credit financing and leasing contracts, the
Financial Services segment also brokers insurance busi-
ness via cooperation arrangements entered into with
local insurance companies. These activities are not ma-
terial to the BMW Group as a whole.
In conjunction with the refinancing of financial services
business, a significant volume of receivables arising
from retail customer and dealer financing is sold. Simi-
larly, rights and obligations relating to leases are sold.
The sale of receivables is a well-established instrument
used by industrial companies. These transactions usually
take the form of asset-backed financing transactions
involving the sale of a portfolio of receivables to a trust
which, in turn, issues marketable securities to refinance
the purchase price. The BMW Group continues to "ser-
vice" the receivables and receives an appropriate fee for
these services. Such assets remain in the Group Finan-
cial Statements although they have been legally sold.
Gains and losses relating to the sale of such assets are
not recognised until the assets are removed from the
Group balance sheet. Special purpose trusts/entities
are included as consolidated companies in accordance
with IFRS 10 (Consolidated Financial Statements).
Inter-segment transactions - relating primarily to inter-
nal sales of products, the provision of funds and the
related interest – are eliminated in the “Eliminations"
column. Further information regarding the allocation
of activities of the BMW Group to segments and a
description of the segments is provided in note 49.
In order to facilitate the sale of its products, the BMW
Group provides various financial services - mainly loan
and lease financing – to both retail customers and dealers.
The inclusion of the financial services activities of the
Group therefore has an impact on the Group Financial
Statements.
In order to provide a better insight into the net assets,
financial position and performance of the BMW Group
and going beyond the requirements of IFRS 8 (Operat-
ing Segments), the Group Financial Statements also
include balance sheets and income statements for the
Automotive, Motorcycles, Financial Services and Other
Entities segments. The Group Cash Flow Statement is
supplemented by statements of cash flows for the Auto-
motive and Financial Services segments. This supple-
mentary information is unaudited.
The number of subsidiaries - including the special
purpose securities fund and special purpose trusts -
consolidated in the Group Financial Statements
changed in 2015 as follows:
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
pany. Furthermore, the non-consolidated entity, BMW
Forschung und Technik GmbH, Munich, was merged
with BMW AG.
3-Business acquisitions
-1,104
898
618
-699
-514
Inventories
Trade receivables
-102
Receivables from sales financing
Current tax
4,540
-1,359
592
511
35,633
Financial assets
1,121
-1,048
-23,586
-1,846
-26,396
-44,346
Deferred tax
Other assets
Non-current assets
-453
383
-7
8
-139
128
-158
-137
1
1
28,178
1,354
37
3,953
1,783
30,617
45,379
-811
48,416
-36,682
-153
38,352
2014
-Financial Services
(unaudited supplementary information)
In the case of a joint operation, the parties that have
joint control of the arrangement have rights to the
assets, and obligations for the liabilities, relating to the
arrangement. Assets, liabilities, revenues and expenses
of a joint operation are recognised proportionately
in the Group Financial Statements on the basis of the
BMW Group's rights and obligations.
Joint operations and joint ventures are forms of joint
arrangements. Such an arrangement exists when the
BMW Group jointly carries out activities on the basis of
a contractual agreement with a third party that requires
the unanimous consent of both parties with respect to
all significant activities of the joint arrangement.
Receivables, payables, provisions, income and expenses
and profits between consolidated companies (intragroup
results) are eliminated on consolidation.
The equity of subsidiaries is consolidated in accordance
with IFRS 3 (Business Combinations). IFRS 3 requires
that all business combinations are accounted for using
the acquisition method, whereby identifiable assets and
liabilities acquired are measured at their fair value at
acquisition date. An excess of acquisition cost over the
Group's share of the net fair value of identifiable assets,
liabilities and contingent liabilities is recognised as good-
will in a separate balance sheet line item and allocated
to the relevant cash-generating unit (CGU).
4-Consolidation principles
THERE Holding B.V., Amsterdam, is included in the
BMW AG Group Financial Statements as an associated
company using the equity method and allocated for
segment reporting purposes to the Automotive segment.
In view of the proximity of the reporting date and on
the grounds of materiality, no fair value adjustments
were recorded in conjunction with the at-equity carry-
ing amount at 31 December 2015, with the consequence
that the Group's interest is accounted for at cost at that
date. The purchase price allocation is expected to be com-
pleted in the first quarter of 2016.
BMW, AUDI and Daimler jointly acquired HERE's map-
ping service with effect from 4 December 2015. Out of
the total purchase price of €2.6 billion (subject to pur-
chase price adjustments), an amount of €0.6 billion was
financed via bank loans taken up by the intermediary
acquiring entity. The remainder is being financed by the
three partners in equal parts. The BMW Group's share
of this amount was approximately €0.67 billion.
B.V., The Hague, the BMW Group has a 33.3% share-
holding in THERE Holding B.V., Amsterdam.
THERE Holding B.V., Amsterdam, is included in the
BMW AG Group Financial Statements for the
year
ended 31 December 2015 as an associated company using
the equity method (see also note 3).
THERE Holding B.V., Amsterdam, and its wholly owned
subsidiary, HERE International B.V., Amsterdam (until
28 January 2016: THERE Acquisition B.V., Amsterdam)
were founded in connection with the acquisition. HERE
International B.V., Amsterdam, acquired all of the shares
of the HERE Group. Via BMW International Holding
The HERE Group's digital maps are fundamental for the
next generation of mobility and location-based services,
providing the basis for new assistance systems and, ulti-
mately, fully autonomous driving. Using high-precision
digital maps in combination with real-time vehicle data,
it will be possible to increase road safety and facilitate the
development of innovative new products and services.
In August 2015, BMW AG (Munich), Daimler AG (Stutt-
gart) and AUDI AG (Ingolstadt) agreed with Nokia
Corporation, Helsinki, to acquire that entity's maps and
location-based services business (HERE Group), as part
of a joint strategy to secure the long-term availability of
HERE's products and services as an open, independent
and value-creating platform for cloud-based maps and
other mobility services.
2015
29,822
(unaudited supplementary information)
Total assets
-65,133
-54,828
Other assets
Cash and cash equivalents
-65,832
-55,342
Current assets
978
870
122,029
106,316
78,841
68,174
-113,026
-99,688
- Motorcycles
Notes to the Group Financial Statements
Accounting Principles and Policies
34-
-1,062
-664
-163
Other financial result
Financial result
Profit/loss before tax
-34
154
-528
-73
-49
-204
83
Income taxes
73
-525
211
1,723
1,975
-1,080
-1,197
-1,323
1,234
-1,430
1,332
Interest and similar expenses
-3
-8
-55
-15
-6
-33
42
83
-89
-98
1,447
-29
1,198
105
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
Diluted earnings per share of common stock in € —
Diluted earnings per share of preferred stock in € -
92
BMW Group
Balance Sheets for Group and Segments at 31 December
Assets
Attributable to shareholders of BMW AG
Note
Automotive
(unaudited supplementary information)
in € million
2015
2014
2015
2014
Group
Attributable to minority interest.
-55
༄། ༅| ཤྩ ༄| ་ ༄
-460
-80
Net profit/loss
-21
11
1
1
73
1,426
1,187
137
104
-460
-80
༄།༄|ཉཋ| | |
138
-7
-1,295
1,177
7
-19,097
-17,783
-18,484
-17,057
-16,973
-Revenues
7
Cost of sales
314
3,153
2,816
7
7
-613
448
20,599
23,739
-20,586
-1,365
91 GROUP FINANCIAL STATEMENTS
Motorcycles
Financial Services
Other Entities
Eliminations
(unaudited supplementary information) (unaudited supplementary information) (unaudited supplementary information) (unaudited supplementary information)
2015 2014
2015
2014
2015
-2014
2015 2014
-1,990
-1,679
-1,542
-84
Gross profit
-239
-201
-78
83
- Other operating expenses
112
1,981
1,756
169
71
-575
-65
-3
Profit/loss before financial result
Result from equity accounted investments
Interest and similar income
4
4
-44
Intangible assets
-46
-54
-1,164
-1,035
-30
-28
19
-17
Selling and administrative expenses
-46
-73
238
136
-59
-81
- Other operating income
-27
182
-98
Equity attributable to shareholders of BMWAG
22.
-6,499
42,706
Total assets
172,174
154,803
83,352
79,131
43,022
90-GROUP FINANCIAL STATEMENTS
Income Statements
90 Statement of
Comprehensive Income
92-Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
90
56,844
61,831
5,752
5,384
4,859
3,952
-2,381
-1,906
-1,240
-1,186
-4,693
-5,038
-19,907
-19,231
33
-6,122
-7,688
3,952
Equity
6,635
98 Notes
113 Notes to the Income Statement
Revenue reserves
Accumulated other equity
3333
34-
657
656
Capital reserves
34
- 2,005
34-
-41,027
35,621
34.
-1,181
-2,027
2014
2015
2014
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Other assets
Cash and cash equivalents
Current assets
Equity and liabilities
in € million
Subscribed capital
Note
Group
Automotive
(unaudited supplementary information)
2015
98 Accounting Principles and
Policies
23,586
-28,178
-1,887
Other investments
26
428
-408
5,147
5,110
-1,088
Receivables from sales financing
-41,865
37,438
Financial assets
28-
2,208
2,024
27-
2,233
-1,088
-2,233
6,899
-5,999
Property, plant and equipment
2015
-17,759
-17,182
-17,416
-16,863
Leased products
24-
-34,965
30,165
3
Investments accounted for using the equity method
25
586
447
Deferred tax
16
31.
32
27-
28
Current tax
29
30
| | | |
-11,071
-11,089
-10,611
-10,698
2,751
- 2,153
2,453
Financial assets
-7,372
Receivables from sales financing
Inventories
-1,945
-2,061
4,114
-3,253
Other assets
Non-current assets
30
-1,568
-1,094
3,935
- 3,662
110,343
97,959
40,330
36,425
Trade receivables
BMW Group
23
31 December 2015
Change in current other financial liabilities
Repayment of non-current other financial liabilities
Proceeds from new non-current other financial liabilities
Repayment of bonds
Proceeds from the issue of bonds
Interest paid
-23
-1,917
Intragroup financing and equity transactions
Payments into equity
Issue/buy-back of treasury shares
-4,072
-6,116
5,659
-7,603
43-
Cash inflow/outflow from investing activities
Payment of dividend for the previous year
15
-1,715
Change in commercial paper -
-498
2,132
2,648
-5,697
-8,802
- 5,900
9,715
-7,249
-8,908
10,892
-13,007
-133
-264
Effect of exchange rate on cash and cash equivalents
Cash inflow/outflow from financing activities
Proceeds from the sale of marketable securities and from matured term deposits
-1,012
-4,216
Investments in marketable securities and term deposits
-25
379
-566
-971
298
-551
41
-293
Interest received
Income taxes paid
Change in other operating assets and liabilities
-Change in trade payables
Change in trade receivables
Change in inventories
Cash inflow/outflow from operating activities
550
323
-3,323
-190
-215
Proceeds from the disposal of investments
-99
-7461
36
-6,099
-5,889
-38
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investments
Investment in intangible assets and property, plant and equipment
2,912
-137
132
960
43-
-4,252
-6,880
43-
5,004
3,133
-369
-3,898
-6,637
-3,309
-4,026
-15
-124
3
172
-1,034
128
29
31
4,230
-109
579
383
Change in deferred taxes
367
-70
46
-552
-337
-655
-518
8
-5
-54
-138
-14
5
-5
316
4,577
-24²
-12
159
7,688
6,122
Cash and cash equivalents as at 31 December
-7,671
-7,688
Cash and cash equivalents as at 1 January
17
-1,566
43-
Change in cash and cash equivalents
│ '།
༅། ས།
Effect of changes in composition of Group on cash and cash equivalents
86
73
1 Expenditure for investments includes the acquisition of shares in THERE Holding B.V., Amsterdam, amounting to €668 million.
2 Interest relating to financial services business is classified as revenues/cost of sales.
Changes in working capital
Automotive
- Financial Services
-302
-40
-125
2,786
-2,893
Net profit
1,198
-1,447
4,521
-5,147
2014
2015
2014
2015
(unaudited supplementary information) (unaudited supplementary information)
95 GROUP FINANCIAL STATEMENTS
-907
147 Other Disclosures
163 Segment Information
of Comprehensive Income
-3,538
-384
-4,499
-599
-25,835
-30,933
-51
28,755
- 26,923
31,471
-835
33,495
43,801
-25,258
-29,180
46,169
582
-23,680
23,613
.357
401
14,695
595
Pension provisions
Other provisions
Deferred tax
432
-162
-19,122
571
-32,871
53,158
518
223
23,038
630
41,503
65,912
275
396
21
48
192
263
62
85
Current tax
Other provisions
Non-current provisions and liabilities
- Other liabilities
- Financial liabilities
16,030
8
408
-16,610
24
58
-13
-1,130
31
28
Accumulated other equity
Revenue reserves
Capital reserves
Subscribed capital
2015
(unaudited supplementary information)
Equity attributable to shareholders of BMW AG
2014
2014
(unaudited supplementary information)
Eliminations
Equity and liabilities
Other Entities
98
2015
Minority interest
=
9,948
5,078
-6,158
-75
273
-313
160
136
55
-78
45
Equity
-14,996
-15,869
12,031
15,225
9,357
1,710
-282
378
-15,624
17
-699
-514
-331
-47
-116
-77
Change in deferred taxes
-3,898
Gain/loss on disposal of tangible and intangible assets and marketable securities
-6,637
-2,720
-3,299
Change in leased products
-1,103
-296
Change in provisions
Change in receivables from sales financing
-144
-63
Result from equity accounted investments -
121 Notes to the Statement
113 Notes to the Income Statement
98 Accounting Principles and
Policies
98 Notes
Equity
96 Group Statement of Changes in
94-Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
Income Statements
90
90-GROUP FINANCIAL STATEMENTS
-655
-518
4,323
4,686
Depreciation and amortisation of other tangible, intangible and investment assets
-127
68,174
78,841
106,316
122,029
870
978
Current provisions and liabilities
Other liabilities
-54,998
-55,512
-65,525
-66,224
11,087
27,388
30,121
13,071
Trade payables
Financial liabilities
-113,026
122 Notes to the Balance Sheet
-99,688
94
-239
Other interest and similar income/expenses
2,774
2,751
Reconciliation between net profit and cash inflow/outflow from operating activities
Current tax
5,817
6,396
Net profit
2014
Group
2015
Note
in € million
Cash Flow Statements for Group and Segments
BMW Group
Total equity and liabilities
1
Other non-cash income and expense items
371
Minority
Equity
Accumulated other equity
97 GROUP FINANCIAL STATEMENTS
41,027
2,027
-Total
657
-71
7,381
-1,012
6,369
22
-1,904
34-
attributable to
shareholders
interest
of BMW AG
5,798
Dividends paid
-1,707
-1,707
1 January 2014
35,600
188
35,412
1,136
135
-1,627
Derivative
financial
instruments
differences
Securities
Currency
translation
35,621
19
2,005
34-
capital
Capital
Subscribed
Note
31 December 2015
Premium arising on capital increase relating to preferred stock
Other changes
reserves
Subscribed share capital increase out of Authorised Capital
Net profit
Dividends paid
1 January 2015
in € million
31 December 2014
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
Other comprehensive income for the period after tax
Comprehensive income 31 December 2015
Revenue reserves
34-
656
Revenue reserves
- Capital
reserves
Subscribed
capital
Note
35,621
2,005
656
34-
4,206
-1,592
5,798
15
-1,707
33,122
1,990
656
904
904
6
-1,616
27
7,262
-857
-117
855
893
7,289
-893
-117
-855
-6,396
27
6,369
Dividends paid
-857
1
1
22
- Premium arising on capital increase relating to preferred stock -
Other changes
-541
- Subscribed share capital increase out of Authorised Capital -
Other comprehensive income for the period after tax
Comprehensive income 31 December 2015
-Net profit
42,764
234
42,530
-1,337
24
132
-81
-10
-71
22
-1,904
-1,904
1 January 2015
37,437
141
-723
- Premium arising on capital increase relating to preferred stock -
Other changes
-10
-10
-15
15
- Subscribed share capital increase out of Authorised Capital
3,519
19
3,500
-1,616
- Net profit
5,817
-2,298
-2,298
-480
Other comprehensive income for the period after tax
Comprehensive income 31 December 2014
37,220
37,437
217
37,220
-480
141
-723
-Derivative
financial
instruments
differences
translation
Securities
Currency
-Total
Minority
interest
-Equity
attributable to
shareholders
of BMW AG
Accumulated other equity
31 December 2014
217
Net profit
- Other comprehensive income for the period after tax
Comprehensive income 31 December 2014
1 January 2014
-5,836
-7,524
-170
-253
3,881
-5,406
-140
-458
-3,775
-6,498
177
144
-134
36
-387
-297
Cash inflow/outflow from operating activities
- Investment in intangible assets and property, plant and equipment
-4,299
-2,840
-1,715
-1,917
-15
23
Intragroup financing and equity transactions
Payment of dividend for the previous year
Payments into equity
Issue/buy-back of treasury shares
- Proceeds from the sale of marketable securities and from matured term deposits
Cash inflow/outflow from investing activities
Investments in marketable securities and term deposits
Proceeds from the disposal of investments
Expenditure for investments
Proceeds from the disposal of intangible assets and property, plant and equipment
-823
38
-6,021
-5,791
Result from equity accounted investments
Gain/loss on disposal of tangible and intangible assets and marketable securities-
Other non-cash income and expense items
Change in receivables from sales financing
Change in leased products
Depreciation and amortisation of other tangible, intangible and investment assets
Change in provisions
- Other interest and similar income/expenses
Reconciliation between net profit and cash inflow/outflow from operating activities
Current tax
56
60
-16
-163
Dividends paid
-15
14
Changes in working capital
5,913
- Change in inventories
Change in trade payables -
-10,351
Interest received
-180
9,423
11,836
-132
Income taxes paid
-161
-133
-2,531
-2,595
Change in other operating assets and liabilities
858
-1,706
419
-2,295
- Change in trade receivables
4,094
-4,715
-136
90-GROUP FINANCIAL STATEMENTS
Cash and cash equivalents as at 31 December
- Cash and cash equivalents as at 1 January
879
1,783
1,359
5,752
3,952
-1,783
6,775
5,752
-1,023
-1,800
Change in cash and cash equivalents
Effect of changes in composition of Group on cash and cash equivalents
904
Income Statements
-424
90 Statement of
92 Balance Sheets
in € million
Group Statement of Changes in Equity
BMW Group
-264
96
147 Other Disclosures
163 Segment Information
122 Notes to the Balance Sheet
of Comprehensive Income
121 Notes to the Statement
113 Notes to the Income Statement
98 Accounting Principles and
Policies
98 Notes
Equity
96 - Group Statement of Changes in
94 Cash Flow Statements
Comprehensive Income
_
90
5,298
-4,814
-7,671
-41
-521
Proceeds from new non-current other financial liabilities
-8,787
-773
452
108
Repayment of bonds
Proceeds from the issue of bonds
-733
Interest paid
2
-1,009
-719
Repayment of non-current other financial liabilities
Cash inflow/outflow from financing activities
-3,343
-1,073
-429
Change in current other financial liabilities
Change in commercial paper
-6,130
-4,682
Effect of exchange rate on cash and cash equivalents
10,028
5,927
-1,042
18
70
39
-11
IASB
EU
12.11.2009/
1.1.2018
Financial Instruments
IFRS 9
Expected impact
on BMW Group
Acquisition of an Interest in a Joint Operation
application
Date of
mandatory
Date of
issue by IASB
Standard/Interpretation
(b) Financial reporting pronouncements issued by the IASB, but not yet applied
No Significant in principle
110
1 Mandatory application in annual periods beginning on or after 1 February 2015.
2 Mandatory application in annual periods beginning on or after 17 June 2014.
Insignificant
Date of
mandatory
application
28.10.2010/
Insignificant
19.11.2013/
IFRS 11
IFRS 10, IFRS 12 and IAS 28)
1.1.2015
-6.5.2014
IAS 28
Consolidation Exception (Amendments to
IFRS 12/
No
16.12.2011/
-1.1.2016
Investment Entities: Applying the
IFRS 10/
Insignificant
No
-11.9.2014
Sale or Contribution of Assets between an
Investor and an Associate or Joint Venture
(Amendments to IFRS 10 and IAS 28)
IFRS 10/
IAS 28
24.7.2014
18.12.2014
1.7.2014
In the event of involvement in legal proceedings or
when claims are brought against a Group entity, provi-
sions for litigation and liability risks are recognised
when an outflow of resources is probable and a reliable
estimate can be made of the amount of the obligation.
Management is required to make assumptions with re-
spect to the probability of occurrence, the amount in-
volved and the duration of the legal dispute. For these
reasons, the recognition and measurement of provi-
sions for litigation and liability risks are subject to un-
certainty. The outcome of legal proceedings is often
difficult to predict. Further information is provided in
Insignificant
Date of
Standard/Interpretation
2015:
(a) Financial reporting rules applied for the first time in the financial year 2015
The following Standards, Revised Standards, Amendments and Interpretations were applied for the first time in
the financial year
8-Financial reporting rules
Determining the scope of consolidated companies to be
included in the Group Financial Statements may involve
the use of judgement. In particular when the BMW
Group holds 50% or less of the voting rights, a detailed
assessment must be made as to whether sole control,
joint control or significant influence applies. For instance,
other contractual rights and/or other matters and cir-
cumstances could result in the conclusion that the BMW
entity concerned controls or jointly controls an entity
in which it has a participation. In the latter case, it must
then be decided whether the joint arrangement is a joint
operation or a joint venture. In making its judgement,
the BMW Group must take all contractual arrangements
and other circumstances into account, and not just the
structure and legal form of the entity. A new assessment
is made in the event of any indication of changes in the
previous assessment of (joint) control. Further informa-
tion is provided in note 2.
In addition, judgement is required in particular when
assessing whether the risks and rewards incidental to
ownership of a leased asset have been transferred for
the purposes of determining the classification of leasing
arrangements.
note 36. If the recognition and measurement criteria
relevant for provisions are not fulfilled and the possi-
bility of any outflow in settlement is remote,
the poten-
tial obligation is disclosed as a contingent liability.
depending on the product and sales market concerned.
Warranty provisions are recognised when the risks and
rewards of ownership of the goods are transferred to
the dealer or retail customer or when a new category of
warranty is introduced. In order to determine the level
of the provision, various factors are taken into considera-
tion, including estimations based on past experience
with the nature and amount of claims. These estima-
tions also involve assessing the future level of potential
repair costs and price increases per product and mar-
ket. Provisions for warranties are adjusted regularly to
take account of new circumstances and the impact of
any changes recognised in the income statement. Further
information is provided in note 36. Similar estimates
are also made in conjunction with the measurement of
expected reimbursement claims.
109 GROUP FINANCIAL STATEMENTS
Estimations are required for the purposes of recognising
and measuring provisions for warranty obligations
(statutory, contractual and voluntary). In addition to
statutorily prescribed manufacturer warranties, the
BMW Group also offers various categories of warranty
note 35.
The calculation of pension provisions requires assump-
tions to be made with regard to discount factors, salary
trends, employee fluctuation and the life expectancy
of employees. As in previous years, discount factors are
determined by reference to market yields at the end
of the reporting period on high quality corporate bonds.
The salary level trend refers to the expected rate of
salary increase which is estimated annually depending
on inflation and the career development of employees
within the Group. Further information is provided in
The calculation of deferred tax assets requires assump-
tions to be made with regard to the level of future tax-
able income and the timing of recovery of deferred tax
assets. These assumptions take account of forecast oper-
ating results and the impact on earnings of the reversal
of taxable temporary differences. Since future busi-
ness developments cannot be predicted with certainty
and to some extent cannot be influenced by the BMW
Group, the measurement of deferred tax assets is sub-
ject to uncertainty. Further information is provided in
-1.1.2016
note 16.
Current income taxes are computed throughout the
BMW Group in accordance with tax legislation appli-
cable in each relevant country. In situations where a
permissible element of discretion has been applied
in determining the amount of a tax exposure to be
recognised in the financial statements, there is always
a possibility that local tax authorities reach a dif-
may
ferent conclusion.
issue by IASB
Date of
mandatory
application
IASB
Date of
mandatory
application
EU
Impact
Insignificant
-17.6.2014²
1.2.20151
-1.7.2014
12.12.2013
1.1.2014
20.5.2013
Annual Improvements to IFRS 2011-2013
Annual Improvements to IFRS 2010-2012
12.12.2013
Levies
Employee Contributions (Amendments to
IAS 19)
Insignificant
1.2.20151
1.7.2014
21.11.2013
Employment Benefits:-
IAS 19
on BMW Group
IFRIC 21
1.1.2016
Equity Method in Separate Financial
(Amendments to IFRS 11)
IAS 16/-
IAS 41
(Amendments to IAS 16 and IAS 38)
Insignificant
1.1.2016
1.1.2016
12.5.2014
Clarification of Acceptable Methods of
Depreciation and Amortisation
IAS 38
Agriculture: Bearer Plants -
IAS 16/
for Unrealised Losses
Insignificant
No
1.1.2017
19.1.2016
Recognition of Deferred Tax Assets
IAS 12
163 Segment Information
(Amendments to IAS 12)
147 Other Disclosures
30.6.2014
1.1.2016
- None
1 The mandatory effective date for the Amendments was deferred by the IASB for an indefinite period on 17 December 2015.
2 Interim standard IFRS 14 will not be endorsed into EU law.
in note 27.
- No
1.1.2017
-21.5.2015
Insignificant
1.1.2016
1.1.2016
1.1.2016
Statements (Amendments to IAS 27)
Annual Improvements to IFRS 2012-2014
Amendments to "International Financial
Reporting Standard for Small and Medium-
sized Entities" (IFRS for SMEs)
None
1.1.2016
-1.1.2016
12.8.2014
IAS 27
(Amendments to IAS 16 and IAS 41)
None
25.9.2014
Insignificant
Amendments to IAS 7)
of Comprehensive Income
92 Balance Sheets
Comprehensive Income
11.9.2015
90 Statement of
Income Statements
90
No Significant in principle
-1.1.2018
IFRS 16
28.5.2014/
IFRS 15-
90-GROUP FINANCIAL STATEMENTS
Insignificant
No²
-1.1.2016
30.1.2014
Regulatory Deferral Accounts
IFRS 14
Revenue from Contracts with Customers
122 Notes to the Balance Sheet
Leases
1.1.2019
Insignificant
No
1.1.2017
29.1.2016
Cash Flow Statements (Initiative to
Improve Disclosure Requirements -
IAS 7
113 Notes to the Income Statement
121 Notes to the Statement
Policies
13.1.2016
-Significant in principle
1.1.2016 Significant in principle
18.12.2014
Presentation of Financial Statements
(Initiative to Improve Disclosure Require-
ments Amendments to IAS 1)
98-Accounting Principles and
98-Notes
IAS 1
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
-No
-1.1.2016
these purposes, the main factors taken into consideration
are past experience, current market data (such as the
level of financing business arrears), rating classes and
scoring information. Further information is provided
-7.53
The bad debt risk relating to receivables from sales
financing is assessed regularly by the BMW Group. For
Share-based remuneration programmes expected to be
settled in cash are revalued to their fair value at each
balance sheet date between the grant date and the settle-
ment date and on the settlement date itself. The ex-
pense for such programmes is recognised in the income
statement (as personnel expense) over the vesting pe-
riod of the programmes and recognised in the balance
sheet as a provision.
Share-based remuneration programmes which are ex-
pected to be settled in shares are, in accordance with
IFRS 2 (Share-based Payments), measured at their fair
value at grant date. The related expense is recognised
in the income statement (as personnel expense) over the
vesting period, with a contra (credit) entry recorded
against capital reserves.
as attributable to each category of stock, by the average
number of outstanding shares. The net profit is accord-
ingly allocated to the different categories of stock. The
portion of the Group net profit for the year which is not
being distributed is allocated to each category of stock
based on the number of outstanding shares. Profits
available for distribution are determined directly on the
basis of the dividend resolutions passed for common
and preferred stock. Diluted earnings per share are dis-
closed separately.
Basic earnings per share are computed in accordance
with IAS 33 (Earnings per Share). Basic earnings per
share are calculated for common and preferred stock by
dividing the Group net profit after minority interests,
In accordance with IAS 20 (Accounting for Government
Grants and Disclosure of Government Assistance),
public sector grants are not recognised until there is rea-
sonable assurance that the conditions attaching to them
have been complied with and the grants will be received.
The resulting income is recognised in cost of sales over
the periods necessary to match them with the related
costs which they are intended to compensate.
Cost of sales comprises the cost of products sold and the
acquisition cost of purchased goods sold. In addition
to directly attributable material and production costs, it
also includes statutory and non-statutory warranty ex-
penses, research costs, non-capitalised development
costs, amortisation on capitalised development costs,
production-related overheads (including depreciation of
property, plant and equipment and amortisation of other
intangible assets relating to production), write-downs
on inventories, freight and insurance costs relating to
deliveries to dealers and agency fees on direct sales.
Expenses which are directly attributable to financial
services business (including depreciation on leased
products), the interest expense from refinancing the en-
tire financial services business as well as the expense
of risk provisions and write-downs relating to such busi-
ness are also reported in cost of sales.
of the lease. Interest income from finance leases and
from customer and dealer financing are recognised
using the effective interest method and reported as rev-
enues within the line item "Interest income on loan
financing". If the sale of products includes a determina-
ble amount for subsequent services (multiple-compo-
nent contracts), the related revenues are deferred and
recognised as income over the relevant service period.
Amounts are normally recognised as income by reference
to the pattern of related expenditure. Profits arising on
the sale of vehicles for which a Group company retains a
repurchase commitment (buy-back contracts) are not
recognised until such profits have been realised. The
difference between the sales and buy-back price is ac-
counted for as deferred income and recognised in in-
stalments as revenue over the contract term.
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
of Comprehensive Income
113 Notes to the Income Statement
121 Notes to the Statement
98-Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
The share-based remuneration programme for Board
of Management members and senior heads of depart-
ment entitles BMW AG to elect whether to settle its
commitments in cash or with shares of BMW AG com-
mon stock. Following the decision to settle in cash,
this programme is accounted for as a cash-settled share-
based transaction. Further information on share-based
remuneration programmes is provided in note 19.
Purchased and internally-generated intangible assets
are recognised as assets in accordance with IAS 38
(Intangible Assets), where it is probable that the use of
the asset will generate future economic benefits and
where the costs of the asset can be determined reliably.
Such assets are measured at acquisition and/or manu-
facturing cost and, to the extent that they have a finite
useful life, amortised over their estimated useful lives.
With the exception of capitalised development costs,
intangible assets are generally amortised over their esti-
mated useful lives of between three and 20 years.
103 GROUP FINANCIAL STATEMENTS
Development costs for vehicle and engine projects
are capitalised at manufacturing cost, to the extent
that attributable costs can be measured reliably and
both technical feasibility and successful marketing
are assured. It must also be probable that the devel-
opment expenditure will generate future economic
benefits. Capitalised development costs comprise all
expenditure that can be attributed directly to the de-
velopment process, including development-related
overheads. Capitalised development costs are amor-
tised systematically over the estimated product life
(usually four to eleven years) following the start of
production.
90-GROUP FINANCIAL STATEMENTS
Income Statements
104
Where Group products are recognised by BMW Group
entities as leased products under operating leases, they
are measured at manufacturing cost. All other leased
products are measured at acquisition cost. All leased
products are depreciated over the period of the lease
using the straight-line method down to their expected
residual value. Changes in residual value expectations
are recognised - in situations where the recoverable
amount of the lease exceeds the asset's carrying amount –
by adjusting scheduled depreciation prospectively over
the remaining term of the lease contract. If the recover-
able amount is lower than the asset's carrying amount,
an impairment loss is recognised for the shortfall. A test
is carried out at each balance sheet date to determine
whether an impairment loss recognised in prior years no
longer exists or has decreased. In these cases, the carry-
ing amount of the asset is increased to the recoverable
amount. The higher carrying amount resulting from the
ties.
In accordance with IAS 17, assets leased under finance
leases are measured at their fair value at the inception of
the lease or at the present value of the lease payments,
if lower. The assets are depreciated using the straight-
line method over their estimated useful lives or over the
lease period, if shorter. The obligations for future lease
instalments are recognised as other financial liabili-
Non-current assets also include assets relating to leases.
The BMW Group uses property, plant and equipment as
lessee on the one hand and leases out vehicles produced
by the Group and other brands as lessor on the other.
IAS 17 (Leases) contains rules for determining, on the
basis of risks and rewards, the economic owner of the
assets. In the case of finance leases, the assets are at-
tributed to the lessee and in the case of operating leases
the assets are attributed to the lessor.
As a general rule, borrowing costs are not included in
acquisition or manufacturing cost. Borrowing costs that
are directly attributable to the acquisition, construction
or production of a qualifying asset are recognised as a
part of the cost of that asset in accordance with IAS 23
(Borrowing Costs).
The cost of internally constructed plant and equipment
comprises all costs which are directly attributable to the
manufacturing process as well as an appropriate pro-
portion of production-related overheads. This includes
production-related depreciation and an appropriate
proportion of administrative and social costs.
90
For machinery used in multiple-shift operations, depre-
ciation rates are increased to account for the additional
utilisation.
8 to 50
Other equipment, factory and office equipment
Factory and office buildings, residential buildings, fixed installations in buildings and outside facilities.
Plant and machinery.
Systematic depreciation is based on the following useful
lives, applied throughout the BMW Group:
All items of property, plant and equipment are consid-
ered to have finite useful lives. They are recognised at
acquisition or manufacturing cost less scheduled de-
preciation based on the estimated useful lives of the
assets. Depreciation on property, plant and equipment
reflects the pattern of their usage and is generally com-
puted using the straight-line method. Components of
items of property, plant and equipment with different
useful lives are depreciated separately.
the Group's share of the fair value of the individually
identifiable assets acquired and liabilities and contin-
gent liabilities assumed.
in years
Goodwill arises on first-time consolidation of an ac-
quired business when the cost of acquisition exceeds
3 to 21
2 to 25
90-GROUP FINANCIAL STATEMENTS
Income Statements
102
the amount of revenue can be measured reliably, it is
probable that the economic benefits associated with the
transaction will flow to the entity and costs incurred or
to be incurred in respect of the sale can be measured
reliably. Revenues are stated net of settlement discount,
bonuses and rebates. Revenues also include lease rentals
and interest income earned in conjunction with finan-
cial services. Revenues from leasing instalments relate
to operating leases and are recognised in the income
statement on a straight line basis over the relevant term
Korean Won
Russian Rouble
Japanese Yen
Chinese Renminbi
British Pound
US Dollar
2014
2015
1.09
Average rate
Closing rate
The exchange rates of those currencies which have a
material impact on the Group Financial Statements
were as follows:
Foreign currency receivables and payables in the single
entity accounts of BMW AG and subsidiaries are re-
corded, at the date of the transaction, at cost. At the end
of the reporting period, foreign currency receivables
and payables are translated at the closing exchange rate.
The resulting unrealised gains and losses as well as the
subsequent realised gains and losses arising on settle-
ment are recognised in the income statement in accord-
ance with the underlying substance of the relevant
transactions.
statement are also recognised directly in accumulated
other equity.
counted for as a general rule using the equity method
when significant influence can be exercised (IAS 28
Investments in Associates and Joint Ventures). As a
general rule, there is a rebuttable assumption that the
Group has significant influence if it holds between 20%
and 50% of the associated company's or joint venture's
voting power.
The financial statements of consolidated companies
which are drawn up in a foreign currency are translated
using the functional currency concept (IAS 21 The
Effects of Changes in Foreign Exchange Rates) and the
modified closing rate method. The functional currency
of a subsidiary is determined as a general rule on the
basis of the primary economic environment in which it
operates and corresponds therefore usually to the rele-
vant local currency. Income and expenses of foreign
subsidiaries are translated in the Group Financial State-
ments at the average exchange rate for the year, and
assets and liabilities are translated at the closing rate.
Exchange differences arising from the translation of
shareholders' equity are recognised directly in accumu-
lated other equity. Exchange differences arising from the
use of different exchange rates to translate the income
In November 2009 the IASB issued IFRS 9 (Financial
Instruments) as part of a project to revise the accounting
for financial instruments. This Standard marks the first
5-Foreign currency translation
31.12.2015 ―31.12.2014
90
1.21
1.33
Revenues from the sale of products are recognised
when the risks and rewards of ownership of the goods
are transferred to the dealer or customer, provided that
The financial statements of BMW AG and of its subsidi-
aries in Germany and elsewhere have been prepared for
consolidation purposes using uniform accounting poli-
cies in accordance with IFRS 10 (Consolidated Financial
Statements).
6-Accounting policies
51.03
-1,397.80
68.01
1,255.38
-70.98
-1,324.84
79.91
1,278.92
140.38
1.11
-134.28
130.74
8.19
6.97
-7.07
0.81
0.73
0.78
0.74
144.95
90 Statement of
Comprehensive Income
92 Balance Sheets
Provisions for pensions are recognised using the pro-
jected unit credit method in accordance with IAS 19
(Employee Benefits). Under this method, not only obli-
gations relating to known vested benefits at the re-
porting date are recognised, but also the effect of future
increases in pensions and salaries. This involves taking
account of various input factors which are evaluated
on a prudent basis. The calculation is based on an inde-
pendent actuarial valuation which takes into account
all relevant biometric factors.
of the balance sheet as "Liabilities in conjunction with
assets held for sale".
Assets held for sale and disposal groups held for sale
are presented separately in the balance sheet in accord-
ance with IFRS 5, if the carrying amount of the relevant
assets will be recovered principally through a sale trans-
action rather than through continuing use. This situa-
tion only arises if the assets can be sold immediately
in their present condition, the sale is expected to be
completed within one year from the date of classifica-
tion and the sale is highly probable. At the date of
classification, property, plant and equipment, intangible
assets and disposal groups which are being held for
sale are measured at the lower of their carrying amount
and their fair value less costs to sell and scheduled depre-
ciation/amortisation ceases. This does not apply, how-
ever, to items within the disposal group which are not
covered by the measurement rules contained in IFRS 5.
Simultaneously, liabilities directly related to the sale are
presented separately on the equity and liabilities side
Cash and cash equivalents comprise mainly cash on
hand and cash at bank with an original term of up to
three months.
Borrowing costs are not included in the acquisition or
manufacturing cost of inventories.
Work in progress and finished goods are stated at the
lower of average manufacturing cost and net realisable
value. Manufacturing cost comprises all costs which
are directly attributable to the manufacturing process
and an appropriate proportion of production-related
overheads. This includes production-related deprecia-
tion and an appropriate proportion of administrative
and social costs.
Inventories of raw materials, supplies and goods for
resale are stated at the lower of average acquisition cost
and net realisable value.
tax assets also include claims to future tax reductions
which arise from the expected usage of existing tax
losses available for carryforward to the extent that fu-
ture usage is probable. Deferred taxes are computed
using enacted or planned tax rates which are expected
to apply in the relevant national jurisdictions when
the amounts are recovered.
Remeasurements of the net defined benefit liability
for pension plans are recognised, net of deferred tax,
directly in equity (revenue reserves).
107 GROUP FINANCIAL STATEMENTS
come statement.
The fair values of the derivative financial instruments
are measured using market information and recognised
valuation techniques. In those cases where hedge ac-
counting is applied, changes in fair value are recognised
either in profit or loss or in other comprehensive in-
come as a component of accumulated other equity, de-
pending on whether the transactions are classified as
fair value hedges or cash flow hedges. In the case of fair
value hedges, the results of the fair value measurement
of the derivative financial instruments and the related
hedged items are recognised in the income statement.
In the case of fair value changes in cash flow hedges
which are used to mitigate the future cash flow risk on
a recognised asset or liability or on forecast transactions,
unrealised gains and losses on the hedging instrument
are recognised initially directly in accumulated other
equity. Any such gains or losses are recognised subse-
quently in the income statement when the hedged
item (usually external revenue) is recognised in the in-
come statement. The portion of the gains or losses from
fair value measurement not relating to the hedged
item is recognised immediately in the income statement.
If, contrary to the normal case within the BMW Group,
hedge accounting cannot be applied, the gains or losses
from the fair value measurement of derivative finan-
cial instruments are recognised immediately in the in-
If there are no quoted prices on active markets for deriva-
tive financial instruments, credit risk is taken into ac-
count as an adjustment to the fair value of the financial
instrument. The BMW Group applies the option of
measuring the credit risk for a group of financial assets
and financial liabilities on the basis of its net exposure.
Portfolio-based value adjustments to the individual finan-
cial assets and financial liabilities are allocated using the
relative fair value approach (net method).
measured in accordance with IAS 39 at their fair value,
irrespective of their purpose or the intention for which
they are held.
All derivative financial instruments (such as interest,
currency and combined interest/currency swaps, for-
ward currency and forward commodity contracts) are
ments.
Derivative financial instruments are only used within
the BMW Group for hedging purposes in order to reduce
currency, interest rate, fair value and market price risks
from operating activities and related financing require-
Items are presented as financial assets to the extent
that they relate to financing transactions.
In accordance with IAS 12 (Income Taxes), deferred
taxes are recognised on all temporary differences be-
tween the tax and accounting bases of assets and lia-
bilities and on consolidation procedures. Deferred
The recognition of impairment losses on receivables
relating to industrial business is also, as far as possible,
based on the same procedures applied to financial ser-
vices business. Impairment losses (write-downs and
allowances) on receivables are always recorded on
separate accounts and derecognised at the same time
the corresponding receivables are derecognised.
Net interest expense on the net defined benefit liability
and/or net interest income on the net defined benefit
asset are presented separately within the financial result.
All other costs relating to allocations to pension pro-
visions are allocated to costs by function in the income
Other provisions are recognised when the BMW Group
has a present obligation (legal or constructive) arising
from past events, the settlement of which is probable
and when a reliable estimate can be made of the amount
of the obligation. Measurement of provisions is based
on the best estimate of the expenditure required to settle
the present obligation at the end of the reporting
period. Non-current provisions with a remaining period
of more than one year are discounted to the present
value of the expenditures expected to settle the obliga-
tion at the end of the reporting period.
The BMW Group regularly checks the recoverability of
its leased products. One of the main assumptions re-
quired for leased products relates to their residual value
since this represents a significant portion of future cash
inflows. In order to estimate the level of prices likely to
be achieved in the future, the BMW Group incorpo-
rates internally available historical data, current market
data and forecasts of external institutions into its cal-
culations. Internal back-testing is applied to validate the
estimations made. Further information is provided in
note 24.
Estimations are required to assess the recoverability of
a cash-generating unit (CGU). If the recoverability of an
asset is being tested at the level of a CGU, assumptions
must be made with regard to future cash inflows and
outflows, involving in particular an assessment of the
forecasting period to be used and of developments
after that period. For the purposes of determining future
cash inflows and outflows, management applies fore-
casting assumptions which are continually brought up
to date and regularly compared with external sources
of information. The assumptions used take account in
particular of expectations of the profitability of the
product portfolio, future market share developments,
macro-economic developments (such as currency, inter-
est rate and raw materials), the legal environment and
past experience.
The preparation of the Group Financial Statements in
accordance with IFRS requires management to make
certain assumptions and judgements and to use estimates
that can affect the reported amounts of assets and lia-
bilities, revenues and expenses and contingent liabilities.
Major items requiring assumptions and estimations
are described below. The assumptions used are con-
tinuously checked for their validity. Actual amounts
could differ from the assumptions and estimations used
if business conditions develop differently to the Group's
expectations.
7- Assumptions, judgements and estimations
has no liabilities which are held for trading. Liabilities
from finance leases are stated at the present value of
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
113 Notes to the Income Statement
121 Notes to the Statement
98-Accounting Principles and
Policies
statement.
98-Notes
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
90
90-GROUP FINANCIAL STATEMENTS
Income Statements
108
Financial liabilities are measured on first-time recogni-
tion at cost which corresponds to the fair value of the
consideration given. Transaction costs are also taken
into account except for financial liabilities allocated to
the category "financial liabilities measured at fair value
through profit or loss". Subsequent to initial recogni-
tion, liabilities are – with the exception of derivative
financial instruments - measured at amortised cost
using the effective interest method. The BMW Group
96 Group Statement of Changes in
Equity
the future lease payments and disclosed under other
financial liabilities.
Impairment losses on receivables relating to financial
services business are recognised using a uniform meth-
odology that is applied throughout the Group and meets
the requirements of IAS 39. This methodology results in
the recognition of impairment losses both on individual
assets and on groups of assets. If there is objective evi-
dence of impairment, the BMW Group recognises im-
pairment losses on the basis of individual assets. Within
the retail customer business, the existence of overdue
balances or the incidence of similar events in the past
are examples of such objective evidence. In the event of
overdue receivables, impairment losses are always rec-
ognised individually based on the length of period of
the arrears. In the case of dealer financing receivables,
the allocation of the dealer to a corresponding rating
category is also deemed to represent objective evidence
of impairment. If there is no objective evidence of im-
pairment, impairment losses are recognised on financial
assets using a portfolio approach based on similar groups
of assets. Company-specific loss probabilities and loss
ratios, derived from historical data, are used to measure
impairment losses on similar groups of assets.
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Financial assets are accounted for on the basis of the set-
tlement date. On initial recognition, they are measured
at their fair value. Transaction costs are included in the
fair value unless the financial assets are allocated to the
category "financial assets measured at fair value through
profit or loss".
A financial instrument is a contract that gives rise to a
financial asset of one entity and a financial liability or
equity instrument of another entity. Once a BMW Group
entity becomes party to such to a contract, the financial
instrument is recognised either as a financial asset or as
a financial liability.
classified. No held-for-trading financial assets are in-
cluded under this heading.
105 GROUP FINANCIAL STATEMENTS
Non-current marketable securities are measured accord-
ing to the category of financial asset to which they are
Investments in non-consolidated Group companies,
non-consolidated joint operations and interests in asso-
ciated companies, joint ventures and participations
not accounted for using the equity method, are reported
as Other investments, measured at their fair value. If
this value is not available or cannot be determined relia-
bly, they are measured at cost.
Investments accounted for using the equity method are
(except when the investment is impaired) measured at
the Group's share of equity taking account of fair value
adjustments on acquisition. As an exception from this
rule, the associated company, THERE Holding B.V.,
Amsterdam, is included in the Group Financial State-
ments for the financial year 2015 at its acquisition cost
(at 4 December 2015). Investments accounted for using
the equity method comprise joint ventures and signifi-
cant associated companies.
If the reason for a previously recognised impairment
loss no longer exists, the impairment loss is reversed
up to the level of the recoverable amount, capped at
the level of rolled-forward amortised cost. This does
not apply to goodwill: previously recognised impair-
ment losses on goodwill are not reversed. No reversals
of impairment losses were recorded in the financial
year 2015.
The Group's financial assets are allocated to either
cash funds or to the categories "loans and receivables",
"available-for-sale", "held for trading" or "fair value
take account in particular of expectations of the profita-
bility of the product portfolio, future market share de-
velopments, macro-economic developments (such as
currency, interest rate and raw materials prices) as well
as the legal environment and past experience. Cash
flows of the Automotive and Motorcycles CGUs are dis-
counted using a risk-adjusted pre-tax weighted average
cost of capital (WACC) of 12.0% (2014: 12.0%). In the
case of the Financial Services CGU, a sector-compatible
pre-tax cost of equity capital of 13.4% (2014: 13.4%) is
applied. In conjunction with the impairment tests for
CGUs, sensitivity analyses are performed for the main
assumptions. Analyses performed in the year under re-
port confirmed, as in the previous year, that no impair-
ment loss was required to be recognised.
If there is any evidence of impairment of non-financial
assets (except inventories and deferred taxes), or if an
annual impairment test is required to be carried out –
i.e. for intangible assets not yet available for use, intan-
gible assets with an indefinite useful life and goodwill
acquired as part of a business combination – an impair-
ment test pursuant to IAS 36 (Impairment of Assets)
is performed. Each individual asset is tested separately
unless the cash flows generated by the asset cannot be
distinguished to a large degree from the cash flows
generated by other assets or groups of assets (cash-gen-
erating units/CGUs). For the purposes of the impair-
ment test, the asset's carrying amount is compared with
its recoverable amount, the latter defined as the higher
of the asset's fair value less costs to sell and its value in
use. An impairment loss is recognised when the recover-
able amount is lower than the asset's carrying amount.
Fair value is the price that would be received to sell an
asset in an orderly transaction between market partici-
pants at the measurement date. The value in use corre-
sponds to the present value of future cash flows ex-
pected to be derived from an asset or group of assets.
reversal may not, however, exceed the rolled-forward
amortised cost of the asset.
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
113 Notes to the Income Statement
121 Notes to the Statement
98-Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
The first step of the impairment test is to determine the
value in use of an asset. If the calculated value in use is
lower than the carrying amount of the asset, then its
fair value less costs to sell are also determined. If the lat-
ter is also lower than the carrying amount of the asset,
then an impairment loss is recorded, reducing the car-
rying amount to the higher of the asset's value in use or
fair value less costs to sell. The value in use is deter-
mined on the basis of a present value computation.
Cash flows used for the purposes of this calculation are
derived from long-term forecasts approved by manage-
ment. The long-term forecasts themselves are based on
detailed forecasts drawn up at an operational level and,
based on a planning period of six years, correspond
roughly to a typical product's life-cycle. For the pur-
poses of calculating cash flows beyond the planning pe-
riod, the asset's assumed residual value does not take
growth into account. Forecasting assumptions are con-
tinually brought up to date and regularly compared with
external sources of information. The assumptions used
Receivables from sales financing comprise receivables
from retail customer, dealer and lease financing.
option".
- a measurement or recognition inconsistency ("ac-
counting mismatch") is eliminated or significantly
reduced or
113 Notes to the Income Statement
121 Notes to the Statement
98-Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
The prerequisite for categorising an item as a “financial
asset measured at fair value through profit and loss" is
that
90
106
With the exception of derivative financial instruments,
all receivables and other current assets relate to loans
and receivables which are not held for trading. All such
items are measured at amortised cost. Appropriate
impairment losses are recognised to take account of all
identifiable risks.
In accordance with IAS 39 (Financial Instruments:
Recognition and Measurement), assessments are made
regularly as to whether there is any objective evidence
that a financial asset or group of assets may be impaired.
Available-for-sale financial assets are written down if
there is objective evidence that impairment has occurred.
In the case of equity capital instruments that are listed
on a stock market, it is assumed that an item is impaired
if its fair value falls significantly (more than 20%) or on
a prolonged basis (more that 5% over nine months) be-
low acquisition cost. Impairment losses identified after
carrying out an impairment test are recognised as an ex-
pense. Gains and losses on available-for-sale financial
assets are recognised directly in other accumulated
equity until the financial asset is disposed of or is deter-
mined to be impaired, at which time the cumulative loss
previously recognised in other comprehensive income
is reclassified to profit or loss for the period.
Loans and receivables which are not held for trading
and held-to-maturity financial investments with a fixed
term are measured at amortised cost using the effec-
tive interest method. All financial assets for which pub-
lished price quotations in an active market are not avail-
able and whose fair value cannot be determined reliably
are required to be measured at cost.
Available-for-sale assets include non-current invest-
ments, securities and investment fund shares. This cate-
gory includes all non-derivative financial assets which
are not classified as "loans and receivables" or "held-to-
maturity investments" or as items measured "at fair value
through profit and loss".
value of available-for-sale financial assets is measured
using appropriate valuation techniques e.g. discounted
cash flow analysis based on market information available
at the balance sheet date.
Financial assets, for which the fair value option is ap-
plied, include other investments, and remain in the
relevant balance sheet line item after initial recognition.
Gains and losses are presented in the income statement
line item "Other financial result" and interest income
and expenses are presented within the net interest result.
Subsequent to initial recognition, financial assets which
are available-for-sale or held-for-trading or for which
the fair value option is applied, are measured at their fair
value. When market prices are not available, the fair
- a group of financial instruments is managed, and
its performance evaluated, on a fair value basis or
the financial instrument contains one or more
embedded derivatives that are required to be
separated.
90-GROUP FINANCIAL STATEMENTS
Income Statements
of three phases of the IASB project to replace the exist-
ing IAS 39 (Financial Instruments: Recognition and
Measurement). The first phase deals initially only with
101 GROUP FINANCIAL STATEMENTS
Investments accounted for using the equity method
(joint ventures and associated companies) are meas-
ured at the BMW Group's share of equity, taking
account of fair value adjustments. Any difference be-
tween the cost of investment and the Group's share of
equity is accounted for in accordance with the acquisi-
tion method. Investments in other companies are ac-
Expense relating to interest impact on other long-term provisions
2014
111,905
-105,743
-7,783
-7,560
119,688
113,303
The number of employees at the end of the reporting period is disclosed in the Combined Management Report.
119 GROUP FINANCIAL STATEMENTS
Fee expense
The fee expense pursuant to § 314 (1) no. 9 HGB recog-
nised in the financial year 2015 for the Group auditor
in € million
and its network of audit firms amounted to €23 mil-
lion (2014: €23 million) and consists of the following:
2015
2014
Audit of financial statements
thereof KPMG AG Wirtschaftsprüfungsgesellschaft
Other attestation services
- thereof KPMG AG Wirtschaftsprüfungsgesellschaft
Tax advisory services
thereof KPMG AG Wirtschaftsprüfungsgesellschaft-
Other services
thereof KPMG AG Wirtschaftsprüfungsgesellschaft-
Fee expense
thereof KPMG AG Wirtschaftsprüfungsgesellschaft
15
-15
4
3
4
2
2015
year
number of employees during the
average
number
54,499,460
54,259,767
€
9.70
8.83
€
9.72
8.85
3.20
2.90
3.22
2.92
relevant financial years. As in the previous year, diluted
earnings per share correspond to basic earnings per
2
share.
2014
8,887
8,094
1,983
-1,670
10,870
9,764
Personnel expenses include €48 million (2014: €42 mil-
lion) of expenditure incurred to adjust the workforce size.
Employees
thereof 214 (2014: 186) at proportionately-consolidated entities
Apprentices and students gaining work experience
thereof 2 (2014: 2) at proportionately-consolidated entities
Average number of employees
The
was:
2015
-3
1
1
The total carrying amount of the provision for the share-
based remuneration component of current and former
Board of Management members and senior heads of
department at 31 December 2015 was €4,989,668 (2014:
€3,096,674).
The total expense recognised in 2015 for the share-based
remuneration component of current and former Board
of Management members and senior heads of depart-
ment was €1,892,994 (2014: €1,449,486).
The fair value of the programmes for Board of Manage-
ment members and senior heads of department at the
date of grant of the share-based remuneration compo-
nents was €1,605,147 (2014: €1,479,939), based on a
total of 18,143 shares (2014: 17,712 shares) of BMW AG
common stock or a corresponding cash-based settle-
ment measured at the relevant market share price pre-
vailing on the grant date.
Further details on the remuneration of the Board of
Management are provided in the 2015 Compensation
Report, which is part of the Combined Management
Report.
Other assets
Other investments
Leased products
Property, plant and equipment
Intangible assets
in € million
Tax increases as a result of non-deductible expenses
and tax reductions due to tax-exempt income de-
creased significantly compared to one year earlier. As
in the previous year, tax increases as a result of non-
tax-deductible expenses were attributable primarily to
the impact of non-recoverable withholding taxes and
transfer price issues.
163 Segment Information
147 Other Disclosures
122 Notes to the Balance Sheet
of Comprehensive Income
121 Notes to the Statement
113-Notes to the Income Statement
98 Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
90
90-GROUP FINANCIAL STATEMENTS
Income Statements
33.2%
30.7%
2,890
The cash-settlement obligation for the share-based re-
muneration component is measured at its fair value at
the balance sheet date (based on the closing price of
BMW AG common stock in Xetra trading at 31 Decem-
ber 2015).
The share-based remuneration component is measured
at its fair value at each balance sheet date between grant
and settlement date, and on the settlement date itself.
The appropriate amounts are recognised as personnel
expense on a straight-line basis over the vesting period
and reported in the balance sheet as a provision.
With effect from the financial year 2012, qualifying
senior heads of department are also entitled to opt for a
share-based remuneration component, which, in most
respects, is comparable to the share-based remunera-
tion arrangements for Board of Management members.
four years. Once the holding period is fulfilled, BMW AG
grants one additional share of BMW AG common stock
for each three held or, at its discretion, pays the equiva-
lent amount in cash (share-based remuneration com-
ponent). Special rules apply in the case of death or in-
validity of a Board of Management member or early
termination of the contractual relationship before ful-
filment of the holding period.
23
-7
23
-6
The total fee comprises expenses recorded by BMW AG,
Munich, and all consolidated subsidiaries.
The fee expense shown for KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin, relates only to services
provided on behalf of BMW AG, Munich, and its
German subsidiaries.
Government grants and government assistance
Income from asset-related and performance-related
grants, amounting to €33 million (2014: €30 million)
19-Share-based remuneration
The BMW Group operates three share-based remunera-
tion programmes, namely the Employee Share Pro-
gramme (for entitled employees), share-based com-
mitments to members of the Board of Management
and share-based commitments to senior heads of de-
partment.
In the case of the Employee Share Programme, non-
voting shares of preferred stock in BMW AG were
granted to qualifying employees during the financial
year 2015 at favourable conditions (see note 34 for the
number and price of issued shares). The holding pe-
riod for these shares is up to 31 December 2018. The
BMW Group recorded a personnel expense of €6 mil-
lion (2014: €6 million) for the Employee Share Pro-
and €132 million (2014: €73 million) respectively, were
recognised in the income statement in 2015.
A large part of these amount to public sector grants for
the promotion of regional structures and to subsidies
for plant expansion.
gramme in 2015, corresponding to the difference between
the market price and the reduced price of the shares of
preferred stock purchased by employees. The Board of
Management reserves the right to decide anew each year
with respect to an Employee Share Programme.
For financial years beginning after 1 January 2011,
BMW AG has added a share-based remuneration com-
ponent to the existing compensation system for Board
of Management members.
Each Board of Management member is required to invest
20% of his/her total bonus (after tax) in shares of BMW AG
common stock, which are recorded in a separate custodian
account for each member concerned (annual tranche).
Each annual tranche is subject to a holding period of
601,995,196
120
90
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
113-Notes to the Income Statement
121-Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
90-GROUP FINANCIAL STATEMENTS
Income Statements
number 601,995,196
- thereof pension costs: €1,250 million (2014: €991 million)
Personnel expenses
Social security, retirement and welfare costs
2,654
2,827
478
602
Eliminations
3,281
2,945
-715
690
12,435
12,261
12,104
11,678
Valuation allowance
-502
-496
Netting
-9,988
-9,704
-9,988
-9,704
Deferred taxes
1,945
2,061
2,116
1,974
Net
87
-171
95
178
-4,175
4,187
The line "Other variances" comprises primarily recon-
ciling items relating to the Group's share of results of
equity accounted investments.
The allocation of deferred tax assets and liabilities to
balance sheet line items at 31 December is shown in the
following table:
Deferred tax assets -
Deferred tax liabilities -
2015
2014
2015
2014
-12
10
11
1,977
-1,706
20
Liabilities
50
400
-367
393
-6,260
5,486
5
5
11
1,363
-1,289
2,109
2,687
548
- 566
-376
2,828
117 GROUP FINANCIAL STATEMENTS
Tax losses available for carryforward - for the most
part usable without restriction - amounted to €468 mil-
lion (2014: €469 million). This includes an amount of
€345 million (2014: €228 million), for which a valuation
allowance of €100 million (2014: €74 million) was rec-
ognised on the related deferred tax asset. For entities
with tax losses available for carryforward, a net surplus
of deferred tax assets over deferred tax liabilities is re-
ported at 31 December 2015 amounting to €104 mil-
lion (2014: €140 million). Deferred tax assets are recog-
nised on the basis of management's assessment of
whether it is probable that the relevant entities will gen-
erate sufficient future taxable profits, against which
deductible temporary differences can be offset.
5,798.1
€ million
€ million
5,839.6
529.8
- 5,317.7
480.4
90-GROUP FINANCIAL STATEMENTS
Income Statements
90
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
Average number of common stock shares in circulation
Average number of preferred stock shares in circulation
Basic earnings per share of common stock
Basic earnings per share of preferred stock
Dividend per share of common stock
Dividend per share of preferred stock
*Proposal by management.
Basic earnings per share of preferred stock are com-
puted on the basis of the number of preferred stock
shares entitled to receive a dividend in each of the
18-Other disclosures relating to the income statement
113-Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Personnel expenses
The income statement includes personnel costs as follows:
in € million
Wages and salaries
6,369.4
€ million
2014
2015
Capital losses available for carryforward in the United
Kingdom which do not relate to ongoing operations
in € million
increased to €2,234 million due to exchange rate factors
(2014: €2,112 million). As in previous years, deferred
tax assets recognised on these tax losses - amounting to
€402 million at the end of the reporting period (2014:
€422 million) – were fully written down since they can
only be utilised against future capital gains.
Netting relates to the offset of deferred tax assets and
liabilities within individual separate entities or tax
groups to the extent that they relate to the same tax
authorities.
Deferred taxes recognised directly in equity amounted
to €2,004 million (2014: €1,889 million), an increase of
€115 million (2014: €1,438 million) compared to the end
of the previous year. The change includes an increase
in deferred taxes recognised in conjunction with cur-
rency translation amounting to €43 million (2014: €9 mil-
lion).
Changes in deferred tax assets and liabilities during the
reporting period can be summarised as follows:
2015
2014
Deferred taxes at 1 January (assets (-)/liabilities (+))
Deferred tax expense (+)/income (-) recognised through income statement
Change in deferred taxes recognised directly in equity.
Exchange rate impact and other changes
Deferred taxes at 31 December (assets (-)/liabilities (+))
-87
839
Deferred tax assets on tax loss carryforwards and capital
losses before allowances totalled €548 million (2014:
€566 million). After valuation allowances of €502 million
(2014: €496 million), their carrying amount stood at
€46 million (2014: €70 million).
-77
-72
-1,429
253
387
171
-87
Changes in deferred tax assets and liabilities include
changes relating to items recognised either through
the income statement or directly in equity as well as
the impact of exchange rate and other factors. Deferred
taxes recognised directly in equity increased in total
by €72 million (2014: €1,429 million). Of this amount,
€520 million (2014: €759 million) related to the fair
value measurement of derivative financial instruments
and marketable securities (recognised directly in equity),
shown in the summary above in the line items "Other
assets" and "Liabilities". Working in the opposite direc-
tion, deferred taxes relating to remeasurements of the
net defined benefit liability for pension plans (recognised
directly in equity), shown in the summary above in the
line item "Provisions", fell by €448 million (2014: increase
of €670 million).
Deferred taxes are not recognised on retained profits of
€33.7 billion (2014: €30.7 billion) of foreign subsidiaries,
as it is intended to invest these profits to maintain and
expand the business volume of the relevant companies.
A computation was not made of the potential impact
of income taxes on the grounds of disproportionate ex-
pense.
The tax returns of BMW Group entities are checked
regularly by German and foreign tax authorities. Taking
account of a variety of factors - including existing inter-
pretations, commentaries and legal decisions taken re-
lating to the various tax jurisdictions and the BMW
Group's past experience - adequate provision has, to
the extent identifiable and probable, been made for
potential future tax obligations.
118
17- Earnings per share
Net profit for the year after minority interest
Profit attributable to common stock
Profit attributable to preferred stock
-116
-153
--91
Effective tax rate
63,396
Group cost of sales include €19,449 million (2014:
€16,485 million) relating to Financial Services business.
Manufacturing costs include impairment losses on
intangible assets and property, plant and equipment
totalling €3 million (2014: €– million). Cost of sales
is reduced by public-sector subsidies in the form of
reduced taxes on assets and reduced consumption-
in € million
based taxes amounting to €71 million (2014: €54 mil-
lion).
Total research and development expenditure comprises
research costs, non-capitalised development costs and
capitalised development costs (excluding scheduled
amortisation). Total research and development expendi-
ture was as follows:
2015
2014
Research and development expenses
Amortisation
New expenditure for capitalised development costs
Total research and development expenditure
4,271
4,135
-1,166
-1,068
2,064
-1,499
5,169
4,566
11-Selling and administrative expenses
Selling expenses amounted to €5,758 million (2014:
€5,344 million) and comprise mainly marketing, adver-
tising and sales personnel costs.
Administrative expenses amounted to €2,875 million
(2014: €2,548 million) and comprise expenses for
administration not attributable to development, pro-
duction or sales functions.
114
12-Other operating income and expenses
in € million
2015
2014
Exchange gains
323
311
3,072
4,747
74,043
362
547
6,716
3,253
- 2,881
3,133
-2,776
92,175
80,401
An analysis of revenues by segment and geographical region is shown in the segment information in note 49.
10-Cost of sales
Cost of sales comprises:
in € million
Manufacturing costs
Research and development expenses
Warranty expenditure
Income from the reversal of provisions
Cost of sales directly attributable to financial services
Expense for risk provisions and write-downs for financial services business
Other cost of sales.
Cost of sales
2015
2014
43,685
38,253
4,271
4,135
1,891
-1,451
-17,407
14,716
1,495
1,407
Interest expense relating to financial services business
172
-184
Income from the reversal of impairment losses and write-downs
The profit from equity accounted investments
amounted to €518 million (2014: €655 million)
14-Net interest result
in € million
-311
-334
-192
-225
-76
-86
-23
-25
-218
-202
-820
147 Other Disclosures
163 Segment Information
-872
5
Income from the reversal of provisions includes amounts
arising on the termination of legal disputes relating to
the Other Entities segment.
and includes primarily the Group's share of the result
of the BMW Brilliance Automotive Ltd., Shenyang,
joint venture.
2015
2014
Other interest and similar income
- thereof from subsidiaries: €19 million (2014: €18 million)
Interest and similar income
185
200
185
200
Net interest expense on the net defined benefit liability for pension plans
-123
-88
94
-8,181
122 Notes to the Balance Sheet
113-Notes to the Income Statement
121 Notes to the Statement
-27
30
Gains on the disposal of assets
-173
-101
Sundry operating income
219
-251
914
877
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
of Comprehensive Income
Comprehensive Income
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
Other operating income
Exchange losses
Expense for additions to provisions
Expense for impairment losses and write-downs
Losses on the disposal of assets
Sundry operating expenses -
Other operating expenses
Other operating income and expenses
Income and expenses relating to impairment losses and
write-downs (reversals and additions) relate primarily
to allowances on receivables.
13- Result from equity accounted investments
92 Balance Sheets
-72
-7,748
60,280
-77
2,828
2,774
2,751
2014
2015
Deferred tax expense
Income taxes
Current tax expense
in € million
Taxes on income comprise the following:
16- Income taxes
The improvement in other financial result was primarily
attributable to the lower net negative impact arising on
currency derivatives.
The result on investments for the year under report
includes impairment losses on other investments total-
ling €25 million (2014: €153 million). In the previous
year, this line item was influenced by an impairment
loss of €152 million recognised on the investment in
SGL Carbon SE, Wiesbaden.
-747
-454
Other financial result
-597
-430
-597
-430
Losses and gains relating to financial instruments
Sundry other financial result
-150
-24
Result on investments
-153
-25
3
1
Income from investments in subsidiaries and participations
―thereof from subsidiaries: €- million (2014: €2 million)
Impairment losses on investments in subsidiaries and participations
2014
-116
2,890
Current tax expense includes €164 million (2014:
€275 million) relating to prior periods.
A deferred tax expense of €52 million (2014: €83 mil-
lion) is attributable to new temporary differences and
the reversal of temporary differences brought forward.
Actual tax expense
Other variances
275
164
-150
42
Tax increases (+)/tax reductions (-) as a result of non-deductible expenses and tax-exempt income
Tax expense (+)/benefits (-) for prior years
-55
-119
Variances due to different tax rates
2,673
2,832
30.7%
30.7%
2015
-8,707
Expected tax expense
Tax rate applicable in Germany
Profit before tax
2014
2015
in € million
The difference between the expected and actual tax ex-
pense is explained in the following reconciliation:
(2014: 30.7%), applicable for German companies, was
applied across the Group.
116
The actual tax expense for the financial year 2015 of
€2,828 million (2014: €2,890 million) is €4 million
(2014: €217 million higher) lower than the expected tax
expense of €2,832 million (2014: €2,673 million) which
would theoretically arise if the tax rate of 30.7%
national jurisdictions when the amounts are recovered.
A uniform corporation tax rate of 15.0% plus solidarity
surcharge of 5.5% applies in Germany, giving a tax rate of
15.8%, unchanged from the previous year. After taking
account of an average municipal trade tax multiplier rate
(Hebesatz) of 425.0% (2014: 425.0%), the municipal trade
tax rate for German entities is 14.9% (2014: 14.9%). The
overall income tax rate in Germany is therefore 30.7%
(2014: 30.7%). Deferred taxes for non-German entities
are calculated on the basis of the relevant country-spe-
cific tax rates and remained in a range of between 12.5%
and 46.9%. Changes in tax rates resulted in a deferred
tax expense of €36 million (2014: €22 million).
Deferred taxes are computed using enacted or planned
tax rates which are expected to apply in the relevant
The change in the valuation allowance on deferred tax
assets relating to tax losses available for carryforward
and temporary differences resulted in a tax expense of
€105 million (2014: €49 million).
The tax expense was reduced by €64 million (2014:
€27 million) as a result of utilising tax losses/tax credits
brought forward, for which deferred assets had not
previously been recognised.
-9,224
in € million
15-Other financial result
115 GROUP FINANCIAL STATEMENTS
96 Group Statement of Changes in
Equity
98-Notes
98-Accounting Principles and
Policies
113-Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
In January 2016, the IASB published the new Standard
IFRS 16 (Leases). IFRS 16 supersedes IAS 17 and the
related Interpretations (IFRIC 4 Determining whether
an Arrangement contains a Lease, SIC-15 Operating
Leases - Incentives and SIC-27 Evaluating the Substance
of Transactions involving the Legal Form of a Lease).
The new Standard stipulates a completely new approach
to accounting for leases by lessees. Whereas under IAS 17,
the accounting treatment of a lease was determined on
the basis of the transfer of risks and rewards incidental
to ownership of the relevant asset, in the future, all
lease arrangements will be required as a general rule
to be accounted for by the lessee in a similar way to
finance leases.
By contrast, the accounting requirements for lessors, par-
ticularly in relation to the requirement to classify leases,
will remain largely unchanged.
The new Standard is mandatory for annual periods be-
ginning on or after 1 January 2019. Early adoption will
be permitted, provided that IFRS 15 is also adopted at
the same time.
Given that the BMW Group is still in a very early phase
of considering the implications of introducing IFRS 16
and the definitive version of the Standard was only pub-
lished at the beginning of 2016, the detailed impact of
the Standard on the IFRS Group Financial Statements
from the perspective of lessees and lessors, cannot be
foreseen at present.
In December 2014, the IASB issued Amendments to
IAS 1 (Presentation of Financial Statements) as part of
its disclosure initiative. The amendments relate pri-
marily to clarifications relating to the presentation of
financial reports.
Firstly, disclosures are only required to be made in the
notes if their inclusion is material for users of the finan-
cial statements. This also applies when an IFRS Stand-
ard explicitly specifies a minimum list of disclosures.
Secondly, items to be presented in the balance sheet, in-
come statement and comprehensive income can be
aggregated or disaggregated by using subtotals. Thirdly,
it clarifies that an entity's share of other comprehensive
income of equity-accounted entities is required to be
analysed - within the Statement of Comprehensive
Income - to show "components, which will be subse-
quently reclassified to profit and loss" and "compo-
nents, which will be not subsequently reclassified to
profit and loss". Fourthly, it is stressed that there is no
standard template for the notes and that the emphasis
should be on structuring the notes based on the rele-
vance for the specific reporting entity.
The Standard is mandatory for the first time for annual
periods beginning on or after 1 January 2016. Applica-
tion of the new rules will not have a material impact on
the Group Financial Statements.
94 Cash Flow Statements
Early adoption of all of the new IFRS requirements is
permitted. As things stand, the BMW Group does not
plan to adopt any of the new requirements early.
BMW Group
Notes to the Group Financial Statements
Notes to the Income Statement
9-Revenues
Revenues by activity comprise the following:
in € million
Sales of products and related goods
Income from lease instalments
Sales of products previously leased to customers
Interest income on loan financing
Other income
Revenues
2015
2014
-68,643
113 GROUP FINANCIAL STATEMENTS
8,965
92 Balance Sheets
90 Statement of
-319
-433
Net interest result
Interest and similar expenses
-519
-618
thereof to subsidiaries: €-5 million (2014: €-6 million)
-326
-423
Other interest and similar expenses
-105
111 GROUP FINANCIAL STATEMENTS
financial assets. IFRS 9 amends the recognition and
measurement requirements for financial assets, in-
cluding various hybrid contracts.
Financial assets are measured at either amortised cost
or fair value. IFRS 9 harmonises the various rules con-
tained in IAS 39 and reduces the number of valuation
categories for financial instruments on the assets side
of the balance sheet.
Comprehensive Income
The new categorisation is based partly on the entity's
business model and partly on the contractual cash flow
characteristics.
In May 2014 the IASB issued IFRS 15 (Revenue from
Contracts with Customers) together with the Financial
Accounting Standards Board. The objective of the new
Standard is to assimilate all the various existing require-
ments and Interpretations relating to revenue recogni-
tion (IAS 11 Construction Contracts, IAS 18 Revenue,
IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agree-
ments for the Construction of Real Estate, IFRIC 18
Transfers of Assets from Customers, SIC-31 Revenue -
Barter Transactions involving Advertising Services) in
-
a single Standard. The new Standard also stipulates uni-
form revenue recognition principles for all sectors and
all categories.
The new Standard is based on a five-step model, which
sets out the rules for revenue from contracts with cus-
tomers, with the exception – among other things - of
lease arrangements, insurance contracts, financial in-
struments and specified contractual rights and obliga-
tions relating to non-monetary transactions between
entities within the same sector. Revenue can be recog-
nised either over time or at a specific point in time.
The five-step model describes the five steps necessary
to recognise revenue on the basis of the transfer of
control:
1. Identify the contract with the customer
2. Identify the performance obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to separate performance
obligations
5. Recognise revenue when a performance obligation is
satisfied.
A major difference to the previous Standard is the in-
creased scope of discretion for estimates and the intro-
duction of thresholds that could influence the amount
and timing of revenue recognition.
The impact of adoption of the new requirements on the
Group Financial Statements is currently being assessed.
In the case of multi-component contracts with variable
consideration components, it is possible that a change
in the allocation of transaction prices may result in an
earlier recognition of revenues. Buy-back arrangements
with customers could result in the need to change the
accounting treatment, with revenues being recognised
either earlier or later by the BMW Group, depending
on the individual case. Accounting for rights of return
could, under certain circumstances, result in the need
to record eliminations between the operating segments
at an earlier stage. Any such changes would only have
an impact at the moment of first-time adoption, not,
however, during the period in which the new rules are
adopted or in subsequent periods.
IFRS 15 - subject to EU endorsement – is mandatory for
the first time for annual periods beginning on or after
1 January 2018. Early adoption is permitted. In July 2015,
the IASB also published an Exposure Draft containing
clarifications to the Standard, as a consequence of which
the Standard may be amended. For this reason, the
potential impact of applying IFRS 15 cannot be reliably
assessed at present.
112
90-GROUP FINANCIAL STATEMENTS
Income Statements
90
In October 2010, additional rules for financial liabilities
were added to IFRS 9. The requirements for financial
liabilities contained in IAS 39 remain unchanged with
the exception of new requirements relating to the
measurement of an entity's own credit risk at fair value.
A package of amendments to IFRS 9 was announced
on 19 November 2013. On the one hand, the amend-
ments overhaul the requirements for hedge accounting
by introducing a new hedge accounting model. They
also enable entities to change the accounting for lia-
bilities they have elected to measure at fair value, such
that fair value changes due to changes in "own credit
risk" would not require to be recognised in profit or loss.
The mandatory effective date of 1 January 2015 was re-
moved and a new application date of 1 January 2018 set.
The impact of adoption of the Standard on the Group
Financial Statements is currently being investigated.
Based on analyses to date, the new rules are not expected
to have a material impact in terms of the classification
and measurement of financial instruments when the
Standard is adopted. As far as the accounting for hedging
relationships is concerned, analyses to date indicate
that it will be possible to account for the majority of
commodity hedging contracts using hedge accounting
rules. As a result, fluctuations in the price of hedging
contracts during their term will be presented as a com-
ponent of accumulated other equity, thus reducing vola-
tility in reported earnings.
€
Tax loss carryforwards
Provisions
thereof non-current
Intangible assets
Other intangible assets
Development costs
-613
660
1,941
208
204
43
-1,902
- 8,930
-9,593
-5,625
5,915
4,515
25,876
-1,150
2,795
390
23,841
62
319
-77
-4,181
6,499
7,372
4,973
1,035
1,341
Land, titles to land, buildings, including buildings on
-third party land-
Plant and machinery
Other facilities, factory and office equipment
6
27
2
460
2
-13
398
12
-2
62
=
Leased products
30,165
34,965
7,301
3,277
3,536
238
6,804
Advance payments made and construction in progress -
Property, plant and equipment
17,182
17,759
32,338
1,420
3,318
510
29,930
- 2,014
1,5912
6
11
וי
4,656
657
1 Including first-time consolidations.
867
57
וי
107
2
815
Other investments
Non-current marketable securities
641
66
575
Participations
226
57
41
2
-240
Investments in non-consolidated subsidiaries
1,088
150
600
638
Investments accounted for using the equity method
36,969
12,047
14,576
1,954
32,486
2 Prior year figures have been adjusted for changes in accordance with IAS 8 as described in note 9 of the Financial Statements 2014.
-682
3 Including assets under construction of €1,679 million.
Depreciation and amortisation
797
-152
-175
-763
- Goodwill
- 364
364
5
.5
- 5,453
-6,351
4,171
883
1,166
3,888
2014
31.12.
31.12.
2015
- Carrying amount-
2015
31.12.
Dis-
posals
year
Current
ences
differ-
lation
Trans-
1.1.20151
123 GROUP FINANCIAL STATEMENTS
וי
2,233
1,088
1,088
Leased products
30,165 25,914
6,804
3,462
3,401
293
6,572
Property, plant and equipment
Advance payments made and construction in progress -
Other facilities, factory and office equipment
-536
-2,0143 2,971
17,182 15,168
29,909
1,312
2,924
568
27,729
613
-1,897
145
-181
52
1,809
Plant and machinery
6,771
- 4,890
5,625
-8,930
- 23,834
1,129
638
2,461
-76
62
90 Statement of
90
90-GROUP FINANCIAL STATEMENTS
Income Statements
in note 21.
An analysis of changes in intangible assets is provided
No borrowing costs were recognised as a cost compo-
nent of intangible assets during the year under report.
As in the previous year, there was no requirement to
recognise impairment losses or reversals of impairment
losses on intangible assets in 2015.
Intangible assets amounting to €48 million (2014:
€46 million) are subject to restrictions on title.
will of €331 million (2014: €331 million) allocated to
the Financial Services CGU.
Other intangible assets include a brand-name right
amounting to €48 million (2014: €46 million), which is
allocated to the Automotive segment and is not sub-
ject to scheduled depreciation since its useful life is
deemed to be indefinite. The year-on-year change is due
entirely to currency factors. This line item also includes
goodwill of €33 million (2014: €33 million) allocated to
the Automotive cash-generating unit (CGU) and good-
Intangible assets mainly comprise capitalised develop-
ment costs on vehicle and engine projects as well as
subsidies for tool costs, licences, purchased development
projects, software and purchased customer bases.
Amortisation on intangible assets is presented in cost
of sales, selling expenses and administrative expenses.
22-Intangible assets
124
Other investments
553
408
459
16
57
153
264
- Non-current marketable securities
-166 Investments in non-consolidated subsidiaries
387 -Participations
Investments accounted for using the equity method
-164
244
397
57
152
188
-16
Leased products
431
4,178
31.12.
2014
Carrying amount
ing net
income
ences
differ-
Dis- 31.12.
posals
2014
not effect-
year
lation
Changes
Current
Trans-
1.1.2014
Depreciation and amortisation
Other investments
408
428
489
-Non-current marketable securities-
26
2
Investments in non-consolidated subsidiaries
Participations
244
245
411
164
-157
-76
Investments accounted for using the equity method
31.12.
20132
22,071
4,645
1,825
38
282
85
3,849
Land, titles to land, buildings, including buildings on
third party land
Intangible assets
Other intangible assets
Goodwill
- Development costs
6,179
6,499
4,654
1,917
1,246
10
5,315
-788
682
-761
92
-178
-10
665
369
- 5,022
5,453
364
5
5
3,888
1,068
47,091
1,346
4,539
BMW Group
122
|
of €140 million) and within “Derivative financial instru-
ments" with a negative amount of €15 million (2014:
negative amount of €141 million).
Other comprehensive income arising at the level of equity
accounted investments is reported in the Statement of
Changes in Equity within "Translation differences" with
a positive amount of €90 million (2014: positive amount
-2,298
1,438
-764
-1,475
-719
47
-48
-764
-3,736
893
115
778
-765
-75
4
-71
-765
Other comprehensive income from equity accounted investments
Currency translation foreign operations
Other comprehensive income
-2,194
6
-34
40
-1,592
-706
-2,298
1,012
-117
-842
459
-1,301
Notes to the Group Financial Statements
Notes to the Balance Sheet
Financial instruments used for hedging purposes
21-Analysis of changes in Group tangible, intangible and investment assets 2015
- Acquisition and manufacturing cost
Plant and machinery
10,430
-75
-295
240
-164
9,806
Land, titles to land, buildings, including buildings on
12,345
-10,522
-369
1,454
-152
1,035
883
וי
2,210
15
11,155
Intangible assets
146
15
-1,445
Other intangible assets.
369
Goodwill
2,064
9,341
Development costs.
2015
fications
1.1.2015 Translation - Additions Reclassi--Disposals ―31.12.
differences
in € million
32,770
53
-401
-170
-1,592
1,012
-706
-401
-2,298
1,413
2014
2015
Other comprehensive income for the period after tax
Items expected to be reclassified to the income statement in the future
Currency translation foreign operations
Deferred taxes
Other comprehensive income from equity accounted investments
thereof reclassifications to the income statement
- thereof gains/losses arising in the period under report-
Financial instruments used for hedging purposes -
thereof reclassifications to the income statement
thereof gains/losses arising in the period under report
Available-for-sale securities
Items not expected to be reclassified to the income statement in the future
Deferred taxes
Remeasurement of the net defined benefit liability for pension plans
in € million
20-Disclosures relating to the statement of total comprehensive income
Other comprehensive income for the period after tax comprises the following:
Notes to the Statement of Comprehensive Income
Notes to the Group Financial Statements
BMW Group
121 GROUP FINANCIAL STATEMENTS
40
-170
-26
-144
1,413
Remeasurement of the net defined benefit liability for pension plans
Available-for-sale securities
After
tax
taxes
2014
Deferred
Before
tax
After
tax
2015.
Deferred
taxes
tax
Before
in € million
Deferred taxes on components of other comprehensive income are as follows:
-2,298
893
-706
-119
-764
-765
-732
516
-48
-71
-255
-1,318
-1,939
-2,619
-2,194
-1,301
-69
-109
Comprehensive Income
551
1,362
93
369
5
9,341
1,825
1,561
15
11,500
Intangible assets
62
15
1,459
Other intangible assets
374
Goodwill
1,499
9,667
Development costs
in € million
―31.12.
2014
fications
differences
Acquisition and manufacturing cost
1.1.2014 Translation - Additions Reclassi--Disposals
Analysis of changes in Group tangible, intangible and investment assets 2014
2 Including assets under construction of €1,187 million.
1 Including mergers, see note 2.
147 Other Disclosures
163 Segment Information
122-Notes to the Balance Sheet
of Comprehensive Income
1,443
121 Notes to the Statement
1,923
Land, titles to land, buildings, including buildings on
third party land
916
42,982
Property, plant and equipment
-2,014
1
-2,483
1,489
37
-2,972
Advance payments made and construction in progress
2,510
149
-32,764
-1,145
2,023
32
207
65
- 2,355
Other facilities, factory and office equipment
2,436
607
-28,843
Plant and machinery
9,803
51
428
407
207
8,812
11,153
1,954
113 Notes to the Income Statement
98-Notes
Investments accounted for using the equity method
42,266
14,452
18,011
1,738
36,969
Leased products
50,097
1,462
3,680
766
47,113
Property, plant and equipment
1,597
4
-1,691
1,268
4
- 2,020
Advance payments made and construction in progress
2,601
215
34
218
47
-2,517
Other facilities, factory and office equipment
35,469
-1,168
1,088
98 Accounting Principles and
Policies
1,293
2,233
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
Income Statements
90
90-GROUP FINANCIAL STATEMENTS
917
64
ཝཾ།
' |
111
867
Other investments
28
-28
Non-current marketable securities
656
-15
641
Participations
-233
64
68
3
-226
Investments in non-consolidated subsidiaries
_
148
7,408
92 Balance Sheets
96 Group Statement of Changes in
Equity
€29 million) were recognised in 2015 and resulted pri-
marily from accidents and natural disasters. No reversals
of write-down were recognised in the period under re-
port (2014: €3 million).
8,843
297
147
239
272
12
133
3,972
5,261
- 2,888
-3,030
31.12.2014
31.12.2015
The estimated fair value of collateral received for re-
ceivables on which impairment losses were recognised
totalled €26,992 million (2014: €25,443 million) at
the end of the reporting period. This collateral related
primarily to vehicles. The carrying amount of assets
held as collateral and taken back as a result of pay-
ment default amounted to €40 million (2014: €41 mil-
lion).
€13,321 million (2014: €10,808 million). No impairment
losses were recognised for these balances.
Financial assets
Other
Credit card receivables
Loans to third parties
Marketable securities and investment funds
Derivative instruments
in € million
Financial assets comprise:
147 Other Disclosures
163 Segment Information
of Comprehensive Income
122-Notes to the Balance Sheet
121 Notes to the Statement
113 Notes to the Income Statement
28-Financial assets
At 31 December 2015, inventories measured at their
net realisable value amounted to €1,054 million (2014:
€723 million) and are included in total inventories of
€11,071 million (2014: €11,089 million). Write-downs to
net realisable value amounting to €486 million (2014:
Receivables from sales financing which were not over-
due at the end of the reporting period amounted to
11,089
9,227
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122-Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
thereof non-current
thereof current
Prepayments of €1,527 million (2014: €1,323 million) re-
late mainly to prepaid interest and commission paid
to dealers. Prepayments of €795 million (2014: €674 mil-
lion) have a maturity of less than one year.
Receivables from subsidiaries include trade receivables
of €39 million (2014: €41 million) and financial receiva-
bles of €677 million (2014: €680 million). They include
€265 million (2014: €293 million) with a remaining term
of more than one year.
-1,568
1,094
4,693
5,038
Receivables from other companies in which an invest-
ment is held include €892 million (2014: €1,054 million)
due within one year.
Collateral receivables comprise mainly customary
collateral (banking deposits) arising on the sale of re-
ceivables.
31-Inventories
Inventories comprise the following:
in € million
Raw materials and supplies
Work in progress, unbilled contracts
Finished goods and goods for resale
Inventories
31.12.2015
31.12.2014
1,004
918
1,098
944
8,969
11,071
Comprehensive Income
At the end of the reporting period, impairment allow-
ances of €530 million (2014: €515 million) were recog-
nised on a group basis on gross receivables from sales
financing totalling €44,473 million (2014: €38,780 mil-
lion). Impairment allowances of €963 million (2014:
€1,000 million) were recognised at 31 December 2015
on a specific item basis on gross receivables from sales
financing totalling €13,742 million (2014: €12,951 million).
98 Accounting Principles and
Policies
128
1,493
530
963
-24
-7
17
-295
-341
-22
-319
30
265
-1,515
515
-1,000
Balance at 31 December
Exchange rate impact and other changes
Utilised
Allocated (+)/reversed (-)
Balance at 1 January
group basis
Total
Allowance for impairment recognised on a
specific item basis
in € million
2015
Allowances on receivables from sales financing - which only arise within the Financial Services segment - developed
as follows:
61,024
70,043
-1,515
2014
Balance at 1 January adjusted due to deconsolidation of entities.
in € million
Allocated (+)/reversed (-)
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
Income Statements
90
90-GROUP FINANCIAL STATEMENTS
1,515
515
-46
12
34
1,000
-391
-20
-371
-280
41
-239
1,580
482
-1,098
specific item basis
- Total
Allowance for impairment recognised on a
Balance at 31 December
Exchange rate impact and other changes
Utilised
Balance at 1 January
-1,493
90 Statement of
90
Allowances for impairment and credit risk
699
3,657
595
2,745
344
532
4,700
3,872
Receivables relating to credit card business comprise the following:
in € million
31.12.2015
Gross carrying amount
Allowance for impairment
Net carrying amount
31.12.2014
280
247
-8
-8
272
239
Allowances for impairment losses on receivables relating to credit card business developed as follows during the
year under report:
2015
in € million
Allowance for impairment recognised on a
specific item basis
group basis
- Total
Balance at 1 January
Allocated (+)/reversed (-)
Utilised
Debt securities
Exchange rate impact and other changes
due later than three months
Other debt securities
thereof current
2,208
2,024
6,635
5,384
The increase in derivative instruments was primarily
attributable to positive market price developments of
currency derivatives.
The rise in marketable securities and investment funds
results primarily from investments in fixed income
marketable securities.
The amount by which the value of the investment funds
exceeds obligations for part-time working arrange-
ments (€12 million; 2014: €48 million) is reported under
"Other financial assets". Investment funds are held to
secure these obligations. These funds are managed by
BMW Trust e. V., Munich, as part of a Contractual Trust
Arrangement (CTA) and are therefore netted against
the corresponding settlement arrears for pre-retirement
part-time working arrangements.
129 GROUP FINANCIAL STATEMENTS
Marketable securities and investment funds relate to available-for-sale financial assets and comprise:
in € million
31.12.2015 31.12.2014
Stocks
Fixed income securities
Other debt securities
Marketable securities and investment funds
561
-100
4,356
- 3,340
344
5,261
532
3,972
The contracted maturities of debt securities are as follows:
in € million
31.12.2015 ―31.12.2014
Fixed income securities
due within three months
due later than three months
due within three months
Income Statements
Balance at 31 December
in € million
Other assets comprise:
in € million
Prepayments
Receivables from subsidiaries
Receivables from other companies in which an investment is held
Other taxes
Collateral receivables
Expected reimbursement claims
Sundry other assets
Other assets
31.12.2015
31.12.2014
1,527
-1,323
716
-721
-893
-1,055
1,036
-1,078
412
412
-711
-641
966
902
6,261
6,132
90-GROUP FINANCIAL STATEMENTS
30-Other assets
2014
ter more than twelve months. Some of the claims may
be settled earlier than this depending on the timing of
proceedings.
29-Income tax assets
Balance at 1 January
Allocated (+)/reversed (-)
Utilised
Exchange rate impact and other changes
Balance at 31 December
8
7.
8
1
8
Allowance for impairment recognised on a
specific item basis
group basis
8
-7
8
1
8
-Total
9
9
6
-6
-8
-8
1
-1
8
8
130
Income tax assets totalling €2,381 million (2014: €1,906
million) include claims amounting to €519 million
(2014: €653 million) which are expected to be settled af-
94 Cash Flow Statements
62,539
Net carrying amount
47
-11,550
13,220
2014
2015
DriveNow
2015
BMW Brilliance -
Dividends received by the Group
Total comprehensive income.
Other comprehensive income
Income taxes
Interest expenses
Interest income
Profit/loss before financial result
Scheduled depreciation
Disclosures relating to the income statement
Revenues
in € million
The accounting treatment applied to investments ac-
counted for using the equity method is described in
note 6. Financial information relating to equity accounted
investments is aggregated in the following table:
The associated company, THERE Holding B.V., Amsterdam,
(in which the BMW Group has a 33.3% shareholding),
wholly owns HERE International B.V., Amsterdam (until
28 January 2016: THERE Acquisition B.V., Amsterdam),
which, in turn, serves as the parent company of the HERE
Group. Further information is provided in note 3.
cases with a 50.0% shareholding) is a car sharing pro-
vider which currently offers car-sharing services in major
German cities and, going forward, increasingly outside
Germany.
The joint ventures DriveNow GmbH & Co. KG, Munich,
and DriveNow Verwaltungs GmbH, Munich, (in both
The BMW Brilliance Automotive Ltd., Shenyang, joint
venture (in which the BMW Group has a 50.0% share-
holding) produces mainly BMW brand models for the
Chinese market and also has engine manufacturing
facilities, which supply the joint venture's two plants
with petrol engines.
25-Investments accounted for using the equity method
Investments accounted for using the equity method com-
prise the joint ventures BMW Brilliance Automotive Ltd.,
Shenyang (BMW Brilliance), DriveNow GmbH & Co. KG,
Munich, and DriveNow Verwaltungs GmbH, Munich
(DriveNow), as well as the associated company THERE
Holding B.V., Amsterdam (THERE).
note 21.
An analysis of changes in leased products is provided in
ment losses amounting to €24 million (2014: €44 million)
were recognised on leased products in 2015 as a con-
sequence of changes in residual value expectations.
Impairment losses amounting to €119 million (2014:
€137 million) and income from the reversal of impair-
Contingent rents of €54 million (2014: €56 million), based
principally on the distance driven, were recognised in
income. Some of the agreements contain price adjust-
ment clauses as well as extension and purchase options.
32
14,712
380
1,399
1,702
4,171
5,415
Current assets
Cash and cash equivalents
Non-current assets
2015
2014
2015
2014
2015
-THERE¹
DriveNow
BMW Brilliance -
Disclosures relating to the balance sheet
in € million
126
2015
-THERE*
*No disclosure of income statement figures for 2015 on the grounds of immateriality. See also note 3.
-6
-1,339
147
1,081
-144
449
369
15
24
40
-5
-6
247
1
16,527
3
-69
13
22
due later than five years
due between one and five years
due within one year
Present value of future minimum lease payments
due later than five years
due between one and five years
due within one year
Interest portion of the future minimum lease payments
due later than five years
due between one and five years
due within one year
Total of future minimum lease payments
31.12.2014
31.12.2015
Minimum lease payments of the relevant leases are as
follows:
ship is attributable to the BMW Group due to the na-
ture of the lease arrangements (finance leases). Leases
to which BMW AG is party, with a carrying amount
of €102 million (2014: €64 million), run for periods up
to 2030 at the latest and contain price adjustment
clauses in the form of index-linked rentals as well as
extension and purchase options. Assets leased by
BMW Tokyo Corp., Tokyo, with a carrying amount of
€7 million (2014: €2 million), have remaining terms
up to 2039 at the latest. BMW Osaka Corp., Osaka, is
party to a finance lease running until 2022 for an opera-
tional building with a carrying amount of €1 million at
the end of the reporting period (2014: €1 million).
in € million
Property, plant and equipment include a total of
€110 million (2014: €67 million) relating to land and
operational buildings, for which economic owner-
No borrowing costs were recognised as a cost compo-
nent of property, plant and equipment during the year
under report.
An impairment loss of €3 million (2014: €– million) was
recognised on plant and machinery in the Automotive
segment in 2015.
A break-down of the different classes of property, plant
and equipment disclosed in the balance sheet and
changes during the year are shown in note 21.
of Comprehensive Income
122-Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
113 Notes to the Income Statement
121 Notes to the Statement
23-Property, plant and equipment
98 Accounting Principles and
Policies
98-Notes
53
3
-99
190
-7,442
8,445
-7,267
8,079
Minimum lease payments
later than five years
between one and five years
within one year
31.12.2015 ―31.12.2014
cial services business. Minimum lease payments of
€16,527 million (2014: €14,712 million) from non-can-
cellable operating leases fall due as follows:
in € million
The BMW Group, as lessor, leases out its own products
and those of other manufacturers as part of its finan-
24-Leased products
125 GROUP FINANCIAL STATEMENTS
74
121
41
-72
28
37
5
12
སྰ༠༤
45
-12
8
25
-10
༄ 8སེ༅
119
53
-71,536
-3,115
- 976
―31.12.2014
31.12.2015
customers and dealers and €17,128 million (2014:
€15,175 million) for finance leases. Finance leases are
analysed as follows:
in € million
Receivables from sales financing, totalling €70,043 mil-
lion (2014: €61,024 million), comprise €52,915 million
(2014: €45,849 million) for credit financing for retail
27-Receivables from sales financing
127 GROUP FINANCIAL STATEMENTS
A break-down of the different classes of other invest-
ments disclosed in the balance sheet and changes
during the year are shown in note 21.
Impairment losses on participations - recognised with
income statement effect - related to the investment in
SGL Carbon SE, Wiesbaden, which was written down
on the basis of objective criteria, see also note 6.
Impairment losses on investments in non-consolidated
subsidiaries - recognised with income statement effect -
related primarily to BMW i Ventures B.V., Rijswijk.
The additions to non-current marketable securities re-
late to the acquisition of part of a convertible bond,
issued by SGL Carbon SE, Wiesbaden, with a nominal
volume of €28 million. Disposals of investment in non-
consolidated subsidiaries result from the winding-up
of BMW Services Netherlands B.V., Rijswijk.
The additions to investments in non-consolidated sub-
sidiaries relate to capital increases at the level of BMW
SLP S. A. de C.V., San Luis Potosí, BMW i Ventures B.V.,
Rijswijk, and BMW i Ventures, LLC, Wilmington, DE.
Other investments relate to investments in non-consoli-
dated subsidiaries, joints ventures, joint operations and
associated companies, participations and non-current
marketable securities.
of Comprehensive Income
122-Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
113 Notes to the Income Statement
121 Notes to the Statement
26-Other investments
3 The BMW Group holds 73.8% (2014: 50.0%) of net assets at 31 December 2015. Due to the allocation of voting rights within the decision-making bodies of the two entities,
operations remain subject to joint control.
2 Corresponds to the consolidated capital (provided by the shareholders) of Drive Now GmbH & Co. KG, Munich, and its subsidiaries.
98 Accounting Principles and
Policies
98-Notes
Equity
96 Group Statement of Changes in
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
Income Statements
90
90-GROUP FINANCIAL STATEMENTS
Gross investment in finance leases
Carrying amounts as at acquisition date (4 December 2015). See also note 3.
due within one year
due later than five years
Allowance for impairment
Gross carrying amount
―31.12.2014
31.12.2015
Receivables from sales financing include €41,865 mil-
lion (2014: €37,438 million) with a remaining term of
more than one year.
benefit of the lessor amounted to €165 million (2014:
€140 million).
in € million
Allowances for impairment and credit risk
Contingent rents recognised as income (generally relat-
ing to the distance driven) amounted to €1 million
(2014: €2 million). Impairment losses on finance leases
amounting to €174 million (2014: €183 million) were
measured and recognised on the basis of specific credit
risks. Non-guaranteed residual values that fall to the
1,531
1,796
15,175
-102
-127
17,128
-10,175
-11,572
4,898
5,429
16,706
18,924
-109
-134
5,366
-11,231
5,974
-12,816
Unrealised interest income
due later than five years
due between one and five years
due within one year
Present value of future minimum lease payments
due between one and five years
-1,663
668
14
12
-4,215
4,814
Current provisions and liabilities
-48
-236
641
Current financial liabilities
1,093
450
-589
Non-current provisions and liabilities
-48
-2,003
-12
202
365
19
32
-96
13
23
222
2,910
-3,853
Non-current financial liabilities
Equity
- 3,404
3,841
8
6
384
Assets
1,082
1,551
Carrying amount
-373
-376
Eliminations
668
-6
143
1,455
1,927
Group's interest in net assets
2,003
-12
-20
-2,910
-3,853
Net assets
1,477
-8
12
-4,665
5,403
Equity and liabilities
3,480
20
32
-7,575
9,256
Reconciliation of aggregated financial information
third party land
group basis
3
Net liability
2015 2014
1 January
Expense (+)/income (-).
9,636
518
-7,400
475
Remeasurements
-825
-1,872
Plan assets
2015 2014
-7,323
-155
-7
2,313
651
363
238
-351
-832
-1,521
Payments to external funds
-6,749
--237
-490
2015 2014
in € million
Transfers to fund
Employee contributions
31 December 2014
thereof pension provision
thereof assets
-1,394
53
-3,490
Defined benefit obligation
-24
3
144
4,603
4,604
-1
Net interest expense on the net defined benefit liability
is presented within the financial result. All other com-
ponents of pension expense are presented in the in-
come statement under cost of sales, selling and adminis-
trative expenses.
Remeasurements on the obligations side gave rise to
a negative amount of €1,834 million (2014: positive
amount of €3,519 million) and related mainly to the
higher discount rates used in Germany, the UK and
the USA.
139 GROUP FINANCIAL STATEMENTS
The net defined benefit liability for pension plans in Germany, the UK and other countries changed as follows:
Germany
-383
-97
-490
-97
Net liability
2015 -2014
1 January
Expense (+)/income (-)
Remeasurements
-9,499 -7,409
449
-876
-7,734
-6,076
1,765
Plan assets
2015 2014
-1,333
-283
- -275
-166
-130
-294
- -990
-582
400
- 405
-1,390
-2014
2015
in € million
Employee contributions
53
48
-53
-48
Payments on account and pension payments
-167
-159
173
-159
6
31 December
9,215
9,636
-7,855 -7,323
1,360
2,313
United Kingdom.
Defined benefit obligation
147 Other Disclosures
163 Segment Information
Payments to external funds
of Comprehensive Income
122-Notes to the Balance Sheet
113 Notes to the Income Statement
-13,461
2,297
Limitation of
the net defined
benefit asset to
the asset ceiling
Net defined
benefit liability
4
2,301
337
-15,758
337
Interest expense (+)/income (-)
628
-540
88
-88
Past service cost-
-3
-3
337
-3
Total
Defined benefit
obligation
683
-529
154
154
31 December 2015
19,926
-16,930
2,996
Plan assets
2,999
thereof assets
3,000
-1
138
in € million
1 January 2014
Expense/income
Current service cost·
thereof pension provision
Gains (-) or losses (+) arising from settlements
-8
-8
Pensions and other benefits paid
-519
522
Translation differences and other changes
679
20,462
-534
-15,861
145
4,601
-71
90-GROUP FINANCIAL STATEMENTS
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
90
-71
-383
-383
-8
Remeasurements
Gains (-) or losses (+) on plan assets, excluding
amounts included in interest income
-1,394
-1,394
Gains (-) or losses (+) arising from changes in
demographic assumptions
53
53
Gains (-) or losses (+) arising from changes in
financial assumptions
3,490
-3,490
Changes in the limitation of the net defined benefit
asset to the asset ceiling
Gains (-) or losses (+) arising from
experience adjustments
-24
-24
121 Notes to the Statement
Translation differences and other changes
-295
-295
3,271
4,437
-4,331
383
334
8,345
-7,936
thereof non-investment grade
3,525
-1,309
186
231
37
45
1,532
-1,514
Real estate
3
-1,238
Money market funds
thereof investment grade
9,877
2015 -2014
2015 2014
Equity instruments
-1,807
-1,865
-1,340
-1,230
224
-9,450
203
-3,298
Debt instruments -
4,834
- 4,509
-4,623
4,562
420
379
-3,371
255
100
20
12,894
Debt instruments
-189
183
-207
-298
3
-12
13,575
399
thereof investment grade
-189
183
2
111
1
-12
192
493
594
683
5,926
20
20
3
19
12
274
-112
Absolute return funds
33
26
-33
-26
Other
5
5
Total with quoted market price
6,641
6,374
6,251
2015 2014
-212
2015 2014
Other
Plan assets.
Effect of limiting the
Net liability
2015 -2014
2015 2014
net defined benefit
asset to the asset ceiling
―2015 -2014
-2015 2014
1 January
Defined benefit-
obligation
1,327
Expense (+)/income (-)
-109
-74
-804-636
-30-28
Remeasurements
-133
257
38
949
-53
in € million
-106
1,765
-212
Employee contributions
23
20
-23 ― -20
Payments on account and pension payments
-326
― -294
Other
Translation differences and other changes.
31 December
- 569
9,499
334
-446 ― -463
-8,153 -7,734
- 302
8
-8
112
1,174
558
Payments to external funds
-87
-74
-79
46
-94
203
-87
-74
.5
42
-317
38
525
Depending on the cash flow profile and risk structure of the pension obligations involved, pension plan assets are
invested in various investment classes.
140
Plan assets in Germany, the UK and other countries comprised the following:
Components of plan assets
in € million
Germany
United Kingdom
465
525
2
-804
Employee contributions
3
3
-3
-3
Payments on account and pension payments
-47
-66
47
61
Translation differences and other changes
125
110
-83
-71
31 December
1,384
1,327
-922
-Total
-14
-14
-554
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122-Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
90 Statement of
At 31 December 2015 common stock issued by BMW AG
was divided, as at the end of the previous year, into
601,995,196 shares of common stock with a par-value of
€1.00. Preferred stock issued by BMW AG was divided
into 54,809,404 shares (2014: 54,499,544 shares) with a
par-value of €1.00. Unlike the common stock, no voting
rights are attached to the preferred stock. All of the
Company's stock is issued to bearer. Preferred stock bears
an additional dividend of €0.02 per share.
Further information on share-based remuneration is
provided in note 19.
Issued share capital increased by €0.3 million as a result
of the issue to employees of 309,860 shares of non-voting
preferred stock. The number of authorised shares and
the Authorised Capital of BMW AG amounted to 4.5 mil-
lion shares and €4.5 million respectively at the end of
the reporting period. The Company is authorised to
issue 5 million shares of non-voting preferred stock
amounting to nominal €5.0 million prior to 14 May 2019.
The share premium of €22.8 million arising on the share
capital increase was transferred to capital reserves.
Capital reserves
Capital reserves include premiums arising from the issue
of shares and totalled €2,027 million (2014: €2,005 mil-
lion). The change related to the share capital increase in
conjunction with the issue of shares of preferred stock
to employees.
Revenue reserves
Revenue reserves comprise the post-acquisition and non-
distributed earnings of consolidated companies. In
addition, remeasurements of the net defined benefit lia-
bility for pension plans are also presented in revenue
reserves.
In 2015, a total of 309,944 shares of preferred stock was
sold to employees at a reduced price of €53.66 per share
in conjunction with the Company's Employee Share Pro-
gramme. These shares are entitled to receive dividends
with effect from the financial year 2016. 84 shares of
preferred stock were bought back via the stock exchange
in conjunction with the Company's Employee Share
Programme.
Revenue reserves increased during the twelve-month
period under report to €41,027 million (31 December
2014: €35,621 million). They were increased by the
amount of the net profit attributable to shareholders of
BMW AG amounting to €6,369 million (2014: €5,798 mil-
lion) and reduced by the payment of the dividend for
2014 amounting to €1,904 million (for 2013: €1,707 mil-
lion). Revenue reserves also increased by €1,012 million
(2014: reduced by €1,592 million) as a result of re-
measurements of net defined benefit liability for pen-
sion plans (net of deferred tax recognised directly in
Income Statements
90-GROUP FINANCIAL STATEMENTS
2015
2014
Shares issued/in circulation at 1 January
Shares issued in conjunction with Employee Share Programme
Less: shares repurchased and re-issued
Shares issued/in circulation at 31 December
54,499,544
309,944
90
84
Common stock
2015
2014
54,259,787 -601,995,196
-239,777
20
54,499,544 601,995,196
601,995,196
601,995,196
54,809,404
133 GROUP FINANCIAL STATEMENTS
equity). Other miscellaneous changes reduced revenue
reserves by €71 million (2014: €- million).
The unappropriated profit of BMW AG at 31 December
2015 amounts to €2,102 million and will be proposed
to the Annual General Meeting for distribution. This
amount includes €175 million relating to preferred stock.
The amount proposed for distribution represents an
amount of €3.22 per share of preferred stock and €3.20
per share of common stock. The proposed distribution
must be authorised by the shareholders at the Annual
General Meeting of BMW AG. It is therefore not recog-
nised as a liability in the Group Financial Statements.
42,530
37,220
-31.7%
31.6%
49,523
43,167
42,160
37,482
Total capital
91,683
-68.3%
68.4%
134,213
117,869
134
Equity attributable to shareholders of BMW AG increased
during the financial year by 0.1 percentage points,
primarily reflecting the increase in revenue reserves.
Since December 2013, the BMW AG has a long-term
rating of A+ (with stable outlook) and a short-term rating
of A-1 from the rating agency Standard & Poor's, cur-
rently the highest rating given by Standard & Poor's to
a European car manufacturer. Since July 2011, the
Company rating.
80,649
Proportion of total capital
Total financial liabilities
Current financial liabilities
Accumulated other equity
Accumulated other equity comprises all amounts recog-
nised directly in equity resulting from the translation
of the financial statements of foreign subsidiaries, the
effects of recognising changes in the fair value of deriva-
tive financial instruments and marketable securities
directly in equity and the related deferred taxes recog-
nised directly in equity.
Minority interests
Equity attributable to minority interests amounted to
€234 million (2014: €217 million). This includes a mi-
nority interest of €27 million in the results for the year
(2014: €19 million).
Capital management disclosures
The BMW Group's objectives when managing capital
are to safeguard the Group's ability to continue as a
in € million
going concern in the long-term and to provide an ade-
quate return to shareholders.
The BMW Group manages the capital structure and
makes adjustments to it in the light of changes in eco-
nomic conditions and the risk profile of the underlying
assets.
The BMW Group is not subject to any external minimum
equity capital requirements. Within the Financial Ser-
vices segment, however, there are a number of individual
entities which are subject to equity capital requirements
set by regulatory banking agencies.
In order to manage its capital structure, the BMW Group
uses various instruments including the amount of divi-
dends paid to shareholders and share buy-backs.
Moreover, the BMW Group pro-actively manages debt
capital, determining levels of debt capital transactions
with a target debt structure in mind. An important as-
pect of the selection of financial instruments is the ob-
jective to achieve matching maturities for the Group's
financing requirements. In order to reduce non-sys-
tematic risk, the BMW Group uses a variety of financial
instruments available on the world's capital markets to
achieve diversification.
The capital structure at the end of the reporting period
was as follows:
31.12.2015
31.12.2014
Equity attributable to shareholders of BMWAG
Proportion of total capital
Non-current financial liabilities
Preferred stock
Non-current financial liabilities
Number of shares issued
€7,688 million) comprise cash on hand and at bank, all
with an original term of up to three months.
Utilised
Exchange rate impact and other changes
Balance at 31 December
2014
in € million
Balance at 1 January
Allocated (+)/reversed (-)
Utilised
Allocated (+)/reversed (-)
Exchange rate impact and other changes
-76
-83
36
43
-27
-28
-1
-2
Balance at 31 December
84
Balance at 1 January
specific item basis
131 GROUP FINANCIAL STATEMENTS
32-Trade receivables
Trade receivables totalling €2,751 million (2014: €2,153
Allowances for impairment and credit risk
in € million
million) include €53 million (2014: €47 million) due
later than one year.
31.12.2015
31.12.2014
group basis
Gross carrying amount
Allowance for impairment
2,847
-96
2,751
2,236
-83
2,153
Allowances on trade receivables developed as follows during the year under report:
2015
in € million
Allowance for impairment recognised on a
- Total
Net carrying amount
12
96
Allowance for impairment recognised on a
specific item basis
31.12.2014
128
-100
-20
-73
10
-26
15
31.12.2015
30
52
195
281
132
Receivables that are overdue by between one and 30 days
do not normally result in bad debt losses since the over-
due nature of the receivables is primarily attributable to
the timing of receipts around the month-end. In the case
33-Cash and cash equivalents
Cash and cash equivalents of €6,122 million (2014:
of trade receivables, collateral is generally held in the
form of vehicle documents and bank guarantees so that
the risk of bad debt loss is extremely low.
22
More than 120 days overdue.
91-120 days overdue
61-90 days overdue
Total
group basis
98
9
-107
-6
-2
-8
-15
-15
-1
-1
76
7
83
Some trade receivables were overdue for which an impairment loss was not recognised. Overdue balances are
analysed into the following time windows:
in € million
1-30 days overdue
31-60 days overdue
34-Equity
Current financial liabilities
Outlook
BMW AG has a long-term rating of A2 (with stable out-
look) and a short-term rating of P-1 from the rating
agency Moody's. In March 2015, Moody's raised the
outlook from "stable" to "positive" and at the same
time confirmed the long-term and short-term ratings
of A2 and P-1 respectively. This means that BMW AG
continues to enjoy the best ratings of all European car
manufacturers, clearly reflecting the financial strength
of the BMW Group.
Moody's
The pension plans are administered by BMW Pension
Trustees Limited, Hams Hall, and BMW (UK) Trustees
Limited, Hams Hall, both trustee companies which act
independently of the BMW Group. BMW (UK) Trustees
Limited, Hams Hall, is represented by 14 trustees and
BMW Pension Trustees Limited, Hams Hall, by five
trustees. A minimum of one third of the trustees must
be elected by plan participants. The trustees represent
the interests of plan participants and decide on invest-
ment strategies. Recovery contributions to the funds
are determined in agreement with the BMW Group.
USA
The BMW Group's defined benefit plans in the USA are
primarily employer-funded and include final salary
pension plans and a post-retirement medical care plan.
Benefits paid in conjunction with these plans comprise
old-age retirement pensions, early retirement benefits,
137 GROUP FINANCIAL STATEMENTS
surviving dependants' benefits as well as post-retirement regular allocations and retrospective allocations to the
medical care benefits.
Statutory minimum funding requirements apply to the
final salary pension plans. Plan participants are repre-
sented by a committee consisting of six members, which
is authorised to take all decisions pertaining to the
relevant pension plan, including plan structure, invest-
ments and selection of investment managers as well as
in € million
Defined benefit
In the United Kingdom, the BMW Group has defined
benefit plans, which are primarily employer-funded
combined with employee-funded components based on
the conversion of employee remuneration. These plans
are subject to statutory minimum recovery require-
ments. Benefits paid in conjunction with these plans
comprise old-age retirement pensions as well as inva-
lidity and surviving dependants' benefits. These de-
fined benefit plans have been closed to new entrants,
who, since 1 January 2014, are covered by a defined
contribution plan.
obligation
The change in the net defined benefit liability for pen-
sion plans can be derived as follows:
Plan assets
Total Limitation of
the net defined
benefit asset to
the asset ceiling
Net defined
benefit liability
20,462
-15,861
4,601
2
plan. The committee members are nominated by the
management of the relevant participating US entities.
Plan committees act in a fiduciary capacity and are
subject to statutory framework conditions.
4,603
United Kingdom
Defined benefit obligations also remain in Germany, for
which benefits are determined either by multiplying
a fixed amount by the number of years of service or on
the basis of an employee's final salary. The defined bene-
fit plans have been closed to new entrants. With effect
from 1 January 2014, new employees receive a defined
contribution entitlement with a minimum rate of return.
90-GROUP FINANCIAL STATEMENTS
Income Statements
90
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
The assets of the German pension plans are adminis-
tered by BMW Trust e. V., Munich, (German registered
association) in accordance with a CTA. The repre-
sentative bodies of this entity are the Board of Directors
and the Members' General Meeting. BMW Trust e. V.,
Munich, currently has seven members and three Board
of Directors members elected by the Members' General
Meeting. The Board of Directors is responsible for in-
vestments, drawing up and deciding on investment
guidelines as well as monitoring compliance with those
guidelines. The members of the association can be em-
ployees, senior executives and members of the Board
of Directors. An ordinary Members' General Meeting
takes place once every calendar year, and deals with a
range of matters, including receiving and approving
the association's annual report, ratifying the activities of
the Board of Directors and adopting changes to the as-
sociation's statutes.
98 Accounting Principles and
Policies
of Comprehensive Income
122-Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
The decrease in defined benefit obligations results
mainly from the change in the discount rate used for
the actuarial computation in Germany, the UK and
the USA.
The provision for pension-like obligations for post-em-
ployment medical care in the USA and South Africa
amounts to €52 million (2014: €57 million) and is deter-
mined on a similar basis to the measurement of pension
obligations in accordance with IAS 19. Increased costs
do not have a direct impact on medical care obligations
relating to pensioners in the USA. In the case of South
Africa, however, it was assumed that costs would in-
crease in the long term by 8.4% (2014: 8.3%) p.a. The
expense recognised for obligations relating to post-em-
ployment medical care amounted to €10 million (2014:
€8 million).
Numerous defined benefit plans are in place through-
out the BMW Group, the most significant of which are
described below.
Germany
Both employer- and employee-funded benefit plans are
in place in Germany. Benefits paid in conjunction with
these plans comprise old-age retirement pensions as
well as invalidity and surviving dependants' benefits.
The Deferred Remuneration Retirement Plan is an em-
ployee-financed defined contribution plan with a mini-
mum rate of return. The fact that the plan involves a
minimum rate of return means that it is classified as a
defined benefit plan. Employees have the option to
waive payment of certain remuneration components in
return for a future benefit. Any employer social security
contributions saved are credited in the following year
to the individual's benefits account. The converted re-
muneration components and the social security contri-
butions saved are invested on capital markets. When
the benefit falls due, it is paid on the basis of the higher
of the value of the depot account or a guaranteed mini-
mum amount.
113 Notes to the Income Statement
121 Notes to the Statement
1 January 2015
Expense/income
Current service cost
325
325
-224
-224
-1,181
-1,181
1
-429
325
-429
-872
-872
-872
Employee contributions
-79
-79
Pensions and other benefits paid
-540
Transfers to fund
-9
-123
494
Interest expense (+)/income (-)
Past service cost-
Remeasurements
494
591
-468
494
-123
.9
-9
Gains (-) or losses (+) on plan assets, excluding
amounts included in interest income
Gains (-) or losses (+) arising from changes in
demographic assumptions
-224
Gains (-) or losses (+) arising from changes in
financial assumptions
-1,181
Changes in the limitation of the net defined benefit
asset to the asset ceiling
Gains (-) or losses (+) arising from
experience adjustments
-429
136
-1
-1
−1
Under defined benefit plans the enterprise is required to
pay the benefits granted to present and past employees.
Defined benefit plans may be funded or unfunded, the
worthiness for short-term debt is also classified by the
rating agencies as very good, thus enabling it to obtain
refinancing funds on competitive conditions.
latter sometimes covered by accounting provisions.
Pension commitments in Germany are mostly covered
by assets contributed to BMW Trust e. V., Munich, in
conjunction with a contractual trust arrangement (CTA).
The main other countries with funded plans were the
UK, the USA, Switzerland, the Netherlands, Belgium
and Japan. In the meantime, most of the defined bene-
fit plans have been closed to new entrants.
In the case of externally funded plans, the defined bene-
fit obligation is offset against plan assets measured at
their fair value. Where the plan assets exceed the pen-
sion obligations and the BMW Group has a right of re-
imbursement or a right to reduce future contributions,
it reports an asset (within "Other financial assets") at
an amount equivalent to the present value of the future
economic benefits attached to the plan assets. If the plan
is externally funded, a liability is recognised under
pension provisions where the benefit obligation exceeds
fund assets.
Remeasurements of the net liability arise from changes
in the present value of the defined benefit obligation,
the fair value of the plan assets or the asset ceiling. Rea-
sons for remeasurements include changes in financial
and demographic assumptions as well as changes in the
detailed composition of beneficiaries. Remeasurements
are recognised immediately in "Other comprehensive
135 GROUP FINANCIAL STATEMENTS
income" and hence directly in equity (within revenue
reserves).
Past service cost arises where a BMW Group entity in-
troduces a defined benefit plan or changes the benefits
payable under an existing plan. These costs are recog-
nised immediately in the income statement. Similarly,
gains and losses arising on the settlement of a defined
benefit plan are recognised immediately in the income
statement.
Employer contributions paid to state pension insurance
programmes totalled €571 million (2014: €517 million).
The defined benefit obligation is calculated on an ac-
tuarial basis. The actuarial computation requires the
use of estimates and assumptions, which depend on the
economic situation in each particular country. The most
important assumptions applied by the BMW Group are
shown below. The following weighted average values
have been used for Germany, the United Kingdom and
other countries:
in %
Discount rate
Pension level trend
Germany
2015 2014
United Kingdom
2015 2014
-Other
2015 2014
31 December
Post-employment benefit plans are classified as either
defined contribution or defined benefit plans. Under
defined contribution plans an enterprise pays fixed
contributions into a separate entity or fund and does
not assume any other obligations. The total pension ex-
pense for defined contribution plans of the BMW Group
amounted to €71 million (2014: €60 million).
Pension provisions are recognised as a result of commit-
ments to pay future vested pension benefits and current
pensions to present and former employees of the BMW
Group and their dependants. Depending on the legal,
economic and tax circumstances prevailing in each coun-
try, various pension plans are used, based generally on
the length of service, salary and remuneration structure
of the employees involved. Due to similarity of nature,
the obligations of BMW Group companies in the USA
and of BMW (South Africa) (Pty) Ltd., Pretoria, for post-
retirement medical care are also accounted for as pen-
sion provisions in accordance with IAS 19.
35-Pension provisions
Standard & Poor's
A2
P-1
positive
A+
A-1
stable
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122-Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
With their current long-term ratings of A+ (Standard &
Poor's) and A2 (Moody's), the agencies continue to
confirm BMW AG's robust creditworthiness for debt
with a term of more than one year. BMW AG's credit-
2.51
1.60
306
2.10
3.58
2.43
Effect of limiting net defined benefit asset to asset ceiling
Carrying amounts at 31 December
3
1,360
2,313 1,174 1,765
465
2
525
3
2
9,215 -9,636 9,327 -9,499 -1,384 -1,327 -19,926 -20,462
-7,855 7,323 -8,153 -7,734 922
804 16,930 -15,861
2,999
thereof pension provision
thereof assets
-1,360 -2,313 -1,174 -1,765
466
526
3,000
4,604
-1
4,603
Fair value of plan assets
Present value of defined benefit obligations
2014
3.40
3.83
3.48
2.43
-0.02
0.03
The following mortality tables are applied in countries, in which the BMW Group has significant defined benefit plans:
Germany
Mortality Table 2005 G issued by Prof. K. Heubeck (with invalidity rates reduced by 50%)
United Kingdom - S1PA tables weighted accordingly, and S1NA tables minus 2 years, both with a minimum long term annual improvement allowance
USA
RP2014 Mortality Table with collar adjustments projected with MP2015
In Germany, the so-called "pension entitlement trend"
(Festbetragstrend) also represents a significant actuarial
assumption for the purposes of determining benefits
payable at retirement and was left unchanged at 2.0%.
By contrast, the salary level trend assumption is subject
to a comparatively low level of sensitivity within the
BMW Group. The calculation of the salary level trend in
31 December
in € million
the UK also takes account of restrictions due to caps and
floors.
Based on the measurement principles contained in
IAS 19, the following balance sheet carrying amounts
apply to the Group's pension plans:
Germany -
2015 -2014
-United Kingdom -
-2015 -2014-2015 2014
- Other
-Total
2015
-1.60
thereof non-investment grade
9,327
187
16,930 15,861
804
922
7,734
8,153
7,323
90-GROUP FINANCIAL STATEMENTS
7,855
2,967
-578
562
3,355
210
239
1,808
31 December
90
Income Statements
90 Statement of
205
As part of the internal reporting procedures and for in-
ternal management purposes, financial risks relating
to the pension plans are reported on using a deficit-
value-at-risk approach. The investment strategy is also
subjected to regular review together with external con-
sultants, with the aim of ensuring that investments are
Pension fund assets are monitored continuously and
managed from a risk-and-yield perspective. Risk is re-
duced by ensuring a broad spread of investments. In
this context, the BMW Group continuously monitors
the degree of coverage of pension plans as well as ad-
herence to the stipulated investment strategy.
In order to reduce currency exposures, a substantial
portion of plan assets are either invested in the same
currency as the underlying plan or hedged by means of
currency derivatives.
account in the actuarial assumptions applied. The
financial risk of longer-than-assumed life expectancy is
hedged for the majority of participants of the BMW
Group's largest pension plan in the UK by means of a
so-called "longevity hedge".
A substantial portion of plan assets is invested in debt
instruments in order to minimise the effect of capital
market fluctuations on the net liability. The asset port-
folio also includes equity instruments, property and
alternative investments – asset classes capable of gen-
erating the higher rates of return necessary to cover
risks (such as changes in mortality tables) not taken into
The BMW Group is exposed to risks arising from defined
benefit plans on the one hand and defined contribution
plans with a minimum return guarantee on the other.
Pension obligations to employees under such plans are
measured on the basis of actuarial reports. Future pen-
sion payments are discounted by reference to market
yields on high quality corporate bonds. These yields are
subject to market fluctuation and influence the level
of pension obligations. Furthermore, changes in other
actuarial parameters, such as expected rates of inflation,
also have an impact on pension obligations.
of Comprehensive Income
122-Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
113 Notes to the Income Statement
121 Notes to the Statement
98 Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
1,902
949
Employer contributions to plan assets are expected to
amount to €692 million in the coming year. Plan assets
of the BMW Group include own transferable financial
instruments amounting to €6 million (2014: €5 million).
Total without quoted market price
11
17
Cash and cash equivalents
895
1,060
105
105
- 683
-783
107
Real estate
-187
207
1,214
2
24
9
172
- 20
41
93
-261
97
224
282
Other
-183
-1,293
34
-557
-705
424
554
981
Absolute return funds
Comprehensive Income
371
Other financial obligations
due later than five years
due between one and five years
The total of future minimum lease payments under non-
cancellable and other operating leases can be analysed
by maturity as follows:
31.12.2014
31.12.2015
In addition to liabilities, provisions and contingent lia-
bilities, the BMW Group also has other financial com-
mitments, primarily under lease contracts for land,
buildings, plant and machinery, tools, office and other
facilities. These contracts run for periods of one to
49 years. Some of them contain extension and purchase
options as well as price adjustment clauses, based on
index-linked or graduated rentals, including adjust-
ments for inflation. In 2015 an amount of €315 million
(2014: €350 million) was recognised as expense in con-
junction with operating leases. All of these amounts re-
late to minimum lease payments.
Other financial commitments
due within one year
299
Other financial commitments include €14 million (2014:
€7 million) in respect of obligations to non-consolidated
subsidiaries. No back-to-back operating leases were in
place at the end of the reporting period (2014: €1 million).
888
-816
603
2,190
1,790
Purchase commitments amounted to €2,217 million
(2014: €2,247 million) for property, plant and equipment
and €757 million (2014: €750 million) for intangible
assets.
148
42-Financial instruments
The carrying amounts and fair values of financial instruments are assigned to IAS 39 categories and cash funds as
follows:1, 2
90 Statement of
31 December 2015
1,003
Income Statements
-306
90-GROUP FINANCIAL STATEMENTS
in € million
thereof
due within
one year
1,922
915
-1,685
-780
3,910
-1,397
3,370
-1,027
299
123
6,254
32
31
55
-127
56
2,399
5,488
1,894
Deferred income relating to service contracts relates to
service and repair work to be provided under commit-
ments given at the time of the sale of a vehicle (multi-
component arrangements). Grants comprise primarily
public sector funds to promote regional structures
which have been invested in the production plants in
Brazil, Leipzig and Berlin. The grants for the two Ger-
man sites mentioned are subject to holding periods
for the assets concerned of up to five years and mini-
mum employment figures. All conditions attached to
the grants were complied with at 31 December 2015.
In accordance with IAS 20, grant income is recog-
nised over the useful lives of the assets to which they
relate.
146
40-Trade payables
31 December 2015
in € million
Maturity
within
one year
90
Cash funds
Trade receivables
Loans
and receivables
Other
Cash and cash equivalents
-Total
Other assets
Total
Receivables from subsidiaries
Receivables from companies in which
an investment is held
Collateral receivables
Other
31 December 2015
in € million
Liabilities
Credit card receivables
Financial liabilities
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Cash flow hedges-
Fair value hedges
Other derivative instruments
Other
Trade payables
Other liabilities
Total
Bonds
-Loans to third parties
- Marketable securities and investment funds
Other derivative instruments
Fair value
Carrying
amount
Fair value
Carrying
amount
- Fair value
Carrying
amount
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147-Other Disclosures
163 Segment Information
Assets
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Held-to-maturity.
investments
thereof
due within
one year
348
31.12.2014
-1,080
1,080
Social security
-71
17
-89
Advance payments from customers
681
121
802
Deposits received
492
Other taxes
374
Payables to subsidiaries
86
-86
Payables to other companies in which an investment is held
-107
107
Deferred income
2,399
-3,640
215
6,254
Other
871
-4,292
-Total
Maturity
between one
and five years
Weighted
average maturity
period (in days)
-Weighted
average nominal
interest rate (in %)
BMW Finance N.V., The Hague
EUR 1,440 million
81
0.00
GBP 265 million
-74
0.62
BMW Malta Finance Ltd., Floriana
EUR 268 million
Maturity
later than
five years
-13
BMW US Capital, LLC, Wilmington, DE
USD 3,645 million
23
0.32
145 GROUP FINANCIAL STATEMENTS
39-Other liabilities
Other liabilities comprise the following items:
31 December 2015
Maturity
in € million
within
one year
0.01
-176
-10
4,478
162
Payables to other companies in which an investment is held
5
5
Deferred income
1,894
3,373
221
5,488
Other
3,841
-193
162
-7
Other liabilities
7,775
4,026
249
12,050
Deferred income comprises the following items:
in € million
Deferred income from lease financing
Deferred income relating to service contracts
Grants
Other deferred income
Deferred income
31.12.2015
-4,041
Payables to subsidiaries
768
565
Other liabilities
9,208
4,328
231
13,767
31 December 2014
in € million
Maturity
within
one year
Maturity
between one
Maturity
later than
-Total
and five years
five years
Other taxes
929
Social security
69
Advance payments from customers
460
105
Deposits received
415
Payables to subsidiaries
25
14
943
-78
-Total
Payables to other companies in which
Fair value
Other
Trade receivables
Other assets
Receivables from subsidiaries
Receivables from companies in which
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
Cash and cash equivalents
98-Notes
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147-Other Disclosures
163 Segment Information
an investment is held
Collateral receivables
Other
Total
31 December 2014
in € million
Liabilities
Financial liabilities
Bonds
Fair value
98 Accounting Principles and
Policies
Cash funds
- Other
Loans to third parties.
Asset backed financing transactions
Derivative instruments
Cash flow hedges
Other
Fair value hedges
Other derivative instruments
Trade payables
Other liabilities
-Payables to subsidiaries
-Payables to other companies in which
an investment is held
Other
Credit card receivables
4,550
150
31 December 2014
in € million
Assets
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
- Marketable securities and investment funds
Total
Carrying
amount
Loans
and receivables
Fair value
Fair value
Carrying
amount
Fair value
Carrying
amount
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
- Asset backed financing transactions
-Derivative instruments
Cash flow hedges
Fair value hedges
Other
and receivables
Other derivative instruments
Other liabilities
-Payables to subsidiaries
- Payables to other companies in which
Total
an investment is held
Other
1 The carrying amounts of cash flow and fair value hedges are allocated to the category "Held for trading" for the sake of clarity.
2 Based on the fact that maturities are generally short, it is assumed for some items that fair value corresponds to the carrying amount.
3 Carrying amount corresponds to fair value.
Carrying
amount
Held-to-maturity
investments
Fair value
Trade payables
Loans
Cash funds
971
66,672
Held-to-maturity
investments
Carrying
amount
Fair value
62,642
61,024
-200
-200
-12
-12
-239
239
-297
297
-7,688
-7,688
- 2,153
-2,153
-721
-721
-1,055
1,055
412
412
8,100
8,100
971
68,290
Commercial paper
Liabilities from customer deposits (banking)
Liabilities to banks
Bonds
Fair value
Carrying
amount
in relevant currency
(ISO-Code)
Carrying
amount
1 The carrying amounts of cash flow and fair value hedges are allocated to the category "Held for trading" for the sake of clarity.
2 Based on the fact that maturities are generally short, it is assumed for some items that fair value corresponds to the carrying amount.
3 Carrying amount corresponds to fair value.
149 GROUP FINANCIAL STATEMENTS
Other liabilities
Available-
for-sale
Fair value
option
Carrying
amount
Held for
trading
Carrying
amount
Carrying
Carrying
Carrying
amount³
amount³
amount 1,3
402
26
-830
1,194
-1,006
Fair value
Fair value
investments
Held-to-maturity.
-72,309
-70,043
100
100
133
133
-272
272
147
147
6,122
6,122
- 2,751
2,751
-716
-716
893
893
314
314
6,436
6,436
-1,050
78,371
-1,050
76,105
Cash funds
Loans
and receivables
5,161
an investment is held
98
Assets
Carrying
amount³
amount 3
amount 1,3
40,701
-12,783
- 40,319
-12,720
13,543
-13,509
5,415
5,415
13,611
Carrying
13,631
-1,539
-7,773
86
86
-107
5,075
-107
5,075
100,633
100,174
2,535
- 563
-1,452
Liabilities
Financial liabilities
1,539
-7,773
Carrying
Carrying
amount
Fair value 2
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Marketable securities and investment funds
Loans to third parties
Credit card receivables
Other
Cash and cash equivalents
Trade receivables
Other assets
Receivables from subsidiaries
Receivables from companies in which
an investment is held
- Collateral receivables
Other
26
3,030
Total
Other liabilities
Available-
for-sale
Fair value
option
Held for
trading
5,661
Issue volume
USD 2,280 million
The following details apply to the commercial paper:
2015 2014
2015 2014
31 December
in years
Germany
2015 2014
Weighted duration of all pension obligations
-20.5
21.4
19.2
19.9
18.4
United Kingdom
-19.2
Statutory minimum funding and recovery requirements
apply in the UK and the USA which may have an effect
on future amounts. Valuations are performed regularly
to measure the level of funding. In conjunction with
these valuations, funding plans are drawn up and the
amount of any necessary special allocations determined.
36-Other provisions
Other provisions comprise the following items:
in € million
31.12.2015
31.12.2014
-Total
thereof
due within
one year
-Total
thereof
due within
one year
90-GROUP FINANCIAL STATEMENTS
Income Statements
142
90
Other
In the UK, the sensitivity analysis for the pension level
trend also takes account of restrictions due to caps and
floors.
decrease of 0.25%
-610
-3.1
-679
-3.3
Average life expectancy.
increase of 1 year
-632
-3.2
-703
3.4
decrease of 1 year
The weighted duration of all pension obligations in Ger-
many, the UK and other countries (based on present values
of the defined benefit obligation) developed as follows:
-633
-700
-3.4
Pension entitlement trend
increase of 0.25%
decrease of 0.25%
134
0.7
-152
-0.7
-128
-0.6
-146
-0.7
-3.2
90 Statement of
Comprehensive Income
92 Balance Sheets
upon to
1.1.2015 - Translation -Additions -Reversal of
differences
discounting
Utilised Reversed - 31.12.2015
Obligations for personnel and social expenses
Obligations for ongoing operational expenses
Other obligations
-1,871
4,887
2,032
-7
283
54
-1,496
3,462
-677
1
-72
2
-1,414
-2,474
-604
-22
-419
Other provisions changed during the year as follows:
1,939
5,811
-1,880
Other provisions
8,790
344
5,635
75
-4,492
-722
9,630
Income from the reversal of other provisions amounting to €550 million (2014: €198 million) is recorded in cost of
sales and in selling and administrative expenses.
37-Income tax liabilities
Income tax liabilities totalling €1,441 million (2014:
€1,590 million) include obligations amounting to
€485 million (2014: €956 million) which are expected
to be settled after more than twelve months. Some of
the liabilities may be settled earlier than this depend-
ing on the timing of proceedings.
-281
Provisions for other obligations cover numerous specific
risks and obligations of uncertain timing and amount,
in particular for litigation and liability risks.
fulfil obligations over the whole period of the war-
ranty or guarantee. Expected reimbursement claims
amounted to €711 million at the end of the reporting
period (2014: €641 million). Also included are other
provisions for expected payments for bonuses, rebates
and other price deductions.
4,522
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122-Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
Obligations for personnel and social expenses
Obligations for ongoing operational expenses.
Other obligations
Other provisions
Provisions for obligations for personnel and social ex-
penses comprise mainly performance-related remunera-
tion components, early retirement part-time working
arrangements and employee long-service awards. Obliga-
tions for performance-related remuneration components
are normally settled in the following financial year.
Provisions for obligations for ongoing operational ex-
penses relate primarily to warranty obligations and
comprise both statutorily prescribed manufacturer
warranties and other guaranties offered by the BMW
Group. Depending on when claims are made, it is
possible that the BMW Group may be called
in € million
-1,939
1,475
-1,871
-1,442
5,811
2,430
4,887
-1,786
1,880
-1,104
-2,032
1,294
9,630
5,009
8,790
3.6
-727
3.3
655
-Total
Maturity
Maturity
between one
and five years
one year
Maturity
within
-7,773
72
later than
five years
Total
Maturity
Maturity
between one
and five years
-7,701
later than
five years
The total amount of financial liabilities, other liabili-
ties and trade payables with a maturity later than five
in € million
31 December 2014
Trade payables
163 Segment Information
147-Other Disclosures
122-Notes to the Balance Sheet
of Comprehensive Income
121 Notes to the Statement
113 Notes to the Income Statement
Policies
98 Accounting Principles and
98-Notes
Trade payables
-7,580
129
-7,709
in € million
From today's perspective, the BMW Group does not
expect any pending proceedings to have a significant
In accordance with IAS 37, the BMW Group does not
disclose information relating to legal disputes and
risks relating to taxes and customs duties, if such dis-
closures could be expected to prejudice seriously the
position of the BMW Group or if disclosure is not
practicable.
The BMW Group determines its best estimate of contin-
gent liabilities on the basis of the information available
at the date of preparation of the Group Financial State-
ments. This assessment may change over time and is
adjusted regularly on the basis of new information and
circumstances. A part of these risks is insured where
this makes business sense.
Other contingent liabilities comprise mainly legal dis-
putes as well as risks relating to taxes and customs duties.
Contingent liabilities relate entirely to third parties.
121
306
84
213
4
33
93
Contingent liabilities
Other
Performance guarantees
Guarantees
31.12.2014
31.12.2015
in € million
No provisions were recognised for the following contingent liabilities (stated at estimated amounts), since an out-
flow of resources is not considered to be probable:
41-Contingent liabilities and other financial commitments
Contingent liabilities
Other Disclosures
Notes to the Group Financial Statements
BMW Group
147 GROUP FINANCIAL STATEMENTS
years amounts to €8,465 million (2014: €5,442 mil-
lion).
96 Group Statement of Changes in
Equity
Current tax liabilities of €1,441 million (2014: €1,590 mil-
lion) comprise €288 million (2014: €151 million) for
taxes payable and €1,153 million (2014: €1,439 million)
for tax provisions. Tax provisions totalling €8 million
were reversed in the year under report (2014: €1 mil-
lion).
141 GROUP FINANCIAL STATEMENTS
Most of the BMW Group's pension assets are adminis-
tered separately and kept legally segregated from
company assets using trust fund arrangements. As a
consequence, the level of funds required to finance
Carrying
1,327
The sensitivity analysis provided below shows the ex-
tent to which - based on an appropriate review - the
defined benefit obligation would have been affected by
changes in the relevant assumptions that were possible
at the end of the reporting period, if the other assump-
tions used in the calculation were kept constant. It is
only possible, however, to aggregate sensitivities to a
limited extent. Since the change in obligations does not
31 December
follow a linear pattern, all estimates made on the basis
of the specified sensitivities have to be made subject to
this restriction. The calculation of sensitivities using
ranges other than those specified could result in a non-
proportional changes in the defined benefit obligation.
The defined benefit obligation amounted to €19,926 mil-
lion at 31 December 2015.
Change in defined benefit obligation
2015
2014
in € million
in %
in € million
1,384
in %
increase of 0.75%
-2,577
-12.9
-2,888
-14.1
decrease of 0.75%
-3,253
16.3
-3,675
-18.0
Pension level trend
increase of 0.25%
Discount rate
-112
-115
2,607 2,996
9,327 9,499
31 December
in € million
Current employees
Pensioners
Former employees with vested benefits
Defined benefit obligation
pension payments out of operations will be substan-
tially reduced in the future, since most of the Group's
pension obligations are settled out of the assets of
pension funds/trust fund arrangements.
The defined benefit obligation relates to current em-
ployees, former employees with vested benefits and
pensioners as follows:
Other
Germany
2015 -2014
United Kingdom
2015 2014
2015 2014
6,114
6,495
2,183 2,295
1,038
1,003
2,635
2,650
4,537
4,208
231
-212
-466
- 491
9,215
9,636
structured to coincide with the timing of pension pay-
ments and the expected pattern of pension obligations.
In their own way, each of these measures helps to re-
duce fluctuations in pension funding shortfalls.
Issuer
143 GROUP FINANCIAL STATEMENTS
Financial liabilities include all liabilities of the BMW
Group at the relevant balance sheet dates relating to
1.9
BMW US Capital, LLC, Wilmington, DE
variable
EUR 1,500 million
2.6
0.2
variable
GBP 400 million
0.6
0.7
variable
SEK 500 million
5.0
-0.6
variable
USD 2,100 million
-1.1
0.6
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
fixed
AUD 200 million
0.3
4.0
90 Statement of
-0.0
Comprehensive Income
SEK 1,750 million
-2.8
AUD 500 million
4.0
4.2
fixed
CHF 300 million
6.0
1.8
fixed
EUR 15,064 million
6.9
2.3
fixed
-fixed
GBP 2,100 million
2.9
-fixed
HKD 500 million
3.0
-1.6
fixed
JPY 51,000 million
2.5
0.4
fixed
NOK 750 million
5.0
5.0
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
of Comprehensive Income
122-Notes to the Balance Sheet
147 Other Disclosures
163 Segment Information
variable
- EUR 50 million
3.0
0.2
variable
USD 170 million
2.6
0.8
Other
fixed
INR 3,500 million
3.0
5.0
fixed
CAD 1,850 million
4.0
2.2
fixed
JPY 48,000 million
2.7
0.3
fixed
KRW 410,000 million
3.2
2.7
10.3
3.0
AUD 700 million
variable
98-Notes
98 Accounting Principles and
Policies
fixed
EUR 4,340 million
4.5
-1.0
fixed
GBP 300 million
3.9
2.0
fixed
HKD 500 million
1.9
-1.4
fixed
JPY 30,000 million
2.6
0.2
-fixed
- NZD 100 million
-1.9
4.4
-fixed
5.3
3.2
113 Notes to the Income Statement
121 Notes to the Statement
BMW Australia Finance Ltd., Melbourne, Victoria
-fixed
0.8
-1.5
USD 640 million
40,319
-9,030
-3,194
496
-12,720
-9,719
- 3,657
-133
-13,509
-5,415
5,415
- 5,046
-6,912
-8,585
-2,198
2,245
-107
4,550
- 628
-325
586
1,539
42,160
41,289
8,234
91,683
13,631
23,283
-10,124
-Total
31 December 2015
in € million
financing activities. Financial liabilities comprise the
following:
Maturity
within
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper-
Asset backed financing transactions
Derivative instruments
Other
Financial liabilities
31 December 2014
in € million
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Other
Financial liabilities
one year
Maturity
between one
and five years
adverse impact on the result of operations, financial
position and net assets of the Group.
Maturity
later than
five years
Maturity
within
38-Financial liabilities
Maturity
between one
-Total
The BMW Group uses various short-term and long-term
refinancing instruments on money and capital markets
to finance its operations. This diversification enables it to
obtain attractive market conditions.
The main instruments used are corporate bonds, asset-
backed financing transactions, liabilities to banks and
liabilities from customer deposits (banking).
Customer deposit liabilities arise in the BMW Group's
banks, notably in Germany and the USA, which offer a
range of investment products.
144
Bonds comprise:
Issuer
Interest
Issue volume
in relevant currency
(ISO-Code)
Weighted
average maturity
period (in years)
Weighted
average nominal
interest rate (in %)
The increase in liabilities relating to derivatives results
from the fair value measurement of currency and com-
modity derivative instruments.
BMW Finance N.V., The Hague.
EUR 5,415 million
2.2
0.2
variable
GBP 25 million
-1.0
-1.0
variable
SEK 4,700 million
2.5
0.0
-variable
variable
80,649
5,193
37,974
one year
and five years
five years
-8,561
22,817
4,111
-35,489
-7,784
-3,281
489
-9,157
3,309
-11,554
-12,466
- 5,599
5,599
- 3,825
-6,990
69
10,884
-1,930
-1,190
23
3,143
- 626
37,482
-387
-501
1,514
Maturity
later than
amount
94 Cash Flow Statements
92 Balance Sheets
3,772
Currency risks
Raw materials price risks
*The amounts presented for derivative instruments in the previous year have been adjusted and are now based on risk classes.
Other investments (available-for-sale) amounting to
€184 million (2014: €177 million) are measured at amor-
tised cost since quoted market prices are not available
or cannot be determined reliably. These are therefore
not included in the level hierarchy shown above. In ad-
dition, other investments amounting to €244 million
(2014: €231 million) are measured at fair value since
quoted market prices are available. These items are in-
cluded in Level 1.
As in the previous year, there were no reclassifications
within the level hierarchy during the financial year
2015.
In situations where a fair value was required to be
measured for a financial instrument only for disclosure
in € million
1,846
981
61
-1,392
1,281
470
purposes, this was achieved using the discounted cash
flow method and taking account of the BMW Group's
own default risk; for this reason, the fair values calculated
can be allocated to Level 2.
Offsetting of financial instruments
In the BMW Group, financial assets and liabilities re-
lating to derivative financial instruments would nor-
mally be required to be offset. No offsetting takes
place for accounting purposes, however, since the nec-
essary criteria are not met. Since legally enforceable
master netting agreements or similar contracts are in
place, actual offsetting would be possible in principle,
for instance in the case of insolvency. Offsetting would
have the following impact on the carrying amounts of
derivatives:
31.12.2014
Balance sheet amounts as reported
Gross amount of derivatives which can be offset in case of insolvency
Net amount after offsetting
Reported on
assets side
31.12.2015
Reported on
equity and
liabilities side
Reported on
assets side
- Reported on
equity and
liabilities side
3,030
4,550
2,888
3,143
Interest rate risks
Derivative instruments (liabilities)*
- Raw materials price risks
-Currency risks
3. using input factors not based on observable market
data (Level 3).
The following table shows the amounts allocated to
each measurement level at the end of the reporting
period:
Level hierarchy in accordance with IFRS 13-
Level 1
Level 2
Level 3
Marketable securities, investment fund shares and collateral assets - available-for-sale
Other investments - available-for-sale/fair value option
Derivative instruments (assets)
- 5,259
244
Interest rate risks
Currency risks
Raw materials price risks
Derivative instruments (liabilities)
Interest rate risks
Currency risks
- Raw materials price risks
1,939
-1,086
5
-1,352
Interest rate risks
Derivative instruments (assets)*
Level 3
Level 2
231
-3,772
-1,285
Marketable securities, investment fund shares and collateral assets - available-for-sale
Other investments - available-for-sale/fair value option
Level hierarchy in accordance with IFRS 13
in € million
31 December 2014
153 GROUP FINANCIAL STATEMENTS
-1,062
-2,136
Level 1
2. measured at their fair values in an active market for
comparable financial instruments or using measure-
ment models whose main input factors are based on
observable market data (Level 2), or
-1,285
-1,228
-141
Loans and receivables
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
-24
of Comprehensive Income
122 Notes to the Balance Sheet
147-Other Disclosures
163 Segment Information
Other income/expenses
Other liabilities
Income/expenses
Gains/losses from the use of derivatives relate primarily to
fair value gains or losses arising on stand-alone derivatives.
Net losses arising from other investments measured us-
ing the fair value option amounted to €2 million. The
fair value option is applied for non-current marketable
securities with embedded derivatives. No changes in
fair values arose, either during the year under report or
on an accumulated basis since acquisition, which were
attributable to changes in the default risk.
Such credit-risk related changes in fair values are calcu-
lated as a general rule by deducting market-related
changes in fair value from the overall change in fair value.
Net interest expenses from interest rate and interest
rate/currency swaps amounted to €22 million (2014: net
interest income of €101 million).
Impairment losses of €13 million (2014: €152 million)
were recognised in the income statement in 2015 on
in € million
-345
-278
-77
-506
32
Impairment losses/reversals of impairment losses
-69
-144
thereof recognised in the income statement during the period under report
Balance at 31 December
1,745
-3,265
-1,660
-1,915
154
Gains and losses on financial instruments
The following table shows the net gains and losses arising for each of the categories of financial instrument defined
by IAS 39:
in € million
2015
2014
Held for trading
Gains/losses from the use of derivative instruments
-717
-971
Fair value option
Gains/losses on investments measured at fair value through profit and loss
-2
6
-117
Total change during the year
-135
-141
Balance at 1 January
-1,228
Accumulated other equity
1
Net income from participations and investments
-65
129
Gains and losses on sale and fair value measurement of marketable securities held for sale
(including investments in subsidiaries and participations measured at cost)
Available-for-sale
3
1. measured at their fair values in an active market for
identical financial instruments (Level 1),
are
Financial instruments measured at fair value are allo-
cated to different measurement levels in accordance
with IFRS 13. This includes financial instruments that
-11,636
12,487
35,489
-11,554
12,466
- 5,599
-10,886
5,599
10,884
-1,302
-721
1,120
-1,514
-7,709
1,514
-7,709
162
-162
5
5
4,281
· 36,083
4,281
89,663
Liabilities
Financial liabilities
Bonds
Liabilities to banks
Liabilities from customer deposits (banking).
Commercial paper
Asset backed financing transactions
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments.
Other
Trade payables
90,362
Other liabilities
amount1,3
amount 3
Assets
Other investments-
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
- Marketable securities and investment funds
Loans to third parties
- Credit card receivables
Other
-Cash and cash equivalents
Trade receivables
amount3
Other assets
Receivables from subsidiaries
Receivables from companies in which
an investment is held
Collateral receivables
Other
Other liabilities
Available-
for-sale
Fair value
option
Held for
trading
Fair value
Carrying
amount
Carrying
Carrying
-Carrying
Total
Payables to subsidiaries
Payables to other companies in which
an investment is held
3.31
Interest rates taken from interest rate curves were ad-
justed, where necessary, to take account of the credit
quality and risk of the underlying financial instrument.
Raw material
Commodity derivatives were measured on the basis of
the following quoted market prices:
31.12.2015
31.12.2014
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
0.43
98-Notes
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147-Other Disclosures
163 Segment Information
Iron ore
Coke/coal
Aluminium
Palladium
Derivative financial instruments are measured at their
fair value. The fair values of derivative financial instru-
ments are determined using measurement models, as a
consequence of which there is a risk that the amounts
calculated could differ from realisable market prices on
disposal. Observable financial market price spreads are
taken into account in the measurement of derivative
financial instruments. The supply of data to the model
used to calculate fair values also takes account of tenor
and currency basis spreads, thus helping to minimise
differences between the carrying amounts of the in-
struments and the amounts that can be realised on the
financial markets on their disposal. In addition, the
Group's own default risk and that of counterparties is
taken into account in the form of credit default swap
contracts which have matching terms and which can
be observed on the market.
31 December 2015.
in € million
USD/t
USD/t
USD/t
USD/oz
43.05
76.45
1,507.00
561.70
-71.75
110.00
-1,852.50
591.00
98 Accounting Principles and
Policies
2.03
2.20
1.02
Other
3,143
Total
152
Fair value measurement of financial instruments
The fair values shown are computed using market in-
formation available at the balance sheet date, on the
basis of prices quoted by the contract partners or using
ISO Code
in %
EUR
appropriate measurement methods, e.g. discounted cash
flow models. In the latter case, amounts were discounted
at 31 December 2015 on the basis of the following inter-
est rates:
USD
GBP
JPY
CNY
Interest rate for six months
Interest rate for one year
Interest rate for five years
Interest rate for ten years
-0.04
3.26
0.17
-1.59
1.72
0.33
3.07
238
0.12
0.85
-0.06
3.08
-0.16
0.83
0.70
0.84
available-for-sale securities accounted for as participa-
tions, for which fair value changes had previously been
recognised directly in equity. No reversals of impair-
ment losses on marketable securities were recognised
directly in equity in the under report (2014: €7 mil-
lion).
year
The disclosure of interest income resulting from the un-
winding of interest on future expected receipts would
normally only be relevant for the BMW Group where as-
sets have been discounted as part of the process of de-
termining impairment losses. However, as a result of
the assumption that most of the income that is subse-
quently recovered is received within one year and the
fact that the impact is not material, the BMW Group
does not discount assets for the purposes of determining
impairment losses.
model.
The starting point for analysing currency risk with this
model is the identification of forecast foreign currency
transactions or "exposures". At the end of the reporting
period, the principal exposures for the relevant coming
year were as follows:
31.12.2015
31.12.2014
Euro/Chinese Renminbi
Euro/US Dollar
Euro/British Pound
Euro/Korean Won
Euro/Japanese Yen
9,973
10,937
4,770
- 4,743
5,396
A description of the management of this risk is provided
in the Combined Management Report. The BMW
Group measures currency risk using a cash-flow-at-risk
4,818
-1,584
1,162
1,004
In the next stage, these exposures are compared to all
hedges that are in place. The net cash flow surplus
represents an uncovered risk position. The cash-flow-at-
risk approach involves allocating the impact of potential
158
exchange rate fluctuations to operating cash flows on
the basis of probability distributions. Volatilities and
correlations serve as input factors to assess the relevant
probability distributions.
The potential negative impact on earnings is computed
for each currency for the following financial year on
the basis of current market prices and exposures to a con-
fidence level of 95% and a holding period of up to one
year. Correlations between the various currencies are
in € million
taken into account when the risks are aggregated, thus
reducing the overall risk.
The following table shows the potential negative impact
for the BMW Group - measured on the basis of the cash-
flow-at-risk approach - attributable to unfavourable
changes in exchange rates. The impact for the principal
currencies, in each case for the following financial
is as follows:
year,
31.12.2015 ―31.12.2014
Euro/Chinese Renminbi
1,985
Euro/US Dollar
At 31 December 2015 derivative financial instruments,
mostly in the form of forward currency and option
contracts, were in place to hedge the main currencies.
Currency risks
- 3,882
-7,226
11,185
-2,100
1,317
3,418
-7,581
-129
-7,710
-177
45,942
-434
39,785
500
5,299
1,111
91,026
As an enterprise with worldwide operations, business
is conducted in a variety of currencies, from which cur-
rency risks arise. Since a significant portion of Group
revenues is generated outside the euro currency re-
gion and the procurement of production material and
funding is also organised on a worldwide basis, the
currency risk is an extremely important factor for Group
earnings.
The cash flows shown comprise principal repayments
and the related interest. The amounts disclosed for de-
that have a negative fair value at the balance sheet date.
157 GROUP FINANCIAL STATEMENTS
At 31 December 2015 irrevocable credit commitments
to dealers which had not been called upon at the end of
the reporting period amounted to €7,552 million (2014:
€7,247 million).
Solvency is assured at all times by managing and moni-
toring the liquidity situation on the basis of a rolling
cash flow forecast. The resulting funding requirements
are secured by a variety of instruments placed on the
world's financial markets. The objective is to minimise
risk by matching maturities for the Group's financing
requirements within the framework of the target debt
structure. The BMW Group has good access to capital
markets as a result of its solid financial position and a
diversified refinancing strategy. This is underpinned
by the longstanding long- and short-term ratings issued
by Moody's and Standard & Poor's.
Short-term liquidity is managed primarily by issuing
money market instruments (commercial paper). In
this area too, competitive refinancing conditions can
be achieved thanks to Moody's and Standard & Poor's
short-term ratings of P-1 and A-1 respectively.
Also reducing liquidity risk, additional secured and un-
secured lines of credit are in place with international
banks, including a syndicated credit line totalling €6 bil-
lion (2014: €6 billion). Intra-group cash flow fluctua-
tions are evened out by the use of daily cash pooling
arrangements.
Market risks
The principal market risks to which the BMW Group is
exposed are currency risk, interest rate risk and raw
materials price risk.
Protection against such risks is provided in the first
instance through natural hedging which arises when
the values of non-derivative financial instruments have
matching maturities and amounts (netting). Derivative
financial instruments are used to reduce the risk re-
in € million
maining after netting. Financial instruments are only
used to hedge underlying positions or forecast trans-
actions.
The scope of permitted transactions, responsibilities,
financial reporting procedures and control mechanisms
used for financial instruments are set out in internal
guidelines. This includes, above all, a clear separation of
duties between trading and processing. Currency, inter-
est rate and raw materials price risks of the BMW Group
are managed at a corporate level.
Further information is provided in the "Report on out-
look, risks and opportunities" section of the Combined
Management Report.
rivatives comprise only cash flows relating to derivatives
Euro/British Pound
Euro/Korean Won
Euro/Japanese Yen
British Pound
Chinese Renminbi
Japanese Yen
21,785
-17,535
10,742
-12,087
4,220
5,091
1,006
574
536
-113
Interest rate risks can be managed by the use of interest
rate derivatives. The interest rate contracts used for
hedging purposes comprise mainly swaps which are ac-
counted for on the basis of whether they are designated
as a fair value hedge or as a cash flow hedge. A descrip-
tion of the management of interest rate risks is provided
in the Combined Management Report.
As stated there, the BMW Group applies a group-wide
value-at-risk approach for internal reporting purposes
US Dollar
and to manage interest rate risks. This is based on a state-
of-the-art historical simulation, in which the potential
future fair value losses of the interest rate portfolios are
compared across the Group with expected amounts
measured on the basis of a holding period of 250 days
and a confidence level of 99.98%. Aggregation of these
results creates a risk reduction effect due to correlations
between the various portfolios.
In the following table the potential volumes of fair value
fluctuations - measured on the basis of the value-at-risk
in € million
approach - are compared with the expected value for
the interest-rate-sensitive exposures of the BMW Group:
31.12.2015 ―31.12.2014
Euro
US Dollar
British Pound
Chinese Renminbi
Japanese Yen
472
398
449
347
186
159 GROUP FINANCIAL STATEMENTS
Euro
―31.12.2014
31.12.2015
163
-173
-48
-73
-86
66
99
37
68
6
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
The fair values of the Group's interest rate portfolios for
the five main currencies were as follows at the end of
the reporting period:
These risks arise when funds with differing fixed-rate
periods or differing terms are borrowed and invested.
All items subject to, or bearing, interest are exposed to
interest rate risk. Interest rate risks can affect either
side of the balance sheet.
in € million
terest rates.
The BMW Group's financial management system involves
the use of standard financial instruments such as short-
term deposits, investments in variable and fixed-income
securities as well as securities funds. The BMW Group is
therefore exposed to risks resulting from changes in in-
Interest rate risks
-5,601
Currency risk for the BMW Group is concentrated on the
currencies referred to above.
122 Notes to the Balance Sheet
of Comprehensive Income
113 Notes to the Income Statement
121 Notes to the Statement
98 Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
147-Other Disclosures
163 Segment Information
5,601
-12,686
-3,461
Notwithstanding the existence of collateral accepted,
the carrying amounts of financial assets generally take
account of the maximum credit risk arising from the
possibility that the counterparties will not be able to
fulfil their contractual obligations. The maximum credit
risk for irrevocable credit commitments relating to
credit card business amounts to €2,011 million (2014:
€1,181 million). The equivalent figure for dealer financ-
ing is €24,733 million (2014: €22,025 million).
In the case of performance relationships underlying
non-derivative financial instruments, collateral will be
required, information on the credit-standing of the
counterparty obtained or historical data based on the
existing business relationship (i.e. payment patterns to
date) reviewed in order to minimise the credit risk, all
depending on the nature and amount of the exposure
that the BMW Group is proposing to enter into.
Within the financial services business, the financed items
(e.g. vehicles, equipment and property) in the retail cus-
tomer and dealer lines of business serve as first-ranking
collateral with a recoverable value. Security is also put
up by customers in the form of collateral asset pledges,
asset assignment and first-ranking mortgages, supple-
mented where appropriate by warranties and guarantees.
If an item previously accepted as collateral is acquired,
it undergoes a multi-stage process of repossession and
disposal in accordance with the legal situation prevailing
156
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
Bad debt risk
98 Accounting Principles and
Policies
121 Notes to the Statement
of Comprehensive Income
122 Notes to the Balance Sheet
147-Other Disclosures
163 Segment Information
in the relevant market. The assets involved are generally
vehicles which can be converted into cash at any time
via the dealer organisation.
Impairment losses are recorded as soon as credit risks
are identified on individual financial assets, using a
methodology specifically designed by the BMW Group.
More detailed information regarding this methodology
is provided in the section on accounting policies (note 6).
Creditworthiness testing is an important aspect of the
BMW Group's credit risk management. Every borrower's
creditworthiness is tested for all credit financing and
lease contracts entered into by the BMW Group. In the
case of retail customers, creditworthiness is assessed
using validated scoring systems integrated into the pur-
chasing process. In the area of dealer financing, credit-
worthiness is assessed by means of ongoing credit
monitoring and an internal rating system that takes ac-
count not only of the tangible situation of the borrower
but also of qualitative factors such as past reliability in
business relations.
31 December 2015
in € million
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Trade payables
113 Notes to the Income Statement
Fair value hedges are mainly used to hedge the market
prices of bonds, other financial liabilities and receivables
from sales financing.
The difference between the gains/losses on hedging
instruments (mostly interest rate swaps) and the results
recognised on hedged items represents the ineffective
portion of fair value hedges.
-359
10
Cash flow hedges
The effect of cash flow hedges on accumulated other
equity was as follows:
2015
2014
Balance at 1 January
Total changes during the year-
thereof reclassified to the income statement
Balance at 31 December
-480
-1,136
-857
-1,616
-1,318
-255
-1,337
-480
155 GROUP FINANCIAL STATEMENTS
369
-269
-276
7
Ineffectiveness of fair value hedges
Gains/losses on hedging instruments designated as part of a fair value hedge relationship
Gains/losses from hedged items
31.12.2015 ―31.12.2014
The following table shows gains and losses on hedging
instruments and hedged items which are deemed to be
part of a fair value hedge relationship:
Other financial liabilities
Fair value hedges
The BMW Group did not hold any derivative financial
instruments at 31 December 2015, which had been
designated as cash flow hedges to hedge against inter-
est-rate risks.
revenues are recognised. It is expected that €623 million
of net losses, recognised in equity at the end of the re-
porting period, will be reclassified to profit and loss in
the new financial year (2014: losses of €278 million).
in € million
At 31 December 2015 the BMW Group held derivative
financial instruments (mainly forward currency and
option contracts) with terms of up to 55 months (2014:
60 months) in order to hedge currency risks attached
to future transactions. These derivative instruments are
intended to hedge forecast sales denominated in a foreign
currency over the coming 55 months. The income state-
ment impact of the hedged cash flows will be recognised
as a general rule in the same periods in which external
An amount of €8 million (2014: €– million) attributable
to forecasting errors (and the resulting over-hedging of
currency exposures) was recognised as a loss in "Finan-
cial Result" in the period under report. Gains attributable
to the ineffective portion of cash flow hedges amount-
ing to €9 million were recognised in “Financial Result”
(2014: losses of €27 million). No gains or losses were
recognised in "Financial Result” in 2015 in connection
with forecasting errors relating to cash flow hedges for
commodities (2014: losses of €6 million). Losses attribut-
able to the ineffective portion of cash flow hedges
amounting to €13 million were also recognised in "Finan-
cial Result" (2014: gains of €6 million).
Fair value gains and losses recognised on derivatives and
recorded initially in accumulated other equity are re-
classified to cost of sales when the derivatives mature.
At 31 December 2015 the BMW Group held derivative
financial instruments (mostly commodity swaps) with
terms of up to 58 months (2014: 59 months) to hedge
raw materials price risks attached to future transactions
over the coming 58 months. The income statement im-
pact of the hedged cash flows will be recognised as a
general rule in the same periods in which the derivative
matures. It is expected that €127 million of net losses,
recognised in equity at the end of the reporting period,
will be reclassified to profit and loss in the new finan-
cial year (2014: €54 million).
2,888
Total
A concentration of credit risk with particular borrowers
or groups of borrowers has not been identified in con-
junction with financial instruments.
51,180
44,375
8,512
1,203
104,067
31 December 2014
in € million
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Trade payables
Other financial liabilities
570
Total
Maturity
between one
one year
and five years
Maturity
later than
five years
Total
-9,266
23,786
4,232
37,284
-8,110
-3,432
-489
-12,031
-9,225
Maturity
within
-372
-261
-7,773
Further disclosures relating to credit risk - in particular
with regard to the amounts of impairment losses recog-
nised - are provided in the explanatory notes to the
relevant categories of receivables in notes 27, 28 and 32.
Liquidity risk
The following table shows the maturity structure of ex-
pected contractual cash flows (undiscounted) for finan-
cial liabilities:
Maturity
within
one year
Maturity
between one
and five years
Maturity
later than
five years
Total
-10,774
-24,241
-7,230
42,245
-9,464
- 3,485
405
-13,354
- 9,805
-72
-7,701
-6,104
-174
3,366
-2,564
The credit risk relating to derivative financial instruments
is minimised by the fact that the Group only enters into
such contracts with parties of first-class credit standing.
The general credit risk on derivative financial instru-
ments utilised by the BMW Group is therefore not con-
sidered to be significant.
-14,044
-5,195
-5,416
5,416
-13,928
-133
- 3,990
-8,849
4,180
33
-886
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
90
90-GROUP FINANCIAL STATEMENTS
Income Statements
160
The cash flows from investing and financing activities
are based on actual payments and receipts. By con-
trast, the cash flow from operating activities is derived
indirectly from the net profit for the year. Under this
method, changes in assets and liabilities relating to op-
erating activities are adjusted for currency translation
effects and changes in the composition of the Group. The
changes in balance sheet positions shown in the cash
flow statement do not therefore agree directly with the
months from the end of the reporting period and are
subject to an insignificant risk of changes in value.
Cash and cash equivalents included in the cash flow
statement comprise cash on hand, cheques, and cash at
bank, to the extent that they are available within three
The cash flow statements show how the cash and cash
equivalents of the BMW Group and of the Automotive
and Financial Services segments have changed in the
course of the year as a result of cash inflows and cash
outflows. In accordance with IAS 7 (Statement of Cash
Flows), cash flows are classified into cash flows from op-
erating, investing and financing activities.
43-Explanatory notes to the cash flow statements
230
155
98-Notes
Cash flow at risk
98 Accounting Principles and
Policies
Cash inflows and outflows relating to operating leases,
where the BMW Group is the lessor, are aggregated and
shown on the line "Change in leased products" within
cash flows from operating activities.
-108
Stefan Quandt is a shareholder and Deputy Chairman of
the Supervisory Board of BMW AG. He is also the sole
shareholder and Chairman of the Supervisory Board of
Business transactions between BMW Group entities and
other associated companies are small in scale, arise in
the normal course of business and are conducted on the
basis of arm's length principles.
Transactions of BMW Group companies with the asso-
ciated company THERE Holding B.V., Amsterdam, and
that entity's subsidiaries, all arise in the normal course
of business and are conducted on the basis of arm's
length principles. The BMW Group did not sell any goods
or services to THERE Holding B.V., Amsterdam, or its
subsidiaries during the period from 4 to 31 December
2015. Goods or services totalling €7 million were pur-
chased by BMW Group entities from THERE Holding
B.V., Amsterdam, during the period from 4 to 31 De-
cember 2015. At 31 December 2015, payables of BMW
Group entities to THERE Holding B.V., Amsterdam,
and that entity's subsidiaries totalled €3 million.
All relationships of BMW Group entities with the joint
ventures DriveNow GmbH & Co. KG, Munich, and
DriveNow Verwaltungs GmbH, Munich, are conducted
on the basis of arm's length principles. Transactions
with these entities arise in the normal course of business
and are small in scale.
sold goods and services to BMW Brilliance Automotive
Ltd., Shenyang, during the financial year under report
for an amount of €4,815 million (2014: €4,417 million).
At 31 December 2015, receivables of Group companies
from BMW Brilliance Automotive Ltd., Shenyang, to-
talled €892 million (2014: €943 million). Trade and finan-
cial payables of Group companies to BMW Brilliance
Automotive Ltd., Shenyang, amounted to €107 million
(2014: €– million). Group companies received goods
and services from BMW Brilliance Automotive Ltd.,
Shenyang, in 2015 for an amount of €43 million (2014:
€34 million).
Income taxes paid and interest received are classified
as cash flows from operating activities in accordance
with IAS 7.31 and IAS 7.35. Interest paid is presented
on a separate line within cash flows from financing
activities. Dividends received in the financial year 2015
amounted to €1 million (2014: €1 million).
the lessor) is also reported within cash flows from
operating activities.
Transactions of BMW Group companies with the joint
venture BMW Brilliance Automotive Ltd., Shenyang, all
arise in the normal course of business and are conducted
on the basis of arm's length principles. Group companies
In the financial year 2015, the disclosure requirements
contained in IAS 24 affect the BMW Group with regard
to business relationships with non-consolidated sub-
sidiaries, joint ventures and associated companies as
well as with members of the Board of Management and
Supervisory Board of BMW AG.
In accordance with IAS 24 (Related Party Disclosures),
related individuals or entities which have the ability to
control the BMW Group or which are controlled by the
BMW Group, must be disclosed unless such parties
are already included in the Group Financial Statements
of BMW AG as consolidated companies. Control is de-
fined as ownership of more than one half of the voting
power of BMW AG or the power to direct, by statute or
agreement, the financial and operating policies of the
management of the BMW Group. In addition, the dis-
closure requirements of IAS 24 also cover transactions
with associated companies, joint ventures and indi-
viduals that have the ability to exercise significant in-
fluence over the financial and operating policies of
the BMW Group. This also includes close relatives and
intermediary entities. Significant influence over the
financial and operating policies of the BMW Group is
presumed when a party holds 20% or more of the voting
power of BMW AG. In addition, the requirements con-
tained in IAS 24 relating to key management personnel
and close members of their families or intermediary
entities are also applied. In the case of the BMW Group,
this applies to members of the Board of Management
and Supervisory Board.
of Comprehensive Income
122 Notes to the Balance Sheet
147-Other Disclosures
163 Segment Information
113 Notes to the Income Statement
121 Notes to the Statement
44-Related party relationships
The net change in receivables from sales financing
(including finance leases, where the BMW Group is
amounts shown in the Group and segment balance
sheets.
31.12.2014
The BMW Group maintains normal business relation-
ships with non-consolidated subsidiaries. Transactions
with these companies are small in scale, arise in the
normal course of business and are conducted on the ba-
sis of arm's length principles.
The following table shows the potential negative impact
for the BMW Group - measured on the basis of the
cash-flow-at-risk approach – attributable to fluctuations
in prices across all categories of raw materials. The risk
at each reporting date for the following financial year was
as follows:
Held for
for-sale
option
trading
Fair value
Carrying
amount
Carrying
Carrying
Carrying
amount 3
amount 1,3
408
-708
31.12.2015
1,294
Fair value
Available-
amount³
151 GROUP FINANCIAL STATEMENTS
in € million
Other liabilities
posure to a confidence level of 95% and a holding
period of up to one year. Correlations between the
various categories of raw materials are taken into ac-
count when the risks are aggregated, thus reducing
the overall risk.
The potential negative impact on earnings is computed
for each raw material category for the following finan-
cial year on the basis of current market prices and ex-
In the next stage, these exposures are compared to all
hedges that are in place. The net cash flow surplus
represents an uncovered risk position. The cash-flow-at-
risk approach involves allocating the impact of potential
raw materials fluctuations to operating cash flows on
the basis of probability distributions. Volatilities and cor-
relations serve as input factors to assess the relevant
probability distributions.
-3,720
31.12.2014
31.12.2015
3,770
-11
in € million
44
The first step in the analysis of the raw materials price
risk is to determine the volume of planned purchases of
raw materials (and components containing those raw
materials). These amounts, which represent the gross
exposure, were as follows at each reporting date for the
following financial year:
The BMW Group is exposed to the risk of price fluctua-
tions for raw materials. A description of the management
of these risks is provided in the Combined Management
Report.
Raw materials price risk
Raw materials price exposures
-12
1,088
-2,233*
10,024
31.12.2015 - 31.12.2014 - 31.12.2015 - 31.12.2014
-Motorcycles —
69
64
-69
- 4,080
-11,489
4,559
Automotive
557
Services
165 GROUP FINANCIAL STATEMENTS
Financial
Other Entities
Reconciliation to
Group
Group figures
2015
2014
2015
2014
92
2015
575
-6,022
-68,045
-655
2014
147 Other Disclosures
163-Segment Information
Investments accounted for using the equity method
Segment assets
See note 3.
2015
-Automotive
2014
2015
Motorcycles
2014
59,654
5,792
1,984
-17,491
-15,519
6
85,536
75,173
1,990
8
1,679
-7,836
-7,244
182
-112
518
1,671
2015
-4,621
-4,112
22,144
8,686
-7,539
-5,672
-5,119
122 Notes to the Balance Sheet
9,224
-518
-23,901
8,195
-8,707
Segment result
-655
20,676
-7,571
Result from equity accounted investments
Capital expenditure on non-current assets
Depreciation and amortisation on non-current assets -
Financial
Services
Other Entities
Reconciliation to -
Group figures
Group
31.12.2015 - 31.12.2014 - 31.12.2015 - 31.12.2014 - 31.12.2015 - 31.12.2014 - 31.12.2015 - 31.12.2014
2,233
-9,948
9,357
-71,709
-61,516
-79,936
-71,866
-172,174
-1,088
-154,803
-19,206
23,689
-526
-980
-19,073
2
3
92,175
-80,401
External revenues
1,595
-1,526
5
4
-19,097
-17,057
2014
Inter-segment revenues
20,599
7
7
-19,097
-17,057
92,175
80,401
Total revenues
1,975
-1,723
-211
-154
23,739
of Comprehensive Income
49-Explanatory notes to segment information
Information on reportable segments
113 Notes to the Income Statement
The total compensation of the current members of
the Board of Management and the Supervisory Board
of BMW AG for the financial year 2015 amounted to
47-Compensation of members of the Board of
Management and Supervisory Board
162
15.00% are held by Mr. Quandt and Mrs. Klatten indi-
rectly in a so-called “undivided community of heirs",
with the consequence that the 15.00% shareholding
is attributed to both in full. As at the end of the pre-
vious financial year, shareholdings of members of the
BMW AG Board of Management account, in total, for
less than 1% of issued shares.
ant to § 161 of the German Stock Corporation Act. It is
reproduced in the Annual Report 2015 of the BMW
Group and is also available to shareholders on the BMW
Group website at www.bmwgroup.com/ir.
For disclosures relating to key management personnel
pursuant to IAS 24.17, please see note 47 and the Com-
pensation Report.
BMW Trust e. V., Munich, administers assets on a
trustee basis to secure obligations relating to pensions
and pre-retirement part-time working arrangements in
Germany and is therefore a related party of the BMW
Group in accordance with IAS 24. This entity, which is
a registered association (eingetragener Verein) under
German law, does not have any assets of its own. It did
not have any income or expenses during the period
under report. BMW AG bears expenses on a minor scale
and renders services on behalf of BMW Trust e. V.,
Munich.
Apart from vehicle lease contracts concluded on an arm's
length basis, companies of the BMW Group have not
entered into any contracts with members of the Board
of Management or Supervisory Board of BMW AG. The
same applies to close members of the families of those
persons.
and Deputy Chairman of the Supervisory Board of
Altana AG, Wesel. Altana AG, Wesel, acquired vehicles
from the BMW Group during the financial year 2015,
mostly in the form of lease contracts, generating lease
revenue of €3 million (2014: €3 million) for the BMW
Group. The lease contracts all arise in the normal course
of business and are conducted on the basis of arm's
length principles. The BMW Group purchased goods or
services amounting to €324 thousand (2014: €230 thou-
sand) from Altana AG, Wesel, during the financial
year 2015. BMW Group companies had no payables to
Altana AG, Wesel at the end of the reporting period
(2014: €4 thousand), while receivables amounted to
€312 thousand (2014: €50 thousand).
The members of the Supervisory Board of BMW AG hold
in total 43.00% (2014: 27.61%) of the issued common
and preferred stock shares, of which 31.26% (2014:
16.06%) relates to Stefan Quandt, Germany, and 26.74%
(2014: 11.54%) to Susanne Klatten, Germany, whereby
46-Shareholdings of members of the Board of
Management and Supervisory Board
The Board of Management and the Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft have
issued the prescribed Declaration of Compliance pursu-
in € million
45-Declaration with respect to the Corporate
Governance Code
Stefan Quandt is also the indirect majority shareholder of
Solarwatt GmbH, Dresden. Cooperation arrangements
are in place between BMW AG and Solarwatt GmbH,
Dresden, within the field of electromobility. The focus
of this collaboration is on providing complete photovol-
taic solutions for rooftop systems and carports to BMW i
customers. The BMW Group purchased goods or ser-
vices amounting to €3 thousand (2014: €222 thousand)
from Solarwatt GmbH, Dresden, during the financial
year 2015. Solarwatt GmbH, Dresden, leased vehicles
from the BMW Group in 2015, generating lease revenue
of €287 thousand (2014: €223 thousand) for the BMW
Group. All of the above-mentioned services, cooperation
and lease contracts arise in the normal course of business
and are conducted on the basis of arm's length principles.
Receivables of BMW Group entities from Solarwatt GmbH,
Dresden, at 31 December 2015 amounted to €7 thou-
sand (2014: €- thousand). As in the previous financial
year, there were no payables from Group entities to So-
larwatt GmbH, Dresden, at 31 December 2015.
DELTON AG, Bad Homburg v. d. H., which, via its sub-
sidiaries, performed logistic-related services for the
BMW Group during the financial year 2015 amounting
to €23 million (2014: €26 million). In addition, com-
panies of the DELTON Group used vehicles provided
by the BMW Group, mostly in the form of leasing con-
tracts. Income recognised by the BMW Group on these
transactions during the financial year 2015 amounted
to €3 million (2014: €3 million). Amounts payable to
DELTON Group entities at the end of the reporting pe-
riod totalled €3 million (2014: €2 million). Group com-
panies had no receivables from DELTON Group entities
at the end of the reporting period (2014: €– million).
161 GROUP FINANCIAL STATEMENTS
48-Application of exemption provisions
A number of companies and incorporated partnerships
(as defined by $264a HGB) which are consolidated sub-
sidiaries of BMW AG and for which the Group Financial
Statements of BMW AG represent exempting consoli-
dated financial statements, apply the exemptions avail-
able in § 264 (3) and § 264b HGB with regard to the draw-
ing up of a management report. The exemptions have
been applied by:
-
-
-
Alphabet International GmbH, Munich
Bavaria Wirtschaftsagentur GmbH, Munich
BMW Fahrzeugtechnik GmbH, Eisenach
BMW Hams Hall Motoren GmbH, Munich
- BMW M GmbH Gesellschaft für individuelle
Automobile, Munich
- Rolls-Royce Motor Cars GmbH, Munich
Pension obligations to former members of the Board
of Management and their surviving dependants are
covered by pension provisions amounting to €71.8 mil-
lion (2014: €68.4 million), computed in accordance
with IAS 19.
Susanne Klatten is a shareholder and member of the
Supervisory Board of BMW AG and also a shareholder
The compensation systems for members of the Super-
visory Board do not include any stock options, value
appreciation rights comparable to stock options or any
other stock-based compensation components. Apart
from vehicle lease contracts entered into on customary
market conditions, no advances or loans were granted
to members of the Board of Management and the Super-
visory Board, nor were any contingent liabilities entered
into on their behalf.
€43.6 million (2014: €46.1 million) and comprised the
following:
2014
The total compensation of the current Board of Manage-
ment members for 2015 amounted to €35.9 million
(2014: €35.7 million). This comprised fixed components
of €7.7 million (2014: €7.7 million), variable compo-
nents of €27.1 million (2014: €27.0 million) and a share-
based compensation component totalling €1.1 million
(2014: €1.0 million). Pension obligations to current mem-
bers of the Board of Management are covered by provi-
sions amounting to €23.2 million (2014: €31.3 million),
computed in accordance with IAS 19 (Employee Benefits).
of Comprehensive Income
122 Notes to the Balance Sheet
147-Other Disclosures
163-Segment Information
113 Notes to the Income Statement
121 Notes to the Statement
98 Accounting Principles and
Policies
98-Notes
96 Group Statement of Changes in
Equity
94 Cash Flow Statements
92 Balance Sheets
Comprehensive Income
90 Statement of
Income Statements
90
2015
90-GROUP FINANCIAL STATEMENTS
43.6
3.5
2.1.
2.6
-1.0
1.1
39.5
39.9
Benefits in conjunction with the termination of an employment relationship
Compensation
Post-employment benefits
Share-based remuneration component.
Short-term employment benefits
46.1
121 Notes to the Statement
Further details about the remuneration of current mem-
bers of the Board of Management and the Supervisory
Board can be found in the Compensation Report, which
is part of the Combined Management Report.
-
The role of "chief operating decision maker” with re-
spect to resource allocation and performance assess-
ment of the reportable segment is embodied in the full
Board of Management. In order to assist the decision-
taking process, various measures of segment perfor-
mance as well as segment assets have been set for the
various operating segments.
The performance of the Automotive and Motorcycles
segments is managed on the basis of return on capital
employed (ROCE). The relevant measure of segment
results used is therefore profit before financial result.
Capital employed is the corresponding measure of
segment assets used to determine how to allocate re-
sources and comprises all current and non-current
operational assets after deduction of liabilities used
operationally which are not subject to interest (e.g.
trade payables).
The performance of the Financial Services segment is
measured on the basis of return on equity (RoE), with
profit before tax therefore representing the measure of
segment result used. For this reason, the measure of
segment assets in the Financial Services segment corre-
sponds to net assets, defined as total assets less total
liabilities.
The performance of the Other Entities segment is as-
sessed on the basis of profit or loss before tax. The
corresponding measure of segment assets used to
manage the Other Entities segment is total assets less
asset-side income tax items and intragroup invest-
ments.
90-GROUP FINANCIAL STATEMENTS
90
Income Statements
164
Segment information by operating segment is as follows:
Segment information by operating segment
in € million
the Group Financial Statements. The only exceptions to
this general principle is the treatment of inter-segment
warranties (the earnings impact of which is allocated
to the Automotive and Financial Services segments on
the basis used internally to manage the business) and
cross-segment impairment losses on investments in
subsidiaries. Inter-segment receivables and payables,
provisions, income, expenses and profits are eliminated
in the column "Eliminations". Inter-segment sales take
place at arm's length prices.
External revenues
Total revenues
Segment result
Result from equity accounted investments
Capital expenditure on non-current assets
Depreciation and amortisation on non-current assets
in € million
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
Inter-segment revenues
The following German entities apply the exemption
available in § 264 (3) and § 264b HGB with regard to
publication:
Internal management and reporting
Segment information is prepared in conformity with the
accounting policies adopted for preparing and presenting
The principal lines of business of the Financial Services
segment are car leasing, multi-brand financing, fleet
business, retail customer and dealer financing, customer
deposit business and insurance activities.
-
-
-
-
-
-
· Alphabet International GmbH, Munich
Bavaria Wirtschaftsagentur GmbH, Munich
BMW Beteiligungs GmbH & Co. KG, Munich
BMW Fahrzeugtechnik GmbH, Eisenach
BMW Hams Hall Motoren GmbH, Munich
BMW INTEC Beteiligungs GmbH, Munich
Holding and Group financing companies are included in
the Other Entities segment. This segment also includes
operating companies - BMW Services Ltd., Farnborough,
BMW (UK) Investments Ltd., Farnborough, Bavaria Lloyd
Reisebüro GmbH, Munich, and MITEC Mikroelektronik
Mikrotechnik Informatik GmbH, Munich, - which are
not allocated to one of the other segments.
BMW M GmbH Gesellschaft für individuelle
BMW Verwaltungs GmbH, Munich
MITEC Mikroelektronik Mikrotechnik Informatik
GmbH, Munich
- Rolls-Royce Motor Cars GmbH, Munich
In addition, the Dutch entities, BMW International Holding
B.V., The Hague, and Alphabet Nederland B.V., Breda,
apply the exemption provision contained in Article 2:403
of the Civil Code of the Netherlands.
163 GROUP FINANCIAL STATEMENTS
BMW Group
Notes to the Group Financial Statements
Segment Information
Investments accounted for using the equity method —
Segment assets
For the purposes of presenting segment information, the
activities of the BMW Group are divided into operating
segments in accordance with IFRS 8 (Operating Seg-
ments). Operating segments are identified on the same
basis that is used internally to manage and report on per-
formance and takes account of the organisational struc-
ture of the BMW Group based on the various products
and services of the reportable segments.
The activities of the BMW Group are broken down into
the operating segments Automotive, Motorcycles, Finan-
cial Services and Other Entities.
The Automotive segment develops, manufactures, as-
sembles and sells cars and off-road vehicles, under the
brands BMW, MINI and Rolls-Royce as well as spare
parts and accessories. BMW and MINI brand products
are sold in Germany through branches of BMW AG
and by independent, authorised dealers. Sales outside
Germany are handled primarily by subsidiary compa-
nies and by independent import companies in a num-
ber of markets. Rolls-Royce brand vehicles are sold in
the USA, China and Russia via subsidiary companies and
elsewhere by independent, authorised dealers.
The BMW Motorcycles segment develops, manufactures,
assembles and sells motorcycles as well as spare parts
and accessories.
Automobile, Munich
166
9,224
90
184 Compliance in the BMW Group
188 Compensation Report
Good corporate governance - acting in accordance with
the principles of responsible management aimed at in-
creasing the value of the business on a sustainable basis -
is an essential requirement for the BMW Group em-
bracing all areas of the business. Corporate culture within
the BMW Group is founded on transparent reporting and
internal communication, a policy of corporate governance
aimed at the interests of stakeholders, fair and open
dealings between the Board of Management and the
Supervisory Board as well as among employees and
compliance with the law. The Board of Management and
Supervisory Board report in this statement on important
aspects of corporate governance pursuant to § 289 a HGB
and section 3.10 of the German Corporate Governance
Code (GCGC).
Information on the Company's Governing Constitution
The designation "BMW Group" comprises Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) and its
group entities. BMW AG is a stock corporation (Aktien-
gesellschaft) based on the German Stock Corporation
Act (Aktiengesetz) and has its registered office in
Munich, Germany. It has three representative bodies:
the Annual General Meeting, the Supervisory Board
and the Board of Management. The duties and authori-
ties of those bodies derive from the Stock Corporation
Act and the Articles of Incorporation of BMW AG.
Shareholders, as the owners of the business, exercise
their rights at the Annual General Meeting. The Annual
General Meeting decides in particular on the utilisation
of unappropriated profit, the ratification of the acts
of the members of the Board of Management and of the
Supervisory Board, the appointment of the external
auditor, changes to the Articles of Incorporation, speci-
fied capital measures and elects the shareholders'
representatives to the Supervisory Board. The Board of
Management manages the enterprise under its own
responsibility. Within this framework, it is monitored
and advised by the Supervisory Board. The Supervisory
Board appoints the members of the Board of Manage-
ment and can, at any time, revoke an appointment if
there is an important reason. The Board of Manage-
ment keeps the Supervisory Board informed of all sig-
nificant matters regularly, promptly and comprehen-
sively, following the principles of conscientious and
faithful accountability and in accordance with prevailing
law and the reporting duties allocated to it by the Super-
visory Board. The Board of Management requires
the approval of the Supervisory Board for certain major
transactions. The Supervisory Board is not, however,
authorised to undertake management measures itself.
In accordance with the requirements of the German
Co-determination Act for companies that generally em-
ploy more than 20,000 people, the Supervisory Board
of BMW AG is required to comprise ten shareholder
representatives elected at the Annual General Meeting
(Supervisory Board members representing equity or
shareholders) and ten employees elected in accordance
with the provisions of the Co-determination Act (Super-
visory Board members representing employees). The
ten Supervisory Board members representing employees
comprise seven Company employees, including one
executive staff representative, and three members elected
following nomination by unions.
The close interaction between Board of Management
and Supervisory Board in the interests of the enterprise
as described above is also known as a “two-tier board
structure".
Declaration of Compliance and the BMW Group
Corporate Governance Code
Management and supervisory boards of companies listed
in Germany are required by law (§ 161 German Stock
Corporation Act) to report once a year whether the offi-
cially published and relevant recommendations issued
by the "Government Commission on the German Cor-
porate Governance Code", as valid at the date of the
declaration, have been, and are being, complied with.
Companies affected are also required to state which of
the recommendations of the Code have not been or
are not being applied, stating the reason or reasons. The
full text of the declaration, together with explanatory
comments, is shown on the following page of this Annual
Report.
The Board of Management and the Supervisory Board
approved the Group's own Corporate Governance Code
based on the GCGC in previous years in order to pro-
vide interested parties with a comprehensive and stand-
alone document covering the corporate governance
practices applied by the BMW Group. A coordinator
responsible for all corporate governance issues reports
directly and on a regular basis to the Board of Manage-
ment and Supervisory Board.
The Corporate Governance Code for the BMW Group,
together with the Declaration of Compliance, Articles
of Incorporation and other information, can be viewed
and/or downloaded from the BMW Group's website at
www.bmwgroup.com/ir under the menu items "Facts
about the BMW Group" and "Corporate Governance".
169 STATEMENT ON CORPORATE GOVERNANCE
Declaration of the Board of Management and of the
Supervisory Board of Bayerische Motoren Werke
Aktiengesellschaft with respect to the recommendations
of the "Government Commission on the German
Corporate Governance Code" pursuant to § 161 German
Stock Corporation Act
The Board of Management and Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft
("BMW AG") declare the following regarding the recom-
mendations of the "Government Commission on the
German Corporate Governance Code":
1. Since issuance of the last Declaration in December
2014, BMW AG has complied with all of the recommen-
dations published officially on 30 September 2014
in the Federal Gazette (Code version dated 24 June
2014), as announced with the exception of section
4.2.5 sentences 5 and 6.
2. BMW AG will in future comply with all of the recom-
mendations published officially on 12 June 2015 in
the Federal Gazette (Code version dated 5 May 2015),
with the exception of section 4.2.5 sentences 5 and 6.
3. It is recommended in section 4.2.5 sentences 5 and 6
of the Code that specified information pertaining to
management board compensation be disclosed in the
Compensation Report. These recommendations have
not been and will not be complied with, due to un-
certainties with respect to their interpretation and
doubts as to whether the supplementary use of model
tables would be instrumental in making the BMW AG's
Compensation Report transparent and generally un-
derstandable in accordance with generally applicable
financial reporting requirements (see section 4.2.5 sen-
tence 3 of the Code).
Munich, December 2015
Bayerische Motoren Werke
Aktiengesellschaft
On behalf of the
Supervisory Board
Dr.-Ing. Dr.-Ing. E. h.
Norbert Reithofer
Chairman
On behalf of the
Board of Management
Harald Krüger
Chairman
168-STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
Governance Practices
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
171 Members of the Supervisory
Board
Eliminations
-6,183
-5,204
Group
92,175
80,401
60,096
53,846
Munich, 18 February 2016
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management
169 Declaration of the Board of
Management and of the
Harald Krüger
Dr.-Ing. Klaus Draeger
Dr. Friedrich Eichiner
Klaus Fröhlich
Dr. Ian Robertson (HonDSc)
Peter Schwarzenbauer
Oliver Zipse
168
STATEMENT ON CORPORATE GOVERNANCE
168-STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168-Information on the Company's
Governing Constitution
169-Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
170 Members of the Board of
Management
Milagros Caiña Carreiro-Andree
Supervisory Board pursuant to
§161 AktG
170-Members of the Board of
Management
Siemens Aktiengesellschaft
- Henkel AG & Co. KGaA (Shareholders' Committee)
Milagros Caiña Carreiro-Andree (born 1962)
Human Resources, Industrial Relations Director
Klaus Fröhlich (born 1960)
Development
Mandates
HERE International B.V. (since 05.12.2015)
Dr. Ian Robertson (HonDSc) (born 1958)
Sales and Marketing BMW,
Sales Channels BMW Group
Mandates
- Dyson James Group Limited (until 31.12.2015)
Dr.-Ing. Klaus Draeger (born 1956)
Purchasing and Supplier Network
-Membership of other statutory supervisory boards.
Mandates
-Membership of equivalent national or foreign boards of business enterprises.
--Other mandates.
Mandates
- Rolls-Royce Motor Cars Limited (Chairman)
Oliver Zipse (born 1964)
Production
(since 13.05.2015)
Mandates
BMW (South Africa) (Pty) Ltd. (Chairman)
(since 14.05.2015)
BMW Motoren GmbH (Chairman)
(since 15.05.2015)
General Counsel:
Dr. Jürgen Reul
Peter Schwarzenbauer (born 1959)
MINI, Motorcycles, Rolls-Royce,
Aftersales BMW Group
-1,102
(until 13.05.2015)
BMW Brilliance Automotive Ltd. (Deputy Chairman)
FESTO Management Aktiengesellschaft
171-Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
170
Members of the Board of Management
Dr.-Ing. Dr.-Ing. E. h. Norbert Reithofer (born 1956)
Chairman
Harald Krüger (born 1965)
(since 13.05.2015)
Production
(until 13.05.2015)
Mandates
BMW (South Africa) (Pty) Ltd. (Chairman)
(until 13.05.2015)
BMW Motoren GmbH (Chairman)
(until 15.05.2015)
Dr. Friedrich Eichiner (born 1955)
Finance
Mandates
- - Allianz Deutschland AG
― FESTO Aktiengesellschaft
Chairman
1,318
-11,145
-12,792
-316
-363
-664
-163
Group profit before tax
8,707
Reconciliation of capital expenditure on non-current assets
Total for reportable segments
Elimination of inter-segment items
Total Group capital expenditure on non-current assets
29,573
25,297
Financial result of Automotive segment and Motorcycles segment
Elimination of inter-segment items
-5,672
23,901
20,676
Reconciliation of depreciation and amortisation on non-current assets
Total for reportable segments
-13,314
-11,683
Elimination of inter-segment items
-5,119
-4,112
Total Group depreciation and amortisation on non-current assets
8,195
7,571
-4,621
in € million
9,233
Total for reportable segments
Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98-Notes
98 Accounting Principles and
Policies
113 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
-10,204
122 Notes to the Balance Sheet
An impairment loss of €3 million (2014: €– million) was
recognised on plant and machinery in the Automotive
segment in 2015.
Write-downs on inventories to their net realisable value
amounting to €486 million (2014: €29 million) were
recognised by the Automotive segment in the financial
year 2015 and resulted primarily from accidents and
natural disasters. No reversals of write-downs were rec-
ognised in the period under report (2014: €3 million).
Impairment losses and fair value changes on other in-
vestments amounting to €17 million (2014: €153 million)
relating to the Automotive segment and recognised in the
financial result are not included in the segment result.
The segment result of the Financial Services segment is
stated after impairment losses of €406 million (2014:
€268 million) recognised on leased products and €3 mil-
lion on other investments (2014: €– million). Reversals
of impairment losses on leased products amounted to
€81 million (2014: €169 million).
in € million
Reconciliation of segment result
Interest and similar income of the Financial Services
segment amounting to €4 million (2014: €4 million) and
interest and similar expenses amounting to €7 million
(2014: €29 million) are included in the segment result.
The Other Entities' segment result includes interest
and similar income amounting to €1,177 million (2014:
€1,295 million) and interest and similar expenses
amounting to €1,080 million (2014: €1,197 million) as
well as impairment losses on other investments totalling
€7 million (2014: €- million).
The information disclosed for capital expenditure and
depreciation and amortisation relates to non-current
property, plant and equipment, intangible assets and
leased products.
Segment figures can be reconciled to the corresponding
Group figures as follows:
2015
2014
The compensation of the members of the Supervisory
Board for the financial year 2015 amounted to €5.1 mil-
lion (2014: €4.8 million). This comprised fixed compo-
nents of €2.0 million (2014: €2.0 million) and variable
components of €3.1 million (2014: €2.8 million).
90-GROUP FINANCIAL STATEMENTS
31.12.2015 ―31.12.2014
Total for reportable segments
Germany
-13,394
-12,992
28,786
27,137
USA
-18,155
-13,666
-21,000
-17,093
China
-15,856
2014
-15,002
25
Rest of Europe
-28,617
24,635
-13,099
-11,643
Rest of the Americas
3,361
-2,961
2,053
2,050
Other
23
Reconciliation of segment assets
2015
2015
92,238
82,937
- Non-operating assets - Other Entities segment
-7,132
-6,658
Total liabilities - Financial Services segment
112,081
96,959
Non-operating assets - Automotive and Motorcycles segments
41,932
39,449
Liabilities of Automotive and Motorcycles segments not subject to interest
2014
-31,817
Elimination of inter-segment items
-113,026
-99,688
Total Group assets
172,174
154,803
167 GROUP FINANCIAL STATEMENTS
In the case of information by geographical region, ex-
ternal sales are based on the location of the customer's
registered office. Revenues with major customers were
not material overall. The information disclosed for
Information by region
non-current assets relates to property, plant and equip-
ment, intangible assets and leased products. Elimina-
tions disclosed for non-current assets relate to leased
products.
in € million
- Non-current
assets
External
revenues
- 28,488
147 Other Disclosures
163-Segment Information
The remuneration of former members of the Board
of Management and their dependants amounted to
€8.0 million (2014: €5.8 million).
Member since 2008
-
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174-Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
Composition and work procedures of the Board of
Management of BMW AG and its committees
The Board of Management governs the enterprise under
its own responsibility, acting in the interests of the BMW
Group with the aim of achieving sustainable growth
in value. The interests of shareholders, employees and
other stakeholders are also taken into account in the
pursuit of this aim.
The Board of Management determines the strategic
orientation of the enterprise, agrees upon it with the
Supervisory Board and ensures its implementation.
The Board of Management is responsible for ensuring
that all provisions of law and internal regulations are
complied with. Further details about compliance within
the BMW Group can be found in the "Corporate
Governance" section of the Annual Report. The Board
of Management is also responsible for ensuring that
appropriate risk management and risk controlling sys-
tems are in place throughout the Group.
During their period of employment for BMW AG, mem-
bers of the Board of Management are bound by a com-
prehensive non-competition clause. They are required
to act in the enterprise's best interests and may not
pursue personal interests in their decisions or take ad-
vantage of business opportunities intended for the
enterprise. They may only undertake ancillary activities,
in particular supervisory board mandates outside
the BMW Group, with the approval of the Supervisory
Board's Personnel Committee. Each member of the
Board of Management of BMW AG is obliged to disclose
conflicts of interest to the Supervisory Board without
delay and inform the other members of the Board of
Management accordingly.
Following the appointment of a new member to the Board
of Management, the BMW Group Corporate Governance
Officer informs the new member of the framework con-
ditions under which the board member's duties are to
be carried out - in particular those enshrined in the
BMW Group's Corporate Governance Code - as well as
the duty to cooperate when a transaction or event triggers
reporting requirements or requires the approval of the
Supervisory Board.
The Board of Management consults and takes decisions
as a collegiate body in meetings of the Board of Manage-
ment, the Sustainability Board, the Operations Com-
mittee and the Committee for Executive Management
Matters. At its meetings, the Board of Management
defines the overall framework for business strategies
and the use of resources, takes decisions regarding the
implementation of strategies and deals with issues of
particular importance to the BMW Group. The full board
also takes decisions at a basic policy level relating to the
Group's automobile product strategies and product
projects inasmuch as these are relevant for all brands.
The Board of Management and its committees may, as
required and depending on the subject matters being
discussed, invite non-voting advisers to participate at
meetings.
Terms of reference approved by the Board of Manage-
ment contain a planned allocation of divisional respon-
sibilities between the individual board members. These
terms of reference also incorporate the principle that
the full Board of Management bears joint responsibility
for all matters of particular importance and scope. In
addition, members of the Board of Management manage
the relevant portfolio of duties under their responsi-
bility, whereby case-by-case rules can be put in place
for cross-divisional projects. Board members continually
provide the Chairman of the Board of Management
with all information regarding major transactions and
developments within their area of responsibility. The
Chairman of the Board of Management coordinates
cross-divisional matters with the overall targets and plans
of the BMW Group, involving other board members to
the extent that divisions within their area of responsi-
bility are affected.
The Board of Management takes its decisions at meet-
ings generally held on a weekly basis which are con-
vened, coordinated and headed by the Chairman of the
Board of Management. At the request of the Chairman,
decisions can also be taken outside of board meetings if
none of the board members object to this procedure. A
meeting is quorate if all Board of Management members
are invited to the meeting in good time. Members unable
to attend any meeting are entitled to vote in writing,
by fax or by telephone. Votes cast by phone must be
subsequently confirmed in writing. Except in urgent
cases, matters relating to a division for which the re-
sponsible board member is not present will only be dis-
cussed and decided upon with that member's consent.
Unless stipulated otherwise by law or in BMW AG's
statutes, the Board of Management makes decisions on
the basis of a simple majority of votes cast at meetings.
Outside of board meetings, decisions are taken on
the basis of a simple majority of board members. In the
event of a tied vote, the Chairman of the Board of
Management has the casting vote. Any changes to the
board's terms of reference must be passed unanimously.
A board meeting may only be held if more than half of
the board members are present.
In the event that the Chairman of the Board of Manage-
ment is not present or is unable to attend a meeting, the
175 STATEMENT ON CORPORATE GOVERNANCE
member of the board responsible for Finance will
represent him.
Minutes are taken of all meetings and the Board of
Management's resolutions and signed by the Chairman.
Decisions taken by the Board of Management are
binding for all employees.
The rules relating to meetings and resolutions taken
by the full Board of Management are also applicable for
its committees.
Members of the Board of Management not represented
in a committee are provided with the agendas and
minutes of committee meetings. Committee matters are
dealt with in full board meetings if the committee con-
siders it necessary or at the request of a member of the
Board of Management.
A secretariat for Board of Management matters has been
established to assist the Chairman and other board
members with the preparation and follow-up work con-
nected with board meetings.
At meetings of the Operations Committee (generally
held every two weeks), decisions are reached in connec-
tion with automobile product projects, based on the
strategic orientation and decision framework stipulated
at Board of Management meetings. The Operations
Committee comprises the Board of Management mem-
ber responsible for Development (who also chairs the
meetings), together with the board members responsible
for the following areas: Purchases and Supplier Network;
Production; Sales and Marketing BMW, Sales Channels
BMW Group; and MINI, Motorcycles, Rolls-Royce,
Aftersales BMW Group. If the committee chairman is
not present or unable to attend a meeting, the member
of the board responsible for Production represents
him. Resolutions taken at meetings of the Operations
Committee are made online.
The full board usually convenes twice a year in its func-
tion as Sustainability Board in order to define strategy
with regard to sustainability and decide upon measures
to implement that strategy. The Head of Corporate
Affairs and the Representative for Sustainability and
Environmental Protection participate in these meetings
in an advisory capacity.
The Board's Committee for Executive Management
Matters deals with enterprise-wide issues affecting ex-
ecutive managers of the BMW Group, either in their
entirety or individually (such as the executive manage-
ment structure, potential candidates for executive
management, nominations for or promotions to senior
management positions). This committee has, on the
one hand, an advisory and preparatory role (e.g.
making suggestions for promotions to the two remu-
neration groups below board level and preparing
decisions to be taken at board meetings with regard to
human resources principles with the emphasis on
executive management issues) and a decision-taking
function on the other (e.g. deciding on appointments
to senior management positions and promotions to
higher remuneration groups or the wording of human
resources principles decided on by the full board).
The Committee has two members who are entitled to
vote at meetings, namely the Chairman of the Board of
Management (who also chairs the meetings) and the
board member responsible for Human Resources. The
Head of "Human Resources Management and Services"
as well as the Head of "Human Resources Executive
Management" also participate in these meetings in an
advisory function. At the request of the Chairman,
resolutions may also be passed outside of committee
meetings by casting votes in writing, by fax or by tele-
phone if the other member entitled to vote does not ob-
ject immediately. The Committee for Executive Manage-
ment Matters convenes up to ten times a year.
-
171 STATEMENT ON CORPORATE GOVERNANCE
Members of the Supervisory Board
Dr.-Ing. Dr.-Ing. E. h. Norbert Reithofer (born 1956)
Mandates
Chairman of the Executive Management of
Merck KGaA
Deputy Chairman
Member since 2008
Dr. jur. Karl-Ludwig Kley (born 1951)
Chairman of the Works Council, Dingolfing
Deputy Chairman
Member since 2007
Stefan Schmid (born 1965)
Chairman of the European and
General Works Council
Industrial Engineer
Deputy Chairman
Manfred Schoch (born 1955)
Member since 1988
Deere & Company
Bertelsmann Management SE (Deputy Chairman)
Bertelsmann SE & Co. KGaA (Deputy Chairman)
The Board of Management is represented by its Chair-
man in its dealings with the Supervisory Board. The
Chairman of the Board of Management maintains
regular contact with the Chairman of the Supervisory
Board and keeps him informed of all important mat-
ters. The Supervisory Board has passed a resolution
specifying the information and reporting duties of the
Board of Management. As a general rule, in the case
of reports required by dint of law, the Board of Manage-
ment submits its reports to the Supervisory Board in
writing. To the extent possible, documents required as
a basis for taking decisions are sent to the members of
the Supervisory Board in good time before the relevant
meeting. Regarding transactions of fundamental im-
portance, the Supervisory Board has stipulated specific
transactions which require the approval of the Super-
visory Board. Whenever necessary, the Chairman of
the Board of Management obtains the approval of the
Supervisory Board and ensures that reporting duties
to the Supervisory Board are complied with. In order
to fulfil these tasks, the Chairman is supported by all
members of the Board of Management. The fundamen-
tal principle followed when reporting to the Supervisory
Board is that the latter should be kept informed regu-
larly, without delay and comprehensively of all signifi-
cant matters relating to planning, business performance,
risk exposures, risk management and compliance, as
well as any major variances between actual and budgeted
figures.
Mandates
Chairman of the Board of Trustees of
Chairman until 13.05.2015
Member from 2002 until 13.05.2015
Prof. Dr.-Ing. Dr. h. c. Dr.-Ing. E. h.
Joachim Milberg (born 1943)
Entrust Datacard Corp.
AQTON SE (Chairman)
DELTON AG (Chairman)
Mandates
Stefan Quandt (born 1966)
Member since 1997
Deputy Chairman
Entrepreneur
Henkel AG & Co. KGaA (Shareholders' Committee)
Siemens Aktiengesellschaft
Mandates
Management of BMW AG
Member and Chairman since 13.05.2015
Former Chairman of the Board of
BMW Stiftung Herbert Quandt
Former Chairman of the Board of
Management of BMW AG
176
168-STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
178
168-STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
Members of the Supervisory Board may not delegate their
duties. However, the Supervisory Board, the Presiding
Board and the committees may call on experts and
other suitably informed persons to attend meetings to
give advice on specific matters.
The Supervisory Board, the Presiding Board and the
committees also meet without the Board of Management
if deemed necessary.
BMW AG ensures that the Supervisory Board and its
committees are sufficiently equipped to carry out their
duties, including the services provided by a centralised
secretariat to support the chairmen in coordinating the
work of the Supervisory Board.
In accordance with the relevant terms of reference, the
Presiding Board comprises the Chairman of the Super-
visory Board and board deputies. The Presiding Board
prepares Supervisory Board meetings to the extent
that the subject matter to be discussed does not fall
within the remit of any of the committees. This in-
cludes, for example, preparing the annual Declaration
of Compliance with the German Corporate Governance
Code and the Supervisory Board's efficiency exami-
nation.
The Personnel Committee prepares the decisions of the
Supervisory Board with regard to the appointment
and revocation of appointment of members of the Board
of Management and, together with the full Supervisory
Board and the Board of Management, ensures that
long-term successor planning is in place. The Personnel
Committee also prepares the decisions of the Super-
visory Board with regard to the Board of Management's
compensation and the Supervisory Board's regular
review of the Board of Management's compensation
system. In conjunction with the resolutions taken by
the Supervisory Board regarding the compensation
of the Board of Management, the Personnel Committee
is responsible for drawing up, amending and revoking
service/employment contracts or, when necessary,
other relevant contracts with members of the Board of
Management. In specified cases, the Personnel Com-
mittee also has the authority to grant the necessary ap-
proval for a particular transaction (instead of the Super-
visory Board). This includes loans to members of the
Board of Management or Supervisory Board, specified
contracts with members of the Supervisory Board (in
each case taking account of the consequences of related
parties) and other activities of members of the Board
of Management, including the acceptance of non-BMW
Group supervisory board mandates.
The Audit Committee deals in particular with issues re-
lating to the supervision of the financial reporting pro-
cess, the effectiveness of the internal control system,
the risk management system, internal audit arrange-
ments and compliance as well as the performance of
Supervisory Board duties in connection with audits
pursuant to § 20 of the German Securities Trading Act
(WpHG). It also monitors the external audit, auditor
independence and any additional work performed by
the external auditor. It prepares the proposal for the
election of the external auditor at the Annual General
Meeting, makes a recommendation regarding the elec-
tion of the external auditor, issues the audit engage-
ment letter and agrees on points of audit focus as well
as the auditor's fee. The Audit Committee prepares the
Supervisory Board's resolution relating to the Company
and Group Financial Statements and discusses interim
reports with the Board of Management prior to publi-
cation. The Audit Committee also decides on the Super-
visory Board's agreement to use Authorised Capital
2014 (Article 4 no. 5 of the Articles of Incorporation)
and on amendments to the Articles of Incorporation
which only affect its wording.
In line with the terms of reference for the activities of
the plenum, the Supervisory Board has also set out terms
of reference for the Presiding Board and the various
committees. The committees are only quorate if all mem-
bers are present. Resolutions taken by the committees
are passed by a simple majority, unless stipulated other-
wise by law.
In line with the recommendations of the German Cor-
porate Governance Code, the Chairman of the Audit
Committee is independent, and not a former Chairman
of the Board of Management, and has specific knowledge
and experience in applying financial reporting stand-
ards and internal control procedures. He or she also ful-
fils the requirement of being an independent financial
expert as defined by § 100 (5) and § 107 (4) AktG.
The establishment and composition of a mediation com-
mittee are prescribed by the German Co-determination
Act. The Mediation Committee has the task of making
proposals to the Supervisory Board if a resolution for
the appointment of a member of the Board of Manage-
ment has not been carried by the necessary two-thirds
majority of members' votes. In accordance with statutory
requirements, the Mediation Committee comprises the
Chairman and the Deputy Chairman of the Supervisory
Board, one member selected by shareholder repre-
sentatives and one by employee representatives.
179 STATEMENT ON CORPORATE GOVERNANCE
Overview of Supervisory Board committees and their composition
Principal duties,
basis for activities
Members
Presiding Board
- preparation of Supervisory Board meetings to the extent that the subject matter to be discussed
does not fall within the remit of a committee
- activities based on terms of reference
Personnel Committee
- preparation of decisions relating to the appointment and revocation of appointment of mem-
bers of the Board of Management, the compensation and the regular review of the Board of
Management's compensation system
- conclusion, amendment and revocation of employment contracts (in conjunction with the
resolutions taken by the Supervisory Board regarding the compensation of the Board of
Management) and other contracts with members of the Board of Management
- decisions relating to the approval of ancillary activities of Board of Management members,
including acceptance of non-BMW Group supervisory mandates as well as the approval of trans-
actions requiring Supervisory Board approval by dint of law (e.g. loans to Board of Management
or Supervisory Board members)
- set up in accordance with the recommendation contained in the German Corporate Governance
Code, activities based on terms of reference
The Nomination Committee is charged with the task
of finding suitable candidates for election to the Super-
visory Board (as shareholder representatives) and for
inclusion in the Supervisory Board's proposals for elec-
tion at the Annual General Meeting. In line with the
recommendations of the German Corporate Governance
Code, the Nomination Committee comprises only share-
holder representatives.
- Bertelsmann Management SE
The number of meetings held by the Presiding Board
and the committees depends on current requirements.
The Presiding Board, the Personnel Committee and
the Audit Committee normally hold several meetings in
the course of the year (see “Report of the Supervisory
Board" for details of the number of meetings held in
2015).
The composition of the Presiding Board and the com-
mittees is based on legal requirements, BMW AG's
Articles of Incorporation, terms of reference and corpo-
rate governance principles. The expertise and technical
skills of its members is also taken into account.
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176-Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188 Compensation Report
Composition and work procedures of the Supervisory
Board of BMW AG and its committees
BMW AG's Supervisory Board, comprising ten share-
holder representatives (elected by the Annual General
Meeting) and ten employee representatives (elected in
accordance with the Co-Determination Act), has the
task of advising and supervising the Board of Manage-
ment in its governance of the BMW Group. It is in-
volved in all decisions of fundamental importance for
the BMW Group. The Supervisory Board appoints
the members of the Board of Management and decides
upon the level of compensation they receive. The Super-
visory Board can revoke appointments for important
reasons.
Together with the Personnel Committee and the Board
of Management, the Supervisory Board ensures that
long-term successor planning is in place. In their assess-
ment of candidates for a post on the Board of Manage-
ment, the underlying criteria applied by the Supervisory
Board for determining the suitability of candidates are
their expertise in the relevant area of board responsi-
bility, outstanding leadership qualities, a proven track
record, and an understanding of the BMW Group's
business. The Supervisory Board takes diversity into ac-
count when assessing, on balance, which individual
would best complement the Board of Management, in
view of the fact that it is a representative body of the
Company. "Diversity" in the context of the decision-
making process is understood by the Supervisory Board
to encompass various complementary individual pro-
files, work and life experience at both national and in-
ternational level and also the appropriate representa-
tion of both genders. As its target for the proportion of
women on the Board of Management by 31 December
2016, the Supervisory Board has stipulated that the
Board of Management should continue to have at least
one female member. Assuming that the Board of
Management continues to comprise eight members,
this would correspond to a ratio of at least 12.5%.
The Supervisory Board considers that it would be de-
sirable to further increase the proportion of women on
the board, and therefore supports the Board of Manage-
ment's current raft of measures aimed at increasing the
proportion of women at the highest executive manage-
ment levels of the BMW Group. The Board of Manage-
ment reports to the Personnel Committee and the Super-
visory Board at regular intervals on the proportion of,
and changes in, management positions held by women,
in particular within senior executive level and at upper-
most management level. When actually selecting an
individual for a post on the Board of Management, the
Supervisory Board decides in the best interest of the
Group and after amply considering all of the relevant
circumstances.
The Supervisory Board holds a minimum of two meet-
ings in each of the first and second six-month periods
of the calendar year. Normally, five plenary meetings
are held per calendar year. One meeting each year is
planned to cover a number of days and is used, among
other things, to enable an in-depth exchange on strategic
and technological matters. The main emphases of meet-
ings in the period under report are described in the
Report of the Supervisory Board. As a general rule, the
shareholder representatives and employee representa-
tives prepare the Supervisory Board meetings separately
and, if necessary, together with members of the Board
of Management. In particular, members of the Super-
visory Board are legally bound to maintain secrecy with
respect to any confidential reports they receive and any
confidential discussions in which they partake.
The Chairman of the Supervisory Board coordinates
work within the Supervisory Board, chairs its meetings,
handles the external affairs of the Supervisory Board
and represents it in its dealings with the Board of
Management.
The Supervisory Board is quorate if all members have
been invited to the meeting and at least half of its mem-
bers participate in the vote on a particular resolution.
A resolution relating to an agenda item not included in
the invitation is only valid if none of the members of
the Supervisory Board who were not present at the
meeting object to the resolution and if a minimum of
two-thirds of the members are present.
According to the relevant terms of reference, the Chair-
man of the Supervisory Board is, in this capacity, auto-
matically a member of the Presiding Board, the Person-
nel Committee and the Nomination Committee, and
also chairs these committees.
As a basic rule, resolutions are passed by the Super-
visory Board by a simple majority. The German Co-
determination Act contains specific requirements with
regard to majority voting and technical procedures, par-
ticularly with regard to the appointment and revoca-
tion of the appointment of management board mem-
bers and the election of a supervisory board chairman
or deputy chairman. In the event of a tied vote in the
Supervisory Board, the Chairman of the Supervisory
Board has two votes in a renewed vote, assuming it also
results in a tie.
177 STATEMENT ON CORPORATE GOVERNANCE
previously set. In special cases, resolutions may also be
taken outside of meetings, i.e. in writing, by fax or by
electronic means. Minutes are taken of all resolutions
and meetings, which are then signed by the relevant
Chairman.
After its meetings, the Supervisory Board is generally
provided with information on new vehicle models in the
form of a short presentation.
Following the election of a new Supervisory Board mem-
ber, the Corporate Governance Officer informs the
new member of the principal issues affecting his or her
duties - in particular those enshrined in the BMW Group
Corporate Governance Code - including the duty to
cooperate when a transaction or event triggers reporting
requirements or is subject to the approval of the Super-
visory Board.
Members of the Supervisory Board of BMW AG are re-
quired to ensure that they have sufficient time to perform
their mandate. If members of the Supervisory Board of
BMW AG are also members of the management board
of a listed company, they may not accept more than a to-
tal of three mandates on non-BMW Group supervisory
boards of listed companies or in other bodies with com-
parable requirements.
The Supervisory Board examines the efficiency of its
activities on a regular basis. Joint discussions are also
held at plenum meetings, prepared on the basis of a
questionnaire previously devised by and distributed to
the members of the Supervisory Board.
Each member of the Supervisory Board of BMW AG is
bound to act in the best interest of the organisation as
a whole. Members of the Supervisory Board may not
pursue personal interests in their decisions or take ad-
vantage of business opportunities intended to benefit
the BMW Group.
Members of the Supervisory Board are obliged to inform
the full Supervisory Board of any conflicts of interest
which may result from a consultant or directorship func-
tion with clients, suppliers, lenders or other business
partners, enabling the Supervisory Board to report to
the shareholders at the Annual General Meeting on
how it has dealt with such issues. Material conflicts of
interest which are not merely temporary in nature, re-
sult in the termination of the mandate of the relevant
Supervisory Board member.
With regard to nominations for the election of members
of the Supervisory Board, care is taken that the Super-
visory Board in its entirety has the required knowledge,
skills and expertise to perform its tasks in a proper
manner.
The Supervisory Board has set out specific targets for
its own composition (see section “Composition targets
for the Supervisory Board").
The members of the Supervisory Board are responsible
for undertaking appropriate basic and further training
measures, if such measures are deemed necessary to
competently perform the tasks assigned to them. The
Company provides appropriate assistance to members
of the Supervisory Board in this respect.
Taking into account the specific circumstances of the
BMW Group and the number of board members, the
Supervisory Board has set up a Presiding Board and
four committees, namely the Personnel Committee, the
Audit Committee, the Nomination Committee and the
Mediation Committee (see "Overview of Supervisory
Board committees and their composition"). Such com-
mittees serve to raise the efficiency of the Supervisory
Board's work and facilitate the handling of complex
issues. The establishment and function of a mediation
committee is prescribed by law. The person chairing a
committee reports in detail on its work at each plenum
meeting.
In practice, resolutions are taken by the Supervisory
Board and its committees at the relevant meetings. If a
Supervisory Board member is not present at a meeting,
that member can have his/her vote cast by another
Supervisory Board member, assuming an appropriate
request has been made in writing, by fax or in electronic
form. This rule also applies to the casting of the second
vote by the Chairman of the Supervisory Board. The
Chairman of the Supervisory Board can also accept the
retrospective casting of votes by any members not
present at a meeting if this is done within the time limit
Audit Committee
― Bertelsmann SE & Co. KGaA
Verizon Communications Inc. (since 05.11.2015)
Werner Zierer¹ (born 1959)
HEICO Corporation
Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in München
Deutsche Lufthansa Aktiengesellschaft (Chairman)
Infineon Technologies AG (Chairman)
Mandates
Wolfgang Mayrhuber (born 1947)
Member from 2004 until 13.05.2015
Chairman of the Supervisory Board of
Deutsche Lufthansa Aktiengesellschaft
173 STATEMENT ON CORPORATE GOVERNANCE
-Membership of equivalent national or foreign boards of business enterprises.
--Other mandates.
-Membership of other statutory supervisory boards.
3 Employee representatives (members of senior management).
2 Employee representatives (union representatives).
1 Employee representatives (company employees).
Chairman of the Works Council, Landshut
Willibald Löw (born 1956)
Member since 1999
· Städtisches Klinikum München GmbH
MAN Truck & Bus AG
KraussMaffei Group GmbH
Mandates
General Representative of IG Metall Munich
Member since 2009
Horst Lischka² (born 1963)
UnternehmerTUM GmbH (Chairman)
SGL Carbon SE (Chairman)
ALTANA AG (Deputy Chairman)
Mandates
Susanne Klatten (born 1962)
Member since 1997
Entrepreneur
Franz Haniel & Cie. GmbH (until 25.04.2015)
Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in München
-
188 Compensation Report
Member since 2001
Chairman of the Works Council, Regensburg
-
-
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
(Part of Management Report)
168 Information on the Company's
Governing Constitution
CORPORATE GOVERNANCE
168-STATEMENT ON
174
Siemens Healthcare GmbH (since 29.06.2015)
Schaeffler AG (Deputy Chairman)
Mandates
Regional Head of IG Metall Bavaria
Member since 2011
Jürgen Wechsler² (born 1955)
Member of the Works Council, Dingolfing
Member since 2013
Brigitte Rödig (born 1963)
184 Compliance in the BMW Group
Member of the Works Council, Munich
Dr. Dominique Mohabeer1 (born 1963)
-
Miles & More GmbH (Chairman Advisory Board)
FWB Frankfurter Wertpapierbörse (Exchange Council)
--
-
- Lufthansa Technik AG
- Lufthansa Cargo AG
LSG Lufthansa Service Holding AG (Chairman)
· Delvag Luftfahrtversicherungs-AG (Chairman)
Deutsche Post AG
Mandates
Member of the Board of Management, Finance,
of Deutsche Lufthansa Aktiengesellschaft
Member since 13.05.2015
Simone Menne (born 1960)
Member since 2012
Governance Practices
182 Information on Corporate
on Equal Gender Participation
- Infineon Technologies AG
Allianz SE
Mandates
Director of Institut für Demoskopie Allensbach
Gesellschaft zum Studium der öffentlichen
Meinung mbH
Prof. Dr. rer. pol. Renate Köcher (born 1952)
Member since 2008
University Professor
GeoForschungszentrum - GFZ
Helmholtz-Zentrum Potsdam Deutsches
Chairman of the Executive Board of
Prof. Dr. rer. nat. Dr. h. c. Reinhard Hüttl (born 1957)
TBG Limited
Metro AG (Chairman) (until 19.02.2016)
Heraeus Holding GmbH
Franz Haniel & Cie. GmbH (Chairman)
- Nestlé Deutschland AG
DELTON AG (Deputy Chairman)
Entrepreneur
Member since 2004
Franz Haniel (born 1955)
172
· Robert Bosch GmbH
Mandates
Second Chairman of IG Metall
Member since 2014
Christiane Benner2 (born 1968)
-Membership of equivalent national or foreign boards of business enterprises.
--Other mandates.
-Membership of other statutory supervisory boards.
3 Employee representatives (members of senior management).
2 Employee representatives (union representatives).
1 Employee representatives (company employees).
Mandates
- Deutsche Lufthansa Aktiengesellschaft
· Robert Bosch GmbH
Member since 2014
181 Disclosures pursuant to the Act
176 Work Procedures of the
Supervisory Board
Board of Management
174 Work Procedures of the
Board
171 Members of the Supervisory
Management
170 Members of the Board of
Supervisory Board pursuant to
§161 AktG
Management and of the
169 Declaration of the Board of
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
168-STATEMENT ON
Deutsche Post AG
Ulrich Kranz³ (born 1958)
Deutsche Bank AG
Verizon Communications Inc. (until 07.05.2015)
Northern Trust Corporation (until 21.04.2015)
General Electric Company
Mandates
Former Chairman and Chief Executive Officer of
Deere & Company
Member since 2009
Dr. h. c. Robert W. Lane (born 1949)
Mandates
Technikwissenschaften e. V.
President of acatech - Deutsche Akademie der
Member since 2010
Henning Kagermann (born 1947)
Prof. Dr. rer. nat. Dr.-Ing. E. h.
Head of Product Line BMWi
-
- supervision of the financial reporting process, the effectiveness of the internal control system,
the risk management system, internal audit arrangements and compliance as well as the
performance of Supervisory Board duties in connection with audits pursuant to § 20 of the
German Securities Trading Act (WPHG)
174 Work Procedures of the
Board of Management
176-Work Procedures of the
Supervisory Board
- discussion of interim reports with Board of Management prior to publication
1 Chair.
(In accordance with statutory requirements, the
Mediation Committee comprises the Chairman
and Deputy Chairman of the Supervisory Board
and one member each selected by shareholder
representatives and employee representatives.)
Norbert Reithofer (since 13.05.2015)
Joachim Milberg (until 13.05.2015)
Manfred Schoch
Stefan Quandt
Stefan Schmid
(In line with the recommendations of the German
Corporate Governance Code, the Nomination
Committee comprises only shareholder repre-
sentatives.)
Stefan Quandt
Norbert Reithofer (since 13.05.2015)
Joachim Milberg (until 13.05.2015)
Susanne Klatten
Karl-Ludwig Kley
Stefan Quandt
Stefan Schmid
Norbert Reithofer (since 13.05.2015)
Joachim Milberg (until 13.05.2015)
Manfred Schoch
Norbert Reithofer (since 13.05.2015)
Joachim Milberg (until 13.05.2015)
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
Norbert Reithofer¹ (since 13.05.2015)
Joachim Milberg1 (until 13.05.2015)
Manfred Schoch
- proposal to Supervisory Board if resolution for appointment of Board of Management member
has not been carried by the necessary two-thirds majority of Supervisory Board members' votes
- committee required by law
Mediation Committee
- establishment in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of reference
- identification of suitable candidates (male/female) as shareholder representatives on the
Supervisory Board to be put forward for inclusion in the Supervisory Board's proposals for
election at the Annual General Meeting
Nomination Committee
- establishment in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of reference
- amendments to Articles of Incorporation only affecting wording
- decision on approval for utilisation of Authorised Capital 2014
preparation of Supervisory Board's resolution on Company and Group Financial Statements
preparation of proposals for election of external auditor at Annual General Meeting, engagement
of external auditor and compliance of audit engagement, determination of areas of audit emphasis
and fee agreements with external auditor
-
- supervision of external audit, in particular auditor independence and additional work performed
by external auditor
2 Independent financial expert within the meaning of §100 (5) AktG and § 107 (4) AktG.
180
Karl-Ludwig Kley 1,2
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
The time schedule set by the Supervisory Board for
achieving the above-mentioned composition targets is
the period up to 31 December 2016. Future proposals
for nomination made by the Supervisory Board at the
Annual General Meeting - insofar as they apply to
shareholder Supervisory Board members - should take
account of these objectives in such a way that they can
be achieved with the support of the appropriate reso-
lutions at the Annual General Meeting. The Annual
General Meeting is not bound by nominations for elec-
tion proposed by the Supervisory Board. The freedom
of employees to vote for the employee members of
the Supervisory Board is also protected. Under the
Supervisory Board members should not, as a general
rule, hold office in the Supervisory Board for an over-
all period longer than up to the end of the Annual
General Meeting at which the shareholders vote on
the ratification of the member's activities for the 14th
financial year since the beginning of the first period
of office, excluding the financial year in which the
first period of office began. This rule does not apply
to natural persons, who either directly or indirectly
hold significant investments in the Company. It may
also be in the Company's interest to diverge from
the general maximum period, e.g. in order to work
towards another composition target, in particular
gender diversity and diversified professional and per-
sonal backgrounds.
168-STATEMENT ON
No persons carrying out directorship functions or ad-
visory tasks for important competitors of the BMW
Group may belong to the Supervisory Board. In com-
pliance with prevailing legislation, the members of
the Supervisory Board will strive to ensure that no
persons will be nominated for election with whom a
serious conflict of interests could arise (other than
temporarily) due to other activities and functions
carried out by them outside the BMW Group; this in-
cludes in particular advisory activities or director-
ships with customers, suppliers, creditors or other
business partners.
Two independent members of the Supervisory Board
should have expert knowledge of accounting or
auditing.
-
-
At least twelve of the 20 members of the Supervisory
Board should be independent members within the
meaning of section 5.4.2 of the German Corporate
Governance Code, including at least six members
representing the Company's shareholders.
When seeking suitably qualified individuals for the
Supervisory Board whose specialist skills and leader-
ship qualities are most likely to strengthen the Board
as a whole, consideration should also be given to
diversity. When preparing nominations, the extent to
which the work of the Supervisory Board would bene-
fit from diversified professional and personal back-
grounds (including international aspects) and from
an appropriate representation of both genders should
also be taken into account. It is the joint responsibility
of all persons and groupings participating in the
nomination and election process to ensure that the
Supervisory Board includes an appropriate number
of qualified women.
- Ideally, three members of the Supervisory Board should
be figures from the worlds of business, science or
research who have gained experience in areas relevant
to the BMW Group, e.g. chemistry, energy supply, in-
formation technology, or who have acquired spe-
cialist knowledge in subjects relevant for the future of
the BMW Group, e.g. customer requirements, mobility,
resources or sustainability.
- If possible, three of the shareholder representatives
in the Supervisory Board should be entrepreneurs
or persons who have already gained experience in
the management or supervision of another medium
or large-sized company.
To this end, the Supervisory Board has formally speci-
fied the following concrete objectives regarding its com-
position, taking into account the recommendations
contained in the German Corporate Governance Code:
- If possible, four of the members of the Supervisory
Board should have international experience or spe-
cialist knowledge with regard to one or more of the
non-German markets important to the BMW Group.
If possible, the Supervisory Board should include
seven members who have acquired in-depth knowl-
edge and experience from within the enterprise.
The Supervisory Board should not, however, include
more than two former members of the Board of
Management.
As a general rule, the age limit for membership of the
Supervisory Board should be set at 70 years. In ex-
ceptional cases, members may be allowed to remain
on the Board up until the end of the Annual General
Meeting following their 73rd birthday, in order to
fulfil legal requirements or to facilitate smooth succes-
sion in the case of persons with key roles or specialist
qualifications.
184 Compliance in the BMW Group
188 Compensation Report
Composition objectives of the Supervisory Board
The Supervisory Board must be composed in such a way
that its members as a group possess the knowledge,
skills and experience required to properly complete its
tasks.
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176-Work Procedures of the
170 Members of the Board of
Management
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
Supervisory Board
Under the terms of the Employee Share Programme, in
2015 employees were entitled to acquire packages of
between five and twelve shares of non-voting preferred
stock with a discount of €20.83 (2014: €25.00) per share
compared to the market price (average closing price in
Xetra trading during the period from 5 to 11 November
2015: €74.49). All employees of BMW AG and its (di-
rectly or indirectly) wholly owned German subsidiaries
(if agreed to by the directors of those entities) were en-
titled to participate in the programme. Employees were
required to have been in an uninterrupted employment
relationship with BMW AG or the relevant subsidiary
for at least one year at the date on which the alloca-
tion for the year was announced. Shares of preferred
stock acquired in conjunction with the Employee Share
Programme are subject to a vesting period of four
years, starting from 1 January of the year in which the
employees acquired the shares. A total of 309,944 (2014:
239,777) shares of preferred stock were acquired by em-
ployees under the programme in 2015; 309,860 (2014:
239,757) of these shares were drawn from Authorised
Capital 2014, the remainder were bought back via the
stock exchange. Every year the Board of Management of
BMW AG decides whether the programme is to be con-
tinued. Further information is provided in notes 19
and 34 to the Group Financial Statements.
Pursuant to § 15 a of the German Securities Trading Act
(WPHG), members of the Board of Management and
the Supervisory Board, and any persons related to those
members, are required to give notice to BMW AG and
the Federal Agency for the Supervision of Financial
Services of transactions with BMW stock or related finan-
cial instruments if the total sum of such transactions
reaches or exceeds an amount of €5,000 during any
given calendar year. BMW AG publishes such informa-
tion without delay and communicates it to the Com-
panies Register for archiving. Notice of publication is
issued to the Federal Agency for the Supervision of
Financial Services. Securities transactions notified to
BMW AG during the financial year 2015 were also re-
ported on the Company's website.
188
-
Under the terms of this programme, participants give a
commitment to invest an amount equivalent to 20% of
their performance-based bonus in BMW common stock
and to hold the shares so acquired for four years. In re-
turn for this commitment, BMW AG pays 100% of the in-
vestment amount as a net subsidy. Once the four-year
holding period requirement has been fulfilled, the par-
ticipants receive - for each three common stock shares
held and at the Company's option – one further share
of common stock or the equivalent amount in cash.
The share-based remuneration programme for qualify-
ing senior heads of department, introduced with effect
for financial years beginning after 1 January 2012, is
closely based on the programme for Board of Manage-
ment members and is aimed at rewarding a long-term,
entrepreneurial approach to running the business on
a sustainable basis.
Share-based compensation programmes for
employees and members of the Board of Management
Three share-based remuneration programmes were in
place at BMW AG during the year under report, namely
the Employee Share Programme (under which entitled
employees of BMW AG have been able to participate
in the enterprise's success since 1989 in the form of non-
voting shares of preferred stock), a share-based remu-
neration programme for Board of Management mem-
bers, and a share-based remuneration programme for
senior heads of department (relating in both cases to
shares of common stock). The share-based remuneration
The members of the Supervisory Board of BMW AG hold
a total of 43.00% of the Company's shares of common
and preferred stock (2014: 27.61%), of which 31.26%
(2014: 16.06%) relates to Stefan Quandt, Germany, and
26.74% (2014: 11.54%) to Susanne Klatten, Germany,
whereby 15.00% are held by Mr Quandt and Ms Klatten
indirectly in a so-called "undivided community of heirs",
with the consequence that the 15.00% shareholding
is attributed to both in full. The shareholdings of the
members of the Board of Management total less than
1% of all issued shares.
Shareholdings of members of the Board of Management
and the Supervisory Board
Reportable securities transactions
("Directors Dealings")
In the same way that the BMW Group is committed to
lawful and responsible conduct, it expects no less from
its business partners. In 2012, the BMW Group devel-
oped a new Business Relations Compliance programme
aimed at ensuring the reliability of its business relations.
Relevant business partners are checked and evaluated
with a view to identifying potential compliance risks.
These procedures are particularly relevant for relations
with sales partners and service providers, such as agen-
cies and consultants. Depending on the results of the
evaluation, appropriate measures - such as communica-
tion measures, training and possible monitoring – are
implemented to manage compliance risks. The Business
Relations Compliance programme has already been in-
troduced in 37 units since its launch and, over the com-
ing years, will be rolled out successively throughout the
BMW Group's worldwide sales organisation. In 2015, the
Company also continued integrating compliance clauses
to protect contractual relationships into dealer and im-
porter contracts.
187 STATEMENT ON CORPORATE GOVERNANCE
In the interest of investor protection and to ensure that
the BMW Group complies with regulations relating to
potential insider information, the Board of Management
appointed an Ad Hoc Committee back in 1994, consist-
ing of representatives of various specialist departments,
whose members examine the relevance of issues for
Compliance is also an important factor in safeguarding
the future of the BMW Group workforce. With this in
mind, the Board of Management and the national and in-
ternational employee representative bodies of the BMW
Group have agreed on a binding set of Joint Principles
for Lawful Conduct. In doing so, all parties involved
made a commitment to the principles contained in the
BMW Group Legal Compliance Code and to trustful co-
operation in all matters relating to compliance. Employee
representatives are therefore regularly involved in the
process of refining compliance measures within the
BMW Group.
website within the BMW Group's intranet, where em-
ployees can find compliance-related information and
have access to training materials in both German and
English. The website contains a special service area where
various practical tools are made available to employees
to help them deal with typical compliance-related mat-
ters. Since mid-2015, BMW Group employees have also
had access to an IT system, which helps them verify
legal admissibility and approve and document benefits,
especially in connection with corporate hospitality.
To avoid this, BMW Group employees are kept fully up-
to-date with the instruments and measures used by the
Compliance Management System via various internal
channels. As of 2014, all new staff receive a welcome
email underscoring the BMW Group's special commit-
ment to compliance when they join the Company. The
central means of communication is the Compliance
It is essential that employees are aware of and comply
with applicable legal regulations. The BMW Group does
not tolerate violations of the law by its employees. Cul-
pable violations of the law result in employment-con-
tract sanctions and may involve personal liability conse-
quences for the employee involved.
Compliance with and implementation of the Legal Com-
pliance Code are audited regularly by Corporate Audit
and subjected to control checks by Corporate Security
and the BMW Group Compliance Committee Office.
As part of its regular activities, Corporate Audit carries
out on-site audits. The BMW Group Compliance Com-
mittee also engages Corporate Audit to perform com-
pliance-specific checks. In addition, four BMW Group
Compliance Spot Checks, sample tests specifically de-
signed to identify potential corruption risks, were carried
out in 2015. Compliance control activities are coordi-
nated by the BMW Group Panel Compliance Controls.
Any necessary follow-up measures are organised by the
BMW Group Compliance Committee Office.
Through the group-wide reporting system, Compliance
Responsibles throughout the BMW Group report on
compliance-relevant issues to the Compliance Commit-
tee on a regular basis, and, if necessary, on an ad hoc
basis. This includes reporting on the compliance status
of the relevant entities, on identified legal risks and in-
cidences of non-compliance, as well as on corrective/pre-
ventative measures implemented.
168-STATEMENT ON
ad hoc disclosure purposes. All persons working on be-
half of the Company who have access to insider informa-
tion in accordance with existing rules have been, and
continue to be, included in a corresponding, regularly
updated list and informed of the duties arising from in-
sider rules.
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
183 STATEMENT ON CORPORATE GOVERNANCE
170 Members of the Board of
Management
Compliance-related queries and concerns are docu-
mented and followed up by the BMW Group Compliance
Committee Office using an electronic Case Manage-
ment System. If necessary, Corporate Audit, Corporate
Security, the Works Council and legal departments may
be called upon to assist in the investigation process.
Variable cash remuneration, in particular bonuses
Variable cash remuneration consists of a cash bonus and
share-based remuneration component equivalent to
20% of a board member's total bonus after taxes, which
the board member is required to invest in BMW AG com-
mon stock. Taxes and social insurance relating to the
share-based remuneration are also borne by the Com-
pany. In substantiated cases, the Supervisory Board also
has the option of paying an additional special bonus.
The variable remuneration of Board of Management
members comprises variable cash remuneration on the
one hand and a share-based remuneration component
on the other.
Variable remuneration
The basic remuneration of members of the Board of
Management is unchanged from the previous year,
namely €0.75 million p.a. for a board member during
the first period of office, €0.9 million p.a. for a board
member from the second term of appointment or fourth
year of office onwards and €1.5 million p.a. for the
Chairman of the Board of Management.
Fixed remuneration consists of a base salary (paid
monthly) and other remuneration elements, which
comprise mainly the use of Company and leased cars as
well as the payment of insurance premiums, contribu-
tions towards security systems and an annual medical
check-up. Members of the Board of Management are
also entitled to purchase vehicles and other services of
the BMW Group at conditions that also apply in each
relevant case for employees.
Fixed remuneration
Compensation system, compensation components
The compensation of the Board of Management com-
prises both fixed and variable remuneration as well as
a share-based component. Retirement and surviving
dependants' benefit entitlements are also in place.
propriateness of the compensation system annually.
In preparation, the Personnel Committee also consults
remuneration studies. The Supervisory Board reviews
the appropriateness of the compensation system in hori-
zontal terms by comparing compensation paid by
other DAX companies and in vertical terms by compar-
ing board compensation with the salaries of executive
managers and with the average salaries of employees of
BMW AG based in Germany, in both cases with regard
to their various levels and to changes over time. Recom-
mendations made by an independent external remuner-
ation expert and suggestions made by investors and
analysts are also considered in the consultative process.
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
The compensation of members of the Board of Manage-
ment is determined by the full Supervisory Board on
the basis of performance criteria and after taking into
account any remuneration received from Group com-
panies. The principal performance criteria are the na-
ture of the tasks allocated to each member of the Board
of Management, the economic situation and the per-
formance and future prospects of the BMW Group. The
Supervisory Board sets ambitious and relevant para-
meters as the basis for variable compensation. It also
ensures that variable components based on multi-year
assessment criteria take account of both positive and
negative developments and that the package as a whole
encourages a long-term approach to business perfor-
mance. Targets and other parameters may not be changed
retrospectively. The Supervisory Board reviews the ap-
Principles of compensation
The Supervisory Board is responsible for determining
and regularly reviewing the Board of Management's
compensation. The Personnel Committee plays a pre-
paratory role in this process.
1. Board of Management compensation
Responsibility
The following section describes the principles govern-
ing the compensation of the Board of Management and
the stipulations set out in the statutes relating to the
compensation of the Supervisory Board. In addition to
explaining the compensation system, the components
of compensation are also disclosed in absolute figures.
Furthermore, the compensation of each member of the
Board of Management and the Supervisory Board for
the financial year 2015 is disclosed by individual mem-
ber and analysed in its component parts.
Compensation Report
184 Compliance in the BMW Group
188-Compensation Report
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
171 Members of the Supervisory
Board
The compensation system for the Board of Management
at BMW AG is designed to encourage a management
approach focused on the sustainable development of
the BMW Group. One further principle applied when
designing remuneration systems at BMW is that of con-
sistency at different levels. In other words, compensation
systems for the Board of Management, senior manage-
ment and employees of BMW AG should all have a
similar structure and contain similar components. The
Supervisory Board carries out regular checks to ensure
that all Board of Management compensation compo-
nents are appropriate, both individually and in total,
and do not encourage the Board of Management to take
inappropriate risks on behalf of the BMW Group. At the
same time, the compensation model used for the Board
of Management needs to be sufficiently attractive for
highly qualified executives in a competitive environment.
Group SpeakUP Line about possible breaches of the law
within the Company. The BMW Group SpeakUP Line is
available in a total of 34 languages and can be reached
via local toll-free numbers in all countries in which BMW
Group employees are engaged in activities.
Contact and
SpeakUP Line
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
189 STATEMENT ON CORPORATE GOVERNANCE
Compliance
Compliance
Instruments and
Measures of
the BMW Group
Legal Compliance
Code and Regulations
Compliance Risk
Analysis
Network
Company-wide Compliance
Compliance
Reporting
Compliance
Investigations
and Controls
Compliance
Governance and
Processes
BMW Group Compliance Committee Office
Annual
Report
Board of Management BMW AG
Report
Annual
Supervisory Board BMWAG ←
BMW Group Compliance Management System
The Chairman of the BMW Group Compliance Commit-
tee keeps the Audit Committee (which is part of the
Supervisory Board) informed on the current status of
compliance activities within the BMW Group, both on
a regular and a case-by-case basis as the need arises.
The BMW Group Compliance Committee reports regu-
larly to the Board of Management on all compliance-
related issues, including the progress made in refining
the BMW Group Compliance Management System,
details of investigations performed, known infringements
of the law, sanctions imposed and corrective/preven-
tative measures implemented. This ensures that the
Board of Management is immediately notified of any
cases of particular significance. The decisions taken by
the BMW Group Compliance Committee are drafted in
concept, and implemented operationally, by the BMW
Group Compliance Committee Office. The BMW Group
Compliance Committee Office comprises ten employees
and is allocated in organisational terms to the Chairman
of the Board of Management.
The BMW Group Compliance Committee comprises
the heads of the following departments: Legal Affairs,
Corporate and Governmental Affairs, Corporate Audit,
Group Reporting, Organisational Development and
Corporate Human Resources. It manages and monitors
activities necessary to avoid non-compliance with the
law. These activities include training, information and
communication measures, compliance controls and
following up cases of non-compliance.
BMW Group Compliance Committee
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184-Compliance in the BMW Group
188 Compensation Report
Annual
Compliance
Reporting
Compliance
Training
171 Members of the Supervisory
Board
170 Members of the Board of
Management
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
168-STATEMENT ON
186
Employees also have the opportunity to submit informa-
tion-anonymously and confidentially - via the BMW
In order to avoid legal risks, all members of staff can
discuss compliance matters with their managers and
with the relevant departments within the BMW Group,
in particular Legal Affairs, Corporate Audit and Cor-
porate Security. The BMW Group Compliance Contact
serves as a further point of contact for both employees
and non-employees for any questions regarding com-
pliance.
Additional compliance coaching has also been imple-
mented for international sales and financial service loca-
tions. These multi-day classroom seminars strengthen
the understanding of compliance in selected units and
enhance cooperation between the central BMW Group
Compliance Committee Office and decentralised com-
pliance offices. In 2015, market coaching was conducted
in Belgium, Denmark, Finland, Italy, Norway, Portugal,
Spain and Sweden.
Compliance
Communication
In addition to this basic training, more in-depth training
is also provided to certain groups of staff on specific
compliance issues. Since early 2014, a total of 1,900 em-
ployees at BMW AG branches received further training
as anti-money-laundering measures were upgraded.
Antitrust law training was also expanded in 2013, tar-
geting employees who come into contact with antitrust-
related issues as a result of their functions within sales
and marketing, purchasing, production or develop-
ment. Around 10,100 employees have already com-
pleted this training. The relevant divisions also imple-
mented and stepped up further antitrust compliance
measures and processes in 2015 to make employees
who participate in meetings with competitors or work
with suppliers or sales partners sufficiently aware of
antitrust risks.
More than 31,500 managers and staff worldwide have
received training in essential compliance matters since
Managers in particular bear a high degree of responsi-
bility and must set a good example with regard to pre-
venting infringements. Managers throughout the BMW
Group acknowledge this principle by signing a written
declaration, in which they also undertake to inform staff
working for them of the content and significance of the
Legal Compliance Code and make them aware of legal
risks. Managers must, at regular intervals and on their
own initiative, verify compliance with the law and com-
municate regularly with staff on this issue. Any indication
of non-compliance with the law must be rigorously in-
vestigated.
The BMW Group Legal Compliance Code is the corner-
stone of the Group's Compliance Management System,
spelling out the Board of Management's commitment
to compliance as a joint responsibility ("tone from the
top"). This document, which was revised and expanded
in 2014, explains the significance of legal compliance
and provides an overview of the various areas relevant
for the BMW Group. It is available both as a printed
brochure and for download in German and English. In
addition, translations into nine other languages are avail-
able in the BMW Group intranet.
The various elements of the BMW Group Compliance
Management System are shown in the diagram on the
previous page and are applicable for all BMW Group
entities worldwide. To the extent that additional com-
pliance requirements apply to individual countries or
specific lines of business, these are covered by supple-
mentary compliance measures.
Compliance measures are determined and prioritised on
the basis of a group-wide compliance risk assessment
covering all 346 business units and functions worldwide
within the BMW Group. The assessment of compliance
risks is updated annually. Measures are realised with
the aid of a regionally structured compliance manage-
ment team covering all parts of the BMW Group, which
oversees a network of more than 200 Compliance Respon-
sibles.
deserve particular mention: these documents deal with
lawful handling of gifts and benefits and define appro-
priate assessment criteria and approval procedures for
specified actions.
185 STATEMENT ON CORPORATE GOVERNANCE
A coordinated set of instruments and measures is em-
ployed to ensure that the BMW Group, its representative
bodies, its managers and staff act in a lawful manner.
Particular emphasis is placed on compliance with anti-
trust legislation and the avoidance of corruption risks.
Compliance measures are supplemented by a whole
range of internal policies, guidelines and instructions,
which in part reflect applicable legislation. The BMW
Group Policy "Corruption Prevention" and the BMW
Group Instruction "Corporate Hospitality and Gifts"
The Board of Management keeps track of and analyses
compliance-related developments and trends on the
basis of the Group's compliance reporting and input
from the BMW Group Compliance Committee. Meas-
ures to improve the Compliance Management System
are initiated on the basis of identified requirements.
the introduction of the BMW Group Compliance Man-
agement System. The training material is available on
an Internet-based training platform in German and
English and includes a final test. Successful completion
of the training programme, which is documented by a
certificate, is mandatory for all BMW Group managers.
Appropriate processes are in place to ensure that all
newly recruited managers and promoted staff undergo
compliance training. In this way, the BMW Group en-
sures full training coverage for its managers in com-
pliance matters.
The bonus comprises two components, each equally
weighted, namely a corporate earnings-related bonus
and a personal performance-related bonus. The tar-
get bonus (100 %) for a Board of Management member,
for both components of variable compensation, totals
€1.5 million p.a., rising to €1.75 million p.a. from the
second term of appointment or fourth year of office on-
wards. The equivalent figure for the Chairman of the
Board of Management is €3 million p.a. The bonus
figure is capped for all Board of Management members
at 200% of the relevant target bonus.
Governance Practices
An earnings and dividend factor of 1.00 would give rise
to an earnings-based bonus of €0.75 million for the
financial year 2015 for a member of the Board of Manage-
ment during the first period of office and €0.875 million
during the second term of appointment or from the
fourth year in office. The equivalent bonus for the Chair-
man of the Board of Management is €1.5 million. The
earnings factor is 1.00 in the event of a Group net profit
of €3.1 billion and a post-tax return on sales of 5.6 %.
The dividend factor is 1.00 in the event that the dividend
paid on the shares of common stock is between 101 and
110 cents. If the Group net profit were below €1 billion,
or if the post-tax return on sales were less than 2%, the
earnings factor for the financial year 2015 would be
zero. In this case, no corporate earnings-related bonus
would be paid.
Share-based compensation programme
Member of the Board of Management: €350,000-€400,000
Chairman of the Board of Management: €500,000-€700,000
Pension based on amounts credited to individual savings accounts for contributions paid
and interest earned, various forms of disbursement
Pension contributions p.a.:
Pension of €120,000 p.a. plus fixed amounts based on length of Company and board
service
Principal features
Contractual agreement, main points: use of Company cars, insurance premiums,
contributions towards security systems, medical check-up
Once the four-year holding period requirement is fulfilled, Board of Management mem-
bers receive for each three common stock shares held either - at the Company's option -
one further share of common stock or the equivalent amount in cash.
- Earmarked cash remuneration equivalent to the amount required to be invested in
BMW AG shares, plus taxes and social insurance contributions
- Requirement for Board of Management members to each invest an amount equivalent
to 20% of their total bonus (after tax) in BMW AG common stock
-Bonus
May be paid in justified circumstances on an appropriate basis, contractual basis, no
entitlement
- Formula: 50% of target bonus x performance factor
Primarily qualitative criteria, expressed in terms of a performance factor aimed at
measuring the board members' contribution to sustainable and long-term performance
and the future viability of the business
- The earnings factor is derived from the Group net profit and the Group post-tax return
on sales
- Formula: 50% of target bonus x earnings factor x dividend factor (common stock)
Quantitative criteria fixed in advance for a period of three financial years
- €3.00 million (Chairman of the Board of Management)
- €1.75 million (from second term of appointment onwards or fourth year in office)
- €1.50 million (first term of appointment)
Target bonuses p.a. (if target is 100% achieved):
- Criteria for the performance factor also include: innovation (economic and ecological,
e.g. reduction of CO2 emissions), customer orientation, ability to adapt, leadership ac-
complishments and attractiveness as employer, progress in implementing the diversity
concept and activities that foster corporate social responsibility
- €1.50 million
Cash compensation
Monetary value
of matching
component
individual components.
*Including basic remuneration, other fixed remuneration elements and pension contribution. The overall cap is lower than the sum of the maximum amounts for each of the
5,500,000
-9,850,000
-1,200,000
-1,500,000
800,000
-1,400,000
.800,000
-1,400,000
3,500,000
-6,000,000
Chairman of the Board of Management
or from fourth year in office
for share acquisition
in the second term of appointment
4,925,000
-1,000,000
-700,000
-700,000
3,000,000
in the first term of appointment
Member of the Board of Management
Total*
Possible
special bonus
Member of the Board of Management
The corporate earnings-related bonus is based on the
BMW Group's net profit and post-tax return on sales
(which are combined in a single earnings factor) and
the level of the dividend (common stock). The corpo-
rate earnings-related bonus is derived by multiplying
the target amount fixed for each member of the Board
of Management by the earnings factor and by the divi-
dend factor. In exceptional circumstances, for instance
when there have been major acquisitions or disposals,
the Supervisory Board may adjust the level of the corpo-
rate earnings-related bonus.
- €0.90 million (from second term of appointment onwards or fourth year in office)
Chairman of the Board of Management:
Member of the Board of Management:
Board
171 Members of the Supervisory
170 Members of the Board of
Management
Supervisory Board pursuant to
§161 AktG
169 Declaration of the Board of
Management and of the
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
168-STATEMENT ON
Basic compensation p.a.
Parameter/measurement base
174 Work Procedures of the
Board of Management
Component
190
In the event of the termination of mandate, Board of
Management members appointed for the first time prior
to 1 January 2010 are entitled to receive certain defined
new one.
Retirement and surviving dependants' benefits
The provision of retirement and surviving dependants'
benefits for Board of Management members was changed
to a defined contribution system with a guaranteed
minimum return with effect from 1 January 2010. How-
ever, given the fact that board members appointed for
the first time prior to 1 January 2010 for the most part
had a legal right to receive the benefits already prom-
ised to them, these board members were given the
option to choose between the previous system and the
This programme envisages a share-based remuneration
component equivalent to 20% of the board member's
total bonus after taxes, which the board member is re-
quired to invest in BMW AG common stock. Taxes and
social insurance relating to the share-based remunera-
tion component are borne by the Company. As a general
rule, the shares must be held for a minimum of four
years. As part of a matching plan, at the end of the
holding period the Board of Management members will
normally receive from the Company either one addi-
tional share of common stock or an equivalent cash
amount for three shares of common stock held, to be
decided at the discretion of the Company (share-based
remuneration component/matching component). Spe-
cial rules apply in the case of death or invalidity of a
Board of Management member or early termination of
the contractual relationship before fulfilment of the
holding period.
The compensation system includes a share-based remu-
neration programme, in which the level of share-based
remuneration is based on the amount of bonus paid.
The system is aimed at creating further long-term incen-
tives to encourage
sustainable
governance.
Share-based remuneration programme
business to the extent not included directly in the basis
of measurement. Performance factor criteria include
innovation (economic and ecological, e.g. reduction of
carbon emissions), customer focus, ability to adapt,
leadership accomplishments, contributions to the Com-
pany's attractiveness as an employer, progress in imple-
menting the diversity concept, and activities that foster
corporate social responsibility. The target bonus and the
key figures used to determine the corporate earnings-
related bonus are fixed in advance for a period of three
financial years, during which time they may not be
amended retrospectively.
The personal performance-related bonus is derived by
multiplying the target amount set for each member of
the Board of Management by a performance factor. The
Supervisory Board sets the performance factor on the
basis of its assessment of the contribution of the rele-
vant Board of Management member to sustainable and
long-term oriented business development. In setting the
factor, equal consideration is given to personal perfor-
mance, decisions taken in previous forecasting periods,
key decisions affecting the future development of the
business and the effectiveness of measures taken in re-
sponse to changing external conditions as well as other
activities aimed at safeguarding the future viability of the
Overview of compensation system and compensation components
- €0.75 million (first term of appointment)
176 Work Procedures of the
Supervisory Board
182 Information on Corporate
in € p.a.
Remuneration caps (maximum remuneration)
b) Defined contribution system with guaranteed minimum
rate of return
(only applies to board members appointed for the first
time before 1 January 2010; based on legal right to
receive the benefits already promised to them, this group
of persons is entitled to opt between (a) and (b))
a) Defined benefits
Retirement and surviving dependants' benefits
Model
Other compensation
b) Share-based remuneration component
(matching component)
a) Cash compensation component
181 Disclosures pursuant to the Act
on Equal Gender Participation
Share-based remuneration programme
Special bonus payments
(corresponds to 50% of target bonus if target is 100%
achieved)
b) Performance-related bonus
(corresponds to 50% of target bonus if target is 100%
achieved)
a) Corporate earnings-related bonus
Bonus
Variable compensation
184 Compliance in the BMW Group
188-Compensation Report
This principle has been embedded in BMW's internal
rules of conduct for many years. In order to protect itself
systematically against compliance-related and reputa-
tional risks, the Board of Management created a Com-
pliance Committee several years ago, mandated to es-
tablish a worldwide Compliance Management System
throughout the BMW Group.
Employees
Compliance in the BMW Group
Responsible and lawful conduct is fundamental to the
success of the BMW Group. It is an integral part of
our corporate culture and the reason why customers,
shareholders, business partners and the general public
place their trust in us. The Board of Management and
the employees of the BMW Group are obliged to act
responsibly and in compliance with applicable laws and
regulations.
programme for Board of Management members is de-
scribed in detail in the Compensation Report (see also
the "Share-based remuneration" section in the Com-
pensation Report and note 19 to the Group Financial
Statements).
Leading by example
In the Supervisory Board's opinion, its composition as
at 31 December 2015 fulfilled the composition objec-
tives detailed above. In order to make it easier to assess
actual composition and composition targets, brief
curricula vitae of the current members of the Super-
visory Board are available on the Company's website at
www.bmwgroup.com. Information relating to mem-
bers' practised professions and to mandates in other
statutory supervisory boards and equivalent national or
foreign company boards, including the length of their
periods of service on the Supervisory Board, is provided
in the section "Statement on Corporate Governance".
Judging from this information, it is evident that the
Supervisory Board of BMW AG is extremely diversified,
with significantly more than the targeted four members
having international experience or specialist knowledge
with regard to one or more of the non-German markets
important to the Company. In-depth knowledge and
experience from within the enterprise are provided by
seven employee representatives and the Supervisory
Chairman himself. Only one previous Board of Manage-
ment member holds office in the Supervisory Board.
At least four members of the Supervisory Board have
experience in managing another entity. The Super-
visory Board also has three entrepreneurs as members.
Most of the members of the Supervisory Board – in-
cluding the employee representatives – have some ex-
perience in supervising another medium-sized or large
company. Moreover, more than three members of the
Supervisory Board have experience and specialist
knowledge in subjects relevant for the future of the
BMW Group, such as customer requirements, mobility,
resources, sustainability and information technology.
For the purpose of assessing the independence of its
members, the Supervisory Board follows the recommen-
dations of the German Corporate Governance Code.
In the opinion of the Supervisory Board, the fact that a
member has a substantial shareholding in the Com-
pany, or holds office as an employee representative, or
was previously a member of the Board of Manage-
ment, does not rule out that he or she is independent.
A "substantial and not merely temporary conflict of
interests" within the meaning of section 5.4.2 of the
German Corporate Governance Code does not apply
to any of the Supervisory Board members. Employees
holding office in the Supervisory Board are protected by
law when performing their duties. At any rate, all other
Supervisory Board members have a sufficient degree of
economic independence from the Company. Business
with entities, in which the members of the Supervisory
Board carry out a significant function, is conducted on
an arm's length basis. Overall, the Supervisory Board
has concluded that all of its members are independent.
At least three members meet the requirements for
being designated as an independent financial expert.
At the end of the reporting period, the Supervisory
Board had six female members (30%), comprising three
shareholder representatives and three employee repre-
sentatives. The Supervisory Board has 14 male mem-
bers (70%), comprising seven shareholder representa-
tives and seven employee representatives. The Company
therefore complies with the statutory gender quota of
at least 30% female members applicable in Germany
with effect from 1 January 2016. The Supervisory Board
does not currently have any members more than 70 years
old. The principles specified by the Supervisory Board
regarding the length of office of its members will be
taken into account in all future proposals for election.
Disclosures pursuant to the Act on Equal Gender
Participation - targets for the proportion of women at
executive management levels I and II
The Act on Equal Participation of Women and Men in
Executive Positions in the Private and the Public Sector
("Act on Equal Gender Participation") was passed into
German law in 2015.
Under the new legislation, the Supervisory Board of
BMW AG is required to set a target for the proportion
of women on its Board of Management and a time limit
for meeting this target. Likewise, the Board of Manage-
ment of BMW AG is required to establish targets and
time limits for attaining these targets with respect to
the two executive management levels below the Board
of Management. In each case, the first of these time
limits may be no later than 30 June 2017. Since the Com-
pany's financial year corresponds to the calendar year,
the Supervisory Board and the Board of Management
have each decided to set 31 December 2016 as the date
of the first time limit for attaining these targets.
As its target for the proportion of women on the Board
of Management by 31 December 2016, the Supervisory
Board has stipulated that the Board of Management
should continue to have at least one female member.
Assuming that the Board of Management continues to
182
168-STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182-Information on Corporate
Governance Practices
procedural rules stipulated by the German Co-Deter-
mination Act, the Supervisory Board does not have the
right to nominate employee representatives for elec-
tion. The objectives which the Supervisory Board has
set itself with regard to its composition are therefore not
intended to be instructions to those entitled to vote or
restrictions on their freedom to vote.
184 Compliance in the BMW Group
188 Compensation Report
181 STATEMENT ON CORPORATE GOVERNANCE
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184-Compliance in the BMW Group
188 Compensation Report
168-STATEMENT ON
184
We also work in close partnership with our suppliers
and promote their commitment to sustainability.
Activities can only be sustainable, however, if they
cover the entire value-added chain. That is why the
BMW Group not only sets high standards for itself, but
also expects its suppliers and partners to meet the
ecological and social standards it sets and strives con-
tinually to improve the efficiency of processes, measures
and activities. For instance, we consistently require our
dealers and importers to comply with ecological and
social standards on a contractual basis. Moreover, cor-
responding criteria are embedded throughout the entire
purchasing system - including in enquiries to suppliers,
in the sector-wide OEM Sustainability Questionnaire,
in our purchasing terms and in our evaluation of sup-
pliers - in order to promote sustainability aspects in
line with the BMW Group Sustainability Standard. The
BMW Group expects suppliers to ensure that the
BMW Group's sustainability criteria are also adhered
to by their sub-suppliers. Purchasing terms and con-
ditions and other information relating to purchasing
can be found in the publicly available section of the
BMW Group Partner Portal at https://b2b.bmw.com.
Further information on social responsibility to employees
can be found in the section "Workforce".
It goes without saying that the BMW Group abides by
these fundamental principles and rights worldwide.
Employees have therefore been sensitised to this issue
since 2005 by means of regular internal communica-
tions and further training on recent developments in
this area. Two dedicated helplines - the “Human Rights
Contact" and the BMW Group SpeakUP Line - are
available to employees wishing to raise queries or com-
plaints relating to human rights issues. The UN Guiding
Principles for Business and Human Rights provide a
framework for critical reflection and continuous improve-
ment in our endeavours to ensure that human rights
are respected throughout the organisation.
to collective bargaining, the prohibition of child labour,
the right to appropriate remuneration, regulated working
times and compliance with work and safety regulations.
The complete text of the UN Global Compact and the
recommendations of the ILO and other relevant in-
formation can be found at www.unglobalcompact.org
and www.ilo.org. The Joint Declaration on Human
Rights and Working Conditions in the BMW Group
can be found at www.bmwgroup.com under the menu
item “Responsibility" and "Supply Chain Manage-
ment".
The BMW Group stands by its social responsibilities.
Our corporate culture combines the drive for success
with a willingness to be open, trustworthy and trans-
parent. We are well aware of our responsibility towards
society. Our models for sustainable social responsibility
towards employees and for ensuring compliance with
international social standards are based on various in-
ternationally recognised guidelines. The BMW Group
is committed to adhering to the OECD's guidelines for
multinational companies and the contents of the ICC
Business Charter for Sustainable Development. De-
tails of the contents of these guidelines and other rele-
vant information can be found at www.oecd.org and
www.iccwbo.org. The Board of Management signed the
United Nations Global Compact in 2001 and, in 2005,
together with employee representatives, issued a “Joint
Declaration on Human Rights and Working Conditions
in the BMW Group". This Joint Declaration was recon-
firmed in 2010. With the signature of these documents,
we have given our commitment to abide worldwide by
internationally recognised human rights and with the
fundamental working standards of the International
Labour Organization (ILO). The most important of
these are freedom of employment, the prohibition of
discrimination, the freedom of association and the right
Social responsibility towards employees and along
the supplier chain
The core principles are also available at www.bmwgroup.
com under the menu items “Careers” and “Working at
the BMW Group".
We secure the corporate independence of the BMW
Group through sustained profitable growth.
Independence
Social responsibility is an integral part of our corporate
self-image.
Society
In our view, sustainability constitutes a lasting contribu-
tion to the success of the Company. This is the basis upon
which we assume ecological and social responsibility.
Sustainability
Every manager must lead by example.
we ever make.
comprise eight members, this would correspond to a
proportion of at least 12.5%. The Supervisory Board
considers it desirable to increase the proportion of
women on the board and supports the Board of Manage-
ment's current raft of measures, which is also aimed
at increasing the proportion of women at the highest
executive management levels of the BMW Group.
People make companies. Our employees are the
strongest factor in our success, which means our per-
sonnel decisions will be among the most important
Top management within the BMW Group is structured
in terms of functions, following a cohesive job evalua-
tion system based on Mercer.
We aim to be the best - a challenge to which all of us
must rise. Each and every employee must be prepared
to deliver peak performance. We strive to be among
the elite, but without being arrogant. It is the Company
and its products that count - and nothing else.
Responsibility
Every BMW Group employee has the personal responsi-
bility for the Company's success. When working in a
team, each employee must assume personal responsibility
for his or her actions. We are fully aware that we are
working to achieve the Company's goals. For this reason,
we work together in the best interests of the Company.
Effectiveness
The only results that count for the Company are those
which have a sustainable impact. In assessing leader-
ship, we must consider the effectiveness of performance
on results.
Adaptability
Frankness
As we strive to find the best solution, it is each em-
ployee's duty to express any opposing opinions they
may have. The solutions we agree upon will then be
consistently implemented by all those involved.
Respect, trust, fairness
We treat each other with respect. Leadership is based on
mutual trust. Trust is rooted in fairness and reliability.
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
170 Members of the Board of
Management
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
The Board of Management has established target
ranges of 10 to 12% for executive management level I
and 6 to 8% for executive management level II, each to
be reached by 31 December 2016. The targets set out
are relatively modest in view of the imminence of the
deadline.
Peak performance
The success of our Company is determined by our cus-
tomers. They are at the heart of everything we do.
The results of all our activities must be valued in terms
of the benefits they will generate for our customers.
In order to ensure our long-term success we must adapt
to new challenges with speed and flexibility. We there-
fore see change as an opportunity - adaptability is essen-
tial to be able to capitalise on it.
Customer focus
At 31 December 2015, the proportion of female execu-
tives within management/function level I stood at 9.6%
and within management/function level II at 5.5%.
Proportion of female executives within management/
function level I and II at BMW AG
in %
10
8
6
2
Function level I
Function level II
4
5.5
The deployment of diverse, complementary talents in
the workforce increases both the ability of a company to
perform and its customer orientation. Sufficient diver-
sity in the BMW Group makes a major contribution to
improving competitiveness. Promoting an appropriate
gender balance is a key part of this skill mix. The aim of
the Board of Management therefore continues to be to
increase the proportion of women at all management
levels.
The proportion of women has risen further during the
financial year 2015, both in the workforce as a whole
and in management positions, accompanied also by
a large number of programmes, dialogues and infor-
mation events. Further information on the social di-
versity in the BMW Group can be found in the section
"Workforce".
Information on corporate governance practices applied
beyond mandatory requirements
Core principles
9.6
Within the BMW Group, the Board of Management, the
Supervisory Board and the employees base their actions
on twelve core principles which are the cornerstone of
the success of the BMW Group:
On behalf of the Supervisory Board
15 STATEMENT OF THE CHAIRMAN OF THE BOARD OF MANAGEMENT
Harald Krüger - Chairman of the Board of Management
14
Yours
M
Norbert Reithofer
Dear Shareholders,
Chairman of the Supervisory Board
The 7 March 2016 marked an historic milestone in the history of our company. 100 years of Bayerische
Motoren Werke is the achievement of all the company's associates since its founding in 1916 right up until
today. Our experiences and strengths establish the foundation for our future. However, we also know that
it is not past accomplishments but profitable growth, strength in innovation and competitiveness that deter-
mine the success of a company. This is why we are using the occasion of our centenary as a springboard for
"The Next 100 Years". This makes it clear that the company's strategy is and remains geared towards the
long term.
The Motorcycle segment is profitable due to its successful growth strategy. Based on an operating result
of 182 million euros in 2015, the segment reported an EBIT margin of 9.1 per cent.
The strength of our premium brands is the backbone of our success Our three premium brands fascinate
people all around the world. In 2015, more than 2.2 million customers chose a BMW, MINI or Rolls-Royce,
more than in any other year. This was a solid increase of 6.1 per cent over the previous year. For the first time
in our corporate history, the BMW brand sold more than 1.9 million vehicles. With almost 137,000 motor-
cycles and scooters, BMW Motorrad also achieved a new record in sales. The MINI brand also reported the
best year ever, with over 338,400 vehicles sold. Rolls-Royce Motor Cars delivered 3,785 vehicles to customers,
making 2015 the second-best year in its 112-year history.
We continue to strive for a globally balanced distribution of value creation We continue to pursue a balanced
distribution of sales between the world's three major regions, Europe, Asia and America. In view of the
heterogeneous and volatile development of the markets, our distribution strategy allows us to respond more
swiftly to fluctuations and to avoid overdependence on any single region. Europe is still our largest sales region.
Last year we surpassed the mark of one million vehicles sold there for the very first time. Overall, close to
45 per cent of our cars were delivered to customers in Europe. Asia accounted for approximately 30 per cent
of sales, the Americas for 22 per cent.
We are strategically expanding our global production network of currently 30 sites in 14 countries. Our
second engine plant in Shenyang opened in January 2016. In Mexico, preparations for the construction of our
new plant in San Luis Potosí are proceeding according to schedule. On top of that, we are currently expanding
the company's largest production site in Spartanburg, USA in order to be able to meet the high demand
for our premium sports activity vehicles.
Positive sales development reflected in key financials Our successful development in sales is reflected in
our key financials: with over 92 billion euros in sales revenues, the BMW Group posted a significant growth
of 14.6 per cent over the previous year. As forecasted, the Group profit before tax achieved solid growth of
per cent to a new high of 9.2 billion euros. The annual net profit increased by 10 per cent to around 6.4 billion
euros. The EBIT margin in the Automotive segment stands at 9.2 per cent and therefore remains within our
strategic target range.
5.9
With over 1.65 million new contracts with customers and a profit before tax of 1.98 billion euros, the
Financial Services segment once again made a significant contribution to the Group result. The EBT in the
segment grew significantly to 14.6 per cent and stands well above the previous year's level.
Therefore, we achieved the goals we set for the 2015 financial year and we managed to do so in an environ-
ment characterised by intense competition as well as economic and political volatility.
Expression of appreciation by the Supervisory Board The financial year 2015 has again been a record
year for the BMW Group. The Supervisory Board wishes to thank the members of the Board of Management
and the entire staff of the BMW Group worldwide for their outstanding work and concerted performance.
Munich, 9 March 2016
Successful development continued in the financial year 2015 The financial year 2015 was a successful
year for the BMW Group. We achieved new all-time highs for performance indicators such as sales, Group
revenues, Group profit before tax and net profit.
The Supervisory Board also examined the proposal of the Board of Management to use the unappropriated
profit to pay an increased dividend of €3.20 per share of common stock and €3.22 per share of non-voting
preferred stock. The Supervisory Board considers the proposal appropriate and therefore concurs with it.
The Chairman of the BMW Group Compliance Committee reported to the Audit Committee on the
current compliance situation, which, as in the previous year, was deemed satisfactory overall. None of the
information received relating to potential non-compliance or actual incidences of non-compliance identified
in specific cases give any indication of serious or systematic non-compliance with applicable requirements.
Moreover, the Audit Committee requested and received information regarding the further expansion of the
BMW Group Compliance Organisation.
Based on thorough examinations at both Audit Committee and full Supervisory Board level, the Super-
visory Board concurred with the results of the external audit. In accordance with the conclusion reached after
the examination by the Audit Committee and Supervisory Board, no objections were raised. The Group and
Company Financial Statements of Bayerische Motoren Werke Aktiengesellschaft for the financial year 2015
prepared by the Board of Management were approved at the Supervisory Meeting held on 9 March 2016. The
separate financial statements have therefore been adopted.
16
11 REPORT OF THE SUPERVISORY BOARD
The Head of Group Internal Audit reported to the Audit Committee on significant findings of audits con-
ducted by Group Internal Audit on the industrial and financial services sides of the business. In addition,
he provided information on the main topics of planned audits in both areas.
The Audit Committee has already obtained detailed information regarding audit reforms within the EU,
particularly with respect to preparing the selection of the auditor.
The Audit Committee and Supervisory Board obtained an auditor's assurance report regarding compliance
with regulatory requirements for off-market transactions made by BMW AG involving derivatives. The effec-
tiveness of the system that BMW AG currently employs to ensure compliance with regulatory requirements
was confirmed. With an addition to its procedural rules, the Supervisory Board transferred tasks related to
examinations of this type to the Audit Committee.
The Audit Committee concurred with the decision of the Board of Management to raise the Company's
share capital in accordance with § 4 (5) of the Articles of Incorporation (Authorised Capital 2014) by €309,860
and to issue a corresponding number of new non-voting bearer shares of preferred stock, each with a par value
of €1, at favourable conditions to employees.
The Personnel Committee convened four times during the financial year 2015. One of its tasks is to prepare
decisions relating to the composition of the Board of Management. In one case, the Personnel Committee
gave its approval for a member of the Board of Management to accept a mandate for membership of the
supervisory board of a non-BMW Group entity.
The Nomination Committee convened twice in 2015 to deliberate on successor planning for mandates of
the shareholders' representatives and adopt recommendations for proposals for election at the 2015 and
2016 Annual General Meetings, taking the composition objectives stipulated by the Supervisory Board into
due account.
The statutory Mediation Committee was not required to convene during the financial year 2015.
Composition and organisation of the Board of Management After the Annual General Meeting held
on 13 May 2015, I resigned from the Board of Management as previously announced and Harald Krüger took
over as Chairman of the Board of Management. The Supervisory Board had previously appointed Oliver Zipse
as member of the Board of Management for the first time with effect from the end of the Annual General
Meeting. Mr Zipse has worked for the BMW Group since 1991, most recently as head of Group Planning and
Product Strategy. He took over responsibility for Production from Harald Krüger. In the financial year 2015,
the Supervisory Board resolved to extend the mandate of one Board of Management member.
Composition of the Supervisory Board, the Presiding Board and Supervisory Board Committees In
order to facilitate the generational change at the top of the Board of Management and the Supervisory Board,
which he both planned and personally supported, Professor Joachim Milberg resigned from the Supervisory
Board immediately after the 2015 Annual General Meeting. As previously announced, he will be playing a
leading role in the worldwide social engagement and philanthropic work of BMW AG, in particular as Chair-
man of the Board of Trustees of the BMW Foundation Herbert Quandt. Professor Milberg has faithfully served
and had a major influence on the BMW Group over a period of many years, beginning in 1993, first as
12
member and then as Chairman of the Board of Management from 1999. As from 2002 he served firstly as
member and finally, from 2005, as Chairman of the Supervisory Board. The Supervisory Board wishes to
take this opportunity to express its great respect for, and appreciation of, Professor Milberg's achievements.
Wolfgang Mayrhuber also resigned from the Supervisory Board at his own request at the end of the 2015
Annual General Meeting. The Supervisory Board wishes to thank Mr Mayrhuber for his more than ten years
of valuable, trusted cooperation.
Simone Menne was elected to the Supervisory Board as new shareholder representative. Professor Dr
Henning Kagermann was re-elected as member of the Supervisory Board at the Annual General Meeting in
2015.
After my election to the Supervisory Board by the Annual General Meeting in 2015, the Supervisory Board
members elected me as their new Chairman. In this capacity, and in accordance with the relevant terms of
reference, I remained Chairman of the Personnel and Nomination Committees. I was also elected member of
the Audit Committee. The Corporate Governance Report contains a summary of the composition of the
Supervisory Board and its committees.
The Group and Company Financial Statements of Bayerische Motoren Werke Aktiengesellschaft for the
year ended 31 December 2015 and the Combined Management Report – as authorised for issue by the
Board of Management on 18 February 2016 – were audited by KPMG AG Wirtschaftsprüfungsgesellschaft
and given an unqualified audit opinion.
The Financial Statements and the Combined Management Report, the long-form audit reports of the
external auditors and the Board of Management's profit distribution proposal were made available to all
members of the Supervisory Board in a timely manner.
In a first step, the Audit Committee dutifully examined and discussed these documents at a meeting held
on 25 February 2016. The Supervisory Board subsequently examined the relevant drafts of the Board of
Management at its meeting on 9 March 2016, after hearing the committee chairman's report on the meeting of
the Audit Committee. In both meetings, the Board of Management gave a detailed explanation of the fi-
nancial reports it had prepared. Representatives of the external auditors attended both meetings, reported
on significant findings and answered any additional questions raised by the members of the Supervisory
Board. They also confirmed that the risk management system established by the Board of Management is
capable of identifying any events or developments that might impair the going-concern status of the Company
and that no material weaknesses in the internal control system and risk management system were found
with regard to the financial reporting process. Similarly, they confirmed that they had not identified any facts
in the course of their audit work that were inconsistent with the contents of the Declaration of Compliance
issued jointly by the two boards.
13 REPORT OF THE SUPERVISORY BOARD
We continue to fascinate our customers with new models and technologies In 2015, we launched a total
of 15 new models and model revisions in the market, among them the new BMW 2 Series Gran Tourer, the
new BMW X1 and the new MINI Clubman. At Rolls-Royce, the new Drophead Coupe called Dawn celebrated
its world premiere at the International Motor Show in Frankfurt. The model is scheduled to be introduced
in 2016. Most importantly, the model year 2015 was marked by the launch of the sixth generation of the new
BMW 7 Series. With its high-end innovations, our flagship has set new benchmarks in driving dynamics,
efficiency as well as driver assistance systems.
Examination of financial statements and the profit distribution proposal KPMG AG Wirtschaftsprüfungs-
gesellschaft conducted a review of the abridged Interim Group Financial Statements and Interim Group
Management Report for the six-month period ended 30 June 2015. The results of the review were presented
to the Audit Committee by representatives of KPMG AG Wirtschaftsprüfungsgesellschaft. No issues were iden-
tified that might indicate that the abridged Interim Group Financial Statements and Interim Group Manage-
ment Report had not been prepared, in all material respects, in accordance with the applicable provisions.
Consistent technology transfer from BMW i to the BMW core brand The technologies developed for BMW i
are now also being incorporated in the models of our BMW core brand. This includes battery cells, the elec-
tronic control unit and electric drives from the i3 and i8 as well as our expertise in lightweight construction.
A good example of this technology transfer is the Carbon Core of the new BMW 7 Series, a mixed-material
design for the car body structure made of carbon fibre reinforced plastics (CFRP), aluminum and steel. This
Carbon Core received the EuroCarBody Award 2015, the world's most prestigious recognition for innova-
tions in car body construction.
62 Events after the End of the
of BMW AG
59 Comments on Financial Statements detail applicable, depending on the level of aggregation.
The BMW Group's internal management system is based
on a multilayered structure, with varying degrees of
Position and Net Assets
49 Results of Operations, Financial
29 Review of Operations
Performance Indicators
27 Financial and Non-financial
27 Overall Assessment by Management and debt capital.
ensured in the long term if the available capital is
profitably employed. For this to be the case, the profit
generated must sustainably exceed the cost of equity
Environment
BMW i attracts new customer groups to the BMW brand With Efficient Dynamics technology and especially
with the BMW i models, the BMW Group has irreversibly charted the course towards sustainable mobility.
At the end of 2015, average emissions for our new car fleet stood at 127 grams of CO2 per kilometre. Last
year, we sold close to 30,000 BMW i vehicles – up around 66 per cent year-on-year. The fully electric BMW i3 is
already available in 50 countries; it is also the only vehicle with a certified carbon balance for the supply chain,
production, use and recycling. It has attracted new customers to the BMW brand - 80 per cent of i3 buyers
have never driven a BMW before. We have repeatedly stressed that electromobility is not a sprint but a mara-
thon. In order to enable access to e-mobility to many people, the BMW i3 has been included in our DriveNow
car-sharing fleet. Furthermore, the BMW Group and its partners support the establishment of a comprehensive
charging infrastructure in Europe, China and the USA.
23 General and Sector-specific
20-Management System
18 Business Model
18-General Information on the BMW Group safeguarding jobs. Corporate autonomy can only be
The business management system applied by the
BMW Group follows a value-based approach, with a
clear focus on achieving profitable growth, increasing
the value of the business for capital providers and
18-COMBINED MANAGEMENT REPORT
General Information on the BMW Group
Management System
20
The Financial Services segment comprises more than
50 entities and cooperation arrangements with local
financial services providers and importers on all conti-
nents, making it one of the world's leading financial
service providers in the automobile sector. Its main line
of business is providing credit financing and leasing for
BMW Group brand cars and motorcycles to retail cus-
tomers. It also provides customers with access to a wide
range of insurance and banking products. The BMW
Group's international multi-brand fleet business,
operating under the brand name “Alphabet", provides
fleet financing products and comprehensive manage-
ment services for corporate car fleets in 18 countries.
Within the multi-brand financing line of business, credit
financing, leasing and other services are marketed to
retail customers under the brand name “Alphera”. Pro-
viding support to the dealer organisation, such as by
financing dealership vehicle inventories, rounds off the
segment's product range.
BMW Motorrad also focuses on the premium segment
with its range of products, comprising motorcycles for
the Sport, Tour, Roadster, Heritage, Adventure and
Urban Mobility segments. A wide range of accessories
and equipment is also available to provide customers
with additional safety and comfort.
At the same time, the BMW Group continues to push
the boundaries of "premium" to a new level with its
BMW i models. Inspired to the core by the desire for even
greater sustainability, the BMW i epitomises the vehicle
of the future - with its electric drivetrain, revolutionary
lightweight construction, exceptional design and an en-
tirely newly conceived range of mobility services.
rivalled driving pleasure in its class. Rolls-Royce has a
long tradition in the ultra-luxury segment stretching
back over 112 years. Our core BMW brand caters to a
broad array of customer wishes, ranging from fuel-
efficient and innovative models equipped with Efficient
Dynamics through to high-performance, efficient
BMW M vehicles, which help bring the flair of motor-
sport to the roads. All BMW vehicles share one thing in
common - their impressive driving dynamics.
The BMW Group's premium brands (BMW, MINI and
Rolls-Royce) are widely known and highly admired
around the globe for their innovative technologies
and state-of-the-art design. The BMW Group provides
the full spectrum of individual mobility, ranging from
premium-segment small vehicles through to highly luxu-
rious and powerful vehicles. The MINI brand is a veritable
icon in the premium small car segment, offering un-
23 Report on Economic Position
The worldwide distribution network currently consists
of around 3,310 BMW, 1,550 MINI and 140 Rolls-Royce
dealerships. In China alone, around 60 BMW dealerships
were opened in 2015. Products and services are sold in
Germany through BMW Group branches and by inde-
pendent authorised dealers. Sales outside Germany are
handled primarily by subsidiary companies and by in-
dependent import companies in a number of markets.
The dealership and agency network for BMW i currently
covers some 950 locations. The BMW motorcycles sales
network is organised in a similar way to that of the
Group's automobile business. Currently, there are
around 1,150 BMW Motorrad dealerships worldwide.
63 Report on Outlook, Risks and
63 Outlook
Profit before financial result
Capital employed
ROCE Automotive
The most aggregated key performance indicator used
for the Automotive segment is the RoCE. This indicator
provides useful information on the success with which
capital is being employed as well as on operational
profitability. The RoCE is measured on the basis of seg-
ment profit before financial result and the average
amount of capital employed in segment operations. The
strategic target for the Automotive segment's RoCE is
26%.
Automotive segment
are measured on the basis of total return or the return on
equity capital, namely the return on capital employed
(ROCE) for the Automotive and Motorcycles segments
and the return on equity (ROE) for the Financial Ser-
vices segment. As an overall reflection of profitability
(return on sales), capital efficiency (capital turnover)
and other factors, these key performance indicators
provide a cohesive insight into segment performance
and changes in the value of the business.
Management of operating performance at segment level
Operating performance at segment level is managed in
its most aggregated form on the basis of capital rates of
return. Depending on the business model, the segments
In the case of project-related decisions, the system
incorporates a project-oriented control logic focused on
value-based and return-based performance indicators,
which provide a crucial basis for decision-making.
Relevant value drivers which could have a significant
impact on profitability and the value of the business are
defined for each controlling level. The financial and
non-financial value drivers referred to above are reflected
in the key performance indicators used to manage the
business.
Due to the extremely high aggregate impact of vari-
ous factors, it is difficult to manage a business pro-
actively simply by focusing on value added. This
key indicator therefore only serves for intermediate
reporting purposes.
of capital rate
Average weighted cost
Capital employed
Opportunities
Cost of capital
Revenues
Expenses
Profit
Return on sales
and foremost at segment level. In order to manage long-
term performance and assess strategic issues, addi-
tional key performance figures are taken into account at
Group level for controlling purposes. In this context,
the contribution made to business value growth during
the financial year is measured in terms of "value added".
This approach is translated for operational purposes
at both Group and segment level by means of key finan-
cial and non-financial performance indicators ("value
drivers”). The link between value added and the rele‐
vant value drivers is shown in a simplified form in the
following diagram.
Return on capital
(ROCE/ROE)
Value added
Operating performance, for instance, is managed first
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Management System Relevant for the
Financial Reporting Process
81 Internal Control System and Risk
68 Report on Risks and Opportunities
Capital turnover
BMW motorcycles are manufactured primarily at the
BMW Group plant in Berlin. Car brake discs are also pro-
duced at this location. Two further motorcycle produc-
tion plants are located in Manaus (Brazil) and Rayong
(Thailand).
Reporting Period
The Rolls-Royce Phantom, Ghost, Wraith and - since the
end of 2015 - the Dawn Convertible models are manu-
factured exclusively at the Goodwood plant (United
Kingdom).
23 General and Sector-specific
Environment
23 Report on Economic Position
20 Management System
18-Business Model
18-General Information on the BMW Group General information on the BMW Group
This Combined Management Report incorporates the
management reports of Bayerische Motoren Werke
Aktiengesellschaft (BMW AG) and the BMW Group.
18-COMBINED MANAGEMENT REPORT
General Information on the BMW Group
Business Model
COMBINED MANAGEMENT REPORT
18
Harald Krüger
H. 35″
27 Overall Assessment by Management
27 Financial and Non-financial
Yours
We are looking ahead - to the next 100 years of the BMW Group At the BMW Group, we regard every
day as a new opportunity to challenge ourselves and to excel. At our official centenary ceremony on 7 March
2016, we deliberately chose to look forward to the future: how will people move about 30 years from now?
Obviously, no one can predict precisely how our mobility behavior is going to develop. However, those who
do not try to imagine the future will simply not have one. We are presenting our ideas for mobility of the
future with our vision vehicle, the BMW VISION NEXT 100.
Our highly motivated associates are our number one success factor Individual mobility satisfies a fundamen-
tal human need and will remain a strong trend. To ensure our further growth, we need capable and motivated
people as well as new ideas and skills. In 2015, the BMW Group recruited more than 5,900 new associates.
At the end of last year, 4,700 young people were in vocational training with the BMW Group, more than ever
before. On behalf of the Board of Management, I would like to thank all of our 122,244 associates for their
accomplishments in the business year 2015. I would also like to thank our business partners and our suppliers
as well as the entire dealership organisation. We can only deliver on our premium claim thanks to the close
and trustful cooperation with our partners and dealers.
Strategic acquisition of the map service HERE Highly and fully automated driving is based on high-accuracy
maps. Together with partners, we acquired the map service HERE in 2015 to safeguard our access to cloud-
based real-time maps and location-based services. We want HERE to become an independent platform for
the automotive industry and remain accessible beyond that. The combination of high-accuracy maps and
data from the vehicle's environment makes driving safer and more comfortable for everyone. Already today,
HERE provides maps and location-based data for almost 200 countries in over 50 languages.
Connectivity is one of the major trends in our industry. Vehicles, their drivers and their environment will
be even more closely connected in the future. The next logical step is highly and then fully automated driving.
Once again, we see ourselves here as both a driver and an innovator. The new BMW 7 Series is the first series
vehicle that offers fully automated parking. Many things are technologically feasible today. However, beyond
the technical dimension we also require fundamental legal and transport-related policy decisions that will
clearly define the rights and obligations of an extended mobile value chain. The BMW Group takes a clear
position: we want to assist drivers in certain situations. We also want to improve people's safety. And by
protecting their data, we protect their privacy as well.
which can be integrated into our customers' digital lifestyle via a cloud-based set-up and various mobile end
devices. The vehicle provides the personalised digital assistant BMW Connected that makes it possible, among
other things, to control smart-home functions. The BMW Group is the first car company to offer such a com-
prehensive digital service package.
17 STATEMENT OF THE CHAIRMAN OF THE BOARD OF MANAGEMENT
At the 2015 Consumer Electronics Show (CES) in Las Vegas we presented our self-driving BMW i3, which is
able to avoid obstacles and park itself. At the CES 2016, we showcased the BMW i8 Vision Future Interaction,
Highly automated driving is becoming a part of the intelligent car of the future With BMW ConnectedDrive,
the BMW Group has been in a leading position when it comes to driver assistance systems for the past two
decades. These systems improve safety and comfort for our customers.
Our business model will continue to focus on individual mobility in the premium segment – combined
with attractive mobility services. The customer is at the heart of everything we do. We are setting out long-
term targets that will guide us up to 2020 and are gradually implementing the related action plan.
Long-term growth targets up to 2020 In the light of these developments, we have revised and updated our
strategy for the future. We are operating from a solid basis: the BMW Group successfully combines financial
strength, innovation and profitability with further growth, and we intend to pursue this path further with
Strategy NUMBER ONE>NEXT.
Realignment of the company with Strategy NUMBER ONE>NEXT Our Strategy Number ONE has been
the guideline for our actions since autumn 2007. Since the global economic and financial crisis, the company
has developed successfully. At the same time, our environment has changed at a rapid pace. Digitalisation,
in particular, has brought about new technological opportunities for the automobile industry, ranging from
automated driving to connectivity in production.
A broad range of innovative, efficient drivetrains plays a crucial role in adhering to the increasingly strin-
gent requirements for the reduction of emissions. BMW's first plug-in hybrid series model has already been
released: the X5 xDrive40e. As of July 2016, all BMW plug-in hybrid models will be offered under the label of
"iPerformance" - from the BMW 2 Series Active Tourer to the BMW 7 Series. Furthermore, our iPerformance
customers will benefit from a 360° Electric offer, including a wall-mounted charging box and more.
Dear Shareholders Due to its financial strength and the long-term focus of its Strategy NUMBER ONE>NEXT,
the BMW Group will continue to be an attractive investment. We want our shareholders to continue to par-
ticipate in our success. For the financial year 2015, the Board of Management and the Supervisory Board will
propose to the Annual General Meeting to make our anniversary year 2016 the first time in the company's
history to pay dividends totalling over two billion euros. I would like to thank all our shareholders for their vote
of confidence and hope that you will continue to accompany us on our journey into the future.
Performance Indicators
Chairman of the Board of Management
49 Results of Operations, Financial
MINI 3- and 5-door models and the MINI Clubman are
currently manufactured at the site in Oxford (United
Kingdom). The UK production triangle also includes the
components plant in Swindon and the engine plant at
Hams Hall, where petrol engines are manufactured for
MINI and BMW. In Graz (Austria), Magna Steyr Fahr-
zeugtechnik manufactures the MINI Countryman and,
since 2012, the MINI Paceman for the BMW Group.
The Dutch car manufacturer, VDL Nedcar bv (Born),
has been producing the MINI 3-door since 2014 and
the MINI Convertible since 2015 on behalf of the BMW
Group.
29 Review of Operations
in Shenyang (China), which supplies petrol engines to
its neighbouring plants.
19 COMBINED MANAGEMENT REPORT
A variety of components that supply the Group's world-
wide production network are manufactured at the
plants in Landshut and Wackersdorf. The Eisenach site
makes special-purpose metalworking tools for the pro-
duction network. The manufacturing sites in Moses Lake
(USA) and Wackersdorf - both part of the SGL Auto-
motive Carbon Fibers (ACF) joint operations - supply
carbon fibre and carbon fibre fabrics for the production
of BMW i models and the new BMW 7 Series. The BMW
Group's largest engine manufacturing plant in Steyr
(Austria) makes both petrol and diesel engines for the
various BMW and MINI plants. In 2016, the joint venture
BMW Brilliance Automotive Ltd. opened an engine plant
BMW 3 Series and 4 Series models as well as petrol and
diesel engines are manufactured at the BMW Group
plant in Munich. BMW 1, 3 and 4 Series models as well
as the 2 Series Gran Tourer, the Z4 Roadster and the X1
are produced at the Regensburg plant. The BMW 3 Series
Gran Turismo, the BMW 4 Series Gran Coupé, models
of the BMW 5, 6 and 7 Series and also hybrid BMW 5 and
7 Series vehicles are manufactured at the BMW Group
plant in Dingolfing. Chassis and drive components are
also produced at this plant. Models of the BMW 1 and
2 Series as well as the electrically powered BMW i3 and
the BMW i8 hybrid sports car are manufactured at the
Group's Leipzig site. The BMW 3 Series Sedan is assem-
bled at the plant in Rosslyn (South Africa). The BMW X3,
X4, X5 and X6 models are all manufactured at the Group's
plant in Spartanburg (USA). The BMW X1 and various
models of the BMW 3 and 5 Series are built exclusively
for the Chinese market at the two plants operated by
the BMW Brilliance Automotive Ltd. joint venture in
Shenyang (China). Various models are also produced at
the BMW Group plants in Chennai (India) and Rayong
(Thailand). Production at the BMW Group's newest plant
in Araquari (Brazil) currently includes the BMW 3 Series
Sedan, the 1 Series 5-door model, the X3 and the X1 as
well as the MINI Countryman.
The BMW Group operates on a global scale and is repre-
sented in more than 150 countries worldwide. Its research
and innovation network spans 13 locations in five
countries. At 31 December 2015, the Group's production
network comprised a total of 30 locations in 14 countries.
Striving for ecological and social sustainability along the
entire value-added chain, taking full responsibility for
products and giving an unequivocal commitment to pre-
serving resources are prime objectives firmly embedded
in the BMW Group's corporate strategy. As a result of
these endeavours, the BMW Group has ranked among
the most sustainable companies in the automotive in-
dustry for many years.
Long-term thinking and responsible action have long
been the cornerstones of the BMW Group's success.
The BMW Group is one of the most successful makers of
cars and motorcycles worldwide and among the largest
industrial companies in Germany. With BMW, MINI
and Rolls-Royce, the BMW Group owns three of the
strongest premium brands in the automotive industry.
The vehicles manufactured by the BMW Group set ex-
ceptionally high standards in terms of aesthetics, dynam-
ics, technology and quality and are the culmination of
concerted expertise in engineering and innovation. In
addition to its strong position in the motorcycles market,
the BMW Group also offers its customers a successful
range of financial services. In recent years, it has also
established itself as a leading provider of premium ser-
vices for individual mobility. At the end of the reporting
period, the BMW Group employed a workforce of
122,244 people worldwide.
Bayerische Motoren Werke G. m. b. H. came into being
in 1917. Having been originally founded in 1916 as
Bayerische Flugzeugwerke AG (BFW), it finally became
Bayerische Motoren Werke Aktiengesellschaft (BMW AG)
in 1918. The BMW Group comprises BMW AG itself
and all subsidiaries over which BMW AG has either direct
or indirect control. BMW AG is also responsible for
managing the BMW Group as a whole. General condi-
tions on the world's automobile and motorcycle markets
(such as the competitive situation, government policies,
statutory regulations), underlying trends within society
as well as changes in raw materials prices, exchange
rates and interest rates are some of the major external
factors that exert influence on business performance.
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
68 Report on Risks and Opportunities
81 Internal Control System and Risk
The primary function of the BMW Group's partner plants
is to serve nearby regional markets. BMW and MINI cars
are currently also produced in Jakarta (Indonesia), Cairo
(Egypt), Kaliningrad (Russia) and Kulim (Malaysia).
of BMW AG
63 Outlook
Opportunities
63 Report on Outlook, Risks and
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
based in Munich, Germany, is the parent company of
59 Comments on Financial Statements the BMW Group. The primary business objective of the
BMW Group is the development, manufacture and sale
of engines as well as all vehicles equipped with those
engines. The BMW Group is subdivided into the Auto-
motive, Motorcycles, Financial Services and Other Enti-
ties segments (the latter primarily comprising holding
companies and Group financing companies).
Business model
General information on the BMW Group is provided be-
low. There have been no significant changes compared
to the previous year.
Reporting Period
62 Events after the End of the
Position and Net Assets
171 Members of the Supervisory
Board
174 Work Procedures of the
Board of Management
176 Work Procedures of the
Supervisory Board
181 Disclosures pursuant to the Act
on Equal Gender Participation
182 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
188-Compensation Report
2. Supervisory Board compensation
Responsibilities, regulations pursuant to the Articles of
Incorporation
The compensation of the Supervisory Board is specified
either by a resolution of the shareholders at the Annual
General Meeting or in the Articles of Incorporation. The
compensation regulation valid for the financial year un-
der report was resolved by shareholders at the Annual
General Meeting on 14 May 2013 and is set out in Arti-
cle 15 of BMW AG's Articles of Incorporation, which can
be viewed and/or downloaded at www.bmwgroup.com/ir
under the menu items "Facts about the BMW Group"
and "Corporate Governance".
Accordingly, the Articles of Incorporation of BMW AG stip-
ulate that the Chairman of the Supervisory Board shall
receive three times the amount and each Deputy Chair-
man shall receive twice the amount of the remuneration
of a Supervisory Board member. Provided the relevant
committee convened for meetings on at least three days
during the financial year, each chairman of the Super-
visory Board's committees receives twice the amount and
each member of a committee receives one-and-a-half times
the amount of the remuneration of a Supervisory Board
member. If a member of the Supervisory Board exercises
more than one of the functions referred to above, the
compensation is measured only on the basis of the func-
tion that is remunerated with the highest amount.
These two interacting components are intended to ensure
that the compensation of Supervisory Board members
is commensurate overall in relation to the tasks performed
and the Company's financial condition and also takes
account of business performance over several years.
In accordance with the Articles of Incorporation, each
member of BMW AG's Supervisory Board receives, in ad-
dition to the reimbursement of reasonable expenses, a
fixed amount of €70,000 (payable at the end of the year)
as well as a corporate performance-related compensation
of €170 for each full €0.01 by which the average amount
of (undiluted) earnings per share (EPS) of common stock
reported in the Group Financial Statements for the re-
muneration year and the two preceding financial years
exceeds a minimum amount of €2.00 (payable after the
Annual General Meeting held in the following year). An
upper limit corresponding to twice the amount of the
fixed compensation (€140,000) is in place for the corpo-
rate performance-related compensation.
170 Members of the Board of
Management
With this combination of fixed compensation elements
and a corporate performance-related compensation
component oriented toward sustainable growth, the
compensation structure in place for BMW AG's Supervi-
sory Board complies with the recommendation on su-
pervisory board compensation contained in section
5.4.6 paragraph 2 sentence 2 of the German Corporate
Governance Code (version dated 5 May 2015).
The German Corporate Governance Code also recom-
mends in section 5.4.6 paragraph 1 sentence 2 that the
exercising of chair and deputy chair positions in the
Supervisory Board as well as the chair and membership
of committees should also be considered when deter-
mining the level of compensation.
Compensation principles, compensation components
The Supervisory Board of BMW AG receives a fixed
compensation component as well as a corporate perfor-
mance-related compensation component, which is ori-
ented toward sustainable growth and based on a multi-
year assessment. The corporate performance-related
component is based on average earnings per share of
common stock for the remuneration
year and the two
preceding financial years.
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
5 Service cost differs due to the different valuation bases used to measure pension obligations for HGB purposes (expected settlement amount) and for IFRS purposes
(present value of the defined benefit obligation).
168-STATEMENT ON
194
6 Based on a legal right to receive the benefits already promised to them, Board of Management members appointed for the first time prior to 1 January 2010 were given the option
of choosing between the previous defined benefit model and the new defined contribution model.
354,143
(281,278)
4 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2014.
3 Member of the Board of Management since 13.05.2015.
2 Member of the Board of Management until 13.05.2015.
-715,679
(717,656)
1 Provisional number or provisional monetary value calculated on the basis of the closing price of BMW common stock in the Xetra trading system on 30 December 2015 (€97.63)
(fair value at reporting date).
8,232,832
(7,346,081)
8,232,832
(9,600,845)
22,343,033
(25,028,384)
Norbert Reithofer²
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
In addition, each member of the Supervisory Board re-
ceives an attendance fee of €2,000 for each full meeting
of the Supervisory Board (Plenum) that the member has
attended (payable at the end of the financial year). At-
tendance at more than one meeting on the same day is
not remunerated separately.
Attendance fee
Supervisory Board reasonable expenses and any value-
Norbert Reithofer (Chairman)¹
-Total
Variable
compensation
23,198,892
(31,334,919)
-134,055
compensation
Fixed
in €
Compensation of the individual members of the Supervisory Board for the financial year 2015 (2014)
195 STATEMENT ON CORPORATE GOVERNANCE
Supervisory Board members did not receive any further
compensation or benefits from the BMW Group for ad-
visory and/or agency services personally rendered.
41.7
58.3
100.0
2.8
4.8
100.0
The Company also reimburses to each member of the
5.1
3.1
2.0
39.2
2.0
Fixed compensation
Variable compensation
Total compensation
in %
Amount Proportion - Amount Proportion
in %
2014
2015-
in € million
In accordance with Article 15 of the Articles of Incor-
poration, the compensation of the Supervisory Board for
activities during the financial year 2015 amounted to €5.1
million (2014: €4.8 million). This amount includes fixed
compensation of €2.0 million (2014: €2.0 million) and
variable compensation of €3.1 million (2014: €2.8 million).
Compensation of the Supervisory Board for the financial year
2015 (total)
In order to be able to perform his duties, the Chairman
of the Supervisory Board is provided with secretariat
and chauffeur services.
added tax arising on the member's remuneration. The
amounts disclosed below are net amounts.
60.8
2,888,441
(3,054,178)
3,993,819
(3,927,671)
Total4
Klaus Fröhlich
(4,633,694)
(5,599,794)
(409,663)
5,163,692
-5,465,539
-408,960
(177,335)
- 201,018
Friedrich Eichiner
(4,485,792)
(5,359,750)
(409,663)
(147,483)
350,000
5,011,606
- 408,960
-184,066
Klaus Draeger
(989,277)
(990,507)
(368,968)
(366,848)
-1,427,072
-1,427,599
-364,656
360,767
Milagros Caiña Carreiro-Andree
3,992,702
(3,204,346)
-8,000
-5,251,799
2,301,249
(1,922,497)
350,000
-1,510,706
(-)
(-)
(-)
(-)
-1,187,721
-1,188,313
(687,570)
(688,271)
(371,398)
-221,667
221,667
Oliver Zipse³
(369,234)
1,081,155
1,081,408
-1,510,725
- 364,312
Peter Schwarzenbauer
(2,395,377)
(3,029,448)
(414,827)
(356,067)
-2,968,379
- 3,279,690
-411,555
448,139
lan Robertson
(1,286,247)
(2,138,633)
(2,747)
(3,643)
-360,305
-223,986
-70,000
(-)
(70,000)
-196,960
-116,960
10,000
-70,000
Renate Köcher
(185,910)
(105,910)
(10,000)
(70,000)
-196,960
-116,960
-10,000
-70,000
(10,000)
Susanne Klatten
(105,910)
(10,000)
(70,000)
-196,960
-116,960
-10,000
-70,000
Henning Kagermann
(183,910)
(105,910)
(8,000)
(70,000)
196,960
-116,960
(185,910)
-10,000
(105,910)
Ulrich Kranz
(359,256)
-116,960
-10,000
Willibald Löw³
(185,910)
(105,910)
(10,000)
(70,000)
194,960
-116,960
-8,000
-70,000
Horst Lischka³
(183,910)
(185,910)
(105,910)
(70,000)
196,960
-116,960
-10,000
-70,000
Robert W. Lane
(119,329)
(67,028)
(8,000)
(44,301)
-196,960
-116,960
10,000
-70,000
(8,000)
366,041
-70,000
(185,910)
Stefan Schmid (Deputy Chairman)³
(361,820)
(211,820)
(10,000)
(140,000)
-383,920
-233,920
-10,000
-140,000
Stefan Quandt (Deputy Chairman).
(361,820)
(211,820)
(10,000)
(140,000)
-140,000
383,920
-10,000
-140,000
Manfred Schoch (Deputy Chairman)³
(537,730)
(317,730)
206,376
-127,855
-2,000
(10,000)
(210,000)
-76,521
Joachim Milberg (Chairman)² -
(-)
(-)
(-)
233,920
Reinhard Hüttl
-10,000
383,920
(105,910)
(10,000)
(70,000)
-196,960
-116,960
-10,000
-70,000
Franz Haniel
(119,329)
(67,028)
(8,000)
(44,301)
196,960
-116,960
233,920
10,000
Christiane Benner³
(357,820)
(211,820)
(6,000)
(140,000)
377,920
-233,920
4,000
-140,000
Karl-Ludwig Kley (Deputy Chairman)
(361,820)
(211,820)
(10,000)
(140,000)
-70,000
(220,609)
-5,329
-175,287
3,958,305
-4,047,547
(7,093,952)
(7,245,159)
(151,207)
89,242
-1,014
3,058,588
-899,717
-825,000 -74,717
Milagros Caiña
Carreiro-Andree
(1,810)
(5,563,800)
(1,530,152)
(30,152)
(1,500,000)
2,505,052
(4,163,621)
- 6,088,892
-6,218,971
(4,251,756)
2,505,052
-130,079
(88,135)
-1,478
(1,055)
- 4,786,438
(3,245,550)
-1,940,9814
1,302,454
(918,071)
- 564,071
11,652
552,419
Norbert Reithofer³
21,809
(18,071)
(900,000)
176 Work Procedures of the
Supervisory Board
Klaus Draeger
Friedrich Eichiner
(750,000) (68,555)
900,000 -24,797
(900,000) (24,790)
900,000
(818,555)
-71,792
-750,000
Klaus Fröhlich
-4,313,952 -4,217,845
(4,262,153) (4,167,502)
96,107
(94,651)
(1,133)
(3,245,550)
(921,952)
(21,952)
(900,000)
-1,092
- 3,293,863
(4,170,340)
(4,264,991)
174 Work Procedures of the
Board of Management
(94,651)
(3,245,550)
(924,790)
923,982
-23,982
4,218,660
-4,314,767
96,107
-1,092
- 3,293,863
-924,797
(3,600,455)
(3,681,572)
(81,117)
(971)
(2,781,900)
(1,133)
171 Members of the Supervisory
Board
170 Members of the Board of
Management
169 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§161 AktG
21.8
-7.7
-21.7
-7.7
Fixed compensation
Variable cash
in %
- Amount Proportion - Amount Proportion
in %
2014
2015
in € million
The total compensation of the current members of the
Board of Management of BMW AG for the financial
2015 amounted to €35.5 million (2014: €35.4 million),
of which €7.7 million (2014: €7.7 million) relates to fixed
components (including other remuneration). Variable
components amounted to €27.1 million (2014: €27.0 mil-
lion) and the share-based remuneration component to
€0.7 million (2014: €0.7 million).
year
Total compensation of the Board of Management for the
financial year 2015 (2014)
The Supervisory Board has stipulated caps for all variable
remuneration components and for the remuneration of
Board of Management members in total. The caps are
shown in the table "Overview of compensation system
and compensation components".
compensation
Remuneration caps
ing on the level of his own performance-related remu-
neration. Other entitlements resulting from the service
contract were settled subsequent to Dr Reithofer leaving
the Board of Management, in line with agreed terms, by
a payment of €2.5 million in 2015. The Company made
a final pension contribution of €0.7 million on behalf of
Dr Reithofer for the financial
year 2015.
192
In conjunction with the amicable early termination
of Dr Reithofer's Board of Management mandate with
effect from the end of the Annual General Meeting
2015, the Company also reached an agreement with
Dr Reithofer concerning the early termination of his
service contract with effect from the end of the Annual
General Meeting 2015. The contract termination agree-
ment envisages the calculation of variable cash remu-
neration for prorated activities in the financial year 2015
based on target attainment for the financial year 2013.
This arrangement ensures that, having been elected to
the Supervisory Board, he will not be involved in decid-
Termination benefits on premature termination of board
activities, benefits paid by third parties
Board of Management members who retire immediately
after their service on the board and who draw a retire-
ment pension are entitled to purchase vehicles and
other BMW Group services at conditions that also apply
in each relevant case for pensioners and to lease BMW
Group vehicles in accordance with the guidelines appli-
cable to senior heads of departments. Retired Chairmen
of the Board of Management are entitled to use a BMW
Group vehicle as a Company car on a similar basis to
senior heads of departments, and depending on availa-
bility and against payment, use BMW chauffeur services.
Income earned on an employed or a self-employed basis
up to the age of 63 may be offset against pension entitle-
ments. In addition, certain circumstances have been
specified, in the event of which the Company no longer
has any obligation to pay benefits. In such cases, no
transitional payments will be made.
Contributions falling due under the defined contribution
model are paid into an external fund in conjunction
with a trust model that is also used to fund pension ob-
ligations to employees.
Depending on the length of membership in the Board
of Management and the board member's previous ac-
tivities, the annual contribution to be paid amounts
to between €350,000 and €400,000 for a member of
the Board of Management and between €500,000 and
€700,000 for its Chairman. The guaranteed minimum
rate of return p.a. corresponds to the maximum interest
rate used to calculate insurance reserves for life insur-
ance policies (guaranteed interest on life insurance poli-
cies). When granting pension entitlements, the Super-
visory Board considers the targeted level of pension
provision in each case as well as the resulting expense
for the BMW Group.
If a member of the Board of Management with a vested
entitlement dies prior to the commencement of benefit
payments, a surviving spouse or otherwise surviving
children - in the latter case depending on their age and
education - are entitled to receive benefits as surviving
dependants. In case of invalidity or death, a minimum
benefit based on the potential annual contributions (up
to a maximum of 10) will be paid until the person con-
cerned would have reached the age of 60. In addition,
following the death of a retired board member who has
elected to receive a lifelong pension, 60% of that amount
is paid as a lifelong widow's pension. Pensions are in-
creased annually by at least 1%.
The amount of the benefits to be paid is determined
on the basis of the amount accrued in each board mem-
ber's individual pension savings account. The amount
on this account arises from annual contributions paid
in, plus interest earned depending on the type of
investment.
If a mandate is terminated, the new defined contribution
system provides entitlements which can be paid either
(a) in case of death or invalidity as a one-off amount, in
instalments, or (b) upon retirement – depending on the
wish of the ex-board member concerned - optionally
in the form of a lifelong monthly pension, as a one-off
amount, or in instalments, or in a combined form (e.g.
a combination of a one-off payment and a proportion-
ately reduced lifelong monthly pension). Former mem-
bers of the Board of Management are entitled to receive
the retirement benefit at the earliest upon reaching the
age of 60, or in the case of entitlements awarded after
1 January 2012, upon reaching the age of 62.
-196,960
benefits in accordance with the rules of an older (de-
fined benefit) pension plan. Under the defined benefit
plan, the entitlement to retirement benefits arises at the
earliest on reaching the age of 60 or in case of invalidity.
The amount of the pension comprises a basic monthly
amount of €10,000 plus a fixed amount. The fixed amount
is made up of approximately €75 for each year of ser-
vice in the Company before becoming a member of the
Board of Management and between €400 and €600 for
each full year of service on the board (up to a maximum
of 15 years). Pension payments are adjusted based on
the rules applicable for the adjustment of civil servants'
pensions, i.e. the pensions of members of the Board of
Management are adjusted when the civil servants re-
muneration level B6 (excluding allowances) is increased
by more than 5% or in accordance with the Company
Pension Act.
191 STATEMENT ON CORPORATE GOVERNANCE
No commitments or agreements exist to pay compensa-
tion if a board member's mandate is terminated early in
the event of a change of control or a takeover offer. No
members of the Board of Management received any pay-
ments or benefits from third parties in 2015 on account
of their activities as members of the Board of Manage-
ment of BMW AG.
-821,792
27.1
27.0
168 Information on the Company's
Governing Constitution
CORPORATE GOVERNANCE
(Part of Management Report)
168-STATEMENT ON
-1,280,645
Harald Krüger
allocated in
financial year
Total
Total
of benefits
- Total value
Com-
pensation
Variable
cash com-
pensation
component
(matching component)]
Number Monetary
value
Share-based compensation
-76.3
Compensation of the individual members of the Board of Management for the financial year 2015 (2014)
Basic
compen-
sation
Fixed compensation
in € or
number of
matching shares
Matching component; provisional number or provisional monetary value calculated at
grant date (date on which the entitlement became binding in law). The final number
of matching shares is determined in each case when the requirement to invest in
BMW AG common stock has been fulfilled.
100.0
35.4
100.0
35.5
-1.9
-0.7
2.0
-0.7
Share-based compen-
sation component
Total compensation
-76.3
Other
compen-
sation
-2,823,290
871
-76,657
-133,415
Friedrich Eichiner
(407,415)
(191,814)
- 497,690
90,275
Klaus Draeger
(159,210)
(103,493)
268,970
-109,760
Milagros Caiña Carreiro-Andree
(411,815)
(191,845)
497,259
690,016
(202,917)
- 369,498
-166,581
(94,542)
Provision at
31.12.2015 in
accordance with
HGB and IFRS¹
IFRS
in accordance
with HGB and
Expense in 2015
Norbert Reithofer²
Harald Krüger
in €.
Share-based compensation component of the individual
members of the Board of Management for the financial year
2015 (2014)
Pension obligations to former members of the Board of
Management, including Dr Reithofer, and their surviv-
ing dependants are fully covered by pension provisions
amounting to €71.8 million (2014: €68.4 million), com-
puted in accordance with IAS 19.
Total benefits paid to former members of the Board
of Management and their surviving dependants for the
financial year 2015 amounted to €8.0 million (2014:
€5.8 million). This amount includes the above-men-
tioned settlement of €2.5 million paid to Dr Reithofer.
In addition, an expense of €2.6 million (2014: €2.1 mil-
lion) was recognised in the financial year 2015 for
current members of the Board of Management for the
period after the end of their service relationship,
which relates to the expense for allocations to pension
provisions.
278,201
193 STATEMENT ON CORPORATE GOVERNANCE
(181,389)
Klaus Fröhlich
Harald Krüger
in accordance with HGB6
Present value of
pension obligations
(defined benefit plans),
Present value of
pension obligations
(defined benefit plans),
in accordance with IFRS6
in accordance with IFRS
for the financial year 20155 for the financial year 20155
in accordance with HGB
Service cost
Service cost
in €
Pension benefits of the individual members of the Board of Management
2,959,655
(1,253,625)
1,106,057
(1,012,523)
Total4
(-)
(363,844)
(-)
9,915
Oliver Zipse³
(41,435)
(31,055)
-100,747
59,311
Peter Schwarzenbauer
(266,831)
(125,621)
491,185
lan Robertson
(130)
34,375
34,245
(130)
9,915
-358,331
6 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2014.
3 Member of the Board of Management until 13.05.2015.
-781,101
(4,159,711)
(4,254,362)
(94,651)
(1,133)
(3,245,550)
4,208,364
(218,765)
3,721,739 - 3,645,082
(223,388)
-4,304,471
96,107
-1,092
- 3,293,863
-914,501
(914,161)
(14,161)
-750,000 31,101
(750,000) (26,481)
475,806
(-)
-2,823,311
184 Compliance in the BMW Group
188-Compensation Report
Governance Practices
182 Information on Corporate
Peter
181 Disclosures pursuant to the Act
on Equal Gender Participation
(900,000)
-14,501
900,000
lan Robertson
(4,623)
(52)
(172,000)
(46,765)
(394)
(46,371)
Schwarzenbauer
Oliver Zipse
4 In line with agreed terms, the variable cash remuneration of Dr Reithofer for the financial year 2015 was calculated based on target attainment for the financial year 2013.
5 Member of the Board of Management since 13.05.2015.
936
(2,781,900)
2 Value of benefits allocated in financial year 2015 for work performed on the Board of Management during the financial year 2015. No share-based remuneration component
(matching component) from previous years fell due for payment in the financial year 2015, since holding period requirements had not yet been fulfilled.
1 Provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is
determined in each case when the requirement to invest in BMW AG common stock has been fulfilled. See note 19 to the Group Financial Statements for a description of the
accounting treatment of the share-based compensation component.
34,757,626
(34,747,022)
(35,437,174)
35,472,904
715,278
(690,152)
(8,258)
8,032
27,105,316
(27,031,160)
(-)
(-)
(-)
(-)
(-)
(776,481)
2,359,616 -2,311,014
-457
-1,791,119
- 519,895
(-)
7,652,310
(7,715,862)
318,440
(225,136)
(7,490,726)
7,333,870
Total6
(-)
44,089
(3,639,498) (3,558,381)
3,604,412
- 3,686,789
82,377
(81,117)
(971)
48,602
(70,000)
-224,354
(105,910)
4,124
3,873
351
413
4,853
-7,383
4,050
4,212
921
289
5,111
-8,018
Gross profit margin Group3
- 23.1
21.8
11.4
-10.5
-18.1
21.1
Revenues
Income Statement
48,999
56,018
-53,197
- 50,681
60,477
68,821
- Business volume (based on balance sheet carrying amounts)² -
Contract portfolio
-10.7
- 8.0
-0.8
-0.7
-62,416
- 62,009
-67,013
-74,425
49,004
Net profit for the year
Effective tax rate
Income taxes
-Return on sales (earnings before tax/revenues)
Profit before tax
Profit before financial result
-2,874
3,134
330
210
Financial Services
3,243
30.3
-19.1
6.0
49.2
-33.1
33.5
1,250
-739
21
-203
-1,610
2,476
- 8.4
-6.9
-4,907
43,151
44,010
-60,653
1,668,982
-104,286
2006
2007
2008
2009
2010
2011
199 OTHER INFORMATION
6 Proposal by management.
5 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners.
4 Figures are reported in the cash flow statement up to 2006 as cash inflow from operating activities of Industrial Operations.
1 Excluding Husqvarna, sales volume up to 2013: 59,776 units; production up to 2013: 59,426 units.
2 Amount computed on the basis of balance sheet figures: until 2007 from the Group balance sheet, from 2008 onwards from the Financial Services segment balance sheet.
3 Research and development expenses included in cost of sales with the effect from 2008.
207 Contacts
Financial Calendar
206
205 Index of Graphs
204 Index
202 Glossary
200 BMW Group Locations
198-BMW Group Ten-year Comparison
198-OTHER INFORMATION
-1,640
-2.50/2.52
-1,707
2.60/2.62
-1,904
2.90/2.92
2,102
3.20€/3.226
€
€ million
-105,876
89,161
-110,351
89,869
-1,461,166
1,286,310
98,047
-87,306
61,202
66,233
-75,245
2,270,528
2,629,949
3,031,935
3,085,946
3,190,353
3,592,093
Motorcycles
-103,759
104,396
104,220
-82,631
-51,257
99,236
Automobiles
1,366,838
1,541,503
1,439,918
1,258,417
-1,481,253
-1,738,160
Production volume
- Motorcycles¹
Sales volume
Automobiles
-100,064
1,373,970
1,500,678
-102,467
1,435,876
-101,685
-110,360
39,944
- 38,670
- 56,619
32,378
-P
R
-R
R
BMW Group
Locations
200
- Dividend per share of common stock/preferred stock
Dividend total
Dividend
0.70/0.72
1.06/1.08
-0.30/0.32
0.30/0.32
-1.30/1.32
458
694
-197
-197
852
-1,508
2.30/2.32
Personnel cost per employee
-Workforce at year-end 5
-106,575
-76,621
-107,539
-76,704
-100,041
-75,612
-96,230
-72,349
95,453
-83,141
-100,306
84,887
Personnel
198-OTHER INFORMATION
198 BMW Group Ten-year Comparison
200 - BMW Group Locations
202 Glossary
BMW Group ConnectedDrive Lab China, Shanghai,
and BMW Group Designworks Studio Shanghai, China
BMW Group Engineering China, Beijing, China
BMW Group Engineering Japan, Tokyo, Japan
BMW Group Engineering USA, Woodcliff Lake, USA
BMW Technology, Chicago, USA
Oxnard, USA
BMW Group Technology Office USA, Mountain View, USA
BMW Group Engineering and Emission Test Center,
BMW Group Designworks, Newbury Park, USA
BMW Diesel Competence Centre, Steyr, Austria
Germany
BMW Innovation and Technology Centre, Landshut,
BMW Car IT, Munich, Germany
BMW Group Research and Technology, Munich,
Germany
BMW Group Research and Innovation Centre (FIZ),
Munich, Germany
-S
Research and Development
-R
Headquarters
Capital expenditure ratio (capital expenditure/revenues)
-H
-S
-S
S
-A
-R
-S.
S
-R
S
207 Contacts
Financial Calendar
206
205 Index of Graphs
204 Index
The BMW Group is present in the world markets with
30 production and assembly plants, 42 sales subsidiaries
and a research and development network.
- Capital expenditure
Operating cash flow Automotive segment4
Cash and cash equivalents at balance sheet date
-101,086
-101,953
110,164
-123,429
28,555
33,784
39,287
- 36,919
40,134
47,213
31,372
33,469
41,526
-45,119
88,997
46,100
24.2
-24.4
20.1
-19.5
-21.7
22.0
-19,130
-21,744
- 20,273
-19,915
23,930
27,103
-28,543
50,514
49,113
-116,324
92,337
-79,057
-7,432
Cash Flow Statement
- Current provisions and liabilities
Balance sheet total
- Non-current provisions and liabilities
Equity ratio Group
-Equity
Current assets
Non-current assets
Balance Sheet
8.8
-7.6
-7.9
6.8
5.4
5.4
-7,776
- 4,313
4,204
(10,000)
3,263
3,692
5,373
6,246
4,471
-4,921
8,149
8,110
-1,336
2,393
-7,454
-7,767
4,267
122,244
-97,136
3,471
Dividend total
Dr. Ian Robertson (HonDSc)
Klaus Fröhlich
Dr. Friedrich Eichiner
Dr.-Ing. Klaus Draeger
Milagros Caiña Carreiro-Andree
Harald Krüger
The Board of Management
Aktiengesellschaft
Bayerische Motoren Werke
Munich, 18 February 2016
"To the best of our knowledge, and in accordance with
the applicable reporting principles, the Consolidated
Financial Statements give a true and fair view of the
assets, liabilities, financial position and profit of the
Group, and the Group Management Report includes
a fair review of the development and performance of
the business and the position of the Group, together
with a description of the principal opportunities and
risks associated with the expected development of the
Group."
Statement pursuant to § 37y No. 1 of the Securities
Trading Act (WPHG) in conjunction with § 297 (2)
sentence 4 and § 315 (1) sentence 6 of the German
Commercial Code (HGB)
Responsibility Statement by the Company's Legal Representatives
196
184 Compliance in the BMW Group
188 Compensation Report
182 Information on Corporate
Governance Practices
181 Disclosures pursuant to the Act
on Equal Gender Participation
176 Work Procedures of the
Supervisory Board
174 Work Procedures of the
Board of Management
Board
171 Members of the Supervisory
170 Members of the Board of
Management
Supervisory Board pursuant to
§161 AktG
169 Declaration of the Board of
Management and of the
CORPORATE GOVERNANCE
(Part of Management Report)
168 Information on the Company's
Governing Constitution
168-STATEMENT ON
granted by the Company to members of the Board of
Management and the Supervisory Board, nor were any
contingent liabilities entered into on their behalf.
Apart from vehicle lease contracts entered into on cus-
tomary market conditions, no advances and loans were
3. Other
Peter Schwarzenbauer
Oliver Zipse
197
BMW Group
Auditor's Report
units
units
2012
2013
2014
2015
Income Statement
Business volume (based on balance sheet carrying amounts)² -
Contract portfolio
Financial Services
Motorcycles¹
Automobiles
Production volume
Motorcycles¹
Automobiles
6 Figures for the previous year include the remuneration of members of the Supervisory Board who left office during the financial year 2014.
Sales volume
OTHER INFORMATION
198
Wirtschaftsprüfer
Feege
Wirtschaftsprüfer
Pastor
Wirtschaftsprüfungsgesellschaft
KPMG AG
Munich, 25 February 2016
In our opinion, based on the findings of our audit, the
consolidated financial statements comply with IFRSS,
as adopted by the EU, the additional requirements of
German commercial law pursuant to § 315 a (1) HGB and
give a true and fair view of the net assets, financial
position and results of operations of the Group in ac-
cordance with these requirements. The group manage-
ment report is consistent with the consolidated finan-
cial statements and as a whole provides a suitable
view of the Group's position and suitably presents the
opportunities and risks of future development.
Our audit has not led to any reservations.
the business activities and the economic and legal
environment of the Group and expectations as to possi-
ble misstatements are taken into account in the deter-
mination of audit procedures. The effectiveness of the
accounting-related internal control system and the evi-
dence supporting the disclosures in the consolidated
financial statements and in the group management
report are examined primarily on a test basis within the
framework of the audit. The audit also includes assess-
ing the annual financial statements of those entities
included in consolidation, the determination of entities
to be included in consolidation, the accounting and
consolidation principles used and significant estimates
made by the management, as well as evaluating the
overall presentation of the consolidated financial state-
ments and group management report. We believe that
our audit provides a reasonable basis for our opinion.
We conducted our audit of the consolidated financial
statements in accordance with § 317 HGB and German
generally accepted standards for the audit of financial
statements promulgated by the Institut der Wirtschafts-
prüfer (Institute of Public Auditors in Germany) (IDW).
Those standards require that we plan and perform the
audit such that misstatements materially affecting the
presentation of the net assets, financial position and
results of operations in the consolidated financial state-
ments in accordance with the applicable financial report-
ing framework and in the group management report
are detected with reasonable assurance. Knowledge of
We have audited the consolidated financial statements
prepared by Bayerische Motoren Werke Aktiengesell-
schaft, comprising the income statement for group
and
statement of comprehensive income for group, the
balance sheet for group, cash flow statement for group,
group statement of changes in equity and the notes to
the group financial statements and its report on the
position of the Company and the Group for the business
year from 1 January to 31 December 2015. The prepara-
tion of the consolidated financial statements and group
management report in accordance with IFRSS, as
adopted by the EU, and the additional requirements of
German commercial law pursuant to § 315 a (1) HGB
(Handelsgesetzbuch "German Commercial Code") are
the responsibility of the parent company's management.
Our responsibility is to express an opinion on the con-
solidated financial statements and on the group manage-
ment report based on our audit.
BMW Group Ten-year Comparison
5 Member of the Supervisory Board since 13.05.2015.
4 Member of the Supervisory Board until 13.05.2015.
3 These employee representatives have - in line with the guidelines of the Deutsche Gewerkschaftsbund - requested that their remuneration be paid into the
Hans Böckler Foundation.
-10,000
-70,000
Brigitte Rödig³
(185,910)
(105,910)
(10,000)
(70,000)
-196,960
-116,960
-10,000
-70,000
Dominique Mohabeer³
(-)
(-)
-116,960
(-)
-70,125
(183,910)
-127,347
(185,910)
42,618
(105,910)
-74,662
-8,000
-44,685
Simone Menne5
(8,000)
(70,000)
2,000
25,507
Wolfgang Mayrhuber
Dividend per share of common stock/preferred stock
(-)
-2,247,485
136,963
-196,960
(10,000)
2 Member and Chairman of the Supervisory Board until 13.05.2015.
1 Member and Chairman of the Supervisory Board since 13.05.2015.
(4,764,622)
(2,754,240)
(190,000)
(1,820,382)
5,053,009
3,042,241
190,000
1,820,768
(185,910)
(105,910)
(10,000)
(70,000)
(70,000)
196,960
-10,000
-70,000
Total 6
Werner Zierer³
(185,910)
(10,000)
(70,000)
-194,960
-116,960
8,000
-70,000
Jürgen Wechsler³
(185,910)
(105,910)
-116,960
2,117,965
-123,495
(105,910)
1,845,186
106,358
48,395
-51,134
59,078
65,591
€ million
52,834
51,643
58,288
23.2
25.7
24.2
-24.8
-63,819
€ million
%
30,606
35,600
37,437
-42,764
€ million
50,530
52,184
56,844
61,831
€ million
81,305
86,193
97,959
-110,343
€ million
€ million
172,174
154,803
138,377
Dividend
-1,963,798
-115,215
Personnel cost per employee
Workforce at year-end 5.
Personnel
6.8
8.8
-7.6
6.4
-%
Capital expenditure ratio (capital expenditure/revenues)
5,240
-6,711
6,100
Balance sheet total
5,890
Capital expenditure
9,167
-9,964
9,423
11,836
€ million
Operating cash flow Automotive segment4
-7,671
-7,688
-6,122
€ million
Cash and cash equivalents at balance sheet date
Cash Flow Statement
-131,835
€ million
Current provisions and liabilities
8,370
Equity ratio Group
-8,275
-7,978
9,118
9,593
€ million
-20.2
20.1
21.2
-19.7
%
Profit before tax
Profit before financial result
Gross profit margin Group³
-76,848
€ million
-76,059
€ million
Revenues
- 3,846,364
80,974
4,130,002
-84,347
4,359,572
96,390
-4,718,970
111,191
€ million
contracts
-1,861,826
113,811
2,006,366
-110,127
- 2,165,566
-133,615
Non-current provisions and liabilities
-2,279,503
-151,004
units
units
80,401
9,224
-92,175
-7,893
Current assets
Non-current assets
8,707
Equity
Balance Sheet
5,111
5,817
6,396
€ million
34.5
32.5
33.2
30.7
%
Effective tax rate
Net profit for the year
-2,564
-2,692
%
-10.0
-10.8
Return on sales (earnings before tax/revenues)
-10.4
-7,803
10.2
Income taxes
€ million
2,828
- 2,890
Equity ratio
Effectiveness
Abbreviation for "Earnings Before Interest, Taxes, Depre-
ciation and Amortisation". The profit before income
taxes, minority interest, financial result and depreciation/
amortisation.
Efficient Dynamics
The aim of Efficient Dynamics is to reduce consumption
and emissions whilst simultaneously increasing dynamics
and performance. This involves a holistic approach to
achieving optimum automobile potential, ranging from
efficient engine technologies and lightweight construc-
tion to comprehensive energy and heat
inside the vehicle.
The degree to which offsetting changes in fair value or
cash flows attributable to a hedged risk are achieved by
the hedging instrument.
management
Gross profit as a percentage of revenues.
The indicators for water consumption refer to the pro-
duction sites of the BMW Group. The water consumption
includes the process water input for the production
as well as the general water consumption, e.g. for sani-
tation facilities.
Free cash flow
Free cash flow corresponds to the cash inflow from oper-
ating activities of the Automotive segment less the cash
outflow for investing activities of the Automotive seg-
ment adjusted for net investments in marketable securities
and term deposits.
Gross margin
203 OTHER INFORMATION
Indicator for water consumption
EBITDA
International Financial Reporting Standards, intended
to ensure global comparability of financial reporting
and consistent presentation of financial statements.
The IFRS are issued by the International Accounting
Standards Board and include the International
Accounting Standards (IAS), which are still valid.
IFRS
The proportion of equity (= subscribed capital, reserves,
accumulated other equity and minority interest) to the
balance sheet total.
Abbreviation for “Earnings Before Interest and Taxes”.
The profit before income taxes, minority interest and
financial result.
Connected Drive
Abbreviation for "Dow Jones Sustainability Index World".
A family of indexes created by Dow Jones and the Swiss
investment agency SAM Sustainability Group for com-
panies with strategies based on a sustainability concept.
The BMW Group has been one of the leading companies
in the DJSI since 1999.
Glossary
CFRP
202
Operating cash flow
207 Contacts
Abbreviation for carbon-fibre reinforced polymer. CFRP
is a composite material, consisting of carbon-fibres sur-
rounded by a plastic matrix (resin). On a comparative
basis, CFRP is approximately 50% lighter than steel and
30% lighter than aluminium.
Combined heat and power
Combined heat and power (CHP) or cogeneration is
the simultaneous conversion of energy sources into
electricity and useful heating. In comparison to separate
generation of electricity in conventional power plants,
energy is converted more efficiently and with greater
flexibility. As a result, this technology helps to reduce
CO2 emissions.
Common stock
EBIT
Stock with voting rights (cf. preferred stock).
Cost of materials
Comprises all expenditure to purchase raw materials
and supplies.
DAX
Abbreviation for "Deutscher Aktienindex", the German
Stock Index. The index is based on the weighted market
prices of the 30 largest German stock corporations (by stock
market capitalisation).
Deferred taxes
Accounting for deferred taxes is a method of allocating
tax expense to the appropriate accounting period.
Derivatives
Financial products, whose measurement is derived
principally from market price, market price fluctuations
and expected market price changes of the underlying
instrument (e.g. indices, stocks or bonds).
DJSI World
Under the term Connected Drive, the BMW Group
already unites a unique portfolio of innovative features
that enhance comfort, raise infotainment to new levels
and significantly boost safety in BMW Group vehicles.
Cash inflow from the operating activities of the Auto-
motive segment.
Accounting policies -
Apprentices —44
Stock which receives a higher dividend than common
stock, but without voting rights.
207 Contacts
204
Index
A
Automotive segment
B
101 et seq.
G
Group tangible, intangible and investment
assets -
122 et seq.
- 29 et seq.
|
Income statement
- 49, 59, 90 et
seq.,
113 et seq.
206 Financial Calendar
Income taxes
50, 107, 115 et seq., 142
Balance sheet structure - 56
Financial Calendar
206
205-Index of Graphs
204 - Index
Rating
Standardised evaluation of a company's credit standing
which is widely accepted on the global capital markets.
Ratings are published by independent rating agencies,
e.g. Standard & Poor's or Moody's, based on their analysis
of a company.
Return on sales
Pre-tax: Profit before tax as a percentage of revenues.
Post-tax: Profit as a percentage of revenues.
Risk management
An integral component of all business processes. Following
enactment of the German Law on Control and Trans-
parency within Businesses (KonTraG), all companies
listed on a stock exchange in Germany are required to
set up a risk management system. The purpose of this
system is to identify risks at an early stage which could
have a significant adverse effect on the assets, liabilities,
financial position and results of operations, and which
could endanger the continued existence of the Company.
This applies in particular to transactions involving risk,
errors in accounting or financial reporting and violations
of legal requirements. The Board of Management is
required to set up an appropriate system, to document
that system and monitor it regularly with the aid of the
internal audit department.
Subsidiaries
Subsidiaries are those enterprises which, either directly
or indirectly, are under the uniform control of the
management of BMW AG or in which BMW AG, either
directly or indirectly
-
Preferred stock
holds the majority of the voting rights
has control (directly or indirectly) over another enter-
prise on the basis of a control agreement or a provision
in the statutes of that enterprise.
Supplier relationship management
Supplier relationship management (SRM) uses focused
procurement strategies to organise networked supplier
relationships, optimise processes for supplier qualifica-
tion and selection, ensure the application of uniform
standards throughout the Group and create efficient
sourcing and procurement processes along the whole value
added chain.
Sustainability
Sustainability, or sustainable development, gives equal
consideration to ecological, social and economic develop-
ment. In 1987 the United Nations "World Commission
on Environment and Development" defined sustainable
development as development that meets the needs of
the present without compromising the ability of future
generations to meet their own needs. The economic
relevance of corporate sustainability to the BMW Group
is evident in three areas: resources, reputation and risk.
198-OTHER INFORMATION
198 BMW Group Ten-year Comparison
200 BMW Group Locations
202 Glossary
has the right to appoint or remove the majority of the
members of the Board of Management or equivalent
governing body, and in which BMW AG is at the same
time (directly or indirectly) a shareholder
205 Index of Graphs
BMW Group plant Rayong, Thailand
BMW Group plant Regensburg
202-Glossary
BMW Group plant Landshut
BMW Group plant Leipzig
BMW Group plant Munich
BMW Group plant Oxford, GB
BMW Group plant Rosslyn, South Africa
BMW Group plant Spartanburg, USA
BMW Group plant Steyr, Austria
BMW Group plant Swindon, GB
BMW Group plant Wackersdorf
Rolls-Royce Manufacturing Plant, Goodwood, GB
BMW Brilliance Automotive, China (joint venture - 3 plants)
SGL Automotive Carbon Fibers (joint operation - 2 plants)
-A
Partner plants
-S
Sales subsidiary markets/Locations Financial Services
Partner plant, Born, Netherlands
Partner plant, Cairo, Egypt
Argentina
Australia
BMW Group plant Hams Hall, GB
Ireland
BMW Group plant Chennai, India
BMW Group plant Dingolfing
BMW Group plant Eisenach
Production
-R
Bonds 54, 143 et seq.
-P
S
201 OTHER INFORMATION
S
-S
-A
S-
-P
-S P
-S
-S
=S
-S
-S
S
-S
-P
BMW Group plant Araquari, Brazil
BMW Group plant Berlin
Italy
South Korea
Spain
Partner plant, Graz, Austria
Germany
Great Britain
Greece
Hungary
India
Norway
Poland
Portugal
Romania
Russia
Singapore
Slovakia
Slovenia
Indonesia
South Africa
Sales locations only.
198-OTHER INFORMATION
198 BMW Group Ten-year Comparison
200 BMW Group Locations
France
Finland
Denmark
Partner plant, Manaus, Brazil
Austria
Japan
Sweden
Partner plant, Jakarta, Indonesia
Belgium
Partner plant, Kaliningrad, Russia
Brazil
Luxembourg
Malaysia
Switzerland
204 Index
Thailand
Bulgaria
Malta
USA
Canada
China
Czech Republic
Mexico
Netherlands
New Zealand
Partner plant, Kulim, Malaysia
Capital expenditure - 4, 50 et seq.
Remuneration system-
Intangible assets -55 et seq., 102, 124
Trade receivables - 60 et seq., 131
Trade payables - 146
assets 103, 122 et seq.
Tangible, intangible and investment
T
Sustainability - 45 et seq.
Statement of Comprehensive Income
Stock 87 et seq.
Sales volume 3, 27 et seq., 29, 65 et seq.
Segment information — 163 et seq.
Selling and administrative expenses 113
Shareholdings of members of the Board of
Management and the Supervisory Board - 161
S
Risks report - 68 et seq.
Revenues ― 4 et seq., 27 et seq., 49 et seq., 59, 66 et seq.,
101 et seq., 113
Result from equity accounted investments — 114
Return on sales - 20 et seq., 49 et seq.
Revenue reserves — 132
Report of the Supervisory Board — 6 et seq.
Research and development - 38 et seq.
188 et seq.
Related party relationships 160 et seq.
Value drivers - 20
55, 106, 127 et seq.
5
BMW Group in figures
90, 121
Finances
Exchange rates compared to the euro — 24
Steel price trend - 24
35
Stock
Materiality matrix - 46
Environment
BMW Group apprentices at 31 December
Employee attrition rate at BMW AG - 45
Proportion of non-tariff female employees
Proportion of female executives — 182
Workforce
BMW Group - key automobile markets
BMW Group sales volume by region 29
BMW Group - key motorcycle markets - 35
BMW Group sales volume of motorcycles
29
Production and sales volume
Risk management in the BMW Group - 68
BMW Group value added - 58
Balance sheet structure - Automotive segment — 56
Balance sheet structure - Group - 56
Financial liabilities - 54
Change in cash and cash equivalents — 52
Regional mix of purchase volumes - 41
Development of credit loss ratio - 38
Contract portfolio retail customer financing of
Financial Services segment -37
Contract portfolio of Financial Services segment
BMW Group new vehicles financed by
Financial Services segment - 37
Precious metals price trend — 25
Oil price trend - 24
Receivables from sales financing.
Rating 89, 134
R
New financial reporting rules - 109 et seq.
Net profit 4, 49 et seq.
N
Motorcycles segment - 35 et seq.
Marketable securities 105
Supervisory Board - 171 et seq.
Mandates of members of the
-170
Management
Mandates of members of the Board of
M
Locations 200 et seq.
Leased products — 125
Lease business - 36 et seq.
L
per share -88
Key data
Tel. +49 89 382-0
K
O
Other financial result - 115
Other investments - 126
Other operating income and expenses -
Index of Graphs
205 OTHER INFORMATION
Purchasing- 41
Profit before tax -4 et seq., 27 et seq., 49 et seq., 65, 67
Property, plant and equipment - 103
Profit before financial result - 4 et seq., 49 et seq.
Production network - 31 et seq.
Production - 31 et seq.
65 et seq.
Pension provisions - 56, 60, 107, 134 et seq.
Performance indicators -20 et seq., 27 et seq.,
Personnel expenses 118
44
P
36 et seq.
Financial liabilities -55, 107 et seq., 143
Financial result ― 50 et seq., 60
Financial Services segment
Financial instruments - 105 et seq., 148 et seq.
Financial assets - 55, 106, 128 et seq.
F
—114
Outlook 65 et seq.
-142
Other provisions -
Fleet emissions -3, 27 et seq., 47, 66 et seq.
Cash and cash equivalents -51 et seq., 132
45
Development of BMW stock - 87
Employees ― 44 et seq.
39
Equity- -55 et seq., 132 et seq.
Exchange rates - 23 et seq., 64, 77, 101, 157 et seq.
80788 Munich
Bayerische Motoren Werke
Aktiengesellschaft
PUBLISHED BY
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TOWARDS PRESERVING
RESOURCES
A FURTHER CONTRIBUTION
Further information about the BMW Group is available online at www.bmwgroup.com.
Investor Relations information is available directly at www.bmwgroup.com/ir. Information
about the various BMW Group brands is available at www.bmw.com, www.mini.com
and www.rolls-roycemotorcars.com
Efficient Dynamics -
+49 89 382-1 46 61
ir@bmwgroup.com
Earnings per share - 49, 102, 118
Dow Jones Sustainability Index World - 46
Inventories - 107, 130
Investments accounted for using the equity method
and other investments-125 et seq.
Cash flow 4, 51 et seq., 94 et seq., 159 et seq.
Cash flow statement -51 et seq., 94 et seq., 159 et seq.
CFRP-33 et seq.
CO2 emissions -3, 27 et seq., 47, 66 et seq.
Compensation Report
Compliance 184 et seq.
188 et seq.
Connected Drive - 38, 42, 46, 76
Consolidated companies - 99 et seq.
Consolidation principles - 100 et seq.
Contingent liabilities -147
Corporate Governance 168 et seq.
Cost of materials
Cost of sales
D
- 57
50, 102, 113
Dealer organisation/dealerships — 19, 42
Declaration with respect to the Corporate Governance
Code-169
Dividend 89, 118
E
The BMW Group on the Internet
E-mail
Fax
Annual Accounts Press Conference
Annual Report 2016-
Quarterly Report to 30 September 2016
Quarterly Report to 30 June 2016
Annual Accounts Press Conference
Analyst and Investor Conference
Quarterly Report to 31 March 2016
Annual General Meeting
Financial Calendar
206
207 - Contacts
206 Financial Calendar
205 Index of Graphs
204 Index
202 Glossary
200 BMW Group Locations
198 BMW Group Ten-year Comparison
198-OTHER INFORMATION
This version of the Annual Report is a translation
from the German version. Only the original German
version is binding.
_ 184
BMW Group Compliance Management System
Compliance
Analyst and Investor Conference
Quarterly Report to 31 March 2017
Annual General Meeting
Quarterly Report to 30 June 2017
Quarterly Report to 30 September 2017
16 March 2016
17 March 2016
+49 89 382-2 53 87
+49 89 382-2 42 72
presse@bmwgroup.com
+49 89 382-2 44 18
+49 89 382-2 41 18
+49 89 382-2 45 44
Telephone
Investor Relations
E-mail
36
Fax
Business and Finance Press
Contacts
207 OTHER INFORMATION
7 November 2017
11 May 2017
3 August 2017
4 May 2017
21 March 2017
21 March 2017
22 March 2017
4 November 2016
3 May 2016
12 May 2016
2 August 2016
Telephone
Germany
AS
-R-S
18 General Information on the BMW Group
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
ments are shaped, to a large extent, by life-cycle-driven
project work. Projects have a substantial influence on
future performance. Project decisions are therefore a
crucial component of financial management for the
BMW Group.
Decisions are taken on the basis of project calculations
measured in terms of the cash flows each individual
project is expected to generate. Calculations are made
for the full term of a project, i.e. for all future years in
which the project generates cash flows. Project deci-
sions are taken on the basis of the capital value and in-
ternal rate of return calculated for the project.
The capital value of a project indicates the extent to
which a project will be able to generate a positive contri-
bution to earnings over and above the cost of capital.
A project with a positive capital value enhances value
added and therefore results in an increase in the value
of the business. The internal rate of return of the project
corresponds to the average return on capital employed
in the project and, in terms of scope, is equivalent to
the multi-year average RoCE for an individual project. It
is therefore consistent with one of the key performance
indicators.
The criteria used for taking decisions as well as the
long-term impact on periodic earnings is documented
for all project decisions and incorporated in the long-
term Group forecast. This system enables an analysis of
the periodic reporting impact of project decisions on
earnings and rates of return over the term of each project.
The overall result is a cohesive controlling model.
Reporting Period
23 COMBINED MANAGEMENT REPORT
General and Sector-specific Environment
General economic environment in 2015
The world economy grew at a rate of 3.1% in 2015. The
USA recorded robust growth, while the Chinese govern-
ment's plan to transform the country's economy to a
more stable, sustainable level continued to take effect.
Falling demand in China held down the growth rate, ex-
erting a particularly crippling impact on the economies
of raw material exporting countries such as Brazil and
Russia. Moreover, the prospect of the US Federal Reserve
Bank tightening its monetary policy additionally damp-
ened the outlook for emerging economies. These factors
resulted in further capital outflows, lower investment
and currency devaluation in many developing countries.
Despite signs of a resurgence of Greece's problems, mar-
kets in the eurozone continued to recover.
After some initial doubt regarding the robustness of the
economy, the US Federal Reserve Bank set the expected
interest rate turnaround in motion. The upheavals on
capital markets feared by the financial market only had
a limited impact.
In the eurozone, economic output grew more strongly
than one year earlier, with a gross domestic product
(GDP) increase of 1.5%, helped by the monetary policies
of the European Central Bank (ECB). At 1.7%, Germany
again played an important role in driving the European
economy. France (+1.1%) and Italy (+0.7%) also recorded
higher growth rates for the twelve-month period.
Similarly, the majority of southern Europe's economies
showed a year-on-year improvement. For example,
Spain at 3.2% and Portugal, at 1.5%, both contributed
towards the continued economic recovery of the
eurozone.
At 2.2%, the UK economy grew more slowly than one
year earlier. Nevertheless, as in all years since 2011, the
growth rate was higher than that of the eurozone. The
UK government made good use of the positive economic
environment to reduce the budget deficit to its lowest
level since 2007. Domestic consumer spending again
served as a pillar of the economy.
The cyclical upturn in the USA gained further momen-
tum in 2015. The growth rate stood at 2.4%, marginally
higher than one year earlier. The upward trend of the
US economy, now reaching as far back as 2010, con-
tinues to benefit from robust levels of consumer spending.
The stable economic situation on one hand and the
expected rise in inflation on the other hand prompted
the Federal Reserve Bank to usher in the interest rate
turnaround in December 2015.
The Japanese economy was unable to gain any signifi-
cant momentum in 2015. With GDP growth at only
0.6%, it was the weakest of all the G7 countries. The
Bank of Japan continued its expansionary monetary
policies throughout 2015.
In China, the realigned economic strategy introduced
by the government led to a moderate slowdown in the
pace of economic growth (+6.9%), with the growth
rate falling below the 7% mark for the first time since
1990. Despite the ongoing transformation from an
investment to a consumer-oriented economy and
sharp stock market corrections in both mid-2015 and
early 2016, the Chinese economy has shown itself to
be stable.
Apart from India at 7.4%, the other BRIC states failed to
live up to expectations for growth in 2015. Brazil and
Russia, both of which rely on the export of raw materials,
recorded negative growth of 3.6% and 3.8% respectively.
Neither of these countries was able to find a way out
of the currently difficult situation and remained in re-
cession.
Report on Economic Position
62 Events after the End of the
of BMW AG
59 Comments on Financial Statements Operations in the Automotive and Motorcycles seg-
Earnings amount
2015 ―2014
Cost of capital (EC+ DC)
2015
-2014
Value added Group
2015 - 2014
9,723
9,051
6,040
-5,212
3,683
3,839
22
18-COMBINED MANAGEMENT REPORT
18-General Information on the BMW Group
18 Business Model
20-Management System
23-Report on Economic Position
23-General and Sector-specific
Environment
The cost of capital is the minimum rate of return ex-
pected by capital providers in return for the capital em-
ployed by the Group. Since capital employed com-
prises an equity capital element (e.g. share capital) and
a debt capital element (e.g. bonds), the overall cost of
capital rate is determined on the basis of the weighted
average rates for equity and debt capital, measured
using standard market procedures. The pre-tax average
27 Overall Assessment by Management weighted cost of capital for the BMW Group in 2015
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
was 12%, unchanged from the previous year.
Value management used to control projects
Currency markets
BMW Group
The US dollar averaged an exchange rate of 1.11 to
the euro in 2015 and was therefore significantly stronger
than in the previous year. The different direction in
monetary policy currently being pursued by the Euro-
pean Central Bank and the US Federal Bank (Fed) caused
the US dollar to appreciate in value against the euro
from US$ 1.16 to US$ 1.09 (based on monthly averages)
over the course of the twelve-month period.
As its value is coupled to that of the US dollar, at 6.97,
the Chinese renminbi also gained in value against the
euro compared to the previous year. The upward trend
was temporarily halted when Chinese stock markets
witnessed a turbulent phase, only for some of the lost
ground to be regained by the end of the year.
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Russian Rouble
Japanese Yen
British Pound
Source: Reuters.
12
62 Events after the End of the
The Japanese yen gained moderately in value against
the euro during 2015, primarily due to the expansion
of money supply within the eurozone, and recorded an
annual average exchange rate of 134 yen to the euro.
The euro was stronger in 2015 compared to many of the
emerging market currencies, including those of Russia
and Brazil. Its annual average exchange rate increased by
approximately 19% against the Brazilian real and by as
much as 33% against the Russian rouble.
Energy and raw materials prices
-13
Chinese Renminbi
14
15
was US dollar 54, down 46% on the previous year. WTI,
the benchmark for crude oil in the USA, followed a
similar trend.
Steel price trend
(Index: January 2011 = 100)
130
120
110
US Dollar
of BMW AG
59 Comments on Financial Statements
Renminbi
24
Exchange rates compared to the euro
(Index: December 2010 = 100)
190
175
18-COMBINED MANAGEMENT REPORT
160
18 Business Model
20 Management System
145
23-Report on Economic Position
130
23-General and Sector-specific
Environment
115
27 Overall Assessment by Management
100
27 Financial and Non-financial
Performance Indicators
85
29 Review of Operations
70
49 Results of Operations, Financial
Position and Net Assets
Russian Rouble
Japanese Yen
British Pound
US Dollar
Chinese
The British pound also gained in value, rising to an
average annual exchange rate of 0.73 to the euro. Unlike
the Fed, the Bank of England (BOE) has not yet seen any
acute need to raise reference interest rates.
in € million
Capital employed comprises the average amount of
Group equity employed during the year as a whole, the
financial liabilities of the Automotive and Motorcycles
segments, and pension provisions. "Earnings amount"
for these purposes corresponds to Group profit before
tax, adjusted for interest expense incurred in conjunc-
tion with the pension provision and on the financial
liabilities of the Automotive and Motorcycles segments
(earnings before interest expense and taxes).
earnings amount - cost of capital
= earnings amount - (cost of capital rate ×
capital employed)
BMW X5
168,143
147,381
14.1
8.8
BMW X6
46,305
30,244
53.1
2.4
BMW Z4
-7,950
2.9
-10,802
0.4
BMW i
-29,513
-17,793
65.9
-1.5
BMW total
1,905,234
1,811,719
5.2
100.0
*Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 275,891 units, 2015: 282,000 units).
-26.4
21,688
55,050
BMW X4
27.4
8.0
BMW 5 Series
347,096
-373,053
-7.0
-18.2
BMW 6 Series
-20,962
23,988
-12.6
1.1
BMW 7 Series
-36,364
48,519
-25.1
-1.9
BMW X1
120,011
-156,471
-23.3
6.3
BMW X3
137,810
150,915
-8.7
-7.3
The BMW X family also continued to perform well in
2015, with worldwide deliveries to customers totalling
527,319 units (2014: 506,699 units; +4.1%). Sales of
the BMW X5 rose by 14.1% to 168,143 units (2014:
147,381 units). With 137,810 units sold in 2015, the
BMW X3 remained below its previous year's level (2014:
150,915 units; -8.7%). The BMW X4 more than doubled
sales volume during the twelve-month period
(55,050 units; 2014: 21,688 units). As a result of the
model change, sales of the BMW X1, at 120,011 units,
were lower than one year earlier (2014: 156,471 units;
-23.3%). The second-generation BMW X1 first appeared
in showrooms at the end of October 2015 and is set to
continue its predecessor's success story in 2016.
Motorcycle markets
The world's motorcycle markets in the 500 cc plus class
grew by 4.7% in 2015. Motorcycle registrations in Europe
were up by 8.5%, mainly due to a sharp recovery in
southern Europe. Italy recorded double-digit growth,
with registrations 11.3% up on the previous year. Ger-
many's motorcycle market reported a 4.5% increase,
while France finished at a similar level to the previous
year (+0.3%). The US market grew by 3.6%.
27 COMBINED MANAGEMENT REPORT
Report on Economic Position
Overall Assessment by Management
Financial and Non-financial Performance Indicators
Overall assessment of business performance
The BMW Group has every reason to be satisfied with its
performance in 2015. The overall picture was pleasing
in terms of results of operations, financial position and
net assets. Overall, management expectations for the
period were therefore met. This assessment also takes
into account events after the end of the reporting period.
Financial and non-financial performance indicators
In the following section, we report on the principal finan-
cial and non-financial performance indicators used as
the basis for managing the BMW Group and its segments.
As part of the review of operations and the financial
condition of the BMW Group, forecasts made the pre-
vious year for the financial year 2015 are compared with
actual outcomes in 2015.
BMW Group
Profit before tax
Despite facing strong competition on the world's auto-
mobile markets and investing heavily in new technologies
as well as in the expansion of its production network, the
BMW Group remained firmly on course in 2015. Profit
before tax came in at a new all-time high of €9,224 mil-
lion (2014: €8,707 million; +5.9%). In addition to gen-
erally strong demand for the Group's brands, earnings
also increased on the back of favourable currency fac-
tors. Good contributions to earnings also came from the
BMW X6 and X4 models launched at the end of 2014,
as well as from the BMW 2 Series with its various new
models and from the new MINI 3- and 5-door models.
21 COMBINED MANAGEMENT REPORT
Capital employed corresponds to the sum of all current
and non-current operational assets, less liabilities that
do not incur interest (e.g. trade payables). Non-interest-
bearing liabilities are those capital shares which are
available to the operative business without interest. These
include, for example, trade payables.
Due to the key importance of the Automotive segment
for the Group as a whole, consideration is also given
to additional key performance indicators, with varying
degrees of detail, which have a significant impact on
ROCE and hence on segment performance. The most
important of these value drivers are deliveries to cus-
tomers, segment revenues and – as the key performance
indicator for segment profitability – the operating re-
turn on sales. Average carbon emissions for the fleet
are also taken into account, reflecting their potential
impact on earnings in the short term in the form of
ongoing development expenses, and, in the long term,
the consequences of meeting regulatory requirements.
For these purposes, "carbon emissions for the fleet"
corresponds to average emissions of CO2 for new cars
sold in the EU-28 countries.
Managing the business on the basis of key value drivers
makes it easier to identify the reasons for changes in
ROCE and to define suitable measures to influence its
development.
Motorcycles segment
As with the Automotive segment, operating performance
for the Motorcycles segment is managed on the basis of
ROCE. Capital employed is measured using the same
procedures as in the Automotive segment. The strategic
target for the Motorcycles segment's ROCE is 26%.
ROCE Motorcycles
Profit before financial result
Capital employed
The number of vehicles delivered to customers is also
taken into account as a non-financial value driver.
Financial Services segment
As is common practice in the banking sector, the per-
formance of the Financial Services segment is measured
on the basis of return on equity. RoE is defined as seg-
ment profit before taxes, divided by the average amount
of equity capital attributable to the Financial Services
segment. The target is a sustainable return on equity
of at least 18%.
RoE Financial
Services
Profit before tax
Equity capital
Strategic management at Group level
Strategic management, including quantification of the
financial impact of strategic issues on long-term fore-
casting, is performed primarily at Group level. The
most significant performance indicators for these pur-
poses are Group profit before tax and the size of the
Group's workforce at the year-end. Group profit before
tax is a good overall measure of the Group's perfor-
mance after consolidation procedures, and provides a
transparent basis for comparing performance, particu-
larly over time. The size of the Group's workforce is
monitored as an additional key non-financial perfor-
mance indicator.
Information provided by these two key performance in-
dicators is supplemented by the measurement of value
added. This highly aggregated performance indicator
provides an insight into capital efficiency and the (op-
portunity) cost of capital required to generate Group
profit. Value added corresponds to the amount of earn-
ings over and above the cost of capital and gives an in-
dication of whether the Group is meeting the minimum
requirements for the rate of return expected by capital
providers. A positive value added means that a com-
pany is generating more additional value than the cost
of capital.
Value added Group =
ranges.
100
Moderate price increases were observable in the premium
segment of Europe's used car markets in 2015, while
prices in Asia remained stable and even fell slightly in
North America. Selling prices fluctuated within normal
A continuation of the economic slowdown in 2015, ac-
companied by high volatility on the Shanghai stock ex-
change, led to the Chinese economy contributing less to
global economic growth than in the previous year. The
Chinese central bank intervened with a series of interest
rate cuts, curtailing the renminbi's upward trend.
Financial services markets
While the majority of industrialised countries witnessed
an improvement in economic fundamentals in 2015,
market conditions were highly unfavourable for some of
the world's major emerging economies.
After a slow start to the year, the US economy and em-
ployment market returned to an upward trend as from
the second quarter. The rate of inflation remained ex-
tremely low throughout the year, initially prompting the
Fed to adopt a "wait-and-see" approach regarding an
26
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
interest rate rise. The reference interest rate was finally
increased by 0.25% in December 2015, the first rise
announced for almost ten years.
The ECB launched a large-scale bond-buying programme
in March 2015, with the dual objective of propping up
the eurozone's economy and combating low inflation.
Helped by a combination of the low price of oil, a weak
27-Overall Assessment by Management euro and low interest rates, the euro zone managed to
23-Report on Economic Position
23-General and Sector-specific
Environment
27-Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
stage a moderate economic recovery. The hoped-for in-
crease in inflation rates, however, proved elusive, mainly
due to lower energy prices.
The UK economy grew at a stable pace in 2015. The Bank
of England nevertheless refrained from increasing its
reference interest rate, mainly in light of the persistently
low rate of inflation.
The export-dependent Japanese economy suffered from
the slower rate of growth in China and a return to more
cautious consumer spending during the twelve-month
period under report. The Bank of Japan's expansive mon-
etary policies helped the country avoid slipping into re-
cession in 2015.
90
the
80
%
Q2: slight increase
-in line with last year's level
136,963 (+10.9%)
units
solid increase
-72.2 (+10.5 %pts)
9.2 (-0.4%pts)
-127 (-2.3%)
85,536 (+13.8%)
%
moderate decrease
%
31.6 (+9.8%pts)
target range between 8 and 10%
Q1: significant increase
solid increase
-2,247,485 (+6.1%)
units
- g CO2/km
slight decrease
solid increase
-9,224 (+5.9%)
-122,244 (+5.1%)
in 2015
-Actual outcome
€ million
solid increase
solid increase
€ million
Financial Services segment
Return on equity
in line with last year's level
%
Italy
18.1
3.5
France
20.6
USA
Germany
Great Britain
Japan
Italy
France
Other
China
Germany
Great Britain
USA
China
as a percentage of sales volume
BMW Group - key automobile markets 2015
In a mostly friendly market environment in Europe,
sales of BMW, MINI and Rolls-Royce brand vehicles rose
by 9.4% to a total of 1,000,427 units, surpassing the one-
million threshold for the first time (2014: 914,587 units).
The number of vehicles sold in Germany was 5.0% up
on the previous year (286,098 units; 2014: 272,345 units).
Business in Great Britain also developed very posi-
tively, with sales rising to a total of 230,982 units (2014:
205,071 units; +12.6%). The pace of growth in Asia
slowed somewhat, mainly reflecting the anticipated
normalisation of the Chinese automobile market. The
BMW Group sold a total of 685,792* units of its three
Europe showing good signs of recovery
The BMW Group sold 2,247,485* BMW, MINI and
Rolls-Royce brand vehicles worldwide in 2015, thereby
setting a new record for the fifth year in succession
(2014: 2,117,965* units; +6.1%). Sales of BMW models
climbed by a solid 5.2% to 1,905,234* units (2014:
1,811,719 units). MINI recorded even more impressive
growth, with sales rising by 12.0% to 338,466 units (2014:
302,183 units). Rolls-Royce Motor Cars sold 3,785 ultra-
luxury sedans, moderately down on the previous year's
high level (2014: 4,063 units; -6.8%).
Solid sales volume growth
AUTOMOTIVE SEGMENT
Review of Operations
Report on Economic Position
29 COMBINED MANAGEMENT REPORT
2 EU-28.
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2015: 282,000 units).
-20.2 (+0.8%pts)
Forecast revision
during the year
3.2
in 2014 Annual Report
Return on capital employed.
44 Workforce
42 Sales and Marketing
The return on capital employed (RoCE) amounted to
72.2% (2014: 61.7%; +10.5 percentage points). The
higher-than-expected increase in ROCE reflects the
pleasing upward trend in earnings on the one hand
and the rigorous management of capital employed on
the other. A number of other factors also influenced
ROCE, including transactions with other segments, the
higher volume of business with service and Connected
59 Comments on Financial Statements Drive contracts as well as efficiency improvements in
The EBIT margin in the Automotive segment (profit be-
fore financial result divided by revenues) came in at 9.2%
(2014: 9.6%; -0.4 percentage points). As predicted, the
EBIT margin from automobile business was within the
target range of between 8 and 10% and thus in line with
forecasts.
EBIT margin and return on capital employed
41 Purchasing
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
29-Automotive Segment
Performance Indicators
29-Review of Operations
27 Overall Assessment by Management
27-Financial and Non-financial
23 General and Sector-specific
Environment
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23-Report on Economic Position
45 Sustainability
28
Segment revenues rose by 13.8% to €85,536 million
(2014: €75,173 million), driven by a strong sales volume
performance and favourable currency factors. The re-
vised forecast for the year from a solid increase to a
significant increase, as communicated in the Quarterly
Report to 31 March 2015, was therefore borne out. In
the Annual Report 2014, the forecast had been a solid in-
crease in Automotive segment revenues.
Revenues
As predicted in the outlook for the full year 2015, carbon
fleet emissions fell slightly and were therefore in line
with forecast.
The BMW Group continually strives to reduce fuel con-
sumption and carbon emissions by deploying innovative
technologies developed in conjunction with the Group's
Efficient Dynamics strategy. The outcome of these en-
deavours is highly efficient combustion engines and
electric drive systems that set standards in terms of both
dynamic flair and driving pleasure. The volume of car-
bon emissions produced by our vehicle fleet sold in
Europe was reduced slightly to 127 grams CO2/km
(2014: 130 grams CO2/km; -2.3%) during the year un-
der report.
Fleet carbon emissions²
As predicted in the Annual Report 2014 for the finan-
cial year 2015, the total number of cars sold by the
BMW Group rose by 6.1% and was therefore in line
with expectations.
The number of BMW brand vehicles sold during the
twelve-month period increased to 1,905,234¹ units (2014:
1,811,719¹ units; +5.2%). MINI recorded a significant
sales volume increase of 12.0% during the year under
report (338,466 units; 2014: 302,183 units). Rolls-Royce
Motor Cars sold 3,785 units (2014: 4,063 units; -6.8%).
creasing normalisation of the market in China and the
tense geopolitical situation worldwide, most notably
the conflict hot spots in the Middle East, sales of BMW,
MINI and Rolls-Royce brand vehicles grew by a solid
6.1% to 2,247,485¹ units (2014: 2,117,965¹ units). The
upward trend reflects the success of numerous new
models, including the expanded range of BMW 2 Series
models launched internationally during the year under
report. The MINI 3- and 5-door models introduced in
2014 also made an important contribution. This perfor-
mance enabled the BMW Group to retain a leading posi-
tion in the premium segment worldwide.
The Automotive segment sold a record number of ve-
hicles for the fifth year in succession. Despite the in-
Automotive segment
Sales volume
As predicted in the outlook for the financial year 2015,
there was a solid increase in size of the BMW Group's
workforce, which was therefore in line with expectations.
At the end of 2015, the BMW Group employed a work-
force of 122,244 people (2014: 116,324 people; +5.1%).
This solid increase in the workforce mainly reflects
strong demand for the BMW Group's brands of automo-
biles and motorcycles as well as the broader range of
mobility services now on offer. The BMW Group also
recruited skilled staff aimed at the increasingly digitali-
sation and at driving the continued development of
electric mobility.
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014:
275,891 units, 2015: 282,000 units).
2 EU-28.
49 Results of Operations, Financial
Position and Net Assets
of BMW AG
62 Events after the End of the
Sales volume
Motorcycles segment
Return on capital employed ·
EBIT margin
Revenues
Fleet emissions²
Sales volume¹
Automotive segment ·
Workforce at year-end
Profit before tax
BMW Group
Comparison of 2015 forecasts with actual outcomes 2015
The following overall picture arises for the principal per-
formance indicators utilised by the BMW Group and its
segments:
The return on equity (ROE) generated by the Financial
Services segment improved to 20.2% in the year under
report (2014: 19.4%; +0.8 percentage points), helped by
a strong operating performance and a stable risk
pro-
file. As predicted in the Annual Report 2014, ROE was
in line with the previous year's level and therefore re-
mained ahead of the minimum target of 18%.
Financial Services segment
Return on equity
The Motorcycles segment generated a return on capital
employed (ROCE) of 31.6% in the year under report
(2014: 21.8%; +9.8 percentage points), a solid increase
on the previous year. In the Quarterly Report at 30 June
2015, the outlook was for a slight increase in RoCE
(outlook in the Annual Report 2014: ROCE in line with
the previous year's level). Contributing factors for the
improved performance were higher sales volume, a sus-
tained high-value model mix and the positive impact
of the new brand strategy embarked upon in 2014.
Return on capital employed
and BMW Motorrad's attractive model range, mild
weather conditions at the end of the year also gave the
strong performance additional tailwind.
In a highly favourable market environment, most notably
in Europe, BMW Motorrad achieved a significant in-
crease of 10.9% with a sales volume of 136,963 units
(2014: 123,495 units). This performance was therefore
better than the solid increase forecast in the Annual
Report 2014. Apart from the robust market environment
Sales volume
Motorcycles segment
investing activities. In the Annual Report 2014, a
moderate decrease in ROCE was predicted. The rate
achieved by the Automotive segment was therefore
well above the minimum target of 26%.
87 BMW Stock and Capital Markets
83 Disclosures Relevant for Takeovers
and Explanatory Comments
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
63 Report on Outlook, Risks and
Opportunities
Reporting Period
Forecast for 2015
12.7
Japan
3.1
80
70
60
Source: Reuters.
Gold
Palladium
Platinum
11
12
13
14
15
90
Precious metals prices stabilised for a short period at the
beginning of the year, before continuing their long-term
downward trend for the remainder of the twelve-month
period. The drop in prices reflects overcapacities on
the supply side, combined with weak demand on world
markets.
Automobile markets
Worldwide registrations of passenger cars and light com-
mercial vehicles grew by 3.3% to 82.4 million units.
The two largest automobile markets, the USA and China,
were once again the mainstays driving this outcome.
Registration figures in China, for instance, increased by
8.9% to 20.5 million units. Although this number points
to a weaker performance than one year earlier, the
Chinese market nevertheless increased the gap between
itself and the US market, which grew by 5.7% to 17.5 mil-
lion units.
Automobile markets in Europe picked up where they had
left off the previous year, growing by 9.2% (14.2 million
units) during the period under report. Excluding registra-
tions in Germany, the European market fared slightly
better with a 10.3% increase to 11.0 million units. The
German automobile market grew by 5.6% to 3.2 million
units and therefore accounted for nearly a quarter of all
new registrations in Europe (22.6%). France (1.9 million
units; +6.8%) and Italy (1.6 million units; +15.5%) both
saw robust growth, which also contributed to the re-
covery. Europe's growth was also helped by a repeated
dynamic performance in Spain (1.0 million units;
+20.9%). Registrations in the United Kingdom were
6.3% higher at 2.6 million units.
Japan's automobile market contracted in 2015, with
new registrations falling and totalling only 4.9 million
units (-9.8%).
Automobile markets in major emerging economies
continued to suffer from recession in 2015. The Russian
market shrank by more than one-third (1.5 million
units; -36.0%) and the Brazilian market by a good quar-
ter (2.5 million units; -25.7%).
1,963.8
1,845.2
1,669.0
Total
65.4
-62.7
There was no sign of a turnaround on the world's steel
markets during the period under report. Here, too,
the general slide in raw materials prices was reflected
in lower steel prices year-on-year.
100
110
120
70
After a brief decrease at the beginning of the year,
price of Brent crude oil - the most relevant benchmark
for Europe - picked up again during the first half of
2015. In stark contrast, the price then proceeded to
plummet during the second six months of the year.
The average price per barrel over the year as a whole
60
11 ―12 13 14 -15
Source: Working Group for the Iron and Metal Processing Industry.
Oil price trend
Price per barrel of Brent Crude
120
110
100
90
80
70
60
50
40
Source: Reuters.
11
12
13
14
15
Price in US Dollar
Price in €
25 COMBINED MANAGEMENT REPORT
Precious metals price trend
(Index: December 2010 = 100)
130
-61.8
61.1
54.8
Other markets
914.6
859.5
865.4
858.4
Europe
15
-14
13
12
11
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
BMW Group sales volume of vehicles by region and market
in 1,000 units
brands in Asia during the year under report (2014:
658,384* units; +4.2%). The sales volume figure of
464,086 units for China was slightly up on one year
earlier (2014: 456,732* units; +1.6%). Sales in the
- 28.5
Other
10.3
-1,000.4
-119,580
―thereof Germany
287.4
405.7
397.0
376.6
348.5
306.3
- thereof USA
495.9
482.3
463.8
425.3
380.3
Americas
464.1
456.7
391.7
327.3
233.6
-thereof China
685.8
658.4
578.7
493.4
375.5
Asia*
286.1
272.3
259.2
285.3
-152,390
Workforce at year-end
23.3
45 Sustainability
44 Workforce
42 Sales and Marketing
41 Purchasing
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
29-Automotive Segment
29-Review of Operations
27 Overall Assessment by Management performance in the premium segment during the year
under report. The BMW X5 as well as the BMW 4,5
and 6 Series, for instance, all continued to head their
relevant segments.
The BMW brand marked another highly successful
Solid growth for the BMW brand*
Americas region increased by 2.8% to 495,897 units
(2014: 482,257 units), the USA accounting for
405,715 units, 2.2% up on the previous year (2014:
396,961 units).
Performance Indicators
27 Financial and Non-financial
Environment
23 General and Sector-specific
2,118.0
18 General Information on the BMW Group
18-COMBINED MANAGEMENT REPORT
30
*Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2011: 94,400 units, 2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units, 2015: 282,000 units).
Other markets
thereof USA
Americas
thereof China'
Asia
thereof Germany
Europe
As predicted in the outlook for the financial year 2015,
the Group's profit before tax achieved a solid growth
and was therefore in line with expectations.
BMW 4 Series
49 Results of Operations, Financial
Position and Net Assets
23-Report on Economic Position
With the Coupé and Convertible body variants now re-
ported as part of the new 2 Series, sales of the BMW 1 Se-
ries, at 182,158 units, were nominally below the previous
year's level (2014: 190,033 units; −4.1%). The BMW 2 Se-
-7.5
of BMW AG
480,214
444,338
BMW 3 Series
8.3
41,038
157,144
BMW 2 Series
9.6
-4.1
-190,033
-182,158
BMW 1 Series
2015 in %
2,247.5
Change
in %
Proportion of
BMW sales volume
62 Events after the End of the
Reporting Period
59 Comments on Financial Statements ries has been a highly popular customer choice since its
launch, with 157,144 units sold during the twelve-month
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
63 Report on Outlook, Risks and
Opportunities
87 BMW Stock and Capital Markets
Sales volume of BMW vehicles by model variant*
in units
period under report (2014: 41,038 units). Sales figures
for the BMW 3 Series were also nominally down year-on-
year, at 444,338 units, reflecting the fact that the Coupé
and Convertible body variants are now reported as
part of the BMW 4 Series (2014: 480,214 units; -7.5%).
Customers took delivery of a total of 152,390 units of
the BMW 4 Series during the period under report (2014:
119,580 units; +27.4%). Now nearing the end of its life
cycle, at 347,096 units, sales of the BMW 5 Series did
not quite match the previous year's high figure (2014:
373,053 units; -7.0%). Owing to the model change at
the end of 2015, worldwide sales of the BMW 7 Series
fell to 36,364 units (2014: 48,519 units; - 25.1%). Now
in its sixth generation, this luxury class model has at-
tracted extremely positive feedback from the trade
press and from customers alike, raising expectations
of a perceptible resurgence in sales figures during
2016.
2015
2014
83 Disclosures Relevant for Takeovers
and Explanatory Comments
12.0
the sale of 1,688 units (2014: 1,906; -11.4%). Sales of the
Rolls-Royce Ghost rose slightly by 3.5% to 1,609 units
(2014: 1,555 units).
In sales volume terms, Rolls-Royce Motor Cars reported
the second-best year in its history (3,785 units; 2014:
4,063 units; -6.8%). The Rolls-Royce Wraith recorded
Rolls-Royce moderately down on previous year's
high level
100.0
302,183
-39.7
-47.0
-15,567
-8,247
338,466
0.9
Sales volume of Rolls-Royce vehicles by model variant
in units
-5,101
3,075
2.4
Phantom
488
Wraith
+5.3%), comprising 1,933,647* BMW (2014: 1,838,268*
units; +5.2%), 342,008 MINI (2014: 322,803 units; +5.9%)
and 3,848 Rolls-Royce brand vehicles (2014: 4,495 units;
-14.4%).
The network set new production volume records in 2015,
making a total of 2,279,503* units (2014: 2,165,566* units;
High capacity utilisation throughout production network
Strong demand and the production start-up of numerous
new models resulted in very high capacity utilisation
levels throughout the BMW Group's production net-
work. At the same time, the process of expanding inter-
national production sites was continued арасе. The
production network comprises 30 locations in 14 coun-
tries worldwide.
-6.8
3,785
-18.9
3.5
-11.4
-1,906
1,688
-1,555
1,609
602
Change in %
2014
2015
Rolls-Royce total
Ghost
4,063
MINI Convertible
-27.0
2015
MINI total
MINI Paceman
MINI Roadster
MINI Coupé
MINI Countryman
MINI Clubman
2014
Internationalisation of production network making
good progress
Sales volume of MINI vehicles by model variant
in units
140,051 units; +58.5%). Sales of the MINI Countryman
totalled 80,230 units (2014: 106,995 units; - 25.0%).
The new MINI Clubman became available towards the
end of October, since then approximately 8,000 units
have been sold.
MINI sales grew by 12.0% worldwide to 338,466 units
(2014: 302,183 units), helped primarily by the popularity
of the new MINI 3- and 5-door models, of which a total
of 221,982 units were delivered to customers (2014:
Significant increase for the MINI brand
31 COMBINED MANAGEMENT REPORT
Spain
17.4
MINI 3- and 5-door
Change
in %
Proportion of
MINI sales volume
2015 in %
- 3,816
-2,784
23.7
-25.0
106,995
80,230
2.4
-39.9
-13,326
8,003
4.2
-18.4
-17,327
65.6
58.5
140,051
-221,982
14,145
0.8
Following global market developments, the BMW Group
has continued to expand its international production
-304,509
32
29-Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38-Research and Development
41-Purchasing
42 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
limit, are always displayed in the same position above
the steering wheel, regardless of the driver's head move-
ments, ensuring that other road users or possible dan-
gers are not hidden from view. Navigation arrows vir-
tually projected onto the road assist the driver by
ensuring that he or she continually concentrates on
the surrounding traffic. If required, the glasses can
also be adjusted to show places of interest or even free
parking spaces en route. A camera installed on the
side of the vehicle assists the driver when parking, en-
abling the driver to check both the obstacles in his or
her line of vision and the distance to the kerb, which is
displayed in their field of vision. The glasses also pro-
vide the driver with a virtual view through parts of the
bodywork by making the A-pillar invisible, for instance,
hence improving all-round vision.
Innovations included in series vehicles
Performance Indicators
27 Financial and Non-financial
Environment
23 General and Sector-specific
Given the pace of technological innovation, cooperation
arrangements in the field of research and development
are commonplace in the automotive industry. The BMW
Group also enters into cooperation agreements with
selected partners. The aim of these research and devel-
opment activities, which may also include cross-sector
input, is to help find innovative solutions for individual
mobility. The focus is currently on next-generation
technologies, such as digitalisation and alternative drive
systems.
Broadly diversified drive system research
In the course of 2015, the Group integrated hybrid tech-
nologies in further BMW brand models. In parallel, en-
gineers continued development work on highly-efficient
combustion engines. In the medium and long term, the
BMW Group is also developing a fuel cell electric vehi-
cle (FCEV). With these varying drive systems, the BMW
Group is well prepared for the challenges of the future
and will also be able to flexibly cater to both the require-
ments of customers and the standards dictated by
39 COMBINED MANAGEMENT REPORT
legislators going forward. With efficient petrol- and
diesel-driven engines, plug-in hybrid systems, battery-
powered drives and also, in future, hydrogen fuel cell
electric vehicles, the BMW Group is looking to provide
suitable technologies for every segment and require-
ment.
In a prototype presented in 2015, a direct water injec-
tion system was used for turbocharged petrol engines
for the first time. This innovative technology greatly
reduces the temperature in the combustion process,
thereby raising the efficiency factor. Moreover, the
technology reduces fuel consumption during higher
performance requirements. The newly developed
BMW 2 Series Active Tourer Plug-in Hybrid is fitted
with a 3-cylinder front-wheel-drive petrol engine, a
high-voltage generator installed at the front and an
electric motor that transfers power to the rear wheels.
The result is a road-linked all-wheel-drive system
unique in its segment.
The hydrogen fuel cell electric drive system is destined
to become an integrated component of the Group's
Efficient Dynamics strategy. The diversity of drive tech-
nologies that can be flexibly coordinated to suit varying
vehicle concepts, customer requirements and statutory
framework conditions on international markets is there-
fore growing. The hydrogen fuel cell electric drive sys-
tem, which converts hydrogen to electricity and steam,
enables locally emissions-free, electrically powered
driving with the dynamic flair typical for the BMW brand,
high suitability for covering long distances, and short
refuelling times, therefore representing a further key
option in the range of BMW eDrive technologies. The
BMW Group has been conducting research and develop-
ment work in the field of hydrogen fuel cell electric ve-
hicles for over 15 years.
In 2015, a new lighting technology known as organic
light-emitting diodes, or OLEDs, were installed in a
series model for the first time. OLEDs consume less
electricity and therefore help further reduce CO2 emis-
sions. Unlike the point-like light emitted by LEDs,
OLEDs illuminate entire areas and are also smaller.
Highly and fully automated driving
though semi-automated systems are capable of con-
trolling both the longitudinal and latitudinal move-
ments of the vehicle (e.g. congestion assistant), they
need to be continually monitored by the driver. As-
sisted systems (such as ACC) on the other hand, only
support the driver when driving forwards or steering
left or right.
At the Consumer Electronics Show (CES) in Las Vegas
in 2015, the BMW Group presented a BMW i3 research
vehicle that demonstrated how parking spaces can be
found in a multi-storey car park with a fully automated,
driverless vehicle. The advantages are less vehicle
damage and far better use of the available parking
space. Laser scanners installed on the vehicle create an
exact picture of the surroundings. The Remote Valet
Parking Assistant links this information with the digital
floor plan of the car park and, based on this data, is capa-
ble of automatically driving the vehicle to a free space
and parking it. When the driver wishes to leave again,
he or she calls the vehicle (via smartwatch, for example)
and it automatically drives to the car park exit, ready to
continue to its next destination, without having to rely
on a GPS signal. As the research vehicle is fitted not only
with its own laser sensors but also with its own computers
and the required algorithms, it can calculate its exact
position in the car park, perfectly monitor its surround-
ings and independently navigate, fully automatically.
Multi-storey car parks do not need to be elaborately
equipped with special infrastructure. The new BMW 7 Se-
ries can already park straight in and out of a parking
space via remote control. The fully automated Parking
Assistant demonstrated in the prototype is a logical con-
tinuation of this innovative technological progress.
At the CES, a further research vehicle was presented
featuring a fully automated system that warns the driver
in the event of an imminent collision and automatically
triggers a braking manoeuvre precise to the last centi-
metre if required. Up to a certain speed, the test vehicle
makes it practically impossible for the driver to collide
with another obstacle. In order to achieve this feat, cam-
eras, radar and laser sensors record the entire surround-
ings of the vehicle. Collision-free driving forms the basis
for taking a crucial step towards achieving accident-free
individual mobility and for that reason the BMW Group
has been working for many years to implement this vi-
sion. Assistance systems such as Active Cruise Control
with a stop-and-go feature (ACC) are already built into
the latest BMW models and react to vehicles driving
ahead. They are radar- and camera-based and apply the
brakes, even until the vehicle comes to a halt if necessary.
40
18-COMBINED MANAGEMENT REPORT
MINI presents Augmented Reality glasses
The MINI Augmented Reality glasses presented at the
Auto Shanghai 2015 supplement reality by superimpos-
ing the wearer's field of vision with additional useful
digital information on events in and around the vehicle,
offering the user not only increased safety, but also
greater convenience. Information relevant for driving,
27 Overall Assessment by Management such as the current speed of the vehicle and the speed
18 General Information on the BMW Group
23-Report on Economic Position
Assistance systems increase both safety and conveni-
ence levels while driving, although the degree of driver
support differs. Fully automated assistance systems of-
fer the highest degree of automation. Fully automated
functions are those which no longer need to be moni-
tored by the driver. As with the fully automated Remote
Valet Parking Assistant, the driver does not even need
to be in the vehicle. Highly automated systems are the
stage before fully automated systems and do not need
to be constantly monitored by the driver. They con-
trol both the longitudinal (driving forwards and back-
wards) and latitudinal (driving to the left or right by
steering) movements of the vehicle. By contrast, al-
The BMW Group has also installed numerous innova-
tions for added driving convenience and assistance in
the latest BMW 7 Series. For example, infotainment
and communication features can be controlled from the
back seat by means of a tablet. Self-configured or pre-
configured functions can be controlled by hand gestures
made within the vehicle. Using the new display key,
the vehicle can be remotely and driverlessly manoeuvred
in and out of tight parking spaces.
Awards and prizes in 2015
The BMW Group won three "Golden Steering Wheels"
during the year under report: for the BMW 7 Series in the
luxury class, for the new BMW X1 among the medium-
sized SUVs, and for the BMW 2 Series Gran Tourer in
the family class, making BMW the most successful brand
in this year's Golden Steering Wheel competition.
36 Financial Services Segment
35 Motorcycles Segment
29-Automotive Segment
29-Review of Operations
Performance Indicators
27 Overall Assessment by Management
27 Financial and Non-financial
23 General and Sector-specific
Environment
38 Research and Development
18 General Information on the BMW Group
23-Report on Economic Position
production in %
in %
Proportion of
Change
2014
2015
Vehicle production of the BMW Group by plant
in units
18-COMBINED MANAGEMENT REPORT
*Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
(2014: 287,466 units, 2015: 287,755 units).
41 Purchasing
-221,998
In the “International Engine of the Year Award", the most
prestigious engine competition worldwide, the BMW
Group was winner in three different classes as well as
overall winner. The new BMW TwinPower Turbo 3-cylin-
der petrol engine, which powers the BMW i8, was win-
ner in its class. The complete drivetrain of the BMW i8
also won the "best new engine" award. The successful
combination of electric motor and petrol engine also won
the overall award. Winner in the 2.5- to 3.0-litre category
was the M TwinPower Turbo in-line 6-cylinder petrol
engine. The quadruple triumph for the BMW Group at
the "International Engine of the Year Award" in 2015
additionally underscores the outstanding efficiency of
the Efficient Dynamics technology package, which, since
2007, has enabled the BMW Group to continually in-
crease the sheer driving pleasure and reduce consump-
tion and emission levels at the same time.
233,656
Leipzig
13.4
11.9
272,015
Germany
USA
Munich
Regensburg
-2.2
369,027
360,804
Dingolfing
9.7
-2.7
228,126
15.8
France
The Wackersdorf Innovation Park is the logistical hub for
materials management and just-in-sequence supply to
BMW Group plants in ten different countries. Further-
more, the dashboards for several plants are produced in
Wackersdorf.
Germany
-0.3
60.0
4,824
-7,716
1 Joint venture BMW Brilliance Automotive Ltd., Shenyang.
2 Contract production.
BMW Group
Partner plants
201,206
Goodwood
Oxford
Chennai
87 BMW Stock and Capital Markets
83 Disclosures Relevant for Takeovers
and Explanatory Comments
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
63 Report on Outlook, Risks and
Opportunities
Reporting Period
Graz (Magna Steyr)²
Born (VDL Nedcar)².
62 Events after the End of the
-179,318
8.8
-1.2
-24.2
35,916
2,165,566
-27,216
2,279,503
0.2
-14.4
- 4,495
12.2
3,848
95.3
-29,196
57,019
3.6
-27.1
-113,401
-82,655
2.5
5.3
of BMW AG
Position and Net Assets
-0.4
-143,390
142,767
Dadong¹
17.6
14.6
349,949
6.3
400,904
3.1
3.8
68,771
-71,353
Rosslyn
10.3
10.5
Spartanburg
59 Comments on Financial Statements
Tiexi¹
-144,076
49 Results of Operations, Financial
0.4
-76.9
- 5,616
9,936
Araquari
45 Sustainability
-144,988
-0.4
-6,012
-8,928
Rayong
44 Workforce
42 Sales and Marketing
6.4
0.6
48.5
100.0
network with the aim of ensuring a balanced distribution
of value added along the production chain.
In North America, the expansion of the plant in Spartan-
burg, USA, continues to make good progress. A new,
state-of-the-art vehicle body manufacturing facility is
currently under construction, as part of the investment
programme announced in 2014. Annual production at
the plant achieved a new record of over 400,000 units in
the year under report. In terms of production volume,
the Spartanburg plant is therefore the largest in the BMW
Group's network.
New models performing well
Motorcycle sales particularly strong in Europe
The number of motorcycles sold in Europe in 2015 to-
talled 81,834 units (2014: 73,611 units), an increase of
11.2%. In Germany, BMW Motorrad reported a solid in-
crease of 9.7% with a sales volume of 23,823 units (2014:
21,714 units). Italy also saw a year-on-year improvement,
with sales 6.3% up at 11,150 units (2014: 10,487 units).
Deliveries to customers in France, at 12,550 units, were
also higher than one year earlier (2014: 11,600 units;
+8.2%), even though the market as a whole remained
flat. The Motorcycles segment sold 16,501 units in the
USA (2014: 15,301 units; +7.8%).
BMW Motorrad reports significant growth in business
The Motorcycles segment profited from a positive market
environment during the period under report, achieving a
new sales volume record for the fifth year in succession.
The number of BMW motorcycles sold to customers world-
wide rose by 10.9% to 136,963 units (2014: 123,495 units).
MOTORCYCLES SEGMENT
35 COMBINED MANAGEMENT REPORT
The expansion of the BMW Group's Eisenach plant con-
tinued as planned in 2015. The site is being extended to
include new buildings and additional production floor
space. Moreover, a state-of-the-art Servo tryout press is
being installed. The project is scheduled for completion
in 2016. The Eisenach plant is one of the three BMW
Group locations worldwide that builds pressing tools.
In addition, some 250 employees at the Eisenach plant
manufacture the majority of the outer body parts
from sheet metal, aluminium and stainless steel for the
Rolls-Royce plant in Goodwood (United Kingdom) as
well as parts for the production of BMW motorcycles in
Berlin.
SGL Automotive Carbon Fibers (SGL ACF), the joint
operation of the BMW Group with the SGL Group, is
also based in Wackersdorf. In Moses Lake, USA, SGL
ACF operates a carbon fibre production plant that is
powered by hydroelectricity and supplies carbon fibres
to the SGL ACF plant in Wackersdorf, where they are
processed into textile parts.
A number of new models helped the Motorcycles seg-
ment deliver another outstanding performance in 2015.
The F 800 R was launched in time for the beginning of
the 2015 motorcycling season, followed by the R 1200 R,
R 1200 RS, S1000 XR and S 1000 RR models over the
course of the year. December 2015 saw the market launch
of the C 650 Sport and C 650 GT model updates, both of
which had previously been presented at the EICMA in-
ternational motorcycle trade fair in Milan. Thanks to an
extensively modified drivetrain, more comfortable sus-
pension settings and revamped controls, these two dy-
namic maxi-scooters offer the ideal combination of sport-
ing flair, smooth touring comfort and urban mobility.
Expenditure for research and development rose by 13.2%
to €5,169 million, mostly for projects aimed at securing
the Group's future (2014: €4,566 million). The research
and development ratio stood at 5.6% and therefore at a
similar level to the previous year (2014: 5.7%). The ratio
of capitalised development costs to total research and
development expenditure for the period (capitalisation
ratio) was 39.9% (2014: 32.8%). Amortisation of capi-
talised development costs totalled €1,166 million (2014:
€1,068 million; +9.2%). Further information on research
and development expenditure is provided in the section
"Report on Economic Position" (Results of Operations)
and in note 10 to the Group Financial Statements.
The growing demand for passenger vehicles also resulted
in high-capacity utilisation at the Landshut plant during
the year under report. The main focus during 2015
was on the start-up of components production for the
BMW brand's flagship model, the BMW 7 Series, includ-
ing production of structural components, light metal die-
cast engine components, CFRP body structure parts,
At the Leipzig plant, growing demand for electric vehicles
worldwide resulted in annual production of the BMWi
vehicles increasing to over 30,000 units. The BMW i3 is
one of the three best-selling electric vehicles both in the
USA and on markets worldwide. The team in Leipzig is
currently producing around 120 BMW i models daily. After
the success of the BMW i8, since 2015 the BMW 225xe
Active Tourer is the second model featuring a plug-in
hybrid drive system to be manufactured at the plant.
Production of the new BMW M2 also started in Leipzig
in 2015, with vehicles produced for the most part in
a flexible mix with all other models of the BMW 1 and
2 Series.
The BMW Group's Regensburg plant raised production
volume by almost 12% year-on-year, manufacturing more
than 300,000 units during the period under report. In the
course of the year, the six-millionth vehicle rolled off
the production line since the plant was first opened in
1986. Furthermore, production of three new models,
the BMW 1 Series, the 2 Series Gran Tourer and the X1
all started during 2015.
87 BMW Stock and Capital Markets
83 Disclosures Relevant for Takeovers
and Explanatory Comments
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
63 Report on Outlook, Risks and
Opportunities
bumpers and other plastic add-on components. Further-
more, the new strategy for the plant continued to make
good progress. The aim is to make the components plant
even more flexible and thus increase the site's long-term
competitiveness. Trendsetting lightweight construction
technologies will play a key role in achieving this end.
Reporting Period
BMW Group sales volume of motorcycles
140
Spain
Italy
Brazil
Great Britain
Other
as a percentage of sales volume
BMW Group - key motorcycle markets 2015
*Excluding Husqvarna, sales volume up to 2013: 59,776 units.
in 1,000 units
104.3 106.4 115.2 123.5 137.0
|||||
20
40
60
80
100
120
11 ―12 13 14 -15
62 Events after the End of the
of BMW AG
Position and Net Assets
Production of modular engines at the Steyr plant was
increased in 2015. At the same time, the development
centre for diesel engines, which is connected with the
plant, is currently being expanded. The Hams Hall en-
gine plant makes 3- and 4-cylinder petrol engines for
BMW and MINI and is also the exclusive manufacturer
of 3-cylinder petrol engines for the BMW i8.
expanding options for a flexible production system with
uniform production and process standards.
In January 2016, the new engine manufacturing plant,
which includes a foundry, was commissioned in Shen-
yang (China) and now supplies engines for vehicle pro-
duction for the Chinese market. With Munich, Hams
Hall (United Kingdom) and Steyr (Austria), the BMW
Group now manufactures engines at a total of four lo-
cations. Moreover, since 2014 the new modular engine
has been introduced in the engine plants step by step,
Introduction of modular engine concept practically
completed
At the Group's partner plants, which mostly serve
their regional markets, a total of 27,216 vehicles were
produced during the period under report. These part-
ner plants include those in Kaliningrad (Russia), Cairo
(Egypt), Jakarta (Indonesia) and Kulim (Malaysia).
The manufacturing sites in Chennai (India) and Rayong
(Thailand) complete the BMW Group's production net-
work. Last year, the plant in Thailand celebrated its 15th
anniversary and expansion work was continued at the
plant at the same time. It is the only production facility
within the network that produces not only BMW and
MINI vehicles, but also BMW motorcycles.
In Shenyang (China), BMW Brilliance Automotive Ltd.
(BBA) produced its one-millionth vehicle during the
period under report. BBA is a joint venture of the BMW
Group and its partner Brilliance China Automotive
Holdings Ltd. Its two plants in Dadong and Tiexi manu-
facture the BMW 3 Series long-wheelbase version, the
BMW 3 Series Sedan, the BMW 5 Series long-wheelbase
version, the BMW 5 Series Plug-in Hybrid and the
BMW X1 for the Chinese market.
Strong production base in Germany
Apart from the expansion of the international production
network, the German plants are an important focus of
ongoing development. For the fifth time in succession,
the BMW Group produced a total of over one million
vehicles at its plants in Munich, Dingolfing, Regensburg
and Leipzig.
In Rosslyn (South Africa) the one-millionth BMW 3 Series
vehicle rolled off the production line in February 2015.
In 1973, the plant was opened as the BMW Group's first
international manufacturing facility and is now an im-
portant part of the network. Within the next few years,
the plant will discontinue production of the BMW 3 Se-
ries and begin making the successor to the current
BMW X3.
33 COMBINED MANAGEMENT REPORT
At the home of Rolls-Royce in Goodwood (United King-
dom), important construction work was carried out to
In order to secure greater capacity for the planned growth,
since 2014 the MINI 3-door model is also being pro-
duced for the BMW Group at the Dutch carmaker VDL
Nedcar in Born. Since 2015, VDL Nedcar has also been
producing the MINI Convertible. The MINI Countryman
and MINI Paceman models are being produced under
contract by the company Magna Steyr Fahrzeugtechnik
in Graz, Austria. This additional capacity with external
partners provides the BMW Group's production network
with even greater flexibility.
In Europe, the British production triangle comprising
the MINI plant in Oxford, the components plant in
Swindon and the engine production facility in Hams
Hall is a fundamental element of the BMW Group's pro-
duction network. At the end of 2015, production at
the Oxford plant comprised the MINI 3- and 5-door ver-
sions and the new MINI Clubman.
currently built in Araquari. Only one year after produc-
tion officially began, the 10,000th vehicle has already
rolled off the production lines.
The comprehensive expansion of the BMW Group plant
in Araquari, Brazil, was completed in September 2015.
The manufacturing infrastructure at the site now in-
cludes body-making, a paint shop and assembly facilities.
The BMW 1 Series 5-door version, the BMW 3 Series Se-
dan, the BMW X1, the X3 and the MINI Countryman are
In San Luis Potosí, Mexico, preparations for constructing
the new plant are running on schedule. A local train-
ing centre has already been opened at the site and the
first employees recruited. The plant is due to commence
operations in 2019.
convert and expand the plant throughout 2015. The BMW
Group is investing in a new single-line production system
at this site as the basis for ensuring the brand's innova-
tive product strategy in the long term. The new tech-
nology and logistics centre in Bognor Regis near Good-
wood was opened as planned. Moreover, Rolls-Royce
Motor Cars recruited 100 new employees during the
period under report.
Thanks to their innovative strength, the plants in Ger-
many play a leading role within the international pro-
duction network and are often the inspiring source
of impetus for the global network as a whole. Digitalisa-
tion, modular concepts and intelligent composite manu-
facture are examples that demonstrate the outstanding
expertise of the production network.
Digitalisation in particular will contribute towards help-
ing the network produce even more flexibly and effi-
ciently. The use of IT-supported technologies in produc-
tion and logistics makes it possible to design even highly
complex workflows, such as through the use of flexible
robot systems, intelligent tools for staff, simulation, and
automated data collection and analysis.
With the production start-up of the new BMW 7 Series,
employees at the Dingolfing plant have proved that
innovation can be combined with complex production
processes. The intelligent composite manufacture is
particularly obvious in the new BMW 7 Series, where
carbon-fibre reinforced polymer (CFRP) is exclusively
used in the passenger compartment. The body struc-
ture, known as Carbon Core, is based on a technology
transfer from the BMW i models. The utilisation of ultra-
lightweight CFRP material and a comprehensive light-
weight design concept make the new 7 Series models
up to 130 kg lighter than their predecessors.
49 Results of Operations, Financial
45 Sustainability
27 Overall Assessment by Management Extensive refurbishment measures were also commenced
at the main plant in Munich in 2015. By mid-2017, a
state-of-the-art painting line will be completed that
meets the utmost standards in terms of profitability and
efficient use of resources. The new building is part of an
extensive investment programme that also includes the
enlargement of the body-making section and vehicle
assembly as well as parts of the logistics department. At
the present time, around 1,000 vehicles a day are rolling
59 Comments on Financial Statements off production lines at the BMW Group's Munich plant,
including the BMW 3 Series Sedan, the BMW 3 Series
Touring, the BMW 4 Series Coupé, the BMW M4 Coupé
and, since the end of 2015, the BMW 3 Series Plug-in
Hybrid.
expansion and modification work at the Dingolfing plant,
which has been ongoing since the end of 2012, made
good progress during the year under report. The BMW
Group is currently investing substantial amounts in the
Dingolfing site in preparation for future vehicle models
and upcoming technologies.
44 Workforce
42 Sales and Marketing
41 Purchasing
29-Automotive Segment
35-Motorcycles Segment
36 Financial Services Segment
38 Research and Development
29-Review of Operations
Performance Indicators
27 Financial and Non-financial
Environment
23 General and Sector-specific
18 General Information on the BMW Group
23-Report on Economic Position
18-COMBINED MANAGEMENT REPORT
34
Despite the BMW 7 Series model change, with a total
of around 360,000 units manufactured in 2015, the
Dingolfing plant registered the second-highest annual
production figure in its history. At the same time,
USA
Research and development are absolutely essential for
the BMW Group to maintain competitiveness as a pre-
mium manufacturer. As part of the Efficient Dynamics
strategy, the Group works continually on additionally
improving energy efficiency and reducing the emissions
of the entire range of automobiles and motorcycles it
sells. Under the catchword "Connected Drive", the BMW
Group works on the connectivity of driver, vehicle and
the outside world. Both concepts embrace forward-
looking technologies in vehicles and are testimony to
the BMW Group's innovative strength. Going forward,
the BMW Group will no doubt continue to set standards
in the field of connectivity on the roads. At 31 Decem-
ber 2015, a total of 12,669 people at 13 locations in five
countries worldwide were working in the BMW Group's
research and development network to achieve this end.
211,434
The positive trend in the global economy and the on-
going lull in the euro crisis enabled the risk profile rele-
vant for the Financial Services segment's total portfolio
to improve again in 2015. The positive trend in bad
debt levels continued in 2015, both for retail and corpo-
rate customers. The risk profile in the credit line of busi-
ness improved slightly compared to the previous year.
The credit loss ratio incurred on the segment's total credit
portfolio decreased by 13 basis points to 0.37% (2014:
0.50%). Reflecting the generally stable conditions pre-
vailing on the international used car markets, sales prices
for BMW and MINI brand pre-owned cars developed
robustly. Average residual value losses incurred on the
resale of these vehicles were marginally higher than in
the previous year. Further information on the risk profile
is provided in the section "Report on risks and oppor-
tunities".
EU Bank
East/Africa
Europe/Middle
Asia/Pacific
EU Bank
Americas
RESEARCH AND DEVELOPMENT
Contract portfolio retail customer financing of
Financial Services segment 2015
37 COMBINED MANAGEMENT REPORT
Americas
3,846 4,130 4,360 4,719
14 -15
12 -13
11
700
1,400
2,100
2,800
3,500
4,200
3,592
30.4
28.5
Europe/Middle East/Africa
Asia/Pacific
24.8
-16.3
Dealership financing significantly up on previous year
As in the previous year, the total volume of dealer finan-
cing increased significantly again year-on-year, growing
by 16.6% to stand at €17,156 million at the end of the
reporting period (2014: €14,710 million).
Slight decrease in multi-brand financing
Multi-brand financing saw a slight decrease (-1.8%)
in the number of new contracts signed in 2015
(162,870 contracts), compared to the previous year
(2014: 165,776 contracts). At 31 December 2015, the
total portfolio comprised 470,150 contracts, slightly
more than one year earlier (2014: 465,702 contracts;
+1.0%).
The BMW Group is one of the leading leasing and full-
service providers of fleet management services in Europe.
Lease and financing arrangements as well as other ser-
vices are provided to commercial customers under the
brand name "Alphabet". At 31 December 2015 the
segment was managing a total portfolio of 602,303 fleet
contracts, 8.5% more than in the previous year (2014:
555,349 contracts).
Further solid growth in fleet business
growth with a 19.4% increase in the number of contracts
being managed at the end of the reporting period. The
Americas region (+8.0%), Europe/Middle East/Africa
(+6.7%) and the EU Bank* (+3.5%) also recorded year-on-
year growth.
20.8 24.2
20.9 22.1
20.7 22.5
19.7 21.5
20.0
21.1
Leasing
Financing
11 ―12 13 14 ―15
10
20
30
40
50
in %
BMW Group new vehicles financed by
Financial Services segment
The dynamic increase in new retail customer business
is also reflected in the overall size of the contract port-
folio. In total, 4,326,631 contracts were in place with re-
tail customers at 31 December 2015 (2014: 4,005,428 con-
tracts), a solid year-on-year increase of 8.0%. In regional
terms, the Asia/Pacific region continued to enjoy strong
The total volume of new credit and leasing contracts
concluded with retail customers during the twelve-
month period under report was €50,606 million, sig-
nificantly up (+22.5%) on the previous year's figure
(2014: €41,318 million).
EU Bank comprises BMW Bank GmbH, its branches in Italy, Spain and Portugal, and
its subsidiary in France.
4,900
in 1,000 units
Contract portfolio of Financial Services segment
*The calculation only includes automobile markets, in which the Financial Services
segment is represented by a consolidated entity.
further markets in Asia and Latin America. The new
model initiative will also be expanded, including the ad-
dition of products that provide greater urban mobility.
Sales volume growth should also benefit from the new
premium models in the under-500 cc segment and a
significantly expanded dealership network. The market
launch of the G 310 R in the second half of 2016 will
Performance Indicators
27 Financial and Non-financial
23 General and Sector-specific
Environment
18 General Information on the BMW Group
23-Report on Economic Position
18-COMBINED MANAGEMENT REPORT
36
Further international growth for BMW Motorrad
The aim of BMW Motorrad's strategic realignment is to
achieve additional growth going forward. With this in
mind, the Motorcycles segment is planning to engage in
With its eRR concept study, BMW Motorrad is drawing
attention to the many possibilities of a fully electric-
powered supersport motorcycle. In terms of design and
chassis technology, the eRR has taken its lead from
the S 1000 RR supersport machine, but with an electric
drive, and is an outstanding example of the possibilities
of sustainable mobility.
The R nineT Scrambler, G 310 R, F 700 GS and F 800 GS
models were all on display for the first time at the
EICMA. The F 700 GS and F 800 GS will both be avail-
able to customers in time for the beginning of the 2016
motorcycling season. Apart from their powerful engines,
they promise exceptional riding pleasure, both on- and
off-road. Like its successful R nineT sister model, the
R nineT Scrambler - which is due to go on sale in the
summer - offers plenty of ways for owners to give it
their own personal touch. Also scheduled for a summer
launch is the G 310 R, which will deliver a combination
of great dynamics and comfort, whether in town or
out cruising on country roads. This innovative machine
signals BMW Motorrad's entry into the under-500 cc
segment as part of the strategic realignment of the
Motorcycles segment, which is aiming for further growth
and increasing internationalisation.
36.1
Other
-5.6
Brazil
-9.2
-8.1
Italy
France
-5.8
Great Britain
-12.0
5.8
27 Overall Assessment by Management be an initial step in this direction. This motorcycle is
designed to appeal to new markets and a younger tar-
get group and will be produced in cooperation with
the TVS Motor Company in India.
Solid increase in deposit business
Deposit business provides an important source of fund-
ing for the Financial Services segment. The volume of
customer deposits held at the year-end grew by a solid
8.4% to €13,509 million (2014: €12,466 million).
29-Review of Operations
38 Research and Development
In the BMW and MINI brand pre-owned vehicle financ-
ing and leasing lines of business, the number of new
contracts signed by the segment fell slightly (−2.1%) to
327,391 contracts (2014: 334,289 contracts).
The proportion of new BMW Group vehicles" leased or
financed by the Financial Services segment was 46.3%,
an increase of 4.6 percentage points over the previous
year (2014: 41.7%).
As in the previous year, credit financing and leasing busi-
ness with retail customers was an important part of the
segment's success in 2015. In total, 1,655,961 new con-
tracts were signed during the period under report, 9.7%
more than in the previous year (2014: 1,509,113 con-
tracts). Leasing business registered a significant in-
crease, growing year-on-year by 11.5%. Credit financing
increased by 8.8%. As a proportion of new business, leas-
ing accounted for 35.3% and credit financing for 64.7%.
Further growth in new business
Financial Services segment continues to grow
The Financial Services segment remained on course in
2015, delivering another good performance within a diffi-
cult market environment. In balance sheet terms, busi-
ness volume grew by 15.4% to stand at €111,191 million
(2014: €96,390 million), partly as a result of favourable
currency factors. The contract portfolio under manage-
ment at 31 December 2015 comprised 4,718,970 con-
tracts (2014: 4,359,572 contracts; +8.2%).
FINANCIAL SERVICES SEGMENT
In line with the new growth strategy, during the
year un-
der report the decision was taken to expand the BMW
motorcycle manufacturing plant in Berlin. Moreover, a
new, state-of-the-art logistics centre is due to be con-
structed right next to the Berlin plant.
Significant increase in motorcycle production
Overall, the BMW Group produced 151,004 motor-
cycles during the year under report (2014: 133,615 units;
+13.0%). This significant rise partly reflects the growing
importance of BMW's production plants in Brazil, where
8,555 motorcycles were assembled (2014: 5,996 units;
+42.7%) and in Thailand, where production more than
doubled to reach 2,712 units (2014: 1,169 units).
87 BMW Stock and Capital Markets
83 Disclosures Relevant for Takeovers
and Explanatory Comments
Management System Relevant for the
Financial Reporting Process
81 Internal Control System and Risk
63 Report on Outlook, Risks and
Opportunities
Reporting Period
62 Events after the End of the
59 Comments on Financial Statements
of BMW AG
49 Results of Operations, Financial
Position and Net Assets
45 Sustainability
44 Workforce
42 Sales and Marketing
41 Purchasing
29 Automotive Segment
35-Motorcycles Segment
36-Financial Services Segment
Significant growth in insurance business
Demand for insurance products remains high. In addition
to the Group's financing and leasing products, customers
can select from a broad range of insurance arrange-
ments, addressing all aspects of individual mobility. Sig-
nificant growth was recorded in 2015, with the num-
ber of new insurance contracts signed up by 11.2% to
1,207,196 contracts (2014: 1,085,781 contracts). At 31 De-
cember 2015, the insurance contract portfolio com-
prised 3,200,742 contracts (2014: 2,874,158 contracts;
+11.4%).
as a percentage by region
Position and Net Assets
35 Motorcycles Segment
29 Automotive Segment
29-Review of Operations
0.1
Performance Indicators
0.2
27 Financial and Non-financial
0.3
23 General and Sector-specific
Environment
0.4
23-Report on Economic Position
0.5
18 General Information on the BMW Group
18-COMBINED MANAGEMENT REPORT
0.6
0.7
in %
36-Financial Services Segment
Development of credit loss ratio
38-Research and Development
Purchasing
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
63 Report on Outlook, Risks and
Opportunities
Reporting Period
62 Events after the End of the
of BMW AG
59 Comments on Financial Statements Risk profile improved
0.37
0.50
0.46
0.48
0.49
11 ―12 13 ―14 15
49 Results of Operations, Financial
45 Sustainability
44 Workforce
42 Sales and Marketing
41
38
27 Overall Assessment by Management
11
Africa
in %, basis: production material
Regional mix of BMW Group purchase volumes 2015
Group. Investing in state-of-the-art manufacturing facili-
ties and efficient structures increases the competitive-
ness of in-house component production. During the
financial year under report, the cornerstone was laid for
a new lightweight design centre at the BMW Group's
component production plant in Landshut. When com-
pleted, the centre will house facilities for some 160 engi-
neers, who will research innovative materials, composite
construction concepts and manufacturing processes
for future vehicle generations.
The Purchasing and Supplier Network is also responsi-
ble for component production throughout the BMW
Investments safeguard productivity and
technology leadership
Increased globalisation, the interconnected nature of
supplier markets and the widespread expansion of
BMW Group sales and production operations around
the world mean that the distribution of purchase
volumes is changing continuously. In the coming years,
the NAFTA region in particular will be the focus of
growth, given the increasing volume of production
planned for the Spartanburg plant in the USA. The
addition of the BMW Group's new plant in San Luis
Potosí, Mexico, which is scheduled to open in 2019,
will reinforce this shift. The BMW Group remains com-
mitted to achieving globally balanced growth in terms
of sales, production and purchase volumes. This strategy
also makes an important contribution to natural cur-
rency hedging.
Increasing pace of globalisation
Asia/Australia
The underlying objective of the BMW Group's pur-
chasing, quality assurance and component production
functions is to achieve the ideal balance between
quality, innovation, flexible supply structures and com-
petitive costs. At all levels - production materials, raw
materials, services and capital goods - arrangements
are in place to ensure that the BMW Group is able to
react flexibly to fluctuations in demand, especially
when operating within a volatile market environment.
PURCHASING AND SUPPLIER NETWORK
41 COMBINED MANAGEMENT REPORT
29 Automotive Segment
29-Review of Operations
Performance Indicators
27 Overall Assessment by Management
27 Financial and Non-financial
23 General and Sector-specific
Environment
18 General Information on the BMW Group
23-Report on Economic Position
Ideal balance between quality, innovation, flexibility
and costs
Rest of
Western Europe
27 Financial and Non-financial
The net positive amount from other operating income
and expenses improved from €5 million to €94 mil-
lion, mainly reflecting gains on the sale of marketable
securities.
including the increased size of the workforce and
higher expenses for new IT projects. Depreciation and
amortisation on property, plant and equipment and
intangible assets recorded in cost of sales and in selling
and administrative expenses amounted to €4,659 mil-
lion (2014: €4,170 million).
Compared to the previous year, selling and administra-
tive expenses increased by €741 million to €8,633 million.
Overall, selling and administrative expenses were
equivalent to 9.4% (2014: 9.8%) of revenues. Adminis-
trative expenses increased due to a number of factors,
Compared to the previous year, research and develop-
ment expenses increased by €136 million to €4,271 mil-
lion. As a percentage of revenues, the research and de-
velopment ratio fell by 0.5 percentage points to 4.6%.
Research and development expenses include amortisa-
tion of capitalised development costs amounting to
€1,166 million (2014: €1,068 million). Total research and
development expenditure - comprising research costs,
non-capitalised development costs and capitalised de-
velopment costs (excluding systematic amortisation
thereon) - amounted to €5,169 million (2014: €4,566 mil-
lion). The research and development expenditure ratio
was therefore 5.6% (2014: 5.7%). The proportion of
development costs recognised as assets was 39.9% (2014:
32.8%).
The Automotive segment recorded a gross profit mar-
gin of 17.7% (2014: 18.6%), while that of the Motor-
cycles segment rose from 18.7% to 22.5%. In the Finan-
cial Services segment, the gross profit margin came in
at 13.3% (2014: 13.7%).
Gross profit improved by 6.6% to €18,132 million, re-
sulting in a gross profit margin of 19.7% (2014: 21.2%).
The Group's cost of sales was 16.8% higher year-on-
year, due to sales volume and currency factors. This
line item mainly comprises manufacturing costs (2015:
€43,685 million; 2014: €38,253 million), the cost of
sales directly attributable to financial services (2015:
€17,407 million; 2014: €14,716 million) and research and
development expenses (2015: €4,271 million; 2014:
€4,135 million).
to €28,648 million (2014: €26,147 million). Particularly
in China and South Korea, revenues increased on the
back of higher sales volume figures and favourable cur-
rency
factors.
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
68 Report on Risks and Opportunities
81 Internal Control System and Risk
63 Outlook
Opportunities
63 Report on Outlook, Risks and
62 Events after the End of the
Reporting Period
59 Comments on Financial Statements
of BMW AG
Position and Net Assets
49-Results of Operations, Financial
29 Review of Operations
Performance Indicators
18-COMBINED MANAGEMENT REPORT
In order to identify significant sustainability topics as
early as possible, the BMW Group also carries out regu-
lar materiality analyses. In this context, it analyses the
importance of various challenges on society, both from
the point of view of different stakeholder groups as
well as from an internal BMW Group perspective. The
results of the materiality analysis, which are shown in
the materiality matrix, form a sound base for verifying
the direction of the BMW Group's sustainability strategy.
The matrix and other details are described in greater
depth in the Sustainability Report 2015.
Stakeholder dialogues and materiality analysis
As a globally operating organisation, the BMW Group
engages in constant exchange with a variety of stake-
holders, both in Germany and abroad. This dialogue
helps identify trends at an early stage, increase the
scope of social engagement, and work better towards
achieving sustainability targets. The BMW Group seeks
contact with selected stakeholders in Europe, Asia and
North America at events held under the banner of the
BMW Group Dialogue. The resulting discussions enable
the impact of current trends on the business environ-
ment to be identified and provide useful feedback on
activities undertaken by the BMW Group in this area.
With its host of sustainability measures, the BMW Group
is supporting the implementation of the UN's Sustain-
able Development Goals (SDGs), which were adopted in
September 2015. Even before the final version was pub-
lished, the SDGs were taken into account when draw-
ing up the list of topics for the Group's 2015 materiality
analysis.
14.2
11.4
10.9
13.8
10.0
12.7
9.1
11.8
BMW Group
BMW AG
11 ―12 ―13 14 ―15
9
-121
-4.1
116,324
5.1
45 COMBINED MANAGEMENT REPORT
Proportion of non-tariff female employees at
BMW AG/BMW Group
in %
14
13
12
11.9
14.5
10
of 15 to 17%. The number of women in management
positions rose to 14.5% for the BMW Group as a whole
and 11.9% for BMW AG. Female representation in pro-
grammes for young employees and interns in the year
under report was approximately 44% for employee
trainee programmes and 25% for student training pro-
grammes.
Profit before financial result (EBIT) amounted to
€9,593 million (2014: €9,118 million).
The personal commitment and creative ideas of our em-
ployees are key factors in achieving sustainable success.
This fact is underlined, for example, by the €17.5 mil-
lion saved in 2015 alone through the CREATE ideas
management system.
The BMW Group safeguards the future viability of its
business model and its long-term growth through sus-
tainable activity. In terms of sustainability, the BMW
Group focuses on three broad areas: the development
of products and services for sustainable individual
mobility (e.g. electric mobility and services such as
DriveNow), the efficient handling of resources along
the entire value-added chain, and its responsibility
towards both its employees and society as a whole.
SUSTAINABILITY
41 Purchasing
Number of employees on unlimited employment contracts leaving the Company.
2.08
1.41
3.47
3.87
2.16
11 ―12 13 ―14 ―15
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Employee attrition rate at BMW AG*
as a percentage of workforce
The workforce in Germany is becoming increasingly
international in character, amply borne out by the fact
that employees from over 100 countries work together
successfully at the Munich site alone. Furthermore, a
balanced age structure in the workforce encourages an
exchange of skills and information between generations
and plays an active role in reducing loss of know-how
when employees retire.
35 Motorcycles Segment
The financial result for the twelve-month period was a
net negative amount of €369 million, an improvement
of €42 million compared to the previous year. The
result from equity-accounted investments, comprising
the Group's share of the results of the joint ventures
BMW Brilliance Automotive Ltd., Shenyang, DriveNow
GmbH & Co. KG, Munich, and DriveNow Verwaltungs
GmbH, Munich, fell by €137 million to €518 million.
The net interest expense also deteriorated year-on-year,
rising by €114 million to €433 million. This increase
was partly attributable to higher net interest expenses
from defined benefit pension plans. Other financial
result in 2015 was a negative amount of €454 million,
mostly arising in connection with the fair value meas-
urement of currency and commodity derivatives. Com-
pared to the previous year, other financial result im-
proved by €293 million, mainly thanks to the lower
negative impact of currency derivatives. In the previous
year, impairment losses recognised on other investments,
most notably on the investment in SGL Carbon SE,
Wiesbaden, had also negatively impacted other finan-
cial result.
Income tax expense amounted to €2,828 million
(2014: €2,890 million), corresponding to an effective
tax rate of 30.7% (2014: 33.2%). The lower income tax
expense for the twelve-month period was partly due
to the changed regional earnings mix as well as inter-
group pricing issues.
The BMW Group retained its status as one of world's
most attractive employers in 2015. In the latest "World's
Most Attractive Employers" rankings published by the
agency Universum, the BMW Group was once again
named best German employer across all sectors and
the most attractive automotive company in the world.
Further progress made as attractive employer
High level of investment to promote employee skill sets
At €352 million, expenditure on basic and further
training was 5.1% higher than one year earlier (2014:
€335 million). Further training mainly focused on-
advanced production techniques and new vehicle de-
velopment technologies.
with the BMW Group in the course of 2015. At the end
of the reporting period, 4,700 young people were in
vocational training and training programmes for promis-
ing talent (2014: 4,595 apprentices; +2.3%).
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
63 Report on Outlook, Risks and
Opportunities
62 Events after the End of the
Reporting Period
of BMW AG
Position and Net Assets
49 Results of Operations, Financial
45-Sustainability
The BMW Group expanded its international training
activities in 2015 with the addition of new vocational
training centres in Brazil, Mexico and Thailand. The
number of new entrants at German sites offering voca-
tional training remained constant at 1,200 apprentices.
59 Comments on Financial Statements All told, some 1,500 apprentices commenced training
Dual vocational training expanded worldwide
developing new technologies.
44-Workforce
42 Sales and Marketing
41 Purchasing
38 Research and Development
36 Financial Services Segment
35 Motorcycles Segment
29 Automotive Segment
29-Review of Operations
Performance Indicators
27 Financial and Non-financial
23 General and Sector-specific
Environment
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23-Report on Economic Position
At 31 December 2015, the BMW Group employed a work-
force of 122,244 people worldwide, 5.1% more than one
year earlier (2014: 116,324 employees). The enlargement
mainly reflects the ongoing expansion of the Group's
international production network in addition to the tar-
geted recruitment of the engineers, IT specialists and
27 Overall Assessment by Management skilled workers it needs to forge ahead with continually
Workforce numbers higher
The BMW Group again improved its ranking according
to the Trendence agency's "European Graduate Barome-
WORKFORCE
BMW Group apprentices at 31 December
3,750
-116
122,244
6.2
-7,245
-7,697
4.4
2,894
5.0
-106,064
-111,410
3,021
Change
in %
- 31.12.2014
31.12.2015
BMW Group
Other
Financial Services
Motorcycles
Automotive
BMW Group employees
The proportion of women in the workforce as a whole,
both in management functions and in training pro-
grammes for young employees and interns, continued
to increase. The figure for women as a percentage of
the total BMW Group workforce improved to 18.1%
(BMW AG: 15.3%), ahead of the internal target range
Diversity constitutes a key factor in ensuring the BMW
Group's continued competitiveness going forward,
focusing on the three aspects of gender, origin/cultural
background, and age/experience. Equal opportunities
for all employees must be ensured, and diversity in
the workforce encouraged and put to good use. In 2015,
various measures were implemented with the aim of
promoting diversity within the Group.
Diversity as a competitive factor
ter". In Trendence's "Young Professional Barometer
Germany", the BMW Group occupied first place for the
fourth
year:
in a row. In Universum's "Young Profes-
sionals Study Germany", the BMW Group achieved its
best results since 2007, taking first place in the "Engi-
neering” and “Business” categories and coming third in
the "IT" category.
3,899 4,266 4,445 4,595 4,700
-12 ―13 14 15
11
750
1,500
2,250
3,000
4,500
44
At the IAA, Rolls-Royce Motor Cars officially introduced
a luxury convertible, the Rolls-Royce Dawn. The specially
designed roof of the Dawn reduces noise in the vehicle's
interior to a minimum. Rolls-Royce also announced its
intention to develop an all-terrain vehicle.
Rolls-Royce presents new luxury convertible
41 Purchasing
38 Research and Development
36 Financial Services Segment
35 Motorcycles Segment
29 Automotive Segment
29-Review of Operations
Performance Indicators
27 Financial and Non-financial
23 General and Sector-specific
Environment
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23-Report on Economic Position
The Group's worldwide distribution network cur-
rently consists of around 3,310 BMW, 1,550 MINI and
140 Rolls-Royce dealerships. In China alone, around
60 BMW dealerships were opened in 2015. Products
and services are sold in Germany through BMW Group
branches and by independent authorised dealers. Sales
outside Germany are handled primarily by subsidiary
27 Overall Assessment by Management companies and, in a number of markets, by independent
SALES AND MARKETING
42
1.4
Africa
15.9
NAFTA
-4.6
-15.8
Rest of Western Europe
Asia/Australia
19.7
Eastern Europe
42.6
Germany
Germany
Eastern Europe
NAFTA
Revenues of the Automotive segment grew by 13.8% to
€85,536 million on the back of higher sales volume
and the positive currency impact. Adjusted for exchange
Earnings performance by segment
42-Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Also in October, MINI presented the new version of the
Convertible, which remains the only model of its kind
in the small car premium segment. The fully automatic
textile top, featuring a totally automated opening and
closing mechanism and sliding roof function, can be
opened in 18 seconds, even while driving at speeds of
up to 30 km/h.
New models for the third-generation MINI
The new MINI John Cooper Works has been available
since April 2015. The new MINI Clubman followed at
the end of October 2015. With its increased size and ad-
ditional functionality, the Clubman has taken on a new
dimension and now easily fits the bill as a household's
first car. The model's outstanding chassis technology de-
livers a high degree of driving comfort.
Moreover, market launches were underpinned by select
communication media, showcasing trendsetting inno-
vations with a range of state-of-the-art technologies to
highlight the exclusive luxury and exceptional comfort
of the new BMW 7 Series. For example, Gesture Control,
the new Display Key, BMW Touch Command, Executive
Lounge, Ambient Lighting and the outstanding quality
of materials were presented and described with all their
special features.
For the first time ever, exclusive product presentations
were deployed to address potential customers well in
advance of official announcements. For example, several
months prior to market launch, more than 26,000 exist-
ing and potential customers from several countries were
invited to stylish presentations, where they had the
opportunity to acquaint themselves with upcoming vehi-
cles and their many new features.
With the sixth generation of its 7 Series, the BMW Group
is heralding a new era in the luxury segment. As the
year's most important market launch, the 7 Series not
only strengthens the brand, it also delivers an innovative
interpretation of luxury. The new BMW 7 Series cele-
brated its world debut at the International Motor Show
(IAA) in Frankfurt in September and its market launch
at the end of October 2015.
New integrated marketing approach adopted for
BMW 7 Series market launch
The second generation of the BMW X1 was launched in
October 2015. Alongside best values to date in terms of
dynamics and efficiency, this highly successful model
also comes with numerous optional features – a com-
bination that will surely enable this new generation to
continue where its predecessor left off. The extremely ef-
ficient BMW X5 xDrive40e arrived on showroom floors
in the USA in early October and launched worldwide in
November. It is the first BMW Sports Activity Vehicle
to combine the BMW xDrive all-wheel drive system with
a more advanced plug-in hybrid system. This vehicle
represents the next step in the process of transferring
innovative drivetrain systems from BMW i models to the
core BMW brand.
Launched in June 2015, the new BMW 2 Series Gran
Tourer is the first BMW to enter the multipurpose vehi-
cle segment. It offers up to seven seats and space for
three children's seats in the second row as a new stand-
ard feature. The updated BMW 3 Series Sedan, the 3 Se-
ries Touring and the M3 have all been on the market
since the end of July. The new-look design highlights
the sporting flair of the 3 Series, while new engines de-
liver instant power more efficiently than ever before.
The BMW brand forged ahead with its new model offen-
sive in 2015. As successor to the 1 Series Convertible,
the new BMW 2 Series Convertible has been on sale
since February 2015. The BMW X5 M and X6 M models
were launched in March. The updated models of the
BMW 6 Series and M6 vehicles as well as the BMW 1 Se-
ries have also been available since March. In the com-
pact class, the facelifted BMW 1 Series excels with its sig-
nificantly changed, more dynamic design. It is now
available for the first time with powerful, highly efficient
3-cylinder petrol and diesel engines.
BMW continues new model offensive
BMW i Ventures invests in start-ups and growing com-
panies that concentrate on mobility requirements in
large urban areas. To date, the BMW i Ventures port-
folio comprises 14 investments.
43 COMBINED MANAGEMENT REPORT
ChargeNow makes public charging simple and transpar-
ent and is therefore an important feature of sustainable
electric mobility. With a single customer card, BMW i
customers have access to a worldwide charging network.
The stations are displayed via the Connected Drive ser-
vices in the navigation unit, via the ChargeNow app or
on the ChargeNow website. ParkNow is a service that
facilitates parking, both on the street and in multi-storey
car parks. Spaces in car parks can be found, booked and
paid for, either online or via an app.
Premium services for individual mobility
Since 2011, the BMW Group and Sixt SE have operated
the car-sharing service DriveNow in the form of a joint
venture. The integration of electric vehicles in these
operations is seen as an increasingly important aspect
of the business. For this reason, over 800 BMW i3 vehi-
cles were added to various DriveNow fleets during the
period under report. Electric vehicles accounted for
approximately 20% of the DriveNow fleet at 31 De-
cember 2015 and DriveNow was being used by some
580,000 customers worldwide. With AlphaCity, com-
panies can offer their staff an alternative car-sharing op-
tion for both business and private use.
Profit before tax increased to €9,224 million (2014:
€8,707 million). The pre-tax return on sales was 10.0%
(2014: 10.8%).
With BMW i 360° ELECTRIC, the BMW Group pro-
vides a comprehensive product and service portfolio
for charging both battery-driven vehicles and plug-in
hybrids worldwide. The BMW i wall boxes and an in-
stallation service are available for simple, quick, emis-
sions-free home charging. As an on-the-road solution,
BMW i is offering the ChargeNow mobility service with
the most wide-ranging network of public charging
stations globally. With over 38,000 charging points in
25 countries, ChargeNow is the largest service provider
of its kind in the world.
Premium". The programme gives participants an exclu-
sive insight into innovative and future-oriented trends
from the worlds of design, innovation, culture, cuisine
and travel.
The BMW i8 stands for a responsible attitude that com-
bines sustainability and an exclusive lifestyle. With
this in mind, the BMW i Pure Impulse Experience
programme has been created under the name "Next
Under the brand name BMW i, the BMW Group offers
solutions for urban mobility that include not only the
vehicles themselves, but also services such as car sharing,
parking and battery charging. Two years on from its
sales launch, the BMW i3 has meanwhile established
itself among the front runners in its segment and is
now one of the three best-selling electric vehicles in the
world. BMW i vehicles are currently on sale in 50 coun-
tries. Over 80% of BMW i buyers are first-time customers
for the BMW Group.
BMW i now well-established
The "Digital Services and Business Models" unit has
been set up to make better use of the opportunities of-
fered by digitalisation and to highlight the significance
of connected mobility beyond the vehicle. The objective
of this new customer-oriented function is to create a
comprehensive range of integrated digital services for
state-of-the-art mobility and to manage the expansion
of those services going forward.
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
Connected mobility and digital services expanded
In 2015, the BMW Group stepped up its activities in the
world of connected mobility. With Connected Drive,
the BMW Group occupies a leading position as provider
of online-based services in vehicles and the connectivity
59 Comments on Financial Statements of driver, vehicle and environment. Connected Drive is
meanwhile available in 45 markets. Comprehensive
connectivity via the on-board SIM card features in more
than 95% of all new BMW cars. Besides its well-known
functions, such as the intelligent emergency call, the
Concierge Call or the real-time traffic information fea-
ture, Connected Drive also includes new highlights
such as a Wi-Fi hotspot in the new BMW 7 Series. It is
also possible to integrate apps from external providers.
All Connected Drive functions can be ordered either
conveniently from home or directly in the vehicle itself
via the Connected Drive Store, which is meanwhile
available in 18 markets.
import companies. The dealership and agency network
for BMW i currently covers some 950 locations.
63 Report on Outlook, Risks and
Opportunities
Reporting Period
62 Events after the End of the
of BMW AG
Position and Net Assets
The global dealership and agency network for BMW i
currently covers some 950 locations. A total of 438 se-
lected BMW i partners are currently offering this brand
on the direct sales markets of Europe and Japan. The
i models are also being offered in ten direct sales markets
via new sales channels, one of which is the "Customer
Interaction Center". Furthermore, the "Mobile Sales
Advisor" sales channel has meanwhile become an inte-
gral component of the BMW i sales model in seven mar-
kets. The BMWi online sales platform gives customers
in the Netherlands, Belgium and Luxembourg the oppor-
tunity to order a BMW i3 via the Internet.
36 Financial Services Segment
42 Sales and Marketing
Guidelines of the Global Reporting Initiative (GRI G4),
the most commonly used set of guidelines for sustain-
ability reporting. The Sustainable Value Report 2015 is
drawn up in accordance with the "comprehensive op-
tion" and is published at the same time as the Annual
Report 2015.
Environment
27 Financial and Non-financial
Performance Indicators
29-Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
41 Purchasing
42 Sales and Marketing
23 General and Sector-specific
44 Workforce
49 - Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
45-Sustainability
83 Disclosures Relevant for Takeovers
Further information on the subject of sustainability
within the BMW Group and the main topics is provided
in the Sustainability Report, which can be accessed on-
line at http://www.bmwgroup.com. The Sustainable
27 Overall Assessment by Management Value Report 2015 was drawn up in accordance with the
23-Report on Economic Position
Water consumption
Process wastewater
-45.1%
Non-recyclable waste
-78.9%
Solvent emissions
CO₂ emissions
-51.4%
-45.7%
In 2015, the BMW Group reduced the consumption of
resources and emissions per vehicle produced by an
average of 7.0% compared with the previous year, giving
rise to savings of €8.2 million. The BMW Group again
cut the energy consumption per vehicle produced by
2.7% to 2.19 MWh during the period under report (2014:
2.25 MWh). The utilisation of highly efficient, ecologically
sustainable combined heat and power plants (CHPs)
and electricity generated from renewable sources at our
production sites, as well as improved energy efficiency
measures, enabled production-related CO2 emissions
per vehicle produced to be forced down by another 13.6%
year-on-year to 0.57 tonnes during the period under re-
port (2014: 0.66 tonnes). At 2.24 m³ per vehicle produced,
larger donations to the BMW Foundation Herbert Quandt
and to the Eberhard von Kuenheim Foundation.
water consumption was slightly higher than one year
earlier, largely due to increased cooling requirements
caused by the hot summer in Germany (2014: 2.18 m³;
+2.8%). At 0.45 m³, the volume of process wastewater
per vehicle produced fell by 4.3% (2014: 0.47m³). The
volume of non-recyclable production waste was further
reduced to 4.00 kg per vehicle produced in 2015 (2014:
4.93 kg; -18.9%). Solvent emissions were successfully
curtailed by 5.4% to 1.22 kg per vehicle produced during
2015 (2014: 1.29 kg).
38 Research and Development
In the year under report, for instance, the proportion
of goods transported by air freight was significantly re-
duced. At 63.1%, the proportion of new vehicles leaving
BMW Group plants by rail was maintained at a high
level (2014: 63.3%).
resources policies
In 2015, the BMW Group reinforced its position as one
of the most attractive employers in the world. The
prominent role played in the field of sustainability helps
employees identify with the business and its products.
This strong sense of identification is one of the factors
contributing to the low attrition rate within the BMW
Group, in turn helping to keep personnel recruitment
expenses on the low side.
Social engagement
The BMW Group expended a total of €39.1 million
(2014: €34.5 million) for social engagement in 2015, in-
cluding €17.1 million (2014: €10.2 million) in the form
of donations. The sharp increase in overall expenditure
for social engagement compared to 2014 mainly reflects
48
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
Sustainability along the entire value-added chain
Sustainability criteria are not only a vital aspect of in-
house production, they also play a major role in the
selection and assessment of suppliers as well as in the
field of transport logistics. The active management
of sustainability risks along the supply chain mitigates
compliance and image risks. With this in mind, the
BMW Group has integrated a comprehensive system of
sustainability management in its purchasing processes.
The amount of energy required for transportation world-
wide has continued to rise sharply in recent years. In
order to keep CO2 emissions to an absolute minimum,
the principle "production follows the market" is applied.
In addition, the proportion of CO2-efficient modes of
transport is being increased continually.
-36.0%
-31.3%
and Explanatory Comments
Environment
Financial result
Profit before tax
Income taxes
Net profit
*Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 275,891 units, 2015: 282,000 units).
2015
2014
-92,175
-80,401
Other financial result
-74,043
18,132
17,005
-8,633
-7,892
914
-877
-820
-872
9,593
-63,396
87 BMW Stock and Capital Markets
Interest and similar expenses
Result from equity accounted investments
49 COMBINED MANAGEMENT REPORT
Report on Economic Position
Results of Operations, Financial Position and Net Assets
Earnings performance
Once again, the BMW Group achieved year-on-year
growth in revenues, sales volume and profit before
tax in the financial year 2015. The number of BMW,
MINI and Rolls-Royce brand cars sold rose by 6.1% to
2,247,485* units.
The BMW Group recorded a net profit of €6,396 million
for the financial year ended 31 December 2015 (2014:
€5,817 million). The post-tax return on sales was 6.9%
(2014: 7.2%). Earnings per share of common and pre-
ferred stock were €9.70 and €9.72 respectively (2014:
€8.83 and €8.85 respectively).
BMW Group revenues increased by 14.6% year-on-year
to reach €92,175 million (2014: €80,401 million). The
main growth drivers were higher sales volume and fa-
vourable currency factors. Adjusted for exchange rate
factors, revenues rose by 7.7%.
Revenues mainly comprise the sale of vehicles and re-
lated products (2015: €68,643 million; 2014: €60,280 mil-
lion), lease instalments (2015: €8,965 million; 2014:
€7,748 million), the sale of vehicles previously leased to
Group Income Statement
Interest and similar income
in € million
External revenues recorded by the segments were
generally up on the previous year's figure. Revenues
from the sale of BMW, MINI and Rolls-Royce brand cars
were significantly higher (14.1%) than one year earlier.
Adjusted for exchange rate factors, revenues grew by
7.4% and therefore slightly faster than sales volume.
The positive currency impact was mainly attributable
to the change in the average exchange rates of the US
dollar, the Chinese renminbi and the British pound
against the euro. The BMW Group recorded a significant
year-on-year rise (18.7%) in external revenues from its
Motorcycles business. External revenues generated
with Financial Services business were 16.1% up on the
previous year. Adjusted for exchange rate factors, exter-
nal revenues for the Motorcycles and Financial Services
segments increased by 15.6% and 8.0% respectively.
Group revenues are spread across all regions, with the
Europe region (including Germany) accounting for
45.6% (2014: 46.8%), the Americas region for 23.3%
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
Other operating income
Other operating expenses
Profit before financial result
customers (2015: €8,181 million; 2014: €6,716 million)
and interest income on loan financing (2015: €3,253 mil-
lion; 2014: €2,881 million).
Energy consumption
Competitive thanks to sustainable human
Clean production
― Environmental and social standards
in the supply chain/sustainable sourcing
- Human rights
- Prevention of corruption and
anticompetitive behaviour
-Alternative drivetrain technologies
-Product safety
-Connected and autonomous driving
-Mobility concepts and services
- Data protection
― Attractive workplace, talent attraction and retention
-Diversity and equal opportunity
The efficient use of resources is an important aspect of
running the business on a sustainable basis. When
applied to all production-related processes, resource
efficiency helps protect the environment and minimise
costs. Since 2006, the consumption of resources and
emissions per vehicle produced has been reduced by an
average of 48.1%. The individual figures are as follows:
- Customer satisfaction
― Design for recycling and resource efficiency
- Occupational health and safety
-Responsible marketing and product communication
― Employee-management relations
-Involvement with local communities
- Biodiversity
23 General and Sector-specific
20 Management System
23-Report on Economic Position
External revenues in Germany edged up by 3.1%. In
the Rest of Europe region and in the Americas region, ex-
ternal revenues increased by 16.2% and 29.4% respec-
tively. Good contributions to the increase in Europe were
made by Great Britain, France, Spain and Italy. Reve-
27 Overall Assessment by Management nues in the Africa, Asia and Oceania region grew 9.6%
(2014: 20.7%) and the Africa, Asia and Oceania region
for 31.1% (2014: 32.5%) of business.
18 General Information on the BMW Group
18 Business Model
18-COMBINED MANAGEMENT REPORT
-Responsible financial services
-Energy use and GHG emissions
of operations and supply chain
-Air emissions of vehicles
-Use of urban space
Waste and water pollution
44 Workforce
45-Sustainability
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Less important
Importance for the stakeholders ►
46
Materiality matrix
Absolute crucial
-Water consumption
-Vehicle efficiency and CO2 emissions
-Air emissions of operations
and supply chain
50
5,817
― Employee development and training
-Socio-economic impacts in society
-2,890
― Corporate Citizenship
-Efficient use of materials in operations and supply chain
Less important
Importance for the BMW Group ►
Low materiality
Medium materiality
High materiality
6,396
Absolute crucial
Sustainability ratings
In 2015, the BMW Group maintained its position among
the world's leading carmakers in terms of sustainability
and again secured excellent placings in widely regarded
ratings. In the Dow Jones Sustainability Indices (DJSI),
the BMW Group took first place in the Automobiles sec-
tor and remains the only enterprise in this sector to have
been consecutively listed in the index since its inception.
In the Global 500 rating of the Carbon Disclosure Project
(CDP), the BMW Group achieved 100 out of a possible
100 points for transparent reporting for the third time
in a row and the top mark “A” for climate protection
measures, making it one of only three companies to have
achieved the CDP's top mark "A" six times running. The
BMW Group was also included in the British FTSE4Good
Index again in 2015.
47 COMBINED MANAGEMENT REPORT
Fleet carbon emissions again reduced
The development of sustainable products and services
is an important aspect of the BMW Group's business
model. CO2 emissions levels are continually being re-
duced by incorporating Efficient Dynamics technolo-
gies in all of the Group's vehicles. The scope of electri-
fication within the fleet was further increased in 2015.
These measures form the basis for complying with le-
gally stipulated CO2 and fuel consumption limits moving
forward. Between 1995 and 2015, the average amount of
CO2 emitted by the Group's three brands sold in Europe
fell by 39.5%. In 2015, the BMW Group's fleet of new
vehicles sold in Europe (EU-28) consumed an average
of 4.7 litres of diesel per 100 km and 5.7 litres of petrol
respectively. CO2 emissions averaged 127 grams per km.
-Donations and philanthropy
- Corporate volunteering
-Political involvement
200
-618
-747
185
655
518
9,118
-369
-411
-519
9,224
-2,828
8,707
-454
Net financial assets Automotive segment
Less: external financial liabilities*
Financial assets
Intragroup net financial assets
Marketable securities and investment funds
Cash and cash equivalents
in € million
53 COMBINED MANAGEMENT REPORT
*Excluding derivative financial instruments.
31.12.2015
31.12.2014
3,952
5,752
4,326
3,366
-11,278
-8,583
19,556
17,701
-2,645
Net financial assets of the Automotive segment comprise
the following:
from financing activities went up by €4,101 million to
€10,028 million, mainly influenced by the change in
other financial liabilities.
-7,524
3,481
liquidity planning, the excess amount was €5,404 mil-
lion (2014: €3,481 million).
Free cash flow for the Automotive segment was as
follows:
in € million
Cash inflow from operating activities -
Cash outflow from investing activities
Net investment in marketable securities and term deposits
Free cash flow Automotive segment
2015
2014
Cash and cash
equivalents
31.12.2015
+73
Currency trans-
lation, changes in
Group composition
-3,478
11,836
9,423
6,122
-5,836
1,092
-106
5,404
Cash outflows for operating activities in the Financial
Services segment are driven primarily by cash flows re-
lating to leased products and receivables from sales fi-
nancing and totalled €10,351 million (2014: €4,715 mil-
lion). Overall, cash outflows from investing activities
totalled €140 million (2014: €297 million). Cash inflows
16,911
Free cash flow of Automotive segment
Refinancing
15,000
7,500
Maturity (years)
within 1 between 1 and 5
later than 5
42,160
41,289
8,234
lion on European capital markets. Bonds were also
issued in British pounds, US dollars, Australian dollars,
South Korean won and other currencies for a total
amount of €6.35 billion.
Nine public ABS transactions were executed in 2015, in-
cluding three in the USA, two each in Germany and
China, and one each in Canada and France, with a total
volume equivalent to €5.7 billion. Further funds were
also raised via new ABS conduit transactions in Canada,
Japan and Switzerland totalling €1.1 billion. Other exist-
ing transactions remained in place in various countries,
including the UK, South Korea, South Africa, Brazil and
Australia.
The regular issue of commercial paper also strengthens
the BMW Group's financial basis. The following table
provides an overview of amounts utilised at 31 December
2015 in connection with the BMW Group's money and
capital market programmes:
Liabilities from customer
deposits (banking)
Asset-backed financing
transactions
Bonds
Bonds
40,319
Asset-backed financing transactions
Amount utilised
Australian Medium Term Notes
Commercial paper
Euro Medium Term Notes
in € billion
Programme
-1,539
22,500
4,550
Derivative instruments
-13,509
-12,720
5,415
Commercial paper
Liabilities to banks
Liabilities from customer deposits (banking)
-13,631
Other
30,000
37,500
in € million
45,000
Performance Indicators
27 Financial and Non-financial
23 General and Sector-specific
Environment
20 Management System
23-Report on Economic Position
18 General Information on the BMW Group
18 Business Model
Apart from issuing commercial paper on the money
market, the BMW Group's financing companies also
issue bearer bonds. In addition, retail customer and
dealer financing receivables on the one hand and leas-
ing rights and obligations on the other are securitised
in the form of asset-backed securities (ABS) financing
arrangements. Financing instruments employed by the
Group's in-house banks in Germany and the USA (e.g.
27 Overall Assessment by Management customer deposits) are also used as a supplementary
29 Review of Operations
18-COMBINED MANAGEMENT REPORT
Financing measures undertaken centrally ensure access
to liquidity for the Group's operating subsidiaries on
market-based and consistent conditions. Funds are ac-
quired with a view to achieving a desired structure for
the composition of liabilities, comprising a finely tuned
mix of financing instruments. The use of longer-term
financing instruments to finance the Group's financial
services business and the maintenance of a sufficiently
high liquidity reserve serves to avoid the liquidity risk
intrinsic to any large portfolio of contracts. This prudent
approach to financing also bolsters BMW AG's ratings.
Further information is provided in the "Liquidity risks"
section of the "Report on outlook, risks and opportu-
nities".
3. Focus on value by optimising financing costs.
2. Autonomy through the diversification of refinancing
instruments and investors, and
1. The ability to act at all times by assuring permanent
access to strategically important capital markets,
The overall objective of Group financing is to ensure the
solvency of the BMW Group at all times. Achieving this
objective is tackled in three strategic areas:
A broadly based range of instruments transacted on in-
ternational money and capital markets is used to refi-
nance worldwide operations. Practically all of the funds
raised are used to finance the BMW Group's Financial
Services business.
54
14,223
source of financing. Owing to the increased use of in-
ternational money and capital markets to raise funds,
the scale of funds raised in the form of loans from in-
59 Comments on Financial Statements ternational banks is relatively small.
Position and Net Assets
BMW Group - financial liabilities
Liabilities to banks
Derivative instruments
Commercial paper
Other
in € million
BMW Group - financial liabilities
49-Results of Operations, Financial
In the course of 2015, the BMW Group issued eight euro
benchmark bonds with a total issue volume of €6.75 bil-
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
63 Outlook
Opportunities
63 Report on Outlook, Risks and
62 Events after the End of the
Reporting Period
of BMW AG
Thanks to its good ratings and the high level of accept-
ance it has on capital markets, the BMW Group was
again able to refinance operations during the financial
year 2015 on debt capital markets. In addition to the
issue of bonds and loan notes on the one hand and
private placements on the other, commercial paper was
also issued. Additional funds were raised via new secu-
ritised instruments and the prolongation of existing in-
struments. As in previous years, all issues were highly
sought after by both private and institutional investors.
activities
+5,004
Other Entities.
Cash outflow
from investing
activities
-7,603
23 General and Sector-specific
51 COMBINED MANAGEMENT REPORT
Revenues by segment
in € million
Profit/loss before tax by segment
in € million
2015
2014
2015
2014
Automotive
85,536
-75,173
Automotive
-7,523
6,886
Motorcycles
7
7
36.3
1,723
1,975
Financial Services
Environment
20,599
Financial Services
-107
-179
Motorcycles
-1,679
1,990
23,739
At €3,427 million, selling expenses were slightly lower
than one year earlier (2014: €3,533 million).
Administrative expenses went up by 15.5% to €2,610 mil-
lion, mainly as a result of new IT projects and the higher
workforce size.
Research and development expenses related mainly to
27 Overall Assessment by Management new vehicle models (including relevant expenses relat-
After deducting the expense for taxes, the Company
reports a net profit of €2,741 million, compared to
€3,229 million in the previous year.
Financial and net assets position
Capital expenditure on intangible assets and property,
plant and equipment in the year under report amounted
to €2,748 million (2014: €3,150 million), down by 12.8%
compared to the previous year. Depreciation and amor-
tisation amounted to €2,072 million (2014: €1,890 mil-
lion).
At €3,250 million, the carrying amount of investments
was similar to one year earlier (2014: €3,236 million).
Inventories increased to €4,267 million (2014: €3,859 mil-
lion) due to higher business volumes generally and
stocking up in conjunction with the introduction of new
models.
The expense for income taxes relates primarily to cur-
rent tax for the financial year 2015.
Receivables from subsidiaries climbed by €1,029 million
to €6,229 million, largely in conjunction with intragroup
financing receivables.
Liquidity within the BMW Group is managed centrally by
BMW AG on the basis of a group-wide liquidity concept,
which revolves around the strategy of concentrating a
significant part of the Group's liquidity at the level of
BMW AG. An important instrument used to achieve this
aim is the cash pool headed by BMW AG. The liquidity
position reported by BMW AG therefore reflects the
global activities of BMW AG and other Group companies.
Cash and cash equivalents went down by €595 million
to €2,478 million. This decrease over the twelve-month
period was mainly due to the increase in funds invested
in marketable securities as a strategic liquidity reserve.
At the same time, intragroup refinancing volumes at the
level of BMW AG were also reduced.
Equity rose by €861 million to €12,927 million, while the
equity ratio improved from 35.2% to 37.0%.
In order to secure obligations resulting from pre-retire-
ment part-time working arrangements and pension obli-
gations, investments in fund assets totalling €496 million
were transferred to BMW Trust e.V., Munich, in con-
junction with a Contractual Trust Arrangement (CTA).
Fund assets are offset against the related guaranteed ob-
ligations. The resulting surplus of assets over liabilities
is reported in the BMW AG balance sheet on the line "Sur-
plus of pension and similar plan assets over liabilities".
Pension provisions, net of designated plan assets, in-
creased from €12 million to €82 million.
The increase in other provisions related mainly to sales-
related obligations, pending losses on commodity and
currency contracts, warranties and personnel-related
obligations.
The decrease in other receivables and other assets to
€1,820 million (2014: €2,502 million) was mainly at-
tributable to a lower volume of genuine repurchase
(repo) transactions in place at the end of the reporting
period and lower tax receivables.
Other Entities
The profit from ordinary activities decreased from
€5,163 million to €4,572 million.
The net positive amount of other operating income and
expenses improved by €156 million to €184 million,
and included primarily realised exchange rate gains and
losses as well as reversals of and allocations to provisions.
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
ing to the start-up of the new 7 Series), the development
of drive systems and work on other innovations. Over-
all, research and development expenses increased by
59-Comments on Financial Statements 14.6% year-on-year.
The financial result deteriorated by €594 million, mainly
as a result of lower gains on the fair value measurement
of designated plan assets and the reduction in the dis-
count interest rate used in conjunction with pension and
other non-current personnel provisions. Lower write-
downs on investments worked in the opposite direction.
of BMW AG
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
62 Events after the End of the
211
-154
Eliminations
The cash flow statement for the Automotive segment
shows that the cash inflow from operating activities ex-
ceeded the cash outflow from investing activities by
€4,312 million (2014: €3,587 million). Adjusted for net
investments in marketable securities and term deposits
with longer terms totalling €1,092 million (2014: outflow
of €106 million), mainly in conjunction with strategic
After adjusting for the effects of exchange rate fluc-
tuations and changes in the composition of the BMW
Group with a total positive amount of €73 million
(2014: €88 million), the various cash flows resulted in
a decrease of cash and cash equivalents of €1,566 mil-
lion (2014: increase of €17 million).
The cash outflow from investing activities exceeded the
cash inflow from operating activities by €6,643 million
in 2015. A similar constellation arose in the previous
year, when the shortfall had amounted to €3,204 million.
Cash inflow from financing activities totalled €5,004 mil-
lion (2014: €3,133 million). Proceeds from the issue of
bonds brought in €13,007 million (2014: €10,892 mil-
lion), compared with an outflow of €8,908 million (2014:
€7,249 million) for the repayment of bonds. Non-cur-
rent other financial liabilities resulted in a cash inflow
of €9,715 million (2014: €5,900 million) and a cash
outflow of €8,802 million (2014: €5,697 million). The net
cash inflow for current other financial liabilities was
€2,648 million (2014: €2,132 million). The change in
commercial paper gave rise to a net cash outflow of
€498 million (2014: €1,012 million). The payment of
dividends resulted in a cash outflow of €1,917 million
(2014: €1,715 million).
Further information on investments is provided in the
section on the net assets position.
The cash outflow for investing activities amounted to
€7,603 million (2014: €6,116 million) and was thus 24.3%
higher than in the previous year. The principal reasons
for the higher cash outflow were a €647 million increase
in expenditure for investments (2014: €99 million)
relating to the acquisition of a shareholding in THERE
Holding B.V., Amsterdam, (accounted for at equity) for
an amount of €668 million and a €1,077 million increase
in the net outflow for investments in marketable secu-
rities and term deposits with longer terms (2015: out-
flow of €1,221 million). The net outflow for these items
comprises investments in marketable securities and
term deposits on the one hand, and proceeds from the
sale of marketable securities and the expiry of term de-
posits on the other.
Change in cash and cash equivalents
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
63 Outlook
Opportunities
63 Report on Outlook, Risks and
Reporting Period
62 Events after the End of the
of BMW AG
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
The cash inflow from operating activities in 2015 de-
creased by €1,952 million to €960 million (2014:
€2,912 million), mainly reflecting a €2,739 million
59 Comments on Financial Statements increase in receivables from sales financing offset by
a €298 million decrease in inventories (2014: increase
of €971 million).
in € million
10,000
+960
activities
7,688
Cash inflow
from operating
Cash and cash
equivalents
31.12.2014
1,000
11,000
2,000
4,000
5,000
6,000
7,000
8,000
9,000
3,000
Cash inflow
from financing
Cash flows from operating activities are determined
indirectly, starting with Group and segment net profit.
By contrast, cash flows from investing and financing
activities are based on actual payments and receipts.
Position and Net Assets
Profit before financial result (EBIT) amounted to
€7,836 million (2014: €7,244 million), giving an EBIT
margin of 9.2% (2014: 9.6%).
Other operating income and expenses deteriorated by
€19 million to a net expense of €82 million.
Compared to the previous year, selling and administra-
tive expenses s increased by €574 million to €7,219 mil-
lion. Administrative expenses increased due to a number
of factors, including the increased size of the workforce
and higher expenses for new IT projects. Overall, selling
and administrative expenses were equivalent to 8.4%
(2014: 8.8%) of revenues.
rate factors, the increase was 6.3%. The gross profit
margin was at a similar level to the previous year at
17.7% (2014: 18.6%).
8,707
9,224
The financial result of the Automotive segment was a
net negative amount of €313 million, an improvement
of €45 million compared to the previous year. The result
from equity-accounted investments, comprising the
segment's share of the results of the BMW Brilliance
Automotive Ltd., Shenyang, joint venture and the two
DriveNow entities, was €137 million lower than one
year earlier. The interest result for the year deteriorated
by €146 million to a net expense of €435 million. This
was partly attributable to higher net interest expenses
from defined benefit pension plans. Other financial
result in 2015 was a negative amount of €396 million,
mostly arising in connection with the fair value meas-
urement of currency and commodities derivatives.
Compared to the previous year, other financial result
improved by €328 million, mainly thanks to the lower
negative impact of currency derivatives. In the previous
year, impairment losses recognised on other investments,
most notably on the investment in SGL Carbon SE,
Wiesbaden, had also negatively impacted other finan-
cial result.
Group
-163
-664
Eliminations
-17,057
-19,097
92,175
Group
80,401
operating, investing and financing activities. Cash and
cash equivalents in the cash flow statements correspond
to the amount disclosed in the balance sheet.
Overall, the Automotive segment reports a solid rise in
profit before tax to €7,523 million (2014: €6,886 million).
Segment profit before tax improved by €72 million to
€179 million on the back of higher sales volume.
49-Results of Operations, Financial
29 Review of Operations
Performance Indicators
27 Overall Assessment by Management
27 Financial and Non-financial
23 General and Sector-specific
Environment
20 Management System
23-Report on Economic Position
Motorcycles segment revenues were 18.5% up on the
previous year. Adjusted for exchange rate factors, the in-
crease was 15.4%.
18 General Information on the BMW Group
18 Business Model
52
The consolidated cash flow statements for the Group and
the Automotive and Financial Services segments show
the sources and applications of cash flows for the finan-
cial years 2015 and 2014, classified into cash flows from
Financial position
The negative impact on earnings at the level of profit be-
fore tax reported in the Eliminations column increased
from €163 million in 2014 to €664 million in 2015,
mainly due to an increase in new leasing business and
changes in the leased products portfolio. The previous
year's figures had also benefited from elimination re-
versal effects.
Profit before tax in the Other Entities segment, at
€211 million, was €57 million higher than one year
earlier.
Financial Services segment revenues grew by 15.2% to
€23,739 million. Adjusted for exchange rate factors, rev-
enues went up by 7.6%. The segment's revenue perfor-
mance primarily reflects the growth of its contract port-
folio. The gross profit margin, at 13.3%, was roughly
in line with the previous year (2014: 13.7%). Selling and
administrative expenses were €129 million higher at
€1,164 million. Other operating income and expenses
improved by €17 million to a net expense of €8 million.
Overall, the Financial Services segment reports profit
before tax of €1,975 million, 14.6% up on the previous
year (2014: €1,723 million).
18-COMBINED MANAGEMENT REPORT
0.3
Cash and cash equivalents went down by €1,566 million
to €6,122 million, due to investments made in mar-
ketable securities. Changes in cash and cash equiva-
lents are described in the "Financial position" section.
Liquid funds stood at a high level of €11.4 billion at
31 December 2015. The BMW Group also has access to
a syndicated credit line of €6 billion, with a term up to
October 2018. This credit line, which is provided by a
consortium of 38 international banks, had not been
utilised at the end of the reporting period.
10.4
9.2
-1,904
9.3
2,102
Shareholders
-1.0
16.0
- 3,306
14.8
3,340
Government/public sector
10.7
-8.4
-1,733
8.5
1,918
Providers of finance
11.3
47.4
- 9,764
Group
4,267
19.0
3,894
14.8%
8.5%
Net value added
Employees
48.3%
in %
BMW Group value added 2015
58
* Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
9.2
-48.3
100.0
42.1
0.1
19
0.1
100.0
22,524
Net value added
27
Minority interest
9.6
18.9
20,620
10,870
Employees
Applied to
12.2
11,398
54.1
44,078
-54.8
51,145
14.6
100.0
81,434
100.0
-9,012
93,289
877
1.0
914
0.2
-156
0.2
200
98.7
-80,401
98.8
-1.1
Providers of finance
Government/public sector
11.1
67.0
9.2
25.3
20,620
24.2
22,524
Net value added
9.5
-7,724
8.8
8,222
62,543
intangible and investment assets
8.5
34.8
-28,344
33.0
-30,746
Gross value added
Bought-in costs
17.8
65.2
53,090
Depreciation and amortisation of total tangible,
9.3%
Shareholders
19.0%
- Automotive equity ratio
39.2
-40.1
%
Group equity ratio
24.2
24.8
%
16.3
17.1
%
%
-24.6
%
Group post-tax return on equity-
Group pre-tax return on equity
Group post-tax return on sales
-7.2
6.9
%
-10.8
10.0
24.5
%
8.2
Financial Services equity ratio
Coverage of cash outflow from investing activities by cash inflow from operating activities (Group)
Cash outflow from investing activities (Group)
Cash inflow from operating activities (Group)
Financial Services
Return on equity
Motorcycles
21.8
-31.6
%
Automotive
8.8
61.7
%
Group
20.8
19.3
%
Return on capital employed
158.1
169.9
%
Coverage of intangible assets, property, plant and equipment by equity (Group)
-72.2
92,175
Group pre-tax return on sales
10.4
68 Report on Risks and Opportunities
81 Internal Control System and Risk
63 Outlook
Opportunities
63 Report on Outlook, Risks and
Reporting Period
62 Events after the End of the
of BMW AG
59-Comments on Financial Statements
Position and Net Assets
49 - Results of Operations, Financial
Management System Relevant for the
Financial Reporting Process
29 Review of Operations
27 Overall Assessment by Management
27 Financial and Non-financial
Environment
23 General and Sector-specific
20 Management System
23-Report on Economic Position
18 Business Model
18 General Information on the BMW Group
18-COMBINED MANAGEMENT REPORT
Minority interest
0.1%
Group
Performance Indicators
%
83 Disclosures Relevant for Takeovers
and Explanatory Comments
Depreciation and amortisation
%
-16.5
15.5
%
Group EBIT margin
Group EBITDA margin
Group gross margin
21.2
19.7
%
87 BMW Stock and Capital Markets
2014
12.2
Key performance figures
Other expenses
24.2
54.8
Cost of materials
Net value added
Depreciation and amortisation -8.8
Cost of materials
0
Other expenses
2015
5.6
in %
in € million
46%
40%
48%
Current assets
Non-current assets
Total equity and liabilities in € billion
Balance sheet structure - Automotive segment
172
155
155
172
2015
2014
2014
2015
5%
4%
thereof cash and cash equivalents
38%
37%
36%
39%
Equity
17%
- Non-current provisions and liabilities
57 COMBINED MANAGEMENT REPORT
The compensation of the Board of Management com-
prises both a fixed and a variable component. Bene-
fits are also payable – primarily in the form of pension
benefits - at the end of members' mandates. Further
details, including an analysis of remuneration by
each individual, are disclosed in the Compensation
Report, which can be found in the section "Statement
on Corporate Governance". The Compensation
Compensation Report
Overall, the results of operations, financial position and
net assets position of the BMW Group continued to de-
velop positively during the year under report.
The Group equity ratio at the end of the reporting period
was 24.8% (31 December 2014: 24.2%). The equity ratio
of the Automotive segment was 40.1% (31 December
2014: 39.2%) and that of the Financial Services segment
was 8.2% (31 December 2014: 8.8%).
83
79
79
83
-2015
Current provisions and liabilities
2014
2014
2015
5%
thereof cash and cash equivalents
43%
Current provisions and liabilities
43%
54%
52%
18%
7%
38%
38%
- Non-current provisions and liabilities
Environment
23 General and Sector-specific
20 Management System
23-Report on Economic Position
18 Business Model
18 General Information on the BMW Group
18-COMBINED MANAGEMENT REPORT
Pension provisions decreased from €4,604 million to
€3,000 million over the twelve-month period, mainly as
a result of the higher discount factors used in Germany,
the UK and the USA.
Current other liabilities went up by €1,433 million to
€9,208 million, partly due to increases in deposits re-
ceived, advance payments from customers, and in-
creases in other taxes. The change in deferred income
due to greater volumes of service contracts, Connected
Drive offers and leasing business also contributed to
the increase.
Group equity rose by €5,327 million to €42,764 million,
increased primarily by the profit attributable to share-
holders of BMW AG (€6,369 million). The dividend paid
by BMW AG reduced equity by €1,904 million. Equity
increased as a result of the positive impact arising on
the currency translation of foreign subsidiaries' finan-
cial statements (€765 million) and on remeasurements
of the net defined benefit liability for pension plans
(€1,413 million), the latter attributable primarily to the
higher discount rates applied in Germany, the UK and
the USA. In addition, deferred taxes on items recognised
directly in equity increased equity by €115 million.
Group equity was reduced by net fair value losses on
derivative financial instruments (€1,301 million) and
on marketable securities (€170 million). Other items in-
creased equity by €40 million.
Non-current and current financial liabilities increased
from €80,649 million to €91,683 million over the twelve-
month period. Adjusted for currency factors, the in-
crease was 10.1%. The execution of new ABS transac-
tions and the issue of new bonds were the main factors
driving the increase in non-current and current finan-
cial liabilities.
27 Overall Assessment by Management
27 Financial and Non-financial
On the equity and liabilities side of the balance sheet,
increases were recorded for non-current and current
financial liabilities (14.7% and 12.5% respectively),
Group equity (14.2%) and current other provisions
(18.4%). By contrast, pension provisions decreased
by 34.8%.
creased by 21.1%, mainly as a result of the purchase of
marketable securities.
Other current financial assets went up by €1,251 million
compared to 31 December 2014 to stand at €6,635 mil-
lion and accounted for 3.9% (2014: 3.5%) of total assets.
Adjusted for exchange rate factors, financial assets in-
Investments accounted for using the equity method were
€1,145 million higher at €2,233 million, whereby the
increase was mainly attributable to the first-time con-
solidation of THERE Holding B.V., Amsterdam, and the
BMW Group's share of earnings of the BMW Brilliance
Automotive Ltd., Shenyang, joint venture.
The growth in business reported by the Financial Services
segment is reflected in increases of €4,592 million and
€4,427 million in current and non-current receivables
from sales financing respectively and in the higher level
of leased products (up by €4,800 million). At 31 Decem-
ber 2015, leased products accounted for 20.3% of total
assets (2014: 19.5%). Adjusted for exchange rate factors,
leased products increased by 10.6%. Non-current re-
ceivables from sales financing accounted for 24.3%
(2014: 24.2%) of total assets, current receivables from
sales financing for 16.4% (2014: 15.2%). Adjusted for ex-
change rate factors, non-current receivables from sales
financing went up by 7.7%, current receivables from
sales financing by 14.5%.
Within current assets, increases were registered in par-
ticular for receivables from sales financing (19.5%) and
financial assets (23.2%). By contrast, cash and cash
equivalents decreased by 20.4%.
The increase in non-current assets on the assets side of
the balance sheet related primarily to leased products
(15.9%), receivables from sales financing (11.8%) and
investments accounted for using the equity method
(105.2%).
The Group balance sheet total increased by €17,371 mil-
lion (11.2%) compared to the end of the previous finan-
cial
year
to stand at €172,174 million at 31 December
2015. Adjusted for exchange rate factors, the balance
sheet total increased by 7.7%. The currency impact
was mainly attributable to the appreciation in the value
of a number of currencies against the euro, most nota-
bly the US dollar, the British pound and the Chinese
renminbi.
Net assets
Further information with respect to financial liabilities
is provided in notes 34, 38 and 42 to the Group Financial
Statements.
55 COMBINED MANAGEMENT REPORT
Net financial assets Automotive segment
Report is a subsection of the Combined Management
Report.
Performance Indicators
49-Results of Operations, Financial
37%
Equity
24%
63%
25%
64%
Current assets
Balance sheet structure - Group
Total equity and liabilities in € billion
Non-current assets
56
87 BMW Stock and Capital Markets
29 Review of Operations
83 Disclosures Relevant for Takeovers
and Explanatory Comments
81 Internal Control System and Risk
68 Report on Risks and Opportunities
63 Outlook
Opportunities
63 Report on Outlook, Risks and
Reporting Period
62 Events after the End of the
of BMW AG
59 Comments on Financial Statements
Position and Net Assets
Management System Relevant for the
Financial Reporting Process
Value added statement
The value added statement shows the value of work per-
formed, less the value of work bought in by the BMW
Group during the financial year. Depreciation and
amortisation, cost of materials, and other expenses are
treated as bought-in costs in the value added calcula-
tion. The allocation statement applies value added to
each of the participants involved in the value added
process. It should be noted that the gross value added
amount treats depreciation as a component of value
added which, in the allocation statement, is treated as
internal financing.
Net valued added by the BMW Group in 2015 in-
creased by 9.2% to €22,524 million and was once
again at a high level.
taxes.
Business environment and review of operations
The general and sector-specific environment in which
the BMW AG operates is the same as that for the
BMW Group and is essentially described in the “Report
on Economic Position" section of the Combined Manage-
ment Report.
BMW AG develops, manufactures and sells cars and
motorcycles as well as spare parts and accessories manu-
factured by itself, foreign subsidiaries and external
suppliers. Sales activities are carried out primarily
through branches, subsidiaries, independent dealers
and importers. In 2015, BMW AG increased sales vol-
ume by 108,595 units to 2,275,367 units. This figure
includes 287,755 units relating to series sets supplied
to the joint venture BMW Brilliance Automotive Ltd.,
Shenyang, an increase of 289 units over the previous
year. At 31 December 2015, BMW AG employed a work-
force of 84,860 people, 4,185 more than one year earlier.
Results of operations
Revenues increased by 8.7% compared to the previous
year, primarily as a result of higher sales volume. In geo-
graphical terms, most of the increase related to North
America and Europe. Sales to Group entities accounted
for €55.5 billion or 76.7% of total revenues of €72.4 billion.
Cost of sales increased by 11.5% to €57,764 million and
therefore at a more pronounced rate than the increase in
revenues, mainly reflecting higher purchase prices from
production sites outside Germany and the intragroup
transfer of prior-year warranty expenses from one of the
Group's sales company to BMW AG. As a result, gross
profit decreased by €167 million to €14,620 million.
BMW AG Income Statement
in € million
2015
Differences between the accounting policies used in the
BMW AG financial statements (prepared in accordance
with HGB) and the BMW Group Financial Statements
(prepared in accordance with IFRS) arise primarily in
connection with the accounting treatment of intangible
assets, financial instruments, provisions and deferred
2014
Cost of sales
Gross profit
-72,384
66,599
-57,764
-51,812
14,620
14,787
Selling expenses
-3,427
Revenues
-3,533
The main financial and non-financial performance indi-
cators relevant for BMW AG are largely identical and
synchronous with those of the Automotive segment
of the BMW Group and are described in detail in the
"Report on Economic Position" section of the Combined
Management Report.
Comments on Financial Statements of BMW AG
Change
2014
2014
20.2
19.4
€ million
960
2,912
€ million
-7,603
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
based in Munich, Germany, is the parent company of
the BMW Group. The comments on the BMW Group
and Automotive segment provided in earlier sections
are also relevant for BMW AG, unless presented differ-
ently in the following section. The Financial Statements
of BMW AG are drawn up in accordance with the pro-
visions of the German Commercial Code (HGB) and
the relevant supplementary provisions contained in
the German Stock Corporation Act (AktG).
-6,116
-12.6
47.6
€ million
5,404
- 3,481
€ million
16,911
-14,223
59 COMBINED MANAGEMENT REPORT
Report on Economic Position
%
in %
Administrative expenses
-2,259
-1,325
Unappropriated profit available for distribution
2,102
1,904
60
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23-Report on Economic Position
-639
2015
in %
2015
Other expenses
Cost of materials*
Total output
Other income
Financial income
Revenues
Work performed
BMW Group value added statement
The bulk of the net value added (48.3%) is applied to
employees. The proportion applied to providers of
finance was at a similar level to the previous year (8.5%).
The government/public sector (including deferred tax
expense) accounted for 14.8%. The proportion of net
value added applied to shareholders was at a similar level
to the previous year (9.3%). Minority interests take a
0.1% share of net value added. The remaining proportion
of net value added (19.0%) will be retained in the Group
to finance future operations.
in € million
-2,610
Transfer to revenue reserves
2,741
Research and development expenses
-4,758
-4,152
Other operating income and expenses
184
28
Result on investments
-1,606
-741
Financial result
3,229
-1,043
Profit from ordinary activities
4,572
5,163
Income taxes
Other taxes
Net profit
-1,782
-1,884
-49
-50
-449
11.3
Stable
Increased
Low
63 COMBINED MANAGEMENT REPORT
Report on Outlook, Risks and Opportunities
Outlook
The report on outlook, risks and opportunities describes
the expected development of the BMW Group, including
the associated material risks and opportunities, from a
Group management perspective. The outlook covers
a period of one year, in line with the Group's internal
management system. However, risks and opportunities
are managed on the basis of a two-year assessment.
The report on risks and opportunities therefore covers a
period of two years.
The report on outlook, risks and opportunities contains
forward-looking assertions based on the BMW Group's
expectations and assessments, which are, by their very
nature, subject to uncertainty. As a result, actual out-
comes, including those attributable to political and eco-
nomic developments, could differ substantially - either
positively or negatively - from the expectations de-
scribed below. Further information can be found in the
section “Report on Risks and Opportunities”.
Outlook
Assumptions used in the outlook
The following outlook relates to a forward-looking pe-
riod of one year and is based on the composition of the
BMW Group during that period. The outlook takes ac-
count of all information known up to the date on which
the financial statements are authorised for issue and
which could have a material effect on the overall perfor-
mance of the BMW Group. The expectations contained
in the outlook are based on the BMW Group's forecasts
for 2016 and reflect the most recent status. The basis for
the preparation of and the principal assumptions used in
the forecasts - which consider the consensual opinions
of leading organisations, such as economic research in-
stitutes and banks - are set out below. The BMW Group's
forecast is drawn up on the basis of these assumptions.
The continuous forecasting process ensures that the
BMW Group is always ready to take advantage of op-
portunities as they arise and to react appropriately to
unexpected risks. The principal risks and opportuni-
ties are described in detail in the section "Report on
Risks and Opportunities". The risks and opportunities
discussed in that section are relevant for all of the
BMW Group's key performance indicators and could
result in variances between the outlook and actual
outcomes.
Economic outlook
The upturn in the world economy is likely to continue
and generate growth of 3.4% in 2016. A more restrictive
monetary policy in the USA, the political instability in
Europe, the high levels of sovereign debt being amassed
in Japan and over-capacities in various industrial sectors
in China pose the greatest risks for global economic
growth. Unsolved geopolitical conflicts and problems
resulting from the high number of people seeking refuge,
particularly in Europe, could possibly lead to nationalis-
tic interests becoming a major issue, with correspond-
ingly negative consequences for world trade. Further in-
formation on political and global economic risks can be
found in the risk report.
Economic recovery in the eurozone is expected to con-
tinue at a growth rate of 1.6% in 2016. Similar to the
previous year, the German economy is predicted to play
a major role and grow by 1.8%. The economies of both
France (1.4%) and Italy (1.3%) are set to record higher
growth rates than one year earlier.
In southern Europe, the reforms implemented in recent
years are contributing to an economic recovery, enabling
Spain and Portugal to continue growing on the back of
the general upturn and are likely to grow by 2.7% and
1.6% respectively, according to forecasts.
Growth in the UK will probably be somewhat weaker,
although again in 2016 the expected GDP growth of
2.2% is well above that of the eurozone. The referendum
on the UK remaining in the EU, which must be held by
the end of 2017, can take place at the earliest in the
second half of 2016 and is therefore a source of additional
uncertainty.
The US economy is likely to maintain its current high
pace of growth. Despite the increase in benchmark in-
terest rates, and hence a less expansive monetary policy,
growth of 2.4% is predicted for 2016. The low price of
oil is highly likely to have a positive impact on consumer
spending.
In Japan, the central bank is again set to continue its
"cheap money" policy in 2016 and therefore guarantee
companies attractive financing conditions, which is
likely to give the Japanese economy sufficient momen-
tum to warrant 1.0% growth.
In China, economic growth is again expected to weaken
slightly in 2016, resulting in a growth rate in the region
of 6.5%. The realignment of the Chinese economy to-
wards a more consumption-oriented society is designed
to lead to greater stability, even if growth rates are likely
64
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
KPMG AG Wirtschaftsprüfungsgesellschaft, Munich,
has issued an unqualified audit opinion on the financial
statements of BMW AG, of which the balance sheet and
the income statement are presented here. The BMW AG
financial statements for the financial year 2015 will be
submitted to the operator of the electronic version of the
German Federal Gazette and can be obtained via the
Company Register website. These financial statements
are available from BMW AG, 80788 Munich, Germany.
23 Report on Economic Position
Events after the end of the reporting period
No events have occurred since the end of the reporting
period which could have a major impact on the result
of operations, financial position and net assets of BMW AG
or the BMW Group.
Outlook
18 General Information on the BMW Group
18 Business Model
20 Management System
23-Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
Risks and opportunities
BMW AG's performance is highly dependent on the
same set of risks and opportunities that affect the BMW
Group and which are described in detail in the “Report
on Outlook, Risks and Opportunities" section of the Com-
bined Management Report. As a general rule, BMW AG
participates in the risks entered into by Group entities
on the basis of the relevant shareholding percentage.
BMW AG is integrated in the group-wide risk manage-
ment system and internal control system of the BMW
Group. Further information is provided in the “Internal
59-Comments on Financial Statements Control System and Risk Management System Relevant
of BMW AG
62-Events after the End of the
Reporting Period
63-Report on Outlook, Risks and
Opportunities
63-Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
for the Financial Reporting Process" section of the Com-
bined Management Report.
Due to its dominant role in the Group and its close ties
with Group entities, expectations for the BMW AG with
respect to the Company's financial and non-financial
performance indicators correspond largely to the BMW
Group's outlook for the Automotive segment, which is
described in detail in the “Report on Outlook, Risks and
Opportunities" section of the Combined Management
Report.
18-COMBINED MANAGEMENT REPORT
23 General and Sector-specific
to be weaker in the short term. It cannot be ruled out,
however, that economic output in China may slow down
more than currently expected.
Automobile markets in major emerging economies are
likely to remain under pressure in the current year. Due
to the prevailing unfavourable economic and political
situation, Russia is expected to see a further drop of
15.4% to 1.2 million units. The situation in Brazil seems
unlikely to stabilise after the decrease recorded in 2015,
with the market expected to contract by a further 7.6%
to 2.3 million units.
Motorcycle markets
Markets for 500 cc plus motorcycles are likely to con-
tinue growing slightly in 2016. Registration figures for
Europe as a whole are also expected to rise slightly,
including a minor increase in Germany. Italy and
France are set to remain at similar levels to the past
65 COMBINED MANAGEMENT REPORT
year. The positive trend in the USA is expected to
continue.
Financial services markets
The trend towards more normal rates of growth in
China, together with weaker signals coming from other
emerging markets, is bound to have an influence on
global trade, and hence on export-oriented industrialised
countries in 2016. While the Chinese central bank will
no doubt be directing its attention to measures aimed at
stabilising the domestic economy, other key central
banks are likely to focus on achieving price stability.
In the USA, stable economic growth, the improving em-
ployment situation and higher inflation could induce
the Fed to raise interest rates moderately over the course
of the year.
In the eurozone, interest rates are set to remain low over
the coming year. Factors such as stubbornly low infla-
tion rates, steady economic recovery and uncertainty re-
garding economic developments on major emerging
markets could persuade the ECB to continue its bond-
buying programme.
Depending on rates of growth and inflation on the
domestic front and developments in key emerging
economies, the UK could well see a first interest rate
rise at some point in 2016. Uncertainties prevailing
prior to the referendum on a possible exit from the EU
could, however, forestall a return to more accustomed
monetary policies.
The Japanese economy is again only likely to see slow
growth in 2016. Even though consumer spending vol-
umes should rise on the back of the Bank of Japan's ex-
pansionary monetary policy, other unfavourable factors,
such as weak demand from China, could stand in the
way of a sustainable upturn.
Expected consequences for the BMW Group
Future developments on international automobile
markets also have a direct influence on outcomes for
the BMW Group. Whereas competition might intensify
in contracting markets, new opportunities beckon in
growth regions. Sales volumes in some countries are
likely to be affected by a range of new competitive chal-
lenges. The dynamic growth seen on European mar-
kets in 2015 is not expected to maintain the same pace
in 2016. The Americas region should see a continua-
tion of the upward trend of previous years. Despite
the ongoing process of normalisation on the Chinese
market, sales volumes in Asia could well pick up
again.
Due to its global business model, the BMW Group is well
placed to exploit opportunities, including those arising
at short notice. Outstanding coordination between the
Group's sales and production networks also helps cush-
ion the impact of unforeseeable developments in its
various regions. Investing in markets with good future
prospects is also a basis for further growth, while simul-
taneously expanding the global presence of the BMW
Group. Thanks to its three strong brands - BMW, MINI
and Rolls-Royce - there is every reason to assume that
the BMW Group will continue performing successfully
during the current year.
Outlook for the BMW Group
BMW Group
Profit before tax: slight increase expected
Competition on international automobile markets is set
to remain fierce in the current year. Furthermore, con-
tinuing normalisation on the Chinese market and develop-
ments in Russia are likely to influence the pace of earn-
ings growth. Political and macroeconomic uncertainties
in Europe may also play a role (see the section "Political
and global economic risks" in the risk report).
Nevertheless, the BMW Group expects to remain firmly
on course for growth in 2016. Attractive products and
services, covering the entire spectrum of individual mo-
bility, will continue making a substantial contribution
to further improving earnings. This upward trend will,
however, be held down by rising personnel expenses
and high levels of investment in projects that ultimately
help safeguard future competitiveness. Overall, Group
profit before tax is expected to increase slightly year-on-
year (2015: €9,224 million).
Workforce at year-end: slight increase expected
The BMW Group will continue to recruit staff in 2016,
spurred by growth in the automobile and motorcycle
lines of business on the one hand and the expansion of
its financial and mobility services on the other. Based
on our latest forecasts, we expect a slight increase in the
size of the workforce (2015: 122,244 employees) during
the coming twelve-month period.
66
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
The market in Japan is forecast to grow by 7.3% to 5.2 mil-
lion units year-on-year.
Environment
The majority of Europe's markets are likely to continue
recovering in 2016, growing overall by approximately
1.4% to 14.4 million units. Excluding Germany, the pic-
ture across Europe is similar, with market volume also
expected to grow by 1.4% to 11.2 million units. The re-
gion's core markets, however, are only likely to see rela-
tively weak growth. Registration figures in Germany, for
instance, are predicted to increase by 1.4% to 3.3 mil-
lion units. The French market is expected to grow by
3.3% to 1.9 million units and the Italian market by 3.0%
to 1.6 million units. By contrast, demand in Spain is
expected to show even more vitality than in 2015 and
grow by 9.7% to 1.1 million units.
Automobile markets
In India, investment-friendly economic policies are likely
to continue in 2016, helping to generate a growth rate
of 7.6%. The outlook for Russia (-0.2%) and Brazil
(-2.6%) is far less bright. After drops in economic output
27 Overall Assessment by Management in 2015, both economies are likely to remain in reces-
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
sion in 2016, with persistently low prices for raw mate-
rials exerting a detrimental effect on growth.
59 Comments on Financial Statements Currency markets
of BMW AG
62 Events after the End of the
Reporting Period
63-Report on Outlook, Risks and
Opportunities
63-Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Currencies which have the greatest influence on the
BMW Group's international business, i.e. the US dollar,
the Chinese renminbi, the Japanese yen and the British
pound, may well be subject to a significant degree of
fluctuation again in 2016.
The US dollar is again likely to remain generally strong
against the euro in 2016. This assumption is supported
by the interest rate turnaround initiated in the USA in
December 2015, highlighting the different approaches
to monetary policies taken by the Fed and the ECB.
Another factor is that economic recovery in Europe is
likely to proceed at a slower pace than in the USA.
Given that the Chinese renminbi will probably remain
closely coupled to the US dollar in the short term, there
is a considerable likelihood that its value against the
euro will tend upwards in 2016. If, on the other hand,
the Chinese central bank continues to intervene in cur-
rency markets, thus halting the upward trend, the value
of the renminbi may possibly move sideways. In the
long term, however, capital markets in China are likely
to become more liberalised, as a result of which the con-
vertibility of the renminbi with other currencies would
increase.
As the Bank of Japan and the ECB seem set to continue
their expansionary monetary policies for the time be-
ing, the rate of the Japanese yen is unlikely to fluctuate
greatly in relation to the euro.
Owing to the robust state of the UK economy, and fanned
by speculation that the Bank of England is on the verge
of raising interest rates, the British pound could either
remain at its current level or even gain additional ground
in the short to medium term.
The onset of normalisation with respect to US mone-
tary policies suggests that the currencies of numerous
emerging economies will remain under pressure in the
foreseeable future. Countries that export raw materials
and are faced with current account and fiscal deficits
are most likely to be affected.
Worldwide demand for automobiles is forecast to grow by
approximately 1.9% in the current year to an estimated
84.0 million units. Breaking that figure down, the BMW
Group forecasts slightly lower growth in the USA than
in 2015, with market volume edging up by around 1.3%
to 17.7 million units. China is expected to see a further
drop in the pace of vehicle registration growth, slowing
to around 6.9% or 22.0 million units.
20 Management System
Events after the End of the Reporting Period
62
628
697
6,229
-5,200
-1,820
2,502
3,911
-3,572
-2,478
3,073
19,333
18,903
Prepayments
303
265
Surplus of pension and similar plan assets over liabilities
-722
-1,123
Total assets
34,977
34,236
3,859
Equity and liabilities
4,267
Cash and cash equivalents
in € million
2015
2014
Assets
Intangible assets
353
405
Property, plant and equipment
11,016
10,304
Investments
-3,250
3,236
Tangible, intangible and investment assets
14,619
13,945
Inventories
Trade receivables
Receivables from subsidiaries
Other receivables and other assets
Marketable securities
Current assets
Report on Economic Position
Subscribed capital
Revenue reserves
82
-12
-7,617
-7,308
7,699
7,320
-1,343
-1,864
4,500
4,784
6,690
6,872
239
216
12,772
13,736
1,549
34,977
-1,083
34,236
Liabilities to banks decreased as a result of the repay-
ment of project-related loans.
Deferred income went up by €466 million to €1,549 million
and comprised mainly amounts relating to services still to
be performed for service and maintenance contracts.
31
Capital reserves
-30
12,927
Unappropriated profit available for distribution
Equity
Registered profit-sharing certificates
Pension provisions
Other provisions
Provisions
Liabilities to banks
Trade payables
Liabilities to subsidiaries
Other liabilities
Liabilities
Deferred income
Total equity and liabilities
657
656
2,107
-2,084
-8,061
-7,422
2,102
-1,904
12,066
Automotive segment
Deliveries to customers: slight increase expected
The BMW Group forecasts successful sales volume per-
formances for all three of its brands in 2016. Apart
from aiming for evenly balanced growth in the various
regions, a sharp eye is also always kept on profitability.
Based on these forecasts, the BMW Group is set to re-
main at the forefront of the premium segment in 2016.
27 Overall Assessment by Management Assuming economic conditions remain stable, deliveries
to customers are expected to rise slightly to a new re-
cord level (2015: 2,247,485¹ units).
23 Report on Economic Position
Supervisory Board
Risk Management
Steering Committee
Board of Management
Group Audit
69 COMBINED MANAGEMENT REPORT
"Network Representatives". The network's formal or-
ganisational structure helps promote its visibility and
underline the importance of risk management within
the BMW Group. The duties, responsibilities, and tasks
of the centralised risk management unit and the above-
mentioned Network Representatives are clearly de-
scribed, documented and accepted. Group risk manage-
ment is geared towards meeting the following three
criteria: effectiveness, usefulness and completeness.
Risks are also potentially capable of damaging the BMW
Group's reputation. Although reputational risks are dif-
ficult to quantify, their importance is constantly grow-
ing, particularly in view of an increasingly critical gen-
eral public and the speed with which information can
be distributed online. With this in mind, a new concept
has been developed (and validated with the aid of exter-
nal experts), aimed at strengthening links between the
BMW Group's risk management and its corporate com-
munication functions. In order to take better account
of reputational risks in the overall risk assessment, the
Head of Group Communication Strategy, Corporate
and Market Communication is now also a member of
the Risk Management Steering Committee. A further
focus was placed on checking the skill sets of staff and
managers involved in risk management throughout the
BMW Group. The revamped intranet portal used for
centralised risk management provides helpful support
for those working in this field, whilst ensuring that risk
reporting is complete.
Risk management for the Group as a whole falls under
the remit of the Risk Management Steering Committee,
the Compliance Committee, the Internal Control System
and the Group Internal Audit.
Risk management process
The risk management process applies throughout the
Group and comprises the early identification and pene-
tration of risks, comprehensive analysis and risk meas-
urement, the coordinated use of suitable management
tools and also the monitoring and evaluation of any
measures taken.
Risks reported from within the network are firstly pre-
sented for review to the Risk Management Steering
Committee, for which Group Controlling is responsible.
After review, the risks are reported to the Board of
Management and the Supervisory Board. Any significant
or going-concern-related risks are classified according
to their potential to impact the Group's results of opera-
tions, financial position and net assets. The level of risk
is then quantified in each case, depending on its proba-
bility of occurrence and the respective risk mitigation
measures.
The risk management system is regularly examined by
the Internal Audit. By sharing experiences with other
companies on an ongoing basis, the BMW Group en-
deavours to incorporate new insights in the risk manage-
ment system, thus ensuring continual improvement.
Regular basic and further training as well as information
events held throughout the BMW Group, particularly
within the risk management network, are invaluable ways
of preparing people for new or additional challenges re-
lating to the processes in which they are involved.
In addition to comprehensive risk management, manag-
ing the business on a sustainable basis also constitutes
one of the Group's core corporate principles. Any risks
or opportunities relating to sustainability issues are ex-
amined and discussed by the Sustainability Committee.
Strategic options and measures open to the BMW Group
are put forward to the Sustainability Board, which in-
cludes the entire Board of Management. Risk aspects
discussed at this level are integrated in the work of the
group-wide risk network. The overall composition of
the Risk Management Steering Committee and the Sus-
tainability Committee ensures that risk and sustainability
management are closely coordinated.
Risk measurement
In order to determine which risks can be considered
significant in relation to results of operations, financial
position and net assets and to identify changes in key
performance indicators used by the BMW Group, risks
are classified as high, medium or low. The impact of
risks is measured and reported net of risk mitigation
measures (net basis).
The overall impact on results of operations based on the
assumption that the risk will materialise is measured
for the two-year assessment period and allocated to the
following categories:
Class
Low
Medium
High
Earnings impact
-> €0-500 million
Internal Control System
-> €500-2,000 million
-> €2,000 million
Monitoring
Controlling
63 Outlook
68 - Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
As a general rule, opportunities and risks are assessed
over a medium-term period of two years. All potential
risks of losses (individual and accumulated risks) are
monitored and managed from a risk management per-
spective. As a matter of principle, any risks capable of
posing a threat to the going-concern status of the BMW
Group are avoided. If there is no specific reference to a
segment, opportunities and risks relate to the Auto-
motive segment.
The scope of entities covered by the report on risks and
opportunities corresponds to the scope of consolidated
entities included in the BMW Group Financial Statements.
Risk management system
The objective of the risk management system, and one
of the key functions of risk reporting, is to identify,
record and actively manage any internal or external
risks that could pose a threat to the attainment of the
Group's corporate targets. The risk management system
covers all significant risks to the Group and any which
could I pose a threat to its going-concern status. In terms
of the structure of the risk management system, the re-
sponsibility for risk reporting lies with each individual
employee and manager in their various roles - and not
with any centralised unit in particular. Every person
employed by the Group is required to report any risks
identified via the available reporting channels. This re-
quirement is set out in guidelines that apply throughout
the Group.
The Group risk management system comprises a decen-
tralised network covering all parts of the business and
is steered by a centralised risk management function.
Each of the BMW Group's fields of responsibility is
represented within the risk management network by
Risk management in the BMW Group
Effectiveness
Usefulness
Completeness
Compliance
Committee
Group-wide risk management
Identification
Reporting
Analysis and
Measurement
Risk management
①
Opportunities
For the sake of simplicity, the overall impact on results
of operations, financial position and net assets is referred
to in the Report on Risks and Opportunities as "earnings
impact".
70
-> €0-50 million
> €50-400 million
> €400 million
Opportunities management system and
identifying opportunities
New opportunities regularly present themselves in the
dynamic business environment in which the BMW
Group operates. General economic trends and sector-
specific factors - including external regulations, sup-
pliers, customers and competitors - are monitored on a
continuous basis. Identifying opportunities is an integral
part of the process of developing strategies and drawing
forecasts for the BMW Group.
up
The Group's product and service portfolio is continually
reviewed on the strength of these analyses and new
product projects are presented to the Board of Manage-
ment for consideration, as deemed appropriate.
The continuous improvement of important business pro-
cesses and strict cost controls are essential in the Group's
ongoing endeavours to ensure good profitability and
a high return on capital employed. Any profitability im-
provement measures likely to be implemented are in-
corporated in the forecast. One example is the imple-
mentation of modular-based production and common
architectures, which enable a greater commonality of
features between different models and product lines.
This strategy, in turn, contributes to improved profita-
bility by reducing development costs and other invest-
ment on the series development of new vehicles. The
new approach helps cut production costs and increase
production flexibility. Moreover, a more competitive cost
basis opens up opportunities to engage in new market
segments.
The implementation of identified opportunities is un-
dertaken on a decentralised basis. The significance
of opportunities for the BMW Group is classified in
the categories "material" or "not material".
Risks and opportunities
The following table provides an overview of all risks
and opportunities and illustrates their significance for
the BMW Group.
Neither at the balance sheet date nor at the date on
which the Group Financial Statements were authorised
for issue were any risks identified that could pose a
threat to the going-concern status of the BMW Group.
Any risks or opportunities which could, from today's
perspective, have a significant impact on the results of
operations, financial position and/or net assets of the
BMW Group are described in the following sections.
Risks and opportunities
Political and global economic risks and opportunities
Strategic and sector risks and opportunities
Risks and opportunities relating to operations
Production and technology.
Risk amount
Change com-
pared to prior year
Opportunities
-Change com-
pared to prior year
Stable
Risk amount
The significance of risks for the BMW Group is deter-
mined on the basis of risk amounts. The measurement
of the amount of a risk takes account of both its impact
Medium
High
Class
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63-Report on Outlook, Risks and
Opportunities
63 Outlook
68-Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
(net of appropriate countermeasures) and its likelihood
of occurrence in each case. The amount of a risk is
ap-
proximated in the case of risks measured on the basis of
"value-at-risk” and “cash-flow-at-risk" models. In this
situation, the following assessment criteria are applied:
Low
The prudent management of opportunities and risks is
a fundamental prerequisite for the Group's ability to
59 Comments on Financial Statements react appropriately to changes in political, legal, techni-
cal or economic conditions. All opportunities and risks
identified are addressed in the Outlook Report, if they
seem likely to materialise. The following sections focus
on potential future developments or events, which could
result in a positive variance (opportunities) or a nega-
tive variance (risks) in the BMW Group's outlook. The
potential impact of risks and opportunities is assessed
separately as a general rule, i.e. without set-off.
63-Report on Outlook, Risks and
Reporting Period
2 EU-28.
67 COMBINED MANAGEMENT REPORT
commencing production and the plants in Brazil and
Thailand raising production volumes.
Financial Services segment
per-
Return on equity expected at previous year's level
The Financial Services segment is likely to continue
forming well in 2016. Segment RoE is expected to come
in at a similar level to the previous year (2015: 20.2%),
thus remaining ahead of the minimum target of 18%.
Overall assessment by Group management
Business is expected to develop well in the financial year
2016, with the introduction of new models and the ex-
pansion of individual mobility-related services promising
further profitable growth. Despite the many challenges
described above, Group profit before tax is forecast to
increase slightly. Automotive segment revenues are ex-
pected to increase slightly on the back of a slight in-
crease in deliveries to customers. Simultaneously, a
slight decrease in fleet carbon emissions is predicted.
The Group's targets are to be met with only a slight rise
in staff numbers worldwide. The Automotive segment's
EBIT margin is set to remain within the target range
of between 8 and 10%, although its ROCE is likely to de-
crease moderately. The Financial Services segment's
ROE will be broadly in line with the previous year. Never-
theless, both performance indicators will be higher than
their long-term targets of 26% (ROCE) and 18% (ROE)
respectively. Motorcycles segment sales are also forecast
to grow slightly, accompanied by a slight drop in RoCE.
Depending on the political and economic situation and
the outcomes of the risks and opportunities described
below, actual business performance could, however, dif-
fer from current expectations.
Principal performance indicators
BMW Group
Profit before tax-
Workforce at year-end
Automotive segment
Sales volume¹
Fleet emissions²
Revenues
EBIT margin
Return on capital employed -
2015
2016
Outlook
€ million
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
(2015: 282,000 units).
9,224
Return on capital employed: slight decrease expected
Segment RoCE is forecast to decrease slightly in 2016
(2015: 31.6%), mainly reflecting the scheduled build-up
of inventory levels due to the Indian partner entity, TVS,
Motorcycles segment
23 General and Sector-specific
Environment
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
of BMW AG
62 Events after the End of the
Reporting Period
63-Report on Outlook, Risks and
Opportunities
63-Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
59 Comments on Financial Statements Although the overall pace of growth may be marginally
weaker than one year earlier, the combination of attrac-
tive new models and good market conditions, particu-
larly in Europe, should nevertheless provide additional
impetus for vehicle sales. Most notably, the previous
year's upward trend on southern European markets is
set to continue. By contrast, the situation on the Russian
car market is likely to remain tense over the forecast pe-
riod. Despite progressive normalisation on the Chinese
market, Asia as a whole is expected to provide a certain
degree of momentum for growth. Sales volume in the
USA is also forecast to rise slightly.
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
A good contribution to overall sales performance in 2016
is expected to come from the new models available since
mid-2015, including the new seven-seater BMW 2 Series
Gran Tourer and the model updates of the BMW 3 Series
Sedan, the 3 Series Touring and the M3. The second
generation of the extremely successful BMW X1 was
launched in October 2015. The highly efficient BMW X5
xDrive40e has been in showrooms since the end of
2015. This plug-in hybrid vehicle represents the next
step in the process of transferring innovative drivetrain
system technologies from BMW i models to the core
BMW brand. At the end of October 2015, the sixth gen-
eration of the BMW 7 Series heralded the beginning of a
new era in the luxury segment. The new MINI Clubman
has also been on the market since the end of October
2015.
Further additions to the model range will also be made
in the course of 2016. February saw the launch of the
new BMW X4 M40i. The premium small car segment
was enriched by the addition of the new version of the
MINI Convertible in early March. A luxury convertible,
the Rolls-Royce Dawn, will become available during the
first half of the year.
Carbon fleet emissions²: slight decrease expected
Regulations governing vehicle carbon emissions are be-
coming stricter all around the world. Developing highly
efficient combustion engines and increasing the scope
of electrification in its fleet of vehicles are key aspects in
the BMW Group's constant efforts to reduce fuel con-
sumption and carbon emissions, without compromising
its excellent standards in terms of sporting flair and
dynamic driving performance. Fleet emissions are fore-
cast to improve slightly in 2016, thus continuing the
trend seen in previous years (2015: 127 grams CO2/km).
Revenues: slight increase expected
The positive business performance predicted for the
BMW Group will also be reflected in Automotive seg-
ment revenues. A slight increase in segment revenues
is therefore predicted for the forecast period (2015:
€85,536 million).
EBIT margin in target range between 8 and 10% expected
An EBIT margin in a range between 8 and 10% (2015:
9.2%) remains the target for the Automotive segment.
Segment RoCE is forecast to decrease moderately (2015:
72.2%). However, the long-term target RoCE of at least
26% for the Automotive segment will be easily surpassed.
Deliveries to customers: slight increase expected
The BMW Group expects the upward trend in the Motor-
cycles segment to continue. The new R NineT Scrambler
and G 310 R models unveiled at last autumn's trade fairs
will broaden the product portfolio and attract new cus-
tomer groups. Overall, deliveries of BMW motorcycles to
customers are forecast to increase slightly year-on-year
(2015: 136,963 units).
slight increase
122,244
slight increase
slight decrease
%
20.2
in line with last year's level
68
Report on Outlook, Risks and Opportunities
Report on Risks and Opportunities
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
As a worldwide leading manufacturer of premium cars
and motorcycles and provider of premium financing
and mobility services, the BMW Group is exposed to
numerous uncertainties and changes. Making full use of
the opportunities that present themselves is the basis for
its entrepreneurial success. In order to achieve growth,
drive profitability, boost efficiency and maintain sustain-
able levels of business going forward, the BMW Group
27 Overall Assessment by Management consciously takes certain risks.
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
of BMW AG
62 Events after the End of the
slight increase
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2015: 282,000 units).
2 EU-28.
Return on equity.
Financial Services segment
units
-2,247,485
slight increase
-g CO2/km
127
slight decrease
€ million
-85,536
slight increase
-%
BMW AG Balance Sheet at 31 December
9.2
%
-72.2
moderate decrease
units
-136,963
-%
31.6
Motorcycles segment
Sales volume
Return on capital employed.
between 8 and 10
61 COMBINED MANAGEMENT REPORT
High
High
Stable
High
- Foreign currencies
Stable
Insignificant
Stable
Medium
Significant
Stable
High
Financial risks and opportunities
Information, data protection and IT -
Pension obligations
Stable
Insignificant
Stable
High
-Stable
Insignificant
Insignificant
Stable
Reduced
Medium
Sales and marketing
-Purchasing
Medium
Stable
Stable
Insignificant
Insignificant
Stable
Significant
Stable
Raw materials
Legal risks
Stable
Stable
Significant
Stable
Stable
Stable
Increased
High
Medium
Liquidity/operational risks
Interest rate changes
-High
Residual value
Stable
Significant
Stable
Significant
High
Stable
Significant
-Liquidity
Low
Stable
Risks and opportunities relating to the provision of financial services
Credit risk
-High
Stable
18 General Information on the BMW Group
Information technology (IT) is used to an increasing
extent in every aspect of the business. In this context,
the significance of electronically processed data and
the availability of IT systems is constantly growing.
These developments create opportunities on the one
hand, whilst also posing a source of risk on the other.
18 Business Model
18-COMBINED MANAGEMENT REPORT
76
The BMW Group could incur damage if the confiden-
tiality or integrity of sensitive information, data and
systems were to be compromised and/or availability re-
stricted. One of the direct consequences of such an
eventuality would be additional expense incurred to re-
cover data and restore systems. Such eventualities could
Information, data protection and IT risks
Risks and opportunities relating to information, data
protection and IT systems
Risks and opportunities relating to pension obligations
The BMW Group's pension obligations to its employees
resulting from defined benefit plans are measured on
the basis of actuarial reports. Future pension payments
are discounted by reference to market yields on high-
quality corporate bonds. These yields are subject to
market fluctuation and therefore influence the level of
pension obligations. Changes in other parameters, such
as rises in inflation and longer life expectancy, also im-
pact pension obligations and payments. Opportunities
and risks arise depending on the nature and scale of
changes in these parameters.
Within a favourable capital market environment, the
return generated by pension assets may exceed expecta-
tions and reduce the deficit of the relevant pension
plans. This, in turn, could have a materially favourable
impact on the net assets position and earnings perfor-
mance of the BMW Group.
If risks relating to pension obligations were to materialise,
they could have a high negative earnings impact over
the two-year assessment period. The level of risk relating
to pension obligations is classified as high.
and the related assets are kept separate from those of
the Group. The amount of funds required to finance pen-
sion payments out of operations in the future is there-
fore substantially reduced, since most of the Group's
pension obligations are settled out of pension fund
assets. The pension assets of the BMW Group comprise
interest-bearing securities, equities, real estate and
other investment classes. Assets held by pension funds
and trust arrangements are monitored continuously
and managed on a risk-and-yield basis. A broad spread
of investments also helps to mitigate risk. In order to re-
duce fluctuations in pension funding shortfalls, invest-
ments are structured to coincide with the timing of
pension payments and the expected pattern of pension
obligations. Remeasurements on the obligations and
fund asset sides are recognised, net of deferred taxes, in
"Other comprehensive income" and hence directly in
equity (within revenue reserves).
Most of the BMW Group's pension obligations are
managed in external pension funds or trust arrangements
The BMW Group considers that these opportunities will
not have a material earnings impact over the two-year
assessment period compared to the assumptions made
in the outlook.
75 COMBINED MANAGEMENT REPORT
20 Management System
Opportunities relating to sales and marketing
The BMW Group focuses its selling capacities primarily
on markets with the greatest sales volume and revenue
potential and fastest growth rates. Developments in the
field of digital communication and connectivity are also
opening up opportunities for marketing the BMW
Group's various brands. Consumers can meanwhile be
reached on a more targeted and individual basis, thus
helping to strengthen long-term relationships and
brand loyalty. Investment in both existing and new mar-
keting concepts is firmly aimed at intensifying relation-
ships with customers. A new online sales platform was
introduced in Great Britain, for example, which enables
customers to select, finance and buy their vehicles
online. There will be no relaxing of efforts in the ac-
tive search for new opportunities to create even greater
added value for customers than currently expected,
whilst at the same time looking for ways to boost sales
volumes and achieve better selling prices. The BMW
Group keeps track of the latest developments and trends
in communication technology, including the use of social
media and networks, in order to extend customer reach
for its brands. The automotive-related business activities
of technology companies are also closely followed (e.g.
automated driving). The BMW Group's brands are present
on numerous platforms, such as Facebook, YouTube
and Twitter. Digital communication can result in a more
intense product and brand experience for customers,
which could, in turn, have a positive impact on revenues
and earnings.
Further information on risks in conjunction with pen-
sion provisions is provided in note 35 of the Group
Financial Statements.
23 Report on Economic Position
If purchasing risks were to materialise, they could have
a high negative earnings impact over the two-year as-
sessment period. The level of risk attached to supply risk
is classified as medium.
Environment
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
If sales and marketing risks were to materialise, they
could have a high negative earnings impact over the
two-year assessment period. The level of risk attached
to sales and marketing risks is classified as high.
Management System Relevant for the
Financial Reporting Process
68-Report on Risks and Opportunities
81 Internal Control System and Risk
63 Outlook
Opportunities
63-Report on Outlook, Risks and
Reporting Period
23 General and Sector-specific
62 Events after the End of the
49 Results of Operations, Financial
Position and Net Assets
measures by the departments responsible. Technical
data protection procedures include virus scanners, fire-
wall systems, access authorisation controls at both oper-
59 Comments on Financial Statements ating system and application level, regular data back-
29 Review of Operations
Performance Indicators
27 Financial and Non-financial
27 Overall Assessment by Management lar monitoring, and the implementation of appropriate
Risk management procedures include the systematic
documentation of all informational and IT risks, regu-
also possibly have a negative impact on operating per-
formance due to the non-availability of products and
services or even downtimes in the production of spare
parts and/or vehicles. Indirectly, the BMW Group could
also be exposed to unquantifiable reputational risks.
of BMW AG
Changes in global economic conditions and increasingly
protectionist trends are among the factors that could
result in lower demand as well as fluctuations in the re-
gional spread and composition of sales in terms of
vehicles and mobility services. Risks relating to these
developments can be reduced with the aid of flexible
selling and production processes. At the same time, in-
creased pressure on selling prices and margins caused
by intense competition on the world's markets, particu-
larly in western Europe, the USA and China, requires
constant analysis, including keeping an eye on develop-
ments in grey market volumes from the USA to China.
Selling price and margin risks are measured using a
scenario approach, based on a bottom-up survey of the
key sales markets and an analysis of historical data.
18 General Information on the BMW Group
18 Business Model
The BMW Group does not expect these opportunities
to have a material earnings impact over the two-year as-
sessment period when compared to the assumptions
made in the outlook.
Environment
23 General and Sector-specific
23 Report on Economic Position
20 Management System
ups and data encryption. Regular analyses and controls
(for example the testing of data protection requirements)
and rigorous security management ensure a high level
of security.
18-COMBINED MANAGEMENT REPORT
74
Close cooperation between carmakers and automotive
suppliers in the development and production of vehicles
and the provision of services generates economic bene-
fits, but also raises levels of dependency. The increasing
trend towards modular-based production with a set
of common architectures covering various models and
product lines exacerbates the consequences of the loss
of an individual supplier or failure to supply on time.
As part of the supplier preselection process, the BMW
Group is careful to ensure that its future business part-
ners meet the same high ecological, social and corporate
governance standards by which the BMW Group itself
expects to be measured. The BMW Group Sustain-
ability Standard, which contains a set of fundamental
principles and standards covering both production and
Purchasing risks
Given the long lead times involved in developing new
products and processes, the BMW Group does not
expect these opportunities to have a material impact on
earnings during the forecast period.
Production- and technology-related opportunities
Opportunities could arise as a result of product- or pro-
cess-related technological innovations, or from organi-
sational changes designed to improve efficiency or
increase competitiveness. In the field of lightweight
construction, for example, carbon is being utilised in
high volumes for the first time in the automobile indus-
try in the construction of the BMW i3. During the year
under report, the BMW Group went one step further
by introducing the use of carbon in the BMW 7 Series,
thereby generating competitive benefits in the form of
lower fuel consumption and better driving dynamics
through reduced vehicle weight.
If risks from the production- and technology-related
risks category were to materialise, they could have a
high negative earnings impact over the two-year assess-
ment period. The level of risk attached to production-
and technology-related issues is classified as medium.
through quality assurance activities in the form of regu-
lar audits and the continual improvement of quality
management systems. The BMW Group also recognises
appropriate provisions for both statutory and non-
statutory warranty obligations. These provisions reduce
the risk to the BMW Group's earnings, a fact already
taken into account in the forecast. Further information
on risks in conjunction with provisions for statutory
and non-statutory warranty obligations is provided in
note 36 of the Group Financial Statements.
The development and production of technologically com-
plex vehicles in high volumes is technically challenging
and a source of potential quality risks. In order to
achieve the outstanding level of quality expected of the
BMW Group's products and minimise both statutory
and non-statutory warranty costs, it may possibly be
necessary to incur a higher level of expenditure than
originally forecast. There is also a risk of limited avail-
ability of products, particularly around the time of new
vehicle production start-ups. These risks are mitigated
Risks and opportunities relating to operations
Production- and technology-related risks
Production stoppages and downtimes – in particular due
to fire, but also to manufacturing and control equipment
breakdowns or transportation and logistical disruptions
- pose risks against which the BMW Group has put suit-
able measures in place. From the outset, production
structures and processes are designed with a view to
minimising any potential damage and its probability of
occurrence. The broad array of measures taken includes
technical fire protection solutions, land development
measures including contingencies against flooding, pre-
ventative maintenance, spare parts management on a
multi-site basis, and backup plans for alternative trans-
portation. The level of risk is also reduced by the deploy-
ment of flexible work-schedule models and employee
time accounts, but also by the ability to develop indi-
vidual models at additional sites if necessary, thus en-
abling any backlog arising from production interruptions
to be clawed back within a short time. Moreover, risks
arising from business interruption and loss of production
due to fire are also insured up to economically reason-
able levels with underwriters of good credit standing.
Overall, strategic and sector opportunities capable of
having a positive and sustainable impact on earnings
are currently classified by the BMW Group as insignifi-
cant.
The BMW Group's earnings can be positively affected in
the short to medium term by changes in the legal envi-
ronment. A possible reduction in tariff barriers, import
restrictions or direct excise duties could lower the cost
of materials for the BMW Group, also enabling products
and services to be offered to customers at lower prices.
non-production aspects relevant for bought-in goods
and services, serves as the basis for the supplier net-
work, including the requirement to comply with inter-
nationally recognised human rights and applicable
labour and social standards. The principal tool for en-
suring compliance with the BMW Group Sustainability
Standard is a three-stage sustainability and risk manage-
ment approach comprising a BMW Group-specific sus-
27 Overall Assessment by Management tainability risk filter, a sustainability questionnaire and
a sustainability audit. In addition, the technical and
financial capabilities of suppliers - especially those sup-
plying for modular-based production – are continuously
59 Comments on Financial Statements monitored during both the development and the pro-
duction phases of the Group's vehicles. Particular atten-
tion is paid to the quality of parts. In order to attain the
level of quality required, it may become necessary to
68-Report on Risks and Opportunities invest in new technological concepts or discontinue
27 Financial and Non-financial
Performance Indicators
29 Review of Operations
The integration of previously unidentified innovations
from the supplier market in the product range is a fur-
ther source of opportunities. Innovative suppliers are
offered a variety of options when drawing up contracts,
in order to make it more attractive for those developing
innovative solutions. At regular intervals, the BMW
Group honours its most inventive supplier entities with
the Supplier Innovation Award.
By observing and playing a proactive role in developing
global supplier markets, the BMW Group continuously
strives to increase its competitiveness by working to-
gether with the best providers in the global marketplace
for products and services. Opportunities arise particu-
larly in conjunction with the introduction of new and
innovative production technologies and by capitalising
on favourable location-specific cost factors that present
themselves when local supplier structures are devel-
oped nearby new and existing BMW Group production
plants.
developed by suppliers, in some cases leading to a
broader range of products.
Global sourcing is seen as a key area for generating
opportunities within the Purchasing and Supplier Net-
work, whereby the BMW Group benefits from effi-
ciency improvements and access to innovative solutions
Purchasing opportunities
29 Review of Operations
planned innovations, with the consequence that the cost
of materials could exceed levels incorporated in the
forecast. Supplier sites are assessed for exposure to nat-
ural hazards, such as floods or earthquakes, in order to
identify supply risks at an early stage and implement
appropriate countermeasures. Fire risks at series sup-
pliers are evaluated by means of questionnaires and
selective site inspections. Raw materials management
procedures are in place to mitigate the risk of a produc-
tion interruption due to shortages of supplies of critical
raw materials. In order to reduce supply risks, the
BMW Group works hard to minimise the input of raw
materials or to use alternative raw materials as a sub-
stitute. The increasingly complex nature of the supplier
network, especially at the level of sub-suppliers, whose
operations can only be indirectly influenced by the
BMW Group, is a further potential cause of downtimes
at supplier locations. Production problems incurred
by suppliers could have adverse consequences for the
BMW Group, ranging from increased expenditure to
production interruptions and a corresponding reduc-
tion in sales volume.
-
Risks relating to sales and marketing
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
81 Internal Control System and Risk
63 Outlook
63-Report on Outlook, Risks and
Opportunities
Reporting Period
62 Events after the End of the
of BMW AG
Position and Net Assets
49 Results of Operations, Financial
Management System Relevant for the
Financial Reporting Process
The demands placed on IT facilities, both externally and
internally, are changing at a breathtaking pace in the
face of technological developments. Potential risks are
therefore investigated continuously and appropriate
measures put in place in order to either prevent them
or minimise their impact. Despite regular testing and
the whole gamut of preventative security measures em-
ployed, it is nevertheless impossible to rule out risks
completely in this area.
being downgraded and any ensuing deterioration in
financing conditions.
All employees are required to treat confidential infor-
mation (such as customer and employee data) in an ap-
propriate manner, ensure that information systems are
properly used and that risks are handled with the ut-
most transparency. Uniform requirements, documented
in a coordinated and comprehensive set of principles,
guidelines and work instructions, are applicable group-
wide. Regular communication and awareness-raising
activities create a high degree of security and risk con-
sciousness among the employees involved. Employees
Interest rate risks in the Financial Services segment re-
late to potential losses caused by changes in market
interest rates and can arise when fixed interest rate pe-
riods for assets and liabilities recognised in the balance
sheet do not match. Interest rate risks in the Financial
Services line of business are managed by raising refi-
nancing funds with matching maturities and by em-
ploying interest rate derivatives.
Interest rate risks and opportunities
The BMW Group classifies potential residual value op-
portunities as significant.
If residual value risks were to materialise, they could
have a high earnings impact over the two-year assess-
ment period. A medium earnings impact would then
arise for the segments affected (Financial Services and
Automotive). The level of risk is classified as high for
the Group as a whole.
79 COMBINED MANAGEMENT REPORT
A residual value risk exists if the expected market value
of the vehicle at the end of the contractual term is lower
than its estimated residual value at the date the contract
is entered into. Each vehicle's estimated residual value
is calculated on the basis of historical external and inter-
nal data and used to predict the expected market value
of the vehicle at the end of the contractual period. As
part of the process of managing residual value risks, a
calculation is performed at the inception of each con-
tract to determine the net present value of risk costs.
Market developments are observed throughout the con-
tractual period and the risk assessment updated appro-
priately.
Risks and opportunities arise in conjunction with lease
contracts if the market value of a leased vehicle at the
end of the contractual term of a lease differs from the
residual value estimated at the inception of the lease
and factored into the lease payments.
Residual value risks and opportunities
If credit and counterparty risks were to materialise, they
could have a medium earnings impact over the two-
year assessment period. The level of risk attached to
credit and counterparty risks is classified as high. The
BMW Group classifies potential opportunities in this
area as significant.
Credit and counterparty risks and opportunities
Credit and counterparty default risk arises within the
Financial Services segment if a contractual partner (i.e.
a customer or dealer) either becomes unable or only
partially able to fulfil its contractual obligations, such
that either lower income is generated or losses are in-
curred. The Financial Services segment uses a variety of
rating systems in order to assess the creditworthiness
of its contractual partners. Credit risks are managed at
the time of the initial credit decision on the basis of a
calculation of the present value of standard risk costs
and subsequently, during the term of the credit, by
using a range of risk provisioning techniques to cover
risks emanating from changes in customer creditworthi-
ness. In this context, individual customers are classified
by category each month on the basis of their current
contractual status, and appropriate levels of allowance
recognised in accordance with that classification. If
economies develop more favourably than assumed in the
outlook, there is a chance that credit losses may be re-
duced and earnings improved accordingly.
value risk, interest rate risk, liquidity risk and opera-
tional risk. In order to identify, measure, manage and
monitor these risks, a variety of internal methods has
been developed based on regulatory environment re-
quirements (such as Basel III) and which comply with
both national and international standards. The adopted
risk strategy, in combination with a set of strategic prin-
ciples and rules derived from regulatory requirements,
serve as the basis for risk management within the Finan-
cial Services segment. At the heart of the risk manage-
ment process is a clear division between front- and
back-office activities and a comprehensive internal con-
trol system. The key risk management tool employed
within the Financial Services segment is aimed at en-
suring that the Group's risk-bearing capacity is not ex-
ceeded. In this context, all risks (defined as "unexpected
losses") must be covered at all times by an appropriate
asset cushion in the form of equity capital. Unexpected
losses are measured using a variety of value-at-risk tech-
niques that have been developed for each risk category.
The appropriateness of these techniques is tested at reg-
ular intervals. Risks are aggregated after taking account
of correlation effects. The total amount of risks calculated
in this way is then compared with the so-called "risk
coverage amount", i.e. the resources allocated to cover
risks. The risk coverage amount is determined on the
basis of the Financial Services segment's willingness to
take risks. The segment's risk-bearing capacity is moni-
tored continuously with the aid of an integrated limit
system that also differentiates between the various risk
categories. The segment's total risk exposure was covered
at all times during the past year by the available risk-
coverage volumes.
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Management System Relevant for the
Financial Reporting Process
81 Internal Control System and Risk
63 Outlook
The categories of risk relating to the provision of finan-
68-Report on Risks and Opportunities cial services are credit and counterparty risk, residual
Risks and opportunities relating to the Financial
Services segment
If risks relating to interest rate risks were to materialise,
they could have a medium earnings impact over the
two-year assessment period. The level of risk attached
to interest rate risks is classified as high.
Interest rate developments that are positive compared
to the forecast constitute interest rate opportunities which
the BMW Group classifies as significant.
If the relevant recognition criteria are fulfilled, deriva-
tives used by the BMW Group are accounted for as
hedging relationships. Further information on risks in
conjunction with financial instruments is provided in
note 42 to the Group Financial Statements.
Liquidity and operational risks in the
27 Overall Assessment by Management from damages could arise that are either not covered or
business sense. The application of more rigorous con-
sumer regulations or the stricter interpretation of exist-
ing regulations could result in a greater number of recalls.
Some risks, however, either cannot be estimated or only
to a limited extent. In other cases, the incurrence of ex-
penses or losses may only be considered possible, but
not probable. Such items are reported as contingent lia-
bilities. It cannot be ruled out, however, that losses
Environment
23 General and Sector-specific
23 Report on Economic Position
20 Management System
18 General Information on the BMW Group
18 Business Model
18-COMBINED MANAGEMENT REPORT
Further information on risks in conjunction with finan-
cial instruments is provided in note 42 to the Group
Financial Statements.
80
Like all internationally operating enterprises, the BMW
Group is confronted with legal disputes relating, in
particular, to warranty claims, product liability, infringe-
ments of protected rights and proceedings initiated
by government agencies. Any of these matters could,
among other outcomes, have an adverse impact on the
Group's reputation. Such proceedings are typical for
the sector and can arise as a consequence of realigning
product or purchasing strategies to suit changed market
conditions. Particularly in the US market, class action
lawsuits and product liability risks can have substantial
financial consequences and cause damage to the Group's
public image. The high quality of the Group's products,
which is ensured by regular quality audits and ongoing
improvement measures, helps reduce this risk.
The BMW Group has established a Compliance Organi-
sation aimed at ensuring that its representative bodies,
managers and staff act in a lawful manner at all times.
Further information on the BMW Group's Compliance
Organisation can be found in the section “Corporate
Governance".
Compliance with the law is a basic prerequisite for the
success of the BMW Group. Current law provides the
binding framework for the BMW Group's various busi-
ness activities around the world. The growing interna-
tional scale of the BMW Group's operations, the com-
plexity of the business world and the whole gamut of
complex legal regulations increase the risk of laws not
being adhered to, simply because they are either not
known or not fully understood.
Legal risks
If operational risks were to materialise, they could have
a low earnings impact over the two-year assessment
period. The level of risk attached to operational risks is
classified as medium.
include related legal and reputational risks. The com-
prehensive recording and measurement of risk scenarios,
loss events and countermeasures in the Operational
Risk Management Suite (OpRisk-Suite) provides the ba-
sis for a systematic analysis and management of poten-
tial and/or actual operational risks. Annual self-assess-
ments are also carried out.
Use of the "matched funding principle" to finance the
Financial Services segment's operations eliminates li-
quidity risks to a large extent. Regular measurement
and monitoring ensure that cash inflows and outflows
from transactions in varying maturity cycles and cur-
rencies offset each other. The relevant procedures are
incorporated in the BMW Group's target liquidity con-
cept. Operational risks are defined in the Financial
Services segment as the risk of losses arising as a conse-
quence of the inappropriateness or failure of internal
procedures (process risks), people (personnel-related
risks), systems (infrastructure and IT risks) and external
events (external risks). These four categories of risk also
Financial Services segment
The BMW Group recognises appropriate levels of pro-
vision for lawsuits. A part of these risks, particularly re-
garding the US market, is insured where this makes
Great emphasis is placed on protecting both business
information and employee and customer data from un-
authorised access and/or misuse. Data security based
on International Security Standard ISO/IEC 27001 is
an integral component in all business processes. Per-
sonal data is protected in accordance with the stringent
requirements of the EU Data Protection Directive and
the Federal Data Protection Act (Bundesdatenschutz-
gesetz BDSG).
Opportunities
Reporting Period
Price risks and opportunities relating to precious metals
(platinum, palladium, rhodium) and non-ferrous
metals (aluminium, copper, lead) and, to some extent,
to steel and steel ingredients (iron ore, coke/coal) and
energy (gas, electricity) are hedged using financial
derivatives and/or supply contracts with fixed pricing
arrangements.
The principal objective of these management processes
is to increase planning reliability for the BMW Group.
Risks and opportunities relating to raw materials
Changes in prices of raw materials are monitored on the
basis of a set of well-defined management procedures.
Significant opportunities can arise if currency develop-
ments are favourable for the BMW Group.
If currency risks were to materialise, they could have a
high earnings impact over the two-year assessment
period. A high level of risk is attached to currency risks.
The BMW Group manages currency risks at both strate-
gic (medium and long term) and operating levels (short
and medium term). Medium- and long-term measures
include increasing production volumes in non-euro-re-
gion countries (natural hedging) and increasing purchase
volumes denominated in foreign currencies. Construct-
ing new plants in countries such as the USA, China or
Brazil has also helped reduce foreign currency expo-
sures. Currency risks are managed in the short to me-
dium term and for operational purposes by means of
hedging. Hedging transactions are entered into only with
financial partners of good credit standing. Opportunities
are also secured through the deployment of options.
Counterparty risk management procedures are carried
out continuously in order to monitor the creditworthi-
ness of business partners.
As an internationally operating enterprise, the BMW
Group conducts business in a variety of currencies, thus
giving rise to currency risks and opportunities. Since a
substantial portion of Group revenues is generated out-
side the eurozone (particularly in China and the USA)
and the procurement of production material and fund-
ing is also organised on a worldwide basis, fluctuations
in exchange rates can play a significant role for Group
earnings. Cash-flow-at-risk models and scenario analyses
are used to measure currency risks and opportunities.
Operational currency management is based on the results
provided by these tools. In 2015 the Chinese renminbi,
the US dollar, the British pound, the Russian rouble and
the Japanese yen constituted approximately 70% of the
total foreign currency exposure of the BMW Group.
Currency risks and opportunities
Financial risks and risks relating to the use of financial
instruments
assessment period compared to the assumptions made
in the outlook.
77 COMBINED MANAGEMENT REPORT
The BMW Group does not expect these opportunities
to have a material earnings impact over the two-year
Information, data protection and IT opportunities
Conversely, the deployment of information technology
also opens up a great many opportunities for the BMW
Group. New approaches to production and energy sup-
ply systems currently being investigated in the context
of the Industrial Internet ("Industrie 4.0") are generat-
ing significant efficiency improvements and resulting in
greater sustainability. The range of services and apps
on offer to customers via Connected Drive is constantly
being expanded and updated. The BMW 7 Series offers
the comfort of partially automated driving functions with
the optional Driving Assistant Plus feature. The pur-
chase of a stake in HERE mapping service was an im-
portant step for the next generation of mobility and
location-based services. For the automobile sector, it
serves as the basis for a variety of new customer-oriented
functions, ranging from innovative assistance systems
through to fully automated driving.
If information, data protection and IT risks were to
materialise, they could have a medium earnings impact
over the two-year assessment period. The levels of risk
attached to information, data protection and IT risks are
classified as medium.
data.
Responsibility for data protection in each Group entity
lies with the Board of Management (of BMW AG) or the
relevant company management team. Local Data Privacy
Protection Officers are embedded in each of the Group's
entities. In the case of cooperation arrangements and
business partner relationships, the BMW Group protects
its intellectual property as well as customer and em-
ployee data by stipulating clear instructions with regard
to data protection and the use of information technology.
Information pertaining to key areas of expertise as well
as sensitive personal data are subject to particularly strin-
gent security measures. In a clear signal to employees,
customers and Europe's data protection authorities that
data protection is taken very seriously, the Board of
Management of BMW AG has resolved a set of Binding
Corporate Rules governing the handling of employee
receive training to ensure compliance with the applicable
requirements and in-house rules.
If risks relating to raw materials were to materialise,
they could have a medium earnings impact over the
two-year assessment period. A high level of risk is at-
tached to risks relating to raw materials.
Conversely, significant opportunities can arise if
prices of raw materials develop favourably for the
BMW Group.
Liquidity risks
Based on experience gained during the financial crisis,
a minimum liquidity concept has been developed and is
rigorously adhered to. Solvency is assured at all times
throughout the BMW Group by maintaining a liquidity
reserve and by the broad diversification of refinancing
sources. The liquidity position is monitored continu-
ously at a separate entity level and managed by means
of a cash flow requirements and sourcing forecast system
in place throughout the Group. Liquidity risks may
be reflected in rising refinancing costs. They may also
manifest themselves in restricted access to funds as a
consequence of the general market situation or the de-
fault of individual banks. The major part of the Finan-
cial Services segment's credit financing and lease busi-
ness is refinanced on capital markets. Thanks to its
excellent creditworthiness, the BMW Group has good
access to financial markets and, as in previous years,
was able to raise funds at good conditions during the
year under report, reflecting a diversified refinancing
strategy and the solid liquidity and earnings base of the
BMW Group. Internationally recognised rating agencies
have additionally confirmed the BMW Group's strong
creditworthiness.
62 Events after the End of the
of BMW AG
59 Comments on Financial Statements
Position and Net Assets
49 Results of Operations, Financial
29 Review of Operations
Performance Indicators
27 Financial and Non-financial
63-Report on Outlook, Risks and
Environment
23 Report on Economic Position
A description of the methods applied for risk measure-
ment and hedging in conjunction with currency and
commodity risks is provided in note 42 of the Group
Financial Statements. If the relevant recognition criteria
are fulfilled, derivatives used by the BMW Group as
27 Overall Assessment by Management hedges are accounted for as hedging relationships.
and forecasted figures surpassed. Creating a successful
performance culture and developing the expertise and
skill sets of both staff and managers alike throughout
the organisation can also have a positive impact on both
revenue and profitability.
20 Management System
18 General Information on the BMW Group
18 Business Model
18-COMBINED MANAGEMENT REPORT
78
If liquidity risks were to materialise, they could have a
low earnings impact over the two-year assessment
period. The risk of incurring liquidity risk is classified
as low - including the risk of the BMW Group's rating
23 General and Sector-specific
73 COMBINED MANAGEMENT REPORT
23 Report on Economic Position
The long-term trend towards greater sustainability pro-
vides opportunities to boost sales of sustainable products
and, under the right circumstances, achieve better sell-
ing prices. Innovations such as the BMW i3 and i8 in the
field of electric mobility or Efficient Dynamics across the
entire product portfolio provide excellent platforms for
future growth. Potential also exists in engaging in new
product and market categories and developing new cus-
tomer target groups. New business models and coopera-
tion arrangements with the BMW Group's growing
network of business partners often provide the best
means to exploit these opportunities. Good examples
are the implementation of the 360° ELECTRIC portfolio
in the field of electric mobility, the partnership with
Sixt in the field of mobility services, and collaboration
with Toyota on developing a hydrogen fuel cell system.
Any political and/or global economic opportunities
capable of having a positive sustainable impact on
earnings are currently classified by the BMW Group
as insignificant.
Political and global economic opportunities
Economic conditions influence the operations, financial
position and results of operations of the BMW Group.
Should the global economy develop significantly better
than reflected in the outlook, the revenues and earnings
of the BMW Group could be significantly higher than
originally predicted. A better-than-expected perfor-
mance of the global economy with stronger growth in
China, the introduction of economic stimulus pro-
grammes, the implementation of structural reforms
within the eurozone and robust consumer spending in
the USA could - despite higher financing costs - result
in significantly stronger sales volume growth, reduced
competitive pressure and the possibility of achieving
better selling prices. Economic opportunities present
themselves for the BMW Group through the focused
identification of, and engagement in, growth markets.
If risks from this category were to materialise, they
could due to sales volume fluctuations - have a high
earnings impact over the two-year assessment period.
Overall, the risk amounts attached to political and global
economic risks are classified as high.
and international capital markets. The risks referred to
above could curtail purchasing power in the countries
and regions involved and, among other things, lead to
reduced demand for the products and services offered
by the BMW Group. The Group counters these risks
primarily by internationalising its sales and production
structures, in order to minimise the extent to which
earnings are dependent on the outcomes of risks in in-
dividual countries and regions. The regular monitoring
of macroeconomic data, which serve as the basis for
sales volume and production planning, ensures that
market changes are identified at an early stage. The ex-
tent of political and global economic risks is determined
by analysing historical data and applying a cash-flow-at-
risk approach.
Increasing political unrest, military conflicts, terrorist
activities, natural disasters and/or pandemics could
have a lasting negative impact on the global economy
The threat of distortions on the Chinese property, stock
and banking markets on the one hand and/or an overly
rapid hike in interest rates by the US Federal Bank pose
considerable risks for global financial market stability.
Unsolved structural problems in the eurozone or a re-
newed deterioration in the economic climate, for instance
in Greece, could potentially dampen growth prospects
for the BMW Group. At a political level, the current
refugee crisis poses a threat to European integration
and hopes of further expanding or at least maintaining
a single economic and monetary area.
Shifts between volatile and stable economic phases, com-
bined with the ready availability of information, also
contribute to the uncertainty experienced by both mar-
kets and consumers. Although the US and UK econo-
mies may currently appear to be robust, the underlying
macroeconomic risks - such as misallocations between
asset price classes - have not become any less real com-
pared to the previous year. The transition of the Chinese
economy from an investment-driven to a consumer-
driven market will entail slower growth rates and greater
instability on financial markets. Apart from precipitat-
ing a decline in automobile sales, this process may also
result in lower demand for commodities, which is most
likely to hurt mainly emerging economies such as
Brazil or Russia. A further drop in commodities prices
could result in political and economic upheavals and
hence lead to lower aggregate demand from the coun-
tries affected.
Political and global economic risks
Efficient individual mobility remains a key issue in
countries, in terms of the political regulation of both
national environmental and industrial policymaking.
Changing values in society call for innovative mobility
and service solutions. The potential effect of unforesee-
able disturbances in global economic interdependen-
cies, increasingly fierce competition among established
manufacturers and the emergence of new competitors
is extremely difficult to predict.
many
Political and global economic risks and opportunities
As one of the world's leading providers of premium
products and services, the BMW Group faces a variety
of major challenges. The world is changing at great
speed and the resulting situations can give rise to risks
on the one hand and opportunities on the other.
71 COMBINED MANAGEMENT REPORT
49 Results of Operations, Financial
Position and Net Assets
of BMW AG
not fully covered by insurance policies or provisions, or
which are only reported as contingent liabilities. In ac-
cordance with IAS 37 (Provisions, Contingent Liabilities
59 Comments on Financial Statements and Contingent Assets), the required information is
not provided if the BMW Group concludes that disclosure
of the information could seriously prejudice the out-
come of the relevant legal proceedings. Further informa-
68-Report on Risks and Opportunities tion on contingent liabilities is provided in note 41 to
the Group Financial Statements.
62 Events after the End of the
Reporting Period
63-Report on Outlook, Risks and
Opportunities
63 Outlook
81-Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
If legal risks were to materialise, they could have a low
earnings impact over the two-year assessment period.
The level of risk attached to legal risks is classified as
low. However, it cannot be ruled out that new legal
risks, as yet unidentified, could materialise that could
have a high impact on the BMW Group's results of
operations and financial condition.
Overall assessment of the risk and
opportunities situation
The overall risk assessment is based on a consolidated
view of all significant individual risks and opportuni-
ties. In terms of strategic and sector-specific risks, the
BMW Group has identified a higher level of risk, par-
ticularly in connection with the trend towards stricter
statutory regulations. Operational risks on the purchas-
ing side are decreasing, thanks to the successful imple-
mentation of cost-cutting measures. The level of risk
attached to the category "Risks relating to the Financial
Services segment" has increased as a result of the grow-
ing size of the portfolio. In view of these changes, the
overall risk situation for the BMW Group has increased
compared to the previous year.
In addition to the risk categories described above, un-
foreseeable events could possibly have a negative impact
on the BMW Group's results of operations, financial
position and net assets, as well as on its reputation. A
comprehensive risk management system is in place to
ensure that the BMW Group successfully manages risks
to the greatest extent possible. In addition, the opportu-
nities described above could potentially help the BMW
Group to achieve its targets and forecasts.
From today's perspective, management does not see any
threat to the BMW Group's going-concern status. As in
the previous year, identified risks are considered to be
manageable, but could - just like opportunities – have
an impact on the BMW Group's forecasts if they were to
materialise. The BMW Group's liquidity is stable and all
cash requirements are currently covered by available
funds and accessible credit lines.
The BMW Group is constantly refining the tools it uses
to recruit staff, encourage career development and re-
tain employees within the Group. This environment of-
fers people the ideal situation in which to develop their
skills. If these measures generate greater benefits than
currently expected, the BMW Group's revenues, results
of operations and cash flows can be positively impacted
Strategic and sector risks and opportunities
New regulations and rising fuel and energy prices can
also influence customer behaviour. Medium- and
long-term targets have already been put in place in
Europe, North America, Japan, China and other coun-
tries to minimise both fuel consumption and carbon
emissions.
72
Performance Indicators
18 General Information on the BMW Group
Remaining on growth course depends above all on the
ability to develop innovative products and bring them
to market. The introduction of the BMW i brand opens
up new customer target groups for the Group and con-
solidates the position of BMW as a sustainable, forward-
looking brand. BMWi products can be seen as "empower-
ment projects" for new technologies and processes, which
may also benefit other vehicle concepts. The existing
product portfolio has been expanded to include mobility
services such as DriveNow, ChargeNow and ParkNow.
In 2015, the BMW Group entered new segments with
the BMW 2 Series Active Tourer and the 2 Series Gran
Tourer. The market acceptance and sales volumes of
product innovations that are either planned for the future
or have recently been launched could turn out to be
greater than predicted in the outlook. In the short term,
however, any potentially positive impact is classified as
insignificant.
18-COMBINED MANAGEMENT REPORT
term.
Strategic and sector opportunities
year assessment period. The amounts of risk attached to
strategic and sector-specific risks are classified as high.
If strategic and sector category risks were to materialise,
they could have a high earnings impact over the two-
Employees make a vital contribution to sustainable
growth and improved profitability through their innova-
tive skills. One prerequisite in this regard is a consistent
strategic approach to the management of human re-
sources, even in the event of changes in the legal frame-
work. The BMW Group has put appropriate measures in
place for such eventualities. Risk amounts and earnings
impact in this category are measured on the basis of ex-
tensive scenario analyses.
Further significant risks could be triggered by the
tightening of existing import and export regulations, re-
sulting primarily in additional expenses, but also in re-
strictions in the import and export of vehicles and/or
parts. Changes in the legal business environment are
monitored and assessed regularly by the relevant central-
ised departments, thus ensuring that the BMW Group
always complies with statutory requirements. The impact
of legislation that has either been enacted or is likely to
be enacted is taken into account in the outlook.
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
are not only brought on by new regulations, but also
through changes in public opinion, values, environmen-
tal issues and fuel/energy prices. There is a clear move
59 Comments on Financial Statements towards increasingly stringent vehicle emissions regu-
lations, particularly for conventional drive systems, not
only in the developed markets of Europe and North
America, but also in emerging markets such as China.
The BMW Group counters this risk with its Efficient
Dynamics technology and continues to play a pioneering
role in the premium segment by continually reducing
both fuel consumption and emissions. Since 2013, elec-
tric drive systems built into BMW i vehicles have in-
creasingly broadened the mix on offer, thus bolstering
the BMW Group's efforts to comply with statutory car-
bon emissions regulations and requirements. The BMW
Group is investing in the development of sustainable
drive technologies and materials, with the aim of pro-
viding highly efficient vehicles for individual mobility in
the premium segment, both now and in the future.
68-Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
63 Outlook
Opportunities
63-Report on Outlook, Risks and
Additions to the product and mobility portfolio and ex-
pansion in growth regions are seen as the most im-
portant opportunities for growth in the medium to long
62 Events after the End of the
Reporting Period
18 Business Model
23 General and Sector-specific
Environment
Risks arising from the tightening of laws and regulations
One of the greatest risks for the automobile industry is
the possible threat of short-term tightening of laws
and regulations, as they could give rise to significantly
higher levels of investment and ongoing expenses, and
perhaps more importantly, result in changes in cus-
tomer behaviour. The potential tightening of consumer
protection laws could also result in a greater number of
27 Overall Assessment by Management recalls. In some cases, changes in customer behaviour
27 Financial and Non-financial
Performance Indicators
of BMW AG
27 Financial and Non-financial
20 Management System
49 Results of Operations, Financial
29 Review of Operations
Position and Net Assets
15
Against this background, the DAX reached a new all-
time high of 12,375 points in April. The slowdown of
the Chinese economy and the debate regarding the
manipulation of exhaust emissions of competitors had a
strong negative subsequent influence on the index. The
low for the year of 9,428 points was recorded in Sep-
tember. Following an upturn in the market environment,
the DAX finished the year at 10,743 points, up 9.6% for
Environment
23 General and Sector-specific
20 Management System
18 General Information on the BMW Group
18 Business Model
18-COMBINED MANAGEMENT REPORT
88
BMW preferred stock
Prime Automobile
BMW common stock
DAX
23 Report on Economic Position
13
DAX
BMW common stock
Prime Automobile
BMW preferred stock
12
11
50
75
100
125
27 Overall Assessment by Management the twelve-month period.
14
27 Financial and Non-financial
In March, BMW common stock climbed initially to reach
a new high of €122.60. After falling back to a low for the
year of €75.68 in September, it regained momentum in
29 Review of Operations
Common stock
2011
2012
2013
2014
2015
2015.
BMW AG has enabled its employees to participate in
its success for more than 40 years. Since 1989, this
participation has taken the form of an Employee Share
Programme. A total of 309,944 shares of preferred stock
were issued to employees as part of this programme in
Employee Share Programme
With a market capitalisation of approximately €63 bil-
lion, the BMW Group was among the ten most valuable
German enterprises listed on the stock market at the
end of 2015.
the fourth quarter, finishing the year at €97.63, 8.8%
higher than at the end of 2014. BMW preferred stock
gained 14.1% in value compared to its closing price at
the end of the previous year. At the end of the stock
market year it stood at €77.41 after recording a new all-
time high of €92.19 in March.
Performance Indicators
BMW stock
The Prime Automobile Index performed even better, gain-
ing 7.1% over the year under report to reach 1,596 points.
The EURO STOXX 50 recorded a gain of 3.9% in 2015,
closing at 3,268 points on 31 December.
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87-BMW Stock and Capital Markets
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Outlook
63
Opportunities
63 Report on Outlook, Risks and
62 Events after the End of the
Reporting Period
59 Comments on Financial Statements
of BMW AG
49 Results of Operations, Financial
Position and Net Assets
150
175
120
225
Opportunities
63 Report on Outlook, Risks and
Reporting Period
62 Events after the End of the
of BMW AG
59 Comments on Financial Statements Board of Management or with employees in the event
Compensation agreements with members of the
In accordance with the agreement between BMW AG,
Daimler AG and AUDI AG pertaining to the acqui-
sition of entities of the HERE Group and the related
foundation of There Holding B.V., each contractual
party is required to offer its shares in There Holding
B.V. for sale to the other shareholders in the event
of a change in control. If neither of the other two
parties acquire these shares, these other parties are
entitled to resolve that There Holding B.V. be dis-
solved.
-
Position and Net Assets
49 Results of Operations, Financial
29 Review of Operations
Performance Indicators
27 Overall Assessment by Management
27 Financial and Non-financial
23 General and Sector-specific
Environment
23 Report on Economic Position
20 Management System
18 General Information on the BMW Group
18 Business Model
18-COMBINED MANAGEMENT REPORT
86
An engine supply agreement between BMW AG and
Toyota Motor Europe SA relating to the sale of diesel
engines entitles each of the contractual parties to give
extraordinary notification of termination in the event
that one of the contractual parties merges with an-
other company or is taken over by another company.
The framework cooperation agreement entered into
by BMW AG and Sixt SE (as well as other BMW and
Sixt entities), relating to the foundation and operation
of the car sharing joint venture DriveNow, may be
terminated by Sixt SE if a car hire company acquires
more than 50% of the shares of common stock of
BMW AG. In the event of such a termination, Sixt SE
may, at its own discretion, stipulate the sale of BMW's
interest in the joint venture to Sixt SE or the pur-
chase of Sixt's interest in the joint venture by BMW AG
or one its subsidiaries.
BMW AG is party to an agreement with SGL Carbon
SE, Wiesbaden, relating to the joint operations SGL
Automotive Carbon Fibers LLC, Delaware, USA and
SGL Automotive Carbon Fibers GmbH & Co. KG,
Munich. The agreement includes call and put rights
in case- either directly or indirectly - 50% or more of
the voting rights relating to the relevant other share-
holder of the joint operations are acquired by a third
party, or if 25% of such voting rights have been ac-
quired by a third party if that third party is a com-
petitor of the party that has not been affected by the
acquisition of the voting rights. In the event of such
acquisitions of voting rights by a third party, the non-
affected shareholder has the right to purchase the
shares of the joint operations from the affected share-
holder or to require the affected party to acquire the
other shareholder's shares.
Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83-Disclosures Relevant for Takeovers
and Explanatory Comments
87-BMW Stock and Capital Markets
of a takeover bid
The BMW Group has not concluded any compensation
agreements with members of the Board of Management
or with employees for situations involving a takeover
offer.
250
Development of BMW stock compared to stock exchange indices
(Index: December 2010 = 100)
the authorisation of a further rescue package. However,
the Chinese government's announcement of its inten-
tion to devalue the renminbi triggered further shock
waves on the world's capital markets. Moreover, news
of the manipulation of competitors' diesel and petrol
engines at the end of the third quarter had a negative
effect on investor sentiment with respect to the auto-
mobile industry as a whole. The general mood on stock
markets proceeded to turn yet again during the final
three months of the year. The ECB's announcement that
it is was considering expanding the scale of cheap money
within the euro region and the news of a renewed re-
duction in the reference interest rate by the Chinese
government fuelled the hopes of investors that the global
economy could pick up. As a consequence, the DAX
and the EURO STOXX 50 finished the year with a tangi-
ble gain, despite the losses arising in the interim period.
155.4
187.9
165.9
DAX
Prime
Automobile
201.1
BMW
preferred stock common stock
BMW
200
40
160
200
240
in %
Development of BMW stock compared to stock exchange
indices since 30 December 2010
At the beginning of 2015, the ECB's expansionary mone-
tary policies prompted an upturn in Europe's capital
markets. The loss in value of the euro against the US
dollar provided a boost for European exports and con-
tributed to a more amenable stock market climate. This
initial momentum was overshadowed in the second
quarter by the renewed flare-up of the debt crisis in
Greece, news of China's faltering economy, and the
Ukraine crisis. The Chinese government revised down
its growth forecast for the domestic economy for 2015
from 7.5% to 7.0%. The Greek sovereign debt crisis took
another turn for the worse in June, putting a further
dampener on sentiment among investors. The financial
situation in Greece eased in the third quarter, following
The 2015 stock market year was influenced by the slow-
down of the Chinese economy, the weakness of the
euro against the US dollar and the depreciation in value
of the Chinese renminbi. The Greek debt crisis and the
monetary policies pursued by the US Federal Reserve
Bank were sources of additional uncertainty for inves-
tors. Even the bond-buying programme put in place by
the ECB in the first quarter, initially lauded by capital
markets, was unable to fully counteract the negative con-
sequences of these events. However, thanks to the im-
proved mood towards the year-end, most stock markets
recorded a gain for the twelve-month period.
Volatile stock markets in 2015
BMW shares of common stock climbed to a new record
high of €122.60 during 2015. The BMW Group contin-
ues to have the best ratings in the European automobile
sector, enabling it to benefit from excellent access to in-
ternational capital markets.
BMW Stock and Capital Markets in 2015
87 COMBINED MANAGEMENT REPORT
80
63
Group
(partially in the capacity of guarantor and partially in
the capacity of borrower), if the EIB has reason to
assume – after the change in control has taken place
or 30 days after it has made a request to discuss the
situation – that the change in control could have a
significantly adverse impact or if the borrower refuses
to hold any such discussions. A change in control of
BMW AG arises if one or more individuals take over or
lose control of BMW AG, with control being defined
in the above-mentioned financing agreements as
(i) holding or having control over more than 50% of
the voting rights, (ii) the right to stipulate the majority
of the members of the Board of Management or
Supervisory Board, (iii) the right to receive more than
50% of dividends payable or (iv) any other comparable
controlling influence over BMW AG.
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 - Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83-Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
trol system is functioning properly. Effective measures
are implemented whenever weaknesses are identified
and reported.
83 COMBINED MANAGEMENT REPORT
Disclosures Relevant for Takeovers and Explanatory Comments
Composition of subscribed capital
The subscribed capital (share capital) of BMW AG
amounted to €656,804,600 (2014: €656,494,740) at
31 December 2015 and, in accordance with Article 4
no. 1 of the Articles of Incorporation, is sub-divided
into 601,995,196 shares of common stock (91.66%)
(2014: 601,995,196; 91.70%) each with a par value of
€1, and 54,809,404 (8.34%) (2014: 54,499,544; 8.30%)
shares of non-voting preferred stock, each with a par
value of €1. The Company's shares are issued to bearer.
The rights and duties of shareholders derive from the
German Stock Corporation Act (AktG) in conjunction
with the Company's Articles of Incorporation, the full
text of which is available at www.bmwgroup.com. The
right of shareholders to have their shares evidenced is
excluded in accordance with the Articles of Incorpora-
tion. The voting power attached to each share corre-
sponds to its par value. Each €1 of par value of share
capital represented in a vote entitles the holder to one
vote (Article 18 no. 1 of the Articles of Incorporation).
The Company's shares of preferred stock are shares
within the meaning of § 139 et seq. AktG, which carry a
cumulative preferential right in terms of the allocation
of profit and for which voting rights are normally ex-
cluded. These shares only confer voting rights in excep-
tional cases stipulated by law, in particular when the
preference amount has not been paid or has not been
fully paid in one year and the arrears are not paid in the
subsequent year alongside the full preference amount
due for that year. With the exception of voting rights,
holders of shares of preferred stock are entitled to the
same rights as holders of shares of common stock.
Article 24 of the Articles of Incorporation confers pref-
erential treatment to the non-voting shares of preferred
stock with regard to the appropriation of the Com-
pany's unappropriated profit. Accordingly, the unap-
propriated profit is required to be appropriated in the
following order:
(a) subsequent payment of any arrears on dividends on
non-voting preferred shares in the order of accrue-
ment,
(b) payment of an additional dividend of €0.02 per €1
par value on non-voting preferred shares and
(c) uniform payment of any other dividends on shares
on common and preferred stock, provided the
shareholders do not resolve otherwise at the Annual
General Meeting.
Restrictions on voting rights or the transfer of shares
As well as shares of common stock, the Company has
also issued non-voting shares of preferred stock. Fur-
ther information relating to this can be found above in
the section “Composition of subscribed capital".
When the Company issues non-voting shares of pre-
ferred stock to employees in conjunction with its Em-
ployee Share Programme, these shares are subject as a
general rule to a company-imposed vesting period of
four years, measured from the beginning of the calen-
in which the shares are issued.
dar
year
Contractual holding period arrangements also apply to
shares of common stock required to be acquired by
Board of Management members and certain senior de-
partment heads in conjunction with the share-based
remuneration programmes (Compensation Report of
the Corporate Governance section; note 19 to the
Group Financial Statements).
Direct or indirect investments in capital exceeding
10% of voting rights
29 Review of Operations
Performance Indicators
27 Financial and Non-financial
27 Overall Assessment by Management as part of their reporting duties that the internal con-
2015
81 COMBINED MANAGEMENT REPORT
Internal Control System and Risk Management System Relevant for the Financial Reporting Process
pro-
The internal control system in place throughout the
BMW Group is aimed at ensuring the effectiveness of
operations. It makes an important contribution towards
ensuring compliance with the laws that apply to the
BMW Group as well as providing assurance on the
priety and reliability of internal and external financial
reporting. The internal control system is therefore a
significant factor in the management of process risks.
The principal features of the internal control system
and the risk management system, as far as they relate
to individual entity and Group financial reporting pro-
cesses, are described below.
Information and communication
-
One component of the internal control system is that of
"Information and Communication". It ensures that all
the information needed to achieve the objectives set for
the internal control system is made available to those
responsible in an appropriate and timely manner. Infor-
mation relevant for the various financial reporting pro-
cesses - at BMW AG, other consolidated Group entities
and for the BMW Group as a whole – is set out pri-
marily in organisational manuals, internal and external
financial reporting guidelines, accounting manuals and
training documentation. This information, which can
be accessed at all levels via the BMW Group's intranet
system, provide the framework for ensuring that the
relevant rules are applied consistently throughout the
Group. The quality and relevance of these instructions
are ensured by regular review as well as by continuous
communication between the relevant departments.
Organisational measures
All financial reporting processes (including Group finan-
cial reporting processes) are structured in organisa-
tional terms in accordance with the principle of segrega-
tion of duties, thus making an important contribution
to the early identification of errors and the prevention
of potential wrongdoing. Regular comparison of inter-
nal forecasts and external financial reports, for example,
improves the quality of financial reporting. Moreover,
the internal audit department, in its capacity as a pro-
cess-independent function, tests and assesses the effec-
tiveness of the internal control system and proposes
improvements where appropriate.
Controls
Extensive controls are carried out by managers and staff
in all financial reporting processes at an individual
entity and Group level, thus ensuring that legal require-
ments and internal guidelines are complied with and
that all business transactions are properly executed. Con-
trols are also carried out with the aid of IT applications,
thus reducing the incidence of process risks. Moreover,
the performance of controls on accounts deemed to
be exposed to risk are subject to additional monitoring.
IT authorisations
Based on the information available to the Company, the
following direct or indirect holdings exceeding 10% of
the voting rights at the end of the reporting period were
held at the date stated²:
All IT applications used in financial reporting processes
throughout the BMW Group are subject to access re-
strictions, allowing only authorised persons to gain ac-
cess to systems and data in a controlled environment.
Access authorisations are allocated on the basis of the
nature of the duties to be performed. In addition, IT
processes are designed and authorisations allocated
using the dual control principle, as a result of which, for
instance, requests cannot be submitted and approved
by the same person. Technical monitoring procedures
are also in place to ensure appropriate authorisation
security throughout all IT systems.
All employees are appropriately trained to carry out
their duties and kept informed of any changes in regula-
tions or processes that affect them. Managers and staff
also have access to detailed best-practice descriptions
relating to risks and controls in the various processes,
thus increasing risk awareness at all levels. As a conse-
quence, the internal control system can be evaluated
regularly and further improved as necessary. Employees
can, at any time and independently, deepen their un-
derstanding of control methods and design using an
information platform that is accessible throughout the
entire Group.
Evaluating the effectiveness of the internal
control system
Responsibilities for ensuring the effectiveness of the in-
ternal control system in relation to individual entity
*Disclosures pursuant to § 289 (5) HGB and §315 (2) no. 5 HGB.
82
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
and Group financial reporting processes are clearly de-
fined and allocated to the relevant managers and are
subject to internal audits (e.g. management self-audits,
internal audit department findings). Data analysis tools
are also employed to identify risks relating to business
transactions. Continuous revision and further develop-
ment ensures the effectiveness of the internal control
system. Group entities are required to confirm regularly
Internal control training for employees
Stefan Quandt, Germany
Susanne Klatten, Germany
AQTON SE, Bad Homburg v. d. Höhe, Germany
59 Comments on Financial Statements System of control over voting rights when employees
participate in capital and do not exercise their control
rights directly
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63
Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
87 BMW Stock and Capital Markets
Like all other shareholders, employees exercise their
control rights pertaining to shares they have acquired
in conjunction with the Employee Share Programme
and/or the share-based remuneration programme
directly on the basis of relevant legal provisions and the
Company's Articles of Incorporation.
Statutory regulations and Articles of Incorporation
provisions with regard to the appointment and removal
of members of the Board of Management and changes
to the Articles of Incorporation
The appointment or removal of members of the Board
of Management is based on the rules contained in
§ 84 et seq. AktG in conjunction with § 31 of the German
Co-Determination Act (MitbestG).
Amendments to the Articles of Incorporation must
comply with § 179 et seq. AktG. All amendments must
be decided upon by the shareholders at the Annual
General Meeting (§ 119 (1) no. 5, § 179 (1) AktG). The
Supervisory Board is authorised to approve amend-
ments to the Articles of Incorporation which only affect
its wording (Article 14 no. 3 of the Articles of Incorpo-
ration). Resolutions are passed at the Annual General
Meeting by simple majority of shares unless otherwise
explicitly required by binding provisions of law or, when
a majority of share capital is required, by simple majority
of shares represented in the vote (Article 20 no.1 of the
Articles of Incorporation).
of BMW AG
Authorisations given to the Board of Management
in particular with respect to the issuing or buying back
of shares
in § 71 AktG, e.g. to avert serious and imminent damage
to the Company and/or to offer shares to persons em-
ployed or previously employed by BMW AG or one of its
affiliated companies.
In accordance with the resolution passed at the Annual
General Meeting on 15 May 2014, the Board of Manage-
ment is also authorised – up to 14 May 2019 - to acquire
shares of non-voting preferred stock of the Company
via the stock exchange, up to a maximum of 1% of the
share capital existing at the date of the resolution. The
consideration paid by the Company per share of non-
voting preferred stock (excluding transaction costs) may
not be more than 10% above or below the market price
determined by the opening auction on the date of trad-
ing of the stock in the Xetra trading system (or a suc-
cessor system having a comparable function). Moreover,
the Board of Management is authorised to use the ac-
quired Company's own shares of non-voting preferred
stock for all legally admissible purposes, specifically in-
cluding the right to offer and transfer shares to persons
employed by the Company or one of its affiliated com-
panies up to a proportionate amount of €5 million of
share capital. The subscription rights of existing share-
holders to the new shares of preferred stock used for
the purpose stated above are excluded. The authorisa-
tions may also be exercised in parts on more than one
occasion.
In accordance with § 4 no. 5 of the Articles of Incorpo-
ration, the Board of Management is authorised – with
the approval of the Supervisory Board – to increase
BMW AG's share capital during the period until 14 May
2019 by up to €4,450,383 for the purposes of an Em-
ployee Share Programme by issuing new non-voting
shares of preferred stock, which carry the same rights
as existing non-voting preferred stock, in return for
cash contributions (Authorised Capital 2014). Existing
shareholders may not subscribe to the new shares. No
conditional capital is in place at the reporting date.
Significant agreements entered into by the Company
subject to control change clauses in the event of a
takeover bid
The BMW AG is party to the following major agreements
which contain provisions for the event of a change in
control or the acquisition of control as a result of a take-
over bid:
-
An agreement concluded with an international con-
sortium of banks relating to a syndicated credit line
85 COMBINED MANAGEMENT REPORT
(which was not being utilised at the balance sheet
date) entitles the lending banks to give extraordinary
notice to terminate the credit line (such that all out-
standing amounts, including interest, would fall due
immediately) if one or more parties jointly acquire
direct or indirect control of BMW AG. The term "con-
trol" is defined as the acquisition of more than 50%
of the share capital of BMW AG, the right to receive
more than 50% of the dividend or the right to direct
the affairs of the Company or appoint the majority of
members of the Supervisory Board.
- A cooperation agreement concluded with Peugeot SA
relating to the joint development and production of
a new family of small (1 to 1.6 litre) petrol-driven en-
gines entitles each of the cooperation partners to give
extraordinary notification of termination in the event
of a competitor acquiring control over the other con-
tractual party and if any concerns of the other con-
tractual party concerning the impact of the change
of control on the cooperation arrangements are not
allayed during the subsequent discussion process.
BMW AG acts as guarantor for all obligations arising
from the joint venture agreement relating to BMW
Brilliance Automotive Ltd. in China. This agreement
grants an extraordinary right of termination to either
joint venture partner in the event that, either directly
or indirectly, more than 25% of the shares of the
other party are acquired by a third party or the other
party is merged with another legal entity. The termi-
nation of the joint venture agreement may result in
the sale of the shares to the other joint venture part-
ner or in the liquidation of the joint venture entity.
- Framework agreements are in place with financial in-
stitutions and banks (ISDA Master Agreements) with
respect to trading activities with derivative financial
instruments. Each of these agreements includes an
extraordinary right of termination which triggers the
immediate settlement of all current transactions in
the event that the creditworthiness of the party in-
volved is materially weaker following a direct or indi-
rect acquisition of beneficially owned equity capital
which confers the power to elect a majority of the
Supervisory Board of a contractual party or any other
ownership interest that enables the acquirer to exer-
cise control over a contractual party or which consti-
tutes a merger or a transfer of net assets.
- Financing agreements in place with the European
Investment Bank (EIB) entitle the EIB to request early
repayment of the loan in the event of an imminent
or actual change in control at the level of BMW AG
-
-
The Board of Management is authorised to buy back
shares and sell repurchased shares in situations specified
Number of shares in 1,000
Position and Net Assets
29 Review of Operations
Johanna Quandt GmbH, Bad Homburg v. d. Höhe, Germany
Johanna Quandt GmbH & Co. KG für Automobilwerte, Bad Homburg v. d. Höhe, Germany
Susanne Klatten Beteiligungs GmbH, Bad Homburg v. d. Höhe, Germany
1 Disclosures pursuant to §289 (4) HGB and §315 (4) HGB.
2 Based on voluntary notifications provided by the listed shareholders as at 31 December 2015.
Direct share of
voting rights (%)
Indirect share of
voting rights (%)
0.2
0.2
33,83,4
28.93,5
17.4
16.46
16.4
-12.6
49 Results of Operations, Financial
3 Voting rights held indirectly by the joint heirs of the Johanna Quandt estate are attributed in full in both cases to Stefan Quandt and Susanne Klatten.
5 Controlled entities, of which 3% or more are attributed: Johanna Quandt GmbH, Johanna Quandt GmbH, Johanna Quandt GmbH & Co. KG für Automobilwerte,
Susanne Klatten Beteiligungs GmbH.
6 Controlled entities, of which 3% or more are attributed: Johanna Quandt GmbH & Co. KG für Automobilwerte.
84
18-COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Financial and Non-financial
The voting power percentages disclosed above may have
changed subsequent to the stated date if these changes
were not required to be reported to the Company. Due
to the fact that the Company's shares are issued to bearer,
the Company is generally only aware of changes in
shareholdings if such changes are subject to mandatory
notification rules.
27 Overall Assessment by Management Shares with special rights which confer control rights
There are no shares with special rights which confer
control rights.
Performance Indicators
4 Controlled entities, of which 3% or more are attributed: Johanna Quandt GmbH, Johanna Quandt GmbH & Co. KG für Automobilwerte, AQTON SE.
601,995
Management System Relevant for the
Financial Reporting Process
83-Disclosures Relevant for Takeovers
and Explanatory Comments
601,995
16-
-2,828
-2,890
-2,376
-2,365
6,396
6,886
5,817
4,521
34-
27
-19
5
-7
5,147
34-
7,523
9,224
Profit/loss before tax
Income taxes
Net profit/loss
Attributable to minority interest
Attributable to shareholders of BMW AG
15-
8,707
-454
-396
-724
-369
-411
-313
-358
-747
Financial result
6,369
5,142
147 Other Disclosures
163 Segment Information
Statement of Comprehensive Income for Group
in € million
Note
2015
122 Notes to the Balance Sheet
2014
6,396
5,817
Remeasurement of the net defined benefit liability for pension plans.
35
1,413
-2,298
Net profit
5,798
of Comprehensive Income
9.72
4,514
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
17-
-9.70
17-
9.72
- 8.85
- 8.83
8.85
17-
9.70
8.83
113 Notes to the Income Statement
121 Notes to the Statement
Diluted earnings per share of preferred stock in €
17-
Diluted earnings per share of common stock in €
Other financial result
98 Accounting Principles and
Policies
98 Notes
18,132
17,005
15,137
13,952
11
-8,633
-61,221
-7,892
-6,645
Other operating income
12-
-914
877
689
-7,219
-749
-70,399
-74,043
601,995
2014
(unaudited supplementary information)
-2015
2014
Revenues
-63,396
Cost of sales
9
92,175
80,401
85,536
-75,173
10
Gross profit
Other operating expenses.
12-
-820
331
Interest and similar expenses
14-
-618
-519
-762
327
-620
90 Income Statements
90-Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
90-GROUP FINANCIAL STATEMENTS
200
185
14-
-872
-771
-812
Profit/loss before financial result
9,593
9,118
7,836
7,244
Result from equity accounted investments
13-
518
655
518
655
Interest and similar income
Deferred taxes
-401
Selling and administrative expenses
Items not expected to be reclassified to the income statement in the future
Common stock
Dividend
Key data per share in €
32.01
35.70
48.69
3.202
59.08
Low
45.98
-49.23
-64.65
-74.60
92.19
58.96
-High
2.90
2.50
Earnings per share of preferred stock 4
-7.45
-7.77
8.08
8.83
9.70
2.60
Earnings per share of common stock³
2.52
2.62
2.92
3.222
Preferred stock
2.30
2.32
36.55
48.76
62.09
85.42
95.51
122.60
High
51.76
-72.93
-73.76
85.22
97.63
Year-end closing price-
Stock exchange price in €¹
601,995
-706
601,995
-89.77
-73.52
- Low
-75.68
67.84
-77.41
Year-end closing price.
Stock exchange price in €¹
53,571
53,994
-54,260
54,500
54,809
Number of shares in 1,000
Preferred stock
45.04
53.16
-63.93
-77.41
9.72
8.85
Automotive
7.79
-706
Other comprehensive income for the period after tax
20-
893
-2,298
Total comprehensive income
-119
7,289
Total comprehensive income attributable to minority interests
27
19
Total comprehensive income attributable to shareholders of BMW AG
34-
7,262
3,519
Items expected to be reclassified to the income statement in the future
-764
765
-1,592
Available-for-sale securities
8.10
1,012
-170
40
Financial instruments used for hedging purposes
-1,301
-2,194
-71
-48
Deferred taxes
516
-732
Currency translation foreign operations
3,500
Note
Other comprehensive income from equity accounted investments
Income Statements for Group and Segments
1 Xetra closing prices.
41.34
46.66
54.25
57.03
65.03
2 Proposed by management.
Equity
-13.98
-15.19
in € million
18.02
Operating cash flow Automotive segment
-7.47
-12.38
3 Annual average weighted amount.
14.35
89 COMBINED MANAGEMENT REPORT
Income Statements for Group and Segments
BMW Group
Statement of Comprehensive Income for Group
90
The rating assessments underline the BMW Group's ro-
bust financial condition and excellent creditworthiness.
Thanks to these attributes, the Group not only has good
access to international capital markets, it also benefits
from attractive refinancing conditions, which are par-
ticularly helpful for the BMW Group's financial services
business.
On 24 March 2015, Moody's raised the outlook for
BMW AG's rating from "stable" to "positive". At the same
time, it confirmed BMW AG's long-term rating (A2) and
its short-term rating (P-1), both of which represent the
best ratings currently awarded in the European automo-
bile sector.
turer.
4 Stock weighted according to dividend entitlements.
Intensive communication with capital markets
The BMW Group continued to keep analysts, investors
and rating agencies up to date throughout 2015 with
regular quarterly and year-end financial reports. As in
previous years, numerous one-to-one discussions,
group discussions and dedicated Socially Responsible
Investment (SRI) roadshows were held for investors
wishing to incorporate sustainability criteria in their in-
vestment decisions. This comprehensive communication
with relevant capital market participants was supple-
mented by debt roadshows for capital debt investors
and credit analysts. Communication focused primarily
on developments on the Chinese market, digitalisation
and other technological trends in the automobile in-
dustry, and the relevance of alternative drive systems.
Events organised during the year included a Capital
Markets Day for analysts and investors at the BMW
Group's Spartanburg plant in the USA.
Ratings remain at top level
In this context, and with the approval of the Super-
visory Board, the Board of Management increased
BMW AG's share capital by €309,860 from €656,494,740
to €656,804,600 by issuing 309,860 new non-voting
shares of preferred stock. The increase was executed on
the basis of Authorised Capital 2014 in Article 4 (5) of
the Articles of Incorporation. The new shares of pre-
ferred stock carry the same rights as existing shares of
preferred stock and were issued to enable employees to
obtain an equity participation in the Company. In addi-
tion, 84 shares of preferred stock were bought back via
the stock market in order to service the Employee Share
Programme.
Proposed dividend increase
The BMW Group continues to have the best ratings in
the European automobile sector. Since December 2013,
BMW AG has had a long-term rating of A+ (stable out-
look) and a short-term rating of A-1 from the rating
agency Standard & Poor's, currently the highest rating
given by Standard & Poor's to a European car manufac-
GROUP FINANCIAL STATEMENTS
Reflecting the good earnings performance, the Board of
Management and the Supervisory Board will propose
to the Annual General Meeting to use BMW AG's un-
appropriated profit of €2,102 million (2014: €1,904 mil-
lion) to pay a dividend of €3.20 for each share of com-
mon stock (2014: €2.90) and a dividend of €3.22 for each
share of preferred stock (2014: €2.92), a distribution rate
of 32.9% for 2015 (2014: 32.7%).
-1.8
7,695
79
-2.2
7,244
6,649
7,599
Motorcycles
Automotive
9
7,836
Profit before financial result (EBIT)
9,593
9,118
7,978
8,275
-4.8
-20,017
-19,097
-17,057
-15,955
-14,405
-14.3
6
7
9,386
112
1,643
187
4.8
9,224
9,665
7
8,707
7,893
7,803
Profit before tax
-15.3
-663
-575
-65
-437
182
-949
-17
169
71
44
58
Other Entities
10.2
2,184
1,981
1,756
1,558
Financial Services
2.7
Eliminations
6
-3.1
Eliminations
9,423
9,964
9,167
Operating cash flow Automotive segment
3.2
4,806
4,659
4,170
3,741
3,541
Depreciation and amortisation
−1.1
5,823
5,890
6,100
6,711
5,240
Capital expenditure
Change in %
2016
2015
2014
2013
2012
in € million
→ 04
Further financial performance figures
11,836
11,464
Automotive
Revenues
Other Entities
8.2
25,681
23,739
20,599
19,874
19,550
4.0
2,069
1,990
1,679
1,504
1,490
5
Financial Services
1.0
86,424
85,536
75,173
70,630
70,208
2.2
94,163
92,175
80,401
76,059
76,848
Automotive
Motorcycles
7,170
-2,692
5,111
6,886
→ 08
Profit before tax
2016
2015
2014
2013
2012
50
76.1
76.8
80.4
100
92.2 94.2
in € billion
→ 07
Revenues
2016
2014
2013
2012
5,000
7,978
9,118
10,000
9,593 9,386
in € million
→ 06
in € million
Profit before financial result
9,665
9,224
We carefully monitored the overall performance of the BMW Group, both at scheduled meetings
and at other times as the situation required. The Board of Management informed us of all key sales
and workforce figures on a regular basis. The Chairman of the Board of Management informed
me personally and in a prompt manner regarding all important transactions and key projects.
Similarly, Dr Karl-Ludwig Kley, the Chairman of the Audit Committee, and Dr Friedrich Eichiner,
member of the Board of Management responsible for Finance, consulted on matters directly,
both at scheduled meetings and as the need arose.
1.0
At the beginning of the year, the Board of Management presented us with a summary of new
and revised vehicle models scheduled for market launch in 2016.
One of the main areas of emphasis with regard to reporting and our consultations in 2016 was
the enhanced development of the BMW Group's corporate strategy. We also deliberated at length
on succession planning for the Board of Management. Corporate planning was a further key
area of focus. We discussed the current performance and financial position of the BMW Group
at each of our five Supervisory Board meetings.
Main emphases of the Supervisory Board's monitoring and advisory activities
Throughout the financial year 2016, we performed the duties incumbent on the Supervisory
Board in accordance with the law and the Articles of Association. We continuously monitored
the Board of Management's governance of the business and provided advice on important
projects and plans.
In 2016, BMW AG celebrated its 100th anniversary. Quite fittingly, the BMW Group finished its
centenary year with record earnings. With its Strategy NUMBER ONE > NEXT, the BMW Group
is moving forward with a sense of purpose into the challenging era of digitalisation and
electrification and fully intends to continue playing an active role in shaping technological
change within the automobile industry.
Dear Shareholders,
Norbert Reithofer
Chairman of the Supervisory Board
Supervisory Board
→ Report of the
8
the Chairman of
the Board of
Management
Statement of
Report of the
Supervisory Board
BOARD OF MANAGEMENT
STATEMENT OF THE
CHAIRMAN OF THE
REPORT OF THE
SUPERVISORY BOARD
1
2016
2015
2014
2013
2012
5,000
7,893
7,803
8,707
10,000
6,561
(2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units, 2015: 282,000 units,
2016: 316,200 units).
2016
170
-772
-664
-163
-527
211
154
164
3
-937
Eliminations
Other Entities
9.7
2,166
1,975
1,723
1,619
1,561
Financial Services
3.4
185
179
107
76
6
Motorcycles
5.2
7,916
7,523
-19.4
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
-16.3
Net profit
2015
2014
2013
2012
1,250
1,845.2
1,963.8
2,118.0
2,247.5
2,367.6
2,500
in 1,000 units
→ 05
Sales volume of automobiles*
in Figures
→ BMW Group
60
5
7.7/7.7
10.45/10.47
2.6
8.0
-2,755
6,910
-2,828
6,396
9.70/9.72
-2,890
5,817
8.83/8.85
-2,564
5,329
8.08/8.10
7.75/7.77
Earnings per share in €
Income taxes
8,275
110,351
19.4
Statement of
Report of the
Supervisory Board
BMW Group
in Figures
1
1
→ Page 16 Statement of the Chairman of the Board of Management
→Page 8 Report of the Supervisory Board
→Page 4 BMW Group in Figures
→ Page 180 List of Investments at 31 December 2016
Segment Information
→ Page 175
Other Disclosures
→Page 161
Notes to the Statement of Comprehensive Income
Notes to the Balance Sheet
→Page 140
→ Page 139
Notes to the Income Statement
→ Page 133
→ Page 120
Accounting Principles and Policies
→ Page 120 Notes to the Group Financial Statements
→ Page 118 Group Statement of Changes in Equity
→ Page 116 Cash Flow Statements for Group and Segments
→ Page 114 Balance Sheets for Group and Segments
→ Page 112 Statement of Comprehensive Income for Group
→ Page 112 Income Statements for Group and Segments
GROUP FINANCIAL
STATEMENTS
the Chairman of
3
the Board of
Management
in Figures
130
133
143
Fleet emissions in g CO2/km³
2,367,603
2,247,485
2,117,965
1,963,798
1,845,186
Sales volume2
AUTOMOTIVE SEGMENT
2.0
124,729
122,244
116,324
105,876
Workforce at year-end¹
Change in %
2016
2015
2014
2013
2012
BMW GROUP
→ 01
Key non-financial performance indicators
BMW GROUP IN FIGURES
→ BMW Group
→ Page 232 Index of Graphs
→Page 233 Financial Calendar
→Page 234 Contacts
→Page 230 Index
→Page 226 BMW Group Ten-year Comparison
→Page 228 Glossary
→Page 22 General Information on the BMW Group
MANAGEMENT REPORT
COMBINED
2
→ Page 190 Statement on Corporate Governance (§289a HGB)
(Part of the Combined Management Report)
GOVERNANCE
CORPORATE
4
Board of Management
→Page 16 Statement of the Chairman of the
8 Report of the Supervisory Board
4 BMW Group in Figures
1
→Page
→Page
CONTENTS
Motor Cars Limited
Rolls-Royce
MINI
W
M
THE NEXT
100 YEARS
Mo 25 592
BMW
GROUP
A New Era Begins
ANNUAL REPORT
2016
The Board of Management reported to us regularly and comprehensively on the BMW Group's
financial condition, providing information on sales volume developments, market competition
issues relevant for the Automotive and Motorcycles segments, and changes in the size of the
workforce. It also kept us informed of economic developments in the world's key regions and
the prospects for business in each of them. The Board of Management provided us with regular
updates on new business with retail customers and business volumes in the Financial Services
segment, including explanations of variances against the forecast.
→Page 22 Organisational Structure and Business Model
→Page 24 Locations
→Page 29 Management System
→Page 34 Report on Economic Position
→Page 34 General and Sector-specific Environment
OTHER INFORMATION
5
→ Page 224 Auditor's Report
Responsibility Statement by the
Company's Legal Representatives
→Page 223
Compliance in the BMW Group
Compensation Report
→Page 212
→ Page 207
→ Page 205 Information on Corporate Governance Practices Applied
beyond Mandatory Requirements
→ Page 204 Disclosures pursuant to the Act on Equal
Gender Participation
Composition and Work Procedures of the Board of
Management of BMW AG and its Committees
→Page 198 Composition and Work Procedures of the
Supervisory Board of BMW AG and its Committees
→Page 196
Members of the Supervisory Board
127
→Page 193
→Page 192
Information on the Company's Governing Constitution
Declaration of the Board of Management and of the
Supervisory Board pursuant to § 161 AktG
→ Page 191
→ Page 190
→Page 107 BMW Stock and Capital Markets in 2016
→Page 103 Disclosures Relevant for Takeovers
→ Page 101 Internal Control System and Risk Management
System Relevant for the Financial Reporting Process
→Page 88 Risks and Opportunities
→Page 82 Report on Outlook, Risks and Opportunities
→Page 82 Outlook
→Page 76 Comments on Financial Statements of BMW AG
→Page 63 Results of Operations, Financial Position and Net Assets
→Page 39 Financial and Non-financial Performance Indicators
→Page 42 Review of Operations
→ Page 38 Overall Assessment by Management
Members of the Board of Management
124
5.3
-2.4
MOTORCYCLES SEGMENT
Revenues in € million
AUTOMOTIVE SEGMENT
4.8
9,665
9,224
8,707
7,893
7,803
Change in %
2016
2015
2014
2013
2012
Profit before tax in € million
BMW GROUP
→ 03
Key financial performance indicators
5 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2012: 150,052 units, 2013: 214,920 units, 2014: 287,466 units, 2015: 287,755 units, 2016: 305,726 units).
6 Excluding Husqvarna, production up to 2013: 59,426 units.
* Excluding Husqvarna, sales volume up to 2013: 59,776 units.
1 Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units, 2015: 282,000 units, 2016: 316,200 units).
3 EU-28.
9.4
1,811,157
1,655,961
1,509,113
1,471,385
1,341,296
70,208
70,630
75,173
85,536
20.0
21.2
RoE in % (change in %pts)
FINANCIAL SERVICES SEGMENT
1.4
33.0
31.6
21.8
16.4
1.8
ROCE in % (change in %pts)
MOTORCYCLES SEGMENT
2.1
-3.6
74.3
61.7
63.0
73.7
ROCE in % (change in %pts)
-0.3
8.9
9.2
9.6
9.4
10.8
EBIT margin in % (change in %pts)
1.0
86,424
72.2
20.2
145,555
133,615
2,003,359
1,905,234
338,466
3,785
2,247,485
1,811,719
302,183
4,063
2,117,965
1,655,138
305,030
3,630
1,963,798
1,845,186
1,540,085
301,526
3,575
Total²
Rolls-Royce
MINI
BMW2
Sales volume
Change in %
2016
2015
2014
2013
2012
AUTOMOTIVE SEGMENT
→ 02
Further non-financial performance figures
5.9
145,032
136,963
123,495
115,215
106,358
Sales volume4
5.2
360,233
6.4
4,011
110,127
113,811
New contracts with retail customers
FINANCIAL SERVICES SEGMENT
BMW
Production volume6
MOTORCYCLES SEGMENT
3.5
2,359,756
8.6
4,179
3.1
352,580
151,004
3.6
1,933,647
342,008
3,848
2,279,503
1,838,268
322,803
4,495
2,165,566
1,699,835
303,177
3,354
2,006,366
1,861,826
Total5
1,547,057
311,490
3,279
Rolls-Royce
MINI
BMW 5
Production volume
5.3
2,367,603
6.0
2,002,997
In its regular business status reports, the Board of Management kept us well informed regarding
the progress of important current projects and transactions, which we then deliberated upon in
greater detail. For example, the Board of Management briefed us on the BMW Group's collabo-
ration with Mobileye and Intel aimed at developing technologies for highly and fully automated
driving. It also provided information on the planned joint venture with other automobile
manufacturers to establish a charging infrastructure for electric vehicles that is compatible with
every brand. Other items reported on included the complete acquisition of the parking space
service provider ParkMobile and the enlargement of the group of shareholders for the HERE
mapping service. The Board of Management also informed us on the impact of an earthquake
in Japan on security of supply for certain components.
21.2
10
9
The Board of Management reported to us comprehensively on the performance, risk situation
and business strategies of the Financial Services segment. It also provided information on the
current status of regulatory proceedings involving a locally based financial services company.
Towards the end of the year under report, we studied the annual budget for the financial year
2017 presented to us by the Board of Management. We carefully reviewed the opportunities and
risks attached to the budget and discussed them thoroughly with the Board of Management.
On the second day of the meeting, we focused on the long-term corporate plan for the years
2017-2022. The Board of Management also took the opportunity to point out various risk
scenarios, such as a possible further tightening of emissions regulations. The long-term plan
was approved after exhaustive analysis and consultation. We urged the Board of Management to
maintain close control over fixed costs and profitability in order to secure the necessary levels
of future investment.
We also took the opportunity to personally test-drive a variety of series vehicles on a test track,
including the current BMW plug-in hybrid vehicles and other individual models currently
being developed. In addition, selected vehicle models were presented and explained to us. In
this context, the new brand strategy, a key element of Strategy NUMBER ONE > NEXT, was
considered at length.
Together with the Board of Management, we also debated at length on the topic of digitalisation
in sales and production and the related requirements. After thorough deliberation, the members
of the Supervisory Board approved the Strategy NUMBER ONE > NEXT.
2015
One Supervisory Board meeting was held in Goodwood, England, the headquarters and location
of the Rolls-Royce Motor Cars manufacturing plant. In the course of this meeting we dealt
with several topics, including a Board of Management report on product quality and customer
satisfaction. The Board of Management described various existing and planned emissions
requirements on key markets and presented measures designed to ensure compliance with
those requirements, including the further electrification of the BMW Group's fleet of vehicles.
Furthermore, the Board of Management explained the strategy and risk management measures
in place for Group financing. While visiting the Rolls-Royce manufacturing plant, we gathered
information on topics such as the implementation of individual customer requirements as a way
of optimising customer orientation.
The Board of Management kept us up-to-date at all times on the further development of the
Group's corporate strategy. Based on a thorough analysis of the changing environment in
which the BMW Group operates, the Board of Management set out the strategic targets of
Strategy NUMBER ONE > NEXT, which is designed to reconcile the need to ensure operational
excellence, invest in forward-looking areas and maintain profitability at a stable level. After the
various presentations, we discussed individual points of strategy with the Board of Management,
including digitalisation, electric mobility and lightweight construction.
We reviewed business developments on various key markets in some depth, particularly those
in China and the USA. The referendum held in the United Kingdom on the country leaving the
European Union prompted us to obtain an assessment from the Board of Management regarding
possible future consequences for the BMW Group.
Supervisory Board
Corporate strategy and long-term corporate planning were considered in a meeting held over
two days. In the first part of the meeting we discussed the Strategy NUMBER ONE > NEXT in
great detail, including the implementation measures developed by the Board of Management.
The Board of Management elaborated on topics that included the measures adopted for defined
key areas of technology, such as Efficient Dynamics NEXT.
→ Report of the
Report on Outlook,
Risks and
Opportunities
Management
Report
Combined
96
The BMW Group employs a global sales network,
primarily comprising independent dealers, branches,
subsidiaries and importers to sell its products and
services. Any threat to the continued activities of
parts of the sales network would entail risks for the
BMW Group. If sales and marketing risks were to
materialise, they are likely to have low earnings impact
over the two-year assessment period. The risk level
is classified as low.
New opportunities for the BMW Group's brands are
opening up in particular as a result of developments
in the field of digital communication and connectivity.
Additional opportunities could also arise if new sales
channels contribute to greater brand reach to addi-
tional customer groups than currently envisaged in
the forecast. Digital communication and connectivity
enables consumers to be reached on a more targeted
and individualised basis, thus strengthening long-term
relationships and brand loyalty. The outcome is often
a more intense product and brand experience for cus-
tomers, which could lead to higher sales volume and
have a positive impact on revenues and earnings. The
BMW Group invests in advanced marketing concepts
in order to intensify customer relationships. In 2016,
for example, customers in the United Kingdom were
able to access an online sales platform, enabling them
to select, finance and buy their vehicle online. The
BMW Group's brands are also present on numerous
platforms, such as Facebook, YouTube and Twitter.
The BMW Group estimates the earnings impact as
insignificant over the two-year assessment period as
compared to the assumptions made in the outlook.
→ Risks and
Opportunities
Risks and opportunities relating to
sales and marketing
Within the Purchasing and Supplier Network
opportunities emerge above all in the area of global
sourcing through increased efficiency and the use
of innovations developed by suppliers, which can
lead to a broader range of products. Introduction
of new and innovative production technologies and
location-specific cost factors, in particular through
local supplier structures in close proximity to new
and existing BMW Group production plants, can lead
to lower cost of materials for the BMW Group. The
integration of previously unidentified innovations
from the supplier market into the product range is
a further source of opportunities. The BMW Group
offers innovative suppliers numerous possibilities for
creating specific contractual arrangements which are
attractive for those developing innovative solutions.
At regular intervals, the BMW Group honours its
most inventive suppliers with the Supplier Innova-
tion Award. The BMW Group does not expect these
opportunities to have a significant earnings impact
over the two-year assessment period as compared to
the assumptions made in the outlook.
96
Information, data protection and IT
Great importance is attached to protecting the
confidentiality, integrity and availability of business
information and employee and customer data, for
instance against unauthorised access and misuse. Data
security based on the International Standard ISO/IEC
27001 is an integral component of all business pro-
cesses. As part of risk management procedures, data
protection, information and IT risks are systematically
documented, allocated appropriate measures by the
departments responsible and regularly monitored in
terms of threat level and risk mitigation. Regular anal-
yses and controls and rigorous security management
ensure an appropriate level of security. Despite regular
testing and preventative security measures, it is impos-
sible to eliminate risks completely in this area. All
employees are required to treat carefully information
such as confidential business, customer and employee
data, to use securely information systems and handle
risks with transparency. Group-wide requirements
are documented in a comprehensive set of principles,
guidelines and instructions, such as, for example, the
Binding Corporate Rules for handling of employee
data. Regular communication and information activ-
ities create a high degree of security and risk aware-
ness among employees involved. Employees receive
training to ensure compliance with the applicable
In addition to IT attacks and direct physical inter-
vention, lack of knowledge or misconduct on the
part of employees may also represent a danger to the
confidentiality, integrity and availability of data and
systems. Direct consequences of information, data
protection and IT risks include expenses required
for rapid data, information and systems recovery.
Negative impacts on operational performance due
to the non-availability of products and services or
disruptions in spare-part or vehicle production could
also be possible. A further indirect result could be
reputational damage.
The BMW Group pays particular attention to the qual-
ity of the parts built into its vehicles. In order to attain
a very high level of quality, it may become necessary
to invest in new technological concepts or discontinue
planned innovations, with the consequence that the
cost of materials could exceed levels accounted for in
the outlook. By monitoring and developing global sup-
plier markets, the BMW Group continuously strives
to increase its competitiveness by working together
with the world's best product and service providers.
requirements and in-house rules. The BMW Group
protects its intellectual property as well as customer
and employee data in cooperations and business
partnerships by stipulating clear instructions with
regard to data protection and the use of information
technology. Information pertaining to key areas of
expertise as well as sensitive personal data are subject
to particularly strict security measures. Technical data
protection incorporates industry-wide standards and
best practices. Responsibility for data and information
protection lies for each Group entity with the Board
of Management or relevant management team.
The use of information technology in new products
and services, production or communication with
customers opens up new opportunities. Under the
slogan Industry 4.0, new approaches to production are
being tested which could generate significant improve-
ments in process and energy efficiency. The range
of services and apps on offer to customers via BMW
ConnectedDrive is constantly being expanded and
updated. The purchase together with other companies
of the firm HERE lays the foundation for the next
generation of mobility and location-based services.
For the automobile sector, it serves as the basis for
new customer-oriented functions, such as innovative
assistance systems through to fully automated driving.
The BMW Group expects these opportunities to have
an insignificant earnings impact over the two-year
assessment period compared to the assumptions made
in the outlook.
Financial risks and risks relating to
the use of financial instruments
Currency risks and opportunities
As an internationally operating enterprise, the
BMW Group conducts business in a variety of
currencies, thus giving rise to currency risks and
opportunities. A substantial portion of Group revenue
generation, purchasing and funding occur outside
the eurozone (particularly in China and the USA).
Cash-flow-at-risk models and scenario analyses are
used to measure currency risks and opportunities. If
currency risks were to materialise, they could have a
high earnings impact over the two-year assessment
period. The risk level attached to currency risks is
medium. Significant opportunities can arise if curren-
cy developments are favourable for the BMW Group.
Operational currency management is based on the
results of currency risk analyses. The BMW Group
manages currency risk at both the strategic (medium
and long term) and operational level (short and medi-
um term). Medium- and long-term measures include
increasing production volumes and purchase volumes
in foreign currency regions (natural hedging). Cur-
rency risks are managed in the short to medium term
and for operational purposes by means of hedging on
financial markets. Hedging transactions are entered
into only with financial partners of good credit stand-
ing. Opportunities are also secured through the use
of options during specific market phases.
Risks and opportunities relating to raw materials
As a large-scale manufacturing company, the
BMW Group is exposed to purchase price risks, par-
ticularly in relation to raw materials used in vehicle
production. Basis for the analysis of raw material
price risk are planned purchases of raw materials and
components containing those raw materials. If risks
relating to raw material prices were to materialise, they
would likely have a low earnings impact over the two-
year assessment period. A low risk level is attached
to these risks. Significant opportunities could arise
if raw material prices developed favourably for the
BMW Group.
Changes in commodity prices are monitored on the
basis of a well-defined management process. The
principal objective is to increase planning reliability
for the BMW Group. Price fluctuations for precious
metals (platinum, palladium, rhodium) and non-fer-
rous metals (aluminium, copper, lead), and, to some
extent, on steel and steel ingredients (iron ore, coke-
coal) and energy (gas, electricity) are hedged using
financial derivatives and supply contracts with fixed
pricing arrangements.
The advance of digitalisation across all areas of the
business raises the need for increasingly stringent
requirements for the confidentiality, integrity and
availability of electronically processed data and in
information technology (IT) in general. The increased
threat of cybercrime has changed the risk exposure
of the BMW Group. In addition to intellectual prop-
erty theft, BMW Group must protect itself against
attacks on data integrity and availability. At the same
time, regulations covering the handling of personal
data are also becoming more stringent, for example
with the adoption of the EU General Data Protection
Regulation by the European Parliament in April 2016.
If information, data protection and IT risks were to
materialise, they could have a high earnings impact
over the two-year assessment period. Risk levels
attached to these risks are classified as high.
network, including the requirement to comply with
internationally recognised human rights and appli-
cable labour and social standards. The principal tool
for ensuring compliance with the BMW Group Sus-
tainability Standard is a three-stage risk management
system for sustainability. In addition, the technical
and financial capabilities of suppliers - especially
those supplying for modular-based production - are
monitored. Supplier sites are assessed for exposure
to natural hazards, such as floods or earthquakes, in
order to identify supply risks at an early stage and
implement appropriate safeguards. Fire risks at series
suppliers are evaluated by means of questionnaires
and selective site inspections. In order to minimise
supply risks, the BMW Group works hard to reduce
the input of raw materials or to use alternative raw
materials as a substitute.
Close cooperation between carmakers and automotive
suppliers in the development and production of vehi-
cles and the provision of services generates economic
benefits, but also raises levels of dependency. Potential
reasons for the failure of individual suppliers could
include non-compliance with sustainability or quality
standards, lack of financial strength on the part of a
supplier, the occurrence of natural hazards, IT-related
risks, fires or insufficient supply of raw materials.
As part of the supplier pre-selection process, the
BMW Group is careful to ensure compliance with the
sustainability standards stipulated for the supplier
95
The BMW Group's earnings could also be positively
affected in the short to medium term by changes in
trading policies. A possible reduction in tariff barriers,
import restrictions or direct excise duties could lower
the cost of materials for the BMW Group, also enabling
products and services to be offered to customers at
lower prices. Further opportunities from changes in
legislation and regulatory requirements compared
to the outlook for the earnings performance of the
BMW Group are classified as insignificant.
Market development
In addition to the potential impact of macroeconomic
factors and sector-specific political framework condi-
tions, it is also extremely difficult to predict the impact
of increasingly fierce competition among established
manufacturers and the emergence of new competitors.
Unforeseen consumer preferences and changes in how
brands are perceived can give rise to opportunities
and risks. If market risks were to materialise, they
could have a high earnings impact over the two-year
assessment period. The risk level is classified as high.
Fierce competition, particularly in Western Europe,
the USA and China, is a potential reason for lower
demand and for fluctuations in the regional distri-
bution and composition of demand for vehicles and
mobility services. Greater competition could potential-
ly put pressure on selling prices and margins. Changes
in customer behaviour can also be brought about by
changes in public opinion, values, environmental
issues and fuel or energy prices. Selling price and
margin risks are measured using a scenario approach,
based on a bottom-up survey of the key sales markets
and an analysis of historical data. The BMW Group's
flexible selling and production processes enable risks
to be reduced and opportunities in market and prod-
uct segments to be taken.
Local restrictions affecting product usage in specific
sectors may limit BMW Group sales volumes in indi-
vidual markets. In some urban areas, for instance,
local measures have been or are being introduced
which impose entry restrictions, road use charges
or, in some situations, highly restrictive registration
rules. These restrictions may affect local demand for
the BMW Group vehicles affected and hence have
negative repercussions on sales volume and margins.
The BMW Group's endeavours to counter this risk
include offering locally emission-free vehicles (such
as the BMW i3), which benefit from state subsidies
and exemption rules.
New opportunities are continuously being sought to
create even greater added value for customers than
currently expected, and thereby realise significant
opportunities with respect to sales volumes and pric-
ing. Further development of the product and mobility
portfolio and expansion in growth regions are seen
as the most important growth opportunities for the
BMW Group in the medium to long term. Continued
growth depends above all on the ability to develop
innovative products and bring them to market. The
range of services on offer was further expanded in
2016, including the establishment of new mobility ser-
vices by ReachNow in North America and the expan-
sion of the DriveNow offering introduced in additional
European cities. Furthermore, vehicle-related services
were brought onto the market. The new BMW 5 and
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Opportunities
7 Series models, for instance, include the optional
Driving Assistant Plus which, as a future-oriented
product innovation, offers the comfort of partially
autonomous driving. The BMW Group does not expect
these opportunities to have a material earnings impact
over the two-year assessment period compared to the
assumptions made in the outlook.
Risks and opportunities relating to operations
Risks and opportunities relating to
production and technology
Risks relating to production and technology often
manifest themselves in the form of potential sources
of production interruptions or additional expenses
necessary to comply with quality standards under
changed environmental conditions. If risks from the
production and technology category were to materi-
alise, they could have a high earnings impact over the
two-year assessment period. The risk level attached
to production and technology is classified as high.
Production stoppages and downtimes, in particular
due to fire, but also to machinery and tooling-related
breakdowns, IT disruptions, power failures, transpor-
tation and logistical disruptions, pose risks, against
which the BMW Group has put suitable measures
in place. Production structures and processes are
designed from the outset with a view to minimising
any potential damage and the probability of occur-
rence. The broad array of measures taken include
technical fire protection solutions, land development
measures including contingencies against flooding
when facilities are expanded or new buildings added,
the interchangeability of production facilities, pre-
ventative maintenance, the ability to manage spare
parts across sites, and predictive planning of trans-
portation alternatives. The risk level is also reduced by
deploying flexible working hour models and working
time accounts, but also as appropriate through split
arrangements or by building engine types at addition-
al sites. This makes it possible to recover quickly any
backlog arising from production interruptions. More-
over, risks arising from interruptions and production
downtime due to fire are also appropriately insured
with insurance companies of good credit standing.
In order to attain the outstanding level of quality
expected of the BMW Group's products and corre-
spondingly high external ratings (e.g. for product
safety) and reduce statutory and non-statutory
warranty obligations, it may be necessary to incur a
higher level of expenditure than originally forecast.
In addition, availability of products may be limited,
particularly at the start of production of new vehicles.
These risks are mitigated through regular audits and
the continual improvement of the quality management
system, which ensures a high standard of quality. The
BMW Group also recognises appropriate accounting
provisions for statutory and non-statutory warranty
obligations. Such provisions reduce the risk to earn-
ings, as they are already included in the outlook.
Further information on risks in conjunction with
provisions for statutory and non-statutory warranty
→ see obligations is provided in → note 31 to the Group
Financial Statements.
note 31
Risks and opportunities relating to purchasing
Purchasing risks relate primarily to supply risks
caused by the failure of a supplier to deliver as well
as risks associated with the quality of bought-in parts.
Production problems incurred by suppliers could have
adverse consequences for the BMW Group, ranging
from increased expenditure through to production
interruptions and a corresponding reduction in sales
volume. The increasingly complex nature of the
supplier network, especially at the level of lower tier
suppliers, whose operations can only be indirectly
influenced by the BMW Group, is a further potential
cause of downtimes at supplier locations. Purchas-
ing risks, if materialised, could have a high earnings
impact over the two-year assessment period. The
risk level attached to purchasing risks is classified
as medium.
note 37
95
Liquidity risks
Based on the experience of the financial crisis, a
minimum liquidity concept has been developed and
is rigorously adhered to. Use of the “matched funding
principle" to finance the Financial Services segment's
operations eliminates liquidity risks to a large extent.
Solvency is assured at all times throughout the
BMW Group by maintaining a liquidity reserve and
by the broad diversification of refinancing sources.
Regular measurement and monitoring ensure that
cash inflows and outflows from transactions in
varying maturity cycles and currencies offset each
other. The relevant procedures are incorporated in the
BMW Group's target liquidity concept. The liquidity
position is monitored continuously and managed
by means of a cash flow requirement and sourcing
forecast system in place throughout the Group. A
diversified refinancing strategy reduces dependency
on any specific type of instrument. Moreover, the
BMW Group's solid financial and earnings position
results in the high creditworthiness ratings issued by
internationally recognised rating agencies.
rising refinancing costs. They may also manifest them-
selves in restricted access to funds as a consequence of
the general market situation or the failure of individual
banks. If liquidity risks were to materialise, they would
be likely to have a low earnings impact over the two-
year assessment period. The risk of incurring liquidity
risk, including the risk of the BMW Group's rating
being downgraded and any ensuing deterioration in
financing conditions, is classified as low.
Interest rate risks and opportunities
Interest rate risks in the Financial Services segment
relate to potential losses caused by changes in market
interest rates. They can arise when fixed interest
rate periods for assets and liabilities recognised in
the balance sheet do not match. If risks relating to
interest rate risk were to materialise, they could
have a medium earnings impact over the two-year
assessment period. The risk level is classified as
low. The BMW Group classifies potential interest
rate opportunities as material.
Interest rate risks in the Financial Services line of
business are managed by raising refinancing funds
with matching maturities and by employing inter-
est-rate derivatives.
If the relevant recognition criteria are fulfilled, deriv-
atives used by the BMW Group are accounted for as
hedging instruments. Further information on risks in
conjunction with financial instruments is provided in
→ note 37 to the Group Financial Statements.
→ see
note 37
Operational risks in the Financial Services
segment
Operational risks are defined in the Financial Ser-
vices segment as the risk of losses arising as a conse-
quence of the inappropriateness or failure of internal
procedures (process risks), people (personnel-related
risks), systems (infrastructure and IT risks) and exter-
nal events (external risks). These four categories of
risk also include related legal and reputation risks.
The comprehensive recording and measurement of
risk scenarios, loss events and countermeasures in
the operational risk management system provides
the basis for a systematic analysis and management
of potential or materialised operational risks. Annual
self-assessments are also carried out. If operational
risks were to materialise, they would be likely to have
a low earnings impact over the two-year assessment
period. The risk level is classified as low.
Legal risks
Compliance with the law is a basic prerequisite for the
success of the BMW Group. Current legislation pro-
vides the binding framework for the BMW Group's
various business activities around the world. As a
result of its worldwide operations, the BMW Group
is exposed to a wide range of legal risks. If legal risks
were to materialise, they could have a high earnings
impact over the two-year assessment period. The risk
level attached to significant identified legal risks is
classified as medium. However, it cannot be ruled
out that new legal risks, as yet unforeseen, could
materialise that could have a high earnings impact
for the BMW Group.
The growing international scope of the BMW Group's
operations and of business interdependencies in
general, combined with the variety and complexity
of legal provisions, including increasingly import and
export regulations, give rise to an increased risk that
laws may be violated simply through lack of aware-
ness. The BMW Group has established a Compliance
Organisation aimed at ensuring that its represen-
tative bodies, managers and staff act lawfully at all
times. Further information on the BMW Group's
Compliance Organisation can be found in the section
"Corporate Governance".
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→ Internal Control
System and Risk
Management System
Relevant for the
Financial Reporting
Process
Like all internationally operating entities, the
BMW Group is confronted with legal disputes relat-
ing in particular to warranty claims, product liability,
infringements of protected rights and proceedings
initiated by government agencies. Any of these mat-
ters could, amongst others, have an adverse impact
on the Group's reputation. Such proceedings are
typical for the sector and can arise as a consequence
of realigning product or purchasing strategies to suit
changed market conditions. Particularly in the US
market, class action lawsuits and product liability
risks can have substantial financial consequences
and cause damage to the Group's public image. The
application of more rigorous consumer regulations
or the stricter interpretation of existing regulations
could result in a greater number of recalls. The high
quality of the Group's products, which is ensured
by regular quality audits and ongoing improvement
measures, helps reduce this risk.
The BMW Group recognises appropriate levels
of provision for lawsuits. A part of these risks is
insured where this makes business sense. Some
risks, however, either cannot be estimated or only
to a limited extent. In other cases, the incurrence
of expenses or losses may be considered unlikely.
Such items are reported as contingent liabilities.
It cannot be ruled out, however, that losses from
damages could arise that are either not covered or
not fully covered by insurance policies or provisions,
or as contingent liabilities. In accordance with IAS 37
(Provisions, Contingent Liabilities and Contingent
Assets), the required information is not provided if
the BMW Group concludes that disclosure of the
information could seriously prejudice the outcome of
the relevant legal proceedings. Further information
on contingent liabilities is provided in → note 36 to
the Group Financial Statements.
→ see
note 36
Overall assessment of the risk and
opportunities situation
The overall risk assessment is based on a consolidated
view of all significant individual risks and opportu-
nities. The exposure to risks in the individual risk
categories is essentially stable. In view of the growing
importance of data and IT systems for its business, the
BMW Group sees an increased need for protection in
the area of information, data protection and IT systems.
In view of these changes, the overall risk level for the
BMW Group has increased slightly compared to the
previous year. Overall, there has been no significant
change in the opportunities situation compared to
the previous year.
Each vehicle's estimated residual value is calculated
on the basis of historical external and internal data
and used to estimate the expected market value of
the vehicle at the end of the contractual period. As
part of the process of managing residual value risks,
a calculation is performed at the inception of each
contract to determine the net present value of risk
costs. Market developments are observed through-
out the contractual period and the risk assessment
updated.
The major part of the Financial Services segment's
credit financing and lease business is refinanced on
capital markets. Liquidity risks may be reflected in
Risks and opportunities arise in conjunction with
lease contracts if the market value of a leased vehicle
at the end of the contractual term of a lease differs
from the residual value estimated at the inception
of the lease and factored into the lease payments. A
residual value risk exists if the expected market value
of the vehicle at the end of the contractual term is
lower than its estimated residual value at the date the
contract is entered into. If residual value risks were to
materialise, they could have a high earnings impact
over the two-year assessment period. A high and
medium earnings impact would then arise for the
affected Financial Services and Automotive segments,
respectively. The risk level is classified as medium for
the Group as a whole. Opportunities can arise out of
a positive deviation between the actual market and
the original residual value forecast. The BMW Group
classifies potential residual value opportunities as
significant.
Credit and counterparty risks and opportunities
Credit and counterparty default risk arises with-
in the Financial Services segment if a contractual
partner (i.e. a customer or dealer) either becomes
unable or only partially able to fulfil its contractual
obligations, such that lower income is generated or
losses incurred. If credit and counterparty risks were
to materialise, they could have a medium earnings
impact over the two-year assessment period. The risk
level is classified as medium. The BMW Group classi-
fies potential opportunities in this area as significant.
As part of its credit and counterparty risk manage-
ment system, the Financial Services segment uses
a variety of rating systems in order to assess the
creditworthiness of its contractual partners. Credit
risks are managed at the time of the initial credit
decision on the basis of a calculation of the pres-
ent value of standard risk costs and subsequently,
during the term of the credit, by using a range of
risk provisioning techniques to cover risks resulting
from changes in customer creditworthiness. In this
context, individual customers are classified by cate-
gory each month on the basis of their current con-
tractual status, and appropriate levels of allowance
recognised in accordance with that classification. If
economies develop more favourably than assumed
in the outlook, credit losses may be reduced, leading
to a positive earnings impact.
Setting the regulatory framework for innovative mobil-
ity solutions and providing state-funded incentives
are important prerequisites for developing mobility
services and introducing product innovations, such
as autonomous driving. If the necessary public meas-
ures are implemented globally at a faster
pace than
expected, opportunities will arise for the BMW Group
to expand new business segments more quickly.
Alternative mobility services, such as DriveNow,
ChargeNow and ParkNow, could benefit from sup-
portive regulatory measures, for example through
systematic application in German cities of car-sharing
legislation that comes into force in September 2017.
Access restrictions for inefficient vehicles with lower
environmental standards could provide a competitive
advantage and hence an opportunity for BMW Group
vehicles equipped with Efficient Dynamics technol-
ogies and for BMW i and iPerformance vehicles with
alternative drive systems. The market acceptance and
sales volumes of product innovations that are either
planned for the future or have recently been launched
could turn out to be greater than predicted in the
outlook. Good examples of such opportunities are
implementation of the 360° ELECTRIC portfolio in the
field of electric mobility, achieving growth in the field
of mobility services, and collaborating with Toyota on
developing a hydrogen fuel cell system.
A description of the methods applied for risk measure-
ment and hedging in conjunction with currency and
→ see commodity risks is provided in → note 37 to the Group
Financial Statements. If the relevant recognition crite-
ria are fulfilled, derivatives used by the BMW Group
as hedges are accounted for as hedging relationships.
Further information on risks in conjunction with
→see financial instruments is provided in → note 37 to the
Group Financial Statements.
note 37
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Risks and opportunities relating to
pension obligations
Pension obligations are influenced in particular by
fluctuations of market yields on corporate bonds, as
well as by other economic and demographic parame-
ters. Opportunities and risks arise depending on the
nature and scale of changes in these parameters. If
risks relating to pension obligations materialised, they
could have a high earnings impact over the two-year
assessment period. The risk level relating to pension
obligations is classified as medium. Within a favoura-
ble capital market environment, the return generated
by pension assets may exceed expectations and reduce
the deficit of the relevant pension plans. This could
have a significantly favourable impact on the net asset
position of the BMW Group.
Future pension payments are discounted by reference
to market yields on high-quality corporate bonds.
These yields are subject to market fluctuation and
therefore influence the level of pension obligations.
Changes in other parameters, such as rises in infla-
tion and longer life expectancy, also impact pension
obligations and payments. Most of the BMW Group's
pension obligations are managed in external pension
funds or trust arrangements and the related assets are
kept separate from those of the Group. The amount
of funds required to finance pension payments out
of operations in the future is therefore substantially
reduced, since most of the Group's pension obli-
gations are settled out of pension fund assets. The
pension assets of the BMW Group comprise inter-
est-bearing securities, equities, real estate and other
investment classes. Assets held by pension funds and
trust arrangements are monitored continuously and
managed on a risk-and-yield basis. Diversification
of investments also helps to mitigate risk. In order
to reduce fluctuations in pension funding shortfalls,
investments are structured to match the timing of
pension payments and the expected pattern of pen-
sion obligations. Remeasurements on the liability and
fund asset sides are recognised, net of deferred taxes,
in "Other comprehensive income" and hence directly
in equity (within revenue reserves).
Further information on risks in conjunction with
pension provisions is provided in → note 30 to the see
Group Financial Statements.
note 30
Risks and opportunities relating to
the Financial Services segment
The categories of risk relating to the provision of
financial services comprise credit and counterparty
risk, residual value risk, interest rate risk, operational
risks and liquidity risk. Evaluation of liquidity risk
for the Financial Services segment is included in
the liquidity risk category for the Group as a whole.
The segment's total risk exposure was covered at all
times during the 2016 financial year by the available
risk-covering assets, thus ensuring the Financial
Services segment's risk-bearing capacity.
Residual value risks and opportunities
Further risks can result from the tightening of existing
import and export regulations. These lead primarily to
additional expenses, but can also restrict the import
and export of vehicles or parts. Increased taxes on
high-value consumer goods have also been proposed
in a number of regions. Taxes of this kind in major
markets of the BMW Group, such as China, could have
a negative impact on regional demand and margins
on BMW Group vehicles in the automobile segments
concerned.
Should the global economy develop significantly
better than reflected in the outlook, macroeco-
nomic opportunities could arise with a potentially
favourable impact on the revenues and earnings of
the BMW Group. Stronger Chinese growth, econo-
my-boosting structural reforms within the eurozone,
growth stimulus through infrastructure investment
in the USA or more robust consumer spending by
US households despite rising financing costs, could
result in significantly stronger sales volume growth,
reduced competitive pressures and improved pricing.
Macroeconomic opportunities that could generate a
sustainable impact on earnings are currently classified
by the BMW Group as insignificant.
Strategic and sector risks and opportunities
Changes in legislation and regulatory requirements
Abrupt introduction of tightened new laws and regu-
lations represents a significant risk for the automobile
industry, particularly in relation to emissions, safety
and consumer protection, as well as taxes on vehicle
purchases and use. Country- and sector-specific trade
barriers can also change at short notice. Unfavourable
developments in any of these areas can necessitate
significantly higher levels of investment and ongoing
expenses or influence customer behaviour. Risks from
changes in legislation and regulatory requirements
could have a low impact on earnings over the two-year
assessment period. The risk level attached to these
risks is classified as medium.
Production and technology
Purchasing
Sales and marketing
Information, data protection and IT
Financial risks and opportunities
Foreign currencies
High
Stable
Insignificant
Stable
Medium
Stable
Insignificant
Stable
Low
Stable
Insignificant
Stable
High
Increased
Insignificant
Stable
Medium
Risks and opportunities relating to operations
Stable
Stable
Stable
Risks and opportunities
The following table provides an overview of all risks
and opportunities and illustrates their significance
for the BMW Group.
Overall, neither at the balance sheet date nor at the
date on which the Group Financial Statements were
prepared were any risks identified that could pose a
threat to the going-concern status of the BMW Group.
Risks and opportunities which could, from today's
perspective, have a significant impact on the results
of operations, financial position and net assets of the
BMW Group are described in the following sections.
91
Risk level
Change compared
to prior year*
Opportunities
Change compared
to prior year
RISKS AND OPPORTUNITIES
Macroeconomic risks and opportunities
High
Stable
Insignificant
Stable
Strategic and sector risks and opportunities
Changes in legislation and regulatory requirements
Medium
Stable
Insignificant
Stable
Market developments
High
Insignificant
The BMW Group sees a clear move towards increasing-
ly stringent vehicle emissions regulations, particularly
for conventional drive systems, not only in the devel-
oped markets of Europe and North America, but also
in emerging markets such as China. The introduction
of new measurement procedures to represent stand-
ard driving cycles, combined with significantly lower
emissions thresholds, represents a major challenge for
the automotive sector. The BMW Group counters this
risk with its Efficient Dynamics concept and continues
to play a pioneering role within the premium segment
in reducing both fuel consumption and emissions.
Electric drive systems are being built into a growing
number of models, namely in BMW i vehicles since
2013 and following the introduction of the X5 in
2015 - in models using plug-in-hybrid technologies,
thus contributing to the BMW Group's effort to comply
with statutory carbon emissions requirements.
Significant
Raw materials
Stable
Operational risks
Low
Stable
Legal risks
* Prior-year classifications have been amended in line with the revision of the risk catalogue described in the section "Risk Management System" and the measurement of risk amount described in the section
"Risk measurement".
Medium
Stable
Macroeconomic risks and opportunities
Economic conditions influence business performance
and hence the results of operations, financial posi-
tion and net assets of the BMW Group. Unforeseen
disruptions in global economic ties can have highly
unpredictable effects. Macroeconomic risks can lead
to reduced purchasing power in the countries and
regions involved and lead to reduced demand for the
products and services offered by the BMW Group.
If macroeconomic risks were to materialise, they
could - due to sales volume fluctuations have a
high earnings impact over the two-year assessment
period. Overall, the risk level attached to macroeco-
nomic risks is classified as high. Macroeconomic risks
are evaluated on the basis of historical data and by
means of a cash-flow-at-risk approach, supplemented
by scenario analyses.
-
Given the political events that have occurred during
the financial year under report, future global economic
developments are currently subject to a high degree
of uncertainty, in particular with respect to potential
barriers that could affect global trade. The outcome
of the elections in the USA in November 2016, the
planned exit of the UK from the EU and possible
election wins for anti-globalisation parties in the EU
in the coming years could result in higher tariff and
non-tariff barriers to trade.
42
92
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
The possible introduction of trade barriers by the new
US administration could have an adverse impact on the
BMW Group's operations in the form of less favourable
conditions for importing vehicles. Moreover, counter-
measures by the USA's trading partners could slow
down global economic growth and consequently have
an adverse impact on the export of vehicles produced
in the USA. The BMW Group's production strategy
involves local production both in the USA and in other
important trading regions. The strategy of regional
production reduces the existing risk of trade barriers.
Nevertheless, any increase in trade barriers would
have an adverse impact on the BMW Group.
The Brexit plan could have a long-term adverse
impact on the BMW Group, particularly as a result of
increased trade barriers in relation to the European
single market. In the short and medium term, too,
uncertainty regarding the outcome of the negotiations
with the EU could lead to reduced customer spending
and trigger further unfavourable currency effects.
Unresolved structural problems in the eurozone, a
potential increase in anti-globalisation political sen-
timent and a possible renewed economic downturn
could potentially hold down growth prospects for the
BMW Group. European integration with a unified
economic and currency area remains an important
pillar of economic stability in Europe.
The transition of the Chinese economy from an invest-
ment-driven to a consumer-driven market is likely to
entail slower growth rates and greater instability on
financial markets. If the Chinese economy were to
grow at a significantly slower pace than expected, the
consequence could be not only a decline in automo-
bile sales, but also, potentially, lower demand for raw
materials, which would have a negative impact above
all on emerging economies such as Brazil or Russia.
Any renewed drop in raw material prices could result
in lower demand from these countries. The threat of
turmoil on the Chinese property, stock and banking
markets and an overly rapid hike in interest rates by
the US Federal Reserve pose considerable risks for
global financial market stability.
Furthermore, increasing political unrest, military
conflicts, terrorist activities, natural disasters or
pandemics could have a lasting negative impact on
the global economy and international capital markets.
The BMW Group counters macroeconomic risks pri-
marily by internationalising its sales and production
structures, in order to minimise the extent to which
earnings depend on risks in individual countries and
regions. Flexible sales and production processes across
the BMW Group increase the ability to react quickly
to regional economic developments.
In addition to the risk categories described above,
unforeseen events could have a negative impact on
business operations and hence on the BMW Group's
results of operations, financial position and net assets,
and on its reputation. A comprehensive risk manage-
ment system is in place to ensure that the BMW Group
successfully manages these risks.
Significant
Stable
Stable
Interest rate changes
Low
Stable
Significant
Stable
Liquidity
Low
Stable
Pension obligations
Medium
Stable
Significant
Stable
Risks and opportunities relating to the provision of financial services
Credit risk
Medium
Stable
Significant
Stable
Residual value
Medium
Stable
Significant
Stable
Low
From today's perspective, management does not see
any threat to the BMW Group's going-concern status.
As in the previous year, identified risks are considered
to be manageable, but could - like the opportuni-
ties - have an impact on the BMW Group's forecasts if
they were to materialise. The BMW Group's financial
position is stable and cash needs are currently covered
by available liquidity and credit lines.
The BMW Group sees opportunities relating to produc-
tion and technology primarily in the competitive edge
accruing from mastering new and complex technolo-
gies. Opportunities could arise as a result of product-
or process-related technological innovations, as well
as from organisational changes designed to improve
efficiency and increase competitiveness. In the field of
lightweight construction, for example, carbon is being
utilised in high volumes for the first time in the auto-
mobile industry for the production of the BMW i3. In
2015, the BMW Group then introduced carbon for the
BMW 7 Series. This has generated competitive bene-
fits in the form of lower fuel consumption and better
driving dynamics through reduced vehicle weight.
Given the long lead times involved in developing new
products and processes, additional opportunities are
expected to have insignificant impact on earnings
during the forecast period.
74.60
→ BMW Stock and
Capital Markets in
2016
Development of BMW stock compared to stock market indices
→ 57
Index: December 2011 = 100
200
150
100
200
Prime Automobile
BMW preferred stock
DAX
150
BMW common stock
100
50
50
2012
2013
2014
2015
2016
2017
Source: Reuters.
The Prime Automobile Index lost about one third of
its value towards the middle of the year, with subdued
demand for automobile stocks. The index recovered
during the second half of the year, finishing the report-
ing period at 1,506 points, 5.6% below its closing level
on 30 December 2015.
Combined
Management
Report
BMW common stock followed the downward trend for
the sector index during the first half of the year, at one
stage falling 33% below its previous year's closing level.
It performed significantly better during the second
half of the year, closing at €88.75 (-9.1%) thanks to
strong gains. BMW preferred stock fell by 6.1% in
value compared to its closing price at the end of the
previous year and stood at €72.70 at the end of the
stock market year 2016. With a market capitalisation
of approximately €57 billion, the BMW Group was
among the ten most valuable German enterprises
listed on the stock market.
108
At the beginning of the year, speculation about the
cooling of the Chinese economy had a negative impact
on stock market indices worldwide. At 8,753 points,
the German stock exchange (DAX) reached its low for
the year on 11 February, 18.5% down on its closing
level on 31 December 2015. The ECB's decision to con-
tinue its expansionary monetary policies and, starting
8 June, to buy euro-denominated investment-grade
corporate bonds, had a positive impact on investor
sentiment. However, following the Brexit vote on
23 June and the uncertainties it triggered, indices
around the world slumped again. During the summer
months, stock markets proceeded to recover after the
difficult first half year. The active role of the Bank
of England was well received by investors. Reducing
the reference interest rate to a record low of 0.25%
and the bank's decision to purchase GBP 60 billion
worth of UK government bonds were interpreted as
positive signals. Good labour market figures coming
from the USA and the UK generated further gains
over the summer. During the last three months of
the year, the focus was on the US elections and the
ECB's decision to extend its bond-buying programme
until December 2017. Stock markets generally tended
positively during this phase, with the consequence
that the DAX - despite a turbulent start to the year -
recorded a 6.9% gain for the twelve-month period,
closing at 11,481 points on 30 December 2016. The
EURO STOXX 50 recorded a gain of 0.7% in 2016,
closing at 3,291 points on 30 December.
In accordance with the agreement between
BMW AG, Daimler AG and AUDI AG pertaining
to the acquisition of entities of the HERE Group
and the related foundation of There Holding
B.V., each contractual party is required to offer
its shares in There Holding B.V. for sale to the
other shareholders in the event of a change in
control. If neither of the other two parties
acquires these shares, these other parties are
entitled to resolve that There Holding B. V. be
dissolved.
The development cooperation agreement
between BMW AG, Intel Corporation and Mobil-
eye Vision Technologies Ltd., relating to the
development of technologies deployed in highly
and fully automated vehicles, may be terminat-
ed by any of the contractual parties if a competi-
tor of one of the parties acquires and
subsequently holds at least 30% of the voting
shares of one of the contractual parties.
Compensation agreements with members of the
Board of Management or with employees in the
event of a takeover bid
The BMW Group has not concluded any compensation
agreements with members of the Board of Manage-
ment or with employees for situations involving a
takeover offer.
BMW STOCK
AND CAPITAL MARKETS
IN 2016
→ www.bmwgroup.com/ir
Development of BMW stock compared to stock
market indices since 30 December 2011
→ 56
in %
Capital markets and BMW stock were both impacted by
major political and economic uncertainties during the
past year. Thanks to its consistent focus on the future
and solid financials, the BMW Group continues to enjoy
the best ratings in the European automobile sector and
a high standing on international capital markets.
219.1
240
198.9
194.6
171.5
120
BMW
preferred common
stock
stock
BMW
Prime
DAX
Auto-
mobile
Political uncertainties weigh on stock markets
The stock market year 2016 was dominated by con-
cerns relating to political developments. During the
first half of the year, the approaching Brexit vote had
a negative impact on international financial markets.
Additionally, the US election on 8 November unsettled
markets towards the year-end. Uncertainties regard-
ing the economic situation in China also dampened
investor sentiment. The active role of central banks
over the course of the year tended to counteract these
influences, so that many stock exchanges closed - at
the end of a volatile year – higher than their previous
year's level.
107
-
Employee Share Programme
In this context, and with the approval of the Super-
visory Board, the Board of Management increased
BMW AG's share capital by €305,000 from €656,804,600
to €657,109,600 by issuing 305,000 new non-voting
shares of preferred stock. This increase was executed
on the basis of Authorised Capital 2014 in Article 4
(5) of the Articles of Incorporation. The new shares
of preferred stock carry the same rights as existing
shares of preferred stock. The newly issued shares of
preferred stock for employees are entitled to receive
dividends with effect from the financial year 2017. In
addition, 29 shares of preferred stock were bought
back via the stock market.
95.51
85.42
73.76
65.10
75.68
77.41
63.93
53.16
PREFERRED STOCK
Number of shares in 1,000
55,114
54,809
54,500
54,260
53,994
Stock exchange price in €1
Year-end closing price
High
Low
72.70
77.41
67.84
62.09
122.60
BMW AG has enabled its employees to participate in
its success for more than 40 years. Since 1989, this
participation has taken the form of an Employee Share
Programme. A total of 305,029 shares of preferred
stock were issued to employees as part of this pro-
gramme in 2016.
92.25
85.22
Dividend increase proposed
Reflecting the strong earnings performance, the
Board of Management and the Supervisory Board
will propose to the Annual General Meeting to use
BMW AG's unappropriated profit of €2,300 million ¬
(2015: €2,102 million) to pay a dividend of €3.50 for
each share of common stock (2015: €3.20) and a divi-
dend of €3.52 for each share of preferred stock (2015:
€3.22), a pay-out ratio of 33.3% for 2016 (2015: 32.9%).
BMW stock
→ 58
2016
2015
2014
2013
2012
COMMON STOCK
Number of shares in 1,000
601,995
601,995
601,995
601,995
601,995
Stock exchange price in €1
Year-end closing price
High
Low
88.75
97.63
89.77
72.93
Several supply and development contracts
between BMW AG and various industrial cus-
tomers, all relating to the sale of components for
drivetrain systems, grant an extraordinary right
of termination to the relevant industrial custom-
er in specified cases of a change in control at
BMW AG (e.g. BMW AG merges with a third
party or is taken over by a third party; an auto-
mobile manufacturer acquires more than 50% of
the voting rights or share capital of BMW AG).
The framework cooperation agreement entered
into by BMW AG and Sixt SE amongst others,
relating to the foundation and operation of the
car-sharing joint venture DriveNow, may be ter-
minated by Sixt SE if a car hire company
acquires more than 50% of the shares of com-
mon stock of BMW AG. In the event of such a
termination, Sixt SE may, at its own discretion,
stipulate the sale of BMW's interest in the joint
venture to Sixt SE or the purchase of Sixt's
interest in the joint venture by BMW AG or one
its subsidiaries.
BMW AG is party to an agreement with SGL Car-
bon SE, Wiesbaden, relating to the joint operations
SGL Automotive Carbon Fibers LLC, Delaware,
USA and SGL Automotive Carbon Fibers GmbH &
Co. KG, Munich. The agreement includes call and
put rights in case - either directly or indirectly -
50% or more of the voting rights relating to the rel-
evant other shareholder of the joint operations are
acquired by a third party, or if 25% of such voting
rights have been acquired by a third party if that
third party is a competitor of the party that has not
been affected by the acquisition of the voting
rights. In the event of such acquisitions of voting
rights by a third party, the non-affected sharehold-
er has the right to purchase the shares of the joint
operations from the affected shareholder or to
require the affected party to acquire the other
shareholder's shares.
Composition of subscribed capital
The subscribed capital (share capital) of BMW AG
amounted to €657,109,600 at 31 December 2016
(2015: €656,804,600) and, in accordance with Article 4
no. 1 of the Articles of Incorporation, is sub-divided
into 601,995,196 shares of common stock (91.61%)
(2015: 601,995,196; 91.66%) and 55,114,404 shares of
non-voting preferred stock (8.39%) (2015: 54,809,404;
8.34%), each with a par value of €1. The Company's
shares are issued to bearer.
The rights and duties of shareholders derive from the
German Stock Corporation Act (AktG) in conjunction
with the Company's Articles of Incorporation, the
full text of which is available at www.bmwgroup.com. The
right of shareholders to have their shares evidenced
is excluded in accordance with the Articles of Incor-
poration. The voting power attached to each share
corresponds to its par value. Each €1 of par value
of share capital represented in a vote entitles the
holder to one vote (Article 18 no. 1 of the Articles of
Incorporation).
*Disclosures
pursuant to
§ 289 (4) HGB
and § 315 (4)
HGB.
The Company's shares of preferred stock are shares
within the meaning of § 139 et seq. AktG, which
carry a cumulative preferential right in terms of the
allocation of profit and for which voting rights are
excluded. These shares only confer voting rights in
exceptional cases stipulated by law, in particular when
the preference amount has not been paid or has not
been fully paid in one year and the arrears are not paid
in the subsequent year alongside the full preference
amount due for that year. With the exception of voting
rights, holders of shares of preferred stock are entitled
to the same rights as holders of shares of common
stock. Article 24 of the Articles of Incorporation con-
fers preferential treatment to the non-voting shares of
preferred stock with regard to the appropriation of the
Company's unappropriated profit. Accordingly, the
unappropriated profit is required to be appropriated
in the following order:
(a) subsequent payment of any arrears on dividends
on non-voting preferred shares in the order of
accruement
(b) payment of an additional dividend of €0.02 per
€1 par value on non-voting preferred shares
(c) uniform payment of any other dividends on
shares on common and preferred stock, provid-
ed the shareholders do not resolve otherwise
at the Annual General Meeting
103
→ see
note 39
Restrictions on voting rights or the transfer
of shares
As well as shares of common stock, the Company has
also issued non-voting shares of preferred stock. Fur-
ther information relating to this can be found above
in the section "Composition of subscribed capital”.
When the Company issues non-voting shares of
preferred stock to employees in conjunction with its
Employee Share Programme, these shares are subject
as a general rule to a company-imposed blocking peri-
od of four years, measured from the beginning of the
calendar year in which the shares are issued.
Contractual holding period arrangements also apply to
shares of common stock acquired by Board of Manage-
ment members and certain senior department heads
in conjunction with the share-based remuneration
programmes (Compensation Report of the Corporate
Governance section; → note 39 to the Group Financial
Statements).
104
Combined
Management
Report
→ Disclosures Relevant
for Takeovers
and Explanatory
Comments
DISCLOSURES RELEVANT
FOR TAKEOVERS* AND
EXPLANATORY COMMENTS
Direct or indirect investments in capital exceeding
Responsibilities for ensuring the effectiveness of
the internal control system in relation to individual
entity and Group financial reporting processes are
clearly defined and allocated to the relevant managers
and are subject to internal audits (e.g. management
self-audits, internal audit department findings). Data
analysis tools are also employed to identify risks relat-
ing to business transactions. Continuous revision and
further development ensures the effectiveness of the
internal control system. Group entities are required
to confirm regularly as part of their reporting duties
that the internal control system is functioning prop-
erly. Effective measures are implemented whenever
weaknesses are identified and reported.
All employees are appropriately trained to carry out
their duties and kept informed of any changes in
regulations or processes that affect them. Managers
and staff also have access to detailed best-practice
descriptions relating to risks and controls in the var-
ious processes, thus increasing risk awareness at all
levels. As a consequence, the internal control system
can be evaluated regularly and further improved
as necessary. Employees can, at any time and inde-
pendently, deepen their understanding of control
methods and design using an information platform
that is accessible throughout the entire Group.
INTERNAL CONTROL
SYSTEM* AND RISK
MANAGEMENT SYSTEM
RELEVANT FOR THE
FINANCIAL REPORTING
PROCESS
Disclosures
pursuant to
§ 289 (5) HGB
and § 315 (2)
no. 5 HGB.
reporting. Moreover, the internal audit department,
in its capacity as a process-independent function,
tests and assesses the effectiveness of the internal
control system and proposes improvements where
appropriate.
The internal control system in place throughout the
BMW Group is aimed at ensuring the effectiveness
of operations. It makes an important contribution
towards ensuring compliance with the laws that apply
to the BMW Group as well as providing assurance on
the propriety and reliability of internal and external
financial reporting. The internal control system is
therefore a significant factor in the management of
process risks. The principal features of the internal
control system and the risk management system, as far
as they relate to individual entity and Group financial
reporting processes, are described below.
Information and communication
-
One component of the internal control system is that
of “Information and Communication”. It ensures that
all the information needed to achieve the objectives
set for the internal control system is made available
to those responsible in an appropriate and timely
manner. Information relevant for the various finan-
cial reporting processes
at BMW AG, other consol-
idated Group entities and for the BMW Group as a
whole - is set out primarily in organisational manuals,
internal and external financial reporting guidelines,
accounting manuals and training documentation. This
information, which can be accessed at all levels via the
BMW Group's intranet system, provide the framework
for ensuring that the relevant rules are applied consist-
ently throughout the Group. The quality and relevance
of these instructions are ensured by regular review as
well as by continuous communication between the
relevant departments.
Organisational measures
All financial reporting processes (including Group
financial reporting processes) are structured in
organisational terms in accordance with the principle
of segregation of duties, thus making an important
contribution to the early identification of errors and
the prevention of potential wrongdoing. Regular com-
parison of internal forecasts and external financial
reports, for example, improves the quality of financial
Controls
Extensive controls are carried out by managers and
staff in all financial reporting processes at an individ-
ual entity and Group level, thus ensuring that legal
requirements and internal guidelines are complied
with and that all business transactions are properly
executed. Controls are also carried out with the aid
of IT applications, thus reducing the incidence of
process risks. Moreover, the performance of controls
on accounts deemed to be exposed to risk are subject
to additional monitoring.
IT authorisations
All IT applications used in financial reporting pro-
cesses throughout the BMW Group are subject to
access restrictions, allowing only authorised persons
to gain access to systems and data in a controlled envi-
ronment. Access authorisations are allocated on the
basis of the nature of the duties to be performed. In
addition, IT processes are designed and authorisations
allocated using the dual control principle, as a result of
which, for instance, requests cannot be submitted and
approved by the same person. Technical monitoring
procedures and internal audits are also in place to
ensure appropriate authorisation security throughout
all IT systems.
101
102
Combined
Management
Report
→ Internal Control
System and Risk
Management System
Relevant for the
Financial Reporting
Process
→ Disclosures Relevant
for Takeovers
92.19
Internal control training for employees
Evaluating the effectiveness of the internal
control system
10% of voting rights
Based on the information available to the Company, 1
the following direct or indirect holdings exceeding
10% of the voting rights at the end of the reporting
period were held at the stated reporting date:¹
Authorisations given to the Board of Management
in particular with respect to the issuing or buying
back of shares
The Board of Management is authorised to buy back
shares and sell repurchased shares in situations spec-
ified in § 71 AktG, e.g. to avert serious and imminent
damage to the Company and/or to offer shares to
persons employed or previously employed by BMW AG
or one of its affiliated companies.
-
In accordance with the resolution passed at the
Annual General Meeting on 15 May 2014, the Board of
Management is also authorised – up to 14 May 2019 -
to acquire shares of non-voting preferred stock of the
Company via the stock exchange, up to a maximum
of 1% of the share capital existing at the date of the
resolution. The consideration paid by the Company
per share of non-voting preferred stock (excluding
transaction costs) may not be more than 10% above
or below the market price determined by the opening
auction on the date of trading of the stock in the
Xetra trading system (or a successor system having a
comparable function). Moreover, the Board of Man-
agement is authorised to use the acquired Company's
own shares of non-voting preferred stock for all legally
admissible purposes, specifically including the right
to offer and transfer shares to persons employed by
the Company or one of its affiliated companies up to
a proportionate amount of €5 million of share capital.
The subscription rights of existing shareholders to the
new shares of preferred stock used for the purpose
stated above are excluded. The authorisations may
also be exercised in parts on more than one occasion.
In accordance with Article 4 no. 5 of the Articles of
Incorporation, the Board of Management is author-
ised – with the approval of the Supervisory Board – to
increase BMW AG's share capital during the period
until 14 May 2019 by up to €4,145,383 for the pur-
poses of an Employee Share Scheme by issuing new
non-voting shares of preferred stock, which carry the
same rights as existing non-voting preferred stock,
in return for cash contributions (Authorised Capital
2014). Subscription rights of existing shareholders to
the new shares are excluded. No conditional capital
is in place at the reporting date.
Significant agreements entered into by the
Company subject to control change clauses in the
event of a takeover bid
BMW AG is party to the following major agreements,
which contain provisions that would apply in the event
of a change in control or the acquisition of control as
a result of a takeover bid:
-
An agreement concluded with an international
consortium of banks relating to a syndicated
credit line (which was not being utilised at the
balance sheet date) entitles the lending banks to
give extraordinary notice to terminate the credit
line (such that all outstanding amounts, includ-
ing interest, would fall due immediately) if one
or more parties jointly acquire direct or indirect
control of BMW AG. The term "control" is
defined as the acquisition of more than 50% of
the share capital of BMW AG, or the right to
receive more than 50% of the dividend or the
right to direct the affairs of the Company, or
appoint the majority of the members of the
Supervisory Board.
A cooperation agreement concluded with Peu-
geot SA relating to the joint development and
production of a new family of small (1- to
1.6-litre) petrol engines entitles each of the
cooperation partners to give extraordinary noti-
fication of termination in the event of a compet-
itor acquiring control over the other contractual
party and if any concerns of the other contrac-
tual party concerning the impact of the change
of control on the cooperation arrangements are
not allayed during the subsequent discussion
process.
BMW AG acts as guarantor for all obligations aris-
ing from the joint venture agreement relating to
BMW Brilliance Automotive Ltd. in China. The
agreement grants an extraordinary right of termi-
nation to either joint venture partner in the event
that, either directly or indirectly, more than 25%
of the shares of the other party are acquired by a
third party, or if the other party is merged with
another legal entity. The termination of the joint
venture agreement may result in either the sale of
the shares to the other joint venture partner or in
the liquidation of the joint venture entity.
Framework agreements are in place with finan-
cial institutions and banks (ISDA Master Agree-
ments) with respect to trading activities with
derivative financial instruments. Each of these
agreements includes an extraordinary right of
termination, which triggers the immediate settle-
ment of all current transactions in the event that
the creditworthiness of the party involved is
materially weaker following a direct or indirect
acquisition of beneficially owned equity capital
that confers the power to elect a majority of the
Supervisory Board of a contractual party or any
other ownership interest that enables the acquir-
er to exercise control over a contractual party, or
which constitutes a merger or a transfer of net
assets.
Financing agreements in place with the European
Investment Bank (EIB) entitle the EIB to request
early repayment of the loan in the event of an
imminent or actual change in control at the level
of BMW AG (partially in the capacity of guarantor
and partially in the capacity of borrower), if the
EIB has reason to assume - after the change in
control has taken place or 30 days after it has
made a request to discuss the situation - that the
change in control could have a significantly
adverse impact, or if the borrower refuses to hold
any such discussions. A change in control of
BMW AG arises if one or more individuals take
over or lose control of BMW AG, with control
being defined in the above-mentioned financing
agreements as (i) holding or having control over
more than 50% of the voting rights, (ii) the right
to stipulate the majority of the members of the
Board of Management or Supervisory Board, (iii)
the right to receive more than 50% of dividends
payable or (iv) any other comparable controlling
influence over BMW AG.
105
106
Combined
Management
Report
→ Disclosures Relevant
for Takeovers
and Explanatory
Comments
→ BMW Stock and
Capital Markets in
2016
-
-
General Meeting (§ 119 (1) no. 5, § 179 (1) AktG). The
Supervisory Board is authorised to approve amend-
ments to the Articles of Incorporation which only
affect its wording (Article 14 no. 3 of the Articles of
Incorporation). Resolutions are passed at the Annual
General Meeting by simple majority of shares unless
otherwise explicitly required by binding provisions of
law or, when a majority of share capital is required,
by simple majority of shares represented in the vote
(Article 20 no. 1 of the Articles of Incorporation).
Amendments to the Articles of Incorporation must
comply with § 179 et seq. AktG. All amendments must
be decided upon by the shareholders at the Annual
Statutory regulations and Articles of Incorporation
provisions with regard to the appointment and
removal of members of the Board of Management
and changes to the Articles of Incorporation
The appointment or removal of members of the Board
of Management is based on the rules contained in § 84
et seq. AktG in conjunction with § 31 of the German
Co-Determination Act (MitbestG).
Like all other shareholders, employees exercise their
control rights pertaining to shares they have acquired
in conjunction with the Employee Share Programme
and/or the share-based remuneration programme
directly on the basis of relevant legal provisions and
the Company's Articles of Incorporation.
in %
Stefan Quandt, Germany
AQTON SE, Bad Homburg v.d. Höhe, Germany
Johanna Quandt GmbH, Bad Homburg v.d. Höhe, Germany
Johanna Quandt GmbH & Co. KG für Automobilwerte, Bad Homburg v.d. Höhe, Germany
Susanne Klatten, Germany
Susanne Klatten Beteiligungs GmbH, Bad Homburg v.d. Höhe, Germany
1 Based on voluntary notifications provided by the listed shareholders as at 31 December 2016.
2 Controlled entities, of which 3% or more are attributed: AQTON SE.
3 Controlled entities, of which 3% or more are attributed: Johanna Quandt GmbH & Co. KG für Automobilwerte.
4 Controlled entities, of which 3% or more are attributed: Susanne Klatten Beteiligungs GmbH.
Direct share of
voting rights
48.76
Indirect share of
voting rights
17.42
17.4
16.43
16.4
0.2
12.64
12.6
The voting power percentages disclosed above may
have changed subsequent to the stated date if these
changes were not required to be reported to the
Company. Due to the fact that the Company's shares
are issued to bearer, the Company is generally only
aware of changes in shareholdings if such changes are
subject to mandatory notification rules.
Shares with special rights which confer control
rights
There are no shares with special rights which confer
control rights.
System of control over voting rights when
employees participate in capital and do not
exercise their control rights directly
0.2
74.15
and Explanatory
Comments
7.77
2.62
2.52
Earnings per share of common stock³
10.45
9.70
8.83
8.08
Earnings per share of preferred stock4
10.47
9.72
8.85
8.10
7.79
Operating cash flow Automotive segment
18.02
2.92
14.35
3.22
Preferred stock
56.53
64.65
58.96
59.08
49.23
48.69
35.70
KEY DATA PER SHARE IN €
Dividend
Common stock
3.502
3.20
2.90
2.60
2.50
3.522
15.19
17.45
Equity
The BMW Group continued to inform analysts, inves-
tors, and rating agencies throughout 2016 with regular
quarterly and year-end financial reports. The compre-
hensive information programme provided for relevant
capital market participants also included numerous
one-on-one and group meetings, dedicated socially
responsible investment (SRI) roadshows for investors
using sustainability criteria in their investment deci-
sions, and debt roadshows for fixed-income investors
and credit analysts. Communication focused on the
new Strategy NUMBER ONE > NEXT, the profitability
of future business models, digitalisation and other
technological trends in the automobile industry, and
the relevance of alternative drive systems. In addition
to participating in various conferences and roadshows,
a series of product presentations and a technology
workshop were held for analysts and investors.
Intensive communication with capital markets
continued
The ratings underline the BMW Group's robust
financial condition and excellent creditworthiness.
Thanks to these attributes, it not only has good access
to international capital markets, but also benefits from
attractive refinancing conditions.
On 25 January 2017, Moody's raised its long-term
rating for BMW AG from A2 (positive outlook) to
A1 (stable outlook). The P-1 short-term rating was
reaffirmed. The main reasons for the improved ratings
were the forthcoming launches of attractive products,
the good position of the BMW Group with regard
to the challenges faced by the automobile industry,
a consistently strong operating performance and a
robust financing and capital structure.
stable
stable
A+
A-1
P-1
A1
13.98
Standard &
Poor's
Moody's
Company rating
The BMW Group continues to have the best ratings
in the European automobile sector. Since Decem-
ber 2013, BMW AG has had a long-term rating of A+
(stable outlook) and a short-term rating of A-1 from
the rating agency Standard & Poor's, currently the
highest rating given by Standard & Poor's to a Euro-
pean car manufacturer.
Ratings remain at top level
Non-current financial liabilities
Current financial liabilities
Outlook
Combined
Management
Report
→ BMW Stock and
Capital Markets in
2016
65.11
57.03
54.25
46.66
1 Xetra closing prices.
72.08
³ Annual average weighted amount.
4 Stock weighted according to dividend entitlements.
109
110
2 Proposed by management.
Cash inflow/outflow from operating activities
3,173
960
Investment in intangible assets and property, plant and equipment
-5,823
-746
Expenditure for investments
38
10
Proceeds from the disposal of intangible assets and property, plant and equipment
132
-5,889
-338
142
41,027
-3,323
-2,417
550
1,229
-25
738
Proceeds from the disposal of investments
-566
-93
298
-749
-293
-104
Interest received
140
215
Investments in marketable securities and investment funds
2,787
1,447
1,777
5,147
5,441
2015
2016
2015
information)
2,893
(unaudited supplementary
2016
information)
(unaudited supplementary
Automotive
1 Interest relating to financial services business is classified as revenues/cost of sales.
6,122
7,880
Cash and cash equivalents as at 31 December
7,688
Financial Services
6,122
-117
283
579
275
-369
-187
-6,637
-8,368
-4,026
-3,532
3
-125
172
128
970
31
29
4,577
4,876
11
121
302
139
Cash and cash equivalents as at 1 January
-1,566
1,758
20
Change in commercial paper
Change in current other financial liabilities
Repayment of non-current other financial liabilities
Proceeds from new non-current other financial liabilities
Repayment of bonds
Proceeds from the issue of bonds
Interest paid
Intragroup financing and equity transactions
-2,121
Payment of dividend for the previous year
Issue/buy-back of treasury shares
-7,603
-5,863
Cash inflow/outflow from investing activities
5,659
3,740
Proceeds from the sale of marketable securities and investment funds
-6,880
-3,592
Payments into equity
23
-1,917
-118
-264
Change in cash and cash equivalents
38
Effect of changes in composition of Group on cash and cash equivalents
73
17
Effect of exchange rate on cash and cash equivalents
Cash inflow/outflow from financing activities
5,004
4,393
-498
-1,632
2,648
4,135
-8,802
-8,443
9,715
8,952
-8,908
-10,374
13,007
13,974
Income taxes paid
11
Change in other operating assets and liabilities
Change in trade receivables
Receivables from sales financing
Trade receivables
Inventories
Non-current assets
Other assets
Deferred tax
Financial assets
Receivables from sales financing
Other investments
Financial assets
Current tax
Other assets
Investments accounted for using the equity method
Property, plant and equipment
Intangible assets
ASSETS
78,841 -121,780 -113,026
82,795
122,029
137,728
-67,305 -65,832
48,416
Leased products
Cash and cash equivalents
Current assets
Total assets
EQUITY AND LIABILITIES
Subscribed capital
17,718
31
28
48
6,158
6,755
13
313
353
1,130
1,516
55
77
-15,869
-17,054
15,225
16,744
9,948
11,049
Equity attributable to shareholders of BMW AG
Accumulated other equity
Capital reserves
Revenue reserves
47,046
16,030
35,633
-65,133
35,749
86,396
97,306
-599
-2,596
-27,129
-32,689
22,268
27,120
2,469
3,093
30,425
-2,635
263
222
389
-583
1,985
1,780
236
221
41,865
205
-54,475
-47,194
5
-66,675
-699
-630
1,121
1,104
45,379
811
44,782
40
1,359
3,046
4,540
5,417
894
37
44
1,329
1,354
1,504
28,178
30,228
1
158
178
7
40,422
Change in trade payables
36,328
23,613
Depreciation and amortisation of other tangible, intangible and investment assets
239
131
Other interest and similar income/expenses
2,751
2,670
Current tax
Reconciliation between net profit and cash inflow/outflow from operating activities
6,396
4,998
6,910
2015
2016
Group
in € million
CASH FLOW STATEMENTS FOR GROUP AND SEGMENTS
BMW GROUP
and Segments
Statements for Group
Cash Flow
Net profit
4,686
Change in provisions
883
Change in inventories
Changes in working capital
-518
-441
Result from equity accounted investments
-144
-4
Gain/loss on disposal of tangible and intangible assets and marketable securities
47
-15
Other non-cash income and expense items
77
85
Change in deferred taxes
-6,637
-8,368
Change in receivables from sales financing
-3,299
-2,526
Change in leased products
296
→ BMW Group
29,413
Statements
116
702
23,038
27,368
408
49
223
255
8
3
43,439
518
Minority interest
Equity
-599
-25,835
-30,933
-4,499
-4,748
-583
-31,629
-36,960
31,471
835
33,495
38,506
46,169
54,316
601
599
72,363
630
41,503
65,912
14,107
24
115
Total equity and liabilities
78,841 -121,780 -113,026
82,795
122,029
137,728
Current provisions and liabilities
Trade payables
Other liabilities
Current tax
Financial liabilities
Other provisions
Non-current provisions and liabilities
Other liabilities
Financial liabilities
Deferred tax
Other provisions
Pension provisions
13,071 -67,136 -65,525
30,121 -67,766 -66,224
13,362
27,545
-699
-630
16,610
24
Group
Financial
316
142
5
47
6,910
-303
28
1,415
-189
-189
6,863
-303
1,415
6,674
47
6,721
20
-14
-26
28
20
-40
-2,102
42,764
Equity
Currency
translation
differences
Derivative
financial
attributable to
shareholders
Minority
Securities
-2,102
instruments
interest
Total
132
24
-1,337
42,530
234
of BMWAG
-171
52
78
-1,904
6,369
27
6,396
855
-117
-857
-1,904
893
-117
-857
7,262
27
893
7,289
1
1
855
37,437
217
37,220
47,108
255
47,363
Accumulated other equity
Currency
translation
differences
Securities
Derivative
financial
instruments
Equity
attributable to
shareholders
Minority
of BMW AG
interest
Total
-723
141
-480
48,032
Accumulated other equity
41,027
2,027
657
Other comprehensive income for the period after tax
Comprehensive income 31 December 2016
Net profit
Dividends paid
1 January 2016
in € million
GROUP STATEMENT OF CHANGES IN EQUITY
BMW GROUP
Subscribed share capital increase out of Authorised Capital
Changes in Equity
Statements
Group
Financial
118
117
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
Change in cash and cash equivalents
Effect of changes in composition of Group on cash and cash equivalents
→ BMW Group
Group Statement of
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2016
in € million
2,027
657
29
reserves
reserves
capital
Note
Revenue
Capital
Subscribed
31 December 2015
Premium arising on capital increase relating to preferred stock
Other changes
Subscribed share capital increase out of Authorised Capital
Other comprehensive income for the period after tax
Comprehensive income 31 December 2015
Net profit
Dividends paid
1 January 2015
Effect of exchange rate on cash and cash equivalents
22
Cash inflow/outflow from financing activities
Proceeds from new non-current other financial liabilities
44,445
Note
Subscribed
capital
Capital
reserves
Revenue
reserves
29
656
2,047
2,005
-1,904
6,369
1,012
7,381
22
-71
29
35,621
657
29
-14
Proceeds from the issue of bonds
Repayment of bonds
Interest paid
Intragroup financing and equity transactions
Payment of dividend for the previous year
Payments into equity
Issue/buy-back of treasury shares
Proceeds from the sale of marketable securities and investment funds
Cash inflow/outflow from investing activities
Investments in marketable securities and investment funds
Proceeds from the disposal of investments
Expenditure for investments
Proceeds from the disposal of intangible assets and property, plant and equipment
Investment in intangible assets and property, plant and equipment
Cash inflow/outflow from operating activities
6,863
-1,329
5,534
20
Repayment of non-current other financial liabilities
Change in current other financial liabilities
Change in commercial paper
11
22
-10
-140
-102
-7,524
-5,432
253
304
5,406
20
3,436
-396
-6,498
-3,196
144
140
-823
-122
-387
6
23
-1,917
-521
-520
8,787
8,295
108
67
-773
-2,121
-1,160
870
-264
-118
5,913
6,191
-2,840
-1,833
429
-10
-5,791
38
9
-541
-43
1
2
367
-758
46
-12
50
-172
-518
-441
-5
-1
-138
-3
-337
-15
629
-163
-5,699
-10,351
-9,844
1
132
11,836
11,464
-2,102
-133
164
-2,595
-1,997
-1,706
-283
2,295
-246
60
60
-7,215
-7,671
-720
-719
120
↑
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
Accounting
Principles and
119
Policies
THE GROUP
FINANCIAL
STATEMENTS
ACCOUNTING PRINCIPLES
AND POLICIES
01
Basis of preparation
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (BMW AG Group
Financial Statements or Group Financial Statements)
at 31 December 2016 have been drawn up in accord-
ance with International Financial Reporting Standards
(IFRS), as endorsed by the European Union (EU), and
the supplementary requirements of § 315a (1) of the
German Commercial Code (HGB). The Group Finan-
cial Statements will be submitted to the operator of
the electronic version of the German Federal Gazette
and can be obtained via the Company Register website.
Bayerische Motoren Werke Aktiengesellschaft, which
has its seat at Petuelring 130, Munich, is registered
in the Commercial Register of the District Court of
Munich under the number HRB 42243.
The Group currency is the euro. All amounts are dis-
closed in millions of euros (€ million) unless stated
otherwise.
The BMW Group and segment income statements are
presented using the cost of sales method.
BMW GROUP
NOTES TO
31 December 2015
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
Comprehensive income 31 December 2015
-81
132
24
-1,337
42,530
234
42,764
1 January 2016
Dividends paid
Net profit
Other comprehensive income for the period after tax
Comprehensive income 31 December 2016
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2016
1 January 2015
Dividends paid
Net profit
Other comprehensive income for the period after tax
In order to provide a better insight into the net
assets, financial position and performance of the
BMW Group, and going beyond the requirements of
IFRS 8 (Operating Segments), the Group Financial
Statements also include balance sheets and income
statements for the Automotive, Motorcycles, Financial
Services and Other Entities segments. The Group
Cash Flow Statement is supplemented by statements
of cash flows for the Automotive and Financial Ser-
vices segments. This supplementary information is
unaudited. Inter-segment transactions relate primarily
to internal sales of products, the provision of funds
for Group companies and the related interest. These
items are eliminated in the relevant "Eliminations"
columns. A description of the nature of the BMW
Group's business and operating activities of segments
→ see is provided in → note 44 ("Explanatory notes to seg-
ment information").
-71
note 44
Income taxes paid
-424
1,687
-1,800
842
11
25
39
3,952
21
10
10,028
11,601
-6,130
-5,225
3,343
4,425
195
18
5,752
1,359
1,783
Change in other operating assets and liabilities
Change in trade payables
Change in trade receivables
Change in inventories
Changes in working capital
Gain/loss on disposal of tangible and intangible assets and marketable securities
Result from equity accounted investments
Other non-cash income and expense items
Change in deferred taxes
Change in receivables from sales financing
Change in provisions
Change in leased products
Depreciation and amortisation of other tangible, intangible and investment assets
Reconciliation between net profit and cash inflow/outflow from operating activities
Current tax
Other interest and similar income/expenses
Net profit
1,359
3,046
3,952
4,794
Interest received
-10,687
313
5,966
Deferred taxes
71
43
Other comprehensive income from equity accounted investments
-1,301
-170
40
2,008
-721
Financial instruments used for hedging purposes
1,012
-401
529
-1,329
Items not expected to be reclassified to the income statement in the future
Deferred taxes
1,413
-1,858
Available-for-sale securities
30
516
-230
6,674
29
Total comprehensive income attributable to shareholders of BMW AG
47
Total comprehensive income attributable to minority interests
7,289
6,721
Currency translation foreign operations
Total comprehensive income
-189
17
Other comprehensive income for the period after tax
-119
1,140
Items expected to be reclassified to the income statement in the future
765
893
The Board of Management authorised the Group
Financial Statements for issue on 14 February 2017.
6,910
Net profit
Basic earnings per share of common stock in €
124
132
5,142
5,431
6,369
6,863
13
29
5
10
27
47
Attributable to minority interest
124
132
Attributable to shareholders of BMW AG
10.45
9.70
Basic earnings per share of preferred stock in €
2015
2016
Note
in € million
Statement of Comprehensive Income for Group
→ 60
9.72
10.47
13
Diluted earnings per share of preferred stock in €
9.70
10.45
13
Diluted earnings per share of common stock in €
Dilutive effects
9.72
10.47
13
27
7,262
Financial Services
(unaudited supplementary
information)
-1,325
1,177
1,250
4
11
-575
-663
-1,323
169
1,981
2,184
78
141
-46
-103
-54
-17
-24
-7
-1,006
211
170
1,975
2,166
-89
-109
42
187
-6
-18
-55
-57
-3
-5
1,234
1,216
-1,080
-103
5,147
-59
238
7
6
23,739
25,681
2015
2016
2015
-20,017
information)
Eliminations
2016
2015
information)
(unaudited supplementary
Other Entities
2016
(unaudited supplementary
-19,097
-22,135
-20,586
110
46
35
19
26
-30
-30
-1,164
-1,294
-613
-712
7
6
3,153
3,546
18,484
19,305
-118
-772
5,441
6,910
2015
2016
2015
information)
(unaudited supplementary
Motorcycles
2016
Revenues
2015
Note
information)
Group
(unaudited supplementary
Automotive
in € million
→ 59
2016
Income Statements for Group and Segments
6
92,175
15,451
18,132
18,721
Gross profit
-1,542
-1,639
-70,399
94,163
-70,973
-75,442
7
Cost of sales
1,990
2,069
85,536
86,424
-74,043
STATEMENT OF COMPREHENSIVE INCOME FOR GROUP
INCOME STATEMENTS FOR GROUP AND SEGMENTS
BMW GROUP
→ Page 161
Notes to the Balance Sheet
→ Page 140
→ Page 139
→Page 133
→ Page 120
→ Page 120
Other Disclosures
Notes to the Statement of Comprehensive Income
Notes to the Group Financial Statements
Accounting Principles and Policies
→Page 118 Group Statement of Changes in Equity
→Page 116 Cash Flow Statements for Group and Segments
→ Page 114 Balance Sheets for Group and Segments
→ Page 112 Statement of Comprehensive Income for Group
→ Page 112 Income Statements for Group and Segments
GROUP FINANCIAL
STATEMENTS
Notes to the Income Statement
→Page 175
Segment Information
→ Page 180
for Group
prehensive Income
→ Statement of Com-
for Group and
Segments
Income Statements
→ BMW Group
Group
Financial
Statements
112
Notes
Cash Flow
Statements
Balance Sheets
Income
Income Statements
Statement of
Comprehensive
Group Financial
Statements
3
3
List of Investments at 31 December 2016
15,137
430
448
Selling and administrative expenses
193
-454
131
11
Income taxes
Profit/loss before tax
Financial result
-396
Other financial result
-2
-762
-673
-618
-489
10
Interest and similar expenses
-3
279
-369
221
Net profit/loss
-55
-53
-2,376
-2,475
-2,828
-2,755
12
179
185
7,523
7,916
9,224
9,665
-3
-2
-313
327
6,396
260
196
9
Other operating expenses
27
689
616
914
670
-847
9
-239
-256
-7,219
-7,604
-8,633
-9,158
8
Other operating income
-820
-768
-771
10
Interest and similar income
518
441
518
441
22
Result from equity accounted investments
182
187
7,836
7,695
9,593
9,386
Profit/loss before financial result
-27
-14
185
-11,223
-664
-528
136
103
4,141
4,570
4,621
5,039
31
Deferred tax
Other provisions
83
1,770
2,911
3,000
4,587
30
33,460
45
36,624
12
2,116
401
442
5,545
6,530
4,559
5,357
34
2,795
Other liabilities
1,942
49,523
55,405
33
Financial liabilities
429
740
2,621
42,764
234
255
47,363
29
Subscribed capital
EQUITY AND LIABILITIES
978
1,077
83,352
88,715
657
172,174
Total assets
592
638
43,022
46,063
61,831
66,864
188,535
657
Capital reserves
29
Pension provisions
Equity
Minority interest
42,530
47,108
29
Equity attributable to shareholders of BMW AG
-1,181
-41
29
Accumulated other equity
41,027
44,445
29
Revenue reserves
2,027
2,047
Non-current provisions and liabilities
73,183
63,819
16,693
Other Entities
2016
information)
Financial Services
(unaudited supplementary
978
1,077
83,352
(unaudited supplementary
88,715
188,535
Total equity and liabilities
396
449
35,386
35,398
65,591
172,174
information)
2015
2016
6,585
2
3
-6,183
-7,345
2015
2016
2015
information)
(unaudited supplementary
Eliminations
41,148
45,134
29
30
424
405
67,989
Current assets
Current provisions and liabilities
56
770
1,441
1,074
32
Current tax
85
90
810
4,398
5,009
5,879
31
Other provisions
582
628
14,506
5,187
Financial liabilities
Trade payables
33
20,111
20,477
9,208
10,198
34
Other liabilities
263
303
6,856
7,483
7,773
8,512
35
3,211
1,481
42,160
42,326
48
-389
3,952
6,122
2016
2015
information)
Motorcycles
(unaudited supplementary
2016
2015
2016
2015
Note
information)
(unaudited supplementary
Automotive
ASSETS
in € million
BALANCE SHEETS FOR GROUP AND
SEGMENTS AT 31 DECEMBER 2016
BMW GROUP
Group
at 31 December
Intangible assets
8,157
Investments accounted for using the equity method
34,965
37,789
21
Leased products
365
17,416
19
17,759
20
Property, plant and equipment
48
46
6,899
7,705
7,372
17,960
Group and Segments
Balance Sheets for
→ BMW Group
121
1,426
1,740
1
21
37
-460
137
-561
121
1,447
1,777
204
211
-73
-49
138
-561
-460
Revenues
Cost of sales
Statements
Group
Financial
114
113
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
Attributable to shareholders of BMW AG
Attributable to minority interest
Net profit/loss
Income taxes
Profit/loss before tax
Financial result
Result from equity accounted investments
Interest and similar income
Interest and similar expenses
Other financial result
Profit/loss before financial result
Other operating expenses
Other operating income
Selling and administrative expenses
Gross profit
22
2,546
2,233
2,546
28,178
30,228
23
Receivables from sales financing
139
144
2,453
Financial assets
2,502
2,825
28
Trade receivables
453
492
10,611
11,344
2,751
24
7,065
6,635
7,880
Cash and cash equivalents
2
19,907
21,561
4,693
5,087
26
Other assets
1,240
1,000
2,381
1,938
25
Current tax
4,859
4,862
11,071
4,794
11,841
Inventories
586
1,287
2,208
2,705
24
Financial assets
41,865
Deferred tax
48,032
Receivables from sales financing
5,147
5,195
428
560
Other investments
2,233
23
12
2,327
1,945
386
439
40,330
42,652
110,343
121,671
25
28
3,935
4,043
1,568
1,595
26
Non-current assets
Other assets
4,114
4,310
27
17,566
Remeasurement of the net defined benefit liability for pension plans
6,396
(a) Standards and Revised Standards significant for
the BMW Group and applied for the first time in
the financial year
2016:
In those cases where hedge accounting is applied,
changes in fair value are recognised in the income
statement or in other comprehensive income as a
component of accumulated other equity, depending
on whether the hedging relationship is classified as
a fair value hedge or a cash flow hedge. In the case
of a fair value hedge, the results of the fair value
measurement of the derivative financial instruments
and the related hedged items are recognised in the
income statement. Fair value hedges are mainly used
to hedge the market prices of bonds, other financial
liabilities and receivables from sales financing. In the
case of a cash flow hedge, the effective portion of
the fair value gain or loss on the derivative financial
instrument is recognised directly in accumulated other
equity. The ineffective portion of the fair value gain or
loss is recognised in the income statement. Amounts
recorded in accumulated other equity are recognised
subsequently in the income statement when the
hedged item (usually external revenue) is recognised
in the income statement. If, contrary to the normal
case within the BMW Group, hedge accounting cannot
be applied, the gains or losses arising on the fair value
measurement of derivative financial instruments are
recognised immediately in the income statement.
Deferred taxes are recognised on all temporary dif-
ferences between the tax and accounting bases of
assets and liabilities and on consolidation procedures.
Deferred tax assets also include claims to future tax
reductions which arise from the expected usage of
existing tax losses available for carryforward to the
extent that future usage is probable. The calculation of
deferred tax assets requires assumptions to be made
with regard to the level of future taxable income and
the timing of recovery of deferred tax assets. These
assumptions take account of forecast operating results
and the impact on earnings of the reversal of taxable
temporary differences. Since future business devel-
opments cannot be predicted with certainty and to
some extent cannot be influenced by the BMW Group,
the measurement of deferred tax assets is subject to
uncertainty.
Current income taxes are computed throughout the
BMW Group in accordance with tax legislation appli-
cable in each relevant country. In situations where
judgement was necessary to determine the amount
of a tax exposure to be recognised in the financial
statements, there is always a possibility that local tax
authorities may reach a different conclusion.
Inventories of raw materials, supplies and goods for
resale are stated at the lower of average acquisition
cost and net realisable value.
Work in progress and finished goods are stated at
the lower of manufacturing cost and net realisable
value. Manufacturing cost comprises all costs which
are directly attributable to the manufacturing process
as well as an appropriate proportion of production-re-
lated overheads. This includes production-related
depreciation and amortisation and an appropriate
proportion of administrative and social costs. Bor-
rowing costs are not included in the acquisition or
manufacturing cost of inventories.
Assets held for sale and disposal groups held for sale are
presented separately in the balance sheet in accord-
ance with IFRS 5, if the carrying amount of the rel-
evant assets will be recovered principally through a
sale transaction rather than through continuing use.
This situation only arises if the assets can be sold
immediately in their present condition, the sale is
expected to be completed within one year from the
date of classification and the sale is highly probable.
At the date of classification, property, plant and equip-
ment, intangible assets and disposal groups which are
being held for sale are measured at the lower of their
carrying amount and their fair value less costs to sell
and scheduled depreciation/amortisation ceases. This
does not apply, however, to items within the disposal
group which are not covered by the measurement
rules contained in IFRS 5. Simultaneously, liabilities
directly related to the sale are presented separately on
the equity and liabilities side of the balance sheet as
"Liabilities in conjunction with assets held for sale".
Provisions for pensions and similar obligations are meas-
ured using the projected unit credit method. Under
this method, not only obligations relating to known
vested benefits at the reporting date are recognised,
but also the effect of future expected increases in
pensions and salaries. The calculation is based on
an independent actuarial valuation which takes into
account all relevant biometric factors.
In the case of externally funded plans, the pension
obligation is offset against plan assets measured at
their fair value. If the plan assets exceed the pension
obligation, the surplus is tested for recoverability. In
the event that the BMW Group has a right of reim-
bursement or a right to reduce future contributions,
it reports an asset (within "Other financial assets"),
measured on the basis of the present value of the
future economic benefits attached to the plan assets.
If the plan is externally funded, a liability is recog-
nised under pension provisions where the obligation
exceeds fund assets.
127
128
↑
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
The calculation of the amount of the provision requires
assumptions to be made with regard to discount
factors, salary trends, employee fluctuation and the
life expectancy of employees. Discount factors are
determined by reference to market yields at the end
of the reporting period on high quality fixed-interest
corporate bonds. The salary level trend refers to the
expected rate of salary increase which is estimated
annually depending on inflation and the career devel-
opment of employees within the Group.
Net interest expense on the net obligation and/or
net interest income on the net fund assets of defined
benefit plans are presented separately within the
financial result. All other costs relating to allocations
to pension provisions are allocated to costs by function
in the income statement.
Past service cost arises where a BMW Group compa-
ny introduces a defined benefit plan or changes the
benefits payable under an existing plan. This cost
is recognised immediately in the income statement.
Similarly, gains and losses arising on the settlement
of a defined benefit plan are recognised immediately
in the income statement.
Remeasurements of the net liability arise from
changes in the present value of the defined benefit
obligation, the fair value of the plan assets or the asset
ceiling. Reasons for remeasurements include changes
in financial and demographic assumptions as well as
changes in the detailed composition of beneficiaries.
Remeasurements are recognised immediately in
"Other comprehensive income" and hence directly
in equity (within revenue reserves).
Other provisions are recognised when the BMW Group
has a present obligation (legal or constructive) arising
from past events, the settlement of which is proba-
ble and when a reliable estimate can be made of the
amount of the obligation. Provisions with a remaining
period of more than one year are measured at their
net present value.
The measurement of provisions for statutory and
non-statutory warranty obligations (statutory, contractual
and voluntary) involves estimations. In addition to
statutorily prescribed manufacturer warranties, the
BMW Group also offers various categories of guar-
antee depending on the product and sales market
concerned. These provisions are recognised when
the risks and rewards of ownership of the goods are
transferred to the dealership or retail customer or
when a new category of warranty is introduced. In
order to determine the level of the provision, various
factors are taken into consideration, including estima-
tions based on past experience with the nature and
amount of claims. The future level of potential repair
costs and price increases per product and market are
also taken into account. Provisions for warranties are
adjusted regularly to take account of new circumstanc-
es and the impact of any changes recognised in the
income statement. Specific and expected warranty
items, such as vehicle recall actions, are also included.
Similar estimates are also made in conjunction with
the measurement of expected reimbursement claims,
which, if recognised, are presented as separate assets.
The recognition and measurements of provisions for
litigation and liability risks necessitates making assump-
tions regarding the probability of occurrence, the
amount involved and the duration of the legal dispute.
These assumptions, especially the assumption about
the outcome of legal proceedings, are subject to a high
degree of uncertainty.
If the recognition and measurement criteria relevant
for provisions are not fulfilled and the outflow of
resources to settle the matter is not probable, the
potential obligation is disclosed as a contingent liability.
Financial liabilities are measured on first-time recogni-
tion at their fair value. Transaction costs are also taken
into account, except for financial liabilities allocated to
the category "financial liabilities measured at fair value
through profit or loss". Subsequent to initial recogni-
tion, liabilities are – with the exception of derivative
financial instruments measured at amortised cost
using the effective interest method.
In addition, the Group's own default risk and that of
counterparties is taken into account on the basis of
credit default swap values for market contracts with
matching terms. The BMW Group applies the option
of measuring the credit risk for a group of financial
assets and financial liabilities on the basis of its net
exposure. Portfolio-based value adjustments to the
individual financial assets and financial liabilities are
allocated using the relative fair value approach (net
method).
Derivative financial instruments are used within the
BMW Group for hedging purposes in order to reduce
currency, interest rate, fair value and market price
risks arising from operating activities and the relat-
ed financing requirements. All derivative financial
instruments are measured at their fair value. The fair
values of derivative financial instruments are deter-
mined using measurement models, as a consequence
of which there is a risk that the amounts calculated
could differ from realisable market prices on disposal.
Observable financial market price spreads are taken
into account in the measurement of derivative finan-
cial instruments. The supply of data to the model used
to calculate fair values also takes account of tenor and
currency basis spreads.
The recognition of impairment losses on receivables
relating to the industrial side of the business is also,
as far as possible, based on the same procedures
applied to financial services business. The impair-
ment losses are recorded in separate accounts and
are derecognised at the same time the corresponding
written-down receivables are derecognised.
Receivables from sales financing are measured at amor-
tised cost using the effective interest rate method.
Impairment allowances are recognised both on a
specific-item and a group basis. For these purposes,
the main factors taken into consideration are past
experience, current market data (such as the level
of arrears), rating classes and scoring information.
Specific allowances are recognised if there is objective
evidence of impairment. In the retail customer credit
financing and leasing lines of business, the existence
of overdue balances or the incidence of similar events
in the past are examples of such objective evidence.
In the event of overdue receivables, allowances are
always recognised individually based on the length
of period of the arrears. In the case of dealership
financing receivables, the allocation of the dealership
to a corresponding rating category is also deemed to
represent objective evidence of impairment. If there is
no objective evidence of impairment, allowances are
recognised using a portfolio approach based on similar
groups of assets. Company-specific loss probabilities
and loss ratios, derived from historical data, are used
to measure allowances on similar groups of assets.
Leased items of property, plant and equipment that are allo-
cated to the BMW Group on the grounds of economic
ownership (finance leases) are measured on initial rec-
ognition at their fair value or at the net present value
of the minimum lease payments, if lower. The assets
are depreciated using the straight-line method over
their estimated useful lives or over the lease period, if
shorter. The obligations for future lease instalments
are recognised as other financial liabilities, measured
at their net present value.
Where Group products are recognised by BMW Group
entities as leased products under operating leases,
they are measured at manufacturing cost, plus any
initial direct costs. All other leased products are
measured at acquisition cost. All leased products are
depreciated over the period of the lease using the
straight-line method down to their expected residual
value. Changes in residual value expectations are rec-
ognised - in situations where the recoverable amount
of the lease exceeds the asset's carrying amount - by
adjusting scheduled depreciation prospectively over
the remaining term of the lease. If the recoverable
amount is lower than the asset's carrying amount,
an impairment loss is recognised for the shortfall.
A test is carried out at each balance sheet date to deter-
mine whether an impairment loss recognised in prior
years no longer exists or has decreased. In these cases,
the carrying amount of the asset is increased to the
recoverable amount, at a maximum up to the amount
of the asset's amortised cost. Assumptions need to
be made regarding future residual values, given that
they represent a significant portion of future cash
inflows. In this context, internally available historical
data, current market data and forecasts of external
institutions are taken into account. The assumptions
applied are regularly validated by comparison with
external data.
in years
Factory and office buildings, residential buildings, fixed
installations in buildings and outside facilities
Plant and machinery
Other equipment, factory and office equipment
8 to 50
3 to 21
2 to 25
Investments accounted for using the equity method are
(except when the investment is impaired) measured
at the Group's share of equity, taking account of fair
value adjustments on acquisition.
Investments in non-consolidated subsidiaries, non-con-
solidated joint operations and interests in associated
companies, joint ventures and participations not
accounted for using the equity method, are reported
as other investments, measured at their fair value. If
this value is not available or cannot be determined
reliably, they are measured at cost.
A financial instrument is a contract that gives rise to a
financial asset of one entity and a financial liability or
equity instrument of another entity. Financial assets
are accounted for on the basis of the settlement date.
On initial recognition, financial assets are measured
at their fair value. Transaction costs are included in
the fair value unless the financial assets are allocated
to the category "financial assets measured at fair value
through profit or loss".
The Group's financial assets are allocated to either
cash funds or to the categories "loans and receivables",
"available-for-sale", "held for trading” or “fair value
option".
The fair value option is applied by the BMW Group
for non-current marketable securities with embedded
derivatives. The related gains and losses are presented
in the income statement line item "Other financial
result". Related interest income and expenses are
presented in the net interest result.
Subsequent to initial recognition, financial assets
which are available-for-sale or held-for-trading or for
which the fair value option is applied, are measured at
their fair value. The fair values shown are computed
using market information available at the balance
sheet date, on the basis of prices quoted by the
contract partners or using appropriate measurement
methods, e.g. discounted cash flow models.
Non-derivative financial assets that are not classified
as "loans and receivables" or "held-to-maturity invest-
ments" or as items measured "at fair value through
profit and loss" are classified as "available-for-sale”.
Financial assets that are classified as loans and receiva-
bles are measured at amortised cost using the effective
interest method. All financial assets for which pub-
lished price quotations in an active market are not
available and whose fair value cannot be determined
reliably are measured at cost.
An assessment is made on a regular basis whether
there is any objective evidence that a financial asset
or group of assets may be impaired. For the purposes
of assessing possible impairment, the BMW Group
takes account of all available information, such as
market conditions and prices as well as the length
of time and the scale of the decline in value. In the
case of equity capital instruments that are listed on a
stock market, it is assumed that an item is impaired if
its fair value falls significantly (more than 20%) or on
a prolonged basis (more than 5% over nine months)
below acquisition cost.
125
126
↑
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
-
The use of judgement is required when the BMW Group
enters into lease arrangements, in particular when
assessing the transfer of economic ownership of a
leased item.
Related party disclosures comprise information on
related individuals or entities which control
the BMW Group or which are controlled by the
BMW Group, unless such parties are already included
in the Group Financial Statements of BMW AG as con-
solidated companies. Control is defined as ownership
of more than one half of the voting power of BMW AG
or the power to direct, by statute or agreement, the
financial and operating policies of the management of
the Group. In addition, the disclosure requirements
also cover transactions with associated companies,
joint ventures and individuals that have the ability
to exercise significant influence over the financial
and operating policies of the BMW Group. This also
includes close relatives and intermediary entities.
Significant influence over the financial and operating
policies of the BMW Group is presumed when a party
holds 20% or more of the voting power of BMW AG.
In addition, the requirements contained in IAS 24
relating to key management personnel and close
members of their families or intermediary entities
are also applied. In the case of the BMW Group, this
applies to members of the Board of Management and
the Supervisory Board. Non-consolidated subsidiaries,
joint ventures and associated companies also qualify
as related parties. Details relating to these entities
are provided in the list of investments in → note 45.
Share-based remuneration programmes which are expect-
7
In this context, the BMW Group has examined the
contents of the Notes to the Group Financial State-
ments and the Combined Management Report and
applied the principle of materiality in the Group
Financial Statements for the year ended 31 Decem-
ber 2016, mainly by revising the presentation and
eliminating redundancies.
Standard/Interpretation
IFRS 9
Financial Instruments
IFRS 15
Revenue from Contracts with Customers
IFRS 16
Leases
Date of
issue by
IASB
Date of
mandatory
application
IASB
Date
of mandatory
application
EU
24.7.2014
1.1.2018
28.5.2014
1.1.2018
1.1.2018
1.1.2018
11.9.2015
12.4.2016
13.1.2016
1.1.2019
No
IFRS 9 (Financial Instruments) contains new require-
ments for the classification and measurement of
financial assets that are based on the reporting
entity's business model and its contractual cash flow
characteristics ("Solely Payments of Principal and
Interest" (SPPI) criterion). IFRS 9 also gives rise to
a new model for determining impairment based on
expected credit losses. Furthermore, the requirements
for hedge accounting were revised with the aim of
bringing the accounting treatment more into line with
the reporting entity's risk management activities.
The impact of adoption of IFRS 9 on the Group Finan-
cial Statements is currently being investigated. Based
on analyses to date, the accounting treatment for
specific financial assets that do not comply with the
stipulated cash flow criteria may have to be changed,
by reclassifying them from the "measured at amortised
cost" category to the "measured at fair value” cate-
gory. Based on the current assessment, the change
would only affect a limited volume of assets, with the
consequence that the impact on measurement is not
expected to be material.
(b) Financial reporting pronouncements issued by
the IASB that are significant for the BMW Group,
but have not yet been applied:
→ see
note 45
The Amendments to IAS 1 (Presentation of Financial
Statements) relate primarily to clarifications concern-
ing the presentation of, and disclosures in, financial
statements. The amendments emphasise the principle
that it is only necessary to disclosure information if it
is material for users of the financial statements, even
in cases where specific disclosures in an IFRS are
explicitly defined as minimum requirements.
1.1.2016
ed to be settled in shares are measured at their fair
value at grant date. The related expense is recognised
in the income statement (as personnel expense)
over the vesting period, with a contra (credit) entry
recorded against capital reserves. Share-based remu-
neration programmes expected to be settled in cash
are revalued to their fair value at each balance sheet
date between the grant date and the settlement date
and on the settlement date itself. The expense for such
programmes is recognised in the income statement
(as personnel expense) over the vesting period of the
programmes and presented in the balance sheet as
a provision.
The share-based remuneration programmes for
Board of Management members and senior heads of
department entitles BMW AG to elect whether to settle
its commitments in cash or with shares of BMW AG
common stock. Following the decision to settle in cash,
the share-based remuneration programmes for Board
of Management members and senior heads of depart-
ment are accounted for as cash-settled, share-based
remuneration programmes. Further information on
share-based remuneration programmes is provided
→ see in note 39.
note 39
129
↑
130
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
05
Financial reporting rules
Date of
issue by
IASB
Date of
mandatory
application
IASB
Date
of mandatory
application
EU
Standard/Interpretation
IAS 1
Presentation of Financial Statements
(Initiative to Improve Disclosure Requirements - Amendments to IAS 1)
18.12.2014
1.1.2016
For machinery used in multiple-shift operations,
depreciation rates are increased to account for the
additional utilisation. If there is any indication of
impairment of property, plant and equipment, an
impairment test is performed as described above for
intangible assets.
Cash and cash equivalents, comprising mainly cash on
hand and cash at bank with an original term of up to
three months, are measured at fair value.
All items of property, plant and equipment are measured
at acquisition or manufacturing cost less accumulated
depreciation and accumulated impairment losses. The
cost of internally constructed plant and equipment
comprises all costs which are directly attributable
to the manufacturing process as well as an appro-
priate proportion of production-related overheads.
This includes production-related depreciation and
amortisation as well as an appropriate proportion
of administrative and social costs. As a general rule,
borrowing costs are not included in acquisition or
manufacturing cost unless they are directly attrib-
utable to the asset. The carrying amount of items of
depreciable property, plant and equipment is written
down recording scheduled usage-based depreciation -
as a general rule on a straight-line basis - over the
useful lives of the assets. Depreciation is recorded as
an expense in the income statement.
199
121
122
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
03
Foreign currency translation
The financial statements of consolidated companies
which are drawn up in a foreign currency are trans-
lated using the modified closing rate method. Under
this method, assets and liabilities are translated at the
closing exchange rate, whilst income and
expenses are
translated at the average exchange rate. Differences
arising on foreign currency translation are presented
in "Accumulated other equity".
Foreign currency receivables and payables in the sin-
gle entity accounts of BMW AG and subsidiaries are
measured on initial recognition using the exchange
rate prevailing at the date of first-time recognition.
At the end of the reporting period, foreign currency
receivables and payables are measured using the clos-
ing exchange rate. The resulting unrealised gains and
losses, as well as the subsequent realised gains and
losses arising on settlement, are recognised in the
income statement in accordance with the underlying
substance of the relevant transactions.
The exchange rates of currencies which have a material
impact on the Group Financial Statements were as
follows:
↑
US Dollar
British Pound
Chinese Renminbi
Japanese Yen
Korean Won
Closing rate
Average rate
31.12.2016
31.12.2015
2016
178
21
7
7
02
Group reporting entity and
consolidation principles
The BMW Group Financial Statements include
BMW AG, all material subsidiaries including one spe-
cial purpose securities fund and 40 structured entities,
over which BMW AG - either directly or indirectly.
exercises control. The structured entities are used
exclusively in conjunction with the BMW Group's
asset-backed financing arrangements.
All consolidated subsidiaries have the same year-end as
BMW AG with the exception of BMW India Private Ltd.
and BMW India Financial Services Private Ltd., whose
year-ends are 31 March in accordance with local legal
requirements.
When assessing whether an investment gives rise to
a controlled entity, an associated company, a joint
operation or a joint venture, the BMW Group consid-
ers all relevant contractual arrangements and other
circumstances, and not just the structure and legal
form of the entity. The ultimate classification may
require the use of judgement. A new assessment is
made whenever there is an indication of a change
in the previous assessment regarding (joint) control.
An entity is deemed to be controlled if BMW AG -
either directly or indirectly - has power over it, is
exposed or has rights to variable returns from its
involvement with the entity and has the ability to
influence those returns through its power over the
entity.
-
An entity is classified as an associated company if
BMW AG either directly or indirectly - has the
ability to exert significant influence over the entity's
operating and financial policies. As a general rule,
there is a rebuttable assumption that the Group has
significant influence if it holds between 20% and 50%
of the associated company's voting power.
Joint operations and joint ventures are forms of joint
arrangements. Such an arrangement exists when a
BMW Group entity jointly carries out activities on the
basis of a contractual agreement with a third party.
In the case of a joint operation, the parties that have
joint control of the arrangement have rights to the
assets and obligations for the liabilities, relating to the
arrangement. Assets, liabilities, revenues and expens-
es of a joint operation are recognised proportionately
in the Group Financial Statements on the basis of the
BMW Group entity's rights and obligations (propor-
tionate consolidation). Together with SGL Carbon SE,
Wiesbaden, companies of the BMW Group are party to
three joint operations that manufacture carbon fibres
and carbon fibre cores used in vehicle production.
The BMW Group is also collaborating with Toyota
Motor Corporation, Toyota City, to develop a sports
car. This collaboration is accounted for as a joint
operation.
2015
In the case of a joint venture, the parties which have
joint control only have rights to the net assets of the
arrangement.
The following changes took place in the Group report-
ing entity in the financial year 2016:
Included at
31 December 2015
Included for the
first time in 2016
No longer included
in 2016
Included at
31 December 2016
Germany
Foreign
The following uniform useful lives are applied through-
out the BMW Group:
21
157
178
28
28
As a general rule, associated companies and joint
ventures are accounted for using the equity method,
with measurement on initial recognition based on
acquisition cost.
1.06
Total
1.11
For the purposes of the impairment test, the carrying
amount of an asset (or a cash-generating unit) is com-
pared with the recoverable amount. The first step of
the impairment test is to determine the value in use.
If the value in use is lower than the carrying amount,
the next step is to determine the fair value less costs to
sell and compare the amount so determined with the
asset's carrying amount. If the fair value is lower than
the carrying amount, an impairment loss is recognised,
reducing the carrying amount to the higher of the
asset's value in use or fair value less costs to sell.
If the reason for a previously recognised impairment
loss no longer exists, the impairment loss is reversed
up to the level of the recoverable amount, capped at
the level of rolled-forward amortised cost. Impairment
losses on goodwill are not reversed.
As part of the process of assessing recoverability, it is
generally necessary to apply estimations and assump-
tions - in particular regarding future cash inflows and
outflows and the length of the forecast period – which
could differ from actual amounts. Actual amounts
may differ from the assumptions and estimations
used if business conditions develop differently to the
BMW Group's expectations.
The value in use is determined on the basis of a present
value computation. Cash flows used for the purposes
of this calculation are derived from long-term forecasts
approved by management. The long-term forecasts
themselves are based on detailed forecasts drawn up
at an operational level and, based on a planning period
of six years, correspond roughly to a typical product's
life cycle. For the purposes of calculating cash flows
beyond the planning period, the asset's assumed
residual value does not take growth into account.
Forecasting assumptions are continually brought up
to date and regularly compared with external sources
of information. The assumptions used take account
in particular of expectations of the profitability of the
product portfolio, future market share developments,
macroeconomic developments (such as currency,
interest rate and raw materials prices) as well as the
legal environment and past experience.
123
124
↑
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
Cash flows of the Automotive and Motorcycles
cash-generating units are discounted using a risk-ad-
justed pre-tax cost of capital (WACC). In the case of
the Financial Services cash-generating unit, a sec-
tor-compatible pre-tax cost of equity capital is used.
Calculations were based on the following discount
If there is any indication of impairment of intangible
assets, or if an annual impairment test is required to
be carried out (i.e. intangible assets with an indef-
inite useful life, intangible assets during the devel-
opment phase and goodwill), an impairment test is
performed. Each individual asset is tested separately
unless the cash flows generated by the asset cannot
be distinguished to a large degree from the cash flows
generated by other assets or other groups of assets.
In this case, impairment is tested at the level of a
cash-generating unit.
factors:
Automotive
Financial Services
2016
2015
12.0
12.0
12.0
12.0
13.4
13.4
The risk-adjusted interest rates, calculated using a
CAPM model, also take into account specific peer-
group information relating to beta-factors, capital
structure data and borrowing costs. In conjunction
with the impairment tests for cash-generating units,
sensitivity analyses are performed for the main
assumptions in order to rule out that conceivable
changes to the assumptions used to determine the
recoverable amount would result in the requirement
to recognise an impairment loss.
1.09
in %
Goodwill arises on first-time consolidation of an
acquired business when the cost of acquisition
exceeds the Group's share of the fair value of the
individually identifiable assets acquired and liabilities
and contingent liabilities assumed.
Motorcycles
reliably. Such assets are measured at acquisition
and/or manufacturing cost, as a general rule without
borrowing costs, and, to the extent that they have a
finite useful life, amortised on a straight-line basis
over their estimated useful lives. With the exception
of capitalised development costs, intangible assets
are amortised as a general rule over their estimated
useful lives of between three and 20 years.
1.11
Development costs for vehicle and engine projects are
capitalised at manufacturing cost, to the extent that
attributable costs (including development-related
overhead costs) can be measured reliably and both
technical feasibility and successful marketing are
assured. It must also be probable that the development
expenditure will generate future economic benefits.
Capitalised development costs are amortised system-
atically over the estimated product life (usually four to
eleven years) following the start of production.
0.85
0.74
0.82
0.73
7.34
7.35
6.97
123.34
1,274.34
130.74
1,278.92
120.25
1,283.86
134.28
7.07
04
Purchased and internally-generated intangible assets
are recognised as assets where it is probable that the
use of the asset will generate future economic benefits
and where the costs of the asset can be determined
1,255.38
Public sector grants are not recognised until there is
reasonable assurance that the conditions attaching
to them have been complied with and the grants
will be received. The resulting income is recognised
in cost of sales over the periods necessary to match
them with the related costs which they are intended
to compensate.
on retail customer/dealership financing is recognised
using the effective interest method.
Revenues relating to operating lease arrangements
are recognised on a straight-line basis over the lease
term. Interest income arising on finance leases and
Earnings per share are calculated as follows: Basic
earnings per share are calculated for common and
preferred stock by dividing the net profit after minor-
ity interests, as attributable to each category of stock,
by the average number of outstanding shares. The net
profit is accordingly allocated to the different catego-
ries of stock. The portion of the Group net profit for
the year which is not being distributed is allocated
to each category of stock based on the number of
outstanding shares. Profits available for distribution
are determined directly on the basis of the dividend
resolutions passed for common and preferred stock.
Diluted earnings per share are calculated and sepa-
rately disclosed in accordance with IAS 33.
Profits arising on the sale of vehicles, for which a
Group company retains a repurchase commitment
(buyback contracts), are not immediately recognised.
The difference between the sales and buyback price is
accounted for as deferred income and recognised in
instalments as revenue over the contract term.
If the sale of products includes a determinable amount
for services ("multiple-component contracts"), the
related revenues are deferred and recognised as
income over the service period. Amounts are normally
recognised as income by reference to the pattern of
related expenditure.
Revenues from the sale of products are recognised
when the risks and rewards of ownership of the goods
are transferred to the dealership or customer, provided
that the amount of revenue can be measured reliably,
it is probable that the economic benefits associated
with the transaction will flow to the entity and costs
incurred or to be incurred in respect of the sale can
be measured reliably. Revenues are stated net of set-
tlement discount, bonuses and rebates.
Accounting policies; assumptions, judgements
and estimations
Other comprehensive income arising at the level
of equity accounted investments is reported in the
Statement of Changes in Equity within "Currency
translation foreign operations" with a negative amount
893
139
115
140
of €73 million (2015: positive amount of €90 million)
and within "Financial instruments used for hedging
purposes" with a positive amount of €87 million (2015:
negative amount of €15 million).
Group
Financial
Financial Statements
BMW Group
Notes to the Group
→ Notes to the
18
778
NOTES TO THE BALANCE SHEET
Balance Sheet
Statements
-189
14
3
459
-1,301
Analysis of changes in Group tangible, intangible and investment assets 2016
-842
Other comprehensive income from equity accounted investments
43
-29
-192
71
75
Currency translation foreign operations
-230
-230
765
765
Other comprehensive income
4
Acquisition and manufacturing cost
Land, titles to land, buildings, including
1.1.20161
369
58
1,495
1,188
13,348
buildings on third party land
10,458
-15
300
231
34
10,940
Plant and machinery
1,328
35,497
11,484
1,130
2,192
-2
Translation
differences
Additions
Reclassi-
fications
Disposals
31.12.2016
Development costs
Goodwill
in € million
Other intangible assets
10,522
2,092
369
1,455
2
100
12,346
Intangible assets
-680
Leased products
Financial instruments used for hedging purposes
-170
79
-26
thereof reclassifications to the income statement
Financial instruments used for hedging purposes
thereof gains/losses arising in the period under report
thereof reclassifications to the income statement
-39
-144
2,008
-1,301
1,458
-2,619
550
1,318
40
thereof gains/losses arising in the period under report
Available-for-sale securities
1,012
-185
NOTES TO THE STATEMENT
OF COMPREHENSIVE
INCOME
17
Disclosures relating to the statement of total
comprehensive income
Other comprehensive income for the period after tax
comprises the following:
in € million
Other comprehensive income from equity accounted investments
Deferred taxes
2016
Remeasurement of the net defined benefit liability for pension plans
Deferred taxes
-1,858
1,413
529
-401
Items not expected to be reclassified to the income statement in the future
-1,329
2015
43
71
-721
After
tax
Remeasurement of the net defined benefit liability for pension plans
-1,858
529
-1,329
1,413
Deferred
taxes
-401
Available-for-sale securities
40
-12
28
-170
53
-117
1,012
2,008
tax
Before
516
Currency translation foreign operations
-230
765
Items expected to be reclassified to the income statement in the future
1,140
-119
tax
Other comprehensive income for the period after tax
Deferred taxes on components of other comprehen-
sive income are as follows:
in € million
2016
2015
Before
tax
Deferred
taxes
After
893
1,510
47,113
1,589
Other facilities, factory and office equipment
2,517
47
218
34
215
2,601
Advance payments made and construction in progress
2,020
4
1,268
-1,691
4
1,597
Property, plant and equipment
35,469
1,168
1,362
1,954
10,522
369
152
1,035
1,454
12,345
Land, titles to land, buildings, including
buildings on third party land
A large part of these amounts relate to public sector
grants for the promotion of regional structures and
to subsidies received for plant expansions.
9,806
240
295
75
10,430
Plant and machinery
32,770
551
164
883
766
1,462
Other investments
68
64
233
15
656
28
28
867
3
111
64
917
1 Including mergers.
2 Including assets under construction of €1,187 million.
Non-current marketable securities
641
Participations
68
50,097
Leased products
36,969
1,738
18,011
14,452
42,266
3,680
Investments accounted for using
1,088
1,293
148
2,233
Investments in non-consolidated subsidiaries
226
3
the equity method
691
2,064
15
51,789
Leased products
42,334
316
18,339
15,401
45,588
Investments accounted for using
the equity method
2,233
513
200
2,546
Investments in non-consolidated subsidiaries
233
1,848
3,631
-155
50,161
35,924
Other facilities, factory and office equipment
2,606
22
234
32
222
2
2,672
1,600
23
1,587
-954
3
2,253
Property, plant and equipment
Advance payments made and construction in progress
2,210
321
500
Translation
differences
Additions
Reclassi-
fications
Disposals
31.12.2015
Development costs
Goodwill
Other intangible assets
Intangible assets
9,341
369
1,445
15
146
11,155
1.1.20151
Acquisition and manufacturing cost
in € million
Analysis of changes in Group tangible, intangible and investment assets 2015
Participations
656
56
2
710
Non-current marketable securities
28
56
28
917
2
377
58
1,238
1 Including first-time consolidation.
2 Including assets under construction of €1,760 million.
Other investments
Government grants and government assistance
Income from asset-related and performance-related
grants, amounting to €31 million (2015: €33 million)
and €126 million (2015: €132 million) respectively,
were recognised in the income statement in 2016.
-189
The number of employees at the end of the reporting
period is disclosed in the Combined Management
Report.
Exchange losses
-249
-311
Other financial result
131
-454
Expense for additions to provisions
-303
-192
Expense for impairment losses and
write-downs
-28
-76
Sundry operating expenses
-430
-267
Other operating expenses
-847
-820
Other operating income and expenses
-177
94
Income from the reversal of impairment losses and
expenses for the recognition of impairment losses
relate primarily to impairment allowances on receiv-
ables.
10
Net interest result
in € million
2016
2015
Other interest and similar income
196
-241
185
310
914
262
323
thereof from subsidiaries:
13
Income from the reversal of provisions
115
172
Impairment losses on investments in
subsidiaries and participations
-192
-25
Income from the reversal of impairment
losses and write-downs
51
Sundry other financial result
27
-179
-24
Gains on the disposal of assets
46
173
Income (+) and expenses (-) from
Sundry operating income
196
219
financial instruments
310
-430
Other operating income
670
Result on investments
Exchange gains
thereof from subsidiaries:
19
2,751
77
thereof relating to temporary
in %
2016
2015
differences
80
52
thereof relating to tax loss
Corporation tax rate
15.0
15.0
carryforwards and tax credits
85
5
Solidarity surcharge
5.5
5.5
Income taxes
2,755
2,828
Corporation tax rate including solidarity
surcharge
15.8
15.8
Municipal trade tax rate
14.9
14.9
German income tax rate
25
12
2,670
Current tax expense
Interest and similar income
196
185
Expense relating to interest impact
on other long-term provisions
-84
-72
Net interest expense on the net defined
benefit liability for pension plans
-78
-123
Other interest and similar expenses
-327
-423
Deferred tax expense
thereof to subsidiaries:
-5
16
-489
-618
Net interest result
-293
-433
12
Income taxes
Taxes on income comprise the following:
in € million
2016
2015
Deferred taxes are computed using enacted or planned
tax rates which are expected to apply in the relevant
national jurisdictions when the amounts are recov-
ered. After taking account of an average municipal
trade tax multiplier rate (Hebesatz) of 425.0% (2015:
425.0%), the underlying income tax rate for Germany
was as follows:
-4
30.7
1
Income from investments in subsidiaries
and participations
Research and development expenditure was as
follows:
133
Sales of products and related goods
68,681
68,643
Income from lease instalments
9,507
8,965
Sales of products previously
leased to customers
9,258
8,181
Interest income on loan financing
3,455
Cost of sales is reduced by public-sector subsidies
in the form of reduced taxes on assets and reduced
consumption-based taxes amounting to €69 million
(2015: €71 million).
3,253
2016
2015
Other income
3,262
3,133
Revenues
94,163
92,175
Research and development expenses
4,294
4,271
Amortisation
-1,222
-1,166
in € million
New expenditure for capitalised
Warranty expenses include the accrued expense for
vehicle recall actions, the cost of which is expected to
exceed amounts previously recognised. Accordingly,
a further amount of €678 million was allocated to
the warranty provision for various issues, including
airbags supplied by the Takata group of companies,
the ISOFIX attachment system used for child car seats,
and costs relating to the provision of the network
service for telematics (2G).
2016
Implementation of the new impairment model requires
substantial modifications to existing processes and
systems, especially for the Financial Services segment.
These modifications have been stipulated centrally
and implemented to a large extent at subsidiary level.
The overall impact cannot be quantified reliably as
yet, however, given that the procedures for providing
data by the subsidiaries still requires validation and
some of the major implementation aspects of the
new standard – in particular the transfer criterion for
impairment levels - are not expected to be definitively
established until a later stage in the financial year 2017.
Based on preliminary findings, significant changes to
impairment amounts are not expected.
-
As far as the accounting for hedging relationships is
concerned, analyses to date indicate that it will be pos-
sible to account for the majority of commodity hedg-
ing contracts using hedge accounting rules. Moreover,
changes in the time value of options are required to be
recognised as "cost of hedging" in accumulated other
equity during the hedging period. This approach to
accounting for hedging relationships could significant-
ly reduce the volatility in the amounts reported for
financial result and Group earnings. The presentation
of the cost of hedging in the income statement has not
yet been definitively clarified. It is therefore possible
that shifts could arise between the line items "Profit
before financial result” and “Financial result".
IFRS 9 contains a requirement that it should be
applied retrospectively for classification and meas-
urement, whereas the new rules for hedge accounting
are generally required to be applied prospectively. The
BMW Group intends to apply the exception granted
by the Standard not to restate comparatives for earlier
periods for classification and measurement (including
impairment).
The objective of the new Standard IFRS 15 (Revenue
from Contracts with Customers) is to assimilate all the
various existing requirements and Interpretations
relating to revenue recognition into a single Standard.
The new Standard also stipulates uniform revenue
recognition principles for all sectors and all categories.
The new Standard is based on a five-step model, which
sets out the rules for revenue from contracts with
customers. Revenues are required to be recognised
either over time or at a specific point in time.
A major difference to the previous Standard is the
increased scope of discretion for estimates and the
introduction of thresholds, thus influencing the
amount and timing of revenue recognition.
Accounting for buyback arrangements and rights
of return for vehicles sold, but which the Financial
Services segment will subsequently lease to customers,
will result in the earlier recognition of eliminations.
The adoption of IFRS 15 will result in a one-time
reduction in equity, which will be recognised retro-
spectively as of the date of the beginning of the first
accounting period presented on the basis of the new
requirements. The actual impact of adopting the new
Standard will depend on the level of inventories of
vehicles held by dealerships, the expected number of
leases to be concluded and the amount of inter-seg-
ment profits requiring to be eliminated at the date
of first-time adoption. Based on analyses to date and
the assumptions applied, it is estimated that equity
at 31 December 2016 will be reduced by €650 mil-
lion. The impact in the period following first-time
adoption and in subsequent periods is not expected
to be significant.
In the case of multi-component contracts with variable
consideration components, changes in the allocation
of transaction prices will result in higher amounts
being recognised for vehicle sales and a lower level
of amounts deferred for service contracts. However,
the shift in the timing of revenue recognition is not
expected to have a significant impact at the date of
first-time adoption or in subsequent periods.
A different accounting treatment may be required if
buyback arrangements are in place with customers,
resulting in a shift in the timing of revenue recognition.
The resulting impact is not expected to be significant.
The BMW Group intends to apply the new Standard
entirely retrospectively at the adoption date.
131
132
↑
2015
↑
BMW Group
Notes to the Group
Financial Statements
Accounting
Principles and
Policies
Notes to the
Income Statement
The new Standard IFRS 16 (Leases) stipulates a
completely new approach to accounting for leases
by lessees. Whereas under IAS 17, the accounting
treatment of a lease was determined on the basis of
the transfer of risks and rewards incidental to own-
ership of the asset, in the future, all leases will be
required to be accounted for as a general rule by the
lessee in a similar way to finance leases. Recognition
exemptions are available for short-term leases and for
leasing assets with a low value.
The accounting requirements for lessors, particularly
in relation to the requirement to classify leases, will
remain largely unchanged.
Given that the BMW Group is still in a very early phase
of considering the implications of introducing IFRS 16,
the impact of the Standard on the Group Financial
Statements from a lessee and lessor perspective cannot
be wholly foreseen at present. Similarly, the transi-
tion method to be used on first-time adoption of the
Standard has not yet been stipulated.
Early adoption of all of the new IFRS requirements is
permitted. Currently, the BMW Group does not intend
to adopt any of the new requirements early.
NOTES TO THE INCOME
STATEMENT
06
Revenues
Revenues by activity comprise the following:
in € million
Group
Financial
Statements
13
development costs
2,064
446
Other cost of sales
3,067
2,976
Cost of sales
75,442
74,043
08
Selling and administrative expenses
Selling expenses amounted to €6,030 million (2015:
€5,758 million) and comprise mainly marketing,
advertising and sales personnel costs.
Administrative expenses amounted to €3,128 million
(2015: €2,875 million) and relate mainly to personnel
and IT costs.
134
Group
Financial
Statements
583
BMW Group
Financial Statements
→ Notes to the
Income Statement
09
Other operating income and expenses
Other operating income and expenses comprise the
following items:
in € million
11
Other financial result
in € million
2016
2015
2016
2015
Notes to the Group
2,092
Telematics and roadside assistance
1,435
An analysis of revenues by segment and region is
shown in the segment information in → note 44.
→ see
Total research and development
expenditure
5,164
5,169
note 44
07
Cost of sales
Cost of sales comprises:
in € million
2016
2015
Manufacturing costs
43,175
1,325
43,685
business
20,723
19,449
thereof: Interest expense relating
to financial services business
1,638
1,495
Research and development expenses
4,294
4,271
Warranty expenditure
2,165
1,891
Service contracts
Cost of sales relating to financial services
30.7
Interest and similar expenses
The tax expense was reduced by €49 million (2015*: *Previous year's
figures adjusted.
€41 million) as a result of utilising tax loss carryfor-
wards, for which deferred assets had not previously
been recognised and in conjunction with previously
unrecognised tax credits and temporary differences.
€
10.45
9.70
€
10.47
9.72
€
3.50*
3.20
€
3.52*
3.22
Earnings per share of preferred stock are computed
on the basis of the number of preferred stock shares
entitled to receive a dividend in each of the relevant
Current tax expense includes tax income of €174 mil-
lion (2015: tax expenses of €164 million) relating to
prior periods.
54,499,460
diluted earn-
138
个个
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
Notes to the
Income Statement
→ Notes to the
Statement of
Comprehensive
Income
14
ings per share correspond to basic earnings per share.
Personnel expenses
601,995,196 601,995,196
54,809,375
529.8
724
-520
-561
448
49
253
468
171
Deferred taxes recognised directly in equity in the
financial year 2016 decreased by an additional €29 mil-
lion (2015: increased by €43 million) on currency
translation.
Deferred taxes are not recognised on retained prof-
its of €38.7 billion (2015: €33.7 billion) of foreign
subsidiaries, as it is intended to invest these profits
to maintain and expand the business volume of the
relevant companies. A computation was not made of
the potential impact of income taxes on the grounds
of disproportionate expense.
7
The tax returns of BMW Group entities are checked
regularly by German and foreign tax authorities. Tak-
ing account of a variety of factors - including existing
interpretations, commentaries and legal decisions
taken relating to the various tax jurisdictions and the
BMW Group's past experience - adequate provision
has, to the extent identifiable and probable, been
made for potential future tax obligations.
13
Earnings per share
number
number
Net profit for the year after minority interest
Profit attributable to preferred stock
Average number of common stock shares in circulation
Average number of preferred stock shares in circulation
Basic earnings per share of common stock
Basic earnings per share of preferred stock
Dividend per share of common stock
Dividend per share of preferred stock
*Proposal by management.
2016
2015
€ million
6,862.9
6,369.4
€ million
€ million
6,289.2
573.7
5,839.6
Profit attributable to common stock
-72
The income statement includes personnel expenses
as follows:
2016
204
214
Apprentices and students gaining work
experience
7,913
7,783
thereof at
proportionately-consolidated entities
Average number of employees
2016
2015
15
15
4
4
proportionately-consolidated entities
5
4
2
21
3
1
1
23
23
8
7
2
The fee expense shown for KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin, relates only to services
provided on behalf of BMW AG and its German
subsidiaries.
123,755
119,688
4
in € million
thereof at
115,842
2015
15
Fee expense for the Group auditor
The fee expense pursuant to § 314 (1) no. 9 HGB
recognised in the financial year 2016 for the Group
auditor and its network of audit firms amounted to
€23 million (2015: €23 million) and consists of the
following:
Wages and salaries
9,581
8,887
Pension and welfare expenses
1,152
1,250
Social insurance expenses
Personnel expenses
802
733
in € million
111,905
11,535
Personnel expenses include €61 million (2015: €48 mil-
lion) of costs incurred to adjust the workforce size.
The total pension expense for defined contribution
plans of the BMW Group amounted to €90 million
(2015: €71 million). Employer contributions paid to
state pension insurance schemes totalled €607 million
(2015: €571 million).
The average number of employees during the
year was:
2016
2015
Audit of financial statements
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Other attestation services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Tax advisory services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Other services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Fee expense
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Employees
10,870
163
financial years. As in the previous year,
85
136
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
→ Notes to the
Income Statement
Tax increases as a result of non-deductible expens-
es and tax reductions due to tax-exempt income
increased compared to one year earlier. As in the
previous year, tax increases as a result of non-tax-de-
ductible expenses were attributable primarily to the
impact of non-recoverable withholding taxes and
transfer price issues.
Tax income relating to prior years resulted primarily
from adjustments to income tax receivables and pro-
visions for prior years.
7
The line "Other variances" comprises various recon-
ciling items, including the Group's share of taxes on
the earnings of companies accounted for using the
equity method.
The allocation of deferred tax assets and liabilities to
balance sheet line items at 31 December is shown in
the following table:
in € million
Intangible assets
Property, plant and equipment
Other investments
135
Sundry other assets
Provisions
Liabilities
Eliminations
Valuation allowances on tax loss carryforwards and capital losses
Netting
Deferred taxes
Net
Deferred tax assets
Deferred tax liabilities
2016
2015
2016
2015
13
Tax loss carryforwards and capital losses
10
Effective tax rate
28.5%
The change in the valuation allowance on deferred tax
assets relating to tax losses available for carryforward
and temporary differences resulted in a tax expense
of €38 million (2015*: €82 million).
7
Deferred taxes for non-German entities are calculated
on the basis of the relevant country-specific tax rates,
ranging in the financial year 2016 between 12.5% and
45.0% (2015: between 12.5% and 46.9%). Changes
in tax rates resulted in a deferred tax expense of
€70 million (2015: €36 million).
The difference between the expected tax expense
based on the underlying tax rate for Germany and
actual tax expense is explained in the following
reconciliation:
in € million
2016
2015
Profit before tax
Tax rate applicable in Germany
Expected tax expense
9,665
9,224
30.7%
30.7%
30.7%
2,967
Variances due to different tax rates
77
-119
Tax increases (+)/tax reductions (-) as a result of non-deductible expenses and tax-exempt income
Tax expense (+)/benefits (-) for prior years
78
42
-174
164
Other variances
3
-91
Actual tax expense
2,755
2,828
2,832
2,234
-119
26
-502
-10,888
2,327
-9,988
1,945
-10,888
-9,988
2,795
468
2,116
171
-
Tax loss carryforwards – for the most part usable with-
out restriction amounted to €637 million (2015:
-
€468 million). This includes an amount of €464 million
(2015: €345 million), for which a valuation allowance
of €158 million (2015: €100 million) was recognised
on the related deferred tax asset. For entities with
tax losses available for carryforward, a net surplus
of deferred tax assets over deferred tax liabilities is
reported at 31 December 2016 amounting to €90 mil-
lion (2015: €104 million). Deferred tax assets are
recognised on the basis of management's assessment
of whether it is probable that the relevant entities
will generate sufficient future taxable profits, against
which deductible temporary differences can be offset.
Capital losses available for carryforward in the United
Kingdom which do not relate to ongoing operations
decreased to €1,926 million (2015: €2,234 million) due
to currency factors. As in previous years, deferred tax
assets recognised on these tax losses - amounting to
€327 million at the end of the reporting period (2015:
€402 million) – were fully written down since they can
only be utilised against future capital gains.
-485
-
137
Deferred taxes recognised directly in equity amounted
to €1,812 million (2015: €2,004 million).
7
Changes in deferred tax assets and liabilities during
the reporting period can be summarised as follows:
Deferred taxes at 1 January (assets (−)/liabilities (+))
Deferred tax expense (+)/income (-) recognised through income statement
Change in deferred taxes recognised directly in equity
thereof relating to fair value gains and losses on financial instruments and marketable securities recognised directly in equity
thereof relating to the remeasurements of net liabilities for defined benefit pension plans
Exchange rate impact and other changes
Deferred taxes at 31 December (assets (-)/ liabilities (+))
2016
2015
171
-87
1,977
Netting relates to the offset of deferred tax assets and
liabilities within individual entities or tax groups to
the extent that they relate to the same tax authorities.
12,104
in € million
12,435
20
13,683
305
376
467
367
6,260
3
5
17
11
1,448
1,363
2,861
2,109
6,987
548
715
536
13,700
797
3,281
478
298
3,481
2,760
178
184
4,187
4,966
2,654
2016
Shares issued in conjunction with Employee Share Programme
Preferred stock
Common stock
2015
2016
Shares issued/in circulation at 1 January
54,809,404
Number of shares issued
305,029
54,809,404
29
54,499,544
309,944
84
Shares issued/in circulation at 31 December
55,114,404
2015
601,995,196
601,995,196
Number of shares issued
601,995,196 601,995,196
All of the Company stock is issued to bearer and each
share has a par value of €1.00. Preferred stock, to
which no voting rights are attached, bears an addi-
tional dividend of €0.02 per share.
Less: shares repurchased and re-issued
Equity
20
Receivables that are overdue by between one and
30 days do not normally result in bad debt losses
since the overdue nature of the receivables is primar-
ily attributable to the timing of receipts around the
month-end. In the case of trade receivables, collateral
is generally held in the form of vehicle documents
and bank guarantees so that the risk of bad debt loss
is extremely low.
in € million
In 2016, a total of 305,029 shares of preferred stock
was sold to employees at a reduced price of €44.14 per
share in conjunction with the Company's Employee
Share Programme. These shares are entitled to receive
dividends with effect from the financial year 2017.
29 shares of preferred stock were bought back in
2016 via the stock exchange in conjunction with the
Company's Employee Share Programme.
31.12.2016
31.12.2015
1-30 days overdue
174
128
31-60 days overdue
23
61-90 days overdue
29
10
91-120 days overdue
17
15
More than 120 days overdue
64
22
Balance at 31 December
307
195
29
Issued share capital increased by €0.3 million as a
result of the issue to employees of 305,000 shares of
non-voting preferred stock. The number of author-
ised shares and the Authorised Capital of BMW AG
amounted to 4.2 million shares and €4.2 million
respectively at the end of the reporting period. The
Company is authorised to issue 5 million shares of
non-voting preferred stock amounting to nominal
€5.0 million prior to 14 May 2019.
32.5%
Capital reserves include premiums arising from the
issue of shares and totalled €2,047 million (2015:
€2,027 million). The change related to the share cap-
ital increase arising in conjunction with the issue of
shares of preferred stock to employees amounting to
€20.1 million.
of BMW AG
47,108
42,530
Proportion of total capital
31.7%
Non-current financial liabilities
55,405
49,523
Current financial liabilities
42,326
42,160
Total financial liabilities
97,731
91,683
Proportion of total capital
Total capital
67.5%
68.3%
144,839
134,213
The equity ratio attributable to shareholders of
BMW AG increased during the financial year by
0.8 percentage points, primarily reflecting the
increase in revenue reserves.
2,751
Equity attributable to shareholders
31.12.2015
31.12.2016
in € million
Revenue reserves
Revenue reserves comprise the post-acquisition and
non-distributed earnings of consolidated companies.
In addition, remeasurements of the net defined ben-
efit liability for pension plans are also presented in
revenue reserves.
A proposal will be made that the unappropriated profit
of BMW AG for the financial year 2016 amounting to
€2,300 million be utilised as follows:
Distribution of a dividend of €3.52 per share of
preferred stock (€193 million).
Distribution of a dividend of €3.50 per share of
common stock (€2,107 million).
The proposed distribution was not recognised as a
liability in the Group Financial Statements.
Accumulated other equity
Accumulated other equity comprises all amounts rec-
ognised directly in equity resulting from the transla-
tion of the financial statements of foreign subsidiaries,
the effects of recognising changes in the fair value
of derivative financial instruments and marketable
securities directly in equity and the related deferred
taxes recognised directly in equity.
149
Capital reserves
150
BMW Group
Notes to the Group
Financial Statements
→ Notes to the
Capital management disclosures
The BMW Group's objectives when managing capital
are to safeguard the Group's ability to continue as
a going concern in the long-term and to provide an
adequate return to shareholders.
The BMW Group manages the capital structure and
makes adjustments to it in the light of changes in
economic conditions and the risk profile of the under-
lying assets.
The BMW Group is not subject to any external
minimum equity capital requirements. Within the
Financial Services segment, however, there are a
number of individual entities which are subject to
equity capital requirements set by relevant regulatory
banking agencies.
In order to manage its capital structure, the
BMW Group uses various instruments, including the
amount of dividends paid to shareholders and share
buybacks. Moreover, the BMW Group pro-actively
manages debt capital, determining levels of debt
capital transactions with a target debt structure in
mind. An important aspect of the selection of finan-
cial instruments is the objective to achieve matching
maturities for the Group's financing requirements. In
order to reduce non-systematic risk, the BMW Group
uses a variety of financial instruments available on
the world's capital markets to achieve diversification.
The capital structure at the end of the reporting period
was as follows:
Group
Financial
Statements
2,825
Balance Sheet
-96
THERE
BMW Brilliance
in € million
Dividends received by the Group
Total comprehensive income
Other comprehensive income
Income taxes
Interest expenses
Interest income
Profit/loss before financial result
Scheduled depreciation
Revenues
DISCLOSURES RELATING TO THE INCOME STATEMENT
in € million
→ Notes to the
Balance Sheet
Notes to the Group
Financial Statements
BMW Group
Group
Financial
Statements
Financial information relating to equity accounted
investments is aggregated in the following tables:
144
143
In December 2016, THERE Holding B.V. signed
contracts for the sale of a total of 25% of the shares
of HERE International B.V. The contract relating to
the sale of 15% of the shares to Intel Holdings B.V.,
Schiphol-Rijk, was completed in January 2017. 10%
of the shares were sold to a consortium comprising
NavInfo Co. Ltd., Beijing, Tencent Holdings Ltd.,
Shenzhen, and GIC Private Ltd., Singapore. After
receipt of the approval of the relevant regulatory
agencies, the transaction is expected to be completed
during the first half of 2017.
THERE is included in the BMW AG Group Financial
Statements as an associated company using the equity
method and allocated for segment reporting purposes
to the Automotive segment. In view of the proximity
of the reporting date and on the grounds of imma-
teriality, no fair value adjustments were recorded in
conjunction with the at-equity carrying amount at
31 December 2015, at which stage the investment
was accounted for at cost. During 2016, the Group's
share of earnings was accounted for with one month's
delay, which was caught up at 31 December 2016. The
purchase price allocation was completed during the
first quarter of 2016.
THERE Holding B.V. and its wholly owned subsidi-
ary, HERE International B.V. (until 28 January 2016:
THERE Acquisition B.V.) were founded in connection
with the acquisition. HERE International B. V. acquired
all of the shares of the HERE Group. Via BMW Inter-
national Holding B.V., the BMW Group has a 33.3%
shareholding in THERE Holding B.V. THERE acquired
the HERE Group with effect from 4 December 2015.
The total purchase price of €2.6 billion was financed by
using capital contributions (€2.0 billion) and via bank
loans taken up by HERE International B.V. (€0.6 bil-
lion). The BMW Group's share of the purchase price
was approximately €0.67 billion.
In August 2015, BMW AG, Daimler AG, Stuttgart,
and AUDI AG, Ingolstadt, agreed with Nokia Cor-
poration, Helsinki, to acquire that entity's maps and
location-based services business (HERE Group). The
HERE Group's digital maps are fundamental for the
next generation of mobility and location-based ser-
vices, providing the basis for new assistance systems
and, ultimately, fully autonomous driving.
DriveNow
2016
2015
2016
-4
150
30
3
369
363
22
15
2
1
40
30
DriveNow (in which the BMW Group has a 50.0%
shareholding) offers car-sharing services in major
German cities and abroad.
-6
-149
1,399
1,328
52
47
58
1,240
13,220
380
12,991
486
2015
2016
2015
-15
1,061
BMW Brilliance (in which the BMW Group has a 50.0%
shareholding) produces mainly BMW brand models
for the Chinese market and also has engine manufac-
turing facilities, which supply the joint venture's two
plants with petrol engines.
Investments accounted for using the equity
method
12
12
due within one year
Present value of future minimum lease
payments
69
97
27
50
due later than five years
32
36
due between one and five years
10
11
due within one year
Interest portion of the future minimum
lease payments
190
223
99
127
due later than five years
69
73
due between one and five years
22
due between one and five years
37
37
due later than five years
22
Impairment losses amounting to €384 million (2015:
€119 million) were recognised on leased products in
2016 as a consequence of changes in residual value
expectations. No income was recognised in 2016 from
the reversal of impairment losses (2015: €24 million).
Contingent rents of €46 million (2015: €54 million),
based principally on the distance driven, were rec-
ognised in income. The agreements have, in part,
extension and purchase options.
3
16,527
17,850
Minimum lease payments
4
Net carrying amount
later than five years
8,445
9,154
Investments accounted for using the equity method
comprise the joint venture BMW Brilliance Auto-
motive Ltd. (BMW Brilliance), the joint ventures
DriveNow GmbH & Co. KG and DriveNow Ver-
waltungs GmbH (DriveNow) and the interest in the
associated company THERE Holding B.V. (THERE).
between one and five years
8,692
within one year
31.12.2015
31.12.2016
in € million
Minimum lease payments of non-cancellable oper-
ating leases amounting to €17,850 million (2015:
€16,527 million) fall due as follows:
Leased products
21
121
126
72
77
8,079
23
1,081
-15
Allocated (+)/reversed (-)
70,043
78,260
1,498
535
963
Balance at 1 January*
17,128
16,658
in € million
52,915
61,602
sales financing
Receivables from
Finance lease receivables
and dealerships
Total
group basis
item basis
specific
recognised on a
Allowance for impairment
2016
Allowances on receivables from sales financing -
which only arise within the Financial Services seg-
ment developed as follows:
31.12.2015
248
-25
223
Utilised
group basis
item basis
specific
recognised on a
Allowance for impairment
2015
in € million
Gross carry amount of items with
31.12.2015
31.12.2016
in € million
1,401
31.12.2016
467
Balance at 31 December
25
-2
27
and other changes
Exchange rate impact
* Balance at 1 January adjusted due to deconsolidation of entities.
Impairment allowances
Non-guaranteed residual values that fall to the ben-
efit of the lessor amounted to €118 million (2015:
€165 million).
-345
-41
-304
934
-171
Credit financing for retail customers
lowing:
Current assets
20
96
209
1,663
2,106
Cash and cash equivalents
3,115
2,802
5,415
5,779
Non-current assets
DISCLOSURES RELATING TO THE BALANCE SHEET
2015
2016
2015
2016
2015
2016
DriveNow
THERE
BMW Brilliance
144
134
-6
4,405
3,841
592
365
Receivables from sales financing comprise the fol-
Receivables from sales financing
23
1 Corresponds to the consolidated equity capital provided by the shareholders of DriveNow GmbH & Co. KG and its subsidiaries.
2 The BMW Group holds 67.2% (2015: 73.8%) of the net assets at 31 December 2016. Due to the allocation of voting power within the decision-making bodies of the two entities,
operations remain subject to joint control.
14
10
668
611
1,551
1,925
Carrying amount
-376
in € million
-414
201
151
32
23
235
2,003
1,832
3,853
4,678
Non-current financial liabilities
Equity
33
525
Total
Total of future minimum lease payments
due within one year
31.12.2016
721
660
Other facilities, factory and office equipment
2
2
2,2532
32,351
-119
3,403
1,806
33,829
17,960
1,591 Advance payments made and construction in progress
17,759
Property, plant and equipment
7,308
19
3,306
2,834
7,799
37,789
34,965
2,546
2,233
Leased products
Investments accounted for using
the equity method
76
1,951
214
4
218
5,191
8,157
7,372
Development costs
Goodwill
Other intangible assets
Intangible assets
4,516
-28
320
4
26
4,786
116
6,154
25,891
-100
2,865
2
1,566
27,092
8,832
9,593
Land, titles to land, buildings, including
buildings on third party land
Plant and machinery
1,942
9
5,915
1,188
192
157
4,171
6,351
5,453
5
5
364
364
763
11
175
152
797
657
682
4,656
11
1,341
1,035
4,973
7,372
6,499
Development costs
Goodwill
Other intangible assets
Intangible assets
883
1,166
3,888
Disposals 31.12.2015 31.12.2015 31.12.2014
Investments in non-consolidated subsidiaries
411
76
3
484
226
245
Participations
2
2
26
26
308
489
3
678
560
428
Non-current marketable securities
Other investments
Depreciation and amortisation
Carrying amount
1.1.20151
Translation
differences
Current year
Reclassi-
fications
192
31.12.2015
657
923
Participations
244
245
411
13
Investments in non-consolidated subsidiaries
164
157
76
232
398
12
2
62
Investments accounted for using
the equity method
1,088
2,233
Leased products
30,165
34,965
7,301
3,277
3,536
238
6,804
2
26
460
2
in € million
Minimum lease payments are as follows:
Property, plant and equipment include a total of
€107 million (2015: €110 million) relating to land and
buildings, for which economic ownership is attribut-
able to the BMW Group (finance leases). Leases to
which BMW AG is party, with a carrying amount of
€90 million (2015: €102 million), run for periods up
to 2030 at the latest and contain price adjustment
clauses in the form of index-linked rentals as well as
extension and purchase options.
As in the previous year, no borrowing costs were
recognised as a cost component of property, plant
and equipment in 2016.
No impairment losses were recognised in 2016 (2015:
€3 million).
Property, plant and equipment
20
As in the previous year, no borrowing costs were
recognised as a cost component of intangible assets
in 2016.
As in the previous year, there was no requirement to
recognise impairment losses or reversals of impair-
ment losses on intangible assets in 2016.
Intangible assets amounting to €42 million (2015:
€48 million) are subject to restrictions on title.
Other intangible assets include a brand-name right
amounting to €42 million (2015: €48 million) which
is allocated to the Automotive segment and is not
subject to scheduled amortisation since its useful life
is deemed to be indefinite. The year-on-year change
is due entirely to currency factors. This line item also
includes goodwill of €33 million (2015: €33 million)
allocated to the Automotive cash-generating unit
(CGU) and goodwill of €331 million (2015: €331 mil-
lion) allocated to the Financial Services CGU.
Intangible assets mainly comprise capitalised develop-
ment costs on vehicle and engine projects as well as
subsidies for tool costs, licences, purchased develop-
ment projects, software and purchased customer lists.
2,014 Advance payments made and construction in progress
17,182
Property, plant and equipment
Intangible assets
→ Notes to the
Balance Sheet
BMW Group
Notes to the Group
Financial Statements
Statements
Group
Financial
142
141
Other investments
Non-current marketable securities
408
428
489
27
19
572
17,759
1,420
Translation
1.1.20161
differences
Current year
Reclassi-
fications
Disposals
31.12.2016
31.12.2016 31.12.2015
1,222
4,171
5
797
3
181
4,973
3
1,403
1,130
4,263
7,221
6,351
5
364
364
58
Carrying amount
Depreciation and amortisation
319
62
3,318
510
29,930
1,5912
6
6
Other facilities, factory and office equipment
Plant and machinery
Land, titles to land, buildings, including
buildings on third party land
613
660
1,941
32,338
208
43
1,902
8,930
9,593
25,876
1,150
2,795
390
23,841
5,625
5,915
4,515
204
4,181
impairment allowances recognised
14,440
-8
Utilised
7
Allocated (+)/reversed (-)
8
Balance at 1 January
Total
group basis
item basis
specific
Allowance for impairment
recognised on a
2015
in € million
Balance at 31 December
other changes
Exchange rate impact and
-8
Utilised
8
Allocated (+)/reversed (-)
8
8
Balance at 1 January
7
Exchange rate impact and
668
611
1,927
2,339
Group's interest in net assets
20
15
2,003
1,832
3,853
4,678
Net assets
12
Collateral receivables comprise mainly customary
collateral (banking deposits) arising on the sale of
receivables.
Prepayments relate mainly to prepaid interest and
commission paid to dealerships. Prepayments of
€1,018 million (2015: €795 million) have a maturity
of less than one year.
8
8
Balance at 31 December
1
1
other changes
-8
102
4,693
thereof current
1,135
Other taxes
Total
group basis
item basis
893
1,217
an investment is held
specific
Receivables from companies in which
1,527
1,914
Prepayments
recognised on a
Allowance for impairment
2016
31.12.2015
31.12.2016
in € million
in € million
Other assets comprise:
1,036
5,087
Expected reimbursement claims
711
1,568
1,595
thereof non-current
9
9
6,261
6,682
Other assets
1
966
828
on a specific-item basis
-8
412
387
Collateral receivables
8
716
422
Receivables from subsidiaries
8
779
Other assets
20
Eliminations
76
Balance at 1 January
Total
group basis
item basis
specific
Allowance for impairment
recognised on a
2015
in € million
31.12.2015
31.12.2016
in € million
Trade receivables comprise the following:
Trade receivables
28
The expense recorded in conjunction with inven-
tories during the financial year 2016 amounted to
€55,129 million (2015: €55,536 million).
At 31 December 2016, inventories measured at their
net realisable value amounted to €871 million (2015:
€1,054 million). Write-downs to net realisable value
amounting to €101 million (2015: €486 million) were
recognised in 2016. The write-down recorded in the
previous year resulted primarily from accidents and
natural disasters.
57
11
46
Balance at 31 December
7
2
83
36
-57
Allowance for impairment
2,847
2,882
Gross carrying amount
Some trade receivables were overdue for which an
impairment allowance was not recognised. Overdue
balances are analysed into the following time windows:
28
96
12
84
Balance at 31 December
-2
-1
-1
other changes
Exchange rate impact and
-28
-1
-27
43
7
Allocated (+)/reversed (-)
Utilised
142
2
Exchange rate impact
9,684
Finished goods and goods for resale
recognised on a
Allowance for impairment
2016
The impairment allowance on trade receivables devel-
oped during the year under report as follows:
31.12.2015
31.12.2016
Balance Sheet
→ Notes to the
in € million
Financial Statements
Inventories comprise the following:
Inventories
27
Notes to the Group
BMW Group
Statements
Group
Financial
148
147
8,969
and other changes
in € million
item basis
-20
-1
-19
Utilised
-21
-21
Allocated (+)/reversed (-)
11,071
11,841
96
12
84
Balance at 1 January
1,004
1,000
Raw materials and supplies
Inventories
1,098
1,157
Work in progress, unbilled contracts
Total
group basis
specific
26
Sundry other assets
Income tax assets totalling €1,938 million (2015:
€2,381 million) include claims amounting to €351 mil-
lion (2015: €519 million), which are expected to be
settled after more than twelve months. Some of the
claims may be settled earlier than this depending on
the timing of proceedings.
12,270
allowances
Carrying amount without impairment
-530
-467
on a group basis
Impairment allowances recognised
44,473
52,951
1,493
on a group basis
530
963
Balance at 31 December
impairment allowances recognised
24
7
17
18
1,477
1,562
13,321
5,403
Net carrying amount
70,043
Allowances for impairment losses on receivables
relating to credit card business developed as follows
during the year under report:
5,921
due within one year
Gross investment in finance leases
→ Notes to the
Balance Sheet
Financial Statements
31.12.2015
31.12.2016
in € million
31.12.2015
31.12.2016
Notes to the Group
in € million
Marketable securities and investment funds relate to
available-for-sale financial assets and comprise:
Finance leases are analysed as follows:
BMW Group
Statements
Group
Financial
146
145
The estimated fair value of collateral received for receiv-
ables on which impairment losses were recognised
totalled €30,542 million (2015: €26,992 million). This
collateral related primarily to vehicles. The carrying
amount of assets held as collateral and taken back as
a result of payment default amounted to €153 million
(2015: €40 million).
78,260
5,505
Provisions and liabilities
32
Gross carrying amount of items with
-341
-22
-319
Utilised
-174
-141
thereof for finance lease receivables
295
30
265
Allocated (+)/reversed (-)
-963
-934
on a specific-item basis
1,515
515
1,000
Balance at 1 January
Impairment allowances recognised
13,742
Exchange rate impact
and other changes
598
Non-current provisions and liabilities
670
33
3,480
3,394
9,256
10,183
Assets
RECONCILIATION OF AGGREGATED FINANCIAL
INFORMATION
12
18
384
5,974
518
4,835
Current provisions and liabilities
48
73
641
87
Current financial liabilities
1,093
1,044
589
4,814
due between one and five years
77
12,816
in € million
Fixed income securities
due within three months
780
699
due later than three months
3,669
3,657
Other debt securities
due within three months
104
344
due later than three months
Debt securities
4,553
4,700
31.12.2016
Financial assets comprise:
31.12.2015
Financial assets
1,796
lease payments
due within one year
5,348
due between one and five years
11,278
5,429
11,572
The contracted maturities of debt securities are as
follows:
due later than five years
32
127
16,658
17,128
in € million
31.12.2016
31.12.2015
Unrealised interest income
1,869
24
Marketable securities and
investment funds
5,287
The amount by which the value of investment funds
exceeds obligations for part-time working arrange-
ments (€17 million; 2015: €12 million) is reported
under other financial assets. Investment funds are
held to secure obligations relating to pre-retirement
part-time work arrangements. These funds are man-
aged by BMW Trust e. V., Munich, as part of Con-
tractual Trust Arrangements (CTA) and are therefore
netted against the corresponding settlement arrears
for pre-retirement part-time work arrangements.
Allowances for impairment and credit risk
Receivables relating to credit card business comprise
the following:
in € million
Gross carrying amount
Allowance for impairment
Net carrying amount
31.12.2016
31.12.2015
296
280
-9
-8
287
272
25
Income tax assets
6,635
7,065
2,208
2,705
5,261
Derivative instruments
3,922
3,030
Credit card receivables
287
272
Loans to third parties
Present value of future minimum
129
Other
145
147
Financial assets
9,770
8,843
thereof non-current
thereof current
133
12,574
5,261
Marketable securities and
investment funds
due later than five years
32
18,527
134
18,924
Other debt securities
4,449
5,287
734
561
Fixed income securities
Stocks
104
344
4,356
in Mio. €
31.12.2016
31.12.2015
Maturity within one year
8,512
Maturity between one and five years
Maturity later than five years
Trade payables
8,512
7,773
Trade payables have the following maturities:
31.12.2016
31.12.2015
7,701
72
Trade payables
Deferred income from lease financing
Grants comprise primarily public sector funds to
promote regional structures and which have been
invested in the production plants in Brazil, Mexico,
Leipzig and Berlin. The grants are partly subject to
holding periods for the assets concerned of up to five
years and/or minimum employment figures. Grant
income is recognised over the useful lives of the assets
to which they relate.
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
→ Other Disclosures
Deferred income comprises the following items:
in € million
Deferred income relating to service contracts
Grants
Other deferred income
Deferred income
Deferred income relating to service contracts arises
in conjunction with service and repair work as well
as telematics services and roadside assistance to be
provided under commitments given at the time of
the sale of a vehicle (multi-component arrangements).
Deferred income from lease financing relates primarily
to upfront lease payments.
35
thereof due
1,474
within one year
United Kingdom
Other
31.12.2016
31.12.2015
31.12.2016
31.12.2015
3.83
31.12.2016
31.12.2015
1.80
2.51
2.51
3.58
3.70
Germany
2,599
7,256
55
123
Total
within one year
4,412
1.78
3,910
1,397
2,241
Total
1,037
915
382
30
299
32
221
58
1,922
thereof due
2.1
159
Weighted duration of all pension obligations in years
The following mortality tables are applied in countries,
in which the BMW Group has significant defined
benefit plans:
Germany
United Kingdom
Bonds comprise:
Notes to the Group
Financial Statements
Issuer
→ Notes to the
Balance Sheet
Interest
Issue volume
in relevant currency
(ISO-Code)
Weighted average
maturity period
(in years)
Weighted average
nominal interest rate
(in %)
variable
EUR 6,101 million
2.2
0.1
Pension level trend
variable
Discount rate
The assumptions stated below, all of which depend
on the economic situation in the relevant country,
are used to measure the defined benefit obligation
of each pension plan. The following weighted aver-
age values have been used for Germany, the United
Kingdom and other countries:
Maturity within
31.12.2016
BMW Group at the relevant balance sheet dates
relating to financing activities. Financial liabilities
comprise the following:
Financial liabilities include all liabilities of the
Financial liabilities
33
Current income tax liabilities of €1,074 million
(2015: €1,441 million) comprise €269 million (2015:
€288 million) for taxes payable and €805 million (2015:
€1,153 million) for tax provisions.
Current income tax liabilities totalling €1,074 million
(2015: €1,441 million) include €33 million (2015: 485
€million), which is expected to be settled after more
than twelve months. Some of the liabilities may be
settled earlier than this depending on the timing of
proceedings.
Income tax liabilities
32
Income from the reversal of other provisions amount-
ing to €480 million (2015: €550 million) is recorded
in cost of sales and in selling and administrative
expenses.
Provisions for other obligations cover numerous spe-
cific risks and obligations of uncertain timing and
amount, in particular for litigation and liability risks.
Provisions for obligations for on-going operational
expenses comprise primarily warranty obligations.
Depending on when claims are made, it is possible
that the BMW Group may be called upon to fulfil
obligations over the whole period of the warranty
or guarantee. Expected reimbursement claims at
31 December 2016 amounted to €779 million at the
end of the reporting period (2015: €711 million). Also
included are other provisions for expected payments
for bonuses, rebates and other price deductions.
Provisions for obligations for personnel and social
expenses comprise mainly performance-related
remuneration components, early retirement part-time
working arrangements and employee long-service
awards.
5,879
30
Pension provisions
In the case of defined benefit plans, the BMW Group
is required to pay the benefits it has granted to pres-
ent and past employees. Defined benefit plans may
be funded or unfunded, the latter sometimes covered
by accounting provisions. Pension commitments in
Germany are mostly covered by assets contributed
to BMW Trust e. V., Munich, in conjunction with a
contractual trust arrangement (CTA). The main other
countries with funded plans were the UK, the USA,
Switzerland, the Netherlands, Belgium and Japan. ¬
In the meantime, most of the defined benefit plans
have been closed to new entrants.
in %
GBP 67 million
1.0
0.7
fixed
HKD 1,093 million
4.1
1.9
fixed
JPY 49,100 million
3.7
0.4
fixed
NOK 1,650 million
3.9
2.1
BMW Finance N. V.
fixed
SEK 1,750 million
5.0
1.9
variable
EUR 1,500 million
2.5
5.2
GBP 2,700 million
fixed
variable
SEK 1,950 million
3.0
0.0
fixed
AUD 690 million
5.4
4.0
fixed
in € million
CHF 300 million
1.8
fixed
CNH 300 million
3.0
4.2
fixed
EUR 15,214 million
7.2
2.0
6.0
one year
Maturity between
one and five years
Maturity later
than five years
5,415
Commercial paper
13,509
133
3,657
9,719
Liabilities from customer deposits (banking)
12,720
496
3,194
9,030
Liabilities to banks
13,631
8,585
5,046
Asset backed financing transactions
40,319
6,912
23,283
5,415
Derivative instruments
Other
2,198
-595
1.60
BMW Group
Statements
Group
Financial
158
157
Customer deposit liabilities arise in the BMW Group's
banks, notably in Germany and the USA, which offer
a range of investment products.
91,683
10,124
8,234
42,160
Financial liabilities
1,539
586
325
628
4,550
107
2,245
41,289
3.2
Bonds
Maturity later
than five years
133
3,316
10,063
Liabilities from customer deposits (banking)
14,892
644
3,997
10,251
Liabilities to banks
16,474
9,709
6,765
Asset backed financing transactions
44,421
9,683
25,496
9,242
Bonds
Total
13,512
Commercial paper
3,852
3,852
Maturity between
one and five years
one year
Maturity within
31.12.2015
in € million
97,731
11,261
44,144
42,326
Total
1,249
130
497
Financial liabilities
Other
3,331
179
1,496
1,656
Derivative instruments
622
160
0.0
GBP 250 million
615
615
Payables to subsidiaries
99
99
Social security
Other
Other liabilities
71
21
92
4,659
147
10
4,816
10,198
4,923
434
15,555
Payables to other companies in which an investment is held
in € million
807
893
in € million
31.12.2016
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
Total
Deferred income
Advance payments from customers
Deposits received
Other taxes
2,599
4,238
419
7,256
847
130
977
501
387
807
Deferred income
Advance payments from customers
Deposits received
871
1,080
1,080
107
107
86
86
71
17
1
89
4,292
176
10
4,478
9,208
4,328
231
13,767
5
374
492
802
Other taxes
Payables to other companies in which an investment is held
Payables to subsidiaries
Social security
Other
Other liabilities
Sundry other liabilities include mainly bonuses for
services already performed as well as sales promotions,
commission payable and credit balances on customers'
accounts.
31.12.2015
Other liabilities comprise the following items:
Maturity within
Maturity between
one and five years
Maturity later
than five years
Total
2,399
3,640
215
6,254
681
121
one year
Other liabilities
34
7.33
3.0
1.6
fixed
JPY 30,000 million
3.0
0.2
fixed
NZD 100 million
3.0
4.4
BMW US Capital, LLC
fixed
USD 8,210 million
6.2
2.3
variable
CAD 500 million
2.7
0.9
HKD 834 million
fixed
2.0
5.0
1.8
0.7
variable
NZD 30 million
3.0
2.9
variable
USD 1,295 million
3.0
BMW Canada Inc.
1.4
AUD 130 million
3.8
2.8
fixed
EUR 3,500 million
6.6
0.9
fixed
GBP 300 million
fixed
variable
fixed
4.6
(in %)
EUR 380 million
76
-0.32
BMW Finance N. V.
BMW Malta Finance Ltd.
GBP 300 million
74
0.37
EUR 350 million
13
-0.30
BMW US Capital, LLC
USD 2,722 million
20
0.67
BMW India Financial Services Private Ltd.
INR 14,000 million
91
Weighted average
nominal interest rate
Weighted average
maturity period
(in days)
in relevant currency
(ISO-Code)
Issue volume
variable
AUD 700 million
3.0
2.4
fixed
CNY 2,000 million
3.0
3.3
fixed
CAD 1,600 million
INR 3,500 million
10.3
Other
fixed
KRW 260,000 million
3.9
2.8
The following details apply to the commercial
paper:
Issuer
5.0
2.55
10,918
21.3
325
325
Gains (-) or losses (+) arising from changes in the discount factor
Gains (-) or losses (+) arising from changes in demographic assumptions
-1,181
-1,181
-1,181
-224
-224
-224
Gains (-) or losses (+) arising from experience adjustments
Changes in the limitation of the net defined benefit asset to the
asset ceiling
-429
-429
-429
1
Transfers to fund
-872
-872
-872
Employee contributions
Pensions and other benefits paid
79
-540
-79
-
-
554
14
14
Translation differences and other changes
683
325
-9
123
494
thereof pension provision
4,587
thereof assets
in € million
1 January 2015
EXPENSE/INCOME
Current service cost
Interest expense (+)/income (-)
Past service cost
Gains (-) or losses (+) arising from settlements
REMEASUREMENTS
Gains (-) or losses (+) on plan assets, excluding amounts included
in interest income
Defined
benefit
obligation
Plan assets
-529
Total
Limitation of
Net defined
benefit liability
20,462
-15,861
4,601
494
494
591
-468
123
-9
-9
2
4,603
the net defined
benefit asset to
the asset ceiling
154
154
31 December 2015
Equity instruments
1,726
1,807
611
1,340
235
224
2,572
3,371
Debt instruments
5,439
4,834
6,071
4,623
2015
458
11,968
9,877
thereof investment grade
3,752
3,525
5,564
4,437
422
383
9,738
8,345
thereof non-investment grade
1,687
1,309
420
4,587
2016
2016
19,926
-16,930
2,996
3
2,999
thereof pension provision
thereof assets
3,000
-1
153
154
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
2015
→ Notes to the
Past service cost results from a change in the defined
benefit pension plan in Germany. In future, 12 month-
ly pension payments will be paid to all plan benefi-
ciaries, with a guaranteed 1% increase in pension
entitlements for benefits awarded since 1999.
7
Depending on the cash flow profile and risk structure
of the pension obligations involved, pension plan
assets are invested in various investment classes.
Plan assets in Germany, the UK and other countries
comprised the following:
in € million
COMPONENTS OF PLAN ASSETS
Germany
United Kingdom
Other
Total
2016
2015
2016
2015
Balance Sheet
4,584
-18,315
22,899
521
465
4,587
2,999
thereof pension provision
2,469
1,360
1,597
1,174
521
466
4,587
3,000
thereof assets
1,174
-1
151
152
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
Numerous defined benefit plans are in place through-
out the BMW Group.
Under the motto "THE NEXT 100 YEARS", almost
all of the workforce received a special bonus in
conjunction with the BMW Group's centenary
anniversary. Depending on opportunities available
in each country, the bonus was contributed to the
relevant pension plan or paid to the recipient in a
one-off amount.
The most significant of the BMW Group's pension
plans are described below.
Germany
Both employer- and employee-funded benefit plans
are in place in Germany. Benefits paid in conjunction
with these plans comprise old-age retirement pen-
sions as well as invalidity and surviving dependents'
benefits. The Deferred Remuneration Retirement
Plan is an employee-financed defined contribution
plan with a minimum rate of return. The fact that the
plan involves a minimum rate of return means that
it is classified as a defined benefit plan. Employees
have the option to waive payment of certain remu-
neration components in return for a future benefit.
When the benefit falls due, it is paid on the basis
of the higher of the value of the depot account or a
guaranteed minimum amount. Defined benefit obli-
gations also remain in Germany, for which benefits
are determined either by multiplying a fixed amount
by the number of years of service or on the basis of
an employee's final salary.
The defined benefit plans have been closed to new
entrants. With effect from 1 January 2014, new
employees receive a defined contribution entitle-
ment with a minimum rate of return. Under the
motto "THE NEXT 100 YEARS", this entitlement was
enhanced by a special centenary bonus to employees,
made in the form of a starting contribution to a new
BMW supplementary benefit plan.
The assets of the German pension plans are admin-
istered by BMW Trust e. V., Munich, (German reg-
istered association) in accordance with a CTA. The
representative bodies of this entity are the Board
of Directors and the Members' General Meeting.
BMW Trust e. V., Munich, currently has seven mem-
bers and three Board of Directors members elected
by the Members' General Meeting. The Board of
Directors is responsible for investments, drawing
up
and deciding on investment guidelines as well as
monitoring compliance with those guidelines. The
members of the association can be employees, senior
executives and members of the Board of Directors.
An ordinary Members' General Meeting takes place
once every calendar year, and deals with a range
of matters, including receiving and approving the
association's annual report, ratifying the activities
of the Board of Directors and adopting changes to
the association's statutes.
United Kingdom
-1
In the United Kingdom, the BMW Group has defined
benefit plans, which are primarily employer-funded
combined with employee-funded components based
on the conversion of employee remuneration. These
plans are subject to statutory minimum recovery
requirements. Benefits paid in conjunction with
these plans comprise old-age retirement pensions as
well as invalidity and surviving dependents' benefits.
The defined benefit plans have been closed to new
entrants, who, since 1 January 2014, are covered by
a defined contribution plan.
1,597
2,469
Total
31.12.2015
31.12.2016
31.12.2015
31.12.2016
31.12.2015
Present value of defined benefit
obligations
11,112
9,215
10,311
9,327
1,476
1,384
Fair value of plan assets
1,360
8,643
8,714
8,153
958
922
22,899
18,315
19,926
16,930
Effect of limiting net defined benefit
asset to asset ceiling
3
3
3
3
Carrying amounts at 31 December
7,855
507
The pension plans are administered by BMW Pen-
sion Trustees Limited, Hams Hall, and BMW (UK)
Trustees Limited, Hams Hall, both trustee companies
which act independently of the BMW Group. BMW
(UK) Trustees Limited, Hams Hall, is represented
by 11 trustees and BMW Pension Trustees Limited,
Hams Hall, by five trustees. A minimum of one
third of the trustees must be elected by plan partic-
ipants. The trustees represent the interests of plan
participants and decide on investment strategies.
Recovery contributions to the funds are determined
in agreement with the BMW Group.
plans can be derived as follows:
-1,836
Gains (-) or losses (+) arising from changes in the discount factor
Gains (-) or losses (+) arising from changes in demographic assumptions
4,093
4,093
4,093
-40
-40
-40
Gains (-) or losses (+) arising from experience adjustments
Changes in the limitation of the net defined benefit asset to the
asset ceiling
-118
-118
-118
Transfers to fund
-827
-1,836
-827
Employee contributions
85
-85
Pensions and other benefits paid
-643
676
33
33
Translation differences and other changes
-1,339
1,166
-173
-173
31 December 2016
-827
The change in the net defined benefit liability for pension
-1,836
-8
in € million
1 January 2016
EXPENSE/INCOME
Current service cost
Interest expense (+)/income (−)
Past service cost
Gains (-) or losses (+) arising from settlements
REMEASUREMENTS
Defined
benefit
obligation
Plan assets
Total
19,926
-16,930
2,996
Gains (-) or losses (+) on plan assets, excluding amounts included
in interest income
557
557
-479
78
-171
-171
-8
-8
Limitation of
the net defined
benefit asset to
the asset ceiling
Net defined
benefit liability
3
2,999
557
78
-171
557
186
36
37
in %
in € million
in %
increase of 0.75%
-2,939
-12.8
-2,577
-12.9
decrease of 0.75%
increase of 0.25%
4,031
17.6
3,253
16.3
747
31.12.2015
3.3
3.3
decrease of 0.25%
-713
-3.1
-610
-3.1
increase of 1 year
853
3.7
632
3.2
decrease of 1 year
-854
-3.7
655
-633
in € million
Change in defined benefit obligation
26.7
23.4
79.1
75.0
27.8
28.6
43.1
48.6
17.5
16.7
4.9
5.1
30.2
28.0
31.12.2016
3.4
100.0
100.0
100.0
100.0
100.0
100.0
The sensitivity analysis provided below shows the
extent to which changes in individual factors at the
end of the reporting period influence the defined
benefit obligation.
It is only possible, however, to aggregate sensitivities
to a limited extent. Since the change in obligations 7
does not follow a linear pattern, estimates made on
the basis of the specified sensitivities are only possible
with this restriction. The calculation of sensitivities
using ranges other than those specified could result
in a non-proportional change in the defined benefit
obligation.
Discount rate
Pension level trend
Average life expectancy
Pension entitlement trend
In the UK, the sensitivity analysis for the pension
level trend also takes account of restrictions due to
caps and floors.
8.3
66.3
-3.2
165
1
-1,436
-23
2,191
1,661
Obligations for ongoing operational
expenses
5,811
48
3,219
51
-2,313
-289
6,527
1,705
2,824
1,880
21
938
6
-362
-283
2,200
1,394
Other provisions
9,630
74
5,862
58
-4,111
Other obligations
increase of 0.25%
5
expenses
0.7
134
0.7
decrease of 0.25%
-158
-0.7
-128
-0.6
155
156
Group
Financial
Statements
BMW Group
Notes to the Group
1,939
Financial Statements
31
Other provisions
Other provisions changed during the year as follows:
Balance Sheet
in € million
Translation
1.1.2016
differences
Additions
Reversal of
discounting
Utilised
Reversed
thereof due
31.12.2016 within one year
Obligations for personnel and social
→ Notes to the
Other
67.3
31.12.2016
367
408
207
3
3
954
577
thereof investment grade
195
189
2
2
1
1
543
198
thereof mixed funds
(funds without a rating)
348
178
179
527
178
thereof non-investment grade
227
205
2
2
229
207
192
Real estate
Debt instruments
14,689
2,230
1,532
Real estate
25
20
25
20
Money market funds
26
255
11
19
37
274
13,575
Absolute return funds
33
-
82
33
Other
5
5
Total with quoted market price
7,165
6,641
6,790
6,251
734
683
82
31.12.2015
183
697
1,924
1,902
224
239
3,626
3,355
31 December
8,643
7,855
8,714
8,153
958
922
18,315
1,214
16,930
The BMW Group is exposed to risks arising from
defined benefit plans on the one hand and defined
contribution plans with a minimum return guarantee
on the other. The discount rates used to calculate
pension obligations are subject to market fluctuation
and therefore influence the level of the obligations.
Furthermore, changes in other actuarial parameters,
such as expected rates of inflation, also have an impact
on pension obligations. In order to reduce currency
exposures, a substantial portion of plan assets is either
invested in the same currency as the underlying plan
or hedged by means of currency derivatives. As part
of the internal reporting procedures and for internal
management purposes, financial risks relating to the
pension plans are reported on using a deficit-value-
at-risk approach. The investment strategy is also
subjected to regular review together with external
consultants, with the aim of ensuring that investments
are structured to coincide with the timing of pen-
sion payments and the expected pattern of pension
obligations. Each of these measures helps to reduce
fluctuations in pension funding shortfalls.
The defined benefit obligation relates to current
employees, former employees with vested benefits
and pensioners as follows:
in € million
Current employees
Pensioners
Former employees with vested benefits
Defined benefit obligation
Germany
United Kingdom
Other
31.12.2016 31.12.2015
31.12.2016
31.12.2015
Employer contributions to plan assets are expected to
amount to €1,190 million in the coming year.
172
1,478
562
783
123
105
1,003
1,060
Cash and cash equivalents
17
17
9
24
1
27
41
Absolute return funds
Total without quoted market price
419
745
705
46
34
1,210
1,115
Other
316
282
65
183
51
97
432
376
2.43
2,399
United Kingdom
6,254
31.12.2016
31.12.2015
31.12.2016
Germany
in € million
7
Based on the measurement principles contained in
IAS 19, the following balance sheet carrying amounts
apply to the Group's pension plans:
SP2 tables with weightings
Mortality Table 2005 G issued by Prof. K. Heubeck (with invalidity rates reduced by 50%)
0.02
18.4
17.6
19.2
20.9
20.5
In Germany, the so-called “pension entitlement trend"
(Festbetragstrend) also represents a significant actu-
arial assumption for the purposes of determining
benefits payable at retirement and was left unchanged
at 2.0%.
Loans and receivables
Other income/expenses
Impairment losses/reversals of impairment losses
24
one year
Balance at 31 December
-144
Other liabilities
52
Income/expenses
in the default risk. Such credit-risk related changes in
fair values are calculated as a general rule by deducting
market-related changes in fair value from the overall
change in fair value.
-345
-38
-77
586
32
Gains/losses from the use of derivatives relate primar-
ily to fair value gains or losses arising on stand-alone
derivatives.
In the case of financial instruments for which the
fair value option is applied, no significant changes in
fair values arose in the financial year 2016 or on an
accumulated basis which were attributable to changes
-39
Net interest expenses from interest rate and interest
rate/currency swaps amounted to €120 million (2015:
€22 million).
-210
thereof recognised in the income statement during the period under report
13
28
2016
2015
Gains/losses from the use of derivative instruments
1,265
-717
Fair value option
Gains/losses on investments measured at fair value through profit and loss
-2
Available-for-sale
-117
Gains and losses on sale and fair value measurement of marketable securities held for sale
(including investments in subsidiaries and participations measured at cost)
129
Net income from participations and investments
Impairment losses of €76 million (2015: €13 million)
were recognised in the income statement in 2016 on
available-for-sale securities accounted for as partici-
pations, for which fair value changes had previously
been recognised directly in equity. As in the previous
year, no reversals of impairment losses on marketable
securities occurred.
1
Accumulated other equity
Balance at 1 January
24
141
Total change during the year
-155
The disclosure of interest income resulting from the
unwinding of interest on future expected receipts
would normally only be relevant for the BMW Group
where assets have been discounted as part of the pro-
cess of determining impairment losses. However, as
a result of the assumption that most of the income
that is subsequently recovered is received within one
year and the fact that the impact is not material, the
BMW Group does not discount assets for the purposes
of determining impairment losses.
Total changes during the year
The impact of cash flow hedges on accumulated other
equity is analysed as follows:
Gains/losses on hedging instruments
designated as part of a fair value hedge
relationship
-158
-269
Gains/losses from hedged items
Ineffectiveness of fair value hedges
134
276
-24
7
The difference between the gains/losses on hedging
instruments (mostly interest rate swaps and com-
bined interest rate/currency swaps) and the results
recognised on hedged items represents the ineffective
portion of fair value hedges.
31.12.2016 31.12.2015
168
Statements
BMW Group
Notes to the Group
Financial Statements
→ Other Disclosures
Credit risk
Notwithstanding the existence of collateral accepted,
the carrying amounts of financial assets generally take
account of the maximum credit risk arising from the
possibility that the counterparties will not be able to
fulfil their contractual obligations. The maximum cred-
it risk for irrevocable credit commitments relating to
credit card business amounts to €1,461 million (2015:
€2,011 million). The equivalent figure for dealership
financing is €27,494 million (2015: €24,733 million).
In the case of performance relationships underlying
non-derivative financial instruments, collateral will
be required, information on the credit standing of
the counterparty obtained or historical data based
on the existing business relationship (i.e. payment
patterns to date) reviewed in order to minimise the
credit risk, all depending on the nature and amount
of the exposure that the BMW Group is proposing
to enter into.
Within the financial services business, the financed
items (e.g. vehicles, equipment and property) in
the retail customer and dealership lines of business
serve as first-ranking collateral with a recoverable
value. Security is also put up by customers in the
form of collateral asset pledges, asset assignment
and first-ranking mortgages, supplemented where
appropriate by warranties and guarantees. If an
item previously accepted as collateral is acquired, it
undergoes a multi-stage process of repossession and
disposal in accordance with the legal situation pre-
vailing in the relevant market. The assets involved are
generally vehicles which can be converted into cash
at any time via the dealership organisation.
Impairment losses are recorded as soon as credit risks
are identified on individual financial assets, using a
methodology specifically designed by the BMW Group.
More detailed information regarding this methodol-
ogy is provided in the section on accounting policies
(→ note 4).
Creditworthiness testing is an important aspect of
the BMW Group's credit risk management. Every
borrower's creditworthiness is tested for all credit
financing and lease contracts entered into by the
BMW Group. In the case of retail customer financing,
creditworthiness is assessed using validated scoring
systems integrated into the purchasing process. In
the area of dealership financing, creditworthiness is
assessed by means of ongoing credit monitoring and
an internal rating system that takes account not only
of the tangible situation of the borrower, but also of
qualitative factors such as past reliability in business
relations.
Group
Financial
Cash flow hedges
in € million
An amount of €2 million (2015: €8 million) attributable
to forecasting errors (and the resulting over-hedging
of currency exposures) was recognised as a loss in
"Financial Result" in the year under report. Losses
attributable to the ineffective portion of cash flow
hedges amounting to €11 million were recognised in
“Financial Result" (2015: gains of €9 million). As in
the previous year, no gains or losses were recognised
in "Financial Result" in 2016 in connection with
forecasting errors relating to cash flow hedges for
commodities. Gains attributable to the ineffective
portion of cash flow hedges amounting to €17 million
were recognised in "Financial Result" (2015: losses of
€13 million).
in € million
2016
2015
Balance at 1 January
-1,337
-480
3,265
1,415
-857
At 31 December 2016, the BMW Group held deriva-
tive financial instruments (mainly forward currency
contracts) in order to hedge currency risks attached
to future or existing transactions/items. These deriv-
ative instruments are intended to hedge forecast sales
thereof reclassified to the income
statement
550
78
1,318
-1,337
denominated in a foreign currency over the coming
44 months (2015: 55 months). The income statement
impact of the hedged cash flows will be recognised as
a general rule in the same periods in which external
revenues are recognised. It is expected that €113 mil-
lion of net losses, recognised in equity at the end of
the reporting period, will be reclassified to the income
statement in the new financial year (2015: net losses
of €623 million).
The BMW Group did not hold any derivative financial
instruments at 31 December 2016, which had been
designated at cash flow hedges to hedge against
interest-rate risks.
At 31 December 2016, the BMW Group held deriva-
tive financial instruments (mostly commodity swaps)
with terms of up to 58 months (2015: 58 months) to
hedge raw materials price risks. The income statement
impact of the hedged cash flows will be recognised
as a general rule in the same periods in which the
derivative instruments mature. It is expected that
€94 million of net losses, recognised in equity at the
end of the reporting period, will be reclassified to the
income statement in the new financial year (2015: net
losses of €127 million).
Fair value hedges
The following table shows gains and losses on hedging
instruments and hedged items which are deemed to
be part of a fair value hedge relationship:
167
Fair value gains and losses recognised on derivatives
and recorded initially in accumulated other equity
are reclassified to cost of sales when the derivatives
mature.
Balance at 31 December
1,745
3,331
2,753
Raw materials price risks
Derivative instruments (liabilities)
Interest rate risks
Currency risks
Raw materials price risks
5,387
213
in € million
Marketable securities, investment funds and collateral assets - available-for-sale
Other investments - available-for-sale/fair value option
Derivative instruments (assets)
Interest rate risks
Currency risks
Raw materials price risks
Derivative instruments (liabilities)
Interest rate risks
Currency risks
Raw materials price risks
1,933
1,842
147
Currency risks
Interest rate risks
Derivative instruments (assets)
Other investments - available-for-sale/fair value option
Commodity derivatives were measured on the basis
of the following quoted market prices:
Raw material
31.12.2016
31.12.2015
Iron ore
Coke/coal
Aluminium
Palladium
USD/t
79.65
USD/t
230.00
USD/t 1,695.13
USD/oz
680.96
43.05
76.45
1,507.00
561.70
Financial instruments measured at fair value are allo-
cated to different measurement levels in accordance
with IFRS 13. This includes financial instruments that
1,402
are
2. measured at their fair values in an active market
for comparable financial instruments or using
measurement models whose main input factors
are based on observable market data (Level 2), or
3. using input factors not based on observable mar-
ket data (Level 3).
The following table shows the amounts allocated to
each measurement level at the end of the reporting
period:
in € million
31.12.2016
Level hierarchy in accordance with IFRS 13
Level 1
Level 2
Marketable securities, investment funds and collateral assets - available-for-sale
1. measured at their fair values in an active market
for identical financial instruments (Level 1),
1,479
450
31.12.2015
Balance sheet amounts as reported
Gross amount of derivatives which can be offset in case of insolvency
Net amount after offsetting
Gains and losses on financial instruments
The following table shows the net gains and losses
arising for each of the categories of financial instru-
ment defined by IAS 39:
in € million
Held for trading
31.12.2016
Reported on Reported on equity
assets side and liabilities side
in € million
31.12.2015
Reported on equity
and liabilities side
3,922
→ see
notes 23,24
and 28
3,030
4,550
-1,169
-1,169
-1,285
-1,285
Reported on
assets side
2,162
master netting agreements or similar contracts are in
place, actual offsetting would be possible in principle,
for instance in the case of insolvency. Offsetting would
have the following impact on the carrying amounts
of derivatives:
Offsetting of financial instruments
Level hierarchy in accordance with IFRS 13
Level 1
5,259
244
Level 2
1,939
1,086
5
1,352
In the BMW Group, financial assets and liabilities
relating to derivative financial instruments would
normally be required to be offset. No offsetting takes
place for accounting purposes, however, since the nec-
essary criteria are not met. Since legally enforceable
2,136
Level 3
Level 3
Other investments (available-for-sale) amounting to
€347 million (2015: €184 million) are measured at
amortised cost since quoted market prices are not
available or cannot be determined reliably. These are
therefore not included in the level hierarchy shown
above. In addition, other investments amounting to
€213 million (2015: €244 million) are measured at fair
value since quoted market prices are available. These
items are included in Level 1.
As in the previous year, there were no reclassifications
within the level hierarchy during the financial year
2016.
In situations where a fair value was required to be
measured for a financial instrument only for disclosure
purposes, this was achieved using the discounted cash
flow method and taking account of the BMW Group's
own default risk. For this reason, the fair values cal-
culated can be allocated to Level 2.
165
166
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
→ Other Disclosures
1,062
→ see
note 4
one year
A concentration of credit risk with particular borrow-
ers or groups of borrowers has not been identified in
conjunction with financial instruments.
9,973
3,319
4,770
4,785
5,396
1,926
1,985
1,510
1,162
Euro/British Pound
Euro/Korean Won
Euro/Japanese Yen
In the next stage, these exposures are compared to all
hedges that are in place. The net cash flow surplus
represents an uncovered risk position. The cash-
flow-at-risk approach involves allocating the impact
of potential exchange rate fluctuations to operating
cash flows on the basis of probability distributions.
Volatilities and correlations serve as input factors to
assess the relevant probability distributions.
The potential negative impact on earnings is computed
for each currency for the following financial year on
the basis of current market prices and exposures to a
confidence level of 95% and a holding period of up to
one year. Correlations between the various currencies
are taken into account when the risks are aggregated,
thus reducing the overall risk.
The following table shows the potential negative
impact for the BMW Group - measured on the basis
of the cash-flow-at-risk approach - attributable to
unfavourable changes in exchange rates. The impact
for the principal currencies, in each case for the fol-
lowing financial year, is as follows:
in € million
Euro/Chinese Renminbi
Euro/US Dollar
Euro/British Pound
10,467
Euro/Chinese Renminbi
31.12.2015
31.12.2016
Solvency is assured at all times by managing and mon-
itoring the liquidity situation on the basis of a rolling
cash flow forecast. The resulting funding requirements
are secured by a variety of instruments placed on the
world's financial markets. The objective is to minimise
risk by matching maturities for the Group's financing
requirements within the framework of the target debt
structure. The BMW Group has good access to capital
markets as a result of its solid financial position and
a diversified refinancing strategy. Depending on
financing requirements and market conditions, the
BMW Group issues commercial paper on the money
markets, corporate bonds and asset-backed financial
securities in various currencies. Customer deposits
at the Group's in-house banks are also used as a
supplementary source of financing.
These refinancing activities are underpinned by the
longstanding long- and short-term ratings issued by
Moody's and Standard & Poor's.
Also reducing liquidity risk, additional secured and
unsecured lines of credit are in place with internation-
al banks, including a syndicated credit line totalling
€6 billion (2015: €6 billion). Intra-group cash flow
fluctuations are evened out by the use of daily cash
pooling arrangements.
169
170
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
→ Other Disclosures
Market risks
Euro/Korean Won
The principal market risks to which the BMW Group
is exposed are currency risk, interest rate risk and raw
materials price risk.
The
scope of permitted transactions, responsibilities,
financial reporting procedures and control mecha-
nisms used for financial instruments are set out in
detailed internal guidelines. This includes, above
all, a clear separation of duties between trading and
processing. Currency, interest rate and raw materi-
als price risks of the BMW Group are managed at a
corporate level.
Further information is provided in the "Report on
Outlook, Risks and Opportunities" section of the
Combined Management Report.
Currency risks
As an enterprise with worldwide operations, business
is conducted in a variety of currencies, from which
currency risks arise. Since a significant portion of
Group revenues is generated outside the euro currency
region and the procurement of production materials
and funding is also organised on a worldwide basis,
the currency risk is an extremely important factor for
Group earnings.
At 31 December 2016, derivative financial instruments,
mostly in the form of forward currency contracts, were
in place.
A description of the management of this risk is pro-
vided in the Combined Management Report. The
BMW Group measures currency risk using a cash-
flow-at-risk model.
The starting point for analysing currency risk with
this model is the identification of forecast foreign
currency transactions or "exposures". At the end of
the reporting period, the principal exposures for the
relevant coming year were as follows:
in € million
Euro/US Dollar
Protection against such risks is provided in the first
instance through natural hedging which arises when
the values of non-derivative financial instruments
have matching maturities and amounts (netting).
Derivative financial instruments are used to reduce
the risk remaining after netting. Financial instruments
are only used to hedge underlying positions or forecast
transactions.
Euro/Japanese Yen
31.12.2016
31.12.2015
474
Other
Performance guarantees
Guarantees
The total of future minimum payments under non-
cancellable leases and rental contracts can be analysed
by maturity as follows:
In the financial year 2016, an amount of €432 million
(2015: €315 million) was recognised as expense in
conjunction with operating leases.
In addition to liabilities, provisions and contingent lia-
bilities, the BMW Group also has other financial com-
mitments, primarily under rental and lease contracts
for land, buildings, plant and machinery, tools, office
and other facilities. These contracts run for periods of
one to 85 years. Some of them contain extension and
purchase options as well as price adjustment clauses,
based on index-linked or graduated rentals, including
adjustments for inflation.
Other financial obligations
93
213
67
31.12.2016
in € million
balance sheet date:
The following contingent liabilities existed at the
Contingent liabilities
commitments
Contingent liabilities and other financial
36
OTHER DISCLOSURES
31.12.2015
The cash flows shown comprise principal repayments
and the related interest. The amounts disclosed for
derivatives comprise only cash flows relating to
derivatives that have a negative fair value at the bal-
ance sheet date. At 31 December 2016, irrevocable
credit commitments to dealerships which had not
been called upon at the end of the reporting period
amounted to €9,194 million (2015: 7,552 million).
Contingent liabilities
306
249
163
278
48
134
86
30
99
70
541
68
the currencies referred to above.
due within one year
The BMW Group determines its best estimate of
contingent liabilities on the basis of the information
available at the date of preparation of the Group
Financial Statements. This assessment may change
over time and is adjusted regularly on the basis of new
information and circumstances. Some of the risks are
insured. In accordance with IAS 37, the BMW Group
does not disclose information relating to legal disputes
and risks relating to taxes and customs duties, if such
disclosures could be expected to prejudice seriously
the position of the BMW Group or if disclosure is not
practicable. From today's perspective, the BMW Group
does not expect these proceedings to have a significant
adverse impact on the results of operations, financial
position or net assets of the Group.
In June 2016, Germany's Federal Cartel Agency con-
ducted searches at various carmakers and suppliers,
including the BMW AG, as part of an investigation
into the purchase of steel in the automotive industry.
The investigations have not yet been completed. More
detailed information is currently not available.
Regulatory agencies have ordered the BMW Group
to recall various vehicle models that are fitted with
airbags supplied by the Takata group of companies.
Provision for the costs involved has been recognised
within warranty provisions. It cannot be ruled out,
however, that further BMW Group vehicles will be
affected by future recall actions. Further disclosures
pursuant to IAS 37.86 cannot be provided at present
in view of the fact that technical tests have not yet
been completed.
Other contingent liabilities comprise mainly legal
disputes as well as risks relating to taxes and customs
duties.
31.12.2015
31.12.2016
in € million
Currency risk for the BMW Group is concentrated on
104,067
8,512
44,375
Liabilities from customer deposits (banking)
10,140
3,446
133
13,719
Trade payables
8,512
8,512
Derivative instruments
16,030
1,983
187
4,565
Commercial paper
Other financial liabilities
Total
3,853
3,853
72
52,913
2,395
178
46,957
558
11,238
Further disclosures relating to credit risk – in particu-
lar with regard to the amounts of impairment losses
recognised - are provided in the explanatory notes
to the relevant categories of receivables in → notes 23,
24 and 28.
Liquidity risk
The following table shows the maturity structure of
expected contractual cash flows (undiscounted) for
financial liabilities:
in € million
31.12.2016
Maturity within
Interest rates taken from interest rate curves were
adjusted, where necessary, to take account of the
credit quality and risk of the underlying financial
instrument.
Maturity between
one and five years
Maturity later
than five years
4,234
Total
9,954
26,766
10,089
46,809
Asset backed financing transactions
7,161
9,938
17,099
Liabilities to banks
Bonds
The credit risk relating to derivative financial instru-
ments is minimised by the fact that the Group only
enters into such contracts with parties of first-class
credit standing. The general credit risk on derivative
financial instruments utilised by the BMW Group is
therefore not considered to be significant.
601
11,568
3,990
133
13,928
Trade payables
7,701
72
7,773
Derivative instruments
2,564
9,805
3,366
6,104
Commercial paper
Other financial liabilities
Total
5,416
5,416
261
51,180
372
570
1,203
174
851
Liabilities from customer deposits (banking)
405
111,438
31.12.2015
Maturity within
Maturity between
in € million
one and five years
Maturity later
than five years
Total
Bonds
13,354
10,774
7,230
42,245
Asset backed financing transactions
5,195
8,849
14,044
Liabilities to banks
9,464
3,485
24,241
4.85
13,631
1.25
Bonds
Financial liabilities
LIABILITIES
5,661
5,921
76,105
84,409
6,436
8,167
Total
1,050
1,124
Other
98
100
314
287
Collateral receivables
893
1,217
Receivables from companies in which an investment is held
716
422
Receivables from subsidiaries
2,751
2,825
6,122
7,880
147
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
3,922
1,006
1,215
830
1,194
1,758
949
31.12.2015
31.12.2016
31.12.2015
Held for trading
26
26
26
26
31.12.2016
145
31.12.2015
31.12.2016
Fair value option
*The carrying amounts of cash flow and fair value hedges are allocated to the category "Held for trading" for the sake of clarity.
Total
Other
Payables to other companies in which an investment is held
Payables to subsidiaries
Other liabilities
Trade payables
Other
Other derivative instruments
Fair value hedges
Cash flow hedges
Derivative instruments
Other liabilities
3,030
272
133
37
→ Other Disclosures
Notes to the Group
Financial Statements
BMW Group
Statements
Group
Financial
162
161
757
1,363
Purchase commitments for
intangible assets
2,217
3,141
Purchase commitments for
property plant and equipment
31.12.2015
31.12.2016
in € million
The following obligations also existed for the
BMW Group at the end of the reporting period:
Other financial obligations
2,190
2,444
816
895
1,003
1,102
due between one and five years
due later than five years
371
447
0.23
Financial instruments
The carrying amounts of financial instruments are
assigned to IAS 39 categories and cash funds as fol-
lows:*
in € million
ASSETS
129
5,161
5,287
100
70,043
78,260
402
31.12.2016
31.12.2015
31.12.2016
Loans and receivables
Cash funds
31.12.2015
31.12.2016
287
31.12.2015
Other assets
Trade receivables
Cash and cash equivalents
Other
Credit card receivables
Loans to third parties
Marketable securities and investment funds
Other derivative instruments
Fair value hedges
Cash flow hedges
Derivative instruments
Financial assets
Receivables from sales financing
Other investments
Available for sale
44,421
534
14,892
14,942
40,319
40,701
44,421
45,140
70,043
72,309
78,260
81,621
Carrying amount
Fair value
Carrying amount
Fair value
31.12.2015
31.12.2016
Interest rate for five years
Interest rate for ten years
Interest rate for one year
Interest rate for six months
in %
Fair value measurement of financial instruments
The following interest rate structures were used to
discount financial instruments at 31 December 2016:
Asset-backed financing transactions
Liabilities from customer deposits (banking)
Liabilities to banks
Bonds
Receivables from sales financing
in € million
fact that maturities of some balance sheet items are
generally short, it is assumed in this case that their
fair value corresponds to the carrying amount.
The following table shows the fair values and carrying
amounts of financial assets and liabilities that are
measured at cost or amortised cost and whose carrying
amounts differ from their fair value. Based on the
BMW Group
Notes to the Group
Financial Statements
→ Other Disclosures
14,892
Group
Financial
Statements
12,783
13,545
2.37
40,319
0.67
4.44
0.08
0.87
1.98
0.08
3.77
0.02
0.55
1.18
-0.20
2.94
-0.20
0.60
1.21
-0.23
CNY
JPY
GBP
USD
EUR
ISO Code
13,611
16,474
16,556
13,509
13,543
12,720
164
13,512
Total
Financial assets
Receivables from sales financing
Other investments
ASSETS
4,550
3,331
100,174
109,161
5,075
5,535
107
615
99
7,773
Derivative instruments
1,539
1,452
767
563
870
2,535
1,694
13,631
16,474
5,415
3,852
13,509
163
13,512
12,720
1,249
8,512
Cash flow hedges
86
Other derivative instruments
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Derivative instruments
Cash flow hedges
Fair value hedges
Bonds
Other derivative instruments
Trade payables
Other liabilities
Fair value hedges
Payables to subsidiaries
Other
Payables to other companies in which an investment is held
Other
Financial liabilities
Asset backed financing transactions
Other assets
Total
Other
Collateral receivables
Receivables from companies in which an investment is held
Loans to third parties
Receivables from subsidiaries
Marketable securities and investment funds
Credit card receivables
LIABILITIES
Trade receivables
Cash and cash equivalents
Other
Germany
2015
for non-current assets relates to property, plant and
equipment, intangible assets and leased products.
Eliminations disclosed for non-current assets relate
to leased products.
172,174
188,535
In the case of information by geographical region,
external sales are based on the location of the custom-
er's registered office. Revenues with major customers
were not material overall. The information disclosed
179
2016
in € million
External revenues
2015
Non-current assets
2016
Total Group assets
Information by region
-113,026
126,679
Elimination of inter-segment items
7,432
7,132
Total liabilities -
13,776
92,238
Financial Services segment
112,081
-121,780
Non-operating assets -
45,923
41,932
Liabilities of Automotive
and Motorcycles segments
not subject to interest
33,858
31,817
Automotive and Motorcycles segments
13,394
261
28,786
Rest of the Americas
3,507
3,361
2,628
2,053
Other regions
3,251
3,210
121
Eliminations
-7,345
-6,183
Group
96,423
94,163
1,197
1,439
9,582
10,466
China
16,619
15,856
23
23
USA
16,000
29,741
18,155
21,000
Rest of Europe
30,544
28,617
13,910
13,099
Rest of Asia
23,249
31.12.2015
31.12.2015
Reconciliation of segment assets
Total for reportable segments
Non-operating assets -
Other Entities segment
75,363
71,709
92,112
79,936
188,535
2,546
172,174
Segment assets
2,233
Investments accounted for using the equity method
177
178
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
→ Segment Information
Capital expenditure on non-current assets
Depreciation and amortisation on non-current assets
Result from equity accounted investments
Segment result
Total revenues
92,175
-5,672
-6,271
-5,119
24,162
8,112
518
23,901
8,195
Write-downs on inventories to their net realisable
value amounting to €101 million (2015: €486 million)
were recognised by the Automotive segment in the
financial year 2016. The write-down recorded in the
previous year resulted primarily from accidents and
natural disasters.
Other Entities
Group
31.12.2016
31.12.2015
31.12.2016
31.12.2016
31.12.2015
SEGMENT INFORMATION
BY OPERATING SEGMENT
External revenues
Inter-segment revenues
Reconciliation to Group figures
Impairment losses and fair value changes on oth-
er investments amounting to €174 million (2015:
€17 million) relating to the Automotive segment and
recognised in the financial result are not included in
the segment result.
Financial Services segment result was negatively
impacted by impairment losses totalling €384 million
(2015: €406 million) recognised on leased products.
Income from the reversal of impairment losses on
leased products amounted to €211 million (2015:
€81 million). No impairment losses were recognised
on other financial assets in the year under report
(2015: €3 million).
The Other Entities' segment result includes interest
and similar income amounting to €1,250 million (2015:
€1,177 million) and interest and similar expenses
amounting to €1,006 million (2015: €1,080 million)
as well as impairment losses on other investments
totalling €18 million (2015: €7 million).
Elimination of inter-segment items
-6,756
-5,672
Total Group capital expenditure
on non-current assets
24,162
23,901
29,573
Reconciliation of depreciation and
amortisation on non-current assets
14,383
13,314
-6,271
-5,119
8,112
8,195
in € million
Total for reportable segments
Elimination of inter-segment items
Total Group depreciation and
amortisation on non-current assets
31.12.2016
30,918
Reconciliation of capital expenditure
The information disclosed for capital expenditure and
depreciation and amortisation relates to non-current
property, plant and equipment, intangible assets and
leased products.
Segment figures can be reconciled to the correspond-
ing Group figures as follows:
in € million
on non-current assets
2016
2015
Reconciliation of segment result
Total for reportable segments
Financial result of Automotive
segment and Motorcycles segment
Elimination of inter-segment items
Total for reportable segments
10,218
219
-316
-772
-664
Group profit before tax
9,665
9,224
10,204
63,906
contracts.
180
100
BMW (UK) Manufacturing Ltd., Farnborough
723
136
100
Payables
at 31 December
2015
2016
2015
2016
2015
BMW Brilliance Automotive Ltd.
THERE Holding B.V.
5,316
4,815
460
749
BMW (UK) Holdings Ltd., Farnborough
100
100
BMW Malta Finance Ltd., Floriana
1,366
48
100
BMW Motoren GmbH, Steyr
948
50
179
BMW Financial Services (GB) Ltd., Farnborough
881
282
100
BMW España Finance S. L., Madrid
775
14
100
73
43
892
2016
Receivables
Payables
at 31 December
at 31 December
2015
2016
2015
2016
2015
DELTON AG
3,546
3,617
22,554
22,818
2015
received
Supplies and services
2016
615
107
58
7
9
3
Business relationships of the BMW Group with other
associated companies and joint ventures as well as
with non-consolidated subsidiaries are small in scale.
1,215
Stefan Quandt, Germany, is a shareholder and Deputy
Chairman of the Supervisory Board of BMW AG. He is
also the sole shareholder and Chairman of the Super-
visory Board of DELTON AG, Bad Homburg v.d.H.,
which, via its subsidiaries, performed logistic-related
services for the BMW Group during the financial year
2016. In addition, companies of the DELTON Group
acquired vehicles from the BMW Group by way of
leasing.
7
Susanne Klatten, Germany, is a shareholder and
member of the Supervisory Board of BMW AG and
also a shareholder and Deputy Chairman of the Super-
visory Board of ALTANA AG, Wesel. ALTANA AG,
Wesel, acquired vehicles from the BMW Group during
the financial year 2016, mostly in the form of lease
-6,756
Susanne Klatten, Germany, is also the sole share-
holder and Chairwoman of the Supervisory Board
of UnternehmerTUM GmbH, Garching. During
the financial year 2016, the BMW Group bought in
services from UnternehmerTUM GmbH, Garching,
primarily in the form of consultancy and workshop
services.
Seen from the BMW Group's perspective, the transac-
tions of BMW Group companies with the above-men-
tioned entities were as follows:
in € thousand
Supplies and services
performed
Stefan Quandt, Germany, is also the indirect majority
shareholder of SOLARWATT GmbH, Dresden. Coop-
eration arrangements are in place between BMW AG
and SOLARWATT GmbH, Dresden, within the field
of electric mobility. The focus of this collaboration
is on providing complete photovoltaic solutions for
rooftop systems and carports to BMWi customers.
SOLARWATT GmbH, Dresden, leased vehicles from
the BMW Group in 2016.
1,541
BMW Malta Ltd., Floriana
100
BMW M GmbH Gesellschaft für individuelle Automobile, Munich 3, 5, 6
MITEC Mikroelektronik Mikrotechnik Informatik GmbH, Munich 4,6
Alphabet International GmbH, Munich 4, 5, 6
Alphabet Fuhrparkmanagement GmbH, Munich
Rolls-Royce Motor Cars GmbH, Munich 4, 5, 6
BMW Vermögensverwaltungs GmbH, Munich
BMW Fahrzeugtechnik GmbH, Eisenach 3, 5, 6
BMW Anlagen Verwaltungs GmbH, Munich 3,6
BMW Vertriebszentren Verwaltungs GmbH, Munich
Parkhaus Oberwiesenfeld GmbH, Munich
Bürohaus Petuelring GmbH, Munich
LARGUS Grundstücks-Verwaltungsgesellschaft mbH, Munich
Bavaria Wirtschaftsagentur GmbH, Munich 3, 5, 6
BAVARIA-LLOYD Reisebüro GmbH, Munich
FOREIGN²
Equity
BMW Hams Hall Motoren GmbH, Munich 4,5,6
BMW Verwaltungs GmbH, Munich 3, 6
BMW Finanz Verwaltungs GmbH, Munich
BMW Bank GmbH, Munich³
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
→ List of Investments
at 31 December 2016
LIST OF INVESTMENTS AT
31 DECEMBER 2016
45
in € million
List of investments at 31 December 2016
significance" for the results of operations, financial
position and net assets of BMW AG pursuant to § 286
(3) sentence 1 no. 1 HGB or if financial statements
for a company are not yet available. It is also shown
in the list which subsidiaries apply the exemptions
available in § 264 (3) and § 264 b HGB with regard
to the publication of annual financial statements
and the drawing up of a management report and/or
notes to the financial statements (footnotes 5 and 6).
The Group Financial Statements of BMW AG serve
as exempting consolidated financial statements for
these companies.
BMW AG's subsidiary at 31 December 2016
→ 61
Companies
DOMESTIC¹
BMW Beteiligungs GmbH & Co. KG, Munich6
BMW INTEC Beteiligungs GmbH, Munich 3,6
The List of Investments of BMW AG pursuant to § 285
and § 313 HGB is presented below. Figures for equity
and earnings are not disclosed if they are of "minor ¬
Profit/loss
in € million
Capital invest-
ment in %
5,794
100
100
100
100
51
Europe 13
BMW Holding B.V., The Hague
100
BMW International Holding B.V., Rijswijk11
1,180
100
7,898
100
BMW Österreich Holding GmbH, Steyr
2,502
267
14,696
60,096
100
100
.5
100
3,558
100
1,988
100
325
100
100
100
100
100
100
100
100
100
153
9,224
46.9
-980
UnternehmerTUM GmbH
29
1,227
769
585
276
Apart from vehicle leasing and credit financing con-
tracts concluded on an arm's length basis, companies
of the BMW Group have not entered into any contracts
with members of the Board of Management or Super-
visory Board of BMW AG. The same applies to close
members of the families of those persons.
BMW Trust e. V., Munich, administers assets on a
trustee basis to secure obligations relating to pensions
and pre-retirement part-time working arrangements
in Germany and is therefore a related party of the
BMW Group in accordance with IAS 24. This entity,
which is a registered association (eingetragener Vere-
in) under German law, does not have any assets of its
own. It did not have any income or expenses during
the period under report. BMW AG bears expenses on
an immaterial scale and performs services for BMW
Trust e. V., Munich.
For disclosures relating to key management personnel,
please see → note 42 and the Compensation Report. see
39
Share-based remuneration
Three share-based remuneration programmes are in
place within the BMW Group, namely the Employee
Share Programme (for entitled employees of the
BMW Group), a share-based remuneration programme
for members of the Board of Management and a share-
based remuneration programme for senior heads of
department of BMW AG.
note 42
note 29
In the case of the Employee Share Programme,
non-voting shares of preferred stock in BMW AG were
granted to qualifying employees during the financial
year 2016 at favourable conditions (see → note 29 for → see
the number and price of issued shares). The holding
period for these shares is up to 31 December 2019. In
the financial year 2016, the BMW Group recorded a
personnel expense of €7 million (2015: €6 million) for
the Employee Share Programme, corresponding to the
difference between the market price and the reduced
price of the shares of preferred stock purchased by
employees. The Board of Management reserves the
right to decide anew each year with respect to an
Employee Share Programme.
50
312
337
324
Supplies and services
received
2015
2016
Receivables
at 31 December
2,476
SOLARWATT GmbH
For financial years beginning after 1 January 2011,
BMW AG has added a share-based remuneration
component to the existing compensation system for
Board of Management members.
309
3
1
7
ALTANA AG
2,690
2,764
458
287
A significant proportion of the BMW Group's transac-
tions with related parties relates to the joint venture
BMW Brilliance Automotive Ltd. and the associated
company THERE Holding B. V.
Each Board of Management member is required to
invest 20% of his/her total bonus (after tax) in shares of
BMW AG common stock, which are recorded in a sep-
arate custodian account for each member concerned
(annual tranche). Each annual tranche is subject to a
With effect from the financial year 2012, qualifying
heads of department are also entitled to opt for a
share-based remuneration component, which, in most
respects, is comparable to the share-based remunera-
tion arrangements for Board of Management members.
Pension obligations to current members of the Board
of Management are covered by provisions amounting
to €23.6 million (2015: €23.2 million), computed in
accordance with IAS 19 (Employee Benefits). Pen-
sion obligations to former members of the Board of
Management and their surviving dependants, also
computed in accordance with IAS 19, amounted to
€86.4 million (2015: €71.8 million).
The compensation systems for members of the Super-
visory Board do not include any stock options, value
appreciation rights comparable to stock options or any
other stock-based compensation components. Apart
from vehicle lease and financing contracts entered
into on customary market conditions, no advances
or loans were granted to members of the Board of
Management and the Supervisory Board of BMW AG
or its subsidiaries, nor were any contingent liabilities
entered into on their behalf.
Further details about the remuneration of current
members of the Board of Management and the
Supervisory Board can be found in the Compensation
Report, which is part of the Combined Management
Report.
42
Compensation of members of the Board of
Management and Supervisory Board
The total compensation of the current members of the
Board of Management and the Supervisory Board of
BMW AG for the financial year 2016 in accordance
with IFRS amounted to €46.9 million (2015: €43.6 mil-
lion) and comprised the following:
43
Events after the end of the reporting period
No events have occurred since the end of the financial
year which could have a major impact on the results
of operations, financial position and net assets of
BMW AG and the BMW Group.
in € million
2016
2015
Compensation to members of the
Board of Management
37.6
The total remuneration of former members of the
Board of Management and their dependants amount-
ed to €6.5 million (2015: €8.0 million).
The members of the Supervisory Board of BMW AG
hold in total 27.99% (2015: 43.00%) of the issued
common and preferred stock shares, of which 16.25%
(2015: 31.26%) relates to Stefan Quandt, Germany, and
11.73% (2015: 26.74%) to Susanne Klatten, Germany.
The differences compared to the previous year resulted
almost entirely from the fact that the shares held by
Johanna Quandt GmbH & Co. KG für Automobilwerte,
Bad Homburg v.d. Höhe, are no longer attributed to
Stefan Quandt and Susanne Klatten following the
dissolution of the community of heirs. As at the end of
the previous financial year, shareholdings of members
of the BMW AG Board of Management account, in
total, for less than 1% of issued shares.
Shareholdings of members of the Board of
Management and Supervisory Board
41
The share-based remuneration component is measured
at its fair value at each balance sheet date between
grant and settlement date, and on the settlement date
itself. The appropriate amounts are recognised as per-
sonnel expense on a straight-line basis over the vesting
period and reported in the balance sheet as a provision.
The cash-settlement obligation for the share-based
remuneration component is measured at its fair
value at the balance sheet date (based on the closing
price of BMW AG common stock in Xetra trading at
31 December 2016).
The total carrying amount of the provision for the
share-based remuneration component of current
and former Board of Management members and
senior heads of department at 31 December 2016 was
€5,473,219 (2015: €4,989,668).
The total expense recognised in 2016 for the share-
based remuneration component of current and former
Board of Management members and senior heads of
department was €1,443,227 (2015: €1,892,994).
The fair value of the programmes for Board of Man-
agement members and senior heads of department
at the date of grant of the share-based remuneration
components was €1,950,853 (2015: €1,605,147), based
on a total of 21,201 shares (2015: 18,143 shares) of
BMW AG common stock or a corresponding cash-
based settlement measured at the relevant market
share price prevailing on the grant date.
Further details on the remuneration of the Board
of Management are provided in the Compensation
Report for the financial
year 2016.
40
holding period of four years. Once the holding period
is fulfilled, BMW AG grants one additional share of
BMW AG common stock for each three held or pays
the equivalent amount in cash (share-based remuner-
ation component). Special rules apply in the case of
death or invalidity of a Board of Management member
or early termination of the contractual relationship
before fulfilment of the holding period.
Declaration with respect to the Corporate
Governance Code
173
174
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
→ Other Disclosures
→ Segment Information
issued the prescribed Declaration of Compliance pur-
suant to § 161 of the German Stock Corporation Act.
It is reproduced in the Annual Report 2016 of the
BMW Group and is also available to shareholders on
the BMW Group website at www.bmwgroup.com/ir.
The Board of Management and the Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft have
155
135
31.12.2015
186
16
33
14
12
171
in € million
Euro*
US Dollar
British Pound
Chinese Renminbi
Japanese Yen
*Previous year's figures adjusted.
31.12.2016 31.12.2015
28,063
244
449
545
475
1,331
37
Interest rate risks
The BMW Group's financial management system
involves the use of standard financial instruments
such as short-term deposits, investments in variable
and fixed-income securities as well as securities funds.
The BMW Group is therefore exposed to risks resulting
from changes in interest rates.
Interest rate risks arise when funds with differing
fixed-rate periods or differing terms are borrowed and
invested. All items subject to, or bearing, interest are
exposed to interest rate risk. Interest rate risks can
affect either side of the balance sheet.
The fair values of the Group's interest rate portfolios
for the five main currencies were as follows at the end
of the reporting period:
In the following table the potential volumes of fair
value fluctuations - measured on the basis of the val-
ue-at-risk approach - are compared with the expected
value for the interest-rate-sensitive exposures of the
BMW Group:
25,772
in € million
US Dollar
British Pound
Chinese Renminbi
Japanese Yen
* Previous year's figures adjusted.
31.12.2016
31.12.2015
532
Euro*
14,340
10,742
5,708
cial year was as follows:
Group
Financial
Statements
BMW Group
Notes to the Group
Financial Statements
→ Other Disclosures
The following table shows the potential negative
impact for the BMW Group - measured on the basis
of the cash-flow-at-risk approach - attributable to fluc-
tuations in prices across all categories of raw materials. ¬
in € million
The risk at each reporting date for the following finan-
38
Transactions of Group entities with related parties
arise, without exception, in the normal course of the
business of each of the parties concerned and are
conducted on the basis of arm's length principles.
in € million
Supplies and services
performed
2016
7
Cash flow at risk
31.12.2016
Related party relationship
35.9
172
In the next stage, these exposures are compared to all
hedges that are in place. The net cash flow surplus
represents an uncovered risk position. The cash-
flow-at-risk approach involves allocating the impact
of potential fluctuations in raw materials prices to
operating cash flows on the basis of probability dis-
tributions. Volatilities and correlations serve as input
factors to assess the relevant probability distributions.
4,220
3,124
1,006
571
536
Interest rate risks can be managed by the use of inter-
est rate derivatives. The interest rate contracts used
for hedging purposes comprise mainly swaps, which,
if hedge accounting is applied, are accounted for as
fair value hedges. A description of the management
of interest rate risks is provided in the Combined
Management Report.
As stated there, the BMW Group applies a Group-wide
value-at-risk approach for internal reporting purpos-
es and to manage interest rate risks. This is based
on a state-of-the-art historical simulation, in which
the potential future fair value losses of the interest
rate portfolios are compared across the Group, with
expected amounts measured on the basis of a holding
period of 250 days and a confidence level of 99.98%.
Aggregation of these results creates a risk reduction
effect due to correlations between the various port-
folios.
The potential negative impact on earnings is computed
for each raw materials category for the following finan-
cial year on the basis of current market prices and
exposure to a confidence level of 95% and a holding
period of up to one year. Correlations between the
various categories of raw materials are taken into
account when the risks are aggregated, thus reducing
the overall risk.
Raw materials price risk
The first step in the analysis of the raw materials price
risk is to determine the volume of planned purchases
of raw materials (and components containing those
raw materials). These amounts, which represent the
gross exposure, were as follows at each reporting date
for the following financial year:
in € million
Raw materials price exposures
31.12.2016
31.12.2015
3,150
3,720
The BMW Group is exposed to the risk of price fluc-
tuations for raw materials. A description of the man-
agement of these risks is provided in the Combined
Management Report.
9,665
441
Fixed remuneration
7.7
23,689
Depreciation and amortisation on non-current assets
4,702
4,559
75
69
9,606
8,686
in € million
Automotive
Motorcycles
Financial Services
31.12.2016
31.12.2015
31.12.2016
25,105
92
114
5,792
85,536
2,069
1,990
25,681
23,739
7,695
7,836
31.12.2015
187
2,166
1,975
Result from equity accounted investments
441
518
Capital expenditure on non-current assets
5,699
182
86,424
31.12.2016
Segment assets
94,163
92,175
4
55
-20,017
-19,097
6
7
-20,017
-19,097
94,163
92,175
170
211
-553
2
2
2016
2015
9,411
10,024
600
557
11,049
9,948
Investments accounted for using the equity method
31.12.2015
2,546
Other Entities
2016
2015
Reconciliation to Group figures
2016
Group
2015
2,233
Segment result
Total revenues
1,595
3.4
3.1
Total expense
43.6
thereof due within one year
43.3
39.9
SEGMENT INFORMATION
44
Explanatory notes to segment information
Information on reportable segments
For the purposes of presenting segment information,
the activities of the BMW Group are divided into oper-
ating segments in accordance with IFRS 8 (Operating
Segments). Operating segments are identified on the
same basis that is used internally to manage and report
on performance. The allocation also takes account of
the organisational structure of the BMW Group based
on the various products and services of the reportable
segments.
The activities of the BMW Group are broken down
into the operating segments Automotive, Motorcycles,
Financial Services and Other Entities.
The Automotive segment develops, manufactures,
assembles and sells cars and off-road vehicles, under
the brands BMW, MINI and Rolls-Royce as well as
spare parts, accessories and mobility services. BMW
and MINI brand products are sold in Germany
through branches of BMW AG and by independent,
authorised dealerships. Sales outside Germany are
handled primarily by subsidiary companies and
by independent import companies in a number of
markets. Rolls-Royce brand vehicles are sold in the
USA, China and Russia via subsidiary companies and
elsewhere by independent, authorised dealerships.
The Motorcycles segment develops, manufactures,
assembles and sells motorcycles as well as spare parts
and accessories.
The principal lines of business of the Financial Servic-
es segment are car leasing, fleet business, multi-brand
business, retail customer and dealership financing,
customer deposit business and insurance activities.
Variable compensation
2.0
2.0
Fixed compensation and attendance fees
Variable remuneration
29.0
27.1
Share-based remuneration component
0.8
1.1
Allocation to pension provisions
Holding and Group financing companies are includ-
ed in the Other Entities segment. This segment also
includes operating companies - BMW Services Ltd.,
BMW (UK) Investments Ltd., Bavaria Lloyd Reise-
büro GmbH, and MITEC Mikroelektronik Mikro-
technik Informatik GmbH - which are not allocated
to one of the other segments.
2.8
Benefits in conjunction with the
termination of an employment relationship
1.1
Compensation to members of the
Supervisory Board
5.4
5.1
2.6
Internal management and reporting
Segment information is prepared as a general rule in
conformity with the accounting policies adopted for
preparing and presenting the Group Financial State-
ments. The only exceptions to this general principle
are the treatment of inter-segment warranties (the
earnings impact of which is allocated to the Automo-
tive and Financial Services segments on the basis used
internally to manage the business) and cross-segment
impairment losses on investments in subsidiaries.
Inter-segment receivables and payables, provisions,
income, expenses and profits are eliminated in the
column "Eliminations". Inter-segment sales take place
at arm's length prices.
The role of "chief operating decision maker" with
respect to resource allocation and performance
assessment of the reportable segment is embodied
in the full Board of Management. In order to assist
the decision-taking process, different measures of
segment performance as well as segment assets have
been set for the operating segments.
The performance of the Automotive and Motorcycles
segments is managed on the basis of return on capital
employed (ROCE). The relevant measure of segment
results used is therefore profit before financial result.
Capital employed is the corresponding measure of
segment assets used to determine how to allocate
resources and comprises all current and non-current
operational assets after deduction of liabilities used
operationally which are not subject to interest (e.g.
trade payables).
2015
SEGMENT INFORMATION
BY OPERATING SEGMENT
External revenues
67,977
68,045
2,062
2016
1,984
22,144
Inter-segment revenues
18,447
17,491
7
6
1,559
24,122
7.8
2015
2016
The performance of the Financial Services segment is
measured on the basis of return on equity (ROE), with
profit before tax therefore representing the measure
of segment result used. For this reason, the measure
of segment assets in the Financial Services segment
corresponds to net assets, defined as total assets less
total liabilities.
The performance of the Other Entities segment is
assessed on the basis of profit or loss before tax. The
corresponding measure of segment assets used to
manage the Other Entities segment is total assets less
asset-side income tax items and intragroup invest-
ments.
175
176
Group
Financial
Statements
Financial Services
BMW Group
→ Segment Information
Segment information by operating segment is as
follows:
in € million
Automotive
Motorcycles
2016
2015
Notes to the Group
Financial Statements
64
100
Alphabet France SAS, Rueil-Malmaison
BMW Malaysia Sdn Bhd, Kuala Lumpur
BMW Manufacturing (Thailand) Co., Ltd., Rayong
BMW India Financial Services Private Ltd., Gurgaon
BMW (Thailand) Co., Ltd., Bangkok
BMW Korea Co., Ltd., Seoul
BMW Japan Corp., Tokyo
BMW Financial Services Korea Co., Ltd., Seoul
BMW Japan Finance Corp., Chiba
BMW China Automotive Trading Ltd., Beijing
100
5
177
100
63
682
BMW Automotive Finance (China) Co., Ltd., Beijing
Asia
BMW Financial Services (South Africa) (Pty) Ltd., Midrand
BMW (South Africa) (Pty) Ltd., Pretoria
Africa
100
BMW Asia Pte. Ltd., Singapore
100
BMW India Private Ltd., Gurgaon
BMW China Services Ltd., Beijing
54
320
100
66
384
100
160
535
58
154
987
Oceania
BMW Osaka Corp., Osaka
BMW Holding Malaysia Sdn Bhd, Kuala Lumpur
107
BMW Lease (Malaysia) Sdn Bhd, Kuala Lumpur
BMW Tokyo Corp., Tokyo
BMW Credit (Malaysia) Sdn Bhd, Kuala Lumpur
BMW Asia Pacific Capital Pte Ltd., Singapore
BMW Asia Technology Centre Sdn Bhd, Kuala Lumpur
PT BMW Indonesia, Jakarta
BMW Leasing (Thailand) Co., Ltd., Bangkok
100
100
100
BMW Acquisitions Ltda., São Paulo
BMW Leasing de Mexico S.A. de C.V., Mexico City
BMW Insurance Agency, Inc., Wilmington, Delaware
BMW Leasing do Brasil, S.A., São Paulo
BMW of Manhattan, Inc., Wilmington, Delaware
100
100
100
100
100
100
-31
197
100
555
315
100
59
332
BMW Manufacturing Indústria de Motos da Amazônia Ltda., Manaus 12
BMW Financial Services de Mexico S.A. de C.V. SOFOM, Mexico City
Rolls-Royce Motor Cars NA, LLC, Wilmington, Delaware
100
BMW Consolidation Services Co., LLC, Wilmington, Delaware
BMW Extended Service Corporation, Wilmington, Delaware
100
100
100
100
100
100
100
100
100
100
100
100
100
100
BMW Canada Inc., Richmond Hill, Ontario
BMW Receivables Limited Partnership, Richmond Hill, Ontario
BMW Receivables 1 Inc., Richmond Hill, Ontario
BMW Receivables 2 Inc., Richmond Hill, Ontario
BMW FS Funding Corp., Wilmington, Delaware
BMW Manufacturing LP, Woodcliff Lake, New Jersey
BMW FS Receivables Corp, Wilmington, Delaware
BMW FS Securities LLC, Wilmington, Delaware
BMW Facility Partners, LLC, Wilmington, Delaware
BMW Auto Leasing, LLC, Wilmington, Delaware
SB Acquisitions, LLC, Wilmington, Delaware
BMW de Argentina S.A., Buenos Aires
310
100
BMW (P+A) Ltd., Farnborough
BMW (GB) Ltd., Farnborough
Alphabet Insurance Services Polska Sp. z o.o., Warsaw
Europe
FOREIGN7
100
100
100
100
100
100
Capital invest-
ment in %
in € million
Profit/loss
in € million
Equity
PM Parking Ventures GmbH, Munich
ParkNow GmbH, Munich
BMW Car IT GmbH, Munich4
Bavaria Betriebs-Gastronomie GmbH, Munich4
Automag GmbH, Munich
BMW (UK) Pensions Services Ltd., Hams Hall
Alphabet Fleetservices GmbH, Munich
BMW Car Club Ltd., Farnborough
BMW Group Benefit Trust Ltd., Farnborough
100
John Cooper Works Ltd., Farnborough
100
100
100
100
100
100
100
100
100
100
100
100
100
John Cooper Garages Ltd., Farnborough
Content4all BV, Amsterdam
Cobalt Telephone Technologies Ltd., Basingstoke
Cobalt Holdings Ltd., Basingstoke
BMW Motorsport Ltd., Farnborough
BMW i Ventures B.V., 's-Gravenhage
BMW Drivers Club Ltd., Farnborough
151
DOMESTIC7
at 31 December 2016
100
100
100
100
100
100
100
100
74
100
100
51
100
100
100
100
287
83
108
20
196
100
Companies
BMW Australia Finance Ltd., Mulgrave
-12
→ List of Investments
BMW Group
Notes to the Group
Financial Statements
Statements
Group
Financial
→ 62
BMW AG's non-consolidated companies at 31 December 2016
184
183
100
BMW Melbourne Pty. Ltd., Melbourne
100
BMW Sydney Pty. Ltd., Sydney
100
BMW New Zealand Ltd., Auckland
100
BMW Financial Services New Zealand Ltd., Auckland
100
20
194
BMW Australia Ltd., Melbourne
100
394
000 BMW Leasing, Moscow
BMW de Mexico, S.A. de C.V., Mexico D.F.
BMW do Brasil Ltda., São Paulo
BMW Austria Bank GmbH, Salzburg
100
156
104
BMW International Investment B.V., 's-Gravenhage
100
21
112
Alphabet Belgium Long Term Rental NV, Aartselaar
100
94
119
BMW Russland Trading 000, Moscow
100
7
123
BMW Austria Leasing GmbH, Salzburg
100
8
100
100
APD Industries plc, Farnborough
100
BMW Financial Services Belgium S.A./N.V., Bornem
Alphabet UK Ltd., Glasgow
100
100
100
100
100
100
100
60
103
Alphabet France Fleet Management S.N.C., Rueil-Malmaison
BMW Financial Services B.V., Rijswijk
BMW Services Ltd., Farnborough
Alphabet España Fleet Management S.A.U., Madrid
BMW Norge AS, Fornebu
BMW Financial Services (Ireland) DAC, Dublin
BMW Sverige AB, Stockholm
Swindon Pressings Ltd., Farnborough
BMW Finanzdienstleistungen (Schweiz) AG, Dielsdorf
BMW Bank OOO, Moscow
BMW Vertriebs GmbH, Salzburg
Bavaria Reinsurance Malta Ltd., Floriana
BMW Austria Ges.m.b.H., Salzburg
100
26900
BMW Finance N.V., The Hague
35
345
100
40
364
100
39
374
100
592
100
49
49
719
BMW Iberica S.A., Madrid
BMW Italia S. p.A., San Donato Milanese
BMW Finance S.N.C., Guyancourt
BMW France, Montigny-le-Bretonneux
BMW Coordination Center V.o.F., Bornem
BMW (Schweiz) AG, Dielsdorf
181
100
134
302
100
59
135
Alphabet Nederland B.V., Breda 11
16
136
Rolls-Royce Motor Cars Ltd., Farnborough
12
180
BMW Financial Services Scandinavia AB, Sollentuna
100
36
202
ALPHABET (GB) Ltd., Farnborough
100
65
213
BMW (UK) Ltd., Farnborough
100
21
277
BMW Belgium Luxembourg S.A./N.V., Bornem
24
BMW Financeira S.A. Credito, Financiamento e Investimento, São Paulo
100
100
100
100
100
100
100
100
100
100
100
100
100
BLMC Ltd., Farnborough
Triumph Motor Company Ltd., Farnborough
BMW Central Pension Trustees Ltd., Farnborough
Riley Motors Ltd., Farnborough
BMW (UK) Capital plc, Farnborough
BMW (UK) Investments Ltd., Farnborough
Société Nouvelle WATT Automobiles SARL, Rueil-Malmaison
Alphabet Luxembourg S.A., Leudelange
BMW Milano S.r.I., San Donato Milanese
BMW Madrid S.L., Madrid
100
Oy BMW Suomi AB, Helsinki
The Americas
2,339
BMW SLP, S.A. de C.V., Villa de Reyes 12
BMW Financial Services NA, LLC, Wilmington, Delaware
BMW US Capital, LLC, Wilmington, Delaware
100
353
558
BMW of North America, LLC, Wilmington, Delaware
100
-49
1,007
Financial Services Vehicle Trust, Wilmington, Delaware
100
289
1,429
BMW Manufacturing Co., LLC, Wilmington, Delaware
100
148
1,545
BMW Bank of North America, Inc., Salt Lake City, Utah
100
667
BMW (US) Holding Corp., Wilmington, Delaware
100
BMW Den Haag B.V., The Hague
→ List of Investments
BMW Amsterdam B.V., Amsterdam
Alphabet Italia Fleet Management S.p.A., Rome
BMW Portugal Lda., Porto Salvo
Alphabet Fuhrparkmanagement (Schweiz) AG, Dielsdorf
Alphabet Polska Fleet Management Sp. z o.o., Warsaw
Alphabet Austria Fuhrparkmanagement GmbH, Salzburg
BMW Financial Services Denmark A/S, Copenhagen
BMW Hellas Trade of Cars A.E., Kifissia
100
100
100
100
100
BMW Retail Nederland B.V., Delft
100
100
100
100
100
100
100
BMW Renting (Portugal) Lda., Porto Salvo
at 31 December 2016
BMW Automotive (Ireland) Ltd., Dublin
BMW Services Belgium N.V., Bornem
BMW Group
Notes to the Group
Financial Statements
Statements
Group
Financial
182
100
100
100
100
100
100
100
100
100
100
100
100
BMW Nederland B.V., Rijswijk
BMW Danmark A/S, Copenhagen
BMW Distribution S.A.S., Montigny-le-Bretonneux
BMW Financial Services Polska Sp. z o.o., Warsaw 12
BMW Roma S.r.l., Rome
Park Lane Ltd., Farnborough
100
100
100
Joblinge gemeinnützige AG Berlin, Berlin
IVM Industrie-Verband Motorrad GmbH & Co. Dienstleistungs KG, Essen
Hubject GmbH, Berlin
GSB Sonderabfall-Entsorgung Bayern GmbH, Baar-Ebenhausen
Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern
DOMESTIC
Companies
→ 64
BMW AG's participations at 31 December 2016
20
46
18
25
30
50
40
40
20
25
50
50
Joblinge gemeinnützige AG Leipzig, Leipzig
50
Joblinge gemeinnützige AG München, Munich
Racer Benchmark Group GmbH, Landsberg am Lech
Parkopedia Ltd., Birmingham
JustPark Parking Limited, London
Gios Holding B.V., Oss
Chargemaster Plc., Luton
FOREIGN7
18.3
9.1
10.5
6.2
16.7
9.8
18.9
16.7
3.1
4.6
Capital invest-
ment in %
in € million
Profit/loss
in € million
Equity
SGL Carbon SE, Wiesbaden
RA Rohstoffallianz GmbH i.L., Berlin
Carbon, Inc., Wilmington, Delaware
49
44
SGL Automotive Carbon Fibers, LLC, Dover, Delaware
FOREIGN
SGL Automotive Carbon Fibers Verwaltungs GmbH, Munich³
SGL Automotive Carbon Fibers GmbH & Co. KG, Munich
DOMESTIC
Joint operations - proportionately-consolidated entities
THERE Holding B.V., Amsterdam³
FOREIGN
Associated companies - equity accounted
BMW Brilliance Automotive Ltd., Shenyang
FOREIGN
50
50
-2
38
Capital invest-
ment in %
Profit/loss
in € million
in € million
Equity
DriveNow Verwaltungs GmbH, Munich
DriveNow GmbH & Co. KG, Munich³
Not equity accounted or proportionately-consolidated entities
2
DOMESTIC¹
Digital Energy Solutions GmbH & Co. KG, Munich
49
49
10
43
33
2,003
50
1,061
4,678
Bavarian & Co. Ltd., Incheon
Mini Urban X Accelerator SPV, LLC, Wilmington, Delaware
Parkmobile International Holding BV, Utrecht 10
IP Mobile N.V., Brussels
Stadspasparkeren B.V., Deurne
BMW AVTOTOR Holding B.V., Amsterdam
BMW Albatha Finance PSC, Dubai
BMW Albatha Leasing LLC, Dubai
FOREIGN¹
PDB-Partnership for Dummy Technology and Biomechanics GbR, Gaimersheim
Abgaszentrum der Automobilindustrie GbR, Weissach
The Retail Performance Company GmbH, Munich
Encory GmbH, Unterschleißheim
DOMESTIC
ChargePoint, Inc., Wilmington, Delaware
Life360, Inc., Dover, Delaware
Disclosures pursuant to the Act on Equal Gender Participation
Information on Corporate Governance
→ Page 205
→ Page 204
→ Page 198 Composition and Work Procedures of the Supervisory Board
of BMW AG and its Committees
Composition and Work Procedures of the Board of Management
of BMW AG and its Committees
Members of the Supervisory Board
→ Page 196
→ Page 193
→ Page 192
→ Page 190 Statement on Corporate Governance (§289a HGB)
(Part of the Combined Management Report)
→ Page 190 Information on the Company's Governing Constitution
→Page 191 Declaration of the Board of Management and
of the Supervisory Board pursuant to § 161 AktG
Members of the Board of Management
CORPORATE
GOVERNANCE
Oliver Zipse
Peter Schwarzenbauer
Dr. Ian Robertson (HonDSc)
Dr. Nicolas Peter
Klaus Fröhlich
Milagros Caiña Carreiro-Andree Markus Duesmann
Harald Krüger
The Board of Management
Bayerische Motoren Werke
Aktiengesellschaft
Munich, 14 February 2017
Practices Applied beyond Mandatory Requirements
at 31 December 2016
→Page 207 Compliance in the BMW Group
→ Page 223 Responsibility Statement by the Company's
Legal Representatives
The close interaction between Board of Management
and Supervisory Board in the interests of the enterprise
as described above is also known as a "two-tier board
structure".
The designation "BMW Group" comprises Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) and
its group entities. BMW AG is a stock corporation
(Aktiengesellschaft) based on the German Stock
Corporation Act (Aktiengesetz) and has its registered
office in Munich, Germany. It has three representative
bodies: the Annual General Meeting, the Superviso-
ry Board and the Board of Management. The duties
and authorities of those bodies derive from the Stock
Corporation Act and the Articles of Incorporation of
BMW AG. Shareholders, as the owners of the business,
exercise their rights at the Annual General Meeting.
The Annual General Meeting decides in particular on
the utilisation of unappropriated profit, the ratification
of the acts of the members of the Board of Management
and the Supervisory Board, the appointment of the
external auditor, changes to the Articles of Incorpo-
ration and specified capital measures, and elects the
shareholders' representatives to the Supervisory Board.
The Board of Management manages the enterprise
under its own responsibility. Within this framework,
it is monitored and advised by the Supervisory Board.
The Supervisory Board appoints the members of the
Board of Management and can, at any time, revoke
an appointment for important reasons. The Board of
Management keeps the Supervisory Board informed of
all significant matters regularly, promptly and compre-
hensively, following the principles of conscientious and
faithful accountability and in accordance with prevail-
ing law and the reporting duties allocated to it by the
Supervisory Board. The Board of Management requires
the approval of the Supervisory Board for certain major
transactions. The Supervisory Board is not, however,
authorised to undertake management measures itself.
Information on the Company's
Governing Constitution
Good corporate governance - acting in accordance
with the principles of responsible management aimed
at increasing the value of the business on a sustainable
basis - is an essential requirement for the BMW Group
embracing all areas of the business. Corporate culture
within the BMW Group is founded on transparent
reporting and communication, corporate governance
in the interest of all stakeholders, fair and open coop-
eration between the Board of Management and the
Supervisory Board as well as among employees, and
compliance with existing laws. The Board of Manage-
ment and Supervisory Board report in this statement
on important aspects of corporate governance pursuant
to §§ 289, 315 (5) HGB and section 3.10 of the German
Corporate Governance Code (GCGC).
CORPORATE
GOVERNANCE
STATEMENT ON
Constitution
Governing
→Information on the
Company's
Statement on
Corporate
Governance
190
Report
Compensation
Compliance
Park-line Aqua B.V., 's-Gravenhage
Board of
Management
Company's Govern-
ing Constitution
Corporate
Governance
4
4
→Page 224 BMW Group Auditor's Report
→Page 212 Compensation Report
Desktop Metal, Inc., Wilmington, Delaware
→ List of Investments
BMW Group
16.9
1.1
3.3
0.3
3.6
1.1
10.6
6.7
12.0
1.5
1 The amounts shown for the German subsidiaries correspond to the annual financial statements drawn up in accordance with German accounting requirements (HGB).
Moovit App Global Ltd., St. Ness Ziona
ZIRX Technologies, Inc., Dover, Delaware
Zendrive, Inc., Dover, Delaware
Turo, Inc., Dover, Delaware
striVB Labs., Inc., Camden, Delaware
Srividya Tech, Inc., Wilmington, Delaware
Scoop Technologies, Inc., Wilmington, Delaware
RideCell, Inc., Wilmington, Delaware
Rever Moto, Inc., Wilmington, Delaware
Nauto, Inc., Dover, Delaware
18.6
Notes to the Group
Financial Statements
9.1
1.7
Statements
Group
Financial
188
187
13 First-time consolidation in the financial year 2016: BMW Leasing (GB) Ltd., Farnborough.
12 First-time consolidation.
¹¹Exemption pursuant to Article 2:403 of the Civil Code of the Netherlands applied.
10 Significant influence.
⁹ Including power to appoint representative bodies.
rules. Equity not denominated in euro is translated into euro using the closing exchange rate at the balance sheet date, earnings are translated using the average rate.
8 The amounts shown for entities accounted for using the equity method and for proportionately consolidated entities correspond to the annual financial statements drawn up in accordance with uniform IFRS
7 These entities are neither consolidated nor accounted for using the equity method due to their overall immateriality for the Group Financial Statements.
6 Exemption from publication of financial statements applied in accordance with § 264 (3) and § 264 b HGB.
Exemption from drawing up a management report applied in accordance with § 264 (3) and § 264 b HGB.
4 Profit and Loss Transfer Agreement with a subsidiary of BMW AG.
3 Profit and Loss Transfer Agreement with BMW AG.
2 The amounts shown for the foreign subsidiaries correspond to the annual financial statements drawn up in accordance with uniform IFRS rules. Equity and earnings not denominated in euro are translated into
euro using the closing exchange rate at the balance sheet date.
1.2
2.6
2.7
0.9
11.8
Joint ventures - equity accounted
Supervisory Board
→ 63
Asia
100
100
100
BMW Automobile Distributors (Pty) Ltd., Midrand
BPF Midrand Property Holdings (Pty) Ltd., Midrand
Multisource Properties (Pty) Ltd., Midrand
Africa
BMW Finance (United Arab Emirates) Ltd., Dubai
100
100
100
100
100
100
100
100
BMW Financial Services Hong Kong Limited, Hong Kong
BMW Financial Services Singapore Pte Ltd., Singapore
BMW India Leasing Pvt. Ltd., Gurgaon
Statements
Group
Financial
186
185
49
100
70
100
85888287
100
100
100
Herald International Financial Leasing Co., Ltd., Tianjin
THEPSATRI Co., Ltd., Bangkok⁹
BMW Philippines Corp., Manila
BMW Insurance Services Korea Co. Ltd., Seoul
100
100
Toluca Planta de Automoviles, S.A. de C.V., Mexico City
MINI Business Innovation, LLC, Wilmington, Delaware
Reach Now, LLC, Wilmington, Delaware
Parkmobile Group Holding BV, Amsterdam
Parkmobile Group BV, Amsterdam
100
Parkmobile France SAS, Versailles
100
Parkmobile Benelux B.V., Amsterdam
100
Parkmobile Belgium BvBa, Antwerpen
100
Park-Mobile (UK) Limited, Basingstoke
100
Park-line Holding B.V., 's-Gravenhage
100
Park-line B.V., 's-Gravenhage
Companies
Parkmobile Hellas SA, Athens
BMW Group
Notes to the Group
Financial Statements
Parkmobile Licenses B.V., Amsterdam
Parkmobile Software BV, Amsterdam
BMW Operations Corp., Wilmington, Delaware
BMW Technology Corporation, Wilmington, Delaware
Designworks/USA, Inc., Newbury Park, California
BMW Leasing de Argentina S.A., Buenos Aires
BMW i Ventures, LLC, Wilmington, Delaware
BMW Experience Centre Inc., Richmond Hill, Ontario
The Americas
90
100
100
100
100
60
100
100
U.T.E. Alphabet España-Bujarkay, Sevilla
Parkmobile Suisse SA, Bulle
Parkmobile Limited, Basingstoke
→ List of Investments
217-07 Northern Boulevard Corporation, Wilmington, Delaware
BMW AG's associated companies, joint ventures and joint operations at 31 December 2016
at 31 December 2016
Munich, 9 March 2017
BMW Group remains the world's leading premium car company in 2016
In its centenary year 2016, the BMW Group continued its successful business development. For
the sixth consecutive year, sales reached a new all-time high. With a solid increase of 5.3 per cent
over the previous year, sales climbed to more than 2.3 million vehicles. The BMW Group therefore
remains the leading car company in the global premium segment.
We are creating common platforms and architectures for economical industrialisation of com-
bustion engines with Efficient Dynamics technology and electrification across all brands and
model series.
The BMW Group is currently the world's most successful premium provider of plug-in hybrid
vehicles. In 2017, we will release two more models: the BMW 5 Series iPerformance and the
MINI Countryman. These will be followed in 2018 by the BMW i8 Roadster. A year later, we will
launch an all-electric MINI and in 2020, an all-electric BMW X3.
to deliver a further 100,000 electrified vehicles. Our customers can choose between seven
different models.
and BMW plug-in hybrid models. In 2017, we intend to go one better: this year alone, we aim
Between the launch of the BMW i3 in 2013 and 2016, we sold more than 100,000 BMW i models
Our goal: to sell 100,000 electrified vehicles in 2017
Demand will increase with more models and greater range - as shown by the example of our
BMW i3 with its new 94-amp-hour battery. We delivered a total of more than 62,000 BMW i
vehicles and BMW plug-in hybrids to customers in 2016. The BMW i3 is one of the leading electric
vehicles available, while the BMW X5 is the top-selling plug-in hybrid. At our car-sharing service
DriveNow, operated with Sixt SE, BMW i3s already make up 20 per cent of the European fleet.
We see this as a great opportunity to make people, especially young people, excited about
electric driving.
Alongside digitalisation, emission-free mobility is another huge task for our industry. By 2025,
we expect around 15 to 25 per cent of BMW Group sales to be electrified vehicles. To achieve
this, we continue to expand the share of electrified models across all our brands and series.
Firmly on course for sustainable mobility
Later this year, we will begin testing autonomous driving in city centres with a fleet of 40 com-
puter-operated vehicles. Customer safety will naturally be our top priority.
We are developing and testing highly-automated and autonomous vehicles at our new Research
and Development Centre for Autonomous Driving near Munich. This was also decided as part
of Strategy NUMBER ONE > NEXT.
Campus for highly-automated and autonomous vehicles
Semi-automated driving with the new BMW 7 Series and BMW 5 Series
The transition to fully-autonomous driving, from around 2030, will see responsibility shift from
driver to machine in five stages. We already have around 8.5 million connected vehicles on the
road today. Our customers are already benefitting from state-of-the-art driver assistance systems
in the BMW 7 Series and the new BMW 5 Series. We are directing all our efforts towards the next
technological leap, which will bring highly-automated driving and further future technologies
to the road with the iNext in 2021.
of the Board of
Management
→ Statement of the
Chairman
18
17
Autonomous driving opens up new possibilities for customers
Autonomous driving will be a key technology for the future of mobility, opening up totally new
possibilities for our customers. Above all, people will be able to reclaim the time they previously
spent behind the wheel concentrating on the traffic. With all our products and services, we
offer various forms of mobility that generate individual excitement, creative space, are intuitive
to use and, at the same time, fully integrated into our customers' lives. As the vehicle becomes
more familiar with its owner, it offers tailored recommendations to make everyday life easier.
Our acquisition, together with other German manufacturers, of map service HERE was followed
by another important strategic decision in 2016: the BMW Group is joining forces with Intel
and sensor specialist Mobileye to advance highly-automated and autonomous driving.
future business.
Our aspiration to be a technology leader in mobility is firmly anchored in Strategy
NUMBER ONE > NEXT. To achieve this, we need to focus even more on a cooperative spirit.
In the digital age, new players from the IT world are bringing their business model to the
automotive sector - proving once again that individual mobility is an attractive field for
Cooperation for faster technological breakthroughs
With its bold, entrepreneurial spirit and ground-breaking innovations, the BMW Group has
always shaped individual mobility - constantly evolving in the process. Through Strategy
NUMBER ONE, we grew from a manufacturer of premium automobiles to a provider of premium
mobility and mobility services. Strategy NUMBER ONE > NEXT maps out the company's
further evolution towards a tech company for premium mobility and premium services. To
achieve this, we will continue to expand our mobility services: DriveNow, ReachNow, ParkNow
and ChargeNow.
Becoming a tech company for premium mobility and premium services
with Strategy NUMBER ONE > NEXT
2016 was our centenary year. And you could see the reports everywhere: "The BMW Group is
not resting on its laurels – it is actively shaping the future." The response of many people when
they saw our BMW, MINI, Rolls-Royce and BMW Motorrad Vision Vehicles for the first time,
was unequivocally enthusiastic: "The BMW Group's Vision Vehicles are unlike anything we've
seen before." I experienced this excitement myself in Munich, Beijing and Los Angeles. With
our Vision Vehicles, we are providing a glimpse of mobility beyond 2030, when autonomous
driving, connectivity, electro-mobility and services will be part of everyday life.
New all-time highs for BMW, MINI and BMW Motorrad brands
The BMW brand sold more than two million vehicles for the first time in a single year. Demand
for the X models, the BMW 2 Series and the new BMW 7 Series was particularly strong. The MINI
brand also achieved record sales of 360,233 vehicles; as did BMW Motorrad, with 145,032 motor-
Rolls-Royce delivered 4,011 vehicles to customers and reported the second-best year in its
113-year history.
Our Vision Vehicles fascinate people the world over
On behalf of the Supervisory Board
Chairman of the Board of Management
Harald Krüger
H. 35"
Yours
I would like to thank all of our shareholders and debt investors. You, dear shareholders and
investors, accompany us as we embark upon a new age of mobility. With our strategy, we have
shown you our roadmap for the future and we are consistently implementing the measures
accordingly. Your commitment is a sign of your appreciation and trust. We will do everything
in our power to ensure that BMW AG remains an attractive investment and a reliable and
future-oriented company that justifies your trust.
It is only right that our shareholders share in our success. In the 101st year of BMW AG, the
Board of Management and Supervisory Board will therefore propose to the Annual General
Meeting the highest dividend in the history of the company for the financial year 2016, with
a total payout of 2.3 billion euros. Associates of BMW AG in Germany will also share in the
company's positive performance through our profit-sharing programme.
In early 2017, the rating agency Moody's upgraded our long-term credit rating to A1 – giving the
BMW Group the best rating of any European automobile manufacturer and the second-highest
worldwide. This financial stability forms the basis for our investments in the future.
-
We firmly believe that the diverse challenges of tomorrow's mobility open up new opportunities
for further growth and technological progress which we will pursue in the interest of our
customers. In doing so, we combine fresh thinking, operational excellence and profitability. For
the past seven years, the EBIT margin in the Automotive segment has been within or above our
target range of eight to ten per cent.
Dear Shareholders,
2017 model offensive
In the 2017 financial year, we will offer customers more than 20 new BMW, MINI and Rolls-Royce
models. For BMW, a highlight for the current financial year will be the arrival of the most innova-
tive BMW 5 Series of all time. This status has been confirmed by awards such as "Best Connected
Car of the Year". Our 5 Series customers can choose from options ranging from a plug-in hybrid
variant to the M Performance model. Our current MINI line-up is young and striking, with five
models full of character that appeal to different target groups. The new MINI Countryman is
our second spearhead in the fast-growing premium compact segment. Motorcycle fans can also
look forward to new models this year with 14 market launches from BMW Motorrad.
of the Board of
Management
→ Statement of the
Chairman
20
19
19
On behalf of the Board of Management, as well as personally, I would like to thank all our
associates worldwide for their dedication during the financial year 2016. I would also like to
thank our business partners and suppliers, as well as the entire retail organisation. You all play
a direct part in our success!
In 2016, we once again invested more than 350 million euros in vocational and professional
training for associates. The BMW Group is also training more than 4,600 young people. This
reflects the company's sense of responsibility towards future generations.
The company employed a total of 124,729 people at the end of 2016. This represents a slight
year-on-year increase of 2.0 per cent. In addition to specialists in alternative drivetrains and
automated driving, we are also recruiting experts for our financial services business and expansion
in mobility services. The BMW Group continues to benefit from its status as a highly attractive
employer, as shown in numerous rankings amongst engineering, IT and business graduates. This
helps us attract the young talent we need to implement digitalisation in all our business segments.
Highly motivated associates are the key to our success
The company is also one of the leading financial services providers in the automotive sector. Our
Financial Services division concluded more than 1.8 million new contracts with retail customers
in 2016. For the first time, the segment Financial Services posted pre-tax earnings of more than
2.1 billion euros and therefore once again made a major contribution to the Group result.
EBT rose slightly as forecast - by 4.8 per cent year-on-year. Annual net profit increased by
8.0 per cent to more than 6.9 billion euros. The EBIT margin in the Automotive segment stands
at 8.9 per cent and therefore remains within our target range.
The BMW Group posted record revenues of over 94.1 billion euros in 2016. Profit before tax also
reached a new high of more than 9.6 billion euros.
We achieved our goals for 2016. We succeeded despite increasing uncertainties in the political
and economic environment and strong competition on the global auto markets.
Targets met for financial year 2016
The desirability of our brands and products is reflected in rankings and awards. The BMW Group
was once again the highest-ranked automobile manufacturer in Fortune Magazine's 2017 "World's
Most Admired Companies" and is the only German company in the top 50. With the "World
Car Award" and "Best Car" for the BMW 7 Series and "Golden Steering Wheel" for the BMW i3,
the BMW Group earned several of the world's top honours in 2016.
cycles and scooters sold.
A new era has begun for your company: in this, the first year of our “Next 100″, we are embarking
on a new age of individual mobility. Everything we do is for our customers. For them, we are
creating a new kind of premium mobility geared entirely towards their individual needs, and
which will continue to thrill and excite them moving ahead.
The BMW Group continues to benefit from its balanced distribution of sales across the world's
three major market regions: Europe, Asia and the Americas. We are making targeted investments
in our production network of 31 sites in 14 countries on five continents to enhance performance
and flexibility.
Harald Krüger
Chairman of the Board of Management
On repeated occasions, the Audit Committee dealt with the new requirements for financial year-
end audits, particularly the rules applying to non-audit-related services provided by the auditor
and the procedure for changing the external auditor. In accordance with statutory requirements,
we approved a list of non-audit-related services that may be provided by the external auditor.
Furthermore, we performed our statutory duties in connection with the mandatory audit of
over-the-counter trading with derivatives pursuant to § 20 of the Securities Trading Act (WpHG).
An external auditor confirmed the effectiveness of the system that BMW AG currently employs
to ensure compliance with regulatory requirements. Furthermore, in the Audit Committee we
concurred with the decision of the Board of Management to raise the Company's share capital
in accordance with § 4 (5) of the Articles of Incorporation (Authorised Capital 2014) by €305,000
and, in conjunction with the Employee Share Programme, to issue a corresponding number
of new non-voting bearer shares of preferred stock, each with a par value of €1, at favourable
conditions to employees.
The Personnel Committee convened five times during the financial year 2016. One of the
principal duties of this committee is to prepare decisions of the full Supervisory Board relating
to the composition of the Board of Management. In specific cases, we also gave our approval for
members of the Board of Management to accept non-BMW Group mandates.
The Nomination Committee convened twice during the financial year 2016. At these meetings, we
deliberated on succession planning for mandates of the shareholders' representatives and, taking
account of the composition targets set, made one recommendation for a proposed nomination
of a candidate for election at the Annual General Meeting 2017.
The statutory Mediation Committee was not required to convene during the financial year 2016.
Composition and organisation of the Board of Management
During the period under report, the composition of the Board of Management changed as part
of the process of amicably agreed succession planning.
With effect from 1 October 2016, the Supervisory Board appointed Markus Duesman as member
of the Board of Management. Mr Duesmann has many years of management experience in the
automobile industry and has been with BMW AG since 2007. Most recently, he was head of
powertrain and the related process chain within the development area. Mr Duesmann took over
board responsibility for the Purchasing and Supplier Network from Dr Klaus Draeger, whose
mandate ended on 30 September 2016.
With effect from 1 January 2017, we appointed Dr Nicolas Peter as member of the Board of
Management. Dr Peter joined BMW AG in 1991 and most recently worked as head of the European
sales region. He took over board responsibility for Finances from Dr Friedrich Eichiner, who
retired from the Board of Management with effect from the end of 2016.
We would like to extend our special thanks to Dr Draeger and Dr Eichiner for their many years
of dedicated work in the interests of the BMW Group, both in highly successful years and during
the challenging period of the global financial and economic crisis. We equally wish to thank
them for their personal contribution to the BMW Group's long-term success.
13
14
→ Report of the
Composition of the Supervisory Board, the Presiding Board
and Supervisory Board Committees
In 2016, the Annual General Meeting re-elected Simone Menne to the Supervisory Board for
a term of five years. Ulrich Kranz resigned his mandate as executive staff representative with
effect from the end of 2016. As elected substitute member, Ralf Hattler became a member of
the Supervisory Board with effect from 1 January 2017. We thank Mr Kranz for the trusting and
constructive working relationship within the Supervisory Board.
The composition of the Presiding Board and the committees of the Supervisory Board remained
unchanged during the financial year 2016. The Corporate Governance Report contains a summary
of the composition of the Supervisory Board and its committees.
Examination of financial statements and the profit distribution proposal
KPMG AG Wirtschaftsprüfungsgesellschaft conducted a review of the abridged Interim Group
Financial Statements and Interim Group Management Report for the six-month period ended
30 June 2016. The results of the review were presented to the Audit Committee by representatives
of KPMG AG Wirtschaftsprüfungsgesellschaft. No issues were identified that might indicate
that the abridged Interim Group Financial Statements and Interim Group Management Report
had not been prepared, in all material respects, in accordance with the applicable provisions.
The Group and Company Financial Statements of Bayerische Motoren Werke Aktiengesellschaft
for the year ended 31 December 2016 and the Combined Management Report
- as author-
ised for issue by the Board of Management on 14 February 2017 – were audited by KPMG AG
Wirtschaftsprüfungsgesellschaft and given an unqualified audit opinion.
-
KPMG AG Wirtschaftsprüfungsgesellschaft is the external auditor for BMW AG and the
BMW Group. The Auditor's Report has been signed with effect from the financial year 2016 by
Christian Sailer, as independent auditor (Wirtschaftsprüfer), and with effect from the financial
year 2014 by Andreas Feege, as independent auditor (Wirtschaftsprüfer), responsible for the
performance of the engagement.
The Financial Statements and the Combined Management Report, the long-form audit reports
of the external auditors and the Board of Management's profit distribution proposal were made
available to all members of the Supervisory Board in a timely manner.
In a first step, the Audit Committee diligently examined and discussed these documents at a
meeting held on 24 February 2017. The Supervisory Board subsequently examined the relevant
drafts of the Board of Management at its meeting on 9 March 2017, after hearing the committee
chairman's report on the meeting of the Audit Committee. In both meetings, the Board of
Management gave a detailed explanation of the financial reports it had prepared. Representatives
of the external auditors attended both meetings, reported on significant findings and answered
any additional questions raised by the members of the Supervisory Board. They confirmed that
the risk management system established by the Board of Management is capable of identifying
developments at an early stage that might impair the Company's going-concern status. They
also confirmed that no material weaknesses in the internal control system and risk management
system were found with regard to the financial reporting process. Similarly, they confirmed that
they had not identified any issues in the course of their audit work that were inconsistent with
the contents of the Declaration of Compliance issued jointly by the two boards.
Based on thorough examination by the Audit Committee and the full Supervisory Board, we
concurred with the results of the external audit. In accordance with the conclusion reached after
the examination by the Audit Committee and the full Supervisory Board, no objections were
raised. The Group and Company Financial Statements of Bayerische Motoren Werke Aktien-
gesellschaft for the financial year 2016 prepared by the Board of Management were approved at
the Supervisory Board meeting held on 9 March 2017. The separate financial statements have
therefore been adopted.
We also examined the proposal of the Board of Management to use the unappropriated profit to
pay an increased dividend of €3.50 per share of common stock and €3.52 per share of non-voting
preferred stock. We consider the proposal appropriate and therefore concur with it.
Expression of appreciation by the Supervisory Board
The Supervisory Board wishes to thank the members of the Board of Management and the entire
staff of the BMW Group worldwide for their efforts and hard work, which contributed to the
overall success of the BMW Group in its centenary year.
Dear Shareholders,
Pro-actively shaping change
The Group corporate culture, the spirit of innovation, and the passionate commitment of our
workforce provide a strong foundation for taking on the challenges of the future. Building on
this firm base, the BMW Group will continue to play a formative and leading role in shaping
technological change, with the clear aim of emerging on the winning side.
The Head of Group Internal Audit reported on internal audit matters, including a description
of the significant internal audit findings and the planned areas of focus on the industrial and
financial services sides of the business.
The Head of Group Financial Reporting informed us about the internal control system (ICS)
underlying financial reporting and explained measures being taken to develop the system further.
No material ICS weaknesses were identified which would jeopardise the system's effectiveness.
The BMW Group Compliance Committee chairman provided information on the current status of
compliance within the Group as well as changes in the BMW Group Compliance Organisation aimed
at strengthening local compliance management, including the next steps to be taken in this area.
Supervisory Board
Together with the Board of Management, we undertook an in-depth review of the corporate
governance standards currently in place within the BMW Group as well as the rules set out
in the German Corporate Governance Code. The latest Declaration of Compliance, issued in
December 2016, is included in the Annual Report.
15
Chairman of the Supervisory Board
Norbert Reithofer
Men
Yours
In both the Personnel Committee and the full Supervisory Board, we examined not only the
structure, but also the amounts of compensation paid to the various members of the Board of
Management. In this context, we reviewed trends in business performance and board compen-
sation over a period of several years. We also gave general consideration to the remuneration
paid to executive managers and employees of BMW AG within Germany over the course of time.
A compensation consultant, independent of both the Board of Management and BMW AG, was
called upon to provide expert advice and assist us in our evaluation of DAX-related compensation
studies. We concluded that the level of compensation paid to board members, including their
pension entitlements, is appropriate and in keeping with other DAX-listed companies. The
Supervisory Board therefore resolved not to propose any changes to the system of Board of
Management compensation in 2016. Further information on the amounts of compensation
paid to the members of the Board of Management is provided in the Compensation Report (see
section "Statement on Corporate Governance").
of the Board of
We also discussed with the Board of Management the probable impact of technological changes
on future workforce requirements. We were informed about the range of measures implemented
to incorporate Strategy NUMBER ONE > NEXT in the BMW Group's corporate culture and
brought up to date on activities aimed at attracting young talent. The Board of Management
also provided details of actual and planned additions to the workforce in defined growth areas.
The Board of Management also reported on the latest status of the BMW Group's diversity concept.
The report presented figures for the percentage of female executives in the BMW Group, in par-
ticular the proportions in the two executive management levels below the Board of Management,
the targets set, and the latest status of these two levels.
We again decided upon a target for the proportion of female members on the Board of Manage-
ment, including a time frame for target attainment. As its target for the period from 1 January 2017
to 31 December 2020, we stipulated that the Board of Management should continue to have at
least one female member. We consider it a key aim to increase the proportion of women on the
Board of Management and fully support the Board's endeavours to increase the percentage of
women employed at the highest executive management levels within the BMW Group. Moreover,
we developed a diversity concept for the composition of the Board of Management.
The composition targets for the Supervisory Board, which represent the basis for a diversity
concept, were not changed during the financial year 2016. Compliance with the composition
targets set for 31 December 2016 was determined by way of self-assessment.
→ Statement of the
Chairman
No conflicts of interest arose on the part of members of either of the two boards during the
year under report. Significant transactions with Supervisory Board members and other related
parties as defined by IAS 24, including close relatives and intermediary entities, are examined
on a quarterly basis.
16
As in previous years, the Head of Group Controlling reported during the financial year 2016
on the current risk profile of the BMW Group and provided an overview of the changes made
to the risk management system in view of new internal and external requirements.
11
12
→ Report of the
Supervisory Board
Each of the five Supervisory Board meetings during the financial year 2016 was attended on
average by over 90% of its members, a fact that can be tied in to the analysis of attendance fees
for individual members disclosed in the Compensation Report. During their term of office in
the period under report, none of the members of the Supervisory Board took part in only half or
less than half of the meetings of the Supervisory Board, the Presiding Board or the committees
to which any given member belongs.
Description of Presiding Board activities and committee work
The Supervisory Board has established a Presiding Board and four committees. The chairpersons
of the various committees reported to the Supervisory Board in depth on any committee meetings
held since the previous meeting of the full Supervisory Board. I brought the representatives
of the shareholders up to date regarding the deliberations of the Nomination Committee. A
detailed description of the duties, composition and work procedures of the various committees
is provided in the Corporate Governance Report.
The Presiding Board convened four times during the year under report. Assuming no other
committee was responsible, the Presiding Board prepared the detailed agenda for the meetings of
the full Supervisory Board, including the careful preparation of topics on the basis of written and
oral reports provided by members of the Board of Management and senior heads of department.
We also stipulated further topics for full Supervisory Board meetings and made suggestions for
reports submitted to the Supervisory Board.
The Audit Committee held four meetings and three telephone conference calls during the financial
year 2016. In the course of those conference calls, together with the Board of Management we
deliberated on the Quarterly Financial Reports prior to their publication. Representatives of the
external auditors were present during the telephone conference call held in conjunction with
the Half-year Financial Report.
The Audit Committee Meeting held in spring 2016 focused primarily on preparing for the
Supervisory Board meeting at which the financial statements were to be examined. Before
recommending to the full Supervisory Board that KPMG AG Wirtschaftsprüfungsgesellschaft
be elected as Company and Group auditor at the Annual General Meeting 2016, we obtained a
Declaration of Independence from KPMG AG Wirtschaftsprüfungsgesellschaft. We also consid-
ered the scope and composition of non-audit services, including tax advisory services provided
by KPMG entities to the BMW Group. There were no indications of conflicts of interest, grounds
for exclusion or lack of independence on the part of the auditor.
The fee proposals for the audit of the year-end Company and Group Financial Statements 2016 and
the review of the Half-year Financial Report were deemed appropriate. Subsequent to the Annual
General Meeting 2016, we therefore appointed KPMG AG Wirtschaftsprüfungsgesellschaft for
the relevant engagements and specified audit focus areas.
Management
The Supervisory Board also assessed the efficiency of its own work with the aim of further
improving its internal procedures and the work of its committees. With this point in mind, I
also conducted individual discussions with the members of the Supervisory Board. The matter
was also considered at a meeting of the full Supervisory Board. Additional topics for report were
identified as part of the overall conclusion reached.
Chairman of the European
Deputy Chairman
Member since 1988
Robert Bosch GmbH
Manfred Schoch¹ (*1955)
and General Works Council
Former Chairman of the Board of
Franz Haniel (*1955)
Member since 2004
Mandates
Entrepreneur
Mandates
-
DELTON AG (Deputy Chairman)
Franz Haniel & Cie. GmbH (Chairman)
Heraeus Holding GmbH
Industrial Engineer
Second Chairman of IG Metall
Siemens Aktiengesellschaft
Christiane Benner² (*1968)
Verizon Communications Inc.
Bertelsmann Management SE (until 9 May 2016)
Bertelsmann SE & Co. KGaA (until 9 May 2016)
Deutsche Lufthansa Aktiengesellschaft
E.ON SE (Chairman, since 8 June 2016)
Mandates
Chairman of the Supervisory Board of the E.ON SE
(since 8 June 2016)
Deputy Chairman
Member since 2008
Dr. jur. Karl-Ludwig Kley (*1951)
Henkel AG & Co. KGaA (Shareholders' Committee)
Mandates
TBG Limited
Chairman
Management of BMW AG
Member since 2014
Stefan Quandt (*1966)
Member since 1997
Deputy Chairman
President of acatech - Deutsche Akademie
Mandates
Membership of equivalent national or foreign boards of business enterprises.
---Other mandates.
193
194
Statement on
Corporate
Governance
→ Members of the
Supervisory Board
Membership of other statutory supervisory boards.
Prof. Dr. rer. nat. Dr.-Ing. E.h.
Henning Kagermann (*1947)
Member since 2010
Mandates
-
Deutsche Bank AG
Member since 2015
Deutsche Post AG
Münchener Rückversicherungs-Gesellschaft
der Technikwissenschaften e. V.
Entrepreneur
³ Employee representatives (members of senior management).
1 Employee representatives (company employees).
DELTON AG (Chairman)
AQTON SE (Chairman)
Entrust Datacard Corp.
Ralf Hattler³ (*1968)
Member since 1 January 2017
Head of Indirect Purchasing
Stefan Schmid¹ (*1965)
2 Employee representatives (union representatives).
Member since 2007
Chairman of the Works Council, Dingolfing
Prof. Dr. rer. nat. Dr. h.c. Reinhard Hüttl (*1957)
Member since 2008
Chairman of the Executive Board
of Helmholtz-Zentrum Potsdam
Deutsches GeoForschungsZentrum - GFZ
University Professor
Deputy Chairman
Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer (*1956)
(since 25 February 2016)
Dr. Jürgen Reul
Dr. Ian Robertson (HonDSc) (*1958)
TÜV SÜD AG (since 15 July 2016)
-
Mandates
Dr.-Ing. Klaus Draeger (*1956)
Purchasing and Supplier Network
(until 30 September 2016)
Milagros Caiña Carreiro-Andree (*1962)
Human Resources, Industrial Relations Director
Sales and Marketing BMW,
(Deputy Chairman, since 1 January 2017)
Mandates
(since 1 January 2017)
Dr. Nicolas Peter (*1962)
Finance
Harald Krüger (*1965)
Chairman
HERE International B.V.
Mandates
BMW Brilliance Automotive Ltd.
Klaus Fröhlich (*1960)
Development
Sales Channels BMW Group
Weybourne Limited (since 3 January 2017)
Weybourne Group Limited (since 25 February 2016)
Rolls-Royce Motor Cars Limited (Chairman)
Aktiengesellschaft in München
Dr. Friedrich Eichiner (*1955)
Mandates
MINI, Motorrad, Rolls-Royce,
Aftersales BMW Group
Peter Schwarzenbauer (*1959)
Mandates
BMW Motoren GmbH (until 7 November 2016)
(since 1 October 2016)
Purchasing and Supplier Network
Markus Duesmann (*1969)
Weybourne Management Limited
(since 25 February 2016)
Weybourne Investments Holdings
Mandates
BOARD OF MANAGEMENT
MEMBERS OF THE
Supervisory Board
Mandates
-
Allianz Deutschland AG (until 30 June 2016)
Allianz SE (since 4 May 2016)
FESTO Aktiengesellschaft
BMW Brilliance Automotive Ltd.
(Deputy Chairman, until 1 January 2017)
(until 31 December 2016)
FESTO Management Aktiengesellschaft
Mandates
BMW (South Africa) (Pty) Ltd. (Chairman)
BMW Motoren GmbH (Chairman)
- Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
--- Other mandates.
General Counsel:
Oliver Zipse (*1964)
Production
Finance
The Board of Management and Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft
("BMW AG") declare the following regarding the rec-
ommendations of the "Government Commission on
the German Corporate Governance Code":
1. Since issuance of the last Declaration in December
2015, BMW AG has complied with all of the rec-
ommendations published officially on 12 June 2015
in the Federal Gazette (Code version dated 5 May
2015), as announced with the exception of sec-
tion 4.2.5 sentences 5 and 6.
→ Members of the
Board of
Management
→Members of the
Statement on
Corporate
Governance
192
Harald Krüger
Chairman
On behalf of the
Board of Management
Chairman
Dr.-Ing. Dr.-Ing. E. h.
Norbert Reithofer
On behalf of the
Supervisory Board
Bayerische Motoren Werke
Aktiengesellschaft
Munich, December 2016
191
3. It is recommended in section 4.2.5 sentences 5
and 6 of the Code that specified information per-
taining to management board compensation be
disclosed in the Compensation Report. These rec-
ommendations have not been and will not be
complied with, due to uncertainties with respect
to their interpretation and doubts as to whether
the supplementary use of model tables would be
instrumental in making the BMW AG's Compen-
sation Report transparent and generally under-
standable in accordance with generally applicable
financial reporting requirements (see section 4.2.5
sentence 3 of the Code).
2. BMW AG will in future comply with all of the rec-
ommendations published officially on 12 June
2015 in the Federal Gazette (Code version dated
5 May 2015), with the exception of section 4.2.5
sentences 5 and 6.
MEMBERS OF THE
SUPERVISORY BOARD
Susanne Klatten (*1962)
Other mandates.
Entrepreneur
BMW AG's Supervisory Board is composed of ten share-
holder representatives (elected by the Annual General
Meeting) and ten employee representatives (elected in
accordance with the Co-Determination Act). The ten
Supervisory Board members representing employees
comprise seven Company employees, including one
executive staff representative, and three members elect-
ed following nomination by unions. The Supervisory
Board has the task of advising and supervising the Board
of Management in its management of the BMW Group.
It is involved in all decisions of fundamental importance
for the BMW Group. The Supervisory Board appoints
the members of the Board of Management and decides
upon the level of compensation they receive. The Super-
visory Board can revoke appointments for important
COMPOSITION AND WORK
PROCEDURES OF THE
SUPERVISORY BOARD OF
BMW AG AND ITS
COMMITTEES
and its Committees
Work Procedures of
the Supervisory
Board of BMWAG
→ Composition and
Statement on
Corporate
Governance
198
197
The Board of Management is represented by its Chair-
man in its dealings with the Supervisory Board. The
Chairman of the Board of Management maintains
regular contact with the Chairman of the Supervisory
Board and keeps him informed of all important mat-
ters. The Supervisory Board has passed a resolution
specifying the information and reporting duties of
the Board of Management. As a general rule, in the
case of reports required by dint of law, the Board of
Management submits its reports to the Supervisory
Board in writing. To the extent possible, documents
required as a basis for taking decisions are sent to
the members of the Supervisory Board in good time
before the relevant meeting. Regarding transactions
of fundamental importance, the Supervisory Board
has stipulated specific transactions which require
the approval of the Supervisory Board. Whenever
necessary, the Chairman of the Board of Management
obtains the approval of the Supervisory Board and
ensures that reporting duties to the Supervisory Board
are complied with. In order to fulfil these tasks, the
Chairman is supported by all members of the Board
of Management. The fundamental principle followed
when reporting to the Supervisory Board is that the
latter should be kept informed regularly, without delay
and comprehensively of all significant matters relating
to planning, business performance, risk exposures,
risk management and compliance, as well as any major
variances between actual and budgeted figures.
their entirety or individually (such as the executive
management structure, potential candidates for exec-
utive management, nominations for or promotions to
senior management positions). This committee has,
on the one hand, an advisory and preparatory role
(e.g. making suggestions for promotions to the two
remuneration groups below board level and preparing
decisions to be taken at board meetings with regard
to human resources principles with the emphasis on
executive management issues) and a decision-taking
function on the other (e.g. deciding on appointments
to senior management positions and promotions to
higher remuneration groups or the wording of human
resources principles decided on by the full board).
The Committee has two members who are entitled to
vote at meetings, namely the Chairman of the Board
of Management (who also chairs the meetings) and
the board member responsible for Human Resources.
The Head of "Human Resources Management and
Services" as well as the Head of "Human Resources
Executive Management" also participate in these
meetings in an advisory function. At the request of
the Chairman, resolutions may also be passed outside
of committee meetings by casting votes in writing,
by fax or by telephone if the other member entitled
to vote does not object immediately. The Committee
for Executive Management Matters convenes up to
six times a year.
The Board's Committee for Executive Management
Matters deals with enterprise-wide issues affecting
executive managers of the BMW Group, either in
The full board usually convenes up to twice a year in
its function as Sustainability Board in order to define
strategy with regard to sustainability and decide upon
measures to implement that strategy. The Head of
Corporate Affairs and the Representative for Sus-
tainability and Environmental Protection participate
in these meetings in an advisory capacity.
At meetings of the Operations Committee (general-
ly held every two weeks), decisions are reached in
connection with automobile product projects, based
on the strategic orientation and decision framework
stipulated at Board of Management meetings. The
Operations Committee comprises the Board of
Management member responsible for Development
(who also chairs the meetings), together with the
board members responsible for the following areas:
Purchasing and Supplier Network; Production; Sales
and Marketing BMW, Sales Channels BMW Group;
and MINI, Motorcycles, Rolls-Royce, Aftersales BMW
Group. If the committee chairman is not present or
unable to attend a meeting, the member of the board
responsible for Production represents him. Resolu-
tions taken at meetings of the Operations Committee
are made online.
A secretariat for Board of Management matters has
been established to assist the Chairman and other
board members with the preparation and follow-up
work connected with board meetings.
Members of the Board of Management not represent-
ed in a committee are provided with the agendas and
minutes of committee meetings. Committee matters
are dealt with in full board meetings if the committee
considers it necessary or at the request of a member
of the Board of Management.
for its committees.
The rules relating to meetings and resolutions taken
by the full Board of Management are also applicable
Management of
BMW AG and its
Committees
COMPOSITION AND WORK
PROCEDURES OF THE
BOARD OF MANAGEMENT
OF BMW AG AND ITS
COMMITTEES
The Board of Management governs the enterprise
under its own responsibility, acting in the interests
of the BMW Group with the aim of achieving sustain-
able growth in value. The interests of shareholders,
employees and other stakeholders are also taken into
account in the pursuit of this aim.
The Board of Management determines the strategic
orientation of the enterprise, agrees upon it with the
Supervisory Board and ensures its implementation.
The Board of Management is responsible for ensuring
that all provisions of law and internal regulations are
complied with. Further details about compliance with-
in the BMW Group can be found in the "Corporate
Governance" section of the Annual Report. The Board
of Management is also responsible for ensuring that
appropriate risk management and risk controlling
systems are in place throughout the Group.
During their period of employment for BMW AG,
members of the Board of Management are bound by
a comprehensive non-competition clause. They are
required to act in the enterprise's best interests and
may not pursue personal interests in their decisions
or take advantage of business opportunities intended
for the enterprise. They may only undertake ancillary
activities, in particular supervisory board mandates
outside the BMW Group, with the approval of the
Supervisory Board's Personnel Committee. Each
member of the Board of Management of BMW AG is
obliged to disclose conflicts of interest to the Super-
visory Board without delay and inform the other
members of the Board of Management accordingly.
Following the appointment of a new member to the
Board of Management, the BMW Group Corporate
Governance Officer informs the new member of the
framework conditions under which the board mem-
ber's duties are to be carried out - in particular those
enshrined in the BMW Group's Corporate Govern-
ance Code - as well as the duty to cooperate when a
transaction or event triggers reporting requirements
or requires the approval of the Supervisory Board.
reasons.
The Board of Management consults and takes deci-
sions as a collegiate body in meetings of the Board
Terms of reference approved by the Board of Man-
agement contain a planned allocation of divisional
responsibilities between the individual board mem-
bers. These terms of reference also incorporate the
principle that the full Board of Management bears
joint responsibility for all matters of particular impor-
tance and scope. In addition, members of the Board of
Management manage the relevant portfolio of duties
under their responsibility, whereby case-by-case rules
can be put in place for cross-divisional projects. Board
members continually provide the Chairman of the
Board of Management with all information regarding
major transactions and developments within their
area of responsibility. The Chairman of the Board
of Management coordinates cross-divisional matters
with the overall targets and plans of the BMW Group,
involving other board members to the extent that divi-
sions within their area of responsibility are affected.
The Board of Management takes its decisions at
meetings generally held on a weekly basis which are
convened, coordinated and headed by the Chairman
of the Board of Management. At the request of the
Chairman, decisions can also be taken outside of
board meetings if none of the board members object
to this procedure. A meeting is quorate if all Board
of Management members are invited to the meeting
in good time. Members unable to attend any meeting
are entitled to vote in writing, by fax or by telephone.
Votes cast by phone must be subsequently confirmed
in writing. Except in urgent cases, matters relating to
a division for which the responsible board member is
not present will only be discussed and decided upon
with that member's consent.
Unless stipulated otherwise by law or in BMW AG's
statutes, the Board of Management makes decisions
on the basis of a simple majority of votes cast at meet-
ings. Outside of board meetings, decisions are taken
on the basis of a simple majority of board members.
In the event of a tied vote, the Chairman of the Board
of Management has the casting vote. Any changes
to the board's terms of reference must be passed
unanimously. A board meeting may only be held if
more than half of the board members are present.
In the event that the Chairman of the Board of
Management is not present or is unable to attend
a meeting, the member of the board responsible for
Finance will represent him.
Minutes are taken of all meetings and the Board of
Management's resolutions and signed by the Chair-
man. Decisions taken by the Board of Management
are binding for all employees.
of Management, the Sustainability Board, the Oper-
ations Committee and the Committee for Executive
Management Matters. At its meetings, the Board
of Management defines the overall framework for
business strategies and the use of resources, takes
decisions regarding the implementation of strategies
and deals with issues of particular importance to the
BMW Group. The full board also takes decisions at a
basic policy level relating to the Group's automobile
product strategies and product projects inasmuch as
these are relevant for all brands. The Board of Man-
agement and its committees may, as required and
depending on the subject matters being discussed,
invite non-voting advisers to participate at meetings.
The Supervisory Board holds a minimum of two meet-
ings per calendar half-year. Normally, five plenary
meetings are held per calendar year. One meeting each
year is planned to extend to several days and is used,
among other things, to enable an in-depth exchange on
strategic and technological matters. The main topics of
meetings in the period under report are summarised
in the Report of the Supervisory Board. Shareholder
representatives and employee representatives generally
prepare Supervisory Board meetings separately and
occasionally with members of the Board of Manage-
ment. Members of the Supervisory Board are specif-
ically legally bound to maintain secrecy with respect
to confidential reports they receive and confidential
discussions in which they partake.
The Chairman of the Supervisory Board coordinates
work within the Supervisory Board, convenes and
chairs its meetings, handles the external affairs of the
Supervisory Board and represents it before the Board
of Management.
The Supervisory Board has a quorum if all members
have been invited to the meeting and at least half the
members of whom it is required to comprise partic-
ipate in the vote. A resolution relating to an agenda
item not included in the invitation is only valid if none
of the members of the Supervisory Board who were
not present at the meeting object to the resolution
and if a minimum of two-thirds of the members are
present.
BMW AG ensures that the Supervisory Board and its
committees are appropriately equipped to carry out
their duties. This includes providing a central Super-
visory Board office to support Chairpersons in their
coordination work.
In accordance with rules of procedure, the Presiding
Board comprises the Chairman of the Supervisory Board
and Deputies. The Presiding Board prepares Superviso-
ry Board meetings to the extent that the subject matter
does not fall within the remit of a committee. This
includes, for example, preparing the annual Declaration
of Compliance with the German Corporate Governance
Code and assessment of Supervisory Board efficiency.
199
200
Statement on
Corporate
Governance
The Supervisory Board, the Presiding Board and com-
mittees also meet without the Board of Management
when necessary.
→ Composition and
The Personnel Committee prepares decisions of the
Supervisory Board with regard to the appointment and,
where applicable, removal of members of the Board of
Management and, together with the full Supervisory
Board and the Board of Management, ensures long-
term succession planning. The Personnel Committee
also
prepares s decisions of the Supervisory Board with
regard to Board of Management compensation and the
regular review of the compensation system for the Board
of Management. In conjunction with resolutions taken
by the Supervisory Board regarding the compensation
of the Board of Management, the Personnel Committee
is responsible for drawing up, amending and revoking
employment contracts or, when necessary, to prepare
and conclude other relevant contracts with members
of the Board of Management. In certain cases, the
Personnel Committee is also authorised to grant the
necessary approval of a business transaction on behalf of
the Supervisory Board. This includes cases of providing
loans to members of the Board of Management or Super-
visory Board, certain contractual arrangements with
members of the Supervisory Board, taking into account
related parties, as well as ancillary activities of members
of the Board of Management, including acceptance of
non-BMW Group supervisory board mandates.
The Audit Committee deals in particular with the super-
vision of the financial reporting process, effectiveness
of the internal control system, the risk management
system, internal audit system and compliance as well
as the performance of Supervisory Board duties in
connection with audits pursuant to § 20 of the German
Securities Trading Act (WpHG). It also oversees the
audit of financial statements, auditor independence
and any additional work performed by the auditor. It
prepares the proposal for the election of the auditor
at the Annual General Meeting, makes a relevant
recommendation, issues the audit engagement and
agrees on points of audit focus as well as the auditor's
fee. The Audit Committee prepares the Supervisory
Board's resolution relating to the Company and Group
Financial Statements and discusses interim reports
with the Board of Management prior to publication.
The Audit Committee also decides on the Supervisory
Board's agreement on the use of Authorised Capital
2014 (Article 4 no. 5 of the Articles of Incorporation)
and on amendments to the Articles of Incorporation
which only affect its wording.
In line with the recommendations of the German Cor-
porate Governance Code, the Chairman of the Audit
Committee is independent, and not a former Chairman
of the Board of Management, and has special knowledge
and experience in the application of financial reporting
standards and internal control procedures. He also
fulfils the requirement of being a financial expert as
defined by § 100 (5) and § 107 (4) AktG.
The Nomination Committee is charged with the task of
finding suitable candidates for election to the Super-
visory Board as shareholder representatives and to
propose them to the Supervisory Board for election at
the Annual General Meeting. In line with the recom-
mendations of the German Corporate Governance Code,
the Nomination Committee is exclusively composed of
shareholder representatives.
The establishment and composition of a mediation com-
mittee are prescribed by the German Co-determination
Act. The Mediation Committee has the task of making
proposals to the Supervisory Board if a resolution for the
appointment of a member of the Board of Management
has not been carried by the necessary two-thirds major-
ity of members' votes. In accordance with statutory
requirements, the Mediation Committee comprises the
Chairman and the Deputy Chairman of the Supervisory
Board, one member selected by shareholder represent-
atives and one by employee representatives.
Declaration of the Board of Management and of the
Supervisory Board of Bayerische Motoren Werke
Aktiengesellschaft with respect to the recommen-
dations of the "Government Commission on the
German Corporate Governance Code" pursuant to
§ 161 German Stock Corporation Act
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
→Composition and
Work Procedures
of the Board of
Members of the Supervisory Board may not delegate
their duties to others. However, the Supervisory Board,
the Presiding Board and the committees may call on
experts and informed persons to attend meetings and
advise on specific matters.
The number of meetings held by the Presiding Board
and committees depends on requirements. The Pre-
siding Board, the Personnel Committee and the Audit
Committee generally hold several meetings in the course
of the year (see "Report of the Supervisory Board" for
details of the number of meetings held in 2016).
Resolutions of the Supervisory Board are generally
passed by a simple majority. The German Co-determina-
tion Act contains specific legal requirements with regard
to majorities and technical procedures, particularly with
regard to the appointment and removal of management
board members and the election of Chairman or Deputy
Chairman of the Supervisory Board. In the event of a
tied vote in the Supervisory Board, the Chairman of
the Supervisory Board has two votes in a renewed vote,
assuming it also results in a tie.
In practice, resolutions are regularly passed by the
Supervisory Board and its committees at meetings.
Supervisory Board members who are not present can
submit their vote in written, fax or electronic form via
another Supervisory Board member. This rule also
applies for the second vote of the Chairman of the
Supervisory Board. The Chairman of the Supervisory
Board can also grant a period of time in which all mem-
bers not present at a meeting may retrospectively vote.
In special cases, resolutions may also be passed outside
of meetings, in particular in writing, by fax or by elec-
tronic means. Resolutions and meetings are recorded
in minutes, which are signed by the relevant Chairman.
Following its meetings, the Supervisory Board generally
requests information on new vehicle models in the form
of a short presentation.
Following the election of a new Supervisory Board
member, the Corporate Governance Officer informs
the new member of the main framework for performing
duties, in particular the BMW Group Corporate Gov-
ernance Code and individual contributions required in
circumstances which trigger reporting obligations or are
subject to Supervisory Board approval.
Members of the Supervisory Board of BMW AG take
care to ensure that they have sufficient time to perform
their mandate. If members of the Supervisory Board of
BMW AG are also members of the management board of
a listed company, they may not accept more than three
mandates on non-BMW Group supervisory boards of
listed companies or in other bodies with comparable
requirements.
Member since 1997
In line with the rules of procedure for the activities of
the plenum, the Supervisory Board has set out proce-
dural rules for the Presiding Board and committees.
Committees only have a quorum when all members
participate. Committee resolutions are passed by a
simple majority, unless otherwise stipulated by law.
Members of the Supervisory Board of BMW AG are
obliged to act in the best interest of the organisation as
a whole. They may not pursue personal interests in their
decisions or take advantage of business opportunities
intended to benefit the BMW Group.
In proposing candidates for election as members of the
Supervisory Board, care is taken that the Supervisory
Board collectively has the required knowledge, skills and
expertise to perform its tasks appropriately.
The Supervisory Board has stated specific targets for its
composition (see section “Composition targets for the
Supervisory Board").
Members of the Supervisory Board are responsible for
undertaking any training required for the performance
of their duties. The Company provides them with appro-
priate assistance therein.
Taking into account the specific circumstances of the
BMW Group and the number of Board members, the
Supervisory Board has set up a Presiding Board and
four committees: the Personnel Committee, the Audit
Committee, the Nomination Committee and the Medi-
ation Committee (see "Overview of Supervisory Board
committees and their composition"). These serve to
raise the efficiency of the Supervisory Board's work and
facilitate handling of complex issues. Establishment and
function of a mediation committee is prescribed by law.
Committee chairpersons report in detail on committee
work at each plenary meeting of the Supervisory Board.
Composition of the Presiding Board and the committees
is based on legal requirements, the Articles of Incor-
poration, rules of procedure and corporate governance
principles, while taking into particular account the
expertise of Board members.
According to the rules of procedure, the Chairman of the
Supervisory Board is, by virtue of this function, member
and Chairman of the Presiding Board, the Personnel
Committee and the Nomination Committee.
Members of the Supervisory Board are obliged to inform
the Supervisory Board of any conflicts of interest, in
particular those resulting from a consulting or executive
role with clients, suppliers, lenders or other business
partners, so that the Supervisory Board can report to
the shareholders at the Annual General Meeting on
its treatment of the issue. Material and non-temporary
conflicts of interest of a Supervisory Board member
result in a termination of mandate.
Statement on
Corporate
Governance
The Supervisory Board regularly assesses the efficiency
of its activities. To this end, shared discussion is con-
ducted within the Supervisory Board and individual
meetings held with the Chairman, prepared on the basis
of a questionnaire sent in advance, which is drawn up
by the Supervisory Board.
195
Member since 1999
Chairman of the Works Council, Landshut
Prof. Dr. rer. pol. Renate Köcher (*1952)
Member since 2008
Director of Institut für Demoskopie
Allensbach Gesellschaft zum Studium der
öffentlichen Meinung mbH
Mandates
Allianz SE (until 3 May 2017)
Infineon Technologies AG
Nestlé Deutschland AG
Willibald Löw¹ (*1956)
Robert Bosch GmbH
Member from 2014 to 31 December 2016
Head of Product Line BMWi
Simone Menne (*1960)
Member since 2015
Member of Management of Boehringer
Ingelheim Gruppe, Finance
(since 1 September 2016)
Ulrich Kranz³ (*1958)
Mandates
Städtisches Klinikum München GmbH
KraussMaffei Group GmbH
196
Mandates
ALTANA AG (Deputy Chairman)
SGL Carbon SE (Chairman)
UnternehmerTUM GmbH (Chairman)
Dr. h.c. Robert W. Lane (*1949)
MAN Truck & Bus AG
Member since 2009
Deere & Company
Mandates
General Electric Company
Horst Lischka² (*1963)
Member since 2009
General Representative of IG Metall Munich
Former Chairman and Chief Executive Officer of
-
Mandates
-
Member of the Works Council, Munich
Brigitte Rödig¹ (*1963)
Member since 2013
Member of the Works Council, Dingolfing
Jürgen Wechsler² (*1955)
Member since 2011
Dr. Dominique Mohabeer¹ (*1963)
Member since 2012
Mandates
Schaeffler AG (Deputy Chairman)
Siemens Healthcare GmbH (Deputy Chairman)
Werner Zierer¹ (*1959)
Member since 2001
-
Chairman of the Works Council, Regensburg
-
Membership of equivalent national or foreign boards of business enterprises.
Regional Head of IG Metall Bavaria
³ Employee representatives (members of senior management).
Deutsche Post AG
Membership of other statutory supervisory boards.
LSG Lufthansa Service Holding AG (Chairman)
(until 31 December 2016)
(until 31 December 2016)
Lufthansa Technik AG
(until 31 December 2016)
Lufthansa Cargo AG
FWB Frankfurter Wertpapierbörse
(Exchange Council)
(until 31 August 2016)
Miles & More GmbH (Chairman Advisory Board)
(until 31 August 2016)
1 Employee representatives (company employees).
² Employee representatives (union representatives).
Delvag Luftfahrtversicherungs-AG (Chairman)
(until 31 August 2016)
At least two members should have international
management experience.
Composition objectives of the Supervisory Board,
diversity concept
When selecting an individual for a particular Board of
Management position, the Supervisory Board decides
in the best interest of the Group and after due con-
sideration of all relevant circumstances.
In accordance with the recommendation of the
German Corporate Governance Code, the
Supervisory Board has set a standard age limit
for Board of Management membership. This
aims at a retirement age of 60. Consideration is
also given to achieving an appropriate age-mix
within the Board of Management.
To this end, the Supervisory Board has approved the
following concrete objectives for its composition, tak-
ing into account recommendations contained in the
German Corporate Governance Code. These objectives
also describe the concept for achieving diversity in
the composition of the Supervisory Board (diversity
concept):
The Supervisory Board has stipulated a target
for the proportion of women on the Board of
Management. This is outlined in the section
“Disclosures pursuant to the Act on Equal Gen-
der Participation”. The Board of Management
reports to the Personnel Committee and the
Supervisory Board at regular intervals on the
proportion and development of women in
senior management positions, in particular at
executive levels.
The Board of Management should collectively
have extensive experience in the fields of devel-
opment, production, sales and marketing,
finances and human resources.
At least two members of the Board of Manage-
ment should have a technical background.
The Supervisory Board is to be composed in such a way
that its members collectively possess the knowledge,
skills and experience required to properly perform
its tasks.
The Supervisory Board, in collaboration with the
Personnel Committee and the Board of Management,
ensures long-term succession planning. In their assess-
ment of candidates for Board of Management posi-
tions, the underlying suitability criteria applied by the
Supervisory Board are expertise in the relevant function,
outstanding leadership qualities, proven track record
and knowledge of the Company. The Supervisory Board
has adopted a diversity concept for the composition
of the Board of Management, which is also aligned
with recommendations of the German Corporate
Governance Code. In considering which individuals
would best complement the Board of Management, the
Supervisory Board also takes diversity into account. The
criteria diversity is taken by the Supervisory Board to
encompass in particular different, mutually comple-
mentary profiles, professional and life experiences also
at the international level and an appropriate gender
representation. In reaching its decisions, the Supervi-
sory Board also considers the following:
-
-
-
-
Board of Management succession planning,
diversity concept
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
-
→ Composition and
The members of the Board of Management
should have a long-standing track record of
management experience, ideally with experi-
ence in different professional fields.
Four members of the Supervisory Board should
if possible have international experience or
specialist knowledge of one or more non-German
markets important to the BMW Group.
→Composition and
Three of the shareholder representatives in the
Supervisory Board should if possible be entre-
preneurs or persons who have previous experi-
ence in the management or supervision of
another medium or large-sized company.
Statement on
Corporate
Governance
DISCLOSURES PURSUANT
TO THE ACT ON EQUAL
GENDER PARTICIPATION -
TARGETS FOR THE PROPOR-
TION OF WOMEN ON THE
BOARD OF MANAGEMENT
AND AT EXECUTIVE MAN-
AGEMENT LEVELS I AND II
Board, is provided in the section “Statement on Cor-
porate Governance". Based on this information, it
is evident that the Supervisory Board of BMW AG
very diversified, with significantly more than the
targeted four members having international experi-
ence or specialist knowledge with regard to one or
more of the non-German markets important to the
BMW Group. In-depth knowledge and experience
from within the enterprise are provided by seven
employee representatives, as well as the Chairman
of the Supervisory Board. Only one previous Board of
Management member holds office in the Supervisory
Board. At least four members of the Supervisory Board
have experience in managing another company. The
Supervisory Board also has three entrepreneurs as
members. Most of the members of the Supervisory
Board – including employee representatives – have
experience in supervising another medium-sized or
large company. Moreover, more than three members
of the Supervisory Board have experience and special-
ist knowledge in subjects relevant for the future of the
BMW Group, such as customer requirements, mobility,
resources, sustainability and information technology.
For the purpose of assessing the independence of its
members, the Supervisory Board follows the recom-
mendations of the German Corporate Governance
Code. In the opinion of the Supervisory Board, the
fact that a member has a substantial shareholding
in the Company, or holds office as an employee
representative, or was previously a member of the
Board of Management, does not rule out that he or
she is independent. A substantial and not merely
temporary conflict of interests within the meaning
of section 5.4.2. of the German Corporate Governance
Code does not apply to any of the Supervisory Board
members. Employees holding office in the Supervi-
sory Board are protected by law when performing
their duties. All other Supervisory Board members
have a sufficient degree of economic independence
from the Company. Business with entities, in which
the members of the Supervisory Board carry out a
significant function, is conducted on an arm's length
basis. The Supervisory Board has therefore concluded
that all of its members are independent. At least three
members meet the requirements for being designated
as an independent financial expert. At the end of
the reporting period, the Supervisory Board had six
female members (30%), comprising three shareholder
representatives and three employee representatives.
The Supervisory Board has 14 male members (70%),
comprising seven shareholder representatives and
seven employee representatives. The Company there-
fore complies with the statutory gender quota of at
least 30% female members applicable in Germany
since 1 January 2016. The Supervisory Board does not
currently have any members more than 70
years old.
is
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
→ Disclosures Pursuant
to the Act on Equal
Gender Participation-
Targets for the
Proportion of Women
on the Board of
Management and at
Executive Manage-
ment Levels I and II
→ Information on Cor-
porate Governance
Practices applied
Beyond Mandatory
Requirements
Statement on
Corporate
Governance
204
203
The Supervisory Board should include if possi-
ble seven members who have acquired in-depth
knowledge and experience within the
BMW Group, though no more than two former
members of the Board of Management.
In the Supervisory Board's opinion, its composition
as at 31 December 2016 fulfilled the composition
objectives detailed above. In order to make it easier to
assess the actual composition and composition targets,
brief curricula vitae of the current members of the
Supervisory Board are available on the Company's
website at → www.bmwgroup.com. Information relating to
members' practised professions and to mandates in
other statutory supervisory boards and equivalent
national or foreign company boards, including the
length of their periods of service on the Supervisory
As a general rule, members of the Supervisory
Board should not hold office for longer than
until the end of the Annual General Meeting at
which the resolution is passed ratifying the
member's activities for the 14th financial year
after the beginning of the member's first period
of office. This excludes the financial year in
which the first period of office began. This rule
does not apply to natural persons who either
directly or indirectly hold significant investments
in the Company. In the Company's interest,
deviation from the general maximum period is
possible, for instance in order to work towards
another composition target, in particular diversi-
ty of gender and technical, professional and per-
sonal backgrounds.
An age limit for membership of the Supervisory
Board of 70 years should generally be applied.
In exceptional cases, members may remain on
the Board until the end of the next Annual Gen-
eral Meeting after reaching the age of 73, in
order to fulfil legal requirements or to facilitate
smooth succession in the case of key roles or
specialist qualifications.
No persons carrying out directorship functions
or advisory tasks for important competitors of
the BMW Group may belong to the Supervisory
Board. In compliance with applicable legisla-
tion, members of the Supervisory Board are to
take care that no persons will be nominated
for election with whom a serious, non-temporary
conflict of interests could arise due to other
activities and functions carried out by them out-
side the BMW Group, in particular advisory
activities or directorships with customers, sup-
pliers, creditors or other business partners.
Two independent members of the Supervisory
Board should have expert knowledge of
accounting or auditing.
Of the 20 members of the Supervisory Board at
least twelve should be independent members
within the meaning of section 5.4.2 of the Ger-
man Corporate Governance Code, including
at least six as representatives of the Company's
shareholders.
When seeking qualified individuals for the
Supervisory Board whose specialist skills and
leadership qualities are most likely to strength-
en the Board as a whole, consideration is also
to be given to diversity. When preparing nomi-
nations, the extent to which the work of the
Supervisory Board would benefit from diversi-
fied professional and personal backgrounds
(including international aspects) and from an
appropriate gender representation is also to be
taken into account. It is the joint responsibility
of all those participating in the nomination and
election process to ensure that qualified wom-
en are considered for Supervisory Board mem-
bership.
Three members of the Supervisory Board should
if possible be figures from the worlds of busi-
ness, science or research who have experience
in areas relevant to the BMW Group, e.g. chem-
istry, energy supply, information technology, or
who have specialist knowledge in fields relevant
for the future of the BMW Group, e.g. custom-
er requirements, mobility, resources or sustain-
ability.
-
The time schedule set by the Supervisory Board for
achieving the above-mentioned composition targets
is the period up to 31 December 2017. Proposals for
nomination made by the Supervisory Board at the
Annual General Meeting - insofar as they apply to
shareholder Supervisory Board members - should
take account of these objectives in such a way that
they can be achieved with the support of the appro-
priate resolutions at the Annual General Meeting. The
Annual General Meeting is not bound by nominations
for election proposed by the Supervisory Board. The
freedom of employees to vote for the employee mem-
bers of the Supervisory Board is also protected. Under
the rules stipulated by the German Co-Determination
Act, the Supervisory Board does not have the right
to nominate employee representatives for election.
The objectives which the Supervisory Board has set
itself with regard to its composition are therefore not
intended to be instructions to those entitled to vote
or restrictions on their freedom to vote.
202
-
2 (Independent) financial expert within the meaning of §§ 100 (5) and 107 (4) AktG, no. 5.3.2 GCGC.
The Act on Equal Participation of Women and Men
in Executive Positions in the Private and the Public
Sector ("Act on Equal Gender Participation") was
passed into German law in 2015.
― supervision of external audit, in particular auditor independence and additional work
performed by external auditor
supervision of the financial reporting process, the effectiveness of the internal control
system, the risk management system, internal audit arrangements and compliance as
well as the performance of Supervisory Board duties in connection with audits pursuant
to § 20 of the German Securities Trading Act (WpHG)
AUDIT COMMITTEE
Norbert Reithofer¹
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
― set up in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of reference
members, including acceptance of non-BMW Group supervisory mandates as well as the
approval of transactions requiring Supervisory Board approval by dint of law (e.g. loans
to Board of Management or Supervisory Board members)
conclusion, amendment and revocation of employment contracts (in conjunction with
the resolutions taken by the Supervisory Board regarding the compensation of the Board
of Management) and other contracts with members of the Board of Management
― decisions relating to the approval of ancillary activities of Board of Management
preparation of proposals for election of external auditor at Annual General Meeting,
engagement of external auditor and compliance of audit engagement, determination
preparation of decisions relating to the appointment and revocation of appointment of
members of the Board of Management, the compensation and the regular review of the
Board of Management's compensation system
Norbert Reithofer¹
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
Members
preparation of Supervisory Board meetings to the extent that the subject matter to be
discussed does not fall within the remit of a committee
-activities based on terms of reference
-
PRESIDING BOARD
Principal duties, basis for activities
and their composition
Overview of Supervisory Board committees
PERSONNEL COMMITTEE
of areas of audit emphasis and fee agreements with external auditor
preparation of Supervisory Board's resolution on Company and
Group Financial Statements
1 Chair.
(In accordance with statutory requirements, the Mediation Committee
comprises the Chairman and Deputy Chairman of the Supervisory Board
and one member each selected by shareholder representatives and
employee representatives.)
Manfred Schoch
Stefan Quandt
Stefan Schmid
Norbert Reithofer
― committee required by law
proposal to Supervisory Board if resolution for appointment of Board of Management
member has not been carried by the necessary two-thirds majority of Supervisory Board
members' votes
-
MEDIATION COMMITTEE
(In line with the recommendations of the German Corporate Governance
Code, the Nomination Committee comprises only shareholder representa-
tives.)
Norbert Reithofer¹
Susanne Klatten
Karl-Ludwig Kley
Stefan Quandt
― establishment in accordance with the recommendation contained in the German Corpo-
rate Governance Code, activities based on terms of reference
― identification of suitable candidates (male/female) as shareholder representatives on the
Supervisory Board to be put forward for inclusion in the Supervisory Board's proposals for
election at the Annual General Meeting
NOMINATION COMMITTEE
German Corporate Governance Code, activities based on terms of reference
establishment in accordance with the recommendation contained in the
- amendments to Articles of Incorporation only affecting wording
Karl-Ludwig Kley 1,2
Norbert Reithofer
Manfred Schoch
Stefan Quandt
Stefan Schmid
― decision on approval for utilisation of Authorised Capital 2014
discussion of interim reports with Board of Management prior to publication
201
In accordance with this legislation, the Supervisory
Board of BMW AG is required to set a target for the
proportion of women on its Board of Management
and a time frame for meeting this target. Likewise, the
Board of Management of BMW AG is required to estab-
lish targets and a time frame for attaining these targets
with respect to the two executive management levels
below the Board of Management. As its target for the
Board of Management through to 31 December 2016,
the Supervisory Board had stipulated that the Board
of Management should continue to have at least one
female member. This target was achieved: the Board
of Management has one female member (12.5%).
-
For the first target attainment time frame up to
31 December 2016, target ranges of 10 to 12% and 6 to
8% respectively were set by the Board of Management
for the proportion of women to be represented in the
first and second levels of executive management. On
31 December 2016, the proportion of women within
the first and second executive management levels
A coordinated set of instruments and measures is
employed to ensure that the BMW Group, its repre-
sentative bodies, its managers and staff act in a lawful
manner. Particular emphasis is placed on compliance
with antitrust legislation and the avoidance of corrup-
tion risks. Compliance measures are supplemented
by a whole range of internal policies, guidelines and
instructions, which in part reflect applicable legisla-
tion. The BMW Group Policy "Corruption Prevention"
and the BMW Group Instruction "Corporate Hospi-
tality and Gifts" deserve particular mention: these
documents deal with lawful handling of gifts and
benefits and define appropriate assessment criteria
and approval procedures for specified actions. In 2016
a new BMW Group Policy "Antitrust Compliance",
was introduced in 2016 to establish binding rules of
conduct for all employees across the BMW Group to
prevent unlawful restriction of competition.
The Board of Management keeps track of and analyses
compliance-related developments and trends on the
basis of the Group's compliance reporting and input
from the BMW Group Compliance Committee. Meas-
ures to improve the Compliance Management System
are initiated on the basis of identified requirements.
In 2016, to strengthen local compliance manage-
ment, local compliance functions were established
at 69 BMW Group affiliated companies. Their activi-
ties follow a standardised management process with
clearly defined tasks and responsibilities.
The Chairman of the BMW Group Compliance Com-
mittee keeps the Audit Committee (which is part of the
Supervisory Board) informed on the current status of
compliance activities within the BMW Group, both on
a regular and a case-by-case basis as the need arises.
→ Compliance in the
BMW Group
Statement on
Corporate
Governance
208
207
The decisions taken by the BMW Group Compliance
Committee are drafted in concept, and implement-
ed operationally, by the BMW Group Compliance
Committee Office. The BMW Group Compliance
Committee Office comprises 13 employees and is
allocated in organisational terms to the Chairman of
the Board of Management.
Compliance
Governance and
Processes
Compliance
Training
Compliance measures are determined and priori-
tised on the basis of a group-wide compliance risk
assessment covering all 340 organisational units and
functions worldwide within the BMW Group. The
assessment of compliance risks is updated annually.
Measures are realised with the aid of a regionally
structured compliance management team covering
all parts of the BMW Group, which oversees a network
of more than 210 Compliance Responsibles.
SpeakUP Line
Compliance
Compliance
Reporting
Compliance
Communication
Legal Compliance Code
and Regulations
Compliance Instruments and
Measures of the BMW Group
Annual
Compliance
Reporting
Network
Company-wide Compliance
BMW Group Compliance Committee ←
Office
BMW Group Compliance Committee
Contact and
The various elements of the BMW Group Compliance
Management System are shown in the diagram on the
previous page and are applicable for all BMW Group
organisational units worldwide. To the extent that
additional compliance requirements apply to indi-
vidual countries or specific lines of business, these
are covered by supplementary compliance measures.
The BMW Group Legal Compliance Code is the corner-
stone of the Group's Compliance Management System,
spelling out the Board of Management's commitment
to compliance as a joint responsibility ("tone from
the top"). This document, which was revised and
expanded in 2016, explains the significance of legal
compliance and provides an overview of the various
areas relevant for the BMW Group. It is available both
as a printed brochure and for download in German
and English. In addition, translations into nine other
languages are available in the BMW Group intranet.
Managers in particular bear a high degree of respon-
sibility and must set a good example with regard to
preventing infringements. Managers throughout the
BMW Group acknowledge this principle by signing
a written declaration, in which they also undertake
to inform staff working for them of the content and
significance of the Legal Compliance Code and make
them aware of legal risks. Managers must, at regular
intervals and on their own initiative, verify compliance
with the law and communicate regularly with staff on
this issue. Any indication of non-compliance with the
law must be rigorously investigated.
As its target for the proportion of women on the Board
of Management for the time frame from 1 January 2017
to 31 December 2020, the Supervisory Board has stip-
ulated that the Board of Management should continue
to have at least one female member. Assuming that
the Board of Management continues to comprise eight
members, this would correspond to a proportion of
at least 12.5%. The Supervisory Board considers it
desirable to increase the proportion of women on the
Board of Management and fully supports the Board of
Management's endeavours to increase the proportion
of women at the highest executive management levels
within the BMW Group.
Shareholdings of members of the Board of
Management and the Supervisory Board
The members of the Supervisory Board of BMW AG
hold in total 27.99% of the Company's shares of com-
mon and preferred stock (2015: 43.00%), of which
16.25% (2015: 31.26%) relates to Stefan Quandt,
Germany, and 11.73% (2015: 26.74%) to Susanne
Klatten, Germany. The change from the previous
year is almost entirely due to shares held by Johanna
Quandt GmbH & Co. KG für Automobilwerte no
longer being attributed to Stefan Quandt and Susanne
Klatten following the dissolution of the community of
heirs. The shareholdings of the members of the Board
of Management total less than 1% of all issued shares.
Pursuant to Article 19 of the EU Market Abuse Regu-
lation (MAR), members of the Board of Management
and the Supervisory Board and any persons closely
related to those members are required to give notice
to BMW AG and the Federal Agency for the Super-
vision of Financial Services (BaFin) of transactions
with equity or debt instruments of BMW AG or with
related derivatives or other financial instruments, if
the total sum of such transactions reaches or exceeds
an amount of €5,000 during any given calendar year.
BMW AG publishes such information without delay
and communicates it to the Companies Register
for archiving. Notice of publication is issued to the
Federal Agency for the Supervision of Financial Ser-
vices. Securities transactions notified to BMW AG
during the financial year 2016 are also reported on
the Company's website.
Reportable securities transactions
("Managers' transactions")
In the interest of investor protection and to ensure
that the BMW Group complies with regulations
relating to potential insider information, the Board of
Management appointed an Ad-hoc Committee back in
1994, consisting of representatives of various specialist
departments, whose members examine the relevance
of issues for ad-hoc disclosure purposes. All persons
working on behalf of the company who have access
to insider information in accordance with existing
rules have been, and continue to be, included in a
corresponding, regularly updated list and informed
of the duties arising from insider rules.
Compliance is also an important factor in safeguarding
the future of the BMW Group workforce. With this
in mind, the Board of Management and the national
and international employee representative bodies
of the BMW Group have agreed on a binding set of
Joint Principles for Lawful Conduct. In doing so, all
parties involved made a commitment to the principles
contained in the BMW Group Legal Compliance Code
and to trustful cooperation in all matters relating to
compliance. Employee representatives are therefore
regularly involved in the process of refining compli-
ance measures within the BMW Group.
The BMW Group underlined its position back in 2005
with the Joint Declaration on Human Rights and
Working Conditions at the BMW Group. This was
followed by systematic introduction and upgrading of
measures to protect human rights. Henceforth, these
already established measures were integrated into the
BMW Group's group-wide Compliance Management
System in 2016.
The BMW Group is committed to respecting inter-
nationally recognised human rights, in particular
the UN Guiding Principles on Business and Human
Rights, the ten principles of the UN Global Compact
and the ILO Core Labour Conventions. The company
focuses on topics and areas of activity where it can
leverage its influence as a commercial enterprise.
→ Compliance in the
BMW Group
Statement on
Corporate
Governance
210
209
In the same way that the BMW Group is committed
to lawful and responsible conduct, it expects no less
from its business partners. In 2012, the BMW Group
developed a new Business Relations Compliance pro-
gramme aimed at ensuring the reliability of its business
relations. Relevant business partners are checked and
evaluated with a view to identifying potential compli-
ance risks. These procedures are particularly relevant
for relations with sales partners and service providers,
such as agencies and consultants. Depending on the
results of the evaluation, appropriate measures - such
as communication measures, training and possible
monitoring - are implemented to manage compliance
risks. The Business Relations Compliance programme
has already been introduced in 37 organisational units
since its launch and, over the coming years, will be
rolled out successively throughout the BMW Group's
worldwide sales organisation. In 2016, the company
also continued integrating compliance clauses to pro-
tect contractual relationships into dealer and importer
contracts. An IT system to verify customer integrity
was developed and introduced in 20 markets under
expanded anti-money-laundering measures.
To avoid this, BMW Group employees are kept fully
up-to-date with the instruments and measures used
by the Compliance Management System via various
internal channels. As of 2014, all new staff receive
a welcome email underscoring the BMW Group's
special commitment to compliance when they join
the company. The central means of communication
is the Compliance website within the BMW Group's
intranet, where employees can find compliance-
related information and access training materials
in both German and English. The website contains a
special service area where various practical tools are
made available to employees to help them deal with
typical compliance-related matters. Since mid-2015,
BMW Group employees have also had access to an
IT system, which helps them verify legal admissibility
and approve and document benefits, especially in
connection with corporate hospitality.
It is essential that employees are aware of and comply
with applicable legal regulations. The BMW Group
does not tolerate violations of the law by its employees.
Culpable violations of the law result in employment-
contract sanctions and may involve personal liability
consequences for the employee involved.
Compliance with and implementation of the Legal
Compliance Code are audited regularly by Corporate
Audit and subjected to control checks by Corporate
Security and the BMW Group Compliance Committee
Office. As part of its regular activities, Corporate Audit
carries out on-site audits. The BMW Group Compli-
ance Committee also engages Corporate Audit to
perform compliance-specific checks. In addition, three
BMW Group Compliance Spot Checks, sample tests
specifically designed to identify potential corruption
risks, were carried out in 2016. Compliance control
activities are coordinated by the BMW Group Panel
Through the group-wide reporting system, Com-
pliance Responsibles throughout the BMW Group
report on compliance-relevant issues to the Compli-
ance Committee on a regular basis, and, if necessary,
on an ad hoc basis. This includes reporting on the
compliance status of the relevant organisational units,
on identified legal risks and incidences of non-com-
pliance, as well as on corrective or preventative
measures implemented.
Compliance-related queries and concerns are
documented and followed up by the BMW Group
Compliance Committee Office using an electronic
Case Management System. If necessary, Corporate
Audit, Corporate Security, the Works Council and
legal departments may be called upon to assist in the
investigation process.
Employees also have the opportunity to submit infor-
mation - anonymously and confidentially - via the
BMW Group SpeakUP Line about possible breaches
of the law within the company. The BMW Group
SpeakUP Line is available in a total of 34 languages
and can be reached via local toll-free numbers in
all countries in which BMW Group employees are
engaged in activities.
In order to avoid legal risks, all members of staff are
expected to discuss compliance matters with their
managers and with the relevant departments within
the BMW Group, in particular Legal Affairs, Corporate
Audit and Corporate Security. The BMW Group Com-
pliance Contact serves as a further point of contact for
both employees and non-employees for any questions
regarding compliance.
Additional compliance coaching has also been imple-
mented for international sales and financial service
locations in local markets. These multi-day classroom
seminars strengthen the understanding of compliance
in selected organisational units and enhance cooper-
ation between the central BMW Group Compliance
Committee Office and decentralised compliance
offices. In 2016, market coaching was conducted in
Italy, Belgium, Austria, China and Japan.
In addition to this basic training, more in-depth
training is also provided to certain groups of staff on
specific compliance issues. Since 2013, employees
have been trained related to an extended Antitrust
law training, targeting employees who come into con-
tact with antitrust-related issues as a result of their
functions within sales and marketing, purchasing,
production or development. Around 16,900 employees
have already completed this training. The relevant
divisions also implemented and stepped up further
antitrust compliance measures and processes in 2016
to make employees who participate in meetings with
competitors or work with suppliers or sales partners
sufficiently aware of antitrust risks.
More than 32,500 managers and staff worldwide have
received training in essential compliance matters
since the introduction of the BMW Group Compli-
ance Management System. The training material is
available on an Internet-based training platform in
German and English and includes a final test. Suc-
cessful completion of the training programme, which
is documented by a certificate, is mandatory for all
BMW Group managers. Appropriate processes are in
place to ensure that all newly recruited managers and
promoted staff undergo compliance training. In this
way, the BMW Group ensures full training coverage
for its managers in compliance matters.
Annual
Report
Board of Management BMW AG
Compliance Controls. Any necessary follow-up meas-
ures are organised by the BMW Group Compliance
Committee Office.
Supervisory Board BMW AG
We reflect on our actions, respect each other, offer
clear feedback and celebrate success.
Appreciation
We take consistent decisions and commit to them
personally. This allows us to work freely and more
effectively.
Responsibility
Within the BMW Group, the Board of Management,
the Supervisory Board and the employees base their
actions on five core values which are the cornerstone
of the success of the BMW Group:
Core values
CORPORATE GOVERNANCE
PRACTICES APPLIED
BEYOND MANDATORY
REQUIREMENTS
INFORMATION ON
During 2016, the proportion of women in both the
workforce as a whole and in management positions
increased, reflecting the positive impact of long-term
measures, dialogue and information events. Further
information on the topic of diversity within the
BMW Group can be found in the section "Workforce".
Diversity contributes to greater competitiveness
and innovation at BMW Group. Working together
in mixed, complementary teams raises performance
levels and helps sharpen the focus on the customer.
The requirement of an appropriate gender balance is
seen as an essential component of the BMW Group's
diversity concept. Further increase in the proportion
of women therefore remains an objective of the Board
of Management.
Transparency
Function level II
Function levell
12
in %
→ 65
at BMW AG
Proportion of female executives within
management/function levels I and II
Top management within the BMW Group is structured
in terms of functions, following a consistent job eval-
uation system based on Mercer.
For the next target attainment time frame, which has
been selected to run to 31 December 2020, the Board
of Management has set target ranges of 10.2 - 12% for
the first level of executive management and 8 – 10%
for the second.
Annual
Report
stood at 10.2% and 6.3% respectively. The targets were
therefore achieved within the stipulated time frame.
6.3
We acknowledge concerns and identify inconsisten-
cies in a constructive way. We act with integrity.
10.2
We trust and rely on each other. This is essential if we
are to act swiftly and achieve our goals.
Compliance
Risk Analysis
Compliance
Investigations
and Controls
Trust
BMW Group Compliance Management System
→ 66
The BMW Group Compliance Committee reports
regularly to the Board of Management on all compli-
ance-related issues, including the progress made in
refining the BMW Group Compliance Management
System, details of investigations performed, known
infringements of the law, sanctions imposed and
corrective/preventative measures implemented. This
ensures that the Board of Management is immediately
notified of any cases of particular significance.
The BMW Group Compliance Committee comprises
the heads of the following departments: Legal Affairs,
Corporate and Governmental Affairs, Corporate Audit,
Group Reporting, Organisational Development and
Corporate Human Resources. It manages and moni-
tors activities necessary to avoid non-compliance with
the law. These activities include training, information
and communication measures, compliance controls
and following up cases of non-compliance.
Responsible and lawful conduct is fundamental to the
success of the BMW Group. It is an integral part of
our corporate culture and the reason why customers,
shareholders, business partners and the general public
place their trust in us. The Board of Management and
the employees of the BMW Group are obliged to act
responsibly and in compliance with applicable laws
and regulations.
COMPLIANCE IN THE
BMW GROUP
We also work in close partnership with our suppliers
and promote their commitment to sustainability.
Sustainable business management can only be
effective, however, if it covers the entire value-added
chain. That is why the BMW Group not only sets high
standards for itself, but also expects its suppliers and
partners to meet the ecological and social standards it
sets and strives continually to improve the efficiency
of processes, measures and activities. For instance,
we consistently require our dealers and importers
to comply with ecological and social standards on a
contractual basis. Moreover, corresponding criteria
are embedded throughout the entire purchasing
system - including in enquiries to suppliers, in the
sector-wide OEM Sustainability Questionnaire, in our
purchasing terms and in our evaluation of suppli-
ers in order to promote sustainability aspects in
line with the BMW Group Sustainability Standard.
The BMW Group expects suppliers to ensure that the
BMW Group's sustainability criteria are also adhered
to by their sub-suppliers. Purchasing terms and con-
ditions and other information relating to purchasing
can be found in the publicly available section of the
BMW Group Partner Portal at → https://b2b.bmw.com.
Further information on social responsibility towards
employees can be found in the section "Workforce".
For the BMW Group, worldwide compliance of these
fundamental principles and rights is self-evident.
Since 2005 employees' awareness of this issue has
therefore been raised by means of regular internal
communications and training on recent developments
in this area. The “Compliance Contact” helpline
and the BMW Group SpeakUP Line are available to
employees wishing to raise queries or complaints
relating to human rights issues. With effect from 2016,
human rights have been incorporated as an integral
component of the BMW Group's worldwide Compli-
ance Management System, representing a further step
in the systematic implementation of the UN Guiding
Principles on Business and Human Rights.
This principle has been embedded in BMW Group's
internal rules of conduct for many years. In order to
protect itself systematically against compliance-relat-
ed and reputational risks, the Board of Management
created a Compliance Committee several years ago,
mandated to establish a worldwide Compliance
Management System throughout the BMW Group.
The BMW Group stands by its social responsibilities.
Our corporate culture combines the drive for success
with openness, trust and transparency. We are well
aware of our responsibility towards society. Socially
sustainable human resource policies and compliance
with social standards are based on various interna-
tionally recognised guidelines. The BMW Group is
committed to the OECD's guidelines for multinational
companies and the contents of the ICC Business
Charter for Sustainable Development. Details of the
contents of these guidelines and other relevant infor-
mation can be found at → www.oecd.org and www.iccwbo.org.
The Board of Management signed the United Nations
Global Compact in 2001 and, in 2005, together with
employee representatives, issued a "Joint Declaration
on Human Rights and Working Conditions in the
BMW Group". This Joint Declaration was reconfirmed
in 2010. With the signature of these documents, we
have given our commitment to abide worldwide by
internationally recognised human rights and with the
fundamental working standards of the International
Labour Organization (ILO). These include in particular
freedom of employment, the principle of non-dis-
crimination, freedom of association and the right to
collective bargaining, the prohibition of child labour,
appropriate remuneration, regulated working times
and compliance with work and safety regulations.
The complete text of the UN Global Compact and
the recommendations of the ILO and other relevant
information can be found at → www.unglobal.compact.org and
→ www.ilo.org. The Joint Declaration on Human Rights
and Working Conditions in the BMW Group can
be found at www.bmwgroup.com under the menu items
"Downloads" and "Responsibility".
We are excited by change and open to new opportu-
nities. We learn from our mistakes.
Openness
206
205
→Information on Cor-
porate Governance
Practices applied
Beyond Mandatory
Requirements
Statement on
Corporate
Governance
→ Compliance in the
BMW Group
Social responsibility towards employees and
along the supplier chain
Present value of
pension obliga-
tions (defined
benefit plans),
Service cost in
accordance with
HGB for the
in accordance
with IFRS6
Total5
financial year 20165 financial year 20165
Service cost in
accordance with
Oliver Zipse
Total³
Peter Schwarzenbauer
Ian Robertson
Klaus Fröhlich
Present value of
pension obliga-
tions (defined
benefit plans),
in accordance
Markus Duesmann¹
Friedrich Eichiner²
Klaus Draeger4
with HGB6
1,879,851
510,811
87,500
Milagros Caiña Carreiro-Andree
(1,427,072)
(1,427,599)
(364,656)
(360,767)
1,879,263
360,785
358,490
(3,992,702)
(3,993,819)
(358,331)
(175,287)
4,763,838
4,764,941
507,444
Harald Krüger
(34,245)
Pension entitlements
435,753
68,865
(34,375)
111,253
76,878
(497,259)
(133,415)
489,900
127,176
(-)
2,130
2,130
(497,690)
(90,275)
87,500
(224,354)
in €
(491,185)
196,362
5 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2015.
"Member of the Board of Management until 31 December 2016.
3 Member of the Board of Management since 1 October 2016.
² Member of the Board of Management until 30 September 2016.
1 Provisional number or provisional monetary value calculated on the basis of the closing price of BMW common stock in the Xetra trading system on 30 December 2016 (88.75 €)
(fair value at reporting date).
(2,959,655)
(1,106,057)
2,614,266
829,579
(9,915)
(9,915)
71,285
61,370
(100,747)
(59,311)
95,615
622,236
→ Compensation
(-)
6 Based on a legal right to receive the benefits already promised to them, Board of Management members appointed for the first time prior to 1 October 2010 were given the option of choosing between the
previous defined benefit model and the new defined contribution model.
219
220
Statement on
Corporate
Governance
Report
2. Supervisory Board compensation
Responsibilities, regulation pursuant to
Articles of Incorporation
The compensation of the Supervisory Board is specified
either by a resolution of the shareholders at the Annu-
al General Meeting or in the Articles of Incorporation.
The compensation regulation valid for the financial
year under report was resolved by shareholders at the
Annual General Meeting on 14 May 2013 and is set
out in Article 15 of BMW AG's Articles of Incorpo-
ration, which can be viewed and/or downloaded at
→ www.bmwgroup.com/ir under the menu items "Facts about
the BMW Group" and "Corporate Governance".
Compensation principles, compensation components
The Supervisory Board of BMW AG receives a fixed
compensation component as well as a Company per-
formance-related compensation component, which is
oriented toward sustainable growth and based on a
multi-year assessment. The Company performance-
related component is based on average earnings per
share of common stock for the remuneration year and
the two preceding financial years.
The fixed and performance-related components in
combination are intended to ensure that the compen-
sation of Supervisory Board members is appropriate
in relation to the tasks of Supervisory Board members
and the Company's financial condition and also takes
account of business performance over several years.
In accordance with the Articles of Incorporation, each
member of BMW AG's Supervisory Board receives, in
addition to the reimbursement of reasonable expens-
es, a fixed amount of €70,000 (payable at the end of
the year) as well as a Company performance-related
compensation of €170 for each full €0.01 by which
the average amount of (undiluted) earnings per s share
(EPS) of common stock reported in the Group Finan-
cial Statements for the remuneration year and the two
preceding financial years exceed a minimum amount
of €2.00 (payable after the Annual General Meeting
held in the following year). An upper limit correspond-
ing to twice the amount of the fixed compensation
is in place for the Company performance-related
compensation. The limit for a member of the Supervi-
sory Board with no additional compensation-relevant
function is therefore set at €140,000.
With this combination of fixed compensation ele-
ments and a Company performance-related com-
pensation component oriented toward sustainable
growth, the compensation structure in place for
BMW AG's Supervisory Board complies with the rec-
ommendation on supervisory board compensation
contained in section 5.4.6 paragraph 2 sentence 2 of
the German Corporate Governance Code (version
dated 5 May 2015).
The German Corporate Governance Code also recom-
mends in section 5.4.6 paragraph 1 sentence 2 that
the exercising of chair and deputy chair positions in
the Supervisory Board as well the chair and member-
ship of committees should also be considered when
determining the level of compensation.
Accordingly, the Articles of Incorporation of BMW AG
stipulate that the Chairman of the Supervisory Board
shall receive three times the amount and each Deputy
Chairman shall receive twice the amount of the remu-
neration of a Supervisory Board member. Provided the
relevant committee convened for meetings on at least
three days during the financial year, each chairman
of the Supervisory Board's committees receives twice
the amount and each member of a committee receives
one-and-a-half times the amount of the remuneration
of a Supervisory Board member. If a member of the
Supervisory Board exercises more than one of the
functions referred to above, the compensation is
measured only on the basis of the function that is
remunerated with the highest amount.
In addition, each member of the Supervisory Board
receives an attendance fee of €2,000 for each full
meeting of the Supervisory Board (Plenum) which
the member has attended (payable at the end of the
financial year). Attendance of more than one meeting
on the same day is not remunerated separately.
5 Service cost differs due to the different valuation bases used to measure pension obligations for HGB purposes (expected settlement amount) and for IFRS purposes
(present value of the defined benefit obligation).
The Company also reimburses to each member of
the Supervisory Board reasonable expenses and any
value-added tax arising on the member's remunera-
tion. The amounts disclosed below are net amounts.
4 Member of the Board of Management until 30 September 2016.
2 Member of the Board of Management until 31 December 2016.
1,620,978
(221,667)
(221,667) (1,188,313)
(1,187,721)
2,634,212
(2,301,249)
2,849,067 23,630,940
(2,888,441) (23,198,892)
21,425,612
(22,343,033)
174,793
(184,066)
407,706
(408,960)
7,864,591
5,649,230
(5,251,799)
(5,011,606)
1 Member of the Board of Management since 1 October 2016.
3 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2015.
620,307
For performance of his duties, the Chairman of the
Supervisory Board has the use of an office with admin-
istrative support, as well as the BMW car service.
1,621,507
(350,000)
(350,000)
1,935,142
1,935,142
356,743
354,365
(5,163,692)
(5,465,539)
(408,960)
(201,018)
5,622,284
6,856,658
407,706
189,754
(-)
(1,510,725) (1,510,706)
465,494
424,411
4,469,471
357,410
355,045
(1,081,155)
(1,081,408)
(364,312)
(360,305)
1,480,940
1,481,134
359,548
357,203
(2,968,379)
(3,279,690)
(411,555)
(448,139)
3,502,860
408,564
102,338
Oliver Zipse
(109,760)
Bonus
Cash compen-
sation for share
Share-based compensation programme
Chairman of the Board of Management
in the second term of appointment or from fourth year in office
Member of the Board of Management
in the first term of appointment
Member of the Board of Management
in € p. a.
REMUNERATION CAPS (MAXIMUM REMUNERATION)
Member of the Board of Management: €350,000-€400,000
Chairman of the Board of Management: €500,000
Pension contributions p. a.:
Pension based on amounts credited to individual savings accounts for contributions paid
and interest earned, various forms of disbursement
Pension of €120,000 p. a. plus fixed amounts based on length of Company
and board service
acquisition
b) Defined contribution system with guaranteed minimum rate of return
a) Defined benefits
Principal features
Model
RETIREMENT AND SURVIVING DEPENDANTS' BENEFITS
Contractual agreement, main points: use of Company cars, insurance premiums,
contributions towards security systems, medical check-up
OTHER COMPENSATION
Once the four-year holding period requirement is fulfilled, Board of Management mem-
bers receive for each three common stock shares held either - at the Company's option -
one further share of common stock or the equivalent amount in cash
Earmarked cash remuneration equivalent to the amount required to be invested in
BMW AG shares, plus taxes and social insurance contributions
Requirement for Board of Management members to each invest an amount equivalent to
20% of their total bonus (after tax) in BMW AG common stock
May be paid in justified circumstances on an appropriate basis, contractual basis,
no entitlement
Criteria for the performance factor also include: innovation (economic and ecological,
e.g. reduction of CO2 emissions), customer orientation, ability to adapt, leadership
accomplishments, corporate culture and promoting integrity, attractiveness as employer,
progress in implementing the diversity concept and activities that foster corporate social
responsibility
Formula: 50% of target bonus x performance factor
Primarily qualitative criteria, expressed in terms of a performance factor aimed at
measuring the board members' contribution to sustainable and long-term performance
and the future viability of the business
Quantitative criteria fixed in advance for a period of three financial years
Formula: 50% of target bonus x earnings factor x dividend factor (common stock)
The earnings factor is derived from the Group net profit and the Group post-tax return
on sales
(only applies to board members appointed for the first time before
1 January 2010; based on legal right to receive the benefits already
promised to them, this group of persons is entitled to opt between
(a) and (b)
€1.75 million (from second term of appointment onwards or fourth year in office)
€3.00 million (Chairman of the Board of Management)
Monetary value
of matching
component
Total*
Board of Management members who retire immedi-
ately after their service on the board and who draw a
retirement pension are entitled to purchase vehicles
and BMW Group services at conditions that also apply
for Company pensioners and to lease BMW Group
vehicles in accordance with the guidelines applicable
to senior heads of departments. Retired Chairmen
of the Board of Management are entitled to use a
BMW Group vehicle as a company car on a similar
basis to senior heads of departments, and depend-
ing on availability and against payment, use BMW
chauffeur services.
been specified, in the event of which the Company no
longer has any obligation to pay benefits. Transitional
payments are no longer provided.
Report
→ Compensation
Statement on
Corporate
Governance
216
215
Income earned on an employed or a self-employed
basis up to the age of 63 may be offset against pension
entitlements. In addition, certain circumstances have
Contributions falling due under the defined con-
tribution model are paid into an external fund in
conjunction with a trust model that is also used to
fund pension obligations to employees.
Depending on the length of membership in the Board
of Management and previous activities, the annual
contribution to be paid amounts to between €350,000
and €400,000 for each member of the Board of Man-
agement and €500,000 for the Chairman of the Board
of Management. The guaranteed minimum rate of
return p. a. corresponds to the maximum interest rate
used to calculate insurance reserves for life insurance
policies (guaranteed interest on life insurance policies).
When granting pension entitlements, the Supervisory
Board considers the targeted level of pension provision
in each case as well as the resulting expense for the
BMW Group.
the number of annual contributions possible up to
the age of sixty (up to a maximum of 10). In addition,
following the death of a retired board member who
has elected to receive a lifelong pension, 60% of that
amount is paid as a lifelong widow's pension. Pensions
are increased annually by at least 1%.
If a member of the Board of Management with a
vested entitlement dies prior to the commencement
of benefit payments, a surviving spouse or otherwise
surviving children - in the latter case depending on
their age and education – are entitled to receive ben-
efits as surviving dependants. In case of invalidity or
death, the minimum benefit promised is based on
The amount of the benefits to be paid is determined
on the basis of the amount accrued in each board
member's individual pension savings account. The
amount on this account arises from annual contribu-
tions paid in, plus interest earned depending on the
type of investment.
If a mandate is terminated, the new defined contribu-
tion system provides entitlements which can be paid
either (a) in case of death or invalidity as a one-off
amount or in instalments, or (b) upon retirement –
depending on the wish of the ex-board member con-
cerned in the form of a lifelong monthly pension,
as a one-off amount, in instalments, or in a combined
form (for instance a combination of a one-off payment
and a proportionately reduced lifelong monthly pen-
sion). Former members of the Board of Management
are entitled to receive the retirement benefit at the
earliest upon reaching the age of 60, or in the case
of entitlements awarded after 1 January 2012, upon
reaching the
age of 62.
Possible
special bonus
*Including basic remuneration, other fixed remuneration elements and pension contribution. The overall cap is lower than the sum of the maximum amounts for each of the individual components.
1,500,000
1,400,000
1,400,000
6,000,000
5,500,000
1,200,000
800,000
800,000
3,500,000
4,925,000
1,000,000
700,000
700,000
3,000,000
9,850,000
Termination benefits on premature termination of
board activities, benefits paid by third parties
In conjunction with the consensual early termina-
tion of Dr Eichiner's Board of Management mandate
with effect from the expiry of 31 December 2016, the
Company also reached an agreement with Dr Eichiner
concerning an amendment to his service contract,
which ends on 31 May 2017. For the period from
the termination of his board mandate through to
31 May 2017, he continues to receive fixed compen-
sation of €0.38 million. A payment of €0.75 million,
payable in 2017, was agreed to settle all other com-
pensation entitlements for the remainder of the
€1.50 million (first term of appointment)
Target bonuses p. a. (if target is 100% achieved):
The bonus comprises two components, each equally
weighted, namely a corporate earnings-related bonus
and a personal performance-related bonus. The target
bonus (100%) for a Board of Management member,
for both components of variable compensation, totals
€1.5 million p. a., rising to €1.75 million p. a. from the
second term or fourth year of office onwards. The
equivalent figure for the Chairman of the Board of
Management is €3 million p. a. The bonus figure is
capped for all Board of Management members at 200%
of the relevant target bonus.
Supervisory Board also has the option of paying an
additional special bonus.
Variable cash remuneration, in particular bonuses
Variable cash remuneration consists of a cash bonus
and share-based remuneration component equiva-
lent to 20% of a board member's total bonus after
taxes, which the board member is required to invest
in BMW AG common stock. Taxes and social insur-
ance relating to the share-based remuneration are
also borne by the Company. In justified cases, the
The variable remuneration of Board of Management
members comprises variable cash remuneration on
the one hand and a share-based remuneration com-
ponent on the other.
Variable remuneration
The basic remuneration of members of the Board of
Management was unchanged from the previous year,
namely €0.75 million p. a. for a board member during
the first term of office, €0.9 million p.a. for a board
member from the second term of office or fourth
year of office onwards and €1.5 million p. a. for the
Chairman of the Board of Management.
Fixed remuneration consists of a base salary (paid
monthly) and other remuneration elements, which
comprise mainly the use of company and leased cars
as well as the payment of insurance premiums, con-
tributions towards security systems and an annual
medical check-up. Members of the Board of Manage-
ment are also entitled to purchase vehicles and other
services of the BMW Group at conditions that also
apply in each relevant case for employees.
Fixed remuneration
Compensation system, compensation components
The compensation of the Board of Management com-
prises both fixed and variable remuneration as well as
a share-based component. Retirement and surviving
dependants' benefit entitlements are also in place.
positive and negative developments and that the pack-
age as a whole encourages a long-term approach to
business performance. Targets and other parameters
may not be changed retrospectively. The Supervisory
Board reviews the appropriateness of the compensa-
tion system annually. In preparation, the Personnel
Committee also consults remuneration studies. The
Supervisory Board reviews the appropriateness of the
compensation system in horizontal terms by compar-
ing compensation paid by other DAX companies and
in vertical terms by comparing board compensation
with the salaries of executive managers and with the
average salaries of employees of BMW AG based in
Germany, in both cases with regard to their various
levels and to changes over time. Recommendations
made by an independent external remuneration
expert and suggestions made by investors and analysts
are also considered in the consultative process.
The compensation of members of the Board of Man-
agement is determined by the full Supervisory Board
on the basis of performance criteria and after taking
into account any remuneration received from Group
companies. The principal performance criteria are the
nature of the tasks allocated to each member of the
Board of Management, the economic situation and the
performance and future prospects of the BMW Group.
The Supervisory Board sets ambitious and relevant
parameters as the basis for variable compensation.
It also ensures that variable components based on
multi-year assessment criteria take account of both
The compensation system for the Board of Man-
agement at BMW AG is designed to encourage a
management approach focused on the sustainable
development of the BMW Group. One further prin-
ciple applied when designing remuneration systems
at BMW is that of consistency at different levels. This
means that compensation systems for the Board of
Management, senior management and employees
of BMW AG are composed of similar elements. The
Supervisory Board carries out regular checks to ensure
that all Board of Management compensation compo-
nents are appropriate, both individually and in total,
and do not encourage the Board of Management to
take inappropriate risks on behalf of the BMW Group.
At the same time, the compensation model used for
the Board of Management needs to be sufficiently
attractive for highly qualified executives in a compet-
itive environment.
Principles of compensation
The full Supervisory Board is responsible for deter-
mining and regularly reviewing Board of Management
compensation. The necessary preparation for these
tasks is undertaken by the Supervisory Board's Per-
sonnel Committee.
The corporate earnings-related bonus is based on the
BMW Group's net profit and post-tax return on sales
(which are combined in a single earnings factor) and
the level of the dividend (common stock). The corpo-
rate earnings-related bonus is derived by multiplying
the target amount fixed for each member of the Board
of Management by the earnings factor and by the
dividend factor. In exceptional circumstances, for
instance when there have been major acquisitions or
disposals, the Supervisory Board may adjust the level
of the corporate earnings-related bonus.
Responsibilities
The following section describes the principles govern-
ing the compensation of the Board of Management
and the stipulations set out in the statutes relating
to the compensation of the Supervisory Board. In
addition to explaining the compensation system, the
components of compensation are also disclosed in
absolute figures. Furthermore, the compensation
of each member of the Board of Management and
the Supervisory Board for the financial year 2016 is
disclosed per individual member and analysed in its
component parts.
COMPENSATION REPORT
Report
→ Compensation
Statement on
Corporate
Governance
212
211
Under the terms of the Employee Share Programme,
in 2016 employees were entitled to acquire packages
of between four and eleven shares of non-voting pre-
ferred stock with a discount of €22.72 (2015: €20.83)
per share compared to the market price (average
closing price in Xetra trading during the period from
4 to 9 November 2016: €66.86). All employees of
BMW AG and its (directly or indirectly) wholly owned
German subsidiaries (if agreed to by the directors
of those entities) were entitled to participate in the
programme. Employees were required to have been
in an uninterrupted employment relationship with
BMW AG or the relevant subsidiary for at least one
year at the date on which the allocation for the year
was announced. Shares of preferred stock acquired
in conjunction with the Employee Share Programme
are subject to a blocking period of four years, starting
from 1 January of the year in which the employees
acquired the shares. A total of 305,029 (2015: 309,944)
shares of preferred stock were acquired by employees
under the programme in 2016; 305,000 (2015: 309,860)
of these shares were drawn from Authorised Capital
2014, the remainder were bought back via the stock
exchange. Every year the Board of Management of
BMW AG decides whether the scheme is to be con-
tinued. Further information is provided in → notes 29
and 39 to the Group Financial Statements.
→ see
notes
29 and 39
→ see
note 39
-
Under the terms of the programme, participants give
a commitment to invest an amount equivalent to 20%
of their performance-based bonus in BMW common
stock and to hold the shares so acquired for a min-
imum of four years. In return for this commitment,
BMW AG pays 100% of the investment amount as a net
subsidy. Once the four-year holding period require-
ment has been fulfilled, the participants receive – for
each three common stock shares held and at the
Company's option one further share of common
stock or the equivalent amount in cash.
The share-based remuneration programme for qual-
ifying heads of department, introduced with effect
for financial years beginning after 1 January 2012, is
closely based on the programme for Board of Manage-
ment members and is aimed at rewarding a long-term,
entrepreneurial approach to running the business on
a sustainable basis.
Three share-based remuneration schemes were
in place at BMW AG during the year under report,
namely the Employee Share Programme (under which
entitled employees of BMW AG have been able to
participate in the enterprise's success since 1989 in
the form of non-voting shares of preferred stock), a
share-based remuneration programme for Board of
Management members, and a share-based remuner-
ation programme for senior heads of department
(relating in both cases to shares of common stock).
The share-based remuneration programme for Board
of Management members is described in detail in
the Compensation Report (see also the "Share-based
remuneration" section in the Compensation Report
and → note 39 to the Group Financial Statements).
1. Board of Management compensation
-
An earnings and dividend factor of 1.00 would give
rise to an earnings-based bonus of €0.75 million for
the financial year 2016 for a member of the Board
of Management during the first period of office and
one of €0.875 million during the second term of
appointment or from the fourth year in office. The
equivalent bonus for the Chairman of the Board of
Management is €1.5 million. The earnings factor is
1.00 in the event of a Group net profit of €3.1 billion
and a post-tax return on sales of 5.6%. The dividend
factor is 1.00 in the event that the dividend paid on
the shares of common stock is between 101 and 110
cents. If the Group net profit were below €2 billion,
or if the post-tax return on sales were less than 2%,
the earnings factor for the financial year 2016 would
be zero. In this case, no corporate earnings-related
bonus would be paid.
at safeguarding the future viability of the business
to the extent not included directly in the basis of
measurement. Performance factor criteria include
innovation (economic and ecological, e.g. reduction
of carbon emissions), customer focus, ability to adapt,
leadership accomplishments, shaping corporate cul-
ture and promoting integrity, contributions to the
Company's attractiveness as an employer, progress
in implementing the diversity concept, and activities
that foster corporate social responsibility. The target
bonus and the key figures used to determine the cor-
porate earnings-related bonus are fixed in advance for
a period of three financial years, during which time
they may not be amended retrospectively.
(matching component)
b) Share-based remuneration component
a) Cash compensation component
Share-based remuneration programme
Special bonus payments
(corresponds to 50% of target bonus if target is 100% achieved)
b) Performance-related bonus
(corresponds to 50% of target bonus if target is 100% achieved)
a) Corporate earnings-related bonus
Bonus
VARIABLE COMPENSATION
€1.50 million
- €0.90 million (from second term of appointment onwards or fourth year in office)
Chairman of the Board of Management:
€0.75 million (first term of appointment)
The personal performance-related bonus is derived by
multiplying the target amount set for each member
of the Board of Management by a performance factor.
The Supervisory Board sets the performance factor
on the basis of its assessment of the contribution
of the relevant Board of Management member to
sustainable and long-term oriented business devel-
opment. In setting the factor, equal consideration is
given to personal performance and decisions taken
in previous planning periods, key decisions affecting
the future development of the business and the effec-
tiveness of measures taken in response to changing
external conditions as well as other activities aimed
Member of the Board of Management:
BASIC COMPENSATION P. A.
Component
full year of service on the board (up to a maximum
of 15 years). Pension payments are adjusted based
on the rules applicable for the adjustment of civil
servants' pensions, i.e. the pensions of members of
the Board of Management are adjusted when the civil
servants remuneration level B6 (excluding allowances)
is increased by more than 5% or in accordance with
the Company Pension Act.
Overview of compensation system and
compensation components
defined benefit plan, the entitlement to retirement
benefits arises at the earliest on reaching the age of
60 or in case of invalidity. The amount of the pen-
sion comprises a basic monthly amount of €10,000
plus a fixed amount. The fixed amount is made up
of approximately €75 for each year of service in the
Company before becoming a member of the Board of
Management plus between €400 and €600 for each 7
→ Compensation
Report
Statement on
Corporate
Governance
214
213
In the event of the termination of mandate, Board
of Management members appointed for the first
time prior to 1 January 2010 are entitled to receive
certain defined benefits in accordance with the rules
of an older (defined benefit) pension plan. Under the
Retirement and surviving dependants' benefits
The provision of retirement and surviving depend-
ants' benefits for Board of Management members
was changed to a defined contribution system with a
guaranteed minimum return with effect from 1 Janu-
ary 2010. However, given the fact that board members
appointed for the first time prior to 1 January 2010 for
the most part had a legal right to receive the benefits
already promised to them, these board members were
given the option to choose between the previous sys-
tem and the new one.
This programme envisages a share-based remuner-
ation component equivalent to 20% of the board
member's total bonus after taxes, which the board
member is required to invest in BMW AG common
stock. Taxes and social insurance relating to the share-
based remuneration component are borne by the
Company. As a general rule, the shares must be held
for a minimum of four years. As part of a matching
plan, at the end of the holding period the Board of
Management members will normally receive from
the Company either one additional share of common
stock or an equivalent cash amount for three shares
of common stock held, to be decided at the discretion
of the Company (share-based remuneration compo-
nent/matching component). Special rules apply in the
case of death or invalidity of a Board of Management
member or early termination of the contractual rela-
tionship before fulfilment of the holding period.
The compensation system includes a share-based
remuneration programme, in which the level of share-
based remuneration is based on the amount of bonus
paid. The system is aimed at creating further long-term
incentives to encourage sustainable governance.
Share-based remuneration programme
Parameter/measurement base
Share-based compensation programmes for
employees and members of the Board of
Management
contractual period. The Company will make a final
pension contribution of €0.167 million on behalf of
Dr Eichiner for the financial year 2017.
Remuneration caps
750,000 114,694 864,694 2,973,589
(475,806) (44,089) (519,895) (1,791,119)
7,425,000 385,391 7,810,391 28,992,624
(7,333,870) (318,440) (7,652,310) (27,105,316)
Total6
Oliver Zipse
(936)
(781,101) (2,823,311)
(31,101)
(750,000)
1,058
895,189 3,345,313
32,689
862,500
Peter Schwarzenbauer
(1,092)
(914,501) (3,293,863)
876
(14,501)
1,097
918,735 3,469,214
(871)
876
807,311 2,973,589
(821,792) (2,823,290)
750,000 57,311
(750,000) (71,792)
900,000 18,735
Ian Robertson
Klaus Fröhlich
(1,092)
(923,982) (3,293,863)
(23,982)
(900,000)
1,097
925,413 3,469,214
(900,000)
25,413
(457)
161,622 7,627,519 7,545,122
(130,079) (6,218,971) (6,088,892)
101,198 4,544,873 4,443,675
(89,242) (4,047,547) (3,958,305)
75,922 3,382,272 3,404,174
(96,107) (4,314,767) (4,218,660)
21,629 966,461 944,832
(-)
101,198
(96,107)
80,811
(76,657)
101,198 4,489,147 4,483,005
(96,107) (4,304,471) (4,208,364)
97,601 4,338,103 4,240,502
(82,377) (3,686,789) (3,604,412)
80,811 3,919,094 3,838,283
(48,602) (2,359,616) (2,311,014)
821,990 37,625,005 37,172,944
Peter Schwarzenbauer
Ian Robertson
Klaus Fröhlich
Friedrich Eichiner4
Markus Duesmann³
Klaus Draeger²
Milagros Caiña Carreiro-Andree
Harald Krüger
in €
financial year 2016 (2015)
of the Board of Management for the
Share-based component of the individual members
Report
→ Compensation
8,964
Statement on
Corporate
Governance
217
Pension obligations to former members of the Board of
Management and their surviving dependants are cov-
ered by pension provisions amounting to €86.4 million
(2015: €71.8 million), recognised in accordance with
IAS 19.
Total benefits paid to former members of the Board of
Management and their surviving dependants for the
financial year 2016 amounted to €6.5 million (2015:
€8.0 million).
In addition, an expense of €2.8 million (2015: €2.6 mil-
lion) was recognised in the financial year 2016 for
current members of the Board of Management for
the period after the end of their service relationship,
which relates to the expense for allocations to pension
provisions.
6 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2015.
5 Member of the Board of Management until 31 December 2016.
4 Member of the Board of Management since 1 October 2016.
3 Member of the Board of Management until 30 September 2016.
1 Provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is determined in each case when the
requirement to invest in BMW AG common stock has been fulfilled. See note 39 to the Group Financial Statements for a description of the accounting treatment of the share-based compensation component.
² Value of benefits granted for work performed on the Board of Management during the financial year 2016 plus the amount falling due for payment in conjunction with a share-based remuneration component
granted in a previous year and for which the holding period requirements were met.
(715,278) (35,472,904) (34,757,626)
(8,032)
(4,313,952) (4,217,845)
3,861,711 3,780,900
(3,721,739) (3,645,082)
4,495,825 4,492,451
(-)
218
No commitments or agreements exist to pay com-
pensation for early termination of a board member's
mandate in the event of a change of control or a take-
over offer. No members of the Board of Management
received any payments or benefits from third parties
in 2016 on account of their activities as members of
the Board of Management.
900,000
(-)
100.0
35.5
100.0
37.6
Total compensation
2.0
0.7
2.1
0.8
Share-based compensation component*
76.3
27.1
77.1
29.0
* Matching component; provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is determined in
each case when the requirement to invest in BMW AG common stock has been fulfilled.
21.7
20.8
7.8
Variable cash compensation
Fixed compensation
Proportion in %
Amount
Proportion in %
Amount
2015
2016
in € million
The total compensation of the current members
of the Board of Management of BMW AG for the
financial year 2016 amounted to €37.6 million (2015:
€35.5 million), of which €7.8 million (2015: €7.7 mil-
lion) relates to fixed components (including other
remuneration). Variable components amounted to
€29.0 million (2015: €27.1 million) and the share-
based remuneration component to €0.8 million (2015:
€0.7 million).
Total compensation of the Board of Management for
the financial year 2016 (2015)
The Supervisory Board has stipulated caps for variable
remuneration components and for the remuneration
of Board of Management members in total. The caps
are shown in the table "Overview of compensation
system and compensation components".
7.7
Friedrich Eichiner5
Compensation of the individual members
Share-based
(-)
288
(1,092)
823
1,752
(1,478)
1,097
(1,014)
18,719 1,518,719 5,947,178
(21,809) (1,302,454) (4,786,438)
74,461 974,461 3,469,214
(74,717) (899,717) (3,058,588)
29,440 704,440 2,601,910
(24,797) (924,797) (3,293,863)
743,403
201,429
13,929
675,000
(900,000)
187,500
Markus Duesmann4
Klaus Draeger³
(825,000)
900,000
Milagros Caiña Carreiro-Andree
of the Board of Management for the
financial year 2016 (2015)
(1,280,645)
Harald Krüger
Number Monetary value
Total value of
benefits
allocated in
financial year²
Compensation
Total
compensation component
(matching component)
Variable cash
compensation
Total
compensation
compensation
number of matching shares
Other
Basic
in € or
Fixed compensation
1,500,000
(268,970)
IFRS for the
279,932
284,247
15,276
(369,498)
(166,581)
557,844
Provision at
31.12.2016 in
accordance with
HGB and IFRS¹
in accordance with
HGB and IFRS
Expense in 2016
Accounting policies
Apprentices → 57
Automotive segment
→ 122 et seq.
210,220
A
→ 80, 146 et seq., 162 et seq.
Financial assets
Financial instruments → 162 et seq.
F
INDEX
Research and non-capitalised development costs as a
percentage of Group revenues.
Other
Information
230
229
Financial liabilities → 70, 157 et seq.
Research and development expense ratio
The sum of research and non-capitalised development
cost and capitalised development cost (not including
the associated scheduled amortisation).
Research and development expenditure
revenues.
→ Index
Financial result → 65,78
→ 49 et seq.
Fleet emissions
Corporate Governance
Consolidated companies
Consolidation principles
Contingent liabilities
→ 52 et seq.
Connected Drive
Compensation Report → 212 et seq.
Compliance → 207 et seq.
Cash flow statement → 67 et seq., 116 et seq.
CO2 emissions → 4, 39, 61, 86 et seq.
Capital expenditure → 5, 65 et seq.
Cash and cash equivalents
Cash flow → 5, 68 et seq., 116 et seq.
→ 67 et seq., 162 et seq.
Financial Services segment
C
→ 70, 157 et seq.
→ 72
Balance sheet structure
Bonds
B
→ 4, 39, 61, 86
Group profit/loss before tax as a percentage of Group
G
→ 42 et seq.
Group tangible, intangible and investment
assets → 124, 140 et seq.
Cost of materials
Pre-tax return on sales
Post-tax return on sales
Abbreviation for "Earnings Before Interest and Taxes",
equivalent in the BMW Group income statement to
"Profit/loss before financial result".
EBIT
Liquid funds generated (cash inflows) or used (cash
outflows) during a reporting period.
Cash flow
Basic earnings per share are calculated for common
and preferred stock by dividing the net profit after
minority interests, as attributable to each category of
stock, by the average number of shares in circulation.
Earnings per share of preferred stock are computed
on the basis of the number of preferred stock shares
entitled to receive a dividend in each of the relevant
financial years.
Earnings per share (EPS)
Capitalised development costs as a percentage of
research and development expenditure.
Capitalisation rate
revenues.
Investments in property, plant and equipment and
other intangible assets (excluding capitalised
development costs) as a percentage of Group
Cash flow at risk
Capital expenditure ratio
Credit default swap (CDS)
The process of combining separate financial state-
ments of Group entities into Group Financial State-
ments, depicting the financial position, net assets
and results of operations of the Group as a single
economic entity.
Consolidation
The sum of the balance sheet line items “Leased prod-
ucts" and "Receivables from sales financing" (current
and non-current), as reported in the balance sheet for
the Financial Services segment.
Business volume in balance sheet terms
A securitised debt instrument in which the issuer
certifies its obligation to repay the nominal amount
at the end of a fixed term and to pay a fixed or variable
rate of interest.
Bond
A form of corporate financing involving the sale of
receivables to a financing company.
Asset-backed financing transactions
Short-term debt instruments with a term of less than
one year which are usually sold at a discount to their
face value.
Financial swap agreements, under which creditors of
securities (usually bonds) pay premiums to the seller
of the CDS to hedge against the risk that the issuer of
the bond will default. As with credit default insurance
agreements, the party receiving the premiums gives
a commitment to compensate the bond creditor in
the event of default.
Group net profit as a percentage of Group revenues.
Similar to "value at risk" (see definition below).
Profit/loss before financial result as a percentage of
Gross profit as a percentage of Group revenues.
Gross margin
A measure of the potential maximum loss in value of
an item during a set time period, based on a specified
probability.
Value at risk
Goodwill corresponds to the consideration paid to
acquire an entity, less the fair value of the separate
assets acquired and liabilities assumed. The buyer
is willing to pay the additional amount in return for
future expected earnings.
Goodwill
RoE in the Financial Services segment is calculated as
segment profit before taxes, divided by the average
amount of equity capital attributable to the Financial
Services segment.
Return on Equity (ROE)
ROCE in the Automotive and Motorcycles segments
is measured on the basis of relevant segment profit
before financial result and the average amount of
capital employed in the segment concerned. Capital
employed corresponds to the sum of all current and
non-current operational assets, less liabilities that do
not incur interest.
Return on Capital Employed (ROCE)
EBIT margin
A hedge against exposures to fluctuations in the fair
value of a balance sheet item.
The amount for which an asset could be exchanged,
or a liability settled, between knowledgeable, willing
parties in an arm's length transaction.
Fair value
total.
Equity capital as a percentage of the balance sheet
Equity ratio
The effective tax rate is calculated by dividing the
income tax expense by the Group profit before tax.
Effective tax rate
A hedge against exposures to the variability in fore-
casted cash flows, particularly in connection with
exchange rate fluctuations.
Cash flow hedge
revenues.
Fair value hedge
Commercial paper
Cost of sales
→ 121
→ 121
Dividend total
Dividend per share of common stock/preferred stock
€
€ million
€
124,729
99,575
122,244
97,136
116,324
92,337
110,351
89,869
DIVIDEND
2,300
1,904
3.506/3.526
3.20/3.22
2.90/2.92
1,707
2.60/2.62
1 Excluding Husqvarna, sales volume up to 2013: 59,776 units; production up to 2013: 59,426 units.
² Amount computed on the basis of balance sheet figures: until 2007 from the Group balance sheet, from 2008 onwards from the Financial Services segment balance sheet.
3 Research and development expenses included in cost of sales with effect from 2008.
4 Figures are reported in the cash flow statement up to 2006 as cash inflow from operating activities of Industrial Operations.
5 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners.
6 Proposal by management.
2,102
2012
Personnel cost per employee
PERSONNEL
67,989
65,591
59,078
51,134
€ million
188,535
172,174
154,803
138,377
CASH FLOW STATEMENT
Workforce at year-end5
Cash and cash equivalents at balance sheet date
7,880
6,122
7,688
7,671
Operating cash flow Automotive segment4
€ million
11,464
11,836
9,423
9,964
€ million
→133
2011
(116,960)
→ 191
Corporate Governance Code
10,000
Declaration with respect to the
Dealer organisation/dealerships → 23,55
D
→74 et seq.
→ 161
L
→ 190 et seq.
Digitalisation → 23, 45, 51, 55, 85, 96
Dividend → 109, 137
→ 109
Key data
K
Investments accounted for using the equity method
and other investments → 143 et seq.
Inventories → 71, 80, 148
→ 80, 142
→ 65, 135 et seq., 156
→ 63, 77, 112 et seq., 133 et seq.
Intangible assets
Income taxes
Income statement
per share
2010
Dow Jones Sustainability Index World
Earnings per share → 5, 137
EBIT margin/return on sales
Efficient Dynamics → 52
Employees 4, 39, 57 et seq., 85
Equity →73, 149
Exchange rates
(196,960)
Horst Lischka¹
70,000
→ 130 et seq.
New financial reporting rules
5,63
Net profit
N
Marketable securities → 67 et seq., 125, 140 et seq.
→ 48
Motorcycles segment
→ 193 et seq.
E
Mandates of members of the Supervisory Board
M
List of investments → 180 et seq.
Locations → 24 et seq.
→ 143
→ 49 et seq.
Leased products
Lease business
5, 29 et seq., 40, 65, 86
→ 61
→ 35, 84, 97, 122, 170
Mandates of members of the Board of Management
→ 192
GLOSSARY
Dividend per share of common stock/preferred stock
Other
Information
62,416
56,619
50,530
49,004
43,151
39,944
38,670
32,378
4,151
62,009
2,720
2,383
2,980
2,933
5.4
4.0
3.8
4.7
5.6
5.2
2,312
67,013
74,425
81,305
0.8
0.7
6.9
2,692
2,476
1,610
203
21
739
34.5
33.5
33.1
49.2
6.0
19.1
5,111
4,907
3,243
210
330
3,134
30,606
27,103
23,930
19,915
88,997
8,370
7,776
7,432
7,767
7,454
2,393
9,167
8,110
8,149
4,921
4,471
6,246
105,876
89,161
100,306
95,453
84,887
83,141
96,230
72,349
100,041
75,612
107,539
76,704
101,086
8.0
101,953
123,429
20,273
21,744
23.2
22.0
21.7
19.5
20.1
24.4
52,834
49,113
46,100
45,119
41,526
33,469
48,395
47,213
40,134
36,919
39,287
33,784
131,835
110,164
10.7
10.2
3,873
0.30/0.32
0.30/0.32
1.30/1.32
694
197
197
852
1,508
2.30/2.32
2009
2008
2007
1,845,186
106,358
1,668,982
104,286
1,461,166
98,047
1,286,310
87,306
1,435,876
101,685
1,500,678
102,467
SALES VOLUME
Automobiles
Motorcycles¹
PRODUCTION VOLUME
1.06/1.08
1,861,826
113,811
Gross profit margin³
Earnings before tax
228
227
€ million
DIVIDEND
Dividend total
Personnel cost per employee
Workforce at year-end5
PERSONNEL
Cash and cash equivalents at balance sheet date
Operating cash flow Automotive segment4
CASH FLOW STATEMENT
Balance sheet total
Current provisions and liabilities
Non-current provisions and liabilities
Equity
Equity ratio
Capital expenditure ratio (capital expenditure/revenues)
Capital expenditure (excluding capitalised development costs)
Non-current assets
Current assets
BALANCE SHEET
130,220
Net profit for the year
Income taxes
Effective tax rate
Return on sales (earnings before tax/revenues)
Earnings before financial result
→ Glossary
1,738,160
110,360
1,258,417
60,477
50,681
53,197
56,018
20.2
21.1
18.1
10.5
11.4
21.8
8,275
8,018
5,111
289
921
4,212
7,803
7,383
4,853
413
351
68,821
1,481,253
76,848
INCOME STATEMENT
99,236
82,631
1,439,918
104,220
1,541,503
104,396
Automobiles
Motorcycles¹
FINANCIAL SERVICES
3,846,364
3,592,093
3,190,353
3,085,946
3,031,935
2,629,949
Contract portfolio
80,974
75,245
66,233
61,202
60,653
51,257
Business volume (based on balance sheet carrying amounts)²
Revenues
51,643
25.7
63,819
39.2
3.4
63.0
3.1
60.8
5.4
100.0
5.1
100.0
2.0
222
→ Compensation
Report
→ Responsibility
Statement by the
Company's Legal
Representatives
Compensation of the individual members of the Supervisory Board for the financial year 2016 (2015)
in €
Norbert Reithofer (Chairman)
Fixed
compensation
Attendance fee
Variable
compensation
Statement on
Corporate
Governance
37.0
2.0
Proportion in %
Feege
Wirtschaftsprüfer
OTHER
INFORMATION
→ Page 226 BMW Group Ten-year Comparison
→Page 228 Glossary
→Page 230 Index
→ Page 232 Index of Graphs
Total compensation of the Supervisory Board for the
2016 financial year
In accordance with Article 15 of the Articles of Incor-
poration, the compensation of the Supervisory Board
for activities during the financial year 2016 totalled ¬
€5.4 million (2015: €5.1 million). This amount includes
fixed compensation of €2.0 million (2015: €2.0 million)
and variable compensation of €3.4 million (2015:
€3.1 million).
221
in € million
Fixed compensation
Variable compensation
Total compensation
fur-
Supervisory Board members did not receive any
ther compensation or benefits from the BMW Group
for advisory and/or agency services personally ren-
dered.
2016
2015
Amount
Proportion in %
Amount
Total
210,000
10,000
390,660
10,000
260,440
410,440
(140,000)
(10,000)
(233,920)
(383,920)
Karl-Ludwig Kley (Deputy Chairman)
140,000
8,000
260,440
408,440
(140,000)
(4,000)
(233,920)
(377,920)
Christiane Benner¹
70,000
10,000
130,220
210,220
140,000
Wirtschaftsprüfer
Stefan Schmid (Deputy Chairman)¹
(233,920)
610,660
(134,055)
(8,000)
(223,986)
(366,041)
Manfred Schoch (Deputy Chairman)¹
140,000
10,000
260,440
410,440
(140,000)
(10,000)
(233,920)
(383,920)
Stefan Quandt (Deputy Chairman)
140,000
10,000
260,440
410,440
(140,000)
(10,000)
(383,920)
Sailer
Wirtschaftsprüfungsgesellschaft
KPMG AG
130,220
210,220
(70,000)
(10,000)
(116,960)
(196,960)
Brigitte Rödig¹
Jürgen Wechsler¹
70,000
8,000
130,220
208,220
(70,000)
(10,000)
(116,960)
(196,960)
70,000
8,000
130,220
208,220
(70,000)
10,000
(8,000)
70,000
(127,347)
(70,000)
(8,000)
(116,960)
(194,960)
Willibald Löw¹
70,000
10,000
130,220
210,220
(70,000)
(10,000)
(116,960)
(196,960)
Simone Menne
70,000
10,000
130,220
210,220
(44,685)
(8,000)
(74,662)
Dominique Mohabeer¹
(70,000)
(116,960)
Werner Zierer¹
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management
Harald Krüger
Milagros Caiña Carreiro-Andree Markus Duesmann
Klaus Fröhlich
Dr. Nicolas Peter
Dr. Ian Robertson (HonDSc)
Peter Schwarzenbauer
Oliver Zipse
223
224
Statement on
Corporate
Governance
→ BMW Group
Auditor's Report
BMW GROUP
AUDITOR'S REPORT
We have audited the consolidated financial statements
prepared by the Bayerische Motoren Werke Aktien-
gesellschaft, comprising the income statement for
group and statement of comprehensive income
for group, the balance sheet for group, cash flow
statement for group, group statement of changes in
equity and the notes to the group financial statements,
together with the group management report for the
business year from 1 January to 31 December 2016.
The preparation of the consolidated financial state-
ments and the group management report in accord-
ance with IFRSs, as adopted by the EU, and the
additional requirements of German commercial law
pursuant to § 315 a Abs. 1 HGB [Handelsgesetzbuch
"German Commercial Code"] are the responsibility
of the parent company's management. Our respon-
sibility is to express an opinion on the consolidated
financial statements and on the group management
report based on our audit.
We conducted our audit of the consolidated financial
statements in accordance with § 317 HGB [Handels-
gesetzbuch "German Commercial Code"] and German
generally accepted standards for the audit of financial
statements promulgated by the Institut der Wirtschaft-
sprüfer [Institute of Public Auditors in Germany]
(IDW). Those standards require that we plan and
perform the audit such that misstatements materially
affecting the presentation of the net assets, financial
position and results of operations in the consolidated
financial statements in accordance with the applica-
ble financial reporting framework and in the group
management report are detected with reasonable
assurance. Knowledge of the business activities and
the economic and legal environment of the Group and
expectations as to possible misstatements are taken
into account in the determination of audit procedures.
The effectiveness of the accounting-related internal
control system and the evidence supporting the dis-
closures in the consolidated financial statements and
the group management report are examined primarily
on a test basis within the framework of the audit. The
audit includes assessing the annual financial state-
ments of those entities included in consolidation, the
determination of entities to be included in consoli-
dation, the accounting and consolidation principles
used and significant estimates made by management,
as well as evaluating the overall presentation of the
consolidated financial statements and group man-
agement report. We believe that our audit provides a
reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit,
the consolidated financial statements comply with
IFRSS, as adopted by the EU, the additional require-
ments of German commercial law pursuant to § 315 a
Abs. 1 HGB and give a true and fair view of the net
assets, financial position and results of operations of
the Group in accordance with these requirements.
The group management report is consistent with the
consolidated financial statements, complies with
the German statutory requirements, and as a whole
provides a suitable view of the Company's position
and suitably presents the opportunities and risks of
future development.
Munich, 24 February 2017
Munich, 14 February 2017
(194,960)
"To the best of our knowledge, and in accordance with
the applicable reporting principles, the Consolidated
Financial Statements give a true and fair view of the
assets, liabilities, financial position and profit of the
Group, and the Group Management Report includes
a fair review of the development and performance of
the business and the position of the Group, together
with a description of the principal opportunities and
risks associated with the expected development of
the Group."
RESPONSIBILITY
STATEMENT BY THE
COMPANY'S LEGAL
REPRESENTATIVES
70,000
10,000
130,220
210,220
(70,000)
(10,000)
(116,960)
(196,960)
Total²
1,820,000
188,000
3,385,720
5,393,720
(1,820,768)
(190,000)
(3,042,241)
(5,053,009)
1 These employee representatives have - in line with the guidelines of the Deutsche Gewerkschaftsbund - requested that their remuneration be paid into the Hans Böckler Foundation.
² Figures for the previous year include the remuneration of members of the Supervisory Board who left office during the financial year of 2015.
3. Other
Apart from vehicle lease and financing contracts
entered into on customary conditions, no advances
or loans were granted to members of the Board of
Management and the Supervisory Board of BMW AG
or its subsidiaries, nor were any contingent liabilities
entered into on their behalf.
Statement pursuant to § 37y No. 1 of the
Securities Trading Act (WpHG) in conjunction
with § 297 (2) sentence 4 and § 315 (1) sentence
6 of the German Commercial Code (HGB)
(10,000)
(116,960)
(196,960)
€ million
9,665
9,224
8,707
7,893
Return on sales (earnings before tax/revenues)
%
10.3
10.0
10.8
10.4
Income taxes
€ million
2,755
2,828
2,890
2,564
Effective tax rate
%
28.5
30.7
Earnings before tax
33.2
7,978
9,593
5,114,906
123,394
4,718,970
111,191
4,359,572
96,390
4,130,002
84,347
INCOME STATEMENT
Revenues
€ million
94,163
92,175
80,401
76,059
Gross profit margin³
%
19.9
19.7
21.2
20.1
Earnings before financial result
€ million
9,386
9,118
€ million
32.5
€ million
3,731
3,826
4,601
4,967
%
4.0
4.2
5.7
6.5
€ million
47,363
42,764
37,437
35,600
%
25.1
24.8
24.2
1,640
€ million
73,183
€ million
Net profit for the year
52,184
61,831
6,910
6,396
5,817
5,329
BALANCE SHEET
Non-current assets
Current assets
Capital expenditure (excluding capitalised development costs)
Capital expenditure ratio (capital expenditure/revenues)
Equity
Equity ratio
Non-current provisions and liabilities
Current provisions and liabilities
Balance sheet total
€ million
121,671
110,343
97,959
86,193
€ million
66,864
56,844
58,288
Business volume (based on balance sheet carrying amounts)²
Contract portfolio
(116,960)
(196,960)
Susanne Klatten
70,000
10,000
130,220
210,220
(70,000)
(10,000)
(116,960)
(196,960)
Renate Köcher
70,000
10,000
130,220
210,220
(70,000)
(10,000)
(116,960)
(196,960)
Ulrich Kranz
(10,000)
70,000
(70,000)
130,220
Franz Haniel
70,000
8,000
130,220
208,220
(70,000)
(10,000)
(116,960)
(196,960)
Reinhard Hüttl
70,000
10,000
130,220
210,220
(70,000)
(10,000)
(116,960)
(196,960)
Henning Kagermann
70,000
8,000
208,220
contracts
10,000
210,220
Comparison
BMW GROUP
TEN-YEAR COMPARISON
SALES VOLUME
Automobiles
Motorcycles¹
PRODUCTION VOLUME
Automobiles
Motorcycles¹
2016
2015
2014
2013
units
units
2,367,603 2,247,485
145,032 136,963
2,117,965 1,963,798
123,495 115,215
units
units
2,359,756
145,555
2,279,503
151,004
2,165,566 2,006,366
133,615 110,127
FINANCIAL SERVICES
→ BMW Group
Ten-year
130,220
Other
Information
Contacts
(70,000)
(10,000)
(116,960)
(196,960)
Robert W. Lane
70,000
8,000
130,220
208,220
(70,000)
(10,000)
→ Page 233 Financial Calendar
→Page 234 Contacts
5
5
Other
Information
Ten-year
Comparison
Glossary
Index
Index of Graphs
Financial Calendar
226
2.50/2.52
The corresponding CO₂ emissions were compensated by additional environmental and cli-
mate protection measures as part of a reforestation project in collaboration with Bergwald-
projekt e. V. (certificate number: DE-141-217903).
Germany
↑↑
→ Index of Graphs
Other
Information
232
231
→ 148 et seq.
→160
Trade payables
Trade receivables
Financial Calendar
→ 140 et seq.
T
→112, 139
Sustainability → 59 et seq.
Stock → 107 et seq.
Statement of Comprehensive Income
ment and the Supervisory Board → 174
Shareholdings of members of the Board of Manage-
Selling and administrative expenses →65,133
Tangible, intangible and investment assets
INDEX OF GRAPHS
Finances
BMW Group in Figures
Sales volume and locations
→ 72
→ 88
→ 207
BMW Group Financial liabilities
Balance sheet structure - Group → 72
Balance sheet structure - Automotive segment
BMW Group value added 2016 → 75
Risk management in the BMW Group
Development of BMW stock → 107, 108
BMW Group Compliance Management System
→ 70
BMW Group Change in cash and cash equivalents
→ 68
→ 54
Regional mix of BMW Group purchase volumes
2016
→ 51
→ 50
Development of credit loss ratio
Contract portfolio retail customer financing of
Financial Services segment 2016
BMW Group new vehicles financed or leased by
Financial Services segment → 49
→ 49
Contract portfolio of Financial Services segment
→ 29
→ 6
BMW Group Value drivers
Segment information → 175 et seq.
→ 4, 39 et seq., 42 et seq., 48, 86 et seq.
Sales volume
S
Production network → 24 et seq., 44 et seq.
→ 138
→ 4 et seq., 29 et seq., 39 et seq.,
73, 80, 127, 151 et seq.
Production → 44 et seq.
Personnel expenses
85 et seq.
Performance indicators
Pension provisions
P
→ 134
→156
Outlook → 82 et seq.
Other provisions
Other operating income and expenses
Other investments →165
Other financial result → 134
0
Telephone +49 89 382-0
Profit before financial result → 5 et seq., 63 et seq.,
BMW Group Locations
65 et seq.
Property, plant and equipment
→ 88 et seq.
→ 5,30 et seq., 41, 87
RoE
ROCE → 5, 29 et seq., 40, 86
Risks and opportunities
Revenues → 5,40 et seq., 63, 66 et seq., 78, 86 et seq., 133
→ 65
Revenue reserves → 149
Return on sales → 5,29 et seq., 40, 65, 86
Remuneration system → 212 et seq.
Report of the Supervisory Board → 8 et seq.
Research and development →51 et seq.
Result from equity accounted investments
→ 172 et seq.
→ 71, 145 et seq.
Refinancing → 69 et seq.
Receivables from sales financing
Rating → 110
R
→ 142
→ 54
Purchasing
Profit before tax → 5 et seq., 39, 65, 85, 87
→ 24 et seq.
Related party relationships
→ 42
The BMW Group on the Internet
ir@bmwgroup.com
+49 89 382-1 46 61
+49 89 382-2 53 87
E-mail
Fax
Telephone +49 89 382-3 16 84
Investor Relations
Further information about the BMW Group is
available online at → www.bmwgroup.com.
presse@bmwgroup.com
Fax
E-mail
+49 89 382-2 41 18
Business and Finance Press
Telephone +49 89 382-2 45 44
CONTACTS
→ Contacts
Other
Information
234
233
+49 89 382-2 44 18
Investor Relations information is available directly
at www.bmwgroup.com/ir.
Information about the various BMW Group brands
is available at www.bmw.com, www.mini.com
80788 Munich
BMW Group - key automobile markets 2016
BMW Group sales volume of motorcycles → 48
BMW Group-key motorcycle markets 2016
Aktiengesellschaft
Bayerische Motoren Werke
PUBLISHED BY
This version of the Annual Report is a translation
from the German version. Only the original German
version is binding.
print production
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MIX
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The BMW Annual Report was printed on paper produced in accordance with the internation-
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A further contribution
www.rolls-roycemotorcars.com.
and
Quarterly Report to 30 September 2018
7 November 2018
www.fsc.org
2 August 2018
2017
FINANCIAL CALENDAR
→ 35
→ 36
Oil price trend
Precious metals price trend
Steel price trend → 37
→ 36
Exchange rates compared to the euro
Further information
→ 60
Materiality matrix
Sustainability
Proportion of female executives within management
→ 59
Employee attrition rate at BMW AG
→ 57
BMW Group apprentices at 31 December
Proportion of female employees in management
functions at BMW AG/BMW Group → 58
Quarterly Report to 30 June 2018
→ 48
Workforce
21 March 2017
Annual Accounts Press Conference
→205
Analyst and Investor Conference
Quarterly Report to 31 March 2018
17 May 2018
22 March 2017
Annual General Meeting
4 May 2018
Analyst and Investor Conference
Annual Accounts Press Conference
21 March 2018
Annual Report 2017
21 March 2018
22 March 2018
Quarterly Report to 30 September 2017
4 May 2017
7 November 2017
Quarterly Report to 30 June 2017
3 August 2017
Quarterly Report to 31 March 2017
2018
11 May 2017
Annual General Meeting
▲ Research and development
network in Europe
BMW Group Research and Innovation
Centre (FIZ), Munich, Germany
BMW Group Research and
Technology, Munich, Germany
BMW Car IT, Munich, Germany
BMW Innovation and Technology
Centre, Landshut, Germany
BMW Diesel Competence Centre,
Steyr, Austria
Hungary¹
Romania¹
Bulgaria¹
Greece
Partner plant, Born,
Netherlands
Partner plant, Graz,
Austria
Combined
Management
Report
26
Sales subsidiaries and
Financial Services
locations Europe
Partner plants
in Europe
BMW Group plant Landshut
BMW Group plant Hams Hall, GB
BMW Group plant Steyr, Austria
BMW Group plant Wackersdorf
BMW Group plant Regensburg
BMW Group plant Munich
BMW Group plant Leipzig
BMW Group plant Eisenach
BMW Group plant Dingolfing
BMW Group plant Berlin
■Production in Europe
Malta
Slovenia¹
General Information
on the BMW Group
→ Organisational
Italy
BMW Group plant Oxford, GB
BMW Group plant Swindon, GB
Rolls-Royce Manufacturing Plant,
Goodwood, GB
Structure and
Business Model
Thailand
throughout the BMW Group production network
worldwide.
Portugal
Petrol engines for BMW, MINI
BMW i8 Plug-in-hybrid engines
Production of core engine parts
Toolmaking, outer body parts for Rolls-Royce, aluminium tanks for BMW Motorrad
Chassis and drivetrain components
Components for electric mobility
Rolls-Royce bodywork, pressed parts
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X5
BMW 3 Series, BMW 4 Series, BMW 5 Series, BMW 6 Series, BMW 7 Series
M-models: BMW M5, BMW M6
Plug-in-hybrid vehicles: BMW 5 Series, BMW 7 Series
BMW motorcycles, Maxi-Scooter, car brake discs
BMW 3 Series, BMW X1, BMW X3, BMW X4
Germany
United Kingdom
Austria
South Africa
USA
Germany
United Kingdom
Brazil
Germany
At the end of the reporting period, the Group's pro-
duction network comprised a total of 31 locations in 14
countries. The 31 locations comprise 19 BMW Group
manufacturing facilities, five plants belonging to joint
ventures/operations, five partner plants and two con-
tract production plants. The same quality, safety and
sustainability standards are applicable for all plants
Germany
Germany
Germany
Germany
Oxford
Manaus
Munich
Landshut
Leipzig
Hams Hall
Eisenach
Dingolfing
Chennai
Berlin
Araquari
BMW GROUP PLANTS
Locations
The 19 BMW Group plants comprise 13 automobile
and engine plants, two plants for BMW motorcycles,
three sites for the production of components, pressed
parts and tools and one supply centre.
United Kingdom
Spain
BMW Group Designworks, Newbury
Park, USA
Slovakia¹
China, Shanghai, and BMW Group
Designworks Studio Shanghai, China
BMW Group Engineering China,
Beijing, China
BMW Group ConnectedDrive Lab
Oxnard, USA
Emission Test Center,
BMW Group Engineering and
BMW Group Technology Office USA,
Mountain View, USA
Components and electric drive systems
▲ Research and development
network outside Europe
Partner plants
outside Europe
Partner plant, Hosur, India
Partner plant, Jakarta, Indonesia
Partner plant, Cairo, Egypt
Partner plant, Kaliningrad, Russia
Partner plant, Kulim, Malaysia
SGL Automotive Carbon Fibers
(joint operation-2 plants)
BMW Group plant Manaus, Brazil
BMW Group plant Rayong, Thailand
BMW Group plant Rosslyn, South Africa
BMW Group plant Spartanburg, USA
BMW Brilliance Automotive, China
(joint venture-3 plants)
BMW Group plant Chennai, India
■BMW Group plant Araquari, Brazil
outside Europe
Production
☐
New Zealand
South Africa
Argentina¹
Brazil
Brazil
Germany
India
Products
Country
Wackersdorf
Swindon
Steyr
Rosslyn
Spartanburg
Regensburg
Rayong
BMW Group Engineering Japan,
Tokyo, Japan
BMW Group Engineering USA,
Woodcliff Lake, USA
BMW Technology, Chicago, USA
Sales subsidiaries and
Financial Services
locations worldwide
Austria
France
Belgium
Poland¹
Czech
Republic¹
Denmark
Finland¹
Sweden
Ireland
Great Britain
Netherlands
Germany
Norway
25
Switzerland
25
BMW Group locations in Europe
Australia
Indonesia¹
Singapore¹
Malaysia
Thailand
Hong Kong”
Japan
South Korea
China
India
Russia
2 Financial Services only.
1 Sales locations only.
→ 10
BMW 1 Series, BMW 2 Series
M-models: BMW M2
27
Electric vehicles: BMW i3
→ Management System
General Information
on the BMW Group
Combined
Management
Report
30
29
29
Revenues
Expenses
Average weighted
cost of capital rate
Capital employed
··
Cost of capital
Capital turnover
Return on sales
(ROCE/ROE)
Value added
Return on capital
degrees of detail, depending on the level of
aggre-
gation. Operating performance, for instance, is
managed primarily at segment level. In order to
manage long-term performance and assess strate-
gic issues, additional key performance figures are
taken into account at Group level. In this context,
with effect from the beginning of the 2017 financial
year, the pre-tax return on sales will be used as an
additional indicator of earnings quality throughout
the BMW Group. The contribution made to enter-
prise value during the financial year continues to be
measured in terms of value added. This approach is
translated into operational processes at both Group
and segment level in the form of key financial and
non-financial performance indicators (value drivers).
The link between value added and the relevant value
drivers is shown in a simplified form in the following
diagram.
→ 11
The BMW Group's internal management system is
based on a multi-layered structure, with varying ¬
The business management system applied by the
BMW Group follows a value-based approach, with
a clear focus on achieving profitability, consistent
growth, increasing the value of the business for cap-
ital providers and safeguarding jobs. Achieving the
desired degree of corporate autonomy can only be
ensured in the long term if available capital is prof-
itably employed. The prerequisite for this is that the
amount of profit generated sustainably exceeds the
cost of equity and debt capital.
MANAGEMENT SYSTEM
MINI Hatch, MINI Convertible, MINI Countryman
MINI Countryman, MINI Paceman
Products
Austria
Netherlands
Country
Graz
Born
Due to the high level of aggregation involved, it is
impractical to manage the business on the basis of
value added. This key indicator therefore only serves
for reporting purposes. Relevant value drivers which
could have a significant impact on business perfor-
mance and enterprise value are defined for each
controlling level. The financial and non-financial
value drivers are reflected in the key performance
indicators used to manage the business. In the case
of project-related decisions, the system incorporates a
project-oriented control logic focused on value-based
and return-based performance indicators, which
therefore provide a sound basis for decision-making.
Management of operating performance
at segment level
→ Operating performance at segment level is managed
at its highest level on the basis of return on capital.
Depending on the business model, the segments are
measured on the basis of return on total capital or
equity. Specifically, the return on capital employed
(ROCE) is used for the Automotive and Motorcycles
segments and the return on equity (ROE) for the
Return on Capital Employed
Managing the business on the basis of key value
drivers makes it easier to identify the reasons for
changes in ROCE and define suitable measures to
drive its development.
Due to its key importance for the Group as a whole,
the Automotive segment is managed on the basis of
additional key performance indicators with varying
degrees of detail, which have a significant impact on
ROCE and hence on segment performance. These
value drivers are sales volume, segment revenues and
the operating return on sales (EBIT margin: profit/loss
before financial result as a percentage of revenues) as
the key performance indicator for segment profitabil-
ity. Average CO2 emissions for the fleet are also taken
into account, due to its impact on ongoing develop-
ment expenses
and the significant long-term impact
of regulatory requirements on Group performance.
Fleet emissions corresponds to average CO2 emissions
of new cars sold in the EU-28 countries.
Capital employed corresponds to the sum of all cur-
rent and non-current operational assets, less liabilities
that do not incur interest (e.g. trade payables and
other provisions).
72.2
74.3
10,854
10,361
7,836
7,695
2015
2016
2015
2016
2015
CONTRACT PRODUCTION
2016
capital employed in € million
Profit before financial result in € million
Average
Automotive
Average capital
employed
Profit before
financial result
ROCE Automotive =
The most comprehensive key performance indica-
tor used for the Automotive segment is RoCE. This
indicator provides information on profitability of
capital employed and on operational business. ROCE
is measured on the basis of segment profit before
financial result and the average amount of capital
employed in segment operations. The strategic target
for the Automotive segment's RoCE is 26%.
Automotive segment
Financial Services segment. As an overall reflection
of profitability (return on sales) and capital efficiency
(capital turnover), these key performance indicators
provide a wide range of information into the factors
driving segment performance and changes in the
value of the business.
Outlook
Performance
→ see sections
Indicators and
→ 12
Return on capital employed in %
Plug-in-hybrid vehicles: BMW 2 Series, BMW i8
Locations
The BMW Group also awards production contracts to
external partners for specific vehicle types. During
the period under report, various MINI models were 7
SGL Automotive Carbon Fibers (SGL ACF) is a joint
operation of the BMW Group with the SGL Group.
At the Moses Lake site in the US State of Washington,
BMW 5 Series Extended-Wheelbase Version
Plug-in-hybrid vehicles: BMW 5 Series Extended-Wheelbase Version
BMW 2 Series, BMW 3 Series (+Extended-Wheelbase Version),
BMW X1 Extended-Wheelbase Version
Plug-in-hybrid vehicles: BMW X1 Extended-Wheelbase Version
Petrol engines, production of core engine parts
Products
China
China
China
Country
Tiexi (Shenyang)
Tiexi (Shenyang)
Dadong (Shenyang)
JOINT VENTURE BMW BRILLIANCE
AUTOMOTIVE HOLDINGS LTD.
Locations
the Chinese market. The Shenyang site comprises
the Dadong and Tiexi automobile plants as well as
an engine plant complete with foundry.
The plants in Shenyang (China) are operated together
with the joint venture partner, Brilliance China Auto-
motive Holdings Ltd., manufacturing exclusively for
United Kingdom
Rolls-Royce Manufacturing Plant Goodwood
Rolls-Royce Phantom, Ghost, Wraith, Dawn
Processing of carbon fibre components
Petrol and diesel engines for BMW and MINI,
Production of core engine parts
High performance engines for M-models
Pressed parts and bodywork components
Distribution center for parts and components
Cockpit assembly
BMW X3, BMW X4, BMW X5, BMW X6
M-models: BMW X5 M, BMW X6 M
Plug-in-hybrid vehicles: BMW X5
BMW 3 Series
BMW 1 Series, BMW 2 Series, BMW 3 Series, BMW 4 Series,
BMW X1, BMW Z4
M-models: BMW M3, BMW M4
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X4, BMW X5, MINI Countryman
Motorcycles
MINI Hatch, MINI Clubman
Petrol and diesel engines, high-performance engines for M-models
Production of core engine parts
Plug-in-hybrid vehicles: BMW 3 Series
M-models: BMW M4
BMW 3 Series, BMW 4 Series
Motorcycles
carbon fibres are produced for subsequent use in the
production of carbon fibre fabrics in Wackersdorf.
Locations
JOINT OPERATION
SGL AUTOMOTIVE CARBON FIBERS
BMW 3 Series, BMW 5 Series, BMW 7 Series, BMW X1, BMW X3, BMW X5
BMW 3 Series, BMW 5 Series, BMW 7 Series, BMW X3, BMW X4, BMW X5, BMW X6
BMW 3 Series, BMW 5 Series, BMW X1, BMW X3, BMW X4, BMW X5, BMW X6
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X4, BMW X5, BMW X6, MINI Countryman
Motorcycles
Products
Malaysia
India
Indonesia
Egypt
Russia
Country
Kulim
Kaliningrad
Cairo
Hosur
Jakarta
PARTNER PLANTS
Locations
→ Management System
(Egypt), Jakarta (Indonesia) and Kulim (Malaysia). In
addition, BMW motorcycles were manufactured by the
cooperation partner, TVS Motor Company, in Hosur
(India).
produced by Magna Steyr Fahrzeugtechnik in Graz
(Austria) and VDL Nedcar in Born (Netherlands).
7
Business Model
→ Organisational
Structure and
General Information
on the BMW Group
Combined
Management
Report
28
27
Carbon fibre fabrics
Carbon fibres
Products
Germany
USA
Country
Wackersdorf
Moses Lake
The primary function of the four partner plants of
the BMW Group is to serve nearby regional markets.
During the year under report, BMW and MINI vehicles
were also manufactured in Kaliningrad (Russia), Cairo
Profit
BMW Group - value drivers
United Arab
Sales and Marketing
2
Combined
Management
Report
General Information
Economic Position
Outlook, Risks and
Opportunities
BMW Stock and
Capital Markets
→Page 57 Workforce
→ Page 59
Sustainability
→ Page 63 Results of Operations, Financial Position and Net Assets
→Page 76 Comments on Financial Statements of BMW AG
→ Page 82 Report on Outlook, Risks and Opportunities
→Page 82 Outlook
→ Page 88
Risks and Opportunities
→ Page 101 Internal Control System and Risk Management
System Relevant for the Financial Reporting Process
→Page 103 Disclosures Relevant for Takeovers
→ Page 107 BMW Stock and Capital Markets in 2016
2
22
22
Combined
Management
Report
General Information
→ Page 55
on the BMW Group
→ Organisational
Purchasing and Supplier Network
Research and Development
Emirates
COMBINED MANAGEMENT
REPORT
→Page 22 General Information on the BMW Group
→ Page 22 Organisational Structure and Business Model
→ Page 24 Locations
→ Page 29 Management System
→ Page 34
Report on Economic Position
→ Page 34
General and Sector-specific Environment
→ Page 38
Overall Assessment by Management
Financial and Non-financial Performance Indicators
→ Page 42
Review of Operations
→ Page 42
Automotive Segment
→ Page 48
Motorcycles Segment
→ Page 49
Financial Services Segment
→ Page 51
→Page 54
Structure and
Business Model
→ Page 39
BMW GROUP
24
24
Combined
Management
Report
General Information
on the BMW Group
→ Organisational
Structure and
Business Model
→ Locations
BMW Group locations worldwide
→ 09
43
7 Sales subsidiaries and
Financial Services
locations worldwide
Production and
assembly plants
13
Research and
development
locations
Headquarters
Canada
USA
GENERAL
INFORMATION
ON THE
Mexico
→ The core BMW brand caters to a broad array of → see sections
customer wishes, ranging from fuel-efficient and
innovative models equipped with Efficient Dynam- Sales and
ics through to efficient, high-performance BMW M
vehicles, which help bring a touch of the flair of motor-
sport to the roads. At the same time, the BMW Group
continues to push the boundaries of “premium” to
new levels with its BMW i models. Designed to the core
for even greater sustainability, the BMWi embodies
the vehicle of the future – with its electric drivetrain,
intelligent lightweight construction, exceptional
design and newly developed range of mobility services.
Marketing
31
connected.
Distribution network enlarged
Digitalisation and connectedness
consistently increased
Automotive
segment and
→ www.bmwgroup.com/company
ORGANISATIONAL
STRUCTURE AND
BUSINESS MODEL
This Combined Management Report incorporates the
management reports of Bayerische Motorenwerke
Aktiengesellschaft (BMW AG) and the BMW Group.
General information on the BMW Group is provided
below. There have been no significant changes com-
pared to the previous year.
Organisational Structure and Business Model
Bayerische Motoren Werke Aktiengesellschaft
(BMW AG), based in Munich, Germany, is the parent
company of the BMW Group. The general purpose
of the Corporation is the development, production
and sale of engines, engine-equipped vehicles, related
accessories and products of the machinery and metal-
working industry as well as the rendering of services
related to the aforementioned items. The BMW Group
is sub-divided into the Automotive, Motorcycles,
Financial Services and Other Entities segments (the
latter primarily comprising holding companies and
Group financing companies). The BMW Group oper-
ates on a global scale and is represented in more than
150 countries worldwide. At the end of the reporting
period, the BMW Group employed a workforce of
124,729 people.
Originally founded in 1916 as Bayerische Flugzeug-
werke AG (BFW), it emerged as Bayerische Motoren
Werke G.m.b.H. in 1917, before finally becoming Bay-
erische Motoren Werke Aktiengesellschaft (BMW AG)
in 1918. The BMW Group comprises BMW AG itself
and all subsidiaries over which BMW AG has either
direct or indirect control. BMW AG is also responsible
for managing the BMW Group as a whole.
Under the motto "THE NEXT 100 YEARS", the
BMW Group celebrated its centenary in March
2016, showcased by a major centenary event held
in Munich. The four concept vehicles unveiled over
the course of the year for the brands BMW, MINI,
Rolls-Royce and BMW Motorrad provided visionary
insights into the future of individual mobility. At
the same time, the BMW Group also presented its
Strategy NUMBER ONE > NEXT, which builds on
the existing strategy and expands its contents on the
basis of recent developments. At the heart of Strategy
23
23
NUMBER ONE > NEXT is a commitment to consistent
future-oriented activity, focusing on developing prod-
ucts, brands and services for individual mobility in the
premium segment. New technologies, digitalisation
and connectedness as well as social responsibility are
further areas of strategic focus.
General information on the BMW Group
The BMW Group is one of the most successful makers
of passenger cars and motorcycles worldwide and
among the largest industrial companies in Germany.
With BMW, MINI and Rolls-Royce, the BMW Group
owns three of the strongest premium brands in the
automotive industry. The vehicles manufactured by
the BMW Group set exceptionally high standards in
terms of aesthetics, dynamics, technology and quality,
and are the culmination of expertise in engineering
and innovation. Its research and innovation network
spans 13 locations in five countries. In addition to its
strong position on international motorcycle markets,
the BMW Group also offers its customers a successful
range of financial services. In recent years, it has also
established itself as a leading provider of premium
services in the field of individual mobility.
→ BMW Group is also working on an integrated digital → see section
concept, Connected Drive, to bring together driver
and vehicle. Through this service, the vehicle becomes
an intelligent companion, digitally integrated and
adapted to the individual needs of each user. The
BMW iNEXT is scheduled to enter the market in 2021,
electrically powered, autonomously driven and fully
→ The BMW Group is also among the leading pro-
viders of financial services in the automobile sector,
segment operating more than 50 entities and cooperation
arrangements with local financial services providers
and importers worldwide. Credit financing and the
leasing of BMW Group brand cars and motorcycles
to retail customers represent the segment's main line
of business. It also provides customers with access
to a wide range of insurance and banking products.
Operating under the brand name "Alphabet”, the
BMW Group's international multi-brand fleet business
provides fleet financing products and comprehensive
management services for corporate car fleets in 19
countries. Within the multi-brand financing line of
business, credit financing, leasing and other services
are marketed to retail customers under the brand
name “Alphera”. Providing support to the dealership
organisation, such as by financing dealership vehicle
inventories, rounds off the segment's product range.
→ The motorcycles business is also focused on the
premium segment, with the model range currently
comprising motorcycles for the Sport, Tour, Roadster,
Heritage, Adventure and Urban Mobility segments.
BMW Motorrad also offers a broad range of equip-
ment options designed to enhance rider safety and
comfort. The motorcycles business sales network is
organised similarly to that of the automobile business.
Currently, around 1,180 BMW Motorrad dealerships
operate worldwide.
The Automotive segment's worldwide distribution net-
work currently consists of around 3,400 BMW, 1,580
MINI and 140 Rolls-Royce dealerships. In Germany,
products and services are sold through BMW Group
branches and by independent authorised dealers.
Sales outside Germany are handled primarily by
subsidiary companies and by independent import
companies in a number of markets. The BMW i deal-
ership and agency network currently covers more
than 1,300 locations.
The MINI brand is a veritable icon in the premium
small car segment, offering unrivalled driving pleasure
in its class. Rolls-Royce has a tradition in the ultra-lux-
ury segment stretching back over more than 100 years.
THE NEXT 100 YEARS -
shaping the future
→ see sections
Workforce and
→ Long-term thinking and responsible action have
long been the cornerstones of the BMW Group's Sustainability
success. Ecological and social sustainability along
the entire value-added chain, full responsibility for
its products and a clear commitment to preserving
resources are prime objectives firmly embedded in
the BMW Group's corporate strategy. The BMW Group
has ranked among the most sustainable companies in
the automotive industry for many years.
→ see section
Financial
Services
→ see section
Motorcycles
segment
Research and
Development
BMW Brilliance
Automotive Ltd.,
Shenyang
units, 2015:
282,000 units).
Automotive segment
Deliveries to customers: solid increase
In 2016, the Automotive segment sold a record number
of vehicles for the sixth year in succession. Dynamic
market conditions, particularly in Europe, influenced
automobile sales volumes more strongly than expect-
ed. Consumer spending in the UK in 2016 remained
stable, despite the Brexit decision. The upward trend
from the previous year in southern European coun-
tries also continued unbroken. Despite growing polit-
ical and economic uncertainties in the international
environment, deliveries to customers increased by a
solid 5.3% to a total of 2,367,603¹ BMW, MINI and
Rolls Royce brand vehicles (2015: 2,247,485¹ units).
1 Including the
joint venture
2 EU-28.
In the Annual Report 2015, the outlook for the full year
2016 had foreseen a slight increase in sales volume.
The generally positive sentiment among consumers,
especially in Europe, but also in Asia, helped the
BMW Group to exceed its original forecast.
Fleet carbon dioxide (CO2) emissions²:
slight decrease
Combined
-
The fleet-wide deployment of Efficient Dynamics
technologies including drivetrain electrification
contributes to the efficient reduction of carbon dioxide
emissions. CO2 emissions produced by the vehicle
fleet sold in Europe (EU-28) decreased slightly to
124 grams CO2/km (2015: 127 grams CO2/km; -2.4%)
in the year under report.
As foreseen in the outlook for the full year 2016, fleet
carbon emissions fell slightly and were therefore in
line with forecast.
39
(2016: 316,200 BMW, the Group's core brand, reported a solid 5.2%
increase to 2,003,359¹ units (2015: 1,905,234¹ units),
taking it over the two-million-unit threshold for the
first time in a single year. MINI also recorded solid
growth, with deliveries to customers up by 6.4% to
360,233 units (2015: 338,466 units). Rolls-Royce Motor
Cars sold 4,011 units (2015: 3,785 units; +6.0%).
-
BY MANAGEMENT
As at 31 December 2016, the BMW Group employed
a workforce of 124,729 (2015: 122,244; +2.0%) world-
wide. The slight company-wide increase was due to
the need for additional qualified staff for the develop-
ment of electric mobility and other technology fields
and the growth of the financial services business.
The systematic expansion of mobility services also
contributed to the increase in the workforce size.
Financial services markets
Management
Report
The global economy grew at a moderate pace in 2016,
with conditions for financial services business gener-
ally tending to be favourable.
Interest levels remained low in the world's indus-
trialised countries. The US Federal Reserve initially
refrained from tightening its monetary policies, before
finally deciding to raise the benchmark interest rate
by 0.25% in December.
In March 2016, the European Central Bank (ECB)
resolved to broaden the scope of its expansionary
monetary policies with a comprehensive package of
measures to generate economic growth through more
favourable lending conditions.
In a bid to prevent a severe economic downturn after
the Brexit decision, the Bank of England lowered its
reference interest rate in August and announced addi-
tional expansionary measures, including extending its
bond purchasing programme.
High public-sector spending and expansionary mon-
etary policies adopted by the Chinese central bank
only partially absorbed the slowdown of the Chinese
economy, resulting in a further normalisation of GDP
growth over the course of the year. The Japanese cen-
tral bank broadened the scope of its expansionary
monetary policies in 2016 in order to stimulate the
economy and reverse deflationary tendencies.
Prices in the premium segment of mainland Europe's
pre-owned car markets rose slightly at the beginning
of 2016, before settling at a similar level to the previous
year in the course of the year. Pre-owned car market
prices in the UK were slightly down year-on-year. Price
levels remained stable on Asian markets. The slight
downward trend continued in North America, despite
a stronger performance during the summer months.
OVERALL ASSESSMENT
Overall assessment of business performance
The BMW Group can look back on a successful
business performance in 2016, despite increased
competition and growing uncertainties in the inter-
national environment. The overall picture was positive
in terms of results of operations, financial position
and net assets. Overall, management expectations
for the period were therefore met. This assessment
also takes into account events after the end of the
reporting period.
FINANCIAL AND NON-
FINANCIAL PERFORMANCE
INDICATORS
The following section provides information on the key
financial and non-financial performance indicators
used as the basis for managing the BMW Group and
its segments. As part of the analysis of operations and
the financial condition of the BMW Group, forecasts
made the previous year for the financial year 2016 are
compared with actual outcomes in 2016.
BMW Group
Profit before tax: slight increase
During the financial year 2016, the BMW Group
continued to invest in innovative technologies and
its production network to ensure future sustainabil-
ity. The Group nevertheless remained on course in
terms of earnings. With a Group profit before tax of
€9,665 million (2015: €9,224 million; +4.8%), earn-
ings reached a new high, despite the continuation
of intensive competition on the world's automobile
markets. In addition to an excellent sales volume
performance, Group earnings also benefited from
an improved financial result.
As foreseen in the outlook for the financial year 2016,
the Group's profit before tax was slightly higher than
one year earlier and therefore in line with expectations.
Workforce at year-end: slight increase
As foreseen in the outlook for the financial year
2016, there was a slight increase in the size of the
BMW Group's workforce, in line with expectations.
Report on
60
financial Perfor-
mance Indicators
2016
90
30
30
2012
2013
2014
2015
2016
2017
Source: Reuters.
Precious metals price trend
→ 17
Index: December 2011 = 100
150
100
mance Indicators
120
Economic Position
→ Financial and Non-
Price in US Dollar
Price in €
00
Revenues: slight increase
Automotive segment revenues edged up by 1.0%
to a new record figure of €86,424 million (2015:
€85,536 million), with currency exchange effects
holding down the scale of the increase. The forecast
of a slight rise in Automotive segment revenues made
in the Annual Report 2015 therefore was confirmed.
EBIT margin in target range of between 8 and 10%
The EBIT margin in the Automotive segment (profit
before financial result divided by revenues) came
in at 8.9% (2015: 9.2%; -0.3 percentage points). As
foreseen for the financial year 2016, the EBIT mar-
gin from automobile business was within the target
range of between 8 and 10% and therefore in line
with expectations.
Return on capital employed (RoCE): slight increase
The return on capital employed (RoCE) amounted to
74.3% (2015: 72.2%; +2.1 percentage points). Amongst
other factors, transactions with other segments and
the expansion of business with service and Connected
Drive contracts made positive contributions to ROCE
for the Automotive segment.
The outlook for RoCE, which was already raised in
the Quarterly Report to 30 June 2016 from a mod-
erate decrease to a slight decrease, was once more
exceeded. In the Annual Report 2015, a moderate
decrease in ROCE was foreseen. The rate achieved by
the Automotive segment in 2016 was therefore once
again well above the minimum target of 26%.
Motorcycles segment
Deliveries to customers: solid increase
In a highly favourable market environment, most nota-
bly in Europe, BMW Motorrad reported a solid 5.9%
increase, with 145,032 units sold (2015: 136,963 units).
These figures benefited from unexpectedly good sales
figures for Europe and Latin America.
The forecast increase, upgraded in the Quarterly
Report to 30 June 2016 from slight to solid, was
therefore realised. In the Annual Report 2015, only
a slight increase in deliveries to customers had been
foreseen for the Motorcycles segment.
Return on capital employed: slight increase
The Motorcycles segment generated a return on capital
employed (ROCE) of 33.0% in the year under report
(2015: 31.6%; +1.4 percentage points), slightly above
the previous year, mainly reflecting effective working
capital management and the improvement in earnings.
The reported figures also benefited from the trend
towards high-value models and the new brand strategy
initiated in 2014.
The forecast RoCE, which had already been changed
from a slight decrease to "at the previous year's level"
in the Quarterly Report to 30 June 2016, was therefore
once again exceeded. In the Annual Report 2015, a
slight decrease in ROCE had been foreseen.
10
40
→ 16
Price per barrel of Brent Crude
120
90
60
Financial and Non-
financial Perfor-
The US economy continued to show a solid perfor-
mance, growing year-on-year by 1.6%. The unem-
ployment rate fell by 0.4 percentage points to 4.9%.
At the same time, however, domestic spending rose
at a slightly lower rate than one year earlier. Exports
only grew slightly as a result of the strong US dollar.
In view of these developments and in anticipation of
a rising inflation rate, the US Federal Reserve (Fed)
raised its benchmark interest rate in December 2016.
↑
Currencies in emerging economies reflected a mixed
picture. While the Brazilian real was down by approx-
imately 4% against the euro, the Russian rouble was
up by approximately 9% against the euro after a strong
rally.
The Japanese yen appreciated by approximately 10%
in 2016, despite the expansion of money supply by
the Bank of Japan. The average exchange rate for the
year was 120.25 yen to the euro.
Despite volatility during the course of the year, the
US dollar remained unchanged compared to the pre-
vious year at an average exchange rate of 1.11 to the
euro in 2016. The Fed shifted only moderately from
its expansionary monetary policies during the year
under report.
The Chinese renminbi lost in value compared to the
previous year, finishing with an average exchange rate
for the
year of 7.35 renminbi to the euro.
The British pound weakened significantly in the wake
of the Brexit decision. Compared to its average rate
of 0.78 to the euro during the first half of the year,
it fell sharply during the second half of the year to
0.86 to the euro. The Bank of England reacted to
increasing post-referendum uncertainty by lowering
interest rates, thus contributing to the weakening of
the pound.
Currency markets
7
Thanks to its economic reforms, India posted a GDP
growth rate of 7.0%, achieving growth of at least 7.0%
for the third year in succession. By contrast, Russia
and Brazil failed once again to pull out of recession.
Although industrial production picked up in Russia,
domestic consumption fell sharply, causing economic
output to fall overall (-0.6%). Brazil, however, recorded
its second consecutive year of deep recession (−3.4%).
Figures for consumption expenditure (household and
public sector) and business investments dropped to
new lows.
The domestic economy in Japan was held down in
particular by high debt levels and the appreciation
of the yen in 2016. After a two-year downward trend,
household spending increased, albeit at a moderate
rate, while exports remained weak. Ultimately, only
economic stimulus programmes prevented Japan from
stagnating in 2016, with the GDP growth rate finishing
at a modest 0.9%.
50
The new strategic direction adopted for China's econ-
omy presented significant challenges for the country's
government. In response to the stock market slump
at the beginning of the year and fears that econom-
ic growth was set to slow down, the government
imposed measures to stimulate the economy. The
6.7% GDP growth rate in China for the full year was
slightly down on the previous year, though within the
pursued target range.
Average capital
employed
7
ROCE
Motorcycles
financial result
Profit before
Motorcycles
Exchange rates compared to the euro
→ 13
→ 15
200
Average
capital employed in € million
2016
Return on capital employed in %
2015
Japanese Yen
Russian Rouble
150
200
2017
Source: Reuters.
2016
2015
2014
2013
2012
LLL LL
100
150
Index: December 2011=100
Return on Capital Employed
As with the Automotive segment, operating perfor-
mance for the Motorcycles segment is managed on the
basis of RoCE. Capital employed is measured on the
same basis as in the Automotive segment. The strategic
RoCE target for the Motorcycles segment is 26%.
Motorcycles segment
2014
2015
2016
Source: Working Group for the Iron and Metal Processing Industry.
2017
Motorcycle markets
Since the beginning of the financial year 2016, market
analysis has been expanded from the half-litre class
(500 cc) to cover the entire 250 cc plus class. This fol-
lows BMW Motorrad's entrance with the entry-level
G 310 R model into a new market segment within the
250 cc plus class.
Global motorcycle markets in the 250 cc plus class
were flat year-on-year, mainly reflecting weaker per-
formance in some overseas regions (+/-0.0%). The
European market grew by 12.4% overall, benefiting
primarily from the significant recovery in Southern
Europe. While the French market grew by an encour-
aging 6.7%, markets in Germany, Italy and Spain all
recorded double-digit increases, expanding by 13.9%,
12.8% and 23.5% respectively. The US market finished
3.8% down year-on-year.
33
37
88
38
Combined
Management
Report
Report on
Economic Position
→ General and Sector-
specific Environment
→ Overall Assessment
2013
2012
60
110
British Pound
100
Chinese Renminbi
US Dollar
35
35
36
Combined
by Management
Management
Report on
Economic Position
→ General and Sector-
specific Environment
Oil price trend
increases.
Japan was unable to turn around the previous year's
negative trend, with the market contracting by a
further 1.6% to 4.8 million units.
Automobile markets in major emerging economies
continued to suffer from recession in 2016. Russia saw
a 4.7% drop to 1.2 million units, while registrations
in Brazil slumped by nearly one third (-32.2%) to
1.7 million units.
85
Report
Source: Reuters.
Profit before financial result in € million
2016
Palladium
9,723
10,000
2015
2016
Value added Group
2015
2016
2015
2016
Cost of capital
Earnings amount
BMW Group
in € million
earnings amount —
(cost of capital rate ×
capital employed)
= earnings amount —
cost of capital
Value added
Group
added, as a highly aggregated performance indicator,
provides an insight into capital efficiency and the
(opportunity) cost of capital required to generate
Group profit. Value added corresponds to the amount
of earnings over and above the cost of capital and gives
an indication of whether the Group is meeting the
minimum requirements for the rate of return expected
by capital providers. A positive value added means
that a company is generating more additional value
than the cost of capital.
6,407
Information provided by these two key performance
indicators is reported with the performance indi-
cators, pre-tax return on sales and value added. Value
6,040
3,683
REPORT
specific Environment
→ General and Sector-
Economic Position
Report on
Management
Report
Combined
==
34
33
33
The criteria used for taking decisions as well as the
long-term impact on periodic earnings is document-
ed for all project decisions and incorporated in the
long-term Group forecast. This approach enables an
analysis of the periodic reporting impact of project
decisions on earnings and rates of return over the
term of each project. The overall result is a cohesive
controlling model.
The net present value of a project indicates the extent
to which a project will be able to generate a positive
contribution to earnings over and above the cost of
capital. A project with a positive net present value
enhances value added and therefore results in an
increase in the value of the business. The internal
rate of return of the project corresponds to the aver-
age return on capital employed in the project and, in
terms of significance, is equivalent to the multi-year
average RoCE for an individual project. It is therefore
consistent with one of the key performance indicators.
Project decisions are taken on the basis of calculations
measured in terms of the cash flows each individual
project is expected to generate. Calculations are made
for the full term of a project, incorporating all future
years in which the project is expected to generate cash
flows. Project decisions are taken on the basis of net
present value and internal rate of return calculated
for the project.
Operational business in the Automotive and Motor-
cycles segments is largely shaped by its life-cycle-
dependent project character. Projects have a sub-
stantial influence on future business performance.
Project decisions are therefore a crucial component
of financial management for the BMW Group.
Value-based project management
Capital employed comprises the average amount of
Group equity employed during the year as a whole, the
financial liabilities of the Automotive and Motorcycles
segments, and pension provisions. The earnings meas-
ure for these purposes corresponds to Group profit
before tax, adjusted for interest expense incurred in
conjunction with the pension provision and on the
financial liabilities of the Automotive and Motorcycles
segments (earnings before interest expense and taxes).
The cost of capital is the minimum rate of return
expected by capital providers in return for the capital
employed. Since capital employed comprises an equity
capital element (e.g. share capital) and a debt capital
element (e.g. bonds), the overall cost of capital rate is
determined on the basis of the weighted average rates
for equity and debt capital, measured using standard
market procedures. The pre-tax average weighted
cost of capital for the BMW Group in 2016 was 12%,
unchanged from the previous year.
3,593
ON ECONOMIC
POSITION
Strategic management and quantification of the
financial impacts as part of the long-term corporate
planning are performed primarily at Group level. The
most significant performance indicators for these
purposes are Group profit before tax and the size of
the Group's workforce at the year-end. Group profit
before tax provides a comprehensive measure of the
Group's overall performance after consolidation
effects and a transparent basis for comparing perfor-
mance, particularly over time. The size of the Group's
workforce is monitored as an additional non-financial
performance indicator.
→ Management System
Average equity capital
Profit before tax
RoE Financial
Services
Financial Services segment. The strategic RoE target
for the Financial Services segment is at least 18%.
with the non-financial value driver sales volume, this
will enable ROCE development to be understood in
greater detail.
→ 14
Return on Equity
As is common practice in the banking sector, the
performance of the Financial Services segment is
measured on the basis of return on equity. RoE is
defined as segment profit before taxes, divided by the
average amount of equity capital attributable to the 7
Financial Services segment
In view of the increasing strategic importance of the
Motorcycles segment, the EBIT margin will be added
as a key performance indicator with effect from the
beginning of the 2017 financial year. In conjunction
31.6
33.0
576
566
182
187
2015
Financial Services
Strategic management at Group level
Profit before tax in € million
Average equity capital in € million
General Information
on the BMW Group
Combined
Management
Report
32
32
31
20.2
21.2
9,756
10,236
1,975
2,166
2015
2016
2015
2016
2015
Return on equity in %
2016
Centenary year sees best Company
performance
Record sales volumes for automobiles
and motorcycles - expectations
exceeded
Record results in operational
segments
150
2015
Europe's automobile markets presented a mixed
picture. After a strong performance in the previous
year, the UK saw only comparatively low growth in
the number of new registrations in 2016 (2.7 million
units; +2.3%). The French automobile market was in
even better shape than one year earlier, recording a
5.3% increase to 2.0 million registrations, ahead of
Germany's growth rate of 4.5% (3.4 million units).
Italy (1.8 million units; +16.2%) and Spain (1.1 million
units; +10.9%) both recorded double-digit percentage
The positive trend on international automobile mar-
kets seen in the previous year continued in 2016.
Worldwide registrations of passenger cars and light
commercial vehicles grew by 5.9% to 87.4 million
units. Strong momentum from China (24.1 million
units; +17.4%) and Europe (15.2 million units; +6.6%)
made significant contributions to growth. By contrast,
the USA recorded only a slight increase (17.6 million
units; +0.4%).
Automobile markets
Index: January 2012 = 100
→ 18
Steel price trend
Steel markets saw at times sharp price rises. During
the course of the year, the USA and the EU imposed
anti-dumping duties on Asian steel products, while
the USA did likewise on European steel products.
The situation was further exacerbated by the Chinese
government's decision to cut working hours in coal-
mines. The price of coal, an important cost factor in
the production of steel, rose accordingly.
The price of Brent crude oil – the most relevant bench-
mark for Europe - fell at the beginning of the year for a
short time to below the level of 30 US dollars per barrel.
A subsequent volatile upward trend saw the price rise
to a high of 57 US dollars per barrel, bolstered by the
agreement reached by the Organisation of Petroleum
Exporting Countries (OPEC) and Russia to cut back oil
production. Despite these developments, the average
price of Brent crude oil fell to 44 US dollars per barrel,
compared to 52 US dollars per barrel in the previous
year. WTI, the benchmark for crude oil in the USA,
followed a similar trend.
-
Raw materials prices
2017
2016
2015
After dropping to new lows at the turn of 2015/2016,
precious metals prices stabilised in the course of 2016
at higher levels. The lower prices seen in preced-
ing years have resulted in manufacturers reducing
over-capacities, while at the same time demand has
recovered.
2013
€9,665 million
2014
Group profit before tax
at record level
GENERAL AND
SECTOR-SPECIFIC
ENVIRONMENT
General economic environment
The global economy grew at a relatively stable pace
in the face of external influences at a rate of 3.1%
in 2016. Against a background of multiple political
uncertainties, global growth seems relatively robust.
The eurozone continued to record moderate economic
growth, helped among other factors by favourable
conditions on the job market. Although the pace of
the economy in China slowed, the decrease was only
marginal. The USA recorded slight growth in 2016. By
contrast, the emerging economies of Russia and Brazil
contracted again in 2016, despite Russia benefiting
from rising raw materials prices.
71 +4.8%
In the UK, the year 2016 was marked by the Brexit
decision, the economic impact of which is expected to
be felt from 2017 onwards. For the year under report,
a robust GDP growth rate of 2.0% was recorded. Polit-
ical uncertainty did not have an adverse impact on
household spending. The growth rate also benefited
from falling unemployment. The increase in invest-
ments by companies was significantly lower than in
previous years, while the rise in government spending
was below average. Despite the massive devaluation
of the British pound after the referendum, exports fell
far short of matching the high growth rate recorded
one year earlier.
100
Gold
Platinum
50
0
2012
Gross domestic product (GDP) in the eurozone grew
by 1.7% year-on-year. The European Central Bank
(ECB) continued to pursue its expansive monetary
policies. Boosted by strong exports and robust domes-
tic demand, the German economy grew by 1.8%, its
fastest rate for five years. France (+1.2%) and Italy
(+0.9%) saw growth at similar levels to the previous
year. In both countries, structural reforms designed to
stimulate the economy remain in the implementation
phase.
47
47
Internationalisation of BMW production network
progresses
By expanding its international production network,
the BMW Group follows global market developments
with the aim of ensuring a balanced distribution of
added value.
In North America, expansion work has been con-
tinued at the BMW plant in Spartanburg (USA). In
2016, the plant set a new annual record, turning out
over 411,000 units. In terms of production volume,
the Spartanburg plant is therefore the largest in the
BMW Group's network.
Important work was carried out to convert and expand
the Rolls-Royce manufacturing plant in Goodwood
(UK) during the period under report. For future mod-
els, the BMW Group is investing in a new production
system on one line at the plant. The new Technology
and Logistics Centre in Bognor Regis, near Goodwood,
was opened in January 2016.
In Europe, the British production cluster comprising
the MINI assembly facility in Oxford, the pressing
plant in Swindon and the engine manufacturing plant
in Hams Hall is a key element in the BMW Group's
production network. In order to secure greater capac-
ity for forecast growth, the MINI 3-door model, the
MINI Convertible and the MINI Countryman are also
being produced for the BMW Group at the automotive
manufacturer VDL NedCar in Born, the Netherlands.
In Rosslyn (South Africa), preparations are already
underway for producing the next generation of the
BMW X3. In May 2016, work began on the body-mak-
ing facility, which is being enlarged by 50%.
In Shenyang (China), the BBA plants in Dadong and
Tiexi produced over 305,000 units, setting a new record
in the process. Comprehensive expansion work at the
Dadong plant has been continued. The extension will
improve the flexibility of the plant and prepare it for
the manufacture of future models.
The manufacturing sites in Chennai (India) and Ray-
ong (Thailand) complete the BMW Group's interna-
tional production network. In 2016, the plant in India
produced the 50,000th BMW for the local market. The
BMW plant in Thailand is the only facility within the
production network that manufactures not only BMW
and MINI automobiles, but also BMW motorcycles.
During the period under report, a total of 32,256 auto-
mobiles were produced at the Group's various partner
plants, which mainly serve their regional markets.
The BMW Group develops and manufactures battery
cell modules, high-voltage storage systems and electric
motors at a total of five locations. The most important
electric drivetrain technologies and components are
developed at the prototype construction facility in
Munich and produced at the Dingolfing and Landshut
plants. The Dingolfing plant manufactures battery
cell modules and installs them in high-voltage storage
systems for the BMW i3, the BMW i8 and the Group's
plug-in hybrid models. The electric motors and range
extenders for the BMWi models are made at the
Landshut plant. The Spartanburg plant in the USA
produces and installs high-voltage storage systems
for the BMW X5 iPerformance. The BBA joint venture
plant in Shenyang is currently building a new centre
for high-voltage storage systems.
In San Luis Potosí (Mexico), preparations for construct-
ing the new plant are running on schedule and a local
training centre has already been opened at the site. The
plant is due to commence operations in 2019.
The BMW Group's largest engine plant, located in
Steyr, produces 3-, 4- and 6-cylinder diesel engines as
well as 3-, 4- and 6-cylinder petrol engines. Engines
made in Steyr are installed in more than half of
all BMW vehicles and in over one third of all MINI
vehicles. In September 2016, the development centre
for diesel engines, which adjoins the manufacturing
plant, took the first new, state-of-the-art engine testing
facilities into service. The Steyr plant established a
new production record of 1,261,449 engines in 2016.
Since its opening, some 160 engineers have been
engaged in research at the Lightweight and Engineer-
ing Center in Landshut, designing innovative hi-tech
materials and composite concepts for the vehicles of
the future. The think tank, built near the production
facilities, concentrates lightweight construction know-
how at the Landshut plant.
Four engine production plants worldwide
1.4
18.5
27,216
32,256
2.3
-35.2
2,359,756
82,655
3.7
53.6
57,019
87,609
0.2
8.6
53,528
2,279,503
3.5
100.0
During the year under report, the BMW Group plant
in Eisenach commissioned a state-of-the-art servo
tryout press. Eisenach is one of three BMW Group
plants worldwide specialised in making pressing
tools. Moreover, some 250 employees at the plant
manufacture the majority of the outer body parts from
sheet metal, aluminium and stainless steel for the
Rolls-Royce plant in Goodwood (UK) as well as parts
for BMW motorcycle production in Berlin.
SGL Automotive Carbon Fibers (SGL ACF), the joint
operation between the BMW Group and the SGL
Group, is also based in Wackersdorf. In Moses Lake
(USA), SGL ACF operates a carbon fibre production
plant that is powered by hydroelectricity and supplies
carbon fibres to the SGL ACF plant in Wackersdorf,
where they are processed into textile cores.
The Wackersdorf Innovation Park is the logistical hub
for materials management and just-in-sequence deliv-
ery to BMW Group assembly plants in ten different
countries. For the first time, a fleet of ten self-driving
Smart Transport robots is being used in Wackersdorf
to transport components within the logistics centre.
These self-driving transport robots are capable of driv-
ing freely within the logistics centre and transporting
loads of up to 500 kilograms.
The BMW Group plant in Leipzig produced over 29,000
BMW i model vehicles during the period under report.
The BMW i3 is one of the three best-selling electric
vehicles worldwide. In addition to the Munich plant,
Leipzig is now the second BMW Group site to utilise
electric trucks, powered exclusively by electricity gen-
erated via renewable sources, to transport its materials
on public roads. In 2016, a total of 246,550 vehicles
rolled off production lines in Leipzig, the highest
figure to date for the plant.
In 2016, the BMW Group plant in Regensburg cele-
brated its 30th anniversary. The highly flexible plant
manufactures eight different models on one line.
During the reporting period, production volume was
boosted to over 346,000 units, approximately 14% up
on the previous year.
Economic Position
Review of Operations
→ Automotive segment
Report on
Combined
Management
Report
46
Extensive expansion work is also progressing at the
main plant in Munich. By mid-2017, a state-of-the-art
painting line will be completed that meets the very
highest standards in efficiency and economical use of
resources. The new building is part of an extensive
investment project that also includes the enlargement
of the body-making section and vehicle assembly as
well as parts of the logistics system.
In November 2016, the BMW Group began manufactur-
ing the seventh generation of the BMW 5 Series at its
Dingolfing assembly plant, which underwent numerous
conversion and building measures to prepare for the
new model. Dingolfing therefore remains the centre of
competence for producing the top BMW model series.
The German plants play a leading role within the
Group's international network. For the sixth year
in succession, the BMW Group produced over one
million vehicles at its German plants in Munich,
Dingolfing, Regensburg and Leipzig.
Flexibility, quality and efficiency are key characteris-
tics of the Group's production system. Its great ability
to adapt enables the BMW Group to respond rapidly
to changing market situations and fluctuations in
regional sales volumes by adapting production plans.
Digitalisation, standardised modules and intelligent
composite construction methods demonstrate the
high performance of the Group's production net-
work. At the same time, the production system offers
customers an impressive level of individualisation,
allowing changes in order specifications up to six days
prior to delivery. The production expertise within
the BMW Group thus gives it a crucial competitive
advantage that contributes to the profitability and
sustainable success of the Company.
45
45
In 2016, the joint venture BBA opened a new engine
plant in Shenyang (China) to produce the latest gen-
eration of BMW TwinPower Turbo 3- and 4-cylinder
petrol engines. The new light metal foundry, which
was opened at the same time, is designed for sus-
tainable production. Both the engine plant and the
light metal foundry meet state-of-the-art production
standards and supply the BMW Brilliance manufac-
turing plants in Dadong and Tiexi. The BMW Group
now manufactures engines at a total of four locations:
Munich (Germany), Hams Hall (UK), Steyr (Austria)
and Shenyang (China).
Strong production base in Germany
Great Britain 5.8
BMW Group sales volume of motorcycles*
2012
20.8
24.2
22.5
Financing 20.7
27.3
25
20.9
Leasing 19.7
21.5
22.1
22.3
40.4
41.7
44.0
46.3
49.6
50
in %
→ 29
BMW Group new vehicles financed or
leased by Financial Services segment*
2016
2015
2014
2013
2012
The total volume of new credit and leasing contracts
concluded with retail customers during the twelve-
month period under report grew by 9.3% year-on-year
to €55,327 million (2015: €50,606 million).
2013
2014
2015
2016
Demand for insurance products remained high in
2016, with the number of new insurance contracts
signed rising by 4.6% to 1,262,973 (2015: 1,207,196
contracts). At 31 December 2016, the contract port-
folio comprised 3,411,872 contracts (2015: 3,200,742
contracts; +6.6%).
Growth in insurance business
The BMW Group is one of Europe's foremost leasing
and full-service providers. The Financial Services
segment's fleet management line of business offers
leasing and financing arrangements as well as other
fleet-related services to commercial customers under
the brand name "Alphabet". The number of new con-
tracts signed rose by 7.0% during the financial year
2016. At 31 December 2016, the segment was thus
managing a portfolio of 644,420 fleet contracts (2015:
602,303 contracts).
Fleet business expanded
* EU Bank comprises BMW Bank GmbH, its branches in Italy, Spain and Portugal, and its
subsidiary in France.
27.6 EU Bank*
29.9 Americas
Middle East/
Africa 24.8
Europe/
Deposit business volume at previous year's level
Customer deposits provide an important source of
refinancing for the Financial Services segment. The
volume of deposits at the end of the reporting period
stood at €13,512 million, in line with the previous
year's level (2015: €13,509 million; +/− 0.0%).
The total volume of dealer financing increased in 2016,
growing by 6.7% to €18,307 million at the end of the
reporting period (2015: €17,156 million).
es BMW Bank
GmbH, its branch-
es in Italy, Spain
and Portugal, and
its subsidiary in
France.
Asia/Pacific 17.7
is represented by
a consolidated
in % per region
of Financial Services segment 2016
Contract portfolio retail customer financing
Multi-brand financing saw a moderate decrease
(-5.9%) in the number of new contracts signed in
2016, which fell to 153,297 (2015: 162,870 contracts).
At 31 December 2016, the total portfolio comprised
466,436 contracts, in line with the previous year (2015:
470,150 contracts; -0.8%).
Decrease in multi-brand financing
The increase in credit financing and leasing business
with retail customers is reflected in the overall contract
portfolio. A total of 4,703,417 contracts were in place
with retail customers at 31 December 2016 (2015:
4,326,631 contracts; +8.7%). By region, Asia/Pacific
continued to enjoy significant growth, recording an
18.0% increase in the contract portfolio, mainly driv-
en by greater demand in China. The Europe/Middle
East/Africa region (+8.6%), the Americas region
(+7.1%) and the EU Bank* region (+5.3%) also record- *EU Bank compris Dealer financing up year-on-year
ed year-on-year growth.
→ Research and
Development
Economic Position
Review of Operations
→ Financial Services
segment
Report on
Combined
Management
Report
50
49
49
*Until 2015 excluding Rolls-Royce.
→ 30
In the BMW and MINI pre-owned vehicle financing
and leasing lines of business, the number of new con-
tracts signed by the segment increased significantly
entity. in 2016 (+10.5 %) to 361,928 contracts (2015: 327,391
contracts).
Almost every second new BMW Group vehicle (49.6%)
was leased or financed by the Financial Services seg-
ment in the financial year 2016, 3.3 percentage points
more than one year earlier (2015: 46.3%).*
Credit financing and leasing business with retail
customers remain a major factor for the success of
the Financial Services segment. During the period
from January to December 2016, 1,811,157 new cred-
it financing and leasing contracts were concluded
with customers, 9.4% up on the previous year (2015:
1,655,961 contracts). This increase reflected a signif-
icant 11.1% rise in credit financing and a solid 6.2%
rise in leasing contracts. Overall, leasing accounted
for 34.2% of new business (2015: 35.3%), with credit
financing at 65.8% (2015: 64.7%).
* Excluding Husqvarna, sales volume up to 5 March 2013: 59,776 units.
2016
2015
2014
2013
2012
Sales of motorcycles in Europe grew by 7.5% to
87,983 units (2015: 81,834 units) year-on-year. These
figures include 24,894 units sold in Germany (2015:
23,823 units; +4.5%), 12,300 units in Italy (2015:
11,150 units; +10.3%) and 13,350 units in France (2015:
12,550 units; +6.4%). Market conditions in the USA
remained very difficult. The number of motorcycles
sold dropped significantly to 13,730 units (2015:
16,501 units; -16.8%).
Dynamic growth in Europe
106.4
115.2
123.5
137.0
145.0
BMW Group - key motorcycle markets 2016
75
in 1,000 units
Solid sales volume growth for BMW Motorrad
The Motorcycles segment profited from a favourable
market environment during the period under report,
particularly in Europe and Latin America, thereby
achieving a record sales volume performance for the
sixth year in succession. Deliveries of BMW motor-
cycles to customers worldwide rose by a solid 5.9%
to 145,032 units (2015: 136,963 units).
Motorcycles segment
→ Financial Services
segment
segment
→ Motorcycles
Review of Operations
Economic Position
Report on
Report
Management
Combined
→ 26
150
48
→ 27
Internationalisation continues
Growth in new business volumes
Services segment
the Financial
markets, in which
* The calculation
only includes
automobile
|||||
3,846
4,130
4,360
4,719
5,115
- 3,000
6,000
as a percentage of sales volume
in 1,000 units
Contract portfolio of
Financial Services segment
Financial services business continues to grow
As in the previous year, the Financial Services segment
continued to perform well in 2016, despite the volatile
market environment. In balance sheet terms, business
volume grew by 11.0% to €123,394 million (2015:
€111,191 million). The contract portfolio under man-
agement at 31 December 2016 comprised 5,114,906
contracts and therefore grew 8.4% year-on-year (2015:
4,718,970 contracts).
Financial Services segment
8.5 Italy
6.6 Spain
9.2 France
9.5 USA
17.2 Germany
3,848
Other 43.2
Started in 2015, expansion work on the BMW Group
plant in Berlin continued during the year under report.
In addition to measures to increase production capac-
ity, a state-of the-art logistics centre is being built near
the Berlin plant and scheduled to begin operations
from the end of 2017.
A total of 145,555 motorcycles rolled off production
lines during the year under report (2015: 151,004 units;
-3.6%). The slight drop was largely attributable to the
higher number of new model production start-ups in
the second half of 2016 compared to one year earlier.
Motorcycle production slightly down on
previous year
Production of the G 310 R commenced at the
Group's cooperation partner TVS Motor Company
in India during the year under report. Operations
at the Group's partner plant in Thailand were also
ramped up. Following the takeover of production in
Manaus (Brazil) in October 2016, for the first time,
BMW Motorrad now operates its own manufacturing
facilities at a location outside Europe.
→ 28
4,179
389
11.0
Asia*
747.3
685.8
658.4
578.7
493.4
thereof China*
516.8
464.1
456.7
391.7
327.3
Other markets
67.7
65.4
62.7
61.8
61.1
Total*
348.5
376.6
397.0
405.7
1,000.4
914.6
859.5
865.4
298.9
286.1
272.3
259.2
287.4
2,367.6
252.2
205.1
189.1
174.5
460.4
495.9
482.3
463.8
425.3
366.5
231.0
2,247.5
2,118.0
1,963.8
BMW X4
BMW X5
BMW X6
BMW Z4
BMW i
176,032
182,158
-3.4
8.8
BMW X3
196,183
24.8
9.8
411,844
444,338
-7.3
20.5
133,272
152,390
-12.5
157,144
1,092.2
BMW X1
BMW 6 Series
1,845.2
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2016: 316,200 units, 2015: 282,000 units, 2014: 275,891 units, 2013: 198,542 units, 2012: 141,165 units).
BMW* brand exceeds the two-million threshold,
again taking a top position in the premium
segment
The BMW brand exceeded the two-million threshold
for the first time in 2016, selling 2,003,359 units.
The BMW 1 Series fell just short of its previous year's
performance with a sales volume of 176,032 units in
the year under report (2015: 182,158 units; -3.4%). By
contrast, at 196,183 units, sales of the BMW 2 Series
were nearly a quarter higher (2015: 157,144 units;
+24.8%). Sales figures for the BMW 3 Series fell
year-
on-year to 411,844 units (2015: 444,338; -7.3%). Near-
ing the end of its life cycle, sales of the BMW 5 Series
at 331,410 units narrowly missed the previous year's
high figure (2015: 347,096 units; -4.5%). Worldwide
Sales volume of BMW vehicles by model variant*
→ 22
sales of the new BMW 7 Series were over two thirds up
on the previous year (61,514 units; 2015: 36,364 units;
+69.2%).
BMW 7 Series
The BMW X family remained extremely popular in
2016, with sales rising by more than one fifth world-
wide to 644,992 units (2015: 527,319 units; + 22.3%).
Sales volume growth of the BMW X1 was particularly
pronounced with a jump of 83.6% to 220,378 units
(2015: 120,011 units). The BMW X3 also saw a sig-
nificant year-on-year rise in deliveries to customers
(157,017 units; 2015: 137,810 units; +13.9%). At
166,219 units, sales of the BMW X5 were only slight-
ly lower than one year earlier (2015: 168,143 units;
-1.1%).
2016
2015
Change in %
Proportion of
BMW sales volume
2016 in %
BMW 1 Series
BMW 2 Series
BMW 3 Series
BMW 4 Series
BMW 5 Series
in units
6.6
thereof USA
thereof Great Britain
Q2: slight decrease
target range
between 8 and 10
moderate decrease
slight increase
slight decrease
slight increase
Fleet emissions²
Sales volume¹
slight increase
slight increase
AUTOMOTIVE SEGMENT
Workforce at year-end
Profit before tax
BMW GROUP
Forecast revision
during the year
in 2015 Annual Report
Forecast for 2016
→ 19
The following overall picture arises for the key per-
formance indicators used by the BMW Group and its
segments:
In the Annual Report 2015, ROE was forecast to be
at the previous year's level. As expected, it remained
ahead of the long-term target of 18%.
Revenues
EBIT margin
Return on capital employed
MOTORCYCLES SEGMENT
slight increase
74.3 (+2.1 %pts)
%
8.9 (-0.3%pts)
%
86,424 (+1.0%)
€ million
124 (-2.4%)
2,367,603 (+5.3%)
Comparison of 2016 forecasts with actual outcomes 2016
units
g CO2/km
€ million
in 2016
Actual outcome
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2016: 316,200 units).
2 EU-28.
in line with last year's level
Return on equity
FINANCIAL SERVICES SEGMENT
Return on capital employed
Sales volume
9,665 (+4.8%)
124,729 (+2.0%)
7
Growth in business volumes and an improved risk
profile in the Financial Services segment had a posi-
tive impact on segment return on equity (RoE) in 2016.
At 21.2%, the RoE was slightly higher than expected
(2015: 20.2%; +1.0 percentage point).
Return on equity: slight increase
as a percentage of sales volume
Other 29.1
21.8 China
Dynamic growth in Europe and Asia, challenges on
the US market
Within a generally favourable market environment,
the BMW Group surpassed the one-million mark for
sales of BMW, MINI and Rolls-Royce brand vehicles in
Europe for the second year in succession in 2016 with
1,092,155 units sold (2015: 1,000,427 units; +9.2%).
Sales figures for Germany were up 4.5% year-on-year
to 298,928 units (2015: 286,098 units). Despite the
Brexit decision, automobile business in Great Britain
Japan 3.2
Italy 3.5
France 3.6
Great Britain 10.7
BMW Group sales volume of vehicles by region and market
→ 20
→ 21
15.5 USA
12.6 Germany
2016
2015
2014
2013
2012
Europe
thereof Germany
in 1,000 units
Americas
BMW Group - key automobile markets 2016
under report,
Financial Services segment
145,032 (+5.9%)
slight decrease
year's level
%
33.0 (+1.4%pts)
%
21.2 (+1.0%pts)
41
also developed positively during the year
with sales rising to a total of 252,205 units (2015:
230,982 units; +9.2%). Sales volume growth was again
recorded in Asia. Overall, sales of the Group's three
brands in the region totalled 747,291* units (2015:
685,792* units; +9.0%), including 516,785* units sold
in China, 11.4% more than one year earlier (2015:
464,086* units). Total sales of BMW, MINI and Rolls-
Royce brand vehicles on the American continent were
down year-on-year within a highly competitive market
environment, falling by 7.2% to 460,398 units (2015:
495,897 units). Sales in the USA fell by 9.7% to 366,493
units (2015: 405,715 units).
42
Combined
Management
Report
Report on
Economic Position
→ Review of Operations
→ Automotive segment
REVIEW OF OPERATIONS
Automotive segment
Solid growth in deliveries to customers
The BMW Group sold 2,367,603* BMW, MINI and
Rolls-Royce brand vehicles worldwide in 2016, thereby
setting a new record for the sixth year in succession
(2015: 2,247,485* units; +5.3%). The BMW brand
recorded a solid 5.2% increase to 2,003,359* units,
thereby exceeding the two-million threshold for
the first time (2015: 1,905,234* units). MINI also
achieved a solid 6.4% increase to 360,233 units (2015:
338,466 units). Rolls-Royce Motor Cars delivered
4,011 luxury automobiles to customers during the
year under report (2015: 3,785 units; +6.0%). A new
all-time high was therefore not only recorded at Group
level, but also for the BMW and MINI brands.
42
0.4
331,410
-4.5
Regensburg
Dingolfing
Leipzig
Munich
Oxford
Tiexi¹
Dadong1
Rosslyn
Rayong
Araquari
Chennai
Goodwood
Born (VDL Nedcar)²
Graz (Magna Steyr)²
Partner plants (Jakarta, Cairo, Kaliningrad, Kulim)
BMW Group
1 Joint Venture BMW Brilliance Automotive Ltd., Shenyang.
2 Contract production.
2016
2015
Spartanburg
in units
→ 25
Vehicle production of the BMW Group by plant
-20.3
7
Ghost
1,175
1,609
-27.0
Wraith/Dawn
Rolls-Royce total
2,447
1,688
Change in %
45.0
3,785
6.0
High capacity utilisation throughout
production network
In 2016, buoyant customer demand and various new
model start-ups resulted in high capacity utilisation
throughout the BMW Group production network. At
the same time, rapid progress was made in expanding
the Group's international manufacturing locations.
The production network currently comprises 31 loca-
tions in 14 countries worldwide.
* Including the
joint venture
BMW Brilliance
Automotive Ltd.,
Shenyang
(2016: 305,833
units, 2015:
287,755 units).
New production records were set in 2016, with a
total of 2,359,756* BMW, MINI and Rolls-Royce
brand vehicles manufactured (2015: 2,279,503* units;
+3.5%), comprising 2,002,997* BMW (2015: 1,933,647*
units; +3.6%), 352,580 MINI (2015: 342,008 units;
+3.1%) and 4,179 Rolls-Royce brand vehicles (2015:
3,848 units; +8.6%).
4,011
Proportion of
production in %
411,171
400,904
11.7
6.9
143,825
142,767
0.7
6.1
63,117
71,353
-11.5
144,988
2.7
8,928
99.9
0.7
15,408
9,936
55.1
0.6
8,568
7,716
17,844
488
161,901
4.9
2.6
17.4
346,291
304,509
13.7
14.7
339,769
360,804
-5.8
8.9
14.4
233,656
5.5
10.4
216,769
221,998
-2.4
9.2
210,971
201,206
246,550
347,096
Extended Wheelbase)
Phantom (incl. Coupé,
8.3
43,323
46,305
-6.4
2.2
5,432
7,950
-31.7
0.3
29,280
29,513
-0.8
1.5
BMW total
2,003,359
1,905,234
5.2
100.0
*Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2016: 316,200 units, 2015: 282,000 units).
−1.1
168,143
166,219
2.9
16.5
13,400
20,962
-36.1
0.7
61,514
36,364
69.2
3.1
43
220,378
83.6
11.0
157,017
137,810
13.9
7.8
58,055
55,050
5.5
120,011
43
44
Combined
Management
Report
63,509
8,003
17.6
68,301
88,477
-22.8
19.0
360,233
338,466
8.3
6.4
Strong performance by Rolls-Royce
Rolls-Royce Motor Cars enjoyed the second-best year
in its history, with 4,011 luxury automobiles delivered
to customers (2015: 3,785 units; +6.0%). This perfor-
mance includes an all-time quarterly high contribution
of 1,386 units in the fourth quarter (2015: 1,181 units;
+17.4%). A high proportion of these sales related to
the new Rolls-Royce Dawn, of which 1,283 units were
sold worldwide after its mid-year launch.
Sales volume of Rolls-Royce vehicles
by model variant
→ 24
in units
2016
2015
Change in %
100.0
Drophead Coupé,
50.2
30,050
Report on
Economic Position
Review of Operations
→ Automotive segment
MINI sets new sales volume record
The MINI brand also set a new sales volume record
in 2016 with a total of 360,233 units sold (2015:
338,466 units; +6.4%). Positive contributions to this per-
formance came from the new Convertible (29,758 units;
2015: 14,145 units) and the new Clubman (63,509 units;
2015: 8,003 units). With 198,373 units sold, the MINI
Hatch 3- and 5-door models fell short of the previous
year's high level (2015: 221,982 units; -10.6%).
Sales volume of MINI vehicles by model variant
→ 23
in units
MINI Hatch (3- and 5-door)
MINI Convertible/Coupé / Roadster
20,004
MINI Clubman
MINI total
2016
2015
Change in %
Proportion of
MINI sales volume
2016 in %
198,373
221,982
-10.6
55.1
MINI Countryman/Paceman
Q2: solid increase
Q2: in line with last
units
Diversity represents a key factor in ensuring the
BMW Group's continued competitiveness going forward,
focusing on the three aspects of gender, cultural back-
ground, and age/experience. The aim is to ensure equal
opportunities for all employees. A variety of measures
were implemented in 2016 to promote and benefit from
diversity in the workforce.
52
As the first concrete steps in implementing the Strat-
egy NUMBER ONE > NEXT, numerous new concepts
and innovations have been presented to the public,
such as the BMW i8 Spyder, which celebrated its world
premiere at the Consumer Electronics Show (CES) in
Las Vegas, followed by the M Performance model of
the BMW 7 Series at the Geneva International Motor
Show. The China version of the BMW X1 was present-
ed at the show in Beijing and the BMW Concept X2
at the Paris Motor Show (Mondial de l'Automobile).
MINI launches new convertible
The new MINI Convertible has been on the market
since March 2016. The new model was launched fea-
turing five different versions of the new generation
of engines with MINI TwinPower Turbo technology.
The sports version, the MINI John Cooper Works
Convertible, became available in May. The new MINI
Convertible keeps up the tradition of highly dynamic
driving pleasure and continues to offer its owners the
typical MINI go-kart feeling.
Workforce
→ www.bmwgroup.com/careers
Slight increase in workforce
At 31 December 2016, the BMW Group employed a
workforce of 124,729 worldwide, 2.0% more than one
year earlier (2015: 122,244 employees). The increase
was primarily due to the expansion of the internation-
al production network and financial services business.
Moreover, skilled workers and IT specialists were
increasingly recruited for future-oriented areas, such
as software architecture and development, artificial
intelligence and autonomous driving.
BMW Group employees
→ 33
Automotive
31.12.2016
31.12.2015
Change in %
112,869
111,410
1.3
57
The first official information on the seventh generation
of the new BMW 5 Series was published in mid-Octo-
ber 2016. The new 5 Series Sedan had its worldwide
debut in Detroit in January 2017 and has been on sale
since mid-February 2017. The success story of the
BMW 5 Series in the sporty business class is being
continued with this dynamic, efficient, innovative
vehicle.
both
The revised model of the BMW 3 Series Gran Turismo
has been available since July 2016. The new modular
engines and Connected Drive range of services com-
bine the sporting flair typical of BMW with superb
efficiency and a high level of connectedness. The
BMW 1 Series and the 2 Series Convertible and Coupé
models have also been available as M Performance
versions since July 2016. In the course of the year,
the BMW X1 and the BMW 1 Series were launched
in China. Since autumn 2016, the BMW M2 Coupé
has been on sale in the compact high-performance
sports car segment.
The global dealership and agency network for BMW i
currently covers over 1,300 locations. In addition,
BMWi models are offered via new channels, such
as the Customer Interaction Center. Moreover, the
Mobile Sales Advisor is now established as a core
element of the sales model in six markets. The BMWi
online store gives customers in the Netherlands, Bel-
gium, Luxembourg, Austria and Italy the opportunity
to order their BMW i3 via the Internet.
Under the name 360° ELECTRIC, BMWi provides a
comprehensive range of products and services for both
all-electric vehicles and plug-in hybrids worldwide.
A new generation of the BMWi wallbox has been
launched for quick, easy charging at home. It can
now charge vehicles at up to three times the previous
speed. While on the road, drivers can now use the
BMW i service ChargeNow with over 65,000 charging
points in 29 different countries.
55
55
99
56
Combined
Management
Report
Report on
Motorcycles
Economic Position
Review of Operations
Premium services for individual mobility
The BMW Group has been developing its range of
mobility services under the brand NOW since 2011.
In Europe, the USA and China, the BMW Group now
offers its customers individually tailored solutions
for urban mobility. The range includes car sharing,
on-demand mobility such as DriveNow and Reach-
Now as well as parking and charging solutions such
as ParkNow and ChargeNow.
The DriveNow premium car-sharing service, a joint
venture between BMW AG and Sixt SE, now has over
750,000 customers in seven countries and is repre-
sented in eleven European cities. Around 20% of
DriveNow vehicles in Europe are electrically powered
and the number is scheduled to grow. With Alphacity,
the BMW Group also provides car-sharing services
for companies.
In April 2016, the BMW Group launched ReachNow
in Seattle (USA), a further development of car sharing.
The ReachNow fleet in Seattle and Portland now com-
prises 800 BMW and MINI brand vehicles. Electrically
powered BMW i3 vehicles make up 20% of the fleet. In
addition to Seattle and Portland, in November 2016
Brooklyn/New York became the third US city to
launch ReachNow. Currently, membership amounts
to more than 32,000 in the three cities. In Decem-
ber 2016, ReachNow began offering Ride in Seattle,
its new mobility service, which enables members to
order a vehicle optionally with a driver. In residential
areas, Fleet Solutions offers the exclusive use of a fleet
of premium vehicles that are permanently available
on location. The ReachNow Reserve service makes it
possible to book a specific vehicle for longer periods
of between two and five days and have it delivered
at the time and place of the customer's choice. Via
ReachNow Share, MINI owners will be able in the
future to rent out their vehicle when they do not need
it themselves.
ParkNow is a comprehensive parking solution for Web,
app and navigation systems. When parking on the
street, payment is made cash-free via smartphone.
When parking in multi-storey car parks, ParkNow
provides support in finding, reserving, booking and
paying for parking spaces. ParkNow was launched in
Germany, Austria and France during the year under
report.
With ChargeNow, the BMW Group provides easy
access to a constantly growing network of public
charging stations that currently includes over 65,000
charging points in 29 countries. Customers can locate
the BMWi partner charging stations directly via the
navigation system integrated in the vehicle, via the
ChargeNow app or via the website. ChargeNow inte-
grates the charging stations of various operators to
form one large, expanding network.
BMW continues electrification strategy with
iPerformance
In early 2016, BMW presented the first iPerformance
model, the plug-in version of the 3 Series. With emis-
sions of only 44g CO2/km and an electric range of
up to 40 km, the iPerformance Sedan combines the
driving dynamics of the 3 Series with the advantages
of an electric drive system. A plug-in hybrid version
of the current 7 Series was launched in July. With
only 45 g CO2/km, the efficient, powerful 4-cylinder
engine sets new standards in the luxury segment. The
BMW 2 Series Active Tourer is also available as an
iPerformance model. With its 3-cylinder combustion
engine and 100 kW/136 hp of power output and a
65 kW/88 hp electric motor, it emits 46 g CO2/km.
→ Sales and Marketing
→ Workforce
3,351
3,021
10.9
2012
2013
2014
2015
2016
58
Combined
Management
Report
Report on
2,500
Economic Position
Review of Operations
→ Sustainability
High level of investment to bolster
employee skill sets
At €352 million, expenditure on basic and further
training remained unchanged at a high level. By
improving the skill sets of its workforce for example
in electric mobility, hydrogen and fuel cell technology,
lightweight construction and robot technology, the
BMW Group is creating a solid foundation for future
activities.
Highly attractive employer
The BMW Group retained its status as one of world's
most attractive employers in 2016. In the latest
"World's Most Attractive Employers" rankings pub-
lished by the agency Universum, the BMW Group was
once again named best German employer across all
sectors and the most attractive automotive company
in the world.
The BMW Group came top in Trendence's “Young
Professional Barometer Germany" for the fifth year
in succession. It also improved its position again in
the Trendence "Graduate Barometer Germany - IT
Edition" for highly sought-after IT specialists, taking
second place in 2016. In Universum's "Young Profes-
sionals Study Germany", the BMW Group took top
spot in both the “Engineering" and "Business" cate-
gories and came third in the "IT" category, confirming
the excellent results of the previous year. Overall, the
BMW Group finished as the best-placed company in
the study.
→ Workforce
The BMW i8 plug-in hybrid sports car continues to
be the best-selling vehicle in its class since its market
launch in 2014. The eDrive technology of the BMW i8
is also integrated in the new BMW iPerformance mod-
els of the 2, 3 and 7 Series as well as in the X5.
4,266
4,445 4,595
Financial Services
8,394
7,697
9.1
Other
115
116
-0.9
4,700
BMW Group
122,244
2.0
Rolls-Royce Dawn launched
The new Rolls-Royce Dawn has been available since
mid-2016. The Dawn was first presented to the media
in March 2016 amid high acclaim. The luxury con-
vertible boasts a special in-house designed roof that
reduces interior noise levels to a minimum. During
the year under report and to celebrate the end of the
vehicle's life cycle, a special edition of 50 Rolls-Royce
Phantoms was built – the Phantom Zenith Collection.
Dual vocational training expanded worldwide
The BMW Group increased its international appren-
ticeship activities during the year under report, due
amongst others to the higher number of apprentices
employed at plants, for example in the USA and
Thailand. The number of new entrants at German
sites remained constant at 1,200 apprentices. At the
end of the reporting period, 4,613 young people were
engaged in vocational training and other training pro-
grammes designed to promote young talent within
the BMW Group (2015: 4,700).
BMW Group apprentices at 31 December
→ 34
5,000
124,729
Since first going on sale in 2013, the BMW i3 has
established itself as the front runner in its segment.
Over 80% of BMW i3 buyers are first-time customers
for the BMW Group. Since summer 2016, the BMW i3
has been optionally available with a battery that pro-
vides 50% more capacity and a range of around 300
kilometres in the European driving cycle.
Under the brand name BMW i, the BMW Group offers
a range of electric mobility solutions that include not
only the vehicles, but also services such as journey
planning using different modes of transport and
charging of electric vehicles. Over 100,000 electric
and electrified vehicles have been sold to customers
since the BMW i brand was launched. BMW i vehicles
are meanwhile available in 52 countries worldwide.
BMW i becoming further established
→ 31
Development of credit loss ratio
Despite ongoing political and economic uncertain-
ties, including the UK's decision to leave the EU, the
stable trend in the global economy during the year
under report contributed to an improvement in the
risk situation of the Financial Services segment's total
portfolio. The risk profile for the segment's credit
financing portfolio also improved slightly. The credit
loss ratio on the total credit portfolio for the twelve-
month period decreased to 0.32%, slightly down on
the previous year's level (2015: 0.37%).
Risk profile improved
5555
51
Report on
Economic Position
Review of Operations
→ Research and
Development
in %
Expertise in drivetrain technology
In 2016, an additional version of the BMW i3 was
launched, featuring significantly greater battery
capacity. The vehicle is also available with or without
a range extender. During the reporting year, plans
were laid for both the first all-electric MINI and for
an electrically powered BMW X3. In 2017, the new
BMW 5 Series and the MINI Countryman are both due
to be launched as plug-in hybrid versions. A roadster
version of the BMW i8 has also been announced for
2018.
With its C-evolution, BMW Motorrad presented in
2016 the second edition of an all-electric "Maxi Scoot-
er” with greatly improved range and higher top speed.
For the medium and long term, the BMW Group is also
developing a fuel cell electric vehicle (FCEV). The fuel
cell electric drive system, which converts hydrogen to
electricity and steam, combines locally emission-free,
electrically powered driving with the dynamic flair
typical of the BMW brand, capability for covering long
distances, and short refuelling times. Battery and fuel
cell technology can be combined in one vehicle.
At the same time, the BMW Group continues to work
on enhancing its existing range of highly efficient
combustion engines. 2016 saw the launch of the new
BMW 7 Series, featuring a newly developed inline
6-cylinder diesel engine that combines high perfor-
mance with low fuel consumption. The BMW 1 and 2
Series M Performance models were presented with a
new, powerful inline 6-cylinder petrol engine in 2016.
Driver assistance systems, highly and fully
automated driving
The new BMW 5 Series offers drivers extensive sup-
port with a variety of assistance systems. It is fitted
with a stereo camera as standard, which monitors
the vehicle's environment together with optionally
available radar and ultrasound sensors. New features
in the BMW 5 Series include an avoidance assistant,
a crossing-traffic warning, a lane-change assistant
and a lane control assistant with active side collision
protection, which monitors the driving lanes and
developments next to the vehicle and actively supports
the driver in the event of imminent collision with a
corrective steering intervention.
With extended functions built into the optionally avail-
able Active Cruise Control (ACC) and the steering and
lane control assistant, the BMW 5 Series represents
a further step towards automated driving, including
recognition of speed limits, which the optional Speed
Limit Assist shows the driver. The assistance system
supports the driver in keeping a correct distance at
speeds up to 210 km/h as well as at accelerating and
braking. These features offer drivers a significant ben-
efit in terms of convenience, particularly at low speeds
and in slow-moving traffic. The optional Remote
Parking feature of the BMW 5 Series Sedan enables
drivers to manoeuvre the vehicle into the tightest of
parking spaces using a remote-control car key.
At the same time, the BMW Group is conducting
research into highly automated systems that do not
need to be permanently monitored by the driver and
fully automated systems that no longer require the
driver to monitor them at all. At the end of 2016,
some 600 BMW Group employees were engaged in
the development of highly automated driving tech-
nologies. Beginning in 2017, the BMW Group plans
to concentrate its expertise in the field of vehicle
connectivity and automated driving at one location.
The BMW Group is consistently extending its portfolio
of electrically powered vehicles. At the end of 2016,
it included the BMW i3 all-electric, battery-powered
vehicle, six plug-in hybrid vehicles for the global
market, and an additional plug-in hybrid exclusively
developed for the Chinese market.
52
0.50
0.5
Management
Report
Combined
Given the pace of technological change, collaboration
in the field of research and development is customary
in the automotive industry. The BMW Group also
enters into collaboration arrangements with selected
partners. The aim of these research and development
activities, which may also include cross-sector cooper-
ation, is to help find innovative solutions for individual
mobility. The focus is on future-oriented technologies
such as digitalisation and alternative drive systems.
note 7
Research and development expenditure totalled
€5,164 million during the year under report, in
line with the previous twelve-month period (2015:
€5,169 million; -0.0%). At 5.5%, the research and
development expenditure ratio was also practically
identical to that of the preceding year (2015: 5.6%).
The ratio of capitalised development costs to total
research and development expenditure for the period
(capitalisation ratio) was 40.5% (2015: 39.9%). Amor-
tisation of capitalised development costs totalled
€1,222 million (2015: €1,166 million; +4.8%). Further
information on research and development expendi-
ture is provided in the "Report on Economic Position
→see (Results of Operations)" and in → note 7 to the Group
Financial Statements.
Research and development are of central importance
for the BMW Group as a premium manufacturer. As
part of the Efficient Dynamics strategy, continual
efforts are undertaken to improve energy efficiency
and reduce emissions across the full range of auto-
mobiles and motorcycles. In line with its Connected
Drive strategy, the BMW Group is engaged in work on
the connectedness of driver, vehicle and the outside
world. The Group seeks to take a leading position in
the field of autonomous driving. At 31 December 2016,
a total of 13,103 people at 13 locations in five coun-
tries worldwide were employed in the BMW Group's
research and innovation network.
→ www.bmwgroup.com/innovation
Research and Development
0.48
Average sales proceeds per vehicle, generated from
remarketing pre-owned BMW and MINI brand vehi-
cles, reflected the marginally less favourable situation
on international pre-owned markets, and were there-
fore slightly down on the previous year. Residual value
losses on such vehicles rose moderately year-on-year,
mainly due to greater competition in North America.
Further information on the risk profile is provided in
the section "Risks and Opportunities".
2015
2014
2013
2012
0.32
0.37
0.25
0.46
2016
BMW supplementary benefit plan
and centenary bonus
52
With BMW Connected, the BMW Group presented
a comprehensive digital concept that facilitates
individual mobility. Based on a flexible platform,
BMW Connected seamlessly combines the vehicle
with the digital life of the user through user devices
such as smartphones. The functions of existing BMW
ConnectedDrive apps will be integrated in BMW
Connected. The security and anonymisation of data
have the highest priority for the BMW Group, both
internally and for its customers.
During the period under report, the new Lightweight
and Engineering Center was opened in Landshut,
the Group's most important components plant. In
future, research will be conducted at the centre on
new materials, composite material concepts and
production processes for future vehicle generations,
encompassing a wide range of technologies.
Regional mix of BMW Group
purchase volumes 2016
→ 32
in %, basis: production material
Asia/Australia 5.7
Rest of Western
Europe 15.4
NAFTA 17.2
1.3 Africa
A further important area is the production of key
components for BMW Group vehicles. Investments in
state-of-the-art manufacturing facilities and efficient
structures ensure the competitiveness of in-house
component production.
39.8 Germany
Sales and Marketing
→ www.bmwgroup.com/brands
The BMW Group's sales and distribution network
comprises some 3,400 BMW, 1,580 MINI and 140
Rolls-Royce dealerships worldwide. Products and
services are sold by independent authorised dealer-
ships, BMW Group branches and subsidiaries, as well
as independent importers in certain markets. The
dealership and agency network for BMW i currently
covers over 1,300 locations.
100th anniversary of BMW
In March 2016, the company celebrated its 100th anni-
versary with the slogan THE NEXT 100 YEARS. The
anniversary year kicked off with a major centenary
event in Munich for employees and the general public.
The four vision vehicles of BMW, MINI, Rolls-Royce
and BMW Motorrad, presented over the course of the
year, provided the international public with a visionary
glimpse into the future of individual mobility.
The BMW VISION NEXT 100 demonstrates how
driving pleasure could look in the future. The MINI
VISION NEXT 100 offers an individualised, continu-
ally available form of urban mobility. The Rolls-Royce
VISION NEXT 100 provides an insight into the future
world of highly customised automotive luxury. Future
motorcycling pleasure with the BMW Motorrad
VISION NEXT 100 promises unlimited freedom.
Digitalisation continued
In 2016, the BMW Group continued to digitalise its
processes in both sales and marketing. The aim is to
make customer contact possible at an earlier stage
and provide individualised offers for vehicle sales and
services. Moreover, online sales help to attract new
customer groups. For example, at the end of 2015 a
nationwide online pilot project began across the UK.
Over the course of the year under report, the sale
of new vehicles via the Internet established itself as
a further sales channel to supplement on-location
dealership sales. This method enables customers to
purchase any BMW model online. The service covers
all aspects of the purchase, including selecting the
right model, fully customised vehicle configuration,
financing and payment. It is even possible to trade in
a used vehicle online. If required, customers can also
receive personal advice from a vehicle specialist (BMW
Product Genius) or take up direct contact with a dealer.
20.6 Eastern Europe
BMW Connected digital platform presented
Investments ensure expertise in productivity
and technology
Connecting procurement markets
Digital connectivity has also become a key topic for
the Group's motorcycles. With its optionally avail-
able "Intelligent Emergency Call", BMW Motorrad
has announced that eCall for urgent help in case of
emergency or accidents will also be added as a feature
of its motorcycles as from 2017.
Next generation of the Air Touch virtual
touchscreen
The BMW Group made further progress in the field
of interaction between the driver and the vehicle
during the year under report. Following up on BMW
Gesture Control, which is already available for the
new BMW 5 and 7 Series, in 2016 the Group pre-
sented its enhanced AirTouch system, which enables
drivers to use simple gestures with an open hand to
activate command fields on a large panorama screen
on the dashboard. At the beginning of 2017, the BMW
HoloActive Touch system was presented to the public
for the first time. The innovative interface between
driver and vehicle is similar to a virtual touchscreen,
which is operated using finger gestures on a screen
that appears to float freely in space.
Extreme lightweight construction in the BMW HP4
BMW Motorrad demonstrated with the exclusive BMW
HP4 RACE experimental motorcycle how extreme
lightweight construction can be realised based on
carbon fibre technology. Among other features, this
motorcycle, which is fit for racing, is equipped with a
highly innovative frame structure made of pure carbon
as well as carbon wheel-rims.
Numerous awards for innovations
The BMW Group won over 50 national and interna-
tional awards during the year under report. Among
other honours, the BMW 7 Series was named World
Luxury Car at the renowned World Car Awards.
At the "International Engine of the Year Award", the
most prestigious engine competition worldwide, the
drivetrain of the BMW i8 was winner in the 1.4- to
1.8-litre category. At the Automotive Innovations
Award, jointly awarded by the Center of Automotive
Management and the auditing and consulting firm
PricewaterhouseCoopers, BMW drivetrains were
adjudged to be the most innovative conventional
systems across all models.
The BMW i3 won the "Golden Steering Wheel" award
in the "Alternative drives" category. In 2016, the
BMW Group won numerous design awards, includ-
ing the International Forum Design Awards for its
Rolls-Royce Dawn, MINI Clubman, MINI Convertible,
BMW M2, BMW X1 and BMW 7 Series.
Continually rising vehicle sales and production vol-
umes outside Europe are also changing the regional
distribution of purchasing volumes, for example due to
the expansion of production capacities in the Group's
plant in Spartanburg, USA, or the construction of
the BMW Group plant in San Luis Potosí, Mexico,
which is scheduled to begin production in 2019. The
BMW Group remains committed to its strategy of
maintaining a regionally balanced growth in sales
volume, production and purchasing volumes. This
strategy also makes an important contribution to
natural hedging against currency risks.
53
Combined
Management
Report
Report on
Economic Position
Review of Operations
→ Purchasing and
Supplier Network
→Sales and Marketing
Purchasing and Supplier Network
Charting a course in a volatile environment
Despite the increasingly volatile environment, the Pur-
chasing and Supplier Network ensures that the Group
is capable of flexibly responding to fluctuations in
demand when purchasing production materials, raw
materials, capital goods and services. The main focus
is on high quality standards, innovation, a flexible
and reliable supply structure and competitive costs.
54
Demographic and economic conditions relevant for
the provision of pension benefits are changing at an
increasingly rapid pace. In 2016, the BMW Group there-
fore enhanced the Company pension plan to make it
more sustainable and viable for the future. To mark the
occasion of its centenary, nearly all employees of the
BMW Group were awarded a one-time centenary bonus.
BMW AG employees received the bonus mainly in the
form of a starting contribution to the new BMW sup-
plementary benefit plan, which serves as an additional
component in the Company pension plan.
4,613
Diversity and equal opportunity
Employee development and training
Socio-economic impacts in society
Mobility concepts
and services
Product safety
Connected and autonomous driving
Alternative drivetrain technologies
Prevention of corruption and
anticompetitive behaviour
Human rights
Environmental and social standards
in the supply chain/sustainable sourcing
Occupational health and safety
Air emissions of vehicles
Energy use and GHG emissions
of operations and supply chain
Air emissions of operations
and supply chain
Data protection
Medium
materiality
High
Importance for the stakeholders
Absolutely
crucial
In order to identify important sustainability topics at
an early stage, the BMW Group also conducts mate-
riality analyses on a regular basis. Moreover, social
challenges are continually monitored and analysed
in order to gauge their significance, from the point
of view of both external and internal stakeholders.
The materiality analysis is used to create a materi-
ality matrix, which is used as a basis to check the
strategic direction of sustainability management. The
materiality matrix is described in greater detail in the
Sustainable Value Report 2016.
7
→ 37
Materiality matrix
The BMW Group is in continual dialogue with a large
number of stakeholders, both in Germany and abroad.
Dialogue helps the Company to recognise global trends
at an early stage, achieve sustainability objectives
more effectively and strengthen social commitment.
In the course of this dialogue, the BMW Group gains
a clear picture of how current trends are changing the
business environment and what role the BMW Group
can play. For example, stakeholder dialogue events
on the topic of urban mobility were held in Seattle,
Boston, Madrid, Tokyo and Barcelona during the
period under report.
Social dialogue and materiality analysis as a basis
for sustainability management
Report on
Economic Position
Review of Operations
Sustainability
Vehicle efficiency and CO2 emissions
Attractive workplace, talent attraction and retention
Customer satisfaction
Design for recycling and resource efficiency
Diversity as a competitive factor
Absolutely
crucial
→
Importance for the BMW Group
←
Political involvement
Efficient use of materials in operations
and supply chain
Employee-management relations
Responsible financial services
Responsible marketing and product communication
Corporate Citizenship
Donations and philanthropy
Corporate volunteering
Biodiversity
Involvement with local communities
Use of urban space
Waste and water pollution
Water consumption
Less
important
important
Less
materiality
Low
Combined
Management
Report
60
materiality
Further information on the subject of sustainability
within the BMW Group and related topics is provided
in the Sustainable Value Report 2016, published online
at → www.bmwgroup.com. The Sustainable Value Report is
drawn up in accordance with the Guidelines of the
Global Reporting Initiative (GRI G4), the most wide-
ly used set of guidelines for sustainability reporting
worldwide. The Sustainable Value Report corresponds
to the "comprehensive" option, in which all relevant
information and indicators of the aspects identified
as essential are reported on. It will be published at
the same time as the Annual Report 2016.
59
59
* Reporting on the proportion of women in management was changed in 2016 and is now
based on the criterion "management function" rather than individual employee
classification. Prior year figures have been adjusted accordingly.
2016
2015
2014
2013
2012
60
11.3
12.5
BMW Group 12.1
BMWAG 10.0
13.3
13.0
13.5
14.3
15.3
16
in %
→ 35
Proportion of female employees in manage-
ment functions at BMW AG/BMW Group*
The proportion of women in the workforce, management
young talent
programmes continued to
increase during the year under report. The percentage of
women in the total BMW Group workforce rose to 18.7%
(BMW AG: 15.8%), above the internal target range of 15 to
17%. The proportion of women in management positions
rose to 15.3% for the BMW Group as a whole and 13.3%
for BMW AG. Female representation in programmes for
young employees and interns in the year under report
was approximately 44% for trainee programmes and 29%
for student training programmes.
functions and
At the same time, the workforce in Germany is becoming
more international. Employees from over 100 countries
work together successfully at the Munich site alone.
Moreover, a balanced age structure in the workforce
encourages an exchange between generations and plays
a role in reducing the loss of know-how when employees
retire.
Employee attrition rate at BMW AG*
10.6
* Number of employees on unlimited employment contracts leaving the Company.
→ 36
responsibility towards employees and society in
general
the efficient use of resources along the entire
value chain
the development of products and services for
sustainable individual mobility (for example
electric mobility and services such as DriveNow
and ReachNow)
Economic success, the responsible use of resources
and the assumption of social responsibilities form the
basis for long-term growth within the BMW Group.
The Group secures the future of its business model
through sustainable activity. In promoting sustaina-
bility, the BMW Group concentrates on three areas:
→ www.bmwgroup.com/responsibility
Sustainability
2016
2015
2014
2013
Through its sustainability policy, the BMW Group is
supporting the achievement of the UN's Sustainable
Development Goals (SDG), which were adopted in
September 2015.
0
1.41
Üli
2.70
2.08
3.47
3.87
3.5
7.0
as a percentage of workforce
2012
2016
Other operating expenses
Selling and administrative expenses
Profit before financial result
Other operating income
Profit before tax
Change in %
94,163
-75,442
Gross profit
92,175
2.2
2015
Cost of sales
131
in € million
→ 38
BMW Group Income Statement
MINI and Rolls-Royce brand cars sold rose by a solid
5.3% to 2,367,603* units.
Once again, the BMW Group achieved year-on-year
growth in revenues, sales volume and profit before
tax in the financial year 2016. The number of BMW, 7
Results of operations
-369
279
-454
-74,043
Financial result
Revenues
-1.9
-847
18,132
in %
Other financial result
→ 39
BMW Group revenues by region
region were as follows:
African rand against the euro. Group revenues by
BMW Group revenues increased slightly by 2.2% year-
on-year to reach €94,163 million (2015: €92,175 mil-
lion). The primary drivers of this performance were
the higher volume of BMW, MINI and Rolls-Royce
brand vehicles sold and the growth in size of the
Financial Services segment's contract portfolio.
Continued fierce competition and negative currency
factors held down the scale of revenue growth. The
negative currency impact on revenues was mainly
attributable to changes in the average exchange rates
of the British pound, Chinese renminbi and South
Profit before tax for the financial year 2016 was slightly
up year-on-year. At 10.3%, the pre-tax return on sales
was similar to one year earlier (2015: 10.0%).
63
6
8.0
6,396
18,721
6,910
2.6
-2,828
-2,755
Income taxes
4.8
9,224
9,665
670
-6.1
-8,633
-9,158
3.2
Net profit
20.9
Integrated sustainability management in production
processes ensures the efficient use of resources. Since
2006, the consumption of resources and emissions per
vehicle produced has been reduced by an average of
50.0%. The individual figures are as follows:
-489
62
62
61
Despite record temperatures and long, hot periods at
some assembly plants in 2016, at 2.25 m³ per vehicle
produced, water consumption was in line with the
previous year (2015: 2.24 m³; +0.4%). At 0.42 m³, the
volume of process wastewater generated per vehicle
produced fell by 6.7% (2015: 0.45 m³). The volume of
non-recyclable production waste was further reduced
to 3.51 kg per vehicle produced during the year under
report (2015: 4.00 kg; -12.3%). Solvent emissions were
cut by 6.6% to 1.14 kg per vehicle produced during
2016 (2015: 1.22 kg).
Despite the slight increase in the average amount
of energy consumed per vehicle, the use of highly
efficient, ecologically sustainable combined heat and
power plants and electricity generated from renewable
sources at production sites enabled the Company to
reduce production-related CO₂ emissions per vehicle
by a further 5.3% year-on-year to 0.54 tonnes during
the period under report (2015: 0.57 tonnes).
In 2016, at 2.21 MWh per vehicle produced, the
amount of energy consumed rose slightly compared
with the previous year (2015: 2.19 MWh; +0.9%). The
higher figure is due amongst others to the start-up of
the new engine plant in Shenyang, China. In addition,
the construction of a new, more efficient painting line
in Munich made it necessary to run two painting lines
in parallel for a certain period.
In 2016, the BMW Group's fleet of new vehicles sold
in Europe (EU-28) consumed an average of 4.6 litres of
diesel and 5.6 litres of petrol per 100 km respectively.
CO2 emissions averaged 124 grams per km.
The development of sustainable products and services
is an integral part of the BMW Group's business model.
The fleet-wide deployment of Efficient Dynamics tech-
nologies is helping to continually reduce CO2 emission
levels. The electrification of the fleet continued to
progress in 2016. Due to the expansion of the mod-
el range, annual sales of electrified BMW vehicles
increased strongly, surpassing the 62,000-unit mark
in the course of 2016. These measures form the basis
for complying with the legally stipulated CO2 and fuel
consumption limits going forward. Between 1995 and
2016, the average CO2 emissions of the three brands
sold by the BMW Group in Europe fell by 41.0%.
Fleet carbon dioxide emissions reduced
-48.6%
-54.6%
-81.5%
-48.8%
-31.0%
-35.4%
2016
Solvent emissions
CO₂ emissions
Non-recyclable waste
Energy consumption
Water consumption
Process wastewater
in %
Clean production
In the Carbon Disclosure Project (CDP), the Group
achieved the best evaluation for its efforts in the field
of climate protection. The BMW Group is therefore
one of only two companies worldwide to have reached
the highest category seven times in a row. Moreover,
the BMW Group was again included in the British
FTSE4Good Index in 2016.
The BMW Group again achieved top rankings in
prestigious ratings on the topic of sustainability in
2016, thus maintaining its leading position as a sus-
tainable automotive manufacturer. In the 2016 rating
for the Dow Jones Sustainability Indices (DJSI), the
BMW Group again headed the Automobiles sector
and is therefore the only carmaker to have been listed
consecutively since the inception of the index.
Top rankings in sustainability ratings
2016
Combined
-618
Management
Report
Economic Position
Interest and similar expenses
5.9
185
196
Interest and similar income
-14.9
518
441
Result from equity accounted investments
-2.2
9,593
9,386
-3.3
-820
RESULTS OF OPERATIONS,
FINANCIAL POSITION AND
NET ASSETS
CREATE.
A key reason for the BMW Group's long-term suc-
cess and an example for the high level of employee
identification with it are the personal engagement
and the ideas brought forward by staff members,
demonstrated by the €25.1 million saved in 2016 in
conjunction with the idea management programme
In 2016, the BMW Group continued to consolidate
its position as one of the most attractive employers
worldwide. Its leading role in terms of sustainability
is a key reason for the high degree of employee loyalty
within the BMW Group and one of the reasons for
the low staff attrition rate, enabling the BMW Group
to maintain a low level of personnel recruitment
expenditure. Further information on the attrition rate
is provided in the section "Workforce".
Sustainability in human resources policies
In 2016, the BMW Group contributed a total of
€87.8 million for social engagement (2015: €39.1 mil-
lion), including €70.4 million for donations (2015:
€17.1 million). The significant increase in the Com-
pany's centenary year was mainly due to a donation
to a BMW foundation.
Social engagement
Sustainability criteria also play a key role when select-
ing and assessing suppliers as well as in the field of
transport logistics. The BMW Group has therefore
integrated a comprehensive sustainability manage-
ment strategy in its purchasing processes. The positive
business performance in recent years has also caused a
significant rise in the Group's transportation require-
ments worldwide. The principle adhered to by the
BMW Group that "production follows the market" is
an effective method of significantly reducing the need
for transportation, therefore keeping CO2 emissions
as low as possible.
Sustainability along the value chain
Although energy and water consumption per vehicle
produced rose slightly, both the use of resources and
the production-related emissions fell by an average of
4.9% in 2016. However, the slight increase in energy
and water consumption per vehicle produced gave rise
to additional costs totalling €2.8 million. The reduction
in resource consumption and production-related emis-
sions
per vehicle produced since 2006 corresponds to
a cost saving of €155.3 million.
Review of Operations
→ Sustainability
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Report on
2015
Other regions
Group
47.1
Cash outflow from investing activities
-372
11,836
11,464
Cash inflow from operating activities
Change
2015
2016
-5,432
4,000
Free cash flow for the Automotive segment was as
follows:
31.12.2016
equivalents
cash
Group composition
changes in
Cash and
Currency
translation,
in € million
-7,524
2,092
Net investment in marketable securities and investment funds
842
3,952
4,794
Cash and cash equivalents
Change
2015
2016
in € million
Net financial assets of the Automotive segment com-
prise the following:
Cash outflows from operating activities in the Finan-
cial Services segment are driven primarily by cash
flows relating to leased products and receivables from
sales financing and totalled €9,844 million (2015:
€10,351 million). The cash outflow from investing
activities totalled €102 million (2015: €140 million).
Cash inflows from financing activities went up by
€1,573 million to €11,601 million, mainly influenced
by the change in other financial liabilities.
69
69
388
5,404
5,792
Free cash flow Automotive segment
-1,332
1,092
-240
Cash inflow
from
financing
activities
activities
activities
from
investing
Economic Position
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Report on
Combined
Management
Report
98
68
The decrease in cash outflows from the Group's
investing activities primarily reflects lower net
investments in marketable securities and investment
funds in connection with the Group's liquidity reserve
(€1,369 million). The net outflow for these items
comprises investments in marketable securities and
investment funds on the one hand, and proceeds from
the sale of marketable securities and investment funds
on the other.
The increase in cash flows from the Group's operating
activities was primarily attributable to the higher net
profit for the year (€514 million), higher depreciation
and amortisation (€312 million), provisions (€587 mil-
lion) and the change in other operating assets and
liabilities (€679 million).
3,324
-1,566
1,758
-18
73
55
Effects of exchange rate
and composition of Group
Change in cash and cash
equivalents
-611
5,004
4,393
Cash inflow from financing
activities
1,740
The Group's financing activities resulted in inflows
and outflows in conjunction with bonds amounting
to €967 million and €1,466 million respectively.
Marketable securities and
The cash outflow from investing activities exceeded the
cash inflow from operating activities by €2,690 million
in the financial year 2016. A similar constellation arose
in the previous year, when the shortfall amounted to
€6,643 million.
After adjustment for the effects of exchange rate
fluctuations and changes in the composition of the
BMW Group totalling a positive amount of €55 million
(2015: €73 million), the various cash flows resulted in
an increase in cash and cash equivalents of €1,758 mil-
lion (2015: decrease of €1,566 million).
from
operating
Cash outflow
Cash inflow
-5,863
8,000
7,880
+55
+4,393
+3,173
12,000
31.12.2015
Cash and
cash
equivalents
6,122
- 4,000
8,000
12,000
in € million
→ 44
BMW Group Change in cash and cash equivalents
7
investment funds
4,147
4,326
later
within between
Maturity (years)
0
11,261
25,000
42,326
44,144
50,000
in € million
→ 46
BMW Group financial liabilities
14,892
Liabilities to banks
* Measured at ex- The following table provides an overview of amounts*
utilised at 31 December 2016 in connection with the
BMW Group's money and capital market programmes:
Twelve public ABS transactions were executed in 2016,
including three in the USA, two each in Germany,
South Africa and China, and one each in Canada,
South Korea and France, with a total volume equiv-
alent to €7.3 billion. Further funds were also raised
via new ABS conduit transactions in Japan and the
USA totalling €1.4 billion. Other existing transactions
remained in place in various countries, including
Germany, Switzerland, the UK, South Korea, South
Africa and Australia.
In the course of 2016, the BMW Group issued four euro
benchmark bonds on the European capital market
with a total issue volume of €2.75 billion. For the first
time, it also issued bonds on the US capital market
with a total issue volume of US Dollar 6.25 billion.
Bonds were also issued in British pounds, Chinese
renminbi, Canadian and Australian dollars and Nor-
wegian krone for a total amount €1.9 billion. Private
placements totalling €4.3 billion were also issued.
change rates at
31.12.2016.
Bonds
44,421
1
Other 1,249
1-5
Asset-backed
and 37
notes 29, 33
Further information with respect to financial liabili-
→ see ties is provided in → notes 29, 33 and 37 to the Group
Financial Statements.
At 31 December 2016, liquid funds stood at a solid
level of €13.2 billion. The BMW Group also has access
to a syndicated credit line of €6 billion, with a term
up to October 2018. This credit line, provided by a
consortium of 38 international banks, was not being
utilised at the end of the reporting period.
3.9
13.8
0.3
1.7
Australian Medium Term Notes
Commercial Paper
34.4
50.0
Euro Medium Term Notes
in € billion
16,474
utilised
Amount
Programme
framework
Programme
financing
transactions
than 5
-7,603
13,512
from customer
16,911
19,520
Automotive segment
Net financial assets
1,147
-2,645
-1,498
liabilities*
Less: external financial
1,462
19,556
21,018
Financial assets
799
11,278
12,077
assets
Intragroup net financial
-179
2,609
deposits (banking)
* Excluding derivative financial instruments.
A broadly based range of instruments transacted on
international money and capital markets is used to
refinance worldwide operations. Close to all of the
funds raised are used to finance the BMW Group's
Financial Services business.
Liabilities
Commercial paper 3,852
Derivate instruments 3,331
in € million
→ 45
BMW Group financial liabilities
Thanks to its excellent ratings and the high level
of acceptance it receives on capital markets, the
BMW Group was again able to refinance operations
on debt capital markets during the financial
year 2016.
In addition to the issue of bonds and loan notes and
private placements, commercial paper was also issued.
Additional funds were raised via new securitised
instruments and the prolongation of existing instru-
ments. As in previous years, all issues were highly
sought after by private and institutional investors alike.
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Economic Position
Report on
Combined
Management
Report
70
Apart from issuing commercial paper on the money
market, the BMW Group's financing companies also
issue bearer bonds. In addition, retail customer and
dealer financing receivables on the one hand and leas-
ing rights and obligations on the other are securitised
in the form of asset-backed securities (ABS) financing
arrangements. Financing instruments employed by
the Group's in-house banks in Germany and the USA
(e.g. customer deposits) are also used as a supplemen-
tary source of financing. Loans are also taken out with
international banks.
Financing measures undertaken centrally ensure
access to liquidity for the Group's operating subsidiar-
ies at market-based, consistent conditions. Funds are
acquired with a view to achieving a desired structure
for the composition of liabilities, comprising a finely
tuned mix of financing instruments. The use of longer-
term financing instruments to finance the Group's
financial services business and the maintenance of
a sufficiently high liquidity reserve serves to avoid
the liquidity risk intrinsic to any large portfolio of
contracts. This prudent approach to financing also
bolsters BMW AG's ratings. Further information is
provided in the section “Liquidity risks" within the
"Report on Outlook, Risks and Opportunities".
3. Focus on value by optimising financing costs
2. Autonomy through the diversification of refi-
nancing instruments and investors
kets
1. The ability to act at all times by assuring perma-
nent access to strategically important capital mar-
The overall objective of Group financing is to ensure
the solvency of the BMW Group at all times. Achieving
this objective is tackled in three strategic areas:
Refinancing
-5,863
Cash outflow from invest-
ing activities
2,213
Gross profit came in slightly higher (+3.2%) at
€18,721 million, reflecting sales volume growth in the
Automotive segment and increased business volumes
in the Financial Services segment. The gross profit
margin was 19.9% (2015: 19.7%).
Warranty expenses include the accrued expense for
vehicle recall actions, the cost of which is expected to
exceed amounts previously recognised. Accordingly,
a further amount of €678 million was allocated to the
warranty provision for various issues, including airbags
supplied by the Takata group of companies, the ISOFIX
attachment system used for child car seats, and costs
relating to the provision of the network service for
telematics (2G). Expenses relating to telematics and
roadside assistance have increased, primarily due to
the greater volume of service contracts and Connected
Drive products.
The Group's cost of sales was slightly higher than in the
previous year, due to sales volume and portfolio factors.
Cost of sales relating to financial services business rose
by €1,274 million to €20,723 million, reflecting the
increased portfolio size. Research and development
expenses were at a similar level to the previous year
in absolute terms and, with an expense ratio of 4.6%,
also in relative terms. Total research and development
expenditure – comprising research costs, non-capital-
ised development costs and capitalised development
costs (excluding systematic amortisation thereon),
amounted to €5,164 million in the year under report
(2015: €5,169 million). As a result of the continuous
expansion and revision of the BMW Group's various
model series, research and development expenditure
remains at a generally constant level. These factors
resulted in a research and development expenditure
ratio of 5.5% (2015: 5.6%) and a capitalisation ratio of
40.5% (2015: 39.9%).
1.9
74,043
75,442
3.1
2,976
3,067
13.9
1,771
2,018
14.5
1,891
2,165
Cost of sales
Other cost of sales
Service contracts, telematics and roadside assistance
Warranty expenses
Sales and administrative expenses rose by €525 million
year-on-year to €9,158 million, resulting in an expense
ratio of 9.7% (2015: 9.4%). The increase was due to a
number of factors, including the larger workforce and
higher expenses for IT projects.
4.8
Depreciation and amortisation on property, plant
and equipment and intangible assets recorded in cost
of sales and in selling and administrative expenses
totalled €4,806 million (2015: €4,659 million). The slight
increase compared to the previous year was mainly
attributable to investments and capitalised develop-
ment costs recorded in previous accounting periods.
Profit before financial result (EBIT) amounted
to €9,386 million in the year under report (2015:
€9,593 million), slightly down on the previous year,
with the positive effect of greater volumes offset by
higher expenses and lower other operating income.
Motorcycles
Automotive
in € million
→ 41
Revenues by segment
Results of operations by segment
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Economic Position
Report on
Combined
Management
Report
66
99
69
65
The post-tax return on sales was 7.3% (2015: 6.9%).
Income tax expense amounted to €2,755 million (2015:
€2,828 million), corresponding to an effective tax rate
of 28.5% (2015: 30.7%). The lower income tax expense
was partly attributable to transfer pricing and the
revaluation of tax-related items.
Profit before tax increased to €9,665 million (2015:
€9,224 million), helped by a number of factors, includ-
ing higher volumes and the improved financial result.
The result on investments for the year
under report
includes impairment losses on other investments
totalling €192 million (2015: €25 million).
The financial result was a net positive amount of
€279 million, an improvement of €648 million com-
pared to the previous year, mainly thanks to net gains
on commodity derivatives on the one hand and lower
losses on currency derivatives on the other. Interest
and similar expenses improved by €129 million to
a net negative amount of €489 million year-on-year,
mainly reflecting lower interest expense on pension
obligations and lower other refinancing costs. The
result from equity accounted investments includes the
Group's share of the results of the joint ventures BMW
Brilliance Automotive Ltd. and the two DriveNow enti-
ties, DriveNow GmbH & Co. KG and DriveNow Ver-
waltungs GmbH. The figure also includes the Group's
share of the result of the associated company THERE
Holding B.V. Compared to the previous year, the result
from equity accounted investments fell by €77 mil-
lion to €441 million. This deterioration was primarily
attributable to the inclusion of THERE Holding B.V.,
with a negative impact of €56 million, largely reflecting
scheduled depreciation and amortisation on purchase
price allocations on the one hand and transaction costs
on the other. At €507 million, the contribution made
by BMW Brilliance Automotive Ltd. was slightly down
on the previous year (2015: €522 million), partly due
to currency factors, including the fact that costs were
incurred for model revisions of vehicles already adapt-
ed for the local market (BMW X1 and BMW 5 Series) as
well as for the localisation of further products.
The net amount of other operating income and
expenses deteriorated from a net positive amount
of €94 million to a negative amount of €177 million,
mainly due to lower gains on the disposal of assets and
higher expenses for provisions. A donation to a BMW
foundation also increased other operating expenses.
Financial Services
1,166
thereof amortisation of capitalised development costs
Economic Position
Report on
Report
Management
Combined
64
*Includes the joint venture BMW Brilliance Automotive, Shenyang Ltd. (2016:
316,200 units, 2015: 282,000 units).
914
100.0
100.0
3.5
3.4
23.3
20.7
Americas (including USA)
27.6
28.8
Asia (including China)
45.6
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
1,222
BMW Group cost of sales
in € million
0.5
4,271
4,294
Research and development expenses
9.6
1,495
1,638
thereof interest expense relating to financial services business
6.6
19,449
20,723
Cost of sales relating to financial services business
-1.2
43,685
43,175
Change in %
2015
2016
Manufacturing costs
→ 40
Europe (including Germany)
Other Entities
2016
Overall, the Automotive segment reported a solid
increase in pre-tax profit. This outcome was largely
due to the improved financial result, which benefited
from net gains on commodity derivatives, reduced
refinancing costs and lower interest expense on pen-
sion obligations.
Due to the various factors described above, at
€7,695 million (2015: €7,836 million), profit before
financial result was slightly down on the previous
year. The EBIT margin came in at 8.9% (2015: 9.2%).
The main factors for the decrease were tougher com-
petition and increased costs, partially countered by
the positive impact of sales volume growth.
The net negative amount of other operating income
and expenses deteriorated by €70 million to €152 mil-
lion, mainly due to lower gains on the disposal of
assets and higher expenses for provisions. A donation
to a BMW foundation also increased other operating
expenses.
At €7,604 million, selling and administrative expens-
es were €385 million higher than the previous year.
Administrative expenses increased due to a number
of factors, including the larger workforce, a new
allocation of expenses relating to internal activities,
and higher expenses for IT projects. Overall, as a
percentage of revenues, the expense ratio was 8.8%
(2015: 8.4%).
Automotive segment revenues grew slightly on the
back of higher sales volumes, with currency factors
holding revenue growth down. The gross profit mar-
gin increased slightly to 17.9% year-on-year (2015:
17.7%).
Automotive segment
4.8
9,224
9,665
-16.3
-664
-772
-19.4
211
170
9.7
1,975
2,166
3.4
67
179
62
Motorcycles segment revenues increased slightly
compared to the previous year. The gross profit
margin dropped from 22.5% to 20.8%, mainly due
to higher expenses incurred in conjunction with the
implementation of the segment's new strategy and the
expansion of its model range. The increased workforce
size is reflected in higher selling and administrative
expenses. As a result of income from the reversal of
write-downs, the Motorcycles segment recorded a
slightly higher profit before tax than one year earlier.
960
3,173
Cash inflow from operating
activities
Change
2015
2016
in € million
→ 43
BMW Group financial position
Cash flows from operating activities are determined
indirectly, starting with Group and segment net profit.
By contrast, cash flows from investing and financing
activities are based on actual payments and receipts.
The consolidated cash flow statements for the Group
and the Automotive and Financial Services segments
show the sources and applications of cash flows for
the financial years 2016 and 2015, classified into cash
flows from operating, investing and financing activities.
Cash and cash equivalents in the cash flow statements
correspond to the amounts disclosed in the balance
sheet.
Financial position
Inter-segment eliminations reduced Group profit
before tax, partly reflecting higher eliminations trig-
gered by the growth in new leasing business and the
ensuing increase in leased products.
Profit before tax in the Other Entities segment was sig-
nificantly lower than one year earlier. The net positive
result from other operating income and expenses
fell
from €192 million to €7 million year-on-year, mainly
due to lower income from the reversal of provisions
in 2016. The decrease was cushioned by the improve-
ment in the net interest result, which was due to lower
refinancing costs.
Other Entities segment/Eliminations
Higher business volumes and a slightly improved
credit risk situation contributed to the solid increase
in the Financial Services segment's profit before tax.
Selling and administrative expenses in the segment
went up by €130 million to €1,294 million, mainly
due to the increased size of the workforce and greater
expense for new IT projects.
The Financial Services segment revenues showed
a solid growth on the back of a dynamic operating
performance, clearly reflected in the upward trend
of its contract portfolio.
Financial Services segment
Motorcycles segment
Currency adjusted
185
7,523
-14.3
-14.3
7
6
9.9
8.2
23,739
25,681
5.6
4.0
1,990
2,069
3.1
1.0
85,536
86,424
change* in %
Change in %
2015
-20,017
5.2
-19,097
94,163
7,916
Change in %
2015
2016
Group
Eliminations
Other Entities
Financial Services
Motorcycles
Automotive
in € million
→ 42
Profit/loss before tax by segment
*The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year's figures.
Group
Eliminations
4.3
2.2
92,175
-4.8
-26.7
79
Combined
Management
Report
Combined
76
66
75
15
-0.2% Minority interest
19.3% Group
9.7% Shareholders
13.7% Government/public sector
8.3% Providers of finance
24.7 Net value added
48.8% Employees
C
Cost of materials 52.5
14.1 Other expenses
Depreciation and
amortisation 8.7
in %
→ 51
BMW Group value added 2016
* Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
Report on
Economic Position
→ Comments on
Financial Statements
of BMW AG
Profit after income tax
Income taxes
Financial result
Result on investments
Other operating income and expenses
Research and development expenses
Administrative expenses
Revenue reserves
Gross profit
Cost of sales
4.9
Revenues
→ 52
BMW AG Income Statement
Results of operations
BMW AG develops, manufactures and sells cars and
motorcycles as well as spare parts and accessories
manufactured in-house, by foreign subsidiaries and
by external suppliers, and performs services related to
these products. Sales activities are carried out primarily
through branches, subsidiaries, independent dealer-
ships and importers. In 2016, BMW AG increased auto-
mobile sales volume by 80,359 units to 2,355,726 units.
This figure includes 305,726 units relating to series sets
supplied to the joint venture BMW Brilliance Automo-
tive Ltd., Shenyang, an increase of 17,971 units over
the previous year. At 31 December 2016, BMW AG
employed a workforce of 85,754 people, 894 more than
one year earlier.
Business environment and review of operations
The general and sector-specific environment in
which BMW AG operates is the same as that for the
BMW Group and is described in the “Report on Eco-
nomic Position" section of the Combined Management
Report.
The German Accounting Directive Implementation Act
(BilRUG) was applied for the first time with effect from
the beginning of the 2016 financial year. Comparative
figures have not been restated where this gave rise to
changes in the presentation of items in the balance
sheet or income statement. Further information
regarding the impact of BilRUG and the comparabil-
ity of individual income statement line items for the
financial year 2016 with those of the previous year
is provided in the notes to the Financial Statements
of BMW AG.
Differences between the accounting policies used
in the BMW AG financial statements (prepared in
accordance with HGB) and the BMW Group Finan-
cial Statements (prepared in accordance with IFRS)
arise primarily in connection with the capitalisation
of intangible assets, the creation of valuation units,
the recognition and measurement of financial instru-
ments and provisions and the recognition of deferred
tax assets. Differences also arise in the presentation
of assets and liabilities in the balance sheet and of
income and expense items in the income statement.
The key financial and non-financial performance
indicators relevant for BMW AG are largely identical
and synchronous with those of the Automotive seg-
ment of the BMW Group and are described in detail
in the "Report on Economic Position" section of the
Combined Management Report.
Bayerische Motoren Werke Aktiengesellschaft
(BMW AG), based in Munich, Germany, is the parent
company of the BMW Group. The comments on the
BMW Group and Automotive segment provided in
earlier sections are also relevant for BMW AG, unless
presented differently in the following section. The
Financial Statements of BMW AG are drawn up in
accordance with the provisions of the German Com-
mercial Code (HGB) and the relevant supplementary
provisions contained in the German Stock Corpora-
tion Act (AktG).
COMMENTS ON FINANCIAL
STATEMENTS OF BMW AG
in € million
100.0
22,524
100.0
6.1
48.3
10,870
48.8
11,535
Net value added
Minority interest
Group
Shareholders
Government/public sector
1,965
Providers of finance
APPLIED TO
4.9
24.2
22,524
24.7
23,623
Net value added
8.8
8,222
8.7
Employees
Other taxes
8.3
8.5
23,623
74.1
0.1
27
0.2
47
6.9
19.0
4,267
19.3
1,918
4,563
9.3
2,102
9.7
2,300
-3.8
14.8
3,340
13.7
3,213
2.5
9.4
Net profit
2016*
2015
Current assets
Cash and cash equivalents
Marketable securities
Other receivables and other assets
Receivables from subsidiaries
Trade receivables
Inventories
14,619
14,711
Tangible, intangible and investment assets
4,260
3,250
Investments
11,016
11,163
Property, plant and equipment
353
310
Intangible assets
ASSETS
2015
2016*
3,238
in € million
4,267
628
19
Subscribed capital
EQUITY AND LIABILITIES
34,977
36,299
Total assets
722
1,183
Surplus of pension and similar plan assets over liabilities
303
667
430
19,333
19,975
2,478
2,676
3,911
3,846
1,820
2,525
6,229
6,001
Prepayments
8,304
→ 53
Financial and net assets position
2,790
3,296
-1,782
-1,308
-1,043
-35
1,606
1,015
184
-137
-19
-4,758
-2,610
-2,504
-3,427
-3,635
14,620
14,404
-57,764
-60,946
72,384
75,350
-4,504
BMW AG Balance Sheet at 31 December
-49
2,741
After deducting the expense for taxes, the Company
reports a net profit of €3,277 million, compared to
€2,741 million in the previous year.
The expense for income taxes relates primarily to
current tax for the financial
year 2016.
The result on investments was down on the previous
year due to lower profit transfers from Group com-
panies. By contrast, the financial result improved by
€1,008 million, mainly due to the higher gains arising
on the fair value measurement of designated plan
assets and lower interest expenses for pensions. In
the latter case, the improvement was attributable to
a change in legislation concerning the methodology
required to be applied to determine the discount factor
for pension provisions.
The net amount of other operating income and expens-
es deteriorated by €321 million to a negative amount
of €137 million, whereby the year-on-year decrease
mainly reflected the reclassification of income from
other services to the line item "Revenues" in conjunc-
tion with the first-time application of BilRUG. Higher
income from the reversal of provisions and the lower
expense for allocations to provisions, in particular
for commodity and currency contract risks, worked
in the opposite direction.
Research and development expenses related mainly
to new vehicle models (including relevant expenses
relating to the start-up of the new BMW 5 Series),
the development of drive systems and work on other
innovations. Compared to the previous year, research
and development expenses decreased by 5.3%.
Selling and administrative expenses increased overall
year-on-year, partly reflecting the cost of the larger
workforce and IT projects.
Cost of sales increased by 5.5% to €60,946 million,
mostly due to the higher cost of materials. As a result,
gross profit decreased by €216 million to €14,404 mil-
lion.
As a consequence of the first-time application of the
Financial Reporting Implementation Act (BilRUG) in
2016, the previous year's figures are only comparable
to a limited extent with those of the financial year
under report. In particular, the amounts reported for
revenues, cost of sales, expenses by function, other
operating income and expenses are affected by the
new, extended definition of "revenues" and the nec-
essary reclassification of expenses related to revenues.
Revenues increased by 4.1% year-on-year, mainly
reflecting higher sales volumes of the BMW X1 and
BMW 7 Series. In geographical terms, most of the
increase related to Asia and Europe. Sales to Group
entities accounted for €56,412 million or 74.9% of
total revenues of €75,350 million.
of BMW AG
Financial Statements
3,277
Economic Position
→ Comments on
Combined
Management
Report
78
77
* German Accounting Directive Implementation Act (BilRUG) applied with effect from the beginning of the financial year 2016. Comparative figures for 2015 have not been adjusted.
2,102
2,300
Unappropriated profit available for distribution
-639
-977
Transfer to revenue reserves
Report on
Capital reserves
intangible and investment assets
3.8
In order to secure obligations resulting from pre-re-
tirement part-time work arrangements and pension
obligations, investments in fund assets totalling
€490 million were transferred to BMW Trust e. V.,
Munich, in conjunction with a Contractual Trust
Arrangement (CTA). Fund assets are offset against the
related guaranteed obligations. The resulting surplus
of assets over liabilities is reported in the BMW AG
balance sheet on the line "Surplus of pension and
similar plan assets over liabilities”.
Under the motto “THE NEXT 100 YEARS", almost all
of the workforce received a special bonus in conjunc-
tion with the BMW AG's centenary anniversary. For
the most part, the bonus was paid in the form of a
starting contribution to a new defined contribution
component of the BMW pension plan. In future, 10%
of the annual profit share payable by BMW AG will
be paid into the plan, for which a minimum rate of
return is guaranteed.
Pension provisions, net of designated plan assets,
increased from €82 million to €93 million.
Other provisions were at a similar level to the previous
year and comprise mainly obligations for person-
nel-related expenses, warranties, selling activities,
litigation and liability risks as well as risks relating
to commodity and currency contracts.
Liabilities to banks decreased as a result of the repay-
ment of project-related loans.
Deferred income went up by €517 million to
€2,066 million and comprised mainly amounts relat-
ing to services still to be performed for service and
maintenance contracts.
Group equity rose by €4,599 million to €47,363 million.
Equity increased year-on-year as a result of the net prof-
it attributable to shareholders of BMW AG amounting
to €6,863 million and fair value gains on derivative
financial instruments amounting to €2,008 million.
Decreases in equity arose in particular in connection
with the dividend payment of €2,102 million and
the negative impact of remeasurements of the net
defined benefit liability for pension plans amounting to
€1,858 million, the latter due mainly to lower discount
rates applied in Germany and the UK.
thereof cash and cash equivalents 5%
Current assets 52%
0
43% Current provisions and liabilities
2015
2016
2015
5%
40%
33
17% Non-current provisions and liabilities
19%
99
66
Equity rose by €1,195 million to €14,122 million, tak-
ing the equity ratio from 37.0% to 38.9%.
Cash and cash equivalents went up by €198 million
to €2,676 million. At the same time, intragroup refi-
nancing volumes at the level of BMW AG were reduced.
Liquidity within the BMW Group is managed centrally
by BMW AG on the basis of a group-wide liquidity
concept, which revolves around the strategy of con-
centrating a significant part of the Group's liquidity
at the level of BMW AG. An important instrument
used to achieve this aim is the cash pool headed by
BMW AG. The liquidity position reported by BMW AG
therefore reflects the global activities of BMW AG and
other Group companies.
The increase in other receivables and other assets
to €2,525 million (2015: €1,820 million) was mainly
attributable to higher receivables from companies with
which an investment relationship exists. Tax receiv-
ables and genuine repurchase (repo) transactions in
place at the end of the reporting period also increased
year-on-year.
6,690
406
239
12,382
12,772
Deferred income
2,066
1,549
Total equity and liabilities
36,299
52%
34,977
80
60
Combined
Management
Report
Report on
Economic Position
→ Comments on
Financial Statements
of BMW AG
Capital expenditure on intangible assets and prop-
erty, plant and equipment in the year under report
totalled €2,346 million (2015: €2,748 million), down
by 14.6% compared to the previous year. Depreciation
and amortisation amounted to €2,233 million (2015:
€2,072 million).
At €3,238 million, the carrying amount of investments
was similar to one year earlier (2015: €3,250 mil-
lion). Further shares in SGL Carbon SE, Wiesbaden,
were purchased during the financial year 2016. An
impairment loss of €64 million (2015: €13 million)
was recognised in the year under report, reflecting
the decreased fair value in the investment in SGL
Carbon SE at 31 December 2016.
At €4,260 million, inventories were practically identical
to the end of the previous year (2015: €4,267 million).
Receivables from subsidiaries, most of which relate
to intragroup financing receivables, decreased slightly
by €228 million to €6,001 million.
*German Accounting Directive Implementation Act (BilRUG) applied with effect from the beginning of the financial year 2016. Comparative figures for 2015 have not been adjusted.
2016
||||
40% Equity
Current assets 35%
66
37% Non-current provisions and liabilities
39%
64%
Non-current assets 65%
133
25% Equity
172
25%
36%
172
189
200
Total equity and liabilities in € billion
→ 48
Balance sheet structure - Group
tion and Net Assets
→ Results of Opera-
tions, Financial Posi-
Economic Position
Report on
Management
Report
189
5,951
36%
thereof cash and cash equivalents 4%
41%
100
66
133
200
33
48%
66
Non-current assets 48%
83
38% Current provisions and liabilities
83
89
100
Total equity and liabilities in € billion
→ 49
Balance sheet structure - Automotive segment
2015
2016
2015
2016
4%
89
4,500
5,030
1,343
0.7
670
0.2
200
0.9
875
98.8
92,175
98.4
94,163
914
Other expenses
Total output
Other income
Financial income
Revenues
WORK PERFORMED
Change in %
in %
in € million
2015
2015
Cost of materials*
2016
in %
1.0
100.0
33.0
30,746
33.4
31,927
Gross value added
2.0
67.0
62,543
66.6
63,781
95,708
Bought-in costs
11,398
14.1
13,502
54.8
51,145
52.5
50,279
2.6
100.0
93,289
12.2
Depreciation and amortisation of total tangible,
in € million
→ 50
2,127
2,107
9,038
8,061
2,300
2,102
14,122
12,927
30
30
657
93
7,606
7,617
7,699
7,699
Liabilities to banks
Trade payables
Liabilities to subsidiaries
Other liabilities
Liabilities
995
82
2016
657
Other provisions
BMW Group value added statement
Net valued added by the BMW Group in the financial
year 2016 remained at a high level.
applied to employees. The remaining portion will be
retained in the Group to finance future operations. It
should be noted that the gross value added amount
treats depreciation as a component of value added
which, in the allocation statement, is treated as inter-
nal financing.
The value added statement shows the value of work
performed, less the value of work bought in by the
BMW Group during the financial year. Depreciation
and amortisation, cost of materials, and other expens-
es are treated as bought-in costs in the net value added
calculation. The allocation statement applies value
added to each of the participants involved in the value
added process. The bulk of the net value added is
Value added statement
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Economic Position
Report on
Combined
Management
Report
74
Provisions
73
The increase in trade payables mainly reflects higher
production volumes.
The sharp rise in other liabilities reflects the increased
scale of service contracts and Connected Drive prod-
ucts, advance payments received from leasing custom-
ers, and the expected higher level of payments due to
dealerships and importers for bonuses, rebates and
other price deductions.
The year-on-year increase in financial liabilities was
primarily attributable to the issue of bonds and higher
liabilities to banks, in both cases securing favourable
refinancing conditions on a long-term basis. In addition,
new ABS transactions were concluded including the
USA and Germany. Lower commercial paper volumes
and the more favourable development of derivatives
kept the increase in financial liabilities down.
Other provisions also increased significantly compared
to 31 December 2015, mostly reflecting the higher level
of warranty provisions for vehicle recall actions, the
cost of which is expected to exceed amounts previously
recognised. Accordingly, a further amount of €678 mil-
lion was allocated to the warranty provision for various
issues, including airbags supplied by the Takata group
of companies, the ISOFIX attachment system used for
child car seats, and costs relating to the provision of
the network service for telematics (2G).
Pension provisions increased significantly compared
to the end of the financial year 2015, mainly due to the
lower discount factors applied in Germany and the UK.
The Group equity ratio at the end of the reporting
period was 25.1% (31 December 2015: 24.8%). The
equity ratio for the Automotive segment was 41.3%
(31 December 2015: 40.1%) and that for the Financial
Services segment stood at 8.0% (31 December 2015:
8.2%).
Unappropriated profit available for distribution
Equity
Registered profit-sharing certificates
Pension provisions
Overall, the results of operations, financial position
and net assets position of the BMW Group continued
to develop positively during the year under report.
Selling expenses
Currency adjusted
22
10.5
8,843
9,770
Financial assets
41.5
12.3
9.9
11.7
78,260
Receivables from sales financing
0.3
30.5
30.8
428
70,043
5.2
Deferred and current tax
4,265
2,825
Total assets
Cash and cash equivalents
Other assets
Trade receivables
6.3
7.0
7.0
11,071
11,841
Inventories
2.3
-3.2
-1.4
4,326
560
2,751
Other investments
14.0
8,157
Intangible assets
Proportion of
balance sheet
total in %
change in %
Change in %
2015
10.6
2016
ASSETS
in € million
→ 47
BMW Group condensed balance sheet at 31 December
Net assets
72
Group
11.4
4.3
Property, plant and equipment
14.0
2,233
2,546
Investments accounted for using the equity method
20.0
7.3
8.1
34,965
37,789
Leased products
9.5
1.1
1.1
17,759
17,960
1.4
2.7
7,372
1.5
10.5
9.5
7,773
8,512
Trade payables
51.8
4.5
5.5
91,683
97,731
Financial liabilities
2.1
3.9
88
6.6
Other liabilities
15,555
13,767
5.4
71
ber 2016.
Cash and cash equivalents went up by €1,758 million,
thus ensuring a solid level of liquid funds at 31 Decem-
Inventories went up by a solid 7.0% compared to the
end of 2015, with most of the increase relating to fin-
ished goods, reflecting general business growth and
stocking up in the various markets.
The growth in business reported by the Financial Ser-
vices segment is reflected in the significant increase
in receivables from sales financing and a solid rise in
the volume of leased products. A total of 1,811,157 new
contracts were concluded with retail customers (leasing
and credit financing) in 2016, 9.4% more than one year
earlier. The credit financing contract portfolio grew
by 9.5% to 3,022,904 contracts, with growth reported
primarily in China and the USA. The lease contract
portfolio increased by 7.3% to stand at 1,680,513 con-
tracts at 31 December 2016.
The balance sheet total of the BMW Group increased
by a solid 9.5% compared to 31 December 2015. The
changes in individual balance sheet items caused by
currency factors relate primarily to changes in the
exchange rates of the US dollar, British pound, South
African rand and Chinese renminbi against the euro.
100.0
9.5
172,174
188,535
Total equity and liabilities
8.3
12.1
13.0
3,557
3,869
9.5
5.8
9.5
9.5
172,174
188,535
4.2
27.6
100.0
28.7
7,880
6.2
6.7
6,261
Deferred and current tax
6,682
6,122
EQUITY AND LIABILITIES
3.5
47,363
Equity
13.0
9,630
10,918
2.4
60.9
52.9
Other provisions
13.4
4,587
Pension provisions
25.1
13.6
10.8
3,000
42,764
98
86
Combined
Management
Report
Important contributions to continued growth will
come in particular from new models. The all-new
BMW 5 Series Sedan has been available since mid-Feb-
ruary 2017. The BMW 5 Series iPerformance and M
Performance models followed in March. The BMW
5 Series iPerformance model as a plug-in hybrid
is now available worldwide. The model revisions
of the BMW 4 Series and the BMW M4 Coupé and
Convertible were also launched in March. The new
BMW 5 Series Touring is scheduled for launch in mid-
June. The second generation of its highly successful
MINI Countryman model was introduced in February.
Towards the middle of year, a John Cooper Works and
a plug-in hybrid will be added to the MINI Country-
man range. Further new models are planned for the
second half of 2017.
Opportunities
→ Outlook
Fleet carbon dioxide emissions²:
slight decrease expected
85
Deliveries to customers: slight increase expected
The BMW Group expects a further year-on-year
increase in sales of BMW, MINI and Rolls-Royce brand
vehicles and aims to achieve again in 2017 a leading
position in the global premium segment. Balanced
growth in major sales regions will help to even out
volatilities in individual markets. Assuming economic
conditions do not deteriorate, deliveries to custom-
ers are forecast to rise slightly to a new high (2016:
2,367,603¹ units) in 2017.
Report on Outlook,
Risks and
Automotive segment
Outlook for the BMW Group
Workforce size at year-end: slight increase expected
Based on current forecasts, the BMW Group's work-
force is again expected to grow slightly in 2017 (2016:
124,729 employees). The main factors driving the
expected increase will be projects aimed at securing
the Group's future, growth of automobile and motor-
cycles business and the expansion of financial and
mobility services.
Nevertheless, the BMW Group intends to continue its
growth course in 2017. New vehicles such as the new
BMW 5 Series and the new MINI Countryman and
new motorcycles such as the two R NineT models as
well as services are expected to make a contribution
to earnings growth. Investments in future-oriented
projects, including vehicle electrification, digitalisa-
tion and the expansion of the production network,
will, however, counteract the general upward trend.
Overall, Group profit before tax is expected to increase
slightly year-on-year (2016: €9,665 million).
Competition on international automobile markets
is set to remain intense during the current year. The
situation is likely to be exacerbated by political and
macroeconomic uncertainties in Europe as well as the
unforeseeable consequences of the Brexit decision in
the UK. Moreover, the strategy of the new US admin-
istration regarding economic policy remains unclear.
Further information is provided in the sections on
political and economic risks in the section "Risks and
Opportunities".
Profit before tax: slight increase expected
BMW Group
-
-
Due to its global business model, the BMW Group
is well placed at all times to exploit opportunities,
including those arising at short notice. Coordination
between the Group's sales and production networks
also helps cushion the impact of unforeseeable
developments in the various regions. Investments
in markets important for the future are also a basis
for further growth, while simultaneously expanding
the global presence of the BMW Group. Thanks to
its three strong brands BMW, MINI and Rolls-
Royce the BMW Group is expected to remain on
course for success during the current year.
Expected consequences for the BMW Group
Future developments on international automobile
markets also have a direct impact on the BMW Group.
Whereas competition is likely to intensify in con-
tracting markets, new opportunities appear in
growth regions. Sales volumes in some countries
are likely to be significantly affected by challenges
in the competitive environment. Europe's markets
are not expected to maintain the pace of growth
seen in 2016. Demand in the Americas region is
likely to remain flat. Asia is expected to continue
its upward trend.
Japan's central bank may have few tools left to stimu-
late the country's economy and rate of inflation. Public
sector spending is therefore expected to increase as a
means to kick-start growth.
The BMW Group is continuing its efforts to reduce
fuel consumption and carbon dioxide emissions.
According to forecasts, carbon dioxide emissions
for the vehicle fleet will decrease slightly during the
outlook period, thus continuing the trend seen in
previous years (2016: 124 grams CO2/km).
Growth in China is set to cool further in 2017, with
the Chinese central bank expected to implement a raft
of measures to accompany the transformation process
for the domestic economy.
The UK economy is expected to come under more
pressure as a consequence of the Brexit vote. The Bank
of England has already announced its intention to
take appropriate measures as necessary.
85
Revenues: slight increase expected
Automotive segment revenues are expected to rise
slightly in line with sales volume. The Company
expects that segment revenues will increase slightly
in 2017 (2016: €86,424 million).
Return on capital employed expected at previous
year's level
An EBIT margin within a range of 8 to 10% (2016:
8.9%) remains the target for the Automotive segment.
AUTOMOTIVE SEGMENT
The pace of global economic growth is expected to pick
up slightly in 2017. With the exception of the USA,
central banks in industrialised countries are likely to
maintain their expansionary course.
Workforce at year-end
Profit before tax
BMW GROUP
Depending on the political and economic situation
and the outcomes of the risks and opportunities
described below, actual business performance could,
however, differ from current expectations.
in deliveries to customers, Automotive segment rev-
enues are also expected to increase slightly in 2017.
At the same time, a slight decrease in fleet carbon
dioxide emissions is expected. The Group's targets are
to be met with a slight rise in the workforce size. The
Automotive segment's EBIT margin in 2017 is set to
remain within the target range of between 8 and 10%,
while its ROCE is forecast to decrease slightly. A slight
fall is also forecast for the RoE in the Financial Services
segment. Both performance indicators will be above
their long-term targets of 26% (RoCE) and 18% (ROE)
respectively. Deliveries to customers in the Motor-
cycles segment are forecast to rise significantly, with
an EBIT margin within the target range of between 8
and 10% and ROCE at the previous year's level.
→ 54
Key performance indicators
Overall assessment by Group management
Business is expected to develop positively in the
financial year 2017. The introduction of numerous
new automobile and motorcycle models as well as the
expansion of individual mobility-related services give
reason to expect that profitable growth will contin-
ue in the current year. Despite the many challenges
described above, Group profit before tax is forecast to
grow slightly. Based on the forecast of a slight increase
Return on equity: slight decrease expected
According to forecasts, the Financial Services segment
is likely to continue performing well in 2017. However,
it is expected that regulatory requirements for equity
capital will be tightened and the risk situation will
normalise in the forecast period. The segment RoE is
therefore expected to decrease slightly year-on-year
(2016: 21.2%). The target of at least 18% is neverthe-
less likely to be exceeded again.
Financial Services segment
EBIT margin in target range between 8 and 10%
expected
Segment RoCE in 2017 is forecast to be in line with
the previous year (2016: 33.0%). The long-term target
ROCE of 26% for the Motorcycles segment will there-
fore be surpassed.
With effect from the beginning of the financial
year 2017, the EBIT margin will also serve as a key
performance indicator for the Motorcycles segment.
Accordingly, segment performance will also be man-
aged based on the operating return on sales (EBIT
margin) in future. Further information can be found
in the description of the Group management system in
the section "General Information on the BMW Group".
EBIT margin in target range between 8 and 10%
expected
2 EU-28.
The BMW Group expects the upward trend in the
Motorcycles segment to continue. New models, includ-
(2016: 316,200 ing the R NineT Pure, the R NineT Racer, the K 1600 B
and the G 310 GS were unveiled at international trade
fairs held in autumn 2016. Together with updated
versions of the R 1200 GS, the S 1000 R, the S 1000 RR,
the K 1600 GT and the luxury GTL, the new models
will expand the product portfolio significantly and
appeal to new customer groups. Overall, deliveries of
BMW motorcycles to customers are forecast to increase
significantly year-on-year (2016: 145,032 units).
significant increase expected
Motorcycles segment
Deliveries to customers:
Segment RoCE is forecast to decrease slightly (2016:
74.3%). However, the long-term target RoCE of at
least 26% for the Automotive segment will be easily
surpassed.
slight decrease expected
Return on capital employed:
units).
BMW Brilliance
Automotive,
Shenyang Ltd.
1 Includes the
joint venture
In this context, a target range of 8 to 10% has also been
set for the Motorcycles segment. The EBIT margin for
the Motorcycles segment is expected to lie within this
range in 2017 (2016: 9.0%).
Financial Services markets
The report on outlook, risks and opportunities
contains forward-looking assertions based on the
BMW Group's expectations and assessments, which
are subject to uncertainty. As a result, actual outcomes
can deviate, for example on account of political and
economic developments - either positively or nega-
tively - from the expectations described below. Further
information can be found in the section "Risks and
Opportunities".
Motorcycle markets
The continuous forecasting process ensures that the
BMW Group is ready to take advantage of oppor-
tunities as they arise and to react appropriately to
unexpected risks. The principal risks and opportuni-
ties are described in detail in the section "Risks and
Opportunities". The risks and opportunities discussed
in that section are relevant for all of the BMW Group's
performance indicators and could result in variances
between the outlook and actual outcomes.
The following outlook relates to a forecast period
of one year and is based on the composition of the
BMW Group during that period. The outlook takes
account of all information known up to the date on
which the financial statements were prepared for issue
and which could have an effect on the overall perfor-
mance of the Group. The expectations contained in
the outlook are based on the BMW Group's forecasts
for 2017 and reflect its most recent status. The basis
for the preparation of and the principal assumptions
used in the forecasts - which consider the consensus
opinions of leading organisations, such as economic
research institutes and banks - are set out below. The
BMW Group's forecast is based on these assumptions.
Assumptions used in the outlook
The report on outlook, risks and opportunities describes
the expected development of the BMW Group, includ-
ing the associated material risks and opportunities,
from a Group management perspective. In line with
the Group's internal management system, the out-
look covers a period of one year. However, risks and
opportunities are managed on the basis of a two-year
assessment. The report on risks and opportunities
therefore covers a period of two years.
OUTLOOK
World economy expected to grow
despite risks
Outlook foresees increase in
revenues and profit
Automobile and motorcycle sales
expected to reach new record levels
Positive Company performance
expected to continue in 2017
REPORT ON OUT-
LOOK, RISKS AND
OPPORTUNITIES
→ Outlook
Opportunities
Economic outlook
Risks and
Management
Report
Combined
62
82
81
KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, has
issued an unqualified audit opinion on the financial
statements of BMW AG, of which the balance sheet and
the income statement are presented here. The BMW AG
financial statements for the financial year 2016 will
be submitted to the operator of the electronic version
of the German Federal Gazette and can be obtained
via the Company Register website. These financial
statements are available from BMW AG, 80788 Munich,
Germany.
Due to its dominant role in the Group and its close ties
with Group entities, expectations for BMW AG with
respect to the Company's financial and non-financial
performance indicators correspond largely to the
BMW Group's outlook for the Automotive segment,
which is described in detail in the "Report on Outlook,
Risks and Opportunities" section of the Combined
Management Report.
Outlook
BMW AG is integrated in the group-wide risk man-
agement system and internal control system of the
BMW Group. Further information is provided in the
"Internal Control System and Risk Management System
Relevant for the Financial Reporting Process" section
of the Combined Management Report.
BMW AG's performance is highly dependent on the
same set of risks and opportunities that affect the
BMW Group and which are described in detail in the
"Report on Outlook, Risks and Opportunities" section
of the Combined Management Report. As a general
rule, BMW AG participates in the risks entered into by
Group entities on the basis of the relevant shareholding
percentage.
Risks and opportunities
Sales volume¹
Report on Outlook,
The world's motorcycle markets in the 250 cc plus class
are forecast to grow slightly in 2017. In Europe, the
positive trend is set to continue in the major markets
of Germany, France, Italy and Spain. The BMW Group
expects the US market to remain at the previous year's
level during the current financial year.
Despite greater political uncertainty, the global
economy is forecast to grow by around 3.4% in 2017,
slightly faster than in the preceding year. A number of
factors make uncertainty likely to persist with regard
to future economic and political developments. These
include the negotiations between the UK and the EU
following the Brexit vote and the future course of the
new US administration. Moreover, the existing risks to
financial stability due to high sovereign debt levels in
Europe and Japan, more restrictive monetary policies
in the USA and high levels of corporate debt in China
have not diminished compared to the previous year.
Further information on political and global economic
risks can be found in the section "Risks and Oppor-
tunities".
of 1.7%.
After dropping back in 2016, the automobile markets
in the world's major emerging economies are expected
to recover in 2017, with registrations predicted to grow
by 4.1% to 1.3 million units in Russia and by 3.0% to
1.7 million units in Brazil.
The automobile market in Japan is likely to contract
further in 2017. Registrations are forecast to be in the
region of 4.7 million units and hence 1.6% down on
the previous year.
Despite the region's continued economic revival,
automobile markets in Europe are not expected to
grow significantly. The trend in Germany is expected
to remain flat (3.4 million). Registrations in France are
forecast to fall slightly (-1.7%) to around 1.95 million
units. After its strong performance in 2016, the Italian
automobile market is expected to grow at a modest
0.7% to around 1.86 million units.
Overall, the world's automobile markets are forecast
to grow by around 1.8% to an estimated 89.0 mil-
lion units in 2017. The US market is expected to
grow by 0.3% to 17.6 million units. The forecast for
China points to an increase of around 5.7% to some
25.5 million units. The country's interior provinces
are expected to contribute significantly to growth as
they catch up.
Automobile markets
As US monetary policies continue to normalise, the
currencies of numerous emerging economies are
likely to remain under pressure in the short term.
Countries that export raw materials and have current
account and fiscal deficits, such as South Africa or
Brazil, are most likely to be affected. Any increase in
raw materials prices would generally have a positive
impact on these economies.
The central bank in Japan could continue to pursue its
highly expansionary monetary policy for the foresee-
able future. This policy could result in the yen hardly
changing in value against the euro or even losing in
value, given that monetary policy in the eurozone is
currently not expected to be expanded.
The uncertain political situation in the UK following
the Brexit vote could lead to capital exports and
encourage the Bank of England to retain its expan-
sionary monetary policy. If the UK economy slows
down at a more pronounced rate than expected in
2017, the Bank of England could adopt additional
measures to increase the money supply. As a result,
the British pound could either stabilise at its current
level or continue to lose value in the short term.
A more restrictive monetary policy in the USA would
boost the value of the US dollar against the euro.
Continued economic recovery in the eurozone, com-
bined with rising inflation, could prompt the ECB to
implement a gradual reduction in government bond
purchases. In that case, the loss in value of the euro
against the US dollar would be less pronounced.
Given that the Chinese renminbi is likely to continue
to move in the same direction as the US dollar in the
short term, it is likely to appreciate slightly against the
euro in 2017. If, however, the Chinese central bank
decides to intervene in the currency markets, it could
result in a relatively narrow fluctuation range.
Currencies of particular importance for the interna-
tional operations of the BMW Group are the Chinese
renminbi, the US dollar, the British pound and the
Japanese yen. These major currencies could be subject
to a significant degree of fluctuation again in 2017.
Currency markets
Economic growth in the eurozone is forecast to slow
down slightly to 1.5% in 2017. Germany, Europe's
largest economy, is expected to grow at a similar rate
(+1.5%). In macroeconomic terms, the prospects of the
other eurozone countries are also expected to develop
positively. GDP growth rates in France (+1.3%) and
Italy (+0.8%) in 2017 are expected to be similar to the
preceding year. The Spanish economy is forecast to
grow by 2.4% and therefore faster than the eurozone
average. Greece also is expected to achieve growth
→ Outlook
Risks and
Report on Outlook,
Management
Report
Combined
84
83
83
The Indian economy is forecast to expand by 7.4%
in 2017, boosted by the gradual implementation of
business-friendly structural reforms. After a number
of years of deep recession, Russia (+1.2%) and Brazil
(+0.6%) could return to growth in 2017, helped by
rising raw materials prices.
According to forecasts, Japan can expect a GDP growth
rate of 1.0% in 2017, with rising exports potentially
providing renewed economic momentum. An expect-
ed increase in domestic consumer spending could also
help revive the Japanese economy.
Despite uncertainty regarding the country's future
political and economic course, GDP in the USA is
expected to grow faster in 2017 than in the preced-
ing year (+2.3%). The US Federal Reserve is likely to
continue its policy of moderate interest rate rises in
2017. After decreasing in 2016, industrial production is
predicted to grow significantly in 2017, with a positive
impact on GDP growth.
In China, economic growth is again predicted to
weaken slightly in the current year, resulting in a
growth rate of around 6.4%. Reducing over-capaci-
ties in various industrial sectors and the controlled
reduction of high debt levels will present the Chinese
government with significant challenges in 2017. The
risk of a significant economic downturn in China
therefore cannot be ruled out.
It is currently assumed that the UK government will
give notice of its intention to leave the EU during the
first half of 2017, thus triggering the start of official
negotiations. Uncertainty regarding the future rela-
tionship is currently influencing both investment
and consumer spending levels in the UK. As a result
of the current situation, it is expected that the UK
economy will see a distinct loss of momentum, with
a significantly lower year-on-year growth rate of 1.2%.
Opportunities
Fleet emissions²
The Fed is expected to continue raising interest rates in
the course of 2017. The expansionary monetary poli-
cies of the ECB are likely to be continued in 2017, with
a slightly reduced volume of monthly bond purchases.
EBIT margin
The risk management system is regularly examined by
the Internal Audit. By sharing experiences with other
companies on an ongoing basis, the BMW Group
endeavours to incorporate new insights in the
risk management system, thus ensuring continual
improvement. Regular training and further develop-
ment programmes as well as information events at
the BMW Group, particularly within the risk man-
agement network, are invaluable ways of preparing
those involved in the process for new or additional
challenges.
measures.
Risks reported from within the network are firstly
presented for review to the Risk Management
Steering Committee, chaired by Group Controlling.
After review, the risks are reported to the Board
of Management and the Supervisory Board. Risks
which are significant or which threaten the Group's
going-concern status are classified according to their
potential to impact the Group's results of operations,
financial position and net assets. The level of risk is
then quantified in each case according to its proba-
bility of occurrence and the respective risk mitigation
The risk management process applies throughout the
Group and comprises the early identification and
assessment of risks, comprehensive analysis and risk
measurement, the coordinated use of suitable man-
agement tools and also the monitoring and evaluation
of any measures taken.
Risk management process
Risk management for the Group as a whole falls under
the remit of the Risk Management Steering Commit-
tee, the Compliance Committee, the Internal Control
System and the Group Internal Audit.
structure.
In view of the dynamic growth of business of the
BMW Group and the increasingly volatile environ-
ment in which it operates, one of the key areas con-
sidered in developing the risk management system
has been the ability to assess the overall risk situation
of the BMW Group. A risk-bearing capacity model has
been developed for the BMW Group, based on the
established controlling models used in the Financial
Services segment as in the banking sector to ensure
risk-bearing capacity. Using a limit control system
to manage significant financial risks on a month-by-
month basis, measures are in place to ensure that
the asset cover, in the form of equity and forecast
Group earnings for the next twelve months, always
exceeds the prevailing risk situation and the risk level
associated with the business strategy currently being
pursued. These controls facilitate the early identifica-
tion of developments which could pose a threat to the
BMW Group's going-concern status. The results of the
calculations of risk bearing capacity are incorporated
in the assessment of the overall risk situation. The
processes and methodologies used to report risks are
regularly reviewed. During the financial year 2016,
the risk catalogue introduced three years earlier was
tested for effectiveness and revised as appropriate.
Identified risks are aggregated into risk categories on
the basis of the risk catalogue. Improved reporting
channels ensure effective systematic risk control and
earlier reporting of risks. Transparency of external
reporting has also been increased, including the
introduction of an additional sub-category "Market
development" to the category "Sales and marketing”,
which enables a distinction to be made between mar-
ket risks typical for the sector and operational risks
relating to the BMW Group's specific sales network
The Group risk management system comprises
a decentralised network covering all parts of the
business and is steered by a centralised risk manage-
ment function. Each of the BMW Group's divisions
is represented within the risk management network
by so-called Network Representatives. The network is
embedded within the formal organisational structure.
This promotes its visibility and underlines the impor-
tance of risk management within the BMW Group. The
duties, responsibilities and tasks of the centralised risk
management unit and the Network Representatives
are clearly described, documented and understood.
Group risk management is geared towards meeting
the following three criteria: effectiveness, usefulness
and completeness.
89
99
Group
Audit
In addition to comprehensive risk management, man-
aging the business on a sustainable basis also consti-
tutes one of the Group's core corporate principles.
Any risks or opportunities relating to sustainability
issues are examined and discussed by the Sustain-
ability Committee. Resulting strategic options and
measures for the BMW Group are put forward to
the Sustainability Board, which includes the entire
Board of Management. Risk aspects discussed are
integrated within the Group-wide risk network. The
overall composition of the Risk Management Steering
Committee and the Sustainability Committee ensures
that risk and sustainability management are closely
coordinated.
Board of
Management
Supervisory
Risk
Management
Steering
Committee
Controlling
Measures
Analysis and
Measurement
Internal Control System
risk management
Group-wide
Identification
Completeness
Reporting/
Monitoring
Compliance
Committee
Board
90
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
Revenues
The implementation of identified opportunities is
undertaken on a decentralised basis within the rel-
evant functions. The significance of opportunities
for the BMW Group is classified in the categories
"significant" and "insignificant".
The continuous optimisation of important business
processes and strict cost controls are essential to
ensuring profitability and a high return on capital
employed. Probable measures to increase profitability
are incorporated in the outlook. One example is the
implementation of modular-based production and
common architectures, which enable a greater com-
monality between different models and product lines.
This strategy contributes to improved profitability by
reducing development costs and other investment on
the series development of new vehicles. This supports
economies of scale in production costs and increases
production flexibility. Moreover, a more competitive
cost basis opens up opportunities to engage in new
market segments.
New opportunities regularly present themselves in
the dynamic business environment in which the
BMW Group operates. Macroeconomic trends and
sector-specific and general business environment,
including external regulations, suppliers, customers
and competitors, are monitored on a continual basis.
Identifying opportunities is an integral part of the
process of developing strategies and drawing up
forecasts for the BMW Group. The Group's product
and service portfolio is continually reviewed on the
strength of these analyses and new product projects,
for example, presented to the Board of Management
for consideration.
> €400 million
> €50-400 million
> €0-50 million
Risk amount
Opportunity management system and
opportunity identification
High
Low
Medium
Class
Overall, the following criteria apply for the purposes
of classifying the risk level:
of occurrence. The risk level is approximated in the
case of risks measured on the basis of "value at risk"
and "cash flow at risk" models. These approximations
flow into the assessment of the significance of the
risks, resulting in increased comparability between
risk categories compared to the previous year.
The significance of risks for the BMW Group is deter-
mined on the basis of risk level. The measurement of
risk level takes account of both earnings impact (net
of appropriate countermeasures) and the likelihood
In the following sections, the term “earnings impact"
is used consistently to cover the overall impact on the
results of operations, financial position and net assets.
> €2,000 million
> €0-500 million
> €500-2,000 million
Earnings impact
Medium
High
Low
Class
When a risk materialises, the overall impact on the
results of operations, financial position and net assets
is measured for the two-year assessment period and
allocated according to the following categories:
In order to determine which risks can be considered
significant in relation to results of operations, financial
position and net assets and to performance indica-
tors of the BMW Group, risks are classified as high,
medium or low. The impact of risks is measured and
reported net of risk mitigation measures (net basis).
Risk measurement
Risk management procedures in place in the Financial
Services segment also address regulatory issues and
requirements, such as Basel III. Internal methods used
to identify, measure, manage and monitor risks within
the Financial Services segment comply with national
and international standards. The adopted risk strategy,
in combination with a set of strategic principles and
guidelines, serves as the basis for risk management
within the Financial Services segment. At the heart
of the risk management process is a clear division
between front- and back-office activities and a compre-
hensive internal control system. The main instrument
of risk management within the Financial Services
segment is ensuring that the Group's risk-bearing
capacity is not exceeded. All risks (defined as unex-
pected losses) must be covered at all times in line
with risk appetite by an asset cushion in the form
of equity capital. Unexpected losses are measured
according to various value-at-risk models, which are
validated at regular intervals. Risks are aggregated
after taking account of correlation effects. In addition
to assessing the Group's ability to bear risk under nor-
mal circumstances, stress scenarios are also taken into
consideration. The segment's risk-bearing capacity is
monitored regularly with the aid of an integrated limit
system that also differentiates between the various
risk categories.
→ Risks and
Opportunities
Usefulness
Effectiveness
90
Risk management in the BMW Group
units
slight decrease
74.3
%
between 8 and 10
8.9
%
slight increase
86,424
€ million
slight decrease
g CO2/km
slight increase
2,367,603
units
slight increase
slight increase
9,665
124,729
€ million
2017 Outlook
2016
Return on capital employed
EBIT margin
Sales volume
→ 55
Return on capital employed
MOTORCYCLES SEGMENT
145,032
%
124
9.0
The objective of the risk management system, and one
of the key functions of risk reporting, is to identify,
record and actively manage any internal or external
risks that could pose a threat to the attainment of
the Group's corporate targets. The risk management
system covers all significant risks to the Group and
any which could pose a threat to its going-concern
status. In terms of structure, the responsibility for
risk reporting lies with each individual employee
and manager in their specific roles - and not with
a centralised unit. Every employee and manager is
required to report any risks identified via the relevant
reporting channels. This requirement is set out in
guidelines that apply throughout the Group.
Risk management system
Opportunities and risks are assessed as a general rule
over a medium-term period of two years. As part of
the risk management process, all potential risks of
loss (individual and accumulated risks) that represent
a threat to the company are monitored and managed.
As a matter of principle, any risks capable of posing a
threat to the going-concern status of the BMW Group
are avoided. If there is no specific reference to a seg-
ment, opportunities and risks relate to the Automotive
segment. The scope of entities covered by the report
on risks and opportunities corresponds to the scope
of consolidated entities included in the BMW Group
Financial Statements.
7
Management of opportunities and risks is a funda-
mental prerequisite for the Group's ability to react
appropriately to changes in political, legal, technical
or economic conditions. All identified opportunities
and risks are addressed in the Outlook Report, if
likely to materialise. The following sections focus
on potential future developments or events, which
could result in a positive deviation (opportunities)
or a negative deviation (risk) from the BMW Group's
outlook. As a general rule, the earnings impact of
risks and opportunities is assessed separately, i.e.
without off-setting.
As a worldwide-leading manufacturer of premium cars
and motorcycles and provider of premium financing
and mobility services, the BMW Group is exposed
to numerous uncertainties and changes. Making full
use of the opportunities arising out of change is a
fundamental aspect of the Group's corporate success.
In order to achieve growth, drive profitability, boost
efficiency and maintain sustainable levels of business
going forward, the BMW Group consciously takes
certain risks.
RISKS AND
OPPORTUNITIES
→ Risks and
Opportunities
Report on Outlook,
Combined
Management
Report
88
88
87
Risks and
Opportunities
in line with last year's level
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2016: 316,200 units).
2 EU-28.
slight decrease
21.2
significant increase
%
Return on equity
FINANCIAL SERVICES SEGMENT
between 8 and 10
33.0
%
80
5,404
92,175
5,792
3,003
3,481
4,459
2017
Revenues
76,059
80,401
Free cash flow Automotive segment
-23.0
0.3
6,711
4,806
4,659
4,170
3,741
Depreciation and amortisation
22.1
7,112
5,823
5,890
6,100
Change in %
Total capital expenditure¹
94,163
4,822
98,678
7
Automotive
-17,057
2016
-15,955
Eliminations
16.7
6
7
7
6
Other Entities
7.3
27,567
25,681
23,739
4.8
20,599
Financial Services
10.3
2,283
2,069
1,990
1,679
1,504
Motorcycles
2.5
88,581
86,424
85,536
75,173
70,630
19,874
2015
2017
2013
8.9
8.9
9.2
9.6
9.4
EBIT margin in % (change in %pts)
2.5
88,581
86,424
85,536
75,173
70,630
Revenues in € million
AUTOMOTIVE SEGMENT
10.2
10,655
9,665
(2013: 198,542 units, 2014: 275,891 units, 2015: 282,000 units, 2016: 316,200 units,
2017: 384,124 units).
9,224
8,707
7,893
Change in %
-19,097
2016
2015
2014
2013
Profit before tax in € million
GROUP
ROCE in % (change in %pts)
2014
63.0
72.2
in € million
→ 04
Further financial performance figures
-3.1
18.1
21.2
20.2
19.4
20.0
RoE in % (change in %pts)
FINANCIAL SERVICES SEGMENT
1.0
34.0
33.0
31.6
21.8
16.4
0.1
9.1
9.0
9.1
6.7
5.3
ROCE in % (change in %pts)
EBIT margin in % (change in %pts)
MOTORCYCLES SEGMENT
4.3
78.6
74.3
61.7
-20,017
107
1.3
26.0
29.3
-1,949
8,706
-2,755
6,910
-2,828
6,396
9.70/9.72
-2,890
5,817
8.83/8.85
-2,564
5,329
8.08/8.10
2 Group profit before tax as a percentage of Group revenues.
1 Expenditure for capitalised development costs, other intangible assets and property, plant and equipment.
Pre-tax return on sales² in % (change in %pts)
Earnings per share in €
Net profit
Income taxes
31.6
-528
-772
-664
-163
-527
Eliminations
-52.9
80
170
211
154
164
Other Entities
1.9
2,207
10.45/10.47
2,166
13.12/13.14
10.4
→ 03
2017
2016
2015
2014
2013
0
1,250
1,963.8
2,118.0
2,247.5
2,463.5
2,367.6
2,500
in 1,000 units
→ 07
BMW Group revenues
→ 05
BMW Group deliveries of automobiles*
→ BMW Group
in Figures
Shareholders
To Our
60
5
0.5
10.8
10.3
10.0
10.8
25.6/25.5
-19,760
1,975
1,619
Other Entities
0.5
2,194
2,184
1,981
1,756
1,643
Financial Services
10.7
207
187
182
112
79
Motorcycles
2.2
7,863
7,695
7,836
7,244
6,649
Automotive
5.3
9,880
9,386
9,593
9,118
7,978
Profit before financial result (EBIT)
44
1,723
71
-17
Financial Services
10.8
205
185
179
76
Motorcycles
9.8
8,691
7,916
7,523
6,886
6,561
Automotive
10.2
10,655
9,665
9,224
8,707
7,893
Profit before tax (EBT)
40.0
-398
-663
-575
-65
-437
Eliminations
14
169
Key financial performance indicators
→ Page
* Excluding Husqvarna, deliveries up to 2013: 59,776 units.
→ Page 40 Management System
→ Page 30 General Information and Group Profile
→Page 30 Organisation and Business Model
MANAGEMENT REPORT
COMBINED
2
Members of the Supervisory Board
→ Page 201
Members of the Board of Management
→ Page 200
→Page 199
→ Page 198
→ Page 198 Statement on Corporate Governance
(Part of the Combined Management Report)
Information on the Company's Governing Constitution
Declaration of the Board of Management and of the
Supervisory Board pursuant to § 161 AktG
GOVERNANCE
CORPORATE
4
→Page 24 BMW Stock and Capital Markets in 2017
Board of Management
→Page 18 Statement of the Chairman of the
Report of the Supervisory Board
8
4 BMW Group in Figures
TO OUR SHAREHOLDERS
1
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
→ Page
CONTENTS
The new era of electric mobility requires visionaries
and people of action. Find out in our image brochure
how BMW Group is shaping the mobility of the future.
Motor Cars Limited
Rolls-Royce
→Page 44 Report on Economic Position
MINI
→ Page 44 General and Sector-specific Environment
→ Page 49 Financial and Non-financial Performance Indicators
GROUP FINANCIAL
STATEMENTS
3
→Page 256 Contacts
→Page 255 Financial Calendar
→Page 254 Index of Graphs
→Page 248 BMW Group Ten-year Comparison
→Page 250 Glossary - Explanation of Key Figures
→Page 252 Index
OTHER INFORMATION
5
→ Page 240 Independent Auditor's Report
Company's Legal Representatives
→Page 239 Responsibility Statement by the
(Part of the Combined Management Report)
Compensation Report
→Page 221
→ Page 216
→Page 214 Information on Corporate Governance Practices Applied
beyond Mandatory Requirements
Compliance in the BMW Group
Supervisory Board of BMW AG and its Committees
→ Page 213 Disclosures pursuant to the Act on Equal
Gender Participation
→Page 206 Composition and Work Procedures of the
Composition and Work Procedures of the Board of
Management of BMW AG and its Committees
→Page 204
→Page 112 Disclosures Relevant for Takeovers
Internal Control System Relevant for Accounting and
Financial Reporting Processes
→ Page 111
→ Page 96
Risks and Opportunities
→ Page 90 Report on Outlook, Risks and Opportunities
→Page 90 Outlook
→ Page 86 Comments on Financial Statements of BMW AG
→ Page 72 Results of Operations, Financial Position and Net Assets
→Page 52 Review of Operations
→Page 48 Overall Assessment by Management
→Page 118 Income Statement
M
THE FUTURE
IS ELECTRIC.
10,655
in € million
→ 08
BMW Group profit before tax
2017
2016
2015
2014
2013
50
76.1
80.4
94.2
92.2
100
98.7
in € billion
2017
2016
2015
2014
2013
5,500
7,978
9,386
9,880
9,593
9,118
11,000
11,000
B
9,224
8,707
ANNUAL REPORT 2017
OF THE FUTURE
WE ARE SHAPING
THE MOBILITY
THE NEXT
100 YEARS
BMW
GROUP
Norbert Reithofer
Chairman of the Supervisory Board
Supervisory Board
→ Report of the
Shareholders
To Our
80
BMW Stock and
Capital Markets
Report of the
Supervisory Board
Statement of
the Chairman of
the Board of
Management
BMW Group in
Figures
To Our
Shareholders
1
CAPITAL MARKETS IN 2017
BMW STOCK AND
BOARD OF MANAGEMENT
CHAIRMAN OF THE
STATEMENT OF THE
REPORT OF THE
SUPERVISORY BOARD
2017
2016
2015
2014
2013
5,500
7,893
9,665
5 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2013: 214,920 units, 2014: 287,466 units, 2015: 287,755 units, 2016: 305,726 units, 2017: 396,749 units).
* Excluding Husqvarna, production up to 2013: 59,426 units.
→ Page 118 Statement of Comprehensive Income
→Page 122 Cash Flow Statement
Production volume
4.1
-16.2
3,362
2,463,526
3.2
4.2
2,088,283
371,881
2,003,359
360,233
4,011
2,367,603
1,905,234
338,466
3,785
2,247,485
1,811,719
302,183
4,063
2,117,965
1,963,798
1,655,138
305,030
3,630
Total²
Rolls-Royce
MINI
BMW2
Deliveries
Change in %
2017
2016
2015
2014
2013
AUTOMOTIVE SEGMENT
→ 02
Further non-financial performance figures
13.2
164,153
145,032
BMW5
136,963
MINI
1,699,835
303,177
3,354
1 Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.
Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2013: 198,542 units, 2014: 275,891 units, 2015: 282,000 units, 2016: 316,200 units, 2017: 384,124 units).
3 EU-28.
1.0
1,828,604
1,811,157
1,655,961
1,509,113
1,471,385
27.6
185,682
145,555
151,004
133,615
110,127
New contracts with retail customers
FINANCIAL SERVICES SEGMENT
BMW
Production volume6
MOTORCYCLES SEGMENT
6.2
-20.8
3,308
2,505,741
7.3
6.0
2,123,947
378,486
2,002,997
352,580
4,179
2,359,756
1,933,647
342,008
3,848
2,279,503
1,838,268
322,803
4,495
2,165,566
2,006,366
Total5
Rolls-Royce
→Page 120 Balance Sheet
123,495
Deliveries4
To Our
Shareholders
1
→Page 24 BMW Stock and Capital Markets in 2017
→ Page 18 Statement of the Chairman of the Board of Management
→Page 8 Report of the Supervisory Board
→Page 4 BMW Group in Figures
BMW Stock and
Capital Markets
Report of the
Supervisory Board
Statement of
the Chairman of
the Board of
Management
BMW Group in
Figures
To Our
Shareholders
1
TO OUR SHAREHOLDERS
Further information on official fuel consumption figures and specific CO₂ emissions values
of new passenger cars is included in the "Guideline for fuel consumption, CO₂ emissions
and electric power consumption of new passenger cars", which can be obtained free of
charge from all dealerships and at https://www.dat.de/en/offers/publications/
guideline-for-fuel-consumption.html.
were determined according to the European Regulation (EC) 715/2007 in the version appli-
cable. The figures refer to a vehicle with basic configuration in Germany and the range
shown considers the different sizes of the selected wheels/tyres and the selected items of
optional equipment.
The fuel consumption, CO₂ emissions, power consumption and operating range figures
http://annual-report2017.bmwgroup.com
Our Annual Report is also available
in digital form under:
TOWARDS
THE FUTURE
→ Page 188 List of Investments at 31 December 2017
→Page 183 Segment Information
→Page 167 Other Disclosures
Notes to the Statement of Comprehensive Income
Notes to the Balance Sheet
→ Page 146
→ Page 145
→Page 139
Notes to the Income Statement
→Page 126 Accounting Principles and Policies
→ Page 126 Notes to the Group Financial Statements
→Page 124 Statement of Changes in Equity
→ BMW Group
in Figures
115,215
BMW GROUP IN FIGURES
→ 01
MOTORCYCLES SEGMENT
4.1
-1.6
122
124
127
130
133
Fleet emissions in g CO2/km³
2,463,526
2,367,603
2,247,485
2,117,965
1,963,798
Deliveries²
AUTOMOTIVE SEGMENT
4.2
129,932
124,729
122,244
116,324
110,351
Workforce at year-end¹
Change in %
2017
2016
2015
2014
2013
GROUP
Key non-financial performance indicators
BMW Group profit before financial result (EBIT)
→ 06
in € million
International automobile markets
46
In the Financial Services segment risk management
also addresses regulatory requirements, such as Basel
III. Internal methods to identify, measure, manage and
monitor risks within the Financial Services segment
comply with national and international standards. The
risk strategy, in combination with a set of strategic
principles and guidelines, serves as the basis for risk
management in the Financial Services business. The
risk management process is ensured organisationally
through a clear division between front- and back-office
activities and a comprehensive internal control system.
The main instrument of risk management within the
Financial Services segment is ensuring the Group's
risk-bearing capacity. At all times, risks in the sense of
unexpected losses must be covered. This is achieved by
means of an asset cushion in the form of equity capital
derived from the entity's risk appetite. Unexpected
losses are measured according to various value-at-risk
models, which are validated at regular intervals. Risks
are aggregated after taking account of correlation
effects. In addition to assessing the Group's ability to
bear risk under normal circumstances, stress scenarios
are also examined. The segment's risk-bearing capacity
is regularly controlled through an integrated limit
system for the various risk categories.
In order to comply with the CSR Directive Imple-
mentation Act, a review of risks with impact on
the non-financial aspects referred to in the law was
conducted as part of the reporting process for the
Group's Non-Financial Declaration. Significant risks
within the meaning of the law are those relating
to business activities, business relationships and
products and services of the BMW Group which are
highly likely to have a serious adverse impact. No
significant risks were identified during the review.
The Group's Non-Financial Declaration is provided in
the Sustainable Value Report 2017, which is available
on the internet at → https://www.bmwgroup.com/svr.
In addition to comprehensive risk management,
sustainable business practice constitutes one of the
core strategic principles of the company. Risks or
opportunities relating to sustainability issues are
considered by the Sustainability Committee. Result-
ing strategic options and measures are put forward
to the Sustainability Board, which comprises the
entire Board of Management. Where necessary,
risk
aspects may be integrated within the Group-wide risk
network. The composition of the Risk Management
Steering Committee and the Sustainability Committee
ensures that risk and sustainability management are
closely coordinated.
The risk management system is regularly examined by
Group Internal Audit. Regular monitoring of external
practice ensures that new insights are incorporated
in the risk management system of the BMW Group,
thus providing for continual improvement. Training
sessions, development programmes and information
events are regularly conducted across the BMW Group,
particularly within the risk management network.
These measures are essential ways of preparing those
involved in the process for new or additional demands.
Significant risks reported from within the network are
firstly presented for review to the Risk Management
Steering Committee, chaired by Group Controlling.
After review, the risks are reported to the Board of
Management and the Supervisory Board. Risks are
classified according to the magnitude of impact on
the Group's results of operations, financial position
and net assets. The magnitude of risk is measured in
each case after risk mitigation measures and according
to the probability of occurrence.
The risk management process covers the entire Group
and comprises early identification of risks, detailed
analysis and risk assessment, the coordinated use of
relevant management tools as well as monitoring and
evaluation of measures taken.
Risk management process
Risk management as a whole comprises the Risk
Management Steering Committee, the Compliance
Committee, the Internal Control System and Group
Internal Audit.
Group risk management is organised formally as a
decentralised, company-wide network and is steered
by a centralised risk management function. Every
BMW Group division is represented within the risk
management organisation by Network Represen-
tatives. This formal structure reinforces the network's
visibility and underlines the importance of risk
management within the BMW Group. Roles, respon-
sibilities and tasks of the central risk management
function and the Network Representatives are clearly
described, documented and understood. In view of
the dynamic growth of business and the increasingly
volatile environment, the BMW Group regularly
reviews its risk management system for effectiveness
and appropriateness.
Group
Audit
Board of
Management
97
Board
Risk
Management
Steering
Committee
Controlling
Internal Control System
Measures
Analysis and
Measurement
risk management
Group-wide
Completeness
Reporting/
Monitoring
Compliance
Committee
Practicability
Identification
Supervisory
Effectiveness
96
Combined
Management
Report
> €50-400 million
> €0-50 million
Risk amount
High
Medium
Low
Class
The implementation of identified opportunities is
undertaken on a decentralised basis within the rele-
vant functions. The significance of opportunities for
the BMW Group is classified on a qualitative basis in
the categories "significant” and “insignificant".
The continuous optimisation of major business
processes and strict cost controls are essential for
ensuring strong profitability and return on capital
employed. Probable measures to increase profitability
are incorporated in the outlook. The implementation
of modular and common architectures, for instance,
allows identical components to be deployed increas-
ingly across models and product lines. This reduces
development costs and investment on the series devel-
opment of new vehicles and contributes positively to
profitability. In addition, it also supports economies
of scale in production costs and increases production
flexibility. Moreover, a more competitive cost basis
opens up opportunities to enter new market segments.
A dynamic market environment also gives rise to
opportunities. The BMW Group continually monitors
macroeconomic trends as well as developments within
the sector and overall environment. This includes
external regulations, suppliers, customers and com-
petitors. Identifying opportunities is an integral part of
the strategic planning process of the BMW Group. The
Group's product and service portfolio is continually
reviewed on the basis of these analyses. This results,
for example, in new product projects being presented
to the Board of Management for consideration.
opportunity identification
Opportunity management system and
98
Overall, the following criteria apply for the purposes
of classifying the risk amount:
In the following sections, earnings impact is used
consistently to cover the overall impact on results of
operations, financial position and net assets.
> €2,000 million
> €0-500 million
> €500-2,000 million
Earnings impact
Medium
High
Low
Class
The overall impact of a risk's occurrence on the results
of operations, financial position and net assets for the
two-year assessment period is classified as follows:
Risks are classified as high, medium or low, based on
their significance with respect to results of operations,
financial position and net assets and to performance
indicators of the BMW Group. The impact of risks
is measured and reported net of risk mitigation
measures (net basis).
Risk measurement
→ Risks and
Opportunities
Report on Outlook,
Risks and
Opportunities
The risk amount is the basis for the classification of
risk levels at the BMW Group. The measurement of
risk amount takes account of both earnings impact
(net of appropriate countermeasures) and the proba-
bility of occurrence. In the case of risks measured on
the basis of value at risk and cash flow at risk models,
the risk amount is determined through approximation.
These approximations flow into the classification of
risk levels.
> €400 million
The objective of the risk management system, and the
main function of risk reporting, is to identify, record
and actively manage internal or external risks that
could threaten the attainment of the Group's corpo-
rate targets. The risk management system covers all
significant and existential risks to the Group. Group
risk management focuses on the criteria of effective-
ness, practicability and completeness. Responsibility
for risk reporting is not allocated to a central function,
but is part of the task of each employee and manager,
according to their individual function. According to
Group-wide rules, every employee and manager has
a duty to report risks through the relevant reporting
channels.
As part of the risk management process, all individual
and cumulative risks that represent a threat to the
success of the business are monitored and managed.
Any risks capable of posing a threat to the going-
concern status of the BMW Group are generally
avoided. Where no specific reference is made, oppor-
tunities and risks relate to the Automotive segment.
The scope of entities consolidated in the Report on
Risks and Opportunities corresponds to the scope of
consolidated entities in the BMW Group Financial
Statements.
164,153
units
significant decrease
77.7
78.6
%
slight increase
between 8 and 10
9.2
8.9
%
slight decrease
122
85,742
164,153
88,581
122
g CO2/km
slight increase
2,463,526
2,463,526
units
slight increase
Financial Services segment
Return on equity: slight decrease expected
The BMW Group expects the Financial Services seg-
ment to continue its successful performance in 2018. In
view of increasing regulatory requirements worldwide,
more equity capital will be required in the segment
going forward. Accordingly, segment RoE is expected
to decrease slightly (2017: 18.1%). In this context, with
effect from the 2018 financial year the sustainable
target return will be changed from its current level of
at least 18% to a new level of at least 14%.
Overall assessment by Group management
Business is expected to show a stable development in
the financial year 2018, with significant contributions
from numerous new automobile and motorcycle mod-
els as well as expansion of individual mobility-related
services. Group profit before tax is expected to be
in line with last year's level, due to the challenges
described above. Automotive segment revenues
7
should grow slightly based on the forecast of a slight
increase in deliveries to customers. At the same
time, fleet carbon dioxide emissions are forecast to
decrease slightly. The Group's targets are to be met
with a slight increase in workforce. The Automotive
segment's EBIT margin in 2018 is set to remain within
the target range of between 8 and 10%, while its ROCE
is forecast to decrease significantly. A slight decrease
is also forecast for the RoE in the Financial Services
segment. However, both performance indicators will
be above their long-term targets of 26% (ROCE) and
14% (ROE¹) respectively. Deliveries to customers in
the Motorcycles segment are forecast to show a solid
increase, with an EBIT margin within the target range
of between 8 and 10% and RoCE slightly up on the
previous year.
€ million
Risk management system
solid increase
9.1
7
→ 62
Risk management in the BMW Group
Management of opportunities and risks is essential for
the Group to react appropriately to changes in political,
economic, technical or legal conditions. Opportunities
and risks which are likely to materialise are taken into
account in the Outlook Report. The following sections
focus on potential future developments or events,
which could result in a positive (opportunity) or a
negative deviation (risk) from the BMW Group's out-
look. The earnings impact of risks and opportunities is
assessed separately without offsetting. Opportunities
and risks are assessed with respect to a medium-term
period of two years.
As a worldwide-leading provider of premium cars,
motorcycles and mobility services, as well as related
financial services, the BMW Group is exposed to
numerous uncertainties and change. Making full
use of the opportunities arising out of change is a
fundamental basis of the Group's corporate success.
In order to achieve growth, profitability, efficiency
and continued sustainable activities going forward,
the BMW Group must consciously assume risk.
RISKS AND
OPPORTUNITIES
Opportunities
→ Risks and
Risks and
Opportunities
Report on Outlook,
Management
Report
Combined
%
96
95
95
slight decrease
18.1
18.1
%
slight increase
34.0
34.0
%
between 8 and 10
9.1
96
The Motorcycles segment RoCE is expected to increase
slightly year-on-year (2017: 34.0%). The long-term
target RoCE of 26% for the Motorcycles segment will
therefore be surpassed.
Return on capital employed: slight increase
expected
The segment EBIT margin in 2018 is expected to
lie within the target range between 8 and 10%
(2017: 9.1%).
global economy
Strong business performance
expected to continue in 2018
Outlook foresees increase in deliveries
and revenues
OUTLOOK
The report on outlook, risks and opportunities describes
the expected development of the BMW Group, includ-
ing the significant risks and opportunities, from a
Group management perspective. In line with the
Group's internal management system, the outlook cov-
ers a period of one year. Risks and opportunities are
managed on the basis of a two-year assessment. The
report on risks and opportunities therefore addresses
a period of two years.
The report on outlook, risks and opportunities con-
tains forward-looking statements. These are based
on the BMW Group's expectations and assessments
and are subject to uncertainty. As a result, actual out-
comes can deviate either positively or negatively - for
example on account of political and economic devel-
opments from the expectations described below.
Further information is provided in the section Risks
and Opportunities.
-
Assumptions used in the outlook
The following outlook relates to a forecast period
of one year and is based on the composition of the
BMW Group during that time. The outlook takes
account of all information available at the time of
reporting and which could have an effect on the overall
performance of the Group. The expectations contained
in the outlook are based on the BMW Group's forecasts
for 2018 and reflect its most recent status. The basis
and principal assumptions of the forecasts are set
out below. They represent a consensus of opinions
of leading organisations, such as economic research
institutes and banks. These assumptions flow into the
planning basis of the BMW Group.
The continuous forecasting process ensures the
BMW Group's ability to exploit opportunities quickly
and systematically as they arise and react in a similar
way to unexpected risks. The principal risks and
opportunities are described in detail in the section
Risks and Opportunities. The risks and opportu-
nities discussed therein are relevant for all of the
BMW Group's performance indicators and could result
in variances between the outlook and actual outcomes.
Economic outlook
Despite an array of uncertainties, particularly in
the area of international trade, the overall outlook
for the world economy is positive. Global economic
growth is forecast to be around 3.9% in 2018. The
exit negotiations between the EU and the UK and the
current US administration's future trade policy remain
factors that could at least significantly slow down the
current upward trend in the event of unfavourable
developments. Moreover, financial market stability
could be jeopardised by over-restrictive monetary
policies in the USA, high levels of corporate debt in
China and excessive sovereign debt in Japan as well
as some eurozone countries. Further information on
political and global economic risks is also available in
the section Risks and Opportunities.
Positive overall outlook for
After a year of robust expansion, economic growth
in the eurozone is forecast to slow down slightly to
2.2% in 2018. Germany, Europe's largest economy, is
expected to grow at a similar rate (+2.3%). Economic
growth of the other member states in the eurozone
is also predicted to develop positively. France (+ 2.0%)
and Italy (+1.4%) are likely to see an increase in GDP
over the outlook period. Based on an expected growth
rate of 2.7%, the Spanish economy is set to
grow faster
than the eurozone average. The economies of both
Portugal and Greece are also expected to grow at
around 2.1%, enabling a reduction in unemployment.
In the USA, the administration's tax-cutting pro-
gramme is likely to give companies greater flexibility
for investment and thereby boost business expansion.
These factors are expected to have a slightly positive
impact on the economy, which is expected to expand
by 2.6% in 2018. The US Federal Reserve will most
likely continue pursuing a more restrictive monetary
policy. The prerequisite is that domestic demand in
private households as well as corporate and public
sectors remains robust and prices rise.
In 2018, China is likely to focus on reducing credit
growth and stimulating the services sector. Greater
diversification of economic sectors could lead to a
reduction in overcapacities. Against this backdrop,
GDP is forecast to rise by 6.5%. Many Chinese indus-
trial companies are confronted with high debt levels,
a situation that could also threaten financial market
stability. Safeguarding market stability therefore
remains one of the most urgent tasks for the Chinese
government. The risk of a significant economic down-
turn in China cannot therefore be ruled out.
The Japanese economy is expected to grow by 1.3%
in 2018. Moderate demand for capital goods as well
as consumer spending could help drive growth. The
weak yen is also likely to create momentum for exports.
If India succeeds in implementing further reforms
aimed at promoting growth, economic output could
rise by even more than the 7.3% forecast for 2018.
Economic growth is also forecast for Russia (+1.9%)
and Brazil (+2.5%), supported by higher raw material
prices and solid corporate investment.
91
42
92
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
The UK's economic performance in the outlook period
will be influenced significantly by the progress of EU
exit negotiations. In view of the official leaving date
in March 2019 and with negotiations making slow
progress to date, the UK economy is preparing for
various scenarios. British companies are considering,
amongst others, relocation of operations to the EU.
The lack of planning certainty is weighing on compa-
nies and private households alike. Consequently, the
economy is expected to slow further with a growth
rate of only 1.4% for the current year.
→ Outlook
REPORT ON OUT-
LOOK, RISKS AND
OPPORTUNITIES
Opportunities
99
89
At €4,643 million, inventories were higher than at the
end of the previous year (2016: €4,260 million), due
to an increase in finished goods.
Receivables from subsidiaries, most of which relate to
intragroup financing receivables, rose to €7,641 mil-
lion (2016: €6,001 million).
The increase in other receivables and other assets to
€2,827 million (2016: €2,525 million) was mainly due
to higher receivables from companies in which an
investment is held, as well as higher tax receivables.
Equity increased by €924 million to €15,046 million.
The equity ratio fell from 38.9% to 36.3%, mainly due
to the increased balance sheet total.
In order to secure pension obligations, investments
in fund assets totalling €498 million were transferred
to BMW Trust e. V., Munich, in conjunction with a
Contractual Trust Arrangement (CTA). Fund assets are
offset against the related guaranteed obligations. The
resulting surplus of assets over liabilities is reported in
the BMW AG balance sheet on the line item Surplus of
pension and similar plan assets over liabilities.
Provisions for pensions increased from €93 million
to €139 million, after offsetting of pension liabilities
with pension assets.
Other provisions increased year on year, mainly due
to increased provisions for pre-retirement part-time
arrangements. With effect from 2017, fund assets
relating to pre-retirement part-time working arrange-
ments are secured by bank guarantees, with the result
that at the reporting date no offsetting amount was
recorded for corresponding assets. Also, provisions
were increased as a result of further additions to the
provision for litigation and liability risks.
Liabilities to banks decreased as a result of the repay-
ment of project-related loans.
Liabilities to subsidiaries comprise mainly intragroup
financial liabilities.
Deferred income increased by €619 million to
€2,685 million and included mainly amounts relating
to services still to be performed related to service and
maintenance contracts.
→ Outlook
Liquidity within the BMW Group is managed centrally
by BMW AG on the basis of a group-wide liquidity
concept. This involves concentrating a significant part
of the Group's liquidity at BMW AG. An important
instrument in this context is the cash pool based at
BMW AG. The liquidity position reported by BMW AG
therefore reflects the global activities of BMW AG and
other Group companies.
Risks and opportunities
BMW AG's performance is essentially dependent on
the same set of risks and opportunities that affect the
BMW Group and which are described in detail in the
Report on Outlook, Risks and Opportunities section
of the Combined Management Report. As a general
rule, BMW AG participates in the risks entered into
by Group companies in proportion to the respective
shareholding percentage.
BMW AG is integrated in the group-wide risk man-
agement system and internal control system of the
BMW Group. Further information is provided in the
section Internal Control System Relevant for Account-
ing and Financial Reporting Processes within the
Combined Management Report.
Outlook
Due to its significance in the Group and its close ties
with Group companies, expectations for BMW AG with
respect to its financial and non-financial performance
indicators correspond largely to the BMW Group's
outlook for the Automotive segment. This is described
in detail in the Report on Outlook, Risks and Oppor-
tunities section of the Combined Management Report.
KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin,
has issued an unqualified audit opinion on the finan-
cial statements of BMW AG, of which the balance sheet
and the income statement are presented here. The
BMW AG financial statements for the financial year
2017 will be submitted to the operator of the electronic
version of the German Federal Gazette and can be
obtained via the Company Register website. These
financial statements are available from BMW AG,
80788 Munich, Germany.
90
90
Combined
Management
Report
Report on Outlook,
Risks and
Cash and cash equivalents increased by €1,542 million
to €4,218 million, mainly due to the surplus from
operational activities and the increase in financial
liabilities. Investment in tangible, intangible and
investment assets and in marketable securities, as
well as payment of the dividend from the previous
year, had an offsetting effect.
Currency markets
Currencies of particular importance for the interna-
tional operations of the BMW Group are the US dollar,
the Chinese renminbi, the Japanese yen and the Brit-
ish pound. All of these major currencies are expected
to remain volatile in 2018.
A significantly more restrictive monetary policy
on the part of the US Federal Reserve as well as
economic stimulus through tax cuts for companies
and private households could raise the value of the
US dollar against the euro. However, a simultaneous
economic upturn in the eurozone, falling unemploy-
ment and rising inflation rates could lead the ECB
to gradually scale down its expansionary monetary
policy. As a result, the euro would probably remain at
a similar value against the US dollar as in the second
half of 2017.
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Outlook
Automotive segment
Deliveries to customers: slight increase expected
The BMW Group expects a further year-on-year
increase in sales of BMW, MINI and Rolls-Royce
brand vehicles and aims to occupy a leading posi-
tion in the global premium segment again in 2018.
Balanced growth in major sales regions will help to
even out volatilities in individual markets. Assuming
economic conditions do not deteriorate, deliveries to
customers are forecast to rise slightly to a new high
(2017: 2,463,526¹ units).
Important contributions to sustained growth can be
expected, amongst others, from the new BMW 6 Series
Gran Turismo, the new BMW X3 (both launched in
November 2017) and the BMW X2 (available since
March 2018). The extended-wheelbase version of the
BMW 5 Series in China will also provide additional
impetus. The new BMW X4, model revisions of the
BMW 2 Series Active Tourer and Gran Tourer (includ-
ing the Active Tourer plug-in hybrid) (BMW 225xe
iPerformance Active Tourer: fuel consumption in
1/100 km (combined) 2.5-2.3//CO₂ emissions in
g/km (combined) 57-52//Electric power consump-
tion in kWh/100 km (combined) 13.7-13.4) and the
BMW i8 Coupé (BMW i8 Coupé: fuel consumption in
1/100 km (combined) 1.9//CO2 emissions in g/km
(combined) 42//Electric power consumption in
kWh/100 km (combined) 14.0) will go on sale during
the spring. The launch of the new BMW i8 Roadster
(BMW i8 Roadster: fuel consumption in 1/100 km (com-
bined) 2.1//CO2 emissions in g/km (combined) 46//
Electric power consumption in kWh/100 km (com-
bined) 14.5) and the BMW 8 Series Coupé are set
to follow later in the year. Model revisions of the
MINI Hatch (3- and 5-door) and MINI Convertible
should also boost demand. The eighth generation of
the Rolls-Royce Phantom has been available since
January 2018.
Fleet CO2 emissions²: slight decrease expected
The BMW Group is continuing in its efforts to reduce
both fuel consumption and CO2 emissions. In addition,
the share of electrified vehicles in total deliveries is
expected to increase. Accordingly, CO2 emissions
across the vehicle fleet as a whole are expected to
decrease slightly during the outlook period, and
continue the trend seen in previous years (2017:
122 g CO2/km).
Revenues: slight increase expected
Automotive segment revenues should benefit from
growth in deliveries. Accordingly, a slight increase in
segment revenues is forecast for 2018 (2017 adjusted:
€85,7423 million).
Combined
EBIT margin in target range between 8 and 10%
expected
accordance with
IFRS 15.
1 Includes the
joint venture
BMW Brilliance
Automotive,
Shenyang Ltd.
(2017: 384,124
units).
2 EU-28.
³ Adjusted in
accordance with
IFRS 15.
Return on capital employed:
significant decrease expected
Segment RoCE is forecast to lie significantly below
the previous year's level (2017 adjusted: 77.74%).
The decrease is attributable, among other things, to
increasing investments in the electrification of the
vehicle fleet, digitalisation and the expansion and
renewal of the model portfolio. However, the long-
term target RoCE of at least 26% for the Automotive
segment will be significantly surpassed.
In view of the introduction of IFRS 16 (Leases) as of
1 January 2019, the future significance of RoCE as a
performance indicator, as opposed to an operational
management tool, is under review.
Motorcycles segment
Deliveries to customers: solid increase expected
The BMW Group expects the positive trend in the
Motorcycles segment to continue. The renewal of the
product range in the previous year, and new models
introduced at the EICMA 2017, such as the F 750 GS,
F 850 GS and K 1600 Grand America, should all have
a positive impact. Furthermore, the Scooter C 400 X
expands the product range for urban environments.
Overall, a solid increase in deliveries of BMW motor-
cycles to customers is forecast (2017: 164,153 units).
EBIT margin in target range between 8 and 10%
expected
An EBIT margin again within a range of 8 to 10%
is expected for the Automotive segment (2017
Adjusted in adjusted: 9.24%).
94
Workforce size at year-end: slight increase expected
The need for qualified staff across the BMW Group
will remain high in 2018. Above all, projects relating
to vehicle electrification and autonomous driving,
growth in the automobile and motorcycle business
and the expansion of financial and mobility services
will lead to a slight increase in the workforce, accord-
ing to current estimates (2017: 129,932 employees).
accordance with
IFRS 15.
The strong economic ties between China and the USA
make it likely that the Chinese renminbi will follow
a similar trend to the US dollar. As a result, the ren-
minbi/euro exchange rate is likely to move sideways
in 2018, subject to volatility.
The performance of the British pound will be deter-
mined largely by the progress made in negotiations
between the EU and the UK. If the negotiating parties
are able to agree on withdrawal terms and successfully
conclude talks on trade relations for the period after
March 2019 or for a transition period, the pound could
appreciate moderately against the euro. If, on the
other hand, planning uncertainty persists, the pound
may come under additional downward pressure.
The central bank in Japan continues to pursue a highly
expansionary monetary policy. For this reason, the
value of the yen against the euro is likely to be almost
unchanged compared to the year-end closing rate or
only slightly lower.
Currencies in numerous emerging economies are like-
ly to remain under pressure against the US dollar as a
result of the ongoing normalisation of US monetary
policy. This applies in particular to countries that
export raw materials, such as Russia, Brazil and South
Africa. By contrast, any increase in raw material prices
will tend to have a positive impact on these economies.
New registrations are forecast to increase slightly
by around 1.5% worldwide to 89.0 million units in
2018, with growth expected from emerging markets
in particular.
The automobile market in Europe is unlikely to benefit
from the global economic recovery, and registrations
are predicted to fall slightly overall (15.6 million
units; -0.6%). New registrations in Germany are
forecast to decrease by 1.2% to 3.4 million units.
The French market is forecast to be flat (2.1 million
units; -0.4%). In Italy, the automobile market is set to
slow after a strong year, with growth in 2018 expected
at only 1.2% (2.0 million units). In the UK the forecast
for new registrations is negative. A further fall of
approximately 4.5% to around 2.4 million units is
expected here.
According to forecasts, the downward trend in the USA
is set to continue. New registrations are expected to
be down by 2.5% to 16.8 million units.
In China, a 3.3% increase is expected in passenger
car registrations to around 25.5 million units. The
automobile market in Japan is likely to see moderate
contraction in 2018. Registrations are forecast to be
down 2.7% year-on-year to approximately 4.9 million
units.
Registrations in Russia are expected to rise by around
10% in 2018 to 1.6 million units on the back of eco-
nomic recovery. In Brazil, registration figures are also
expected to increase in the current year by about 10%
to 2.0 million units.
International motorcycle markets
The world's motorcycle markets in the 250 cc plus class
are expected to remain stable overall in 2018, with
individual markets continuing to develop divergently.
In Europe, the BMW Group expects the major markets
of France, Italy and Spain to continue their positive
trend, while the German market is likely to show a
stable development compared to the previous year.
Markets in the UK and the USA could see a further
slight contraction after the previous year's decline.
93
93
International interest rate environment
The global economic upturn is expected to gain further
momentum in 2018. While successive rises in bench-
mark interest rates seem likely in the USA, tightening
of monetary policies in other industrialised countries
is likely to be carried out with great caution.
The US Federal Reserve is expected to raise interest
rates in three or four increments in the course of 2018
in line with its policy of increasing interest rates.
The ECB is predicted to maintain its expansionary
monetary policy in 2018, while continuing to reduce
the volume of monthly bond purchases.
The uncertainty surrounding the ongoing Brexit nego-
tiations is expected to continue to weigh on the UK
economy in 2018. The Bank of England is expected
to adopt initially a cautious approach and intervene
where necessary.
Growth in China could weaken moderately in 2018.
Japan's central bank is likely to maintain its ultra-
expansive monetary policy in order to drive inflation
and stimulate the economy.
Expected consequences for the BMW Group
Future developments on international automobile
markets have a direct impact on the BMW Group.
While competition could intensify in contracting mar-
kets, new opportunities may appear in growth regions.
Challenges in the competitive environment will have a
significant effect on sales volumes in some countries.
Due to its global business model, the BMW Group is
well placed at all times to exploit opportunities, even at
short notice. Coordination between the Group's sales
and production networks also enables it to balance
out the impact of unforeseeable developments in the
various regions. Investments in markets important for
the future also form a basis for further growth, while
simultaneously strengthening the global presence of
the BMW Group. Thanks to its three premium brands -
BMW, MINI and Rolls-Royce the BMW Group
expects to continue performing successfully in 2018.
Outlook for the BMW Group
Application of International Financial Reporting
Standards IFRS 9 (Financial Instruments) and IFRS 15
(Revenue from Contracts with Customers) is mandato-
ry with effect from 1 January 2018. While application
of IFRS 15 requires adjusted comparative figures for
the financial year 2017, no adjustment of comparative
figures is required in the case of IFRS 9. In order to
ensure a transparent presentation of changes in key
financial performance indicators, the outlook shows
values adjusted in accordance with IFRS 15 as well as
those actually reported for 2017. With regard to key
financial performance indicators for 2018, the outlook
is based on values for 2017 adjusted in accordance
with IFRS 15. Further information on IFRS 9 and
→ see IFRS 15 is provided in → note 5 of the Group Financial
Statements.
note 5
Group
Profit before tax expected at previous year's level
Competition on international automobile markets
is set to remain intense during the current year.
Furthermore, political and economic developments
in Europe remain uncertain. Above all, this is due
to the unforeseeable effects of Brexit negotiations
between the EU and the UK. The economic policy
of the US administration also remains difficult to
predict. Further information is provided in Risks and
Opportunities in the section Macroeconomic risks
and opportunities.
Nevertheless, the BMW Group intends to continue
its strong business performance in 2018. Notable
contributions are likely to come from new vehicles
as well as successful established models. At the same
time, investments in future-oriented projects remain
high, including continued electrification of vehicles,
digitalisation and autonomous driving, amongst
others. The production network will also be further
expanded during the outlook period. Due to the
challenges, Group profit before tax is expected to be
in line with the previous year's level (2017 adjusted:
Adjusted in €10,675* million).
Depending on the political and economic situation
and the risks and opportunities described below,
actual business performance could differ from current
expectations.
BMW Group key performance indicators
MOTORCYCLES SEGMENT
GROUP
→ 61
in line with last
year's level
10,655
129,932
€ million
2018
Outlook³
20172
adjusted
2017
reported
5 EU-28.
4 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 384,124 units).
3 Based on adjusted outlook.
² Adjusted in accordance with IFRS 15.
1 Adjusted with effect from the financial year 2018.
10,675
129,932
FINANCIAL SERVICES SEGMENT
Return on equity
Profit before tax
AUTOMOTIVE SEGMENT
Deliveries to customers4
Fleet emissions5
Workforce at year-end
EBIT margin
Return on capital employed
Deliveries to customers
EBIT margin
Return on capital employed
Revenues
Production stoppages and downtimes due to fire,
machine and tooling breakdowns, IT disruptions,
damage to infrastructure, power failures, transporta-
tion and logistical disruptions represent risks which
the BMW Group addresses through appropriate pre-
cautions. Production structures and processes are
designed from the outset with measures to minimise
potential damage and the probability of occurrence.
Measures taken include technical fire protection,
land development with regard to flooding risks when
facilities are expanded or new buildings added, inter-
changeability of production facilities, preventative
maintenance, management of spare parts across sites,
and predictive planning of transportation alterna-
tives. Risk is also reduced through flexible working
hour models and working time accounts as well as
the ability to build individual split models or engine
types at other sites within the production network.
As a result, backlogs arising from production inter-
ruptions can be quickly recovered. Risks arising from
interruptions and production downtime due to fire are
also appropriately covered with insurance companies
of good credit standing.
→ Risks and
Opportunities
In order to meet high standards in product quality and
achieve favourable external ratings (e.g. for product
safety), reduce statutory and non-statutory warranty
obligations and keep down follow-up costs arising
from other changes in planning assumptions, it may
be necessary to incur a higher level of expenditure
than originally forecast. In addition, availability of
products may be limited, particularly at the start of
production of new vehicles. These risks are mitigated
through regular audits and the continual improve-
ment of quality management, which ensures the high
standard of quality. The BMW Group also recognises
appropriate accounting provisions for statutory and
non-statutory warranty obligations. These reduce
the risk to earnings, as they are already taken into
account in the outlook. Further information on risks
related to provisions for statutory and non-statutory
warranty obligations is provided in → note 31 of the → see
Group Financial Statements.
note 31
The BMW Group sees opportunities in production
processes and technology fields primarily through
the competitive edge gained from mastering new and
complex technologies. Opportunities could arise as a
result of further technological innovations related to
products or processes, as well as from organisational
changes which improve efficiency or increase com-
petitiveness. For example, the BMW Group has been
using since 2017 a fully automated quality control
system in the paint shop newly opened in 2017 at the
BMW Group plant in Munich. The data obtained pro-
vides valuable feedback on the precision of upstream
painting processes. These can be continuously opti-
mised, potential sources of error promptly identified
and rework avoided. Given the long lead times in
developing new products and processes, additional
opportunities within the reporting period are con-
sidered insignificant for the results of operations of
the BMW Group.
103
104
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
Close cooperation between carmakers and suppliers
in the development and production of vehicles and
the provision of services generates economic benefits,
but also increased dependency. Potential reasons for
the failure of individual suppliers include in particular
increased IT-related risk, non-compliance with sus-
tainability or quality standards, insufficient financial
strength of a supplier, the occurrence of natural haz-
ards, fires and insufficient supply of raw materials. As
part of supplier pre-selection, the BMW Group checks
for compliance with the sustainability standards
for the supplier network. This includes compliance
with internationally recognised human rights and
applicable labour and social standards. The principal
means for ensuring compliance with the Sustainability
Standard is a three-stage risk management system for
sustainability. In addition, the technical and financial
capabilities of suppliers are monitored, especially
where modular-based production is concerned.
Supplier sites are assessed for exposure to natural
hazards, such as floods or earthquakes, in order to
identify supply risks at an early stage and implement
appropriate precautions. Fire risks at series suppliers
are evaluated by means of questionnaires and selective
site inspections. In order to minimise supply risks, the
BMW Group draws up measures to reduce the use of
raw materials or to substitute alternative raw materials.
New developments in the field of digital communi-
cation and connectivity in particular offer new oppor-
tunities for the BMW Group's brands. BMW CarData
has made it possible since 2017 to provide customised
service offers to BMW drivers based on data from the
vehicle. If customers wish to use a specific service
and actively consent to the release of their telematics
data, requesting companies receive the data they need
for the service in encrypted form via BMW's secure
backend database. This information provides the basis
for customised, data-driven and innovative service
solutions. Additional opportunities could arise if new
sales channels contribute to greater brand reach to
customer groups than currently envisaged in the
outlook. Digital communication and connectivity
enables consumers to be reached on a more targeted
and individualised basis, thus strengthening long-
term relationships and brand loyalty. This can lead
to a more intense product and brand experience for
customers, which could lead to higher sales volume
and have a positive impact on revenues and earn-
ings. The BMW Group invests in advanced marketing
concepts in order to intensify customer relationships.
The BMW Group estimates the earnings impact as
insignificant over the two-year assessment period as
compared to the assumptions made in the outlook.
Within the Purchasing and Supplier Network,
opportunities arise above all in the area of global
sourcing through increased efficiency and the use
of innovations developed by suppliers, which can
lead to a broader range of products. Making full
use of location-specific cost factors, in particular
through local supplier structures in close proximity
to new and existing BMW Group production plants
and the introduction of new, innovative production
technologies, could lead to lower cost of materials for
the BMW Group. The new supply centre opened in
Landshut in 2017 represents a further step in ensuring
efficient and flexible logistics processes. Integration of
previously unidentified innovations from the supplier
market in the Group's product range could provide
a further source of opportunities. The BMW Group
offers innovative suppliers numerous possibilities for
creating specific contractual arrangements which are
attractive for those developing innovative solutions.
At regular intervals, the BMW Group honours its
most inventive suppliers with the Supplier Innovation
Award. The BMW Group expects these opportuni-
ties to have no significant earnings impact over the
assessment period as compared to the assumptions
made in the outlook.
Risks and opportunities relating to
sales and marketing
In order to sell its products and services, the
BMW Group employs a global sales network, com-
prising primarily independent dealerships, branches,
subsidiaries and importers. Any threat to the contin-
ued activities of parts of the sales network would entail
risks for the BMW Group. The occurrence of sales
and marketing risks is associated with a low earnings
impact over the two-year assessment period. The risk
amount is classified as low.
Information, data protection and IT
Increasing digitalisation across all areas of business
places considerable demands on the confidentiality,
integrity and availability of electronically processed
data and the associated use of information technology
(IT). In addition to the increased threat of cybercrime,
regulations covering the handling of personal data are
becoming more stringent, for example as a result of
the EU General Data Protection Regulation. If risks
relating to information security, data protection and
IT were to materialise, they could have a high earnings
impact over the two-year assessment period. Despite
extensive security measures, the risks in this area are
classified as high.
In addition to cyber attacks and direct physical
intervention, lack of awareness or misconduct on
the part of employees may also represent a danger
to the confidentiality, integrity and availability of
information, data and systems. Direct consequences
include expenditure required for rapid information,
data and systems recovery. Negative impacts on oper-
ational performance due to the non-availability of
products and services or disruptions in the production
of components or vehicles are also possible. A further
indirect result could be reputational damage.
Great importance is attached to the protection of the
confidentiality, integrity and availability of business
information as well as employee and customer data,
for instance against unauthorised access or misuse.
Data security is an integral component of business
processes and is aligned with the International
Standard ISO/IEC 27001. As part of risk management,
information security, data protection and IT risks are
systematically documented, allocated appropriate
measures by the departments concerned and contin-
uously monitored with regard to threat level and risk
mitigation. Regular analyses and controls as well as
rigorous security management ensure an appropriate
level of security. Despite continuous testing and
preventative security measures, it is impossible to
eliminate risks completely in this area. All employees
are required to treat with care information such as
confidential business, customer and employee data,
to use information systems securely and handle
risks with transparency. Group-wide requirements
are documented in a comprehensive set of principles,
guidelines and instructions, such as, for example, the
Privacy Corporate Rules for handling personal data.
Regular communication and awareness-raising meas-
ures create a high level of security and risk awareness
among those involved. Employees receive training
to ensure compliance with the legal requirements
and internal rules. With regard to cooperations and
business partnerships, the BMW Group protects its
intellectual property as well as customer and employ-
ee data through clear instructions on information
Risks relating to production processes and technology
fields are particularly apparent in potential sources
of interruptions in production or additional costs to
comply with quality standards under changed market
conditions. If risks arising from production processes
and technologies were to materialise, they could have
a high earnings impact over the two-year assessment
period. The corresponding risk amounts are classified
as medium. By dealing with risk issues at the planning
stage and taking appropriate measures, the risk has
been reduced.
The BMW Group pays particular attention to the qual-
ity of parts built into its vehicles. In order to attain a
very high level of quality, it may become necessary to
invest in new technological concepts or discontinue
planned innovations, with the result that the cost of
materials could exceed levels accounted for in the
outlook. By monitoring and developing global sup-
plier markets, the BMW Group continuously strives
to optimise its competitiveness by working together
with the world's best product and service providers.
Risks and opportunities relating to operations
Risks and opportunities relating to production
and technologies
101
Local restrictions affecting product usage in specific
sectors may limit BMW Group sales in individual mar-
kets. In some urban areas, for instance, local measures
have been, or are being, introduced, including entry
restrictions, congestion charges or, in some situations,
highly restrictive registration rules. These may affect
local demand for the BMW Group vehicles affected
and hence have a negative impact on sales, margins
and, possibly, the residual value of these vehicles. The
BMW Group addresses this risk by offering locally
emissions-free vehicles, such as the BMW i3, which
benefit from state subsidies and exemptions.
The planned Brexit could have a long-term adverse
impact on the BMW Group, particularly as a result of
increased trade barriers in the form of customs duties
in relation to the European single market. Any such
trade barriers could have a negative impact on volumes
and costs both for vehicles and components produced
in the EU for the UK as well as those produced in
the UK for the European market. In extreme cases,
this could lead to interruptions in production due
to the processing of customs formalities. In addition,
Brexit could lead to reduced customer spending in the
wake of weaker economic performance, particularly
in the UK. In the short and medium term, uncertainty
regarding the outcome of the negotiations with the
EU could exacerbate these factors and cause further
negative currency effects. A possible further economic
downturn within the EU could also potentially reduce
growth prospects for the BMW Group. European inte-
gration with a unified economic and currency area is
an important pillar of economic stability in Europe.
The ongoing transition in China from an invest-
ment-driven to a consumer-driven economy is
associated with slower growth rates and potentially
greater instability on financial markets. If the Chinese
economy were to grow at a significantly slower pace
than expected, the consequence would be not only
a decline in automobile sales, but also, potentially,
lower demand for raw materials, which would have a
negative impact above all on emerging economies such
as Brazil, Russia or South Africa. Any further drop in
raw material prices could result for the BMW Group
in lower demand from these countries. Turmoil on
the Chinese property, stock and banking markets
and an overly rapid increase in interest rates by the
US Federal Reserve could pose considerable risks for
global financial market stability.
Furthermore, increasing political unrest, military
conflicts, terrorist activities, natural disasters or
pandemics could have a lasting negative impact on
the global economy and international capital markets.
The BMW Group addresses macroeconomic risks pri-
marily by internationalising its sales and production
structures, in order to minimise the extent to which
earnings depend on risks in individual countries
and regions. Flexible sales and production processes
within the BMW Group increase the ability to react
quickly to regional economic developments.
Should the global economy develop significantly better
than presented in the outlook, macroeconomic oppor-
tunities could arise for the BMW Group's revenues
and earnings. Significantly stronger GDP growth in
China, consumer-oriented reforms within the euro-
zone, a cancellation of Brexit plans and intensified
trade relations between the EU and the UK, growth
stimulus through the tax reform in the USA or more
robust consumer spending in emerging markets due to
rising raw material prices could result in significantly
stronger sales volume growth, reduced competitive
pressures and corresponding improvement in pricing.
Macroeconomic opportunities that could generate a
sustainable impact on earnings are currently classified
by the BMW Group as insignificant.
Strategic and sector risks and opportunities
Changes in legislation and regulatory requirements
The sudden introduction of more stringent legislation
and regulations, particularly with regard to emissions,
safety and consumer protection and regional vehicle-
related purchase and usage taxes, represents a signif-
icant risk for the automobile industry. Country- and
sector-specific trade barriers can also change at short
notice. A sudden tightening of regulations in any of
these areas can necessitate significantly higher invest-
ments and ongoing expenses or influence customer
behaviour. Risks from changes in legislation and
regulatory requirements could have a medium impact
on earnings over the two-year assessment period. The
risk amount attached to these risks is classified as
high. In particular, risks arising from the tightening
of emission laws have resulted in the assessment of
the risk level being raised.
At present, the BMW Group sees increasingly restric-
tive vehicle emissions regulations, particularly for
conventional drivetrain systems, not only in the devel-
oped markets of Europe and North America, but also
in growth markets such as China. The introduction of
new measurement procedures to represent standard
driving cycles, combined with significantly lower
emissions thresholds, represents a major challenge
for the automotive sector. The BMW Group is address-
ing this risk with its Efficient Dynamics concept and
is playing a pioneering role in reducing both fuel
consumption and emissions within the premium
segment. The product range has been increasingly
expanded with electric drivetrain systems in BMWi
vehicles since 2013 and plug-in-hybrid technologies in
a growing number of series models since 2015. These
technologies have contributed to fulfilment of legal
requirements with regard to CO2 emissions.
Further risks can result from the tightening of existing
import and export regulations. These lead primarily
to additional expenses, but can also restrict imports
and exports of vehicles or parts.
New opportunities are continuously being sought to
create even greater added value for customers than
currently expected, and thereby to realise significant
opportunities with respect to sales growth and pricing.
Further development of the product and mobility port-
folio and expansion in growth regions offer the most
important medium- to long-term growth opportunities
for the BMW Group. Continued growth depends above
all on the ability to develop innovative products and
bring them to market. The range of services on offer
was further expanded in 2017, particularly in the area
of electric mobility. ChargeNow customers have access
to more than 130,000 charging points in 29 countries.
A new digital business field was created under the
name BMW Energy Services. The BMW Group expects
these opportunities to have no significant earnings
impact over the two-year assessment period compared
to the assumptions made in the outlook.
security and data protection and the use of informa-
tion technology. Information pertaining to key areas of
expertise as well as sensitive personal data are subject
to particularly stringent security measures. Technical
data protection incorporates industry-wide standards
and good practices. Responsibility for information
security and data protection lies for each Group entity
with the Board of Management or relevant manage-
Combined
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An established regulatory framework for innovative
mobility solutions as well as government incentives
are important prerequisites for introducing product
innovations, such as autonomous driving, and for
scaling up the range of electric mobility offerings. For
BMWi and iPerformance vehicles with alternative
drivetrain systems a faster expansion of charging
infrastructure could increase acceptance and help
boost sales of planned or recently introduced prod-
uct innovations compared to forecast. This includes
implementation of the 360° ELECTRIC portfolio in
the field of electric mobility and collaboration with
Toyota on hydrogen fuel cell technology.
The BMW Group's earnings could also be positively
affected in the short to medium term by changes in
trading policies. A possible reduction in tariff barriers,
import restrictions or direct excise duties could lower
the cost of materials for the BMW Group, and enable
products and services to be offered to customers at
lower prices. Further opportunities for the earnings
performance of the BMW Group from changes in
legislation and regulatory requirements compared
to the outlook are classified as insignificant.
Market development
In addition to the economic factors and sector-specific
political conditions, increasingly fierce competition
among established manufacturers and the emergence
of new competitors could also have effects which are
difficult to predict. Unforeseen consumer preferences
and changes in brand perceptions can give rise to
opportunities and risks. If market risks were to mate-
rialise, they could have a high earnings impact over
the two-year assessment period. The risk amount is
classified as high.
Intense competition, particularly in Western Europe,
the USA, China, Japan and Korea is a potential cause
for lower demand and for fluctuations in the regional
distribution and composition of demand for BMW,
MINI and Rolls-Royce brand vehicles and for mobility
services. Greater competition could put pressure on
selling prices and margins. Changes in customer
behaviour can also be brought about by changes in
attitudes, values, environmental factors and fuel or
energy prices. For example, the ongoing political and
public discussion on diesel engines could adversely
affect demand for diesel vehicles. At the same time,
however, this could lead to increased demand for vehi-
cles with petrol engines or alternative drivetrains. In
order to determine price and margin risks, a scenario
approach is used. The BMW Group's flexible sales and
production processes enable risks to be reduced and
newly arising opportunities in market and product
segments to be taken.
102
ment team.
Liquidity risks
105
The categories of risk relating to financial services
comprise credit and counterparty risk, residual value
risk, interest rate risk, operational risks and liquidity
risk. Evaluation of liquidity risk for the Financial
Services segment is included in the liquidity risk
category for the Group as a whole.
The segment's total risk exposure was covered at all
times during the 2017 financial year by the available
risk-covering assets. As a result, the Financial Services
segment's risk-bearing capacity was assured at all
times.
Credit and counterparty risks and opportunities
relating to the Financial Services segment
Credit and counterparty default risk arises within the
Financial Services segment if a contractual partner
(e.g. a customer or dealer) either becomes unable or
only partially able to fulfil its contractual obligations,
so that lower income is generated or losses incurred.
If credit and counterparty risks were to materialise,
they could have a medium earnings impact over
the two-year assessment period. The risk amount
is classified as medium. The BMW Group classifies
potential opportunities in this area as significant.
As part of its credit and counterparty risk manage-
ment, the Financial Services segment uses rating
systems in order to assess the creditworthiness of
its contractual partners. Credit risks are managed at
the time of the initial credit decision on the basis of a
calculation of the present value of standard risk costs
and subsequently, during the term of the credit, by risk
provisioning to cover risks resulting from changes in
customer creditworthiness. Individual customers are
hereby classified by category each month on the basis
of their current contractual status, and appropriate
levels of allowance recognised in accordance with
that classification. If macroeconomic developments
are more favourable than assumed in the outlook,
credit losses may be reduced, leading to a positive
earnings impact.
108
Combined
Management
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the Financial Services segment
→ Risks and
Opportunities
Risks and opportunities arise in conjunction with
leasing contracts if the market value of a leased vehicle
at the end of the contractual term of a lease differs
from the residual value estimated at the inception
of the lease and factored into the lease payments. A
residual value risk exists if the expected market value
of the vehicle at the end of the contractual term is
lower than its estimated residual value at the date
the contract is entered into. If residual value risks
were to materialise, they could have a high earnings
impact from the Group's perspective over the two-
year assessment period. A high and medium earnings
impact would then arise for the affected Financial
Services and Automotive segments, respectively. The
risk amount is classified as medium for the Group
as a whole. Opportunities can arise out of a positive
deviation between the actual market value and the
original residual value forecast. The BMW Group
classifies potential residual value opportunities as
significant.
Each vehicle's estimated residual value is calculated
on the basis of historical external and internal data.
This estimation provides the expected market value
of the vehicle at the end of the contractual period. As
part of the management of residual value risks, the
net present value of risk costs is calculated at con-
tract inception. Market developments are observed
throughout the contractual period and the risk assess-
ment updated.
Interest rate risks and opportunities relating
to the Financial Services segment
Interest rate risks in the Financial Services segment
relate to potential losses caused by changes in market
interest rates. These can arise when fixed interest
rate periods do not match for assets and liabilities
recognised in the balance sheet. If risks relating to
interest rate risks were to materialise, they could
have a medium earnings impact over the two-year
assessment period. The risk amount is classified as
low. The BMW Group classifies potential interest rate
opportunities compared to the outlook as significant.
Interest rate risks in the Financial Services business
are managed by matching maturities for refinancing
and by employing interest-rate derivatives. If the
relevant recognition criteria are fulfilled, derivatives
used by the BMW Group are accounted for as hedging
instruments. Further information on risks in con-
junction with financial instruments is provided in
→ note 37 of the Group Financial Statements.
→ see
note 37
Operational risks in the Financial
Services segment
Operational risks are defined in the Financial Services
segment as the risk of losses arising as a consequence
of unsuitability or failure of internal procedures (pro-
cess risks), people (personnel-related risks), systems
(infrastructure and IT risks) and external events
(external risks). The recording and measurement of
risk scenarios, loss events and countermeasures in
the operational risk management system provide the
basis for a systematic analysis and management of
potential or materialised operational risks. Annual
self-assessments are also carried out. If operational
risks were to materialise, they would be likely to have
a low earnings impact over the two-year assessment
period. The risk amount is classified as low.
Residual value risks and opportunities relating
to the Financial Services segment
Risks and opportunities relating to
→ see
note 30
Further information on risks in conjunction with
pension provisions is provided in → note 30 of the
Group Financial Statements.
106
Combined
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Opportunities
Financial risks and risks relating to the use of
financial instruments
Currency risks and opportunities
As an internationally operating enterprise, the
BMW Group conducts business in a variety of cur-
rencies, thus giving rise to currency risks and oppor-
tunities. A substantial portion of Group revenues,
purchasing and funding occur outside the eurozone
(particularly in China and the USA). Cash-flow-at-risk
models and scenario analyses are used to measure cur-
rency risks and opportunities. If currency risks were
to materialise, they could be associated with a high
earnings impact over the two-year assessment period.
The risk level attached to currency risks is medium.
Significant opportunities can arise if currency devel-
opments are favourable for the BMW Group.
Operational currency management is based on the
results of currency risk analyses. The BMW Group
manages currency risks at both strategic (medium
and long term) and operational level (short and
medium term). Medium- and long-term measures
include increasing production volumes and purchase
volumes in foreign currency regions (natural hedging).
Currency risks are managed in the short to medi-
um term and for operational purposes by means of
hedging on financial markets. The principal objective
of this currency management process is to increase
planning reliability for the BMW Group. Hedging
transactions are entered into only with financial
partners of good credit standing. Opportunities are
also secured through the use of options during specific
market phases.
Risks and opportunities relating to raw materials
As a large-scale manufacturing company, the
BMW Group is exposed to purchase price risks, par-
ticularly in relation to raw materials used in vehicle
production. The analysis of raw material price risk
is based on planned purchases of raw materials and
components containing those raw materials. If risks
relating to raw material prices were to materialise, they
would likely have a low earnings impact over the two-
year assessment period. A low risk level is attached
to these risks. Significant opportunities could arise
if raw material prices developed favourably for the
BMW Group.
Changes in commodity prices are monitored on the
basis of a well-defined management process. The
principal objective is to increase planning reliability
for the BMW Group. Price fluctuations for precious
metals (platinum, palladium, rhodium), non-ferrous
metals (aluminium, copper, lead, nickel) and, to some
extent, for steel and steel ingredients (iron ore, coking
coal) and energy (gas, electricity) are hedged using
financial derivatives or supply contracts with fixed
pricing arrangements.
A possible introduction of trade barriers, including
anti-dumping customs duties, by the US adminis-
tration could have an adverse impact on the
BMW Group's operations through less favourable
conditions for importing vehicles. Moreover, counter-
measures by the USA's trading partners could slow
down global economic growth and have an adverse
impact on the export of vehicles produced in the USA.
The BMW Group's "production follows the market"
strategy involves local production both in the USA
and with other important trade partners. Regional
production reduces the existing risk of trade barriers.
Nevertheless, any increase in trade barriers would
have an adverse impact on the BMW Group.
The major part of the Financial Services segment's
credit financing and leasing business is refinanced
on capital markets. Liquidity risks may arise in the
form of rising refinancing costs or from restricted
access to funds as a consequence of the general market
situation or the failure of individual banks. If liquidity
risks were to materialise, they would be likely to have
a low earnings impact over the two-year assessment
period. The risk amount associated with liquidity risk,
including the risk of the BMW Group's credit rating
being downgraded, which would lead to an increase
in financing costs, is classified as low.
Based on the experience of the financial crisis, a
minimum liquidity concept has been developed and
is rigorously adhered to. Use of the "matched funding
principle" to finance the Financial Services segment's
operations eliminates liquidity risks to a large extent.
Solvency is assured at all times throughout the
BMW Group by maintaining a liquidity reserve and
by the broad diversification of refinancing sources.
Regular measurement and monitoring ensure that
cash inflows and outflows for the various maturities
and currencies offset each other. This approach is
incorporated in the BMW Group's target liquidity
concept. The liquidity position is monitored contin-
uously and managed through Group-wide planning
of financial requirements and funding. A diversified
refinancing strategy reduces dependency on any spe-
cific type of instrument. Moreover, the BMW Group's
solid financial and earnings position results in high
credit ratings from internationally recognised rating
agencies. A description of the methods applied for
risk measurement and hedging in conjunction with
currency and commodity risks is provided in → note 37
of the Group Financial Statements. If the relevant
recognition criteria are fulfilled, derivatives used by
the BMW Group as hedges are generally accounted for
as hedging relationships. Further information on risks
in conjunction with financial instruments is provided
→ see in → note 37 of the Group Financial Statements.
→ see
note 37
note 37
17
107
Risks and opportunities relating to
pension obligations
Pension obligations are influenced in particular by
fluctuations of market yields on corporate bonds, as
well as by other economic and demographic para-
meters. Opportunities and risks arise depending
on changes in these parameters. If risks relating to
pension obligations materialised, they could have a
high earnings impact over the two-year assessment
period. The risk amounts relating to pension obliga-
tions are classified as medium. Within a favourable
capital market environment, the return generated by
growth-oriented pension assets may exceed expecta-
tions and reduce the deficit of the relevant pension
plans. This could have a significantly favourable
impact on the net asset position of the BMW Group.
Future pension payments are discounted on the basis
of market yields on high-quality corporate bonds.
These yields are subject to market fluctuation and
therefore influence the level of pension obligations.
Changes in other parameters, such as rises in infla-
tion and longer life expectancy, also impact pension
obligations and payments. The BMW Group's pension
obligations are mainly held in external pension funds
or trust arrangements with the related assets legally
separated from those of the Group. The amount of
funds required to finance pension payments out
of operations in the future is substantially reduced
by the fact that the Group's pension obligations
are mainly settled out of pension fund assets. The
pension assets of the BMW Group comprise interest-
bearing securities, equities, real estate and other
investment classes. Assets held by pension funds and
trust arrangements are monitored continuously and
managed on a risk-and-return basis. Diversification
of investments also helps to mitigate risk. In order
to reduce fluctuations in pension funding shortfalls,
investments are structured to match the timing of
pension payments and the expected development of
pension obligations. Remeasurements on the liability
and fund asset sides are recognised net of deferred
taxes in other comprehensive income and hence
directly in equity (within revenue reserves).
With the advance of digitalisation, the BMW Group
is improving the customer experience and its existing
lines of business. At the same time, new digital busi-
ness segments are emerging, which are mainly focused
on information technology. The development and
provision of digital services for customers, increased
vehicle connectivity and autonomous driving solu-
tions are opening up new opportunities. Through
BMW ConnectedDrive and BMW CarData the range of
services and apps on offer to customers is constantly
being expanded and updated. The BMW Group
expects these opportunities to have no significant
earnings impact over the assessment period compared
to the assumptions made in the outlook.
In view of the political events of recent years, global
economic developments continue to be subject to a
high degree of uncertainty, in particular with respect
to potential barriers to global trade. For example, a
reorientation of the USA's economic policy, the
planned exit of the UK from the EU and possible elec-
tion wins for anti-globalisation parties in EU countries
could result in higher tariff and non-tariff barriers to
trade in the coming years.
Risks and opportunities relating to purchasing
Purchasing risks relate primarily to supply risks caused
by the failure of a supplier as well as risks associated
with the quality of bought-in parts. Production prob-
lems incurred by suppliers could lead to increased
expenditure for the BMW Group through to interrup-
tions in production and a corresponding reduction
in sales. The increasing complexity of the supplier
network, especially at the level of lower tier suppliers,
whose operations can only be indirectly influenced
by the BMW Group, is a further potential cause of
downtimes at supplier locations. The increased threat
of IT attacks on the supplier network in particular
has resulted in a more critical assessment of the
risk situation. If purchasing risks materialised, they
could have a high earnings impact over the two-year
period. The risk amount attached to purchasing risks
is classified as high.
Macroeconomic risks and opportunities
Stable
Insignificant
Stable
Risks and opportunities relating to operations
Production and technology
Purchasing
Sales and marketing
Information, data protection and IT
Medium
Decreased
Insignificant
Stable
High
Increased
Insignificant
Stable
Low
Stable
Insignificant
Stable
High
High
Stable
Market developments
Insignificant
Risks and opportunities
The following table provides an overview of all risks
and opportunities and indicates their significance for
the BMW Group.
Overall, no risks which could threaten the continued
existence of the BMW Group were identified either
at the balance sheet date or at the date on which the
Group Financial Statements were drawn up.
7
Economic conditions influence business performance
and hence the results of operations, financial position
and net assets of the BMW Group. Unforeseen dis-
ruptions in global economic relations can have highly
unpredictable effects. Macroeconomic risks can lead
to reduced purchasing power in the countries and
regions affected and lead to reduced demand for the
products and services offered by the BMW Group.
Macroeconomic risks could - due to sales volume
fluctuations have a high earnings impact over the
two-year assessment period. Overall, the risk amounts
attached to macroeconomic risks are classified as high.
Macroeconomic risks are evaluated on the basis of
historical data and by means of a cash-flow-at-risk
approach, supplemented by scenario analyses.
RISKS AND OPPORTUNITIES
Risks
classification
Change compared
to prior year
Opportunities
classification
Change compared
to prior year
Macroeconomic risks and opportunities
High
Stable
Insignificant
Stable
Strategic and sector risks and opportunities
Changes in legislation and regulatory requirements
High
Increased
Stable
Insignificant
Risks and opportunities which could, from today's
perspective, have a significant impact on the results
of operations, financial position and net assets of the
BMW Group are described below.
Financial risks and opportunities
Residual value
Medium
Stable
Significant
Stable
Interest rate changes
Low
Stable
Significant
Stable
Operational risks
Low
Stable
Legal risks
Medium
Stable
99
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Stable
Stable
Significant
Combined
Management
Report
Medium
Stable
Medium
Significant
Stable
Raw materials
Low
Stable
Significant
Stable
Liquidity
Stable
Stable
Credit risk
Risks and opportunities relating to the provision of financial services
Low
Stable
Foreign currencies
Stable
Pension obligations
Medium
Significant
and Explanatory
Comments
As well as shares of common stock, the Company
has also issued non-voting shares of preferred stock.
Further information can be found in the section
"Composition of subscribed capital".
Restrictions on voting rights or the transfer
of shares
note 39
→ see
(c) uniform payment of any other dividends on
shares of common and preferred stock, provided
the shareholders do not resolve otherwise at
the Annual General Meeting
(b) payment of an additional dividend of €0.02 per
€1 par value on non-voting preferred shares
accruement
(a) subsequent payment of any arrears on dividends
on non-voting preferred shares in the order of
The rights and duties of shareholders derive from the
German Stock Corporation Act (AktG) in conjunction
with the Company's Articles of Incorporation, the
full text of which is available at www.bmwgroup.com. The
right of shareholders to have their shares evidenced
is excluded in accordance with the Articles of Incor-
poration. The voting power attached to each share
corresponds to its par value. Each €1 of par value
of share capital represented in a vote entitles the
holder to one vote (Article 18 no. 1 of the Articles of
Incorporation).
Composition of subscribed capital
EXPLANATORY COMMENTS $315 (1) HGB.
suant to § 289 a
(1) HGB and
*Disclosures pur-
FOR TAKEOVERS* AND
When the Company issues non-voting shares of
preferred stock to employees in conjunction with its
Employee Share Programme, these shares are gener-
ally subject to a company-imposed blocking period
of four years, calculated from the beginning of the
calendar year in which the shares are issued.
DISCLOSURES RELEVANT
The Company's shares of preferred stock are shares
within the meaning of § 139 ff. AktG, which carry a
cumulative preferential right in terms of the allocation
of profit and for which voting rights are excluded.
These shares confer voting rights only in exceptional
cases stipulated by law, in particular when the prefer-
ence amount has not been paid or has not been fully
paid in one year and the arrears are not paid in the
subsequent year alongside the full preference amount
due for that year. With the exception of voting rights,
holders of shares of preferred stock are entitled to
the same rights as holders of shares of common stock.
Article 24 of the Articles of Incorporation confers
preferential treatment to the non-voting shares of
preferred stock with regard to the appropriation of the
Company's unappropriated profit. Accordingly, the
unappropriated profit is required to be appropriated
in the following order:
The subscribed capital (share capital) of BMW AG
amounted to €657,600,600 at 31 December 2017
(2016: €657,109,600) and, in accordance with Article 4
no. 1 of the Articles of Incorporation, is subdivided
into 601,995,196 shares of common stock (91.54%)
(2016: 601,995,196; 91.61%) and 55,605,404 shares of
non-voting preferred stock (8.46 %) (2016: 55,114,404;
8.39%), each with a par value of €1. The Company's
shares are issued to bearer.
Susanne Klatten, Germany
Direct or indirect investments in capital exceeding
17.4
for Takeovers
17.42
0.2
voting rights
Indirect share of
Direct share of
voting rights
3 Controlled entities, of which 3% or more are attributed: Johanna Quandt GmbH & Co. KG für Automobilwerte.
4 Controlled entities, of which 3% or more are attributed: Susanne Klatten Beteiligungs GmbH.
2 Controlled entities, of which 3% or more are attributed: AQTON SE.
1 Based on voluntary notifications provided by the listed shareholders as at 31 December 2017.
Susanne Klatten Beteiligungs GmbH, Bad Homburg v.d. Höhe, Germany
Johanna Quandt GmbH & Co. KG für Automobilwerte, Bad Homburg v.d. Höhe, Germany
Johanna Quandt GmbH, Bad Homburg v.d. Höhe, Germany
AQTON SE, Bad Homburg v.d. Höhe, Germany
Stefan Quandt, Germany
in %
the following direct or indirect holdings exceeding
10% of the voting rights at the end of the reporting
period were held at the stated reporting date:¹
Based on the information available to the Company, 1
10% of voting rights
Contractual holding period arrangements also apply to
shares of common stock acquired by Board of Manage-
ment members and certain senior department heads
in conjunction with the share-based remuneration
programmes (Compensation Report of the Corporate
Governance section; → note 39 of the Group Financial
Statements).
→ Disclosures Relevant
The overall risk assessment is based on a consolidated
view of all significant individual risks and opportuni-
ties. Exposure to risks in the individual risk categories
remains essentially stable. The combination of more
stringent emissions requirements worldwide and the
possibility that related laws and regulations may be
brought forward results in a higher risk level in that
area. In addition, the increased threat of IT attacks
in the supplier network has led to an increased esti-
mation of the risk in purchasing. By contrast, the risk
level for production has been reduced by the imple-
mentation of measures. Overall, there has been no
significant change in the overall risk or opportunities
level compared to the previous year.
112
Financial Reporting
System Relevant for
Accounting and
→ Internal Control
Opportunities
→ Risks and
Risks and
Opportunities
Report on Outlook,
Combined
Management
Report
110
109
The BMW Group recognises appropriate levels of
provision for lawsuits. In addition, a part of these
risks is insured where this makes business sense.
Some risks, however, either cannot be estimated or
only to a limited extent, or may lead to costs only in
an unlikely event. Such items are reported as contin-
gent liabilities. It cannot be ruled out, however, that
damages could arise that are either not covered or not
fully covered by insurance policies or provisions or
reported as contingent liabilities. In accordance with
IAS 37 (Provisions, Contingent Liabilities and Contin-
gent Assets), the required information is not provided
if the BMW Group concludes that disclosure of the
information could seriously prejudice the outcome of
the relevant legal proceedings. Further information
on contingent liabilities is provided in → note 36 of
the Group Financial Statements.
→ see
note 36
note 36
Possible risks for the BMW Group related to com-
petition and antitrust law cannot be predicted or
quantified at present. Further information on cur-
rent developments with regard to antitrust risks and
→ see contingent liabilities can be found in → note 36 of the
Group Financial Statements.
Like all entities with international operations, the
BMW Group is confronted with legal disputes, claims
relating to warranties and product liability or rights
infringements and proceedings initiated by govern-
ment agencies. Any of these could, amongst others,
have an adverse impact on the Group's reputation.
Such proceedings are essentially typical for the sector
or a consequence of realigning product or purchasing
strategies to changed market conditions. Particularly
in the US market, class action lawsuits and product
liability risks can have substantial financial conse-
quences and cause damage to the Group's public
image. More rigorous application or interpretation
of existing regulations could result in a greater number
of recalls. The high quality of the Group's products,
which is ensured by regular quality audits and ongoing
improvement measures, helps reduce this risk.
The increasing globalisation of the BMW Group's
operations and of business interdependencies in
general, combined with the variety and complexity
of legal provisions, including increasingly import and
export regulations, give rise to an increased risk of
non-compliance with applicable law. A Compliance
Management System is in place at BMW Group to
ensure that the representative bodies, managers and
staff consistently act in a lawful manner. Further
information on the BMW Group's Compliance
Management System can be found in the section
Corporate Governance.
Compliance with the law is a basic prerequisite for the
success of the BMW Group. Applicable law provides
the binding framework for the BMW Group's world-
wide activities. As a result of its global operations,
the BMW Group is exposed to various legal risks. If
legal risks were to materialise, they could have a high
earnings impact over the two-year assessment period.
The risk amount attached to significant identified legal
risks is classified as medium. However, it cannot be
ruled out that new legal risks, as yet unforeseen, could
materialise that could have a high earnings impact for
the BMW Group.
Legal risks
16.43
Process
Combined
Management
Report
Overall assessment of the risk and
In addition to the risk categories described above,
unforeseen events could have a negative impact on
business operations and hence on the BMW Group's
results of operations, financial position and net assets,
and its reputation. A comprehensive risk management
system is in place to ensure that the BMW Group
successfully manages these risks.
111
Responsibilities for ensuring the effectiveness of the
internal control system in relation to individual entity
and Group accounting and financial reporting pro-
cesses are clearly defined and allocated to the relevant
line and process managers. These report annually on
their assessment of the effectiveness of the internal
control system for accounting and financial reporting.
The assessment also includes the results of inter-
nal and external audits as well as of ongoing data
analysis. In this context, the Group's units confirm
the effectiveness of the internal control system for
accounting and financial reporting. The results of
the assessment are gathered and documented with
the aid of tools. Weaknesses in the control system are
eliminated, taking into account their potential impact
on accounting processes. The Board of Management
and Audit Committee are briefed annually on the
assessment of the effectiveness of the internal control
system for accounting and financial reporting. The
Board of Management and, where applicable, the
Supervisory Board, are informed immediately in the
event of any significant changes in the effectiveness
of the internal control system.
As part of the ongoing development of accounting and
financial reporting processes at individual entity or
Group level, such controls are adapted to take account
of new requirements and opportunities arising with
advances in information technology. In addition, the
BMW Group uses data analysis tools to ensure that
any control weaknesses are quickly identified and
eliminated.
Controls are integrated into the accounting and finan-
cial reporting processes, at both individual entity and
Group level. These are both preventive and detective
in nature and take account, where appropriate, of
the principle of the separation of duties. Important
accounting-related IT systems incorporate controls
which, amongst others, prevent business transactions
from being recorded incorrectly and ensure that
business transactions are recorded completely and
measured properly in accordance with applicable
requirements. Controls are also in place to test the
appropriateness of consolidation procedures. The
recording of items requiring disclosure is also per-
formed largely through IT systems.
§ 289 (5) HGB
and § 315 (2)
no. 5 HGB.
pursuant to
*Disclosures
Guidelines for recognising, measuring and allocating
items to accounts are available to all employees via
the intranet. New accounting standards are assessed
for their impact on the BMW Group's accounting
and financial reporting. Accounting guidelines and
processes are reviewed continuously and revised at
least once a year or more frequently, if necessary.
The internal control system is subject to continuous
improvement, with system effectiveness assessed
regularly on the basis of centralised and decentralised
process analyses, analyses of data within the various
financial systems and audit procedures. The principal
features of the internal control system, as far as they
relate to individual entity and Group accounting and
financial reporting processes, are described below.
process-independent monitoring measures.
organisational measures incorporating the
principle of separation of duties, and
controls integrated into processes and
IT systems,
Group-wide mandatory accounting guidelines,
-
The internal control system relevant for accounting
and financial reporting processes has the task of
ensuring that accounting and financial reporting by
the BMW Group is both correct and reliable. Inter-
nationally recognised standards for internal control
systems have been taken into account in the design of
the components of the BMW Group's internal control
system. The system comprises:
FINANCIAL REPORTING
PROCESSES
SYSTEM* RELEVANT FOR
ACCOUNTING AND
INTERNAL CONTROL
From today's perspective, management does not see
any threat to the BMW Group's status as a going
concern. As in the previous year, identified risks are
considered to be manageable, but could - like the
opportunities - have an impact on the BMW Group's
outlook if they were to materialise. The BMW Group's
financial position is stable and cash needs are currently
covered by available liquidity and credit lines.
opportunities situation
16.4
→ Disclosures Relevant
12.64
142
132
Attributable to minority interest
86
47
22
10
Attributable to shareholders of BMW AG
29
8,620
6,863
5,254
5,431
142
132
Basic earnings per share of common stock in €
13
13.14
13
Diluted earnings per share of preferred stock in €
10.45
13.12
13
5,441
Diluted earnings per share of common stock in €
10.47
13.14
13
Basic earnings per share of preferred stock in €
10.45
13.12
Dilutive effects
5,276
6,910
8,706
279
775
193
295
131
248
828
11
Profit/loss before tax
Financial result
Other financial result
-2
-673
-530
Income taxes
10.47
221
-2
Net profit/loss
-53
-63
-2,475
-3,415
-2,755
-2
-1,949
185
205
7,916
8,691
9,665
10,655
12
-489
Statement of Comprehensive Income for Group
in € million
-189
Total comprehensive income
9,336
6,721
Total comprehensive income attributable to minority interests
86
47
Total comprehensive income attributable to shareholders of BMW AG
29
9,250
6,674
Note
information)
Group
(unaudited supplementary
Automotive
in € million
Balance Sheet
Cash Flow
Statement
Notes
118
Group
Financial
Statements
→ BMW Group
630
Income Statement
prehensive Income
BMW GROUP
INCOME STATEMENT
STATEMENT OF COMPREHENSIVE INCOME
Income Statements for Group and Segments
→ 63
→ Statement of Com-
17
Other comprehensive income for the period after tax
1,140
475
Items not expected to be reclassified to the income statement in the future
-218
Deferred taxes
-1,858
693
529
-1,329
30
6,910
8,706
Net profit
2016
2017
Note
Remeasurement of the net defined benefit liability for pension plans
→ 64
Available-for-sale securities
40
155
Items expected to be reclassified to the income statement in the future
-230
-1,171
Currency translation foreign operations
-721
39
-597
43
-30
Other comprehensive income from equity accounted investments
2,008
1,914
Financial instruments used for hedging purposes
Deferred taxes
0.2
-412
Interest and similar expenses
-
Several supply and development contracts
between BMW AG and various industrial custom-
ers, all relating to the sale of components for
drivetrain systems, grant an extraordinary right
of termination to the relevant industrial cus-
tomer in specified cases of a change in control
at BMW AG (for example BMW AG merges with
a third party or is taken over by a third party; an
automobile manufacturer acquires more than
50% of the voting rights or share capital of
BMW AG).
BMW AG is party to the shareholder agreement
relating to THERE Holding B.V., which is the
majority shareholder of the HERE Group. In
accordance with the shareholder agreement,
each contractual party is required to offer its
directly or indirectly held shares in THERE
Holding B. V. for sale to the other shareholders
in the event of a change in control. A change
in control of BMW AG arises if a person takes over
or loses control of BMW AG, with control defined
as (i) holding or having control over more than
50% of the voting rights, (ii) the possibility to
control more than 50% of voting rights exercisable
at Annual General Meetings on all or nearly all
matters, or (iii) the right to determine the majority
of members of the Board of Management or the
Supervisory Board. Furthermore, a change in
control occurs if competitors of the HERE Group
or certain potential competitors of the HERE
Group from the technology sector acquire more
than 25% of BMW AG. If none of the other share-
holders acquire these shares, the other sharehold-
ers are entitled to resolve that THERE Holding B.V.
be dissolved.
The development collaboration agreement
between BMW AG, Intel Corporation and
Mobileye Vision Technologies Ltd., relating to
the development of technologies used in highly
and fully automated vehicles, may be terminated
by any of the contractual parties if a competitor
of one of the parties acquires and subsequently
holds at least 30% of the voting shares of one
of the contractual parties.
Compensation agreements with members of the
Board of Management or with employees in the
event of a takeover bid
The BMW Group has not concluded any compensation
agreements with members of the Board of Manage-
ment or with employees for situations involving a
takeover offer.
GROUP FINANCIAL
STATEMENTS
→Page 118 Income Statement
→ Page 118 Statement of Comprehensive Income
→Page 120 Balance Sheet
→Page 122 Cash Flow Statement
→Page 124 Statement of Changes in Equity
Notes to the Group Financial Statements
Accounting Principles and Policies
Notes to the Income Statement
→ Page 126
→ Page 126
→Page 139
2017
Income
Income Statement
Statement of
Comprehensive
Group Financial
Statements
3
3
-
→ Page 188 List of Investments at 31 December 2017
Segment Information
→Page 183
Other Disclosures
→Page 167
→ Page 146
→ Page 145
Notes to the Statement of Comprehensive Income
Notes to the Balance Sheet
-
and Explanatory
Comments
→ Disclosures Relevant
for Takeovers
Authorisations of the Board of Management in
and Explanatory
Comments
for Takeovers
Combined
Management
Report
114
113
particular with respect to the issuing or buying
back of shares
Amendments to the Articles of Incorporation must
comply with $179 ff. AktG. Amendments must be
decided upon by the shareholders at the Annual
General Meeting (§ 119 (1) no. 5, § 179 (1) AktG). The
Supervisory Board is authorised to approve amend-
ments to the Articles of Incorporation which only affect
its wording (Article 14 no. 3 of the Articles of Incorpo-
ration). Resolutions are passed at the Annual General
Meeting by simple majority of shares exercised unless
otherwise explicitly required by binding provisions of
law or, when a majority of share capital is required,
by simple majority of shares represented in the vote
(Article 20 no. 1 of the Articles of Incorporation).
Like all other shareholders, employees exercise their
control rights pertaining to shares they have acquired
in conjunction with the Employee Share Programme
and/or the share-based remuneration programme
directly on the basis of relevant legal provisions and
the Company's Articles of Incorporation.
Control of voting rights when employees
participate in capital and do not exercise their
control rights directly
There are no shares with special rights which confer
control rights.
Shares with special rights which confer control
rights
The voting percentages disclosed above may have
changed subsequent to the stated date if these changes
were not required to be reported to the Company.
As the Company's shares are issued to bearer, the
Company is generally aware of changes in sharehold-
ings only if such changes are subject to mandatory
notification rules.
12.6
Statutory regulations and Articles of Incorporation
provisions with regard to the appointment and
removal of members of the Board of Management
and changes to the Articles of Incorporation
The appointment or removal of members of the Board
of Management is based on the rules contained in
§ 84 ff. AktG in conjunction with § 31 of the German
Co-Determination Act (MitbestG).
Motorcycles
(unaudited supplementary
The Board of Management is authorised to buy back
shares and sell repurchased shares in situations spec-
ified in § 71 AktG, for example to avert serious and
imminent damage to the Company and/or to offer
shares to persons employed or previously employed
by BMW AG or one of its affiliated companies.
In accordance with Article 4 no. 5 of the Articles of
Incorporation, the Board of Management is author-
ised, with the approval of the Supervisory Board, to
increase in return for cash contributions BMW AG's
share capital during the period until 14 May 2019 by
up to €3,654,383 for the purposes of an Employee
Share Programme by issuing new non-voting shares of
preferred stock, which carry the same rights as exist-
ing non-voting preferred stock (Authorised Capital
2014). Subscription rights of existing shareholders
are excluded. No conditional capital is in place at the
reporting date.
Combined
Management
Report
116
115
The framework cooperation agreement entered
into amongst others by BMW AG and Sixt SE,
relating to the foundation and operation of the
car-sharing joint venture DriveNow, may be ter-
minated by Sixt SE if a car hire company acquires
more than 50% of the shares of common stock
of BMW AG. In the event of such a termination,
Sixt SE may, at its own discretion, stipulate the
sale of BMW's interest in the joint venture to
Sixt SE or the purchase of Sixt's interest in the
joint venture by BMW AG or one its subsidiaries.
On 29 January 2018, the BMW Group concluded
with Sixt SE a contract for the purchase of all
shares in DriveNow, which, subject to approval by
the antitrust authority, is expected to take effect
in March 2018. On completion, the framework
cooperation agreement ceases to be effective.
BMW AG was until 11 January 2018 party to an
agreement with SGL Carbon SE, Wiesbaden,
relating to the joint operations SGL Automotive
Carbon Fibers LLC, Delaware, USA and SGL
Automotive Carbon Fibers GmbH & Co. KG,
Munich. The agreement included call and put
rights in case - either directly or indirectly – 50%
or more of the voting rights relating to the rele-
vant other shareholder of the joint operations were
acquired by a third party, or if 25% of such voting
rights were acquired by a third party if that third
party was a competitor of the party unaffected
by the acquisition of the voting rights. In the event
of such acquisitions of voting rights by a third
party, the non-affected shareholder had the right
to purchase the shares of the joint operations from
the affected shareholder or to require the affected
party to acquire the other shareholder's shares.
This agreement was revoked on 11 January 2018 in
conjunction with the sale, on the same date, of
BMW Group's investment in SGL Automotive
Carbon Fibers GmbH & Co. KG, Munich to
SGL Carbon SE, Wiesbaden.
-
In accordance with the resolution passed at the
Annual General Meeting on 15 May 2014, the Board of
Management is also authorised up until 14 May 2019
to acquire shares of non-voting preferred stock of the
Company via the stock exchange, up to a maximum
of 1% of the share capital existing at the date of the
resolution. The consideration paid by the Company
per share of non-voting preferred stock (excluding
transaction costs) may not be more than 10% above
or below the market price of the stock determined
by the opening auction on the date of trading in the
Xetra trading system (or a successor system having a
comparable function). Moreover, the Board of Man-
agement is authorised to use the acquired own shares
of non-voting preferred stock for all legally admissible
purposes, specifically including the right to offer for
sale and transfer shares to persons employed by the
Company or one of its affiliated companies up to a
proportionate amount of €5 million of share capital.
The subscription rights of existing shareholders to the
new shares of preferred stock used for the purpose
stated above are excluded. The authorisations may
also be exercised in parts over several transactions.
Financing agreements in place with the European
Investment Bank (EIB) entitle the EIB to request
early repayment of the loan in the event of an
imminent or actual change in control of
BMW AG, if the EIB has reason to assume - after
the change in control or 30 days after it has
made a request to discuss the situation - that the
change in control could have a significantly
adverse impact, or if the borrower refuses to hold
any such discussions. A change in control of
BMW AG arises if one or more individuals take
over or lose control of BMW AG, with control
being defined in the above-mentioned financing
agreements as (i) holding or having control over
more than 50% of the voting rights, (ii) the right
to appoint the majority of the members of the
Board of Management or Supervisory Board, (iii)
the right to receive more than 50% of dividends
payable or (iv) any other comparable controlling
influence over BMW AG.
BMW AG acts as guarantor for all obligations aris-
ing from the joint venture agreement relating to
BMW Brilliance Automotive Ltd. in China. The
agreement grants an extraordinary right of ter-
mination to either joint venture partner in the event
that - either directly or indirectly-
- 
more than 25%
of the shares of the other party are acquired by a
third party, or if the other party is merged with
another legal entity. The termination of the joint
venture agreement may result in the sale of the
shares to the other joint venture partner or in the
liquidation of the joint venture entity.
A cooperation agreement concluded with Peugeot
SA relating to the joint development and pro-
duction of a new family of small (1- to 1.6-litre)
petrol engines entitles each of the cooperation
partners to give extraordinary notification of
termination in the event of a competitor acquir-
ing control over the other contractual party and
if any concerns of the other contractual party
concerning the impact of the change of control
on the cooperation arrangements are not resolved
during the subsequent discussion
process.
An agreement concluded with an international
consortium of banks relating to a syndicated
credit line, which was not being utilised at the
balance sheet date, entitles the lending banks to
give extraordinary notice to terminate the credit
line, such that all outstanding amounts, includ-
ing interest, would fall due immediately if one or
more parties jointly acquire direct or indirect
control of BMW AG. The term control is defined
as the acquisition of more than 50% of the share
capital of BMW AG, or the right to receive more
than 50% of the dividend or the right to direct
the affairs of the Company, or appoint the major-
ity of the members of the Supervisory Board.
-
BMW AG is party to the following major agreements,
which contain provisions that would apply in the event
of a change in control or the acquisition of control as a
result of a takeover bid:
Significant agreements of the Company taking
effect in the event of change in control following a
takeover bid
Framework agreements are in place with financial
institutions and banks (ISDA Master Agreements)
relating to trading activities with derivative finan-
cial instruments. These agreements include an
extraordinary right of termination which triggers
the immediate settlement of all current trans-
actions in the event that the creditworthiness of
the party involved is significantly weaker follow-
ing a direct or indirect acquisition of beneficially
owned equity capital that confers the power to
elect a majority of the Supervisory Board of a con-
tractual party or any other ownership interest
that enables the acquirer to exercise control over
a contractual party, or which constitutes a
merger or a transfer of net assets.
10
information)
2017
616
4
27
Other operating expenses
9
-1,214
-847
-1,200
-768
-15
-14
Profit/loss before financial result
9,880
9,386
7,863
7,695
207
260
325
196
201
10
Interest and similar income
675
441
738
441
738
22
Result from equity accounted investments
187
2017
670
720
9
-72,266
-75,442
-78,744
7
Cost of sales
2,069
-70,973
2,283
88,581
94,163
98,678
6
Revenues
2016
86,424
2016
-1,809
19,934
Other operating income
-256
-256
-7,604
-7,927
-9,158
Gross profit
-9,560
Selling and administrative expenses
-1,639
430
474
15,451
16,315
18,721
8
2016
All consolidated subsidiaries have the same year-end as
BMW AG with the exception of BMW India Private Ltd.
and BMW India Financial Services Private Ltd., whose
year-ends are 31 March in accordance with local legal
requirements.
-187
(unaudited supplementary
Financial Services
2017
information)
(unaudited supplementary
Automotive
7,880
9,039
6,122
7,880
1,758
1,159
38
64
17
-223
4,393
information)
1,572
2016
2016
988
29
35
4,876
4,699
12
-5
283
89
-117
-114
2,787
2,699
1,777
4,047
5,441
5,276
2017
970
-1,632
4,135
Effect of exchange rate on cash and cash equivalents
Cash inflow/outflow from financing activities
Change in commercial paper
Change in current other financial liabilities
Repayment of non-current other financial liabilities
Proceeds from new non-current other financial liabilities
Repayment of bonds
Proceeds from the issue of bonds
Interest paid¹
Intragroup financing and equity transactions
Payment of dividend for the previous year
Payments into equity
Cash inflow/outflow from investing activities
-5,863
-6,163
3,740
3,866
Effect of changes in composition of Group on cash and cash equivalents
953
Change in cash and cash equivalents
Cash and cash equivalents as at 31 December
-4,084
-8,443
-7,427
8,952
11,894
-10,374
-9,374
13,974
12,061
-118
-165
20
-2,121
-2,324
38
payables amounting to €22 million (2016: € - million) as well as dividends received from investment assets amounting to €258 million (2016: €134 million).
2 Includes €969 million from the sale of receivables from sales financing (multibrand portfolio) amounting to €939 million and other receivables and
1 Interest relating to financial services business is classified as revenues/cost of sales.
Cash and cash equivalents as at 1 January
225
139
-1,855
-3,196
-3,810
970
140
1,037
-
-122
-482
2
-10
-15
-5,699
9
28
-6,972
-9,844
-6,384
11,464
-231
10,848
-396
3,436
552
-489
-118
-165
6,191
4,315
-1,833
567
-2,121
-2,324
20
38
-102
937
-5,432
-6,544
304
211
3,655
142
125
164
78
-441
-738
-1
-2
-3
-41
11
46
11
25
275
-1,872
906
-8,368
-7,440
-3,532
-172
161
50
-1,179
-315
-1,997
-1,896
-283
705
-246
-1,362
60
Proceeds from the sale of marketable securities and investment funds
162
1,214
-12
19
-43
43
2
-20
-758
629
-3,592
-4,041
Investments in marketable securities and investment funds
27,368
24,853
49
17
255
233
3
9
599
549
Minority interest
Equity
-583
-31,629
-36,960
-4,748
-3,545
-198
-30,903
-34,646
36,328
601
38,506
36,037
54,316
849
51,384
45,220
71,704
137,728
137,828
Current provisions and liabilities
Trade payables
Other liabilities
Current tax
Financial liabilities
Other provisions
Non-current provisions and liabilities
Other liabilities
Deferred tax
Financial liabilities
Other provisions
Pension provisions
13,362 -69,702 -67,136
27,545 -70,009 -67,766
-630
-307
14,107
24
15,607
11
13,167
28,811
72,363
702
43,439
198
29,413
28,835
Subscribed capital
EQUITY AND LIABILITIES
Total assets
Cash and cash equivalents
Current assets
Current tax
Other assets
Financial assets
Receivables from sales financing
Trade receivables
Inventories
Non-current assets
Other assets
Deferred tax
Financial assets
Receivables from sales financing
Other investments
Investments accounted for using the equity method
Leased products
Capital reserves
Revenue reserves
Accumulated other equity
Equity attributable to shareholders of BMW AG
14,740
35,095
17,718
17,819
13
48
38
6,755
4,302
353
82,950
356
706
77
72
-17,054
-17,735
16,744
18,102
11,049
1,516
870
82,795 -122,390 -121,780
121
1,285
738
1,414
-93
45
-749
-1,293
-104
166
Income taxes paid
Change in other operating assets and liabilities
Change in trade payables
Change in trade receivables
Change in inventories
Changes in working capital
-441
-738
1,229
Result from equity accounted investments
-2,301
Interest received¹
140
1,2362
Proceeds from the disposal of investment assets and other business units
-338
-142
Expenditure for investment assets
10
30
Proceeds from the disposal of intangible assets and property, plant and equipment
-5,823
-7,112
Investments in intangible assets and property, plant and equipment
3,173
5,909
Cash inflow/outflow from operating activities
142
125
-2,417
-4
-43
Gain/loss on disposal of tangible and intangible assets and marketable securities
2,558
Current tax
Reconciliation between net profit and cash inflow/outflow from operating activities
6,910
8,706
Net profit
2016
2017
Group
in € million
CASH FLOW STATEMENT
BMW GROUP
Cash Flow Statement
→ BMW Group
Statements
Group
Financial
122
2,670
Other interest and similar income/expenses¹
65
131
-15
-249
Other non-cash income and expense items
85
-609
Change in deferred taxes
-8,368
-7,440
Total equity and liabilities
Change in receivables from sales financing
-1,134
Change in leased products
883
696
Change in provisions
4,998
4,822
Depreciation and amortisation of tangible, intangible and investment assets
-2,526
-1,160
67
11,385
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
Dividends paid
Other comprehensive income for the period after tax
Comprehensive income 31 December 2016
Net profit
1 January 2016
47,363
255
47,108
78
52
-171
20
-40
-26
-14
20
-2,102
-2,102
31 December 2016
6,721
125
Group
Financial
On 15 February 2018, the Board of Management
granted approval for publication of the Group Finan-
cial Statements.
note 43
In order to provide a better insight into the results
of operations, financial position and net assets of
the BMW Group, and going beyond the require-
ments of IFRS 8 (Operating Segments), the Group
Financial Statements also include income statements
and balance sheets for the Automotive, Motorcycles,
Financial Services and Other Entities segments. The
Group Cash Flow Statement is supplemented by state-
ments of cash flows for the Automotive and Financial
Services segments. This supplementary information is
unaudited. Inter-segment transactions relate primarily
to internal sales of products, the provision of funds
for Group companies and the related interest. These
items are eliminated in the relevant "Eliminations"
columns. A description of the nature of the business
and major operating activities of the BMW Group's
→ see segments is provided in → note 43 (“Explanatory notes
to segment information").
The BMW Group and segment income statements are
presented using the cost of sales method.
The Group currency is the euro. All amounts are dis-
closed in millions of euros (€ million) unless stated
otherwise.
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (BMW Group
Financial Statements or Group Financial State-
ments) at 31 December 2017 have been drawn up in
accordance with International Financial Reporting
Standards (IFRS), as endorsed by the European Union,
and the supplementary requirements of § 315 a (1)
of the German Commercial Code (HGB). The Group
Financial Statements and Combined Management
Report will be submitted to the operator of the elec-
tronic version of the German Federal Gazette and
can be obtained via the Company Register website.
Bayerische Motoren Werke Aktiengesellschaft, which
has its seat at Petuelring 130, Munich, is registered
in the Commercial Register of the District Court of
Munich under the number HRB 42243.
Basis of preparation
01
AND POLICIES
ACCOUNTING PRINCIPLES
NOTES TO
THE GROUP
FINANCIAL
STATEMENTS
Policies
Principles and
→ Accounting
Financial Statements
Notes to the Group
Statements
126
47
6,674
1,415
Derivative
financial
instruments
Securities
translation
differences
Currency
Accumulated other equity
31 December 2017
54,548
436
54,112
1,515
93
-1,494
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
111
95
16
37
Equity
attributable to
shareholders
Minority
of BMW AG
interest
28
-303
-189
-189
1,415
28
-303
6,910
02
47
6,863
42,764
234
42,530
-1,337
24
132
Total
17
37
Group reporting entity
The BMW Group Financial Statements include
BMW AG and all material subsidiaries over which
BMW AG - either directly or indirectly - exercises
control. This also includes 57 structured entities,
consisting of asset-backed securities entities and
special-purpose funds.
1.11
1.13
1.06
1.20
2016
2017
31.12.2016
31.12.2017
Average rate
Closing rate
Korean Won
Japanese Yen
Chinese Renminbi
British Pound
US Dollar
1 Euro =
The exchange rates of currencies which have a material
impact on the Group Financial Statements were as
follows:
0.89
are measured on initial recognition using the exchange
rate prevailing at the date of first-time recognition.
At the end of the reporting period, foreign currency
receivables and payables are measured using the clos-
ing exchange rate. The resulting unrealised gains and
losses, as well as realised gains and losses arising on
settlement, are recognised in the income statement.
0.85
0.82
Revenues relating to operating lease arrangements
are recognised on a straight-line basis over the lease
term. Interest income arising on finance leases and
on retail customer/dealership financing is recognised
using the effective interest method.
Profits arising on the sale of vehicles for which a
Group company retains a repurchase commitment
(buyback agreements) are not recognised immediately.
The difference between the sales and buyback price is
accounted for as deferred income and recognised in
instalments as revenue over the contract term.
If the sale of products includes a determinable amount
for services ("multiple-component contracts"), the
related revenues are deferred and recognised as
income over the service period. Amounts are normally
recognised as income by reference to the pattern of
related expenditure.
Revenues from the sale of products and services are
recognised when the risks and rewards of ownership
are transferred to the dealership or customer, provided
that the amount of revenue can be measured reliably,
it is probable that the economic benefits associated
with the transaction will flow to the entity and costs
incurred or to be incurred in respect of the sale can
be measured reliably. Revenues are stated net of set-
tlement discount, bonuses and rebates.
Accounting policies; assumptions, judgements
and estimations
04
1,283.86
1,276.47
1,274.34
120.25
126.68
123.34
134.93
1,281.41
7.35
7.63
7.34
7.80
0.88
In the single entity accounts of BMW AG and its sub-
sidiaries, foreign currency receivables and payables &
Foreign currency translation and measurement
The financial statements of consolidated companies
which are presented in a foreign currency are trans-
lated using the modified closing rate method. Under
this method, assets and liabilities are translated at the
closing exchange rate, whilst income and expenses are
translated at the average exchange rate. Differences
arising on foreign currency translation are presented
in "Accumulated other equity".
03
21
31 December 2016
Included at
Total
Foreign
Germany
The following changes took place in the Group report-
ing entity in the financial year 2017:
Associated companies and joint ventures are account-
ed for using the equity method, with measurement on
initial recognition based on acquisition cost.
In the case of a joint venture, the parties which have
joint control only have rights to the net assets of the
arrangement.
The BMW Group is also party to a cooperation with
Toyota Motor Corporation, Toyota City, for the devel-
opment of a sports car. This cooperation is accounted
for as a joint operation.
gradual acquisition of the BMW Group's 49 percent
shareholding. Accordingly, between the beginning
of 2018 and the end of 2020 at the latest, SGL Car-
bon SE will become the sole owner of the hitherto
joint operations. As a consequence of the transaction,
the joint operations will cease to be proportionately
consolidated in the BMW Group Financial Statements
with effect from the financial year 2018.
In the case of a joint operation, the parties that have
joint control of the arrangement have rights to the
assets, and obligations for the liabilities, relating
to the arrangement. Assets, liabilities, revenues
and expenses of a joint operation are recognised
proportionately in the Group Financial Statements
on the basis of the BMW Group entity's rights and
obligations (proportionate consolidation). Together
with SGL Carbon SE, companies of the BMW Group
are party to joint operations for the manufacture of
carbon fibres and carbon fibre fabrics used in vehicle
production. In November 2017, an agreement was
signed with SGL Carbon SE concerning that entity's
Joint operations and joint ventures are forms of joint
arrangements. Such an arrangement exists when a
BMW Group entity jointly carries out activities with
a third party on the basis of a contractual agreement.
An entity is classified as an associated company if
BMW AG - either directly or indirectly - has the abil-
ity to exercise significant influence over the entity's
operating and financial policies. As a general rule,
the Group is assumed to have significant influence
if it holds 20% or more of the entity's voting power.
An entity is deemed to be controlled if BMW AG -
either directly or indirectly - has power over it, is
exposed or has rights to variable returns from it and
has the ability to influence those returns.
assessment.
When assessing whether an investment gives rise to
a controlled entity, an associated company, a joint
operation or a joint venture, the BMW Group con-
siders contractual arrangements and other circum-
stances, as well as the structure and legal form of the
entity. Discretionary decisions may also be required.
If indications exist of a change in the judgement of
(joint) control, the BMW Group undertakes a new
178
199
Included for the
first time in 2017
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
Statements
Group
Financial
128
127
208
187
21
and consolidation principles
31 December 2017
12
11
1
in 2017
No longer included
21
20
1
Included at
Property, plant and equipment
1
Dividends paid
Proceeds from the issue of bonds
Repayment of bonds
Interest paid¹
Intragroup financing and equity transactions
Payment of dividend for the previous year
Payments into equity
Proceeds from the disposal of investment assets and other business units
Investments in marketable securities and investment funds
Proceeds from the sale of marketable securities and investment funds
Cash inflow/outflow from investing activities
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investment assets
Investments in intangible assets and property, plant and equipment
Cash inflow/outflow from operating activities
Interest received¹
Income taxes paid
Change in other operating assets and liabilities
Change in trade payables
Change in trade receivables
Change in inventories
Changes in working capital
Result from equity accounted investments
Proceeds from new non-current other financial liabilities
Repayment of non-current other financial liabilities
Change in current other financial liabilities
Change in commercial paper
Gain/loss on disposal of tangible and intangible assets and marketable securities
Cash inflow/outflow from financing activities
Effect of changes in composition of Group on cash and cash equivalents
Subscribed share capital increase out of Authorised Capital
Dividends paid
Other comprehensive income for the period after tax
Comprehensive income 31 December 2017
Net profit
1 January 2017
in € million
STATEMENT OF CHANGES IN EQUITY
BMW GROUP
Changes in Equity
→ BMW Group
Statement of
Statements
Group
Financial
124
123
The reconciliation of liabilities from financing activities is presented in note 33.
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
Change in cash and cash equivalents
Effect of exchange rate on cash and cash equivalents
Other non-cash income and expense items
Change in receivables from sales financing
Change in deferred taxes
Change in provisions
Change in leased products
10
-82
11,601
4,334
-5,225
-1,859
195
-129
4,425
-4,181
-720
73
-7,215
-7,119
-520
-48
8,295
-141
21
25
64
Depreciation and amortisation of tangible, intangible and investment assets
Other interest and similar income/expenses¹
Current tax
Reconciliation between net profit and cash inflow/outflow from operating activities
Net profit
3,046
1,856
4,794
Premium arising on capital increase relating to preferred stock
Other changes
7,157
3,046
3,952
4,794
1,687
-1,190
842
2,363
11
1,359
1
31 December 2017
1 January 2016
78
52
-171
Total
interest
of BMWAG
instruments
Securities
Minority
shareholders
financial
attributable to
Derivative
Currency
translation
differences
Equity
Accumulated other equity
44,445
47,108
2,047
255
8,620
Other comprehensive income for the period after tax
Comprehensive income 31 December 2017
Net profit
1 January 2017
-2,300
-2,300
630
9,336
86
9,250
1,437
41
-1,323
630
1,437
41
-1,323
8,706
86
47,363
657
29
-14
8,620
44,445
2,047
657
29
Revenue
reserves
reserves
capital
Note
Capital
Subscribed
31 December 2016
Premium arising on capital increase relating to preferred stock
Other changes
Subscribed share capital increase out of Authorised Capital
Dividends paid
Other comprehensive income for the period after tax
Comprehensive income 31 December 2016
Net profit
475
9,095
-2,300
37
16
20
-2,102
5,534
-1,329
6,863
41,027
2,027
657
in € million
29
reserves
Capital
Subscribed
capital
Note
51,256
2,084
658
29
Revenue
reserves
Public sector grants are not recognised until there is
reasonable assurance that the conditions attaching to
them have been complied with and the grants will be
received. The resulting income is recognised in cost of
sales over the same periods as the costs occur which
they are intended to compensate.
Intangible assets
82,795 -122,390 -121,780
7,705
57
46
Property, plant and equipment
20
18,471
17,960
18,050
17,566
388
365
Leased products
21
36,257
37,789
Investments accounted for using the equity method
22
2,767
2,546
2,767
2,546
Other investments
690
560
4,985
8,981
8,157
9,464
19
119
120
Group
Financial
Statements
→ BMW Group
Balance Sheet
at 31 December
BMW GROUP
BALANCE SHEET
AT 31 DECEMBER 2017
in € million
ASSETS
Automotive
5,195
ASSETS
Group
Note
2017
2016
2017
Motorcycles
(unaudited supplementary
information)
2016
2017
2016
Intangible assets
information)
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
Receivables from sales financing
Deferred tax
27
12,707
11,841
12,103
11,344
580
492
Trade receivables
28
2,667
2,825
2,354
2,502
160
144
Receivables from sales financing
23
32,113
30,228
Financial assets
24
7,965
7,065
5,578
4,862
Inventories
439
477
42,652
Other assets
2222
23
48,321
48,032
24
2,369
2,705
1,302
1,287
12
1,927
Financial assets
2,327
4,310
26
1,635
1,595
3,671
4,043
32
28
Non-current assets
121,901
121,671
42,835
3,079
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
Attributable to shareholders of BMW AG
Attributable to minority interest
-443
-712
-1,370
-1,294
-27
-30
20
26
96
35
130
110
-185
-118
-113
-103
-96
-103
210
141
2,194
2,184
14
-17
-398
6
7
3,546
3,581
Financial Services
(unaudited supplementary
information)
2017
Other Entities
(unaudited supplementary
information)
2016
2017
Eliminations
(unaudited supplementary
information)
-663
2016
2016
27,567
25,681
7
6
-19,760
-20,017
-23,986
-22,135
-
19,317
19,305
2017
12
11
1,110
211
4,047
1,777
61
121
-820
-561
64
37
3,983
1,740
61
-292
121
-561
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
Other operating income
Other operating expenses
Profit/loss before financial result
Result from equity accounted investments
Interest and similar income
Interest and similar expenses
Other financial result
Financial result
Profit/loss before tax
Income taxes
Net profit/loss
-820
Current tax
-49
-389
1,250
-1,246
-1,325
-10
-24
-986
-1,006
1,116
1,216
11
-5
-58
-19
-57
-18
66
187
-130
-109
2,207
2,166
80
170
-528
-772
1,840
13
25
(unaudited supplementary
1,938
1,077
Financial Services
(unaudited supplementary
information)
2017
Other Entities
(unaudited supplementary
information)
2016
2017
425
405
29
33
44,285
45,134
Eliminations
(unaudited supplementary
information)
2016
2017
2016
-8,028
-7,345
2
3
1,230
88,715
93,865
188,535
1,481
Trade payables
35
9,731
8,512
8,516
7,483
355
303
Other liabilities
34
10,779
7,160
10,198
20,477
119
56
Current provisions and liabilities
69,047
67,989
37,968
35,398
573
449
Total equity and liabilities
193,483
21,975
947
6,585 -11,457
48,321
30,228
1,531
1,504
1,163
55
44
797
5,331
5,417
1,856
3,046
45,963
18
1,566
-307
-630
-68,898 -66,675
40
41,062
40,422
47,942
47,046
-69,205 -67,305
137,828
137,728
82,950
32,113
1
1
178
48,032
176
221
1,089
1,780
-198
442
389
130
263
-1,724
3,082
-11,223
3,093
27,120
-31,778
-583
-2,635
-32,689
96,766
97,306
35,008
35,749
-53,185
-54,475
24
5
152
26,628
42,326
1,329
894
44,782
33
1,077
EQUITY AND LIABILITIES
Subscribed capital
29
Capital reserves
29
Revenue reserves
29
Accumulated other equity
29
Equity attributable to shareholders of BMW AG
29
1,230
22222
657
2,084
51,256
2,047
44,445
114
54,112
-41
47,108
Minority interest
Equity
Pension provisions
436
54,548
255
658
47,363
88,715
188,535
41,100
714
1,000
Other assets
26
5,525
5,087
23,124
21,561
5
2
Cash and cash equivalents
93,865
9,039
7,157
4,794
8
Current assets
71,582
66,864
51,030
46,063
753
638
Total assets
193,483
7,880
39,441
Earnings per share are calculated as follows: Basic
earnings per share are calculated for common and
preferred stock by dividing the net profit after minority
interest, as attributable to each category of stock, by the
average number of outstanding shares. The net profit
is accordingly allocated to the different categories
of stock. The portion of the Group net profit for the
year which is not being distributed is allocated to each
category of stock based on the number of outstanding
shares. Profits available for distribution are determined
directly on the basis of the dividend resolutions passed
for common and preferred stock. Diluted earnings
per share are calculated and separately disclosed in
accordance with IAS 33.
30
6,793
6,530
487
442
Non-current provisions and liabilities
69,888
73,183
16,456
16,693
657
628
Other provisions
5,357
31
5,879
5,656
5,187
99
90
Current tax
32
1,124
874
770
36,624
Financial liabilities
6,313
5,410
1,074
Other liabilities
34
3,252
2,405
69
83
Other provisions
31
5,437
5,039
4,980
4,570
101
2,911
Deferred tax
1,942
103
832
55,405
53,548
33
4,587
740
1,446
2,795
2,241
Financial liabilities
12
For the purpose of the impairment test, the carrying
amount of an asset (or a cash-generating unit) is com-
pared with the recoverable amount. The first step of
the impairment test is to determine the value in use.
If the value in use is lower than the carrying amount,
the next step is to determine the fair value less costs to
sell and compare the amount so determined with the
asset's carrying amount. If the fair value is lower than
the carrying amount, an impairment loss is recognised,
reducing the carrying amount to the higher of the
asset's value in use or fair value less selling cost.
If the reason for a previously recognised impairment
loss no longer exists, the impairment loss is reversed
up to the level of the recoverable amount, but no high-
er than the amortised acquisition or manufacturing
cost. Impairment losses on goodwill are not reversed.
As part of the assessment of recoverability, it is general-
ly necessary to apply estimations and assumptions - in
particular regarding future cash inflows and outflows
and the length of the forecast period - which could
differ from actual amounts. Actual amounts may differ
from the assumptions and estimations used if business
conditions develop differently to the expectations.
The BMW Group determines the value in use on
the basis of a present value calculation. Cash flows
used for this calculation are derived from long-term
forecasts approved by management. These forecasts
are based on detailed forecasts drawn up at the oper-
ational level and, with a planning period of six years,
correspond roughly to the typical product life cycle of
vehicle projects. For the purposes of calculating cash
flows beyond the planning period, a residual value
is assumed which does not take growth into account.
Forecasting assumptions are continually adjusted to
current information and regularly compared with
external sources. The assumptions used take account
in particular of expectations of the profitability of the
product portfolio, future market share development,
macroeconomic developments (such as currency,
interest rate and raw materials prices) as well as the
legal environment and past experience.
129
130
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
Automotive
in %
Motorcycles
Financial Services
2017
12.0
12.0
12.0
12.0
If there is any indication of impairment of intangible
assets, or if an annual impairment test is required
(i.e. intangible assets with an indefinite useful life,
intangible assets during the development phase and
goodwill), an impairment test is performed. Each
individual asset is tested separately unless the cash
flows generated by the asset are not sufficiently inde-
pendent from the cash flows generated by other assets
or other groups of assets. In this case, impairment is
tested at the level of a cash-generating unit.
13.4
Amounts are discounted on the basis of a market-re-
lated cost of capital rate. Impairment tests for the
Automotive and Motorcycles cash-generating units
are performed using a risk-adjusted pre-tax cost of
capital (WACC). In the case of the Financial Services
cash-generating unit, a pre-tax cost of equity capital
is used, as is customary in the sector. The following
discount factors were applied:
2016
05
Development costs for vehicle, module and architecture
projects are capitalised at manufacturing cost, to the
extent that attributable costs (including develop-
ment-related overhead costs) can be measured reliably
and both technical feasibility and successful marketing
are assured. It must also be sufficiently probable that
the development expenditure will generate future
economic benefits. Capitalised development costs are
amortised on a straight-line basis following the start
of production over the estimated product life cycle
(usually five to 12 years).
13.4
1.1.2017
29.1.2016
Disclosures Initiative - Reconciliation of Liabilities From Financing Activities
(Amendments to IAS 7)
EU
Date of
mandatory
application
Date of
mandatory
application
IASB
IASB
Date of
issue by
IAS 7
Standard/Interpretation
(a) Standards and Revised Standards significant for
the BMW Group applied for the first time in the
financial year 2017:
Financial reporting rules
note 39
→ see in note 39.
The share-based remuneration programme for Board
of Management members and senior heads of depart-
ment entitles BMW AG to elect whether to settle its
commitments in cash or with shares of BMW AG
common stock. Based on the decision to settle in cash,
the share-based remuneration programmes for Board
of Management members and senior heads of depart-
ment are accounted for as cash-settled, share-based
remuneration programmes. Further information on
share-based remuneration programmes is provided
Share-based remuneration programmes which are expect-
ed to be settled in shares are measured at their fair
value at grant date. The related expense is recognised
as personnel expense in the income statement over
the vesting period and offset against capital reserves.
Share-based remuneration programmes expected to
be settled in cash are revalued to their fair value at
each balance sheet date between the grant date and
the settlement date and on the settlement date itself.
The expense is recognised as personnel expense in
the income statement over the vesting period and
presented in the balance sheet as a provision.
notes 38
and 44
The measurement of provisions for statutory and non-
statutory warranty obligations (statutory, contractual and
voluntary) involves estimations. In addition to manu-
facturer warranties prescribed by law, the BMW Group
offers various categories of guarantee depending on
the product and sales market. These provisions are
recognised when the risks and rewards of ownership
of the goods are transferred to the dealership or
retail customer or when a new category of warranty
is introduced. With respect to the level of the provi-
sion, estimations are made in particular based on past
experience of damage claims and processes. Future
potential repair costs and price increases per product
and market are also taken into account. Specific and
expected warranty items, such as vehicle recalls, are
also included. Provisions for warranties for all compa-
nies of the BMW Group are adjusted regularly to take
account of new information, with the impact of any
changes recognised in the income statement. Similar
estimates are made in conjunction with the measure-
ment of expected reimbursement claims, which are
presented as separate assets.
Related party disclosures comprise information on
associated companies, joint ventures and non-con-
solidated subsidiaries as well as individuals which
have the ability to exercise a controlling or significant
influence over the financial and operating policies
of the BMW Group. This includes all persons in key
positions of the Company, as well as close members
of their families or intermediary entities. In the case
of the BMW Group, this also applies to members of
the Board of Management and the Supervisory Board.
Details relating to these individuals and entities are
→ see provided in → note 38 and in the list of investments
disclosed in → note 44.
Financial liabilities are measured on first-time recog-
nition at their fair value. Transaction costs are also
taken into account, except in the case of financial
liabilities allocated to the category "measured at fair
value through profit or loss". Subsequent to initial
recognition, liabilities are - with the exception of
derivative financial instruments - measured at amor-
tised cost using the effective interest method.
If the recognition and measurement criteria relevant
for provisions are not fulfilled and the outflow of
resources on fulfilment is not unlikely, the potential
obligation is disclosed as a contingent liability.
Purchased and internally-generated intangible assets
are recognised as assets where it is probable that the
use of the asset will generate future economic benefits
and where the costs of the asset can be determined
reliably. Such assets are measured at acquisition
or manufacturing cost, as a general rule without
borrowing costs, and, to the extent that they have
a finite useful life, amortised on a straight-line basis
over their estimated useful lives. With the exception
of capitalised development costs, intangible assets
are amortised as a general rule over their estimated
useful lives of between three and 20 years.
Goodwill arises on first-time consolidation of an
acquired business when the cost of acquisition exceeds
the Group's share of the net fair value of the assets
identified during the acquisition, liabilities and con-
tingent liabilities.
The risk-adjusted discount rate, calculated using a
CAPM model, takes into account specific peer-group
information relating to beta-factors, capital structure
data and borrowing costs. In conjunction with the
impairment tests for cash-generating units, sensitivity
analyses are performed for the main assumptions, in
order to rule out that possible changes to the assump-
tions used to determine the recoverable amount would
result in the requirement to recognise an impairment
loss.
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
The following useful lives are applied throughout the
BMW Group:
Derivative financial instruments are used within the
BMW Group for hedging purposes in order to reduce
currency, interest rate, fair value and market price
risks arising from operating activities and the relat-
ed financing requirements. All derivative financial
instruments are measured at their fair value. The
fair values of derivative financial instruments are
determined using measurement models and are
therefore subject to the risk that they could differ
from realisable market prices on disposal. Observ-
able financial market price spreads are taken into
account in the measurement of derivative financial
instruments. The supply of data for the model used
to calculate fair values also takes account of tenor
and currency basis spreads.
In addition, the Group's own credit risk and that of
counterparties is taken into account on the basis of
credit default swap values for market contracts with
matching terms. The BMW Group applies the option
of measuring the credit risk for a group of financial
assets and financial liabilities on the basis of the net
exposure of long and short positions. Portfolio-based
value adjustments to the individual financial assets
and financial liabilities are allocated using the relative
fair value approach (net method).
Where hedge accounting is applied, changes in fair val-
ue are recognised in the income statement or in other
comprehensive income as a component of accumulat-
ed other equity, depending on whether the hedging
relationship is classified as a fair value hedge or a
cash flow hedge. In the case of a fair value hedge, the
results of the fair value measurement of the derivative
financial instruments and the related hedged items
are recognised in the income statement. Fair value
hedges are mainly used to hedge the market prices of
bonds, other financial liabilities and receivables from
sales financing. In the case of a cash flow hedge, the
effective portion of the fair value gain or loss on the
derivative financial instrument is recognised directly
in accumulated other equity. The ineffective portion of
the fair value gain or loss is recognised in the income
statement. Amounts recorded in accumulated other
equity are recognised in the income statement when
the hedged item or external revenue item is recognised
in the income statement. If, contrary to the usual prac-
tice within the BMW Group, hedge accounting cannot
be applied, the gains or losses arising on the fair value
measurement of derivative financial instruments are
recognised in the income statement.
Deferred taxes are recognised on all temporary dif-
ferences between the tax and accounting bases of
assets and liabilities and on consolidation procedures.
The recoverability of deferred tax assets is assessed
at each balance sheet date on the basis of planned
taxable income in future financial years. If with a
probability of more than 50 percent future tax ben-
efits will not be realised, either in part or in total, a
valuation allowance is recognised on the deferred tax
assets. The calculation of deferred tax assets requires
assumptions to be made with regard to the level of
future taxable income and the timing of recovery of
deferred tax assets. These assumptions take account of
forecast operating results and the impact on earnings
of the reversal of taxable temporary differences. Since
future business developments cannot be predicted
with certainty and to an extent cannot be influenced
by the BMW Group, the measurement of deferred tax
assets is subject to uncertainty. Deferred taxes are cal-
culated on the basis of tax rates which are applicable or
expected to apply in the relevant national jurisdictions
when the amounts are recovered.
Current income taxes are calculated within the
BMW Group on the basis of tax legislation applicable
in the relevant countries. To the extent that judgement
was necessary to determine the treatment and amount
of tax items presented in the financial statements,
there is in principle a possibility that local tax author-
ities may take a different position.
Inventories of raw materials, supplies and goods for
resale are stated at the lower of average acquisition
cost and net realisable value.
Work in progress and finished goods are stated at
the lower of manufacturing cost and net realisable
value. Manufacturing cost comprises all costs which
are directly attributable to the manufacturing process
as well as an appropriate proportion of production-
related overheads. This includes production-related
depreciation and amortisation and an appropriate
proportion of administrative and social costs. Financ-
ing costs are not included in the acquisition or man-
ufacturing cost of inventories.
Cash and cash equivalents comprise mainly cash on hand
and cash at bank with an original term of up to three
months, and are measured at face value.
Assets held for sale and disposal groups held for sale
are presented separately in the balance sheet in
accordance with IFRS 5 if the carrying amount of the
relevant assets will be recovered principally through
a sale transaction rather than through continuing
use. This applies only in cases in which the assets
can be sold immediately in their present condition,
the sale is expected to be completed within one year
from the date of classification and the sale is highly
probable. At the date of classification, property, plant
and equipment, intangible assets and disposal groups
which are being held for sale are measured at the
lower of their carrying amount and their fair value
less costs to sell, and are no longer subject to sched-
uled depreciation/amortisation. This does not apply,
however, to items within the disposal group which
are not covered by the measurement rules contained
in IFRS 5. At the same time, liabilities directly related
to the sale are presented separately on the equity and
liabilities side of the balance sheet as Liabilities in
conjunction with assets held for sale.
The recognition of allowances on receivables relating
to the industrial business is also based, as far as pos-
sible, on the same procedures applied in the financial
services business. The impairment allowances are
recorded in separate accounts and are derecognised
at the same time the corresponding written-down
receivables are derecognised.
Provisions for pensions are measured using the pro-
jected unit credit method. Under this method, not
only obligations relating to known vested benefits
at the reporting date are recognised, but also the
effect of future expected increases in pensions and
salaries. The calculation is based on independent
actuarial valuations which take into account relevant
biometric factors.
The calculation of the amount of the provision requires
assumptions to be made with regard to discount rates,
salary trends, employee fluctuation and the life expec-
tancy of employees. Discount rates are determined by
reference to market yields at the end of the reporting
period on high quality fixed-interest corporate bonds.
The salary trend relates to the expected future rate of
salary increase which is estimated annually based on
inflation and the career development of employees
within the Group.
Net interest expense on the net defined benefit lia-
bility and net interest income on net defined benefit
assets are presented separately within the financial
result. All other costs relating to allocations to pension
provisions are allocated to costs by function in the
income statement.
Past service cost arises when a BMW Group compa-
ny introduces a defined benefit plan or changes the
benefits payable under an existing plan. This cost
is recognised immediately in the income statement.
Similarly, gains and losses arising on the settlement
of a defined benefit plan are recognised immediately
in the income statement.
Remeasurement of the net liability can result from
changes in the present value of the defined benefit
obligation, the fair value of the plan assets or the
asset ceiling. Remeasurement can result, amongst
others, from changes in financial and demographic
parameters, as well as changes following the portfolio
development. Remeasurements are recognised imme-
diately in other comprehensive income and hence
directly in equity (within revenue reserves).
133
134
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
Other provisions are recognised when the BMW Group
has a present legal or factual obligation towards a
third party arising from past events, the settlement
of which is probable, and when the amount of the
obligation can be reliably estimated. Provisions with
a remaining term of more than one year are measured
at their net present value.
In the case of funded plans, the pension obligation is
offset against plan assets measured at their fair value.
If the plan assets exceed the pension obligation, the
surplus is tested for recoverability. In the event that
the BMW Group has a right of reimbursement or a
right to reduce future contributions, it reports an asset
(within Other financial assets), measured on the basis
of the present value of the future economic benefits
attached to the plan assets. For funded plans, in cases
where the obligation exceeds plan assets, a liability is
recognised under pension provisions.
1.1.2017
Group
Financial
Statements
132
For machinery used in multiple-shift operations,
depreciation rates are increased to account for the
additional utilisation. If there is any indication of
impairment of property, plant and equipment, an
impairment test is performed as described above for
intangible assets.
With respect to lease arrangements of the BMW Group,
use of judgement is required, in particular with regard
to the transfer of economic ownership of a leased item.
Leased items of property, plant and equipment whose
economic ownership is attributed to the BMW Group
(finance leases) are measured on initial recognition
at fair value or, if lower, at the net present value of
minimum lease payments. The assets are depreciated
using the straight-line method over their estimated
useful lives or, if shorter, over the contractual lease
period. The obligations for future lease payments are
recognised at their net present value in other financial
liabilities.
Group products recognised by BMW Group entities as
leased products under operating leases are measured at
manufacturing cost, including any initial direct costs.
All other leased products are measured at acquisition
cost. All leased products are depreciated over the peri-
od of the lease using the straight-line method down to
their expected residual value. Where the recoverable
amount of a lease exceeds the asset's carrying amount,
changes in residual value expectations are recognised
by adjusting scheduled depreciation prospectively
over the remaining term of the lease. If the recoverable
amount is lower than the asset's carrying amount, an
impairment loss is recognised for the shortfall. A test
is carried out at each balance sheet date to determine
whether an impairment loss recognised in prior years
no longer exists or has decreased. In such cases, the
carrying amount of the asset is increased to the recov-
erable amount, at maximum up to the amount of the
asset's amortised cost.
Assumptions and estimations are required regarding
future residual values, since these represent a sig-
nificant part of future cash inflows. Relevant factors
to be considered include the trend in market prices
and demand on the pre-owned vehicle market. The
assumptions are based on internally available histor-
ical and current market data as well as on forecasts of
external institutions. Furthermore, assumptions are
regularly validated by comparison with external data.
in years
Factory and office buildings, residential buildings, fixed
installations in buildings and outside facilities
Plant and machinery
Other equipment, factory and office equipment
8 to 50
3 to 21
2 to 25
Investments accounted for using the equity method are rec-
ognised at the Group's share of their revalued equity
capital, provided no impairment has been recognised.
Financial assets reported as other investments are recog-
nised and measured at their fair value in accordance
with the requirements of IAS 39. If this value is not
available or cannot be determined reliably, they are
measured at cost. Subsidiaries, joint arrangements
and associated companies included in other invest-
ments, but which are not material to the BMW Group,
do not fall within the scope of IAS 39.
A financial instrument is a contract that gives rise to a
financial asset of one entity and a financial liability or
equity instrument of another entity. Financial assets
are accounted for on the basis of the settlement date.
On initial recognition, financial assets are measured
at their fair value. Transaction costs are included
unless the financial assets are allocated to the category
"financial assets measured at fair value through profit
or loss".
The Group's financial assets are allocated to either
cash funds or to the categories "loans and receivables",
"available-for-sale", "held for trading" or "fair value
option".
The fair value option is applied by the BMW Group
for non-current marketable securities with embed-
ded derivatives and non-current loans receivable
from third parties. The related gains and losses are
presented in the income statement line item Other
financial result. Related interest income and expenses
are presented in net interest result.
Subsequent to initial recognition, financial assets
which are available-for-sale or held-for-trading or for
which the fair value option is applied, are measured at
their fair value. The fair values shown are determined
on the basis of market information available at the
balance sheet date, prices quoted by the contract
partners or appropriate measurement methods, e.g.
discounted cash flow models.
Those non-derivative financial assets that are not
classified as "loans and receivables" or "held-to-
maturity investments" or as items measured "at
fair value through profit and loss" are classified as
"available-for-sale". Financial assets that are classified
as loans and receivables are measured at amortised
cost using the effective interest method. All financial
assets for which published price quotations in an active
market are not available and whose fair value cannot
be determined reliably are measured at cost.
Assessments are regularly made as to whether mate-
rial objective evidence indicates that a financial asset
or portfolio of assets is impaired. For the purposes
of assessing possible impairment, the BMW Group
takes account of all available information, such as
market conditions and prices as well as the duration
and magnitude of the decline in value. In the case of
equity instruments that are listed on a stock market,
it is assumed that an item is impaired if, for example,
its fair value falls below acquisition cost significantly
(more than 20%) or on a prolonged basis (more than
5% over nine months).
Receivables from sales financing are measured at amor-
tised cost using the effective interest rate method. This
also includes receivables arising on vehicle finance
leases. Impairment allowances are recognised both on
a specific-item and a group basis. For these purposes,
the main factors taken into consideration are past
experience and current market data (such as the level
of arrears), as well as information on rating classes
and scoring. Consideration is also given to current
market data and macroeconomic conditions that could
have an impact on the general creditworthiness of
customers as well as the overall market environment
for pre-owned vehicles. The market value of vehicles
which serve as collateral changes when prices on pre-
owned vehicle markets fall. Specific allowances are
recognised if there is objective evidence of impairment.
In the retail credit financing and leasing business,
the existence of overdue balances or the incidence
of similar events in the past are examples of such
evidence. In the event of overdue receivables, allow-
ances are always recognised individually based on
the duration of the arrears. In the case of dealership
financing receivables, the allocation to a correspond-
ing rating category also represents objective evidence
of impairment. If no objective evidence of impairment
exists, allowances are recognised using a portfolio
approach based on similar groups of assets. Company-
specific loss probabilities and loss ratios, derived from
historical data, are used to measure allowances on
similar groups of assets.
131
Items of property, plant and equipment are measured at
acquisition or manufacturing cost less accumulated
depreciation and accumulated impairment losses. The
cost of internally constructed plant and equipment
comprises all costs which are directly attributable
to the manufacturing process as well as an appro-
priate proportion of production-related overheads.
This includes production-related depreciation and
amortisation as well as an appropriate proportion
of administrative and social costs. Financing costs
are not included in acquisition or manufacturing cost
unless they are directly attributable to the asset. The
carrying amount of items of depreciable property,
plant and equipment is written down according to
scheduled usage-based depreciation - as a general
rule on a straight-line basis - over the useful lives of
the assets. Depreciation is recorded as an expense in
the income statement.
The amendments to IAS 7 (Statement of Cash Flows)
require a reconciliation between the opening and
closing balances of liabilities arising from financing 7
135
→ see
note 33
Automotive
Eliminations
-553
-54
-499
Segment
1.1.2018
2017
1.1.2017
Impact on
revenue reserves
89
Impact on
net profit
Impact on
Total impact of first-time application
Hedge accounting
IFRS 9
Introduction of impairment model
IFRS 9
Change in measurement category
IFRS 9
Change in transaction prices relating to
IFRS 15
revenue reserves
Elimination of buyback arrangements and rights
23
78
Other financial reporting standards issued by the IASB
and not yet applied are not expected to have a signif-
icant impact on the BMW Group Financial Statements.
The impact on the BMW Group's results of operations,
financial position and net assets is currently being
analysed as part of a Group-wide implementation
project. A reliable quantitative measurement of the
impact is not possible at present, in particular because
the compilation and assessment of contracts across the
Group has not yet been completed. The BMW Group
expects a slight increase in the balance sheet total and
the result before financial result, as well as a slight
improvement in the net cash flow from operating
activities and a slight deterioration in the net cash
flow from financing activities.
The accounting requirements for lessors, particularly
in relation to the requirement to classify leases, will
remain largely unchanged.
The BMW Group will use the grandfather clause
available for existing leases and apply the available
exemptions regarding the recognition of short-
term leases and low value leasing assets. The new
Standard will be applied for the first time using the
modified retrospective method. Intragroup leasing
arrangements are not reflected in the internal man-
agement system or in internal reporting pursuant
to IFRS 16 and therefore, in accordance with IFRS 8,
do not result in any changes in the presentation of
segment information. Early adoption of IFRS 16 is
not planned.
The new Standard IFRS 16 (Leases) sets out a new
approach to accounting for leases by lessees. While
under IAS 17, the accounting treatment of a lease was
determined on the basis of the transfer of risks and
rewards incidental to ownership of the asset, in the
future, all leases in general are to be accounted for by
the lessee in a similar way to finance leases.
Income Statement
→ Notes to the
→ Accounting
Principles and
Policies
Notes to the Group
Financial Statements
Group
Financial
Statements
112
138
2 Includes effects relating to the reduction of the US federal corporate tax rate from 35% to 21 % with effect from 1 January 2018. The pre-tax profit impact amounts to € + 20 million.
1 Includes the effect of the adjustment relating to entities accounted for using the equity method.
-263
-312
-410
Financial Services/Other
18
Automotive/Financial Services
82
Automotive/Other
137
IFRS 15
Amendment
in € million
1.1.2019
1.1.2019
13.1.2016
12.4.2016
11.9.2015
1.1.2018
1.1.2018
1.1.2018
28.5.2014
1.1.2018
24.7.2014
IFRS 9 (Financial Instruments) contains new require-
ments for the classification and measurement of
financial assets that are based on the reporting entity's
business model for the management of these financial
instruments and the characteristics of its contractual
cash flows ("Solely Payments of Principal and Inter-
est" (SPPI) criterion). IFRS 9 also gives rise to a new
model for determining impairment, which is based on
expected credit losses. To date, impairments have been
recognised when corresponding objective evidence
existed. Furthermore, the requirements for hedge
accounting were revised with the aim of bringing
the accounting treatment more into line with risk
management activities.
EU
Date of
mandatory
application
IASB
Date of
issue by
IASB
Leases
IFRS 16
Revenue from Contracts with Customers
IFRS 15
Financial Instruments
IFRS 9
Standard/Interpretation
activities, for which cash inflows and outflows are
presented in the Statement of Cash Flows. The rec-
onciliation is presented in → note 33.
Date of
mandatory
application
The BMW Group will apply IFRS 9 for the first time
with effect from 1 January 2018. An exception is made
in the accounting treatment of fair value hedging of
a portfolio against interest rate risk, for which the
requirements of IAS 39 will continue to be applied.
IFRS 9 requires retrospective application in the areas
of classification and measurement, while the new
rules for hedge accounting are required to be applied
prospectively, with few exceptions. The BMW Group
will apply the exemption contained in IFRS 9, allowing
unadjusted comparative information for prior periods.
The new requirements for the classification and
measurement of financial assets and financial lia-
bilities result in a number of cases to a change in
measurement category for the BMW Group. In future,
changes in the value of equity instruments falling
within the scope of IFRS 9 which are held at the date
of adoption, will be recognised through the income
statement. Due to the change in the measurement
category, an increase in the revenue reserves amount-
ing to approximately €78 million is recognised at the
date of adoption of the new rules, net of the deferred
tax effect of approximately €1 million. This includes
approximately €76 million for equity instruments
which gives rise to a reduction in accumulated other
equity of the same amount.
The following table shows a summary of the estimated
effect on revenue reserves of the first-time application
of IFRS 9 and IFRS 15.
Buyback arrangements between the Automotive and
Financial Services segments are not reflected in the
internal management system or reporting and there-
fore, in accordance with IFRS 8, do not result in any
changes in the presentation of segment information.
A different accounting treatment may be required if
buyback arrangements are in place with customers,
resulting in a shift in the timing of revenue recognition.
The resulting impact is not expected to be significant.
As a result of the adjustments described above, the
Automotive segment's EBIT margin for 2017 will
improve by 0.3 percentage points to 9.2%.
in both revenues and cost of sales. For the financial
year 2017, the amount subject to changed accounting
presentation in the Automotive segment amounts
to approximately €2.9 billion, and is insignificant
for the Group.
In accordance with IFRS 15, costs relating to sales
promotion measures in the Automotive segment,
such as sales support or residual value subsidies are
to be treated as variable components of consideration
and will therefore in future be recognised as revenue
deductions. A part of these costs have been reported
to date within cost of sales. The change in presenta-
tion in the income statement will result in a decrease
In the case of multi-component contracts with variable
consideration components, changes in the allocation
of transaction prices will result for the Automotive
segment in higher amounts being recognised for
vehicle sales and a lower level of amounts deferred
for service contracts. The shift in the timing of rev-
enue recognition results in a retrospective increase
in Group revenue reserves as at 1 January 2017 of
approximately €89 million, net of deferred taxes of
approximately €38 million (1 January 2018: increase
in revenue reserves of approximately €112 million, net
of deferred taxes of approximately €42 million). The
shift is not expected to have a significant impact on
the income statement during the period of first-time
application.
As a result of the accounting treatment of buyback
arrangements and rights of return for sales of vehicles
which the Financial Services segment will subsequently
lease to customers, intragroup eliminations within
the BMW Group will be subject to earlier recognition.
The application of IFRS 15 results in a retrospective
decrease in Group revenue reserves as at 1 Janu-
ary 2017 amounting to approximately €499 million,
net of deferred taxes of approximately €239 million
(1 January 2018: reduction of revenue reserves by
approximately €553 million, net of deferred taxes of
approximately €192 million). No significant impact
is expected to arise during the period of first-time
application.
A major difference to the previous Standard is the
increased scope of discretion for estimates and the
introduction of thresholds, thus influencing the
amount and timing of revenue recognition.
The new Standard is based on a five-step model, which
sets out the rules for revenue from contracts with
customers. Revenues are required to be recognised
either over time or at a specific point in time.
The Standard will be applied retrospectively in its
entirety with effect from 1 January 2018, meaning that
all comparative information for prior periods will be
adjusted in accordance with IFRS 15. The exemption
provision, allowing contracts fulfilled prior to 1 Janu-
ary 2017 not to be newly assessed in accordance with
IFRS 15, has been applied.
The new Standard IFRS 15 (Revenue from Contracts
with Customers) is aimed to assimilate the numerous
existing requirements and interpretations relating to
revenue recognition into a single Standard. The new
Standard also stipulates uniform revenue recognition
principles for all sectors and all categories.
At the date of the first-time application, the new
accounting requirements for interest rate hedging
instruments will result in an increase in revenue
reserves of approximately €18 million, net of deferred
tax effects of approximately €6 million.
In future, costs arising in conjunction with hedging
will be reported in total in the income statement as
part of the profit before financial result (EBIT). As the
cost of options to hedge foreign currency exposures
is currently reported in the financial result, this will
have a negative impact on the Automotive segment's
EBIT. The scale of the impact will depend on the future
volume of option contracts. The volume of option
contracts at 31 December 2017 is not material.
With regard to the accounting treatment of hedging
relationships, it is expected that it will be possible in
future to apply hedge accounting rules to the majority
of commodity hedging instruments. Moreover, chang-
es in the time value of options are required to be
recognised as "cost of hedging" in accumulated other
equity during the hedging period. These changes are
expected to result in a significant reduction in the
volatility of amounts reported for financial result and
Group earnings.
Overall, the introduction of the new impairment
model across the BMW Group with effect from
1 January 2018 results in a reduction in impairment
allowances and an increase in revenue reserves of
approximately €82 million net of deferred tax effects
of approximately €31 million. Of this amount, approx-
imately €86 million relates to receivables from sales
financing net of deferred tax effects of approximately
€33 million.
For trade receivables, the simplified approach has
been applied. The parameters used to calculate impair-
ment allowances are determined specifically for each
portfolio.
Implementation of the new impairment model has
required substantial modifications to existing process-
es and systems, especially for the Financial Services
segment. Receivables from sales financing have been
measured using the three-stage model stipulated by
IFRS 9. Operating lease receivables represent an
exception, in which the simplified approach has
been applied. For these receivables, expected losses
are calculated for the remaining term. The transfer
criteria for the three-stage impairment model is based
in principle on a comparison of default probabilities
pursuant to the definitions used in the internal risk
management system for each financial instrument.
In addition, qualitative indicators are taken into
account in the transfer criteria, such as overdue period
or significant changes in the internal credit rating.
Impairment allowances are calculated in a central
application. The risk models used were determined
on the basis of internal historical default information
and macroeconomic factors.
Principles and
Policies
Notes to the Group
Financial Statements
→ Accounting
Statements
Group
Financial
136
(b) Financial reporting pronouncements issued by
the IASB that are significant for the BMW Group,
but have not yet been applied:
multi-component contracts¹
The recognition of provisions for litigation and liability
risks necessitates making assumptions in order to
determine the probability of liability, the amount
of claim and the duration of the legal dispute. The
assumptions made, especially the assumption about
the outcome of legal proceedings, are subject to a
high degree of uncertainty. The appropriateness of
assumptions is regularly reviewed, based on assess-
ments undertaken both by management and external
experts, such as lawyers. If new developments arise
in the future that result in a different assessment,
provisions are adjusted accordingly.
Sales of products previously
Sales of products and related goods
71,443
68,681
leased to customers
10,208
9,258
Income from lease instalments
9,816
1,075
9,507
Interest income on loan financing
3,720
3,455
Other income
3,491
3,262
Revenues
98,678
94,163
An analysis of revenues by segment and region is
shown in the segment information in → note 43.
07
Cost of sales
Cost of sales comprises:
Selling and administrative expenses
Selling expenses amounted to €6,167 million (2016:
€6,030 million) and comprise mainly marketing,
advertising and sales personnel costs.
Administrative expenses amounted to €3,393 million
(2016: €3,128 million) and relate mainly to personnel
and IT costs.
→ see
note 43
09
Other operating income and expenses
08
2016
2017
5,164
9,464
5,636
971
1,427
-16
5,196
572
675
NOTES TO THE INCOME
STATEMENT
06
Revenues
Revenues by activity comprise the following:
in € million
Research and development expenditure was as follows:
Other operating income and expenses comprise the
following items:
in € million
2016
Research and development expenses
4,920
4,294
Amortisation
-1,236
-1,222
New expenditure for capitalised
development costs
2,424
2,092
Total research and development
expenditure
6,108
2017
8,157
in € million
2016
4,920
4,294
Exchange losses
-246
-249
Service contracts, telematics and roadside
Expense for additions to provisions
-580
-303
assistance
2,081
2,018
Warranty expenditure
2,041
2,165
Expense for impairment losses and
write-downs
28
191
-16
928
364
380
5
5
7,221
8,409
4,556
943
Research and development expenses
1,638
1,801
to financial services business
Exchange gains
282
262
in € million
2017
2016
Income from the reversal of provisions
138
115
Income from the reversal of impairment
Manufacturing costs
43,877
43,175
losses and write-downs
2017
8
Cost of sales relating to financial services
Gains on the disposal of assets
80
46
business
22,932
20,723
Sundry operating income
212
196
thereof: Interest expense relating
Other operating income
720
670
51
1,236
Development costs
Goodwill
Intangible assets
5,191
1,188
Other intangible assets
657
572
923
58
Goodwill
Development costs
364
364
5
6,351
7,221
4,263
1,130
Other investments
Non-current marketable securities
Participations
subsidiaries
Investments in non-consolidated
1,403
3
4,973
181
3
797
5
4,171
8,157
7,372
Intangible assets
4,516
18
→ Notes to the
Balance Sheet
Analysis of changes in Group tangible, intangible and investment assets 2017
in € million
Development costs
Goodwill
Other intangible assets
Acquisition and manufacturing cost
Translation
1.1.20171 differences
Additions
Reclassi-
fications
Disposals
1,222
31.12.2017
386
1,530
-37
286
13,400
-38
2,710
2,424
943
12,965
385
29
1,750
972
11,484
Other intangible assets
31.12.2016 31.12.2016 31.12.2015
Reclassi-
Value
fications adjustments
1,743
3,395
-708
33,830
2,253
2,5252
829
1,970
158
238
-62
1,952
8,832
8,995
27,838
1,548
5
2,820
-531
27,092
6,154
6,122
4,966
37
-5
337
-115
4,786
147
34,774
18,471
17,960
Land, titles to land, buildings, including
Current year
Translation
1.1.20161 differences
Carrying amount
Depreciation and amortisation
g| | | g|
690
596
29
-1
412
249
189
408
་།ཎ།
678
Disposals
2
192
2,546
2,767
Leased products
37,789
36,257
7,886
3,169
3,633
-379
7,801
721 Other facilities, factory and office equipment
Advance payments made and
construction in progress
Property, plant and equipment
Plant and machinery
buildings on third party land
484
Financial Statements
4,263
Disposals
271
-299
10,940
buildings on third party land
Land, titles to land, buildings, including
Intangible assets
15,100
7,799
37,789
34,965
Leased products
2,546
2,233
Investments accounted for using
the equity method
Investments in non-consolidated
76
116
192
308
157
subsidiaries
411
76
3
484
226
245
Participations
2
228
52
11,088
Plant and machinery
18,281
-3,047
45,595
Leased products
53,245
1,782
4,402
-1,168
51,793
Property, plant and equipment
2,525
2
-1,325
1,694
2
-97
Advance payments made and construction in progress
2,799
168
70
314
-91
2,674
Other facilities, factory and office equipment
36,833
1,560
1,027
2,123
-681
35,924
2,255
16,686
26
Non-current marketable securities
due later than five years
100
127
192
223
Interest portion of the future minimum
lease payments
due within one year
10
11
due between one and five years
32
36
due later than five years
40
50
82
97
Present value of future minimum lease
payments
due within one year
9
12
due between one and five years
41
37
due later than five years
60
77
110
126
73
73
due between one and five years
23
489
192
3
678
560
428
Other investments
148
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
19
Intangible assets
26
Intangible assets mainly comprise capitalised devel-
opment costs on vehicle, module and architecture
projects as well as subsidies for tool costs, licences,
purchased development projects, software and pur-
chased customer lists.
Intangible assets amounting to €41 million (2016:
€42 million) are subject to restrictions on title.
As in the previous year, there was no requirement to
recognise impairment losses or reversals of impair-
ment losses on intangible assets in 2017.
As in the previous year, no borrowing costs were
recognised as a cost component of intangible assets
in 2017.
20
Property, plant and equipment
No impairment losses were recognised in 2017, as in
the previous year.
As in the previous year, no borrowing costs were
recognised as a cost component of property, plant
and equipment in 2017.
Property, plant and equipment include an amount of
€94 million (2016: €107 million) relating to land and
buildings, for which economic ownership is attribut-
able to the BMW Group (finance leases). Leases to
which BMW AG is party, with a carrying amount of
€78 million (2016: €90 million), run for periods up
to 2030 at the latest and contain price adjustment
clauses in the form of index-linked rentals as well as
extension and purchase options.
Minimum lease payments are as follows:
in € million
31.12.2017
31.12.2016
Total of future minimum lease payments
due within one year
19
Other intangible assets include a brand-name right
amounting to €41 million (2016: €42 million) which
is allocated to the Automotive segment and is not
subject to scheduled amortisation since its useful life
is deemed to be indefinite. The year-on-year change
is solely due to currency effects. Intangible assets also
include goodwill of €33 million (2016: €33 million)
allocated to the Automotive cash-generating unit
(CGU) and goodwill of €347 million (2016: €331 mil-
lion) allocated to the Financial Services CGU.
31.12.2017 31.12.2017 31.12.2016
44,143
the equity method
the equity method
Investments accounted for using
45,588
15,401
18,339
316
42,334
Leased products
51,789
1,848
3,631
-155
50,161
Property, plant and equipment
2,253
3
-954
1,587
223
23
1,600
Advance payments made and construction in progress
2,672
222
32
234
22
2,606
Other facilities, factory and office equipment
2,233
513
200
2,546
Value
adjustments³
fications
differences Current year
1.1.20171
Reclassi-
Translation
Carrying amount
Depreciation and amortisation
2 Including assets under construction of €1,760 million.
1 Including first-time consolidation.
1,238
58
377
2
35,924
917
28
28
Non-current marketable securities
710
2
56
656
Participations
500
56
321
2
233
Investments in non-consolidated subsidiaries
Other investments
Investments accounted for using
1,589
1,510
Development costs
in € million
Analysis of changes in Group tangible, intangible and investment assets 2016
ཟ་རྗ། མ། ལྷ།
1,286
130
192
-15
| | གླ
28
820
118
-7
710
438
129
74
-8
³ Including €3 million recognised through the income statement and €76 million directly in equity.
2 Including assets under construction of €2,010 million.
1 Including first-time consolidation.
Other investments
Non-current marketable securities
Participations
Investments in non-consolidated subsidiaries
2,767
418
639
2,546
Goodwill
Other intangible assets
Intangible assets
Acquisition and manufacturing cost
-185
35,497
Plant and machinery
10,940
34
231
300
-15
10,458
buildings on third party land
Land, titles to land, buildings, including
13,348
11,484
369
1,495
58
1,188
691
1,130
2,192
-2
12,346
100
-2
1,455
369
10,522
31.12.2016
Disposals
Reclassi-
fications
Additions
Translation
differences
1.1.2016¹
2,092
Notes to the Group
Investments accounted for using
the equity method
Group
Financial
310
Other financial result
248
131
Deferred taxes for non-German entities are calculat-
ed on the basis of the relevant country-specific tax
rates. These range in the financial year 2017 between
9.0% and 45.0% (2016: between 12.5% and 45.0%).
Changes in tax rates resulted in deferred tax income
of €824 million (2016: €70 million). The principal
reason for this development was the reduction in the 7
US federal corporate income tax rate from 35.0% to
21.0% with effect from 1 January 2018.
The difference between the expected tax expense
based on the underlying tax rate for Germany and
actual tax expense is explained in the following
reconciliation:
141
in € million
Profit before tax
Tax rate applicable in Germany
Expected tax expense
Statements
Tax increases (+)/tax reductions (-) as a result of non-deductible expenses and tax-exempt income
Tax expense (+)/benefits (-) for prior years
Other variances
Actual tax expense
Effective tax rate
2017
2016
10,655
9,665
30.7%
30.7%
3,271
2,967
-1,071
-119
58
78
234
Sundry other financial result
30.7
30.7
in %
2017
2016
thereof from subsidiaries:
13
13
Impairment losses on investments in
Corporation tax rate
15.0
15.0
subsidiaries and participations
-192
Solidarity surcharge
5.5
-104
5.5
14
-179
Corporation tax rate including solidarity
surcharge
15.8
15.8
Income (+) and expenses (-) from
Municipal trade tax rate
14.9
14.9
financial instruments
234
310
German income tax rate
Result on investments
13
-174
3
4,655
2,234
305
6,987
3
3
10
17
613
1,448
3,629
2,861
608
536
5,192
4,966
78
184
2,431
2,760
403
298
3,016
3,481
691
797
12,442
13,700
12,254
13,683
Valuation allowances on tax loss carryforwards and capital losses
467
473
195
26
1,949
2,755
18.3%
28.5%
Variances due to different tax rates were influenced in
particular by the reduction in the US federal corporate
income tax rate, which was required to be taken into
account in the measurement of deferred taxes as of
31 December 2017. This resulted in a reduction in tax
expense of €977 million.
Tax increases as a result of non-deductible expenses
and tax reductions due to tax-exempt income decreased
compared to one year earlier. As in the previous year,
tax increases as a result of non-tax-deductible expenses
were attributable mainly to the impact of non-recover-
able withholding taxes and transfer price issues.
7
Tax income relating to prior years resulted primarily
from adjustments to income tax receivables and pro-
visions for prior years.
Other variances comprise various reconciling items,
including the Group's share of earnings of companies
accounted for using the equity method.
The allocation of deferred tax assets and liabilities to
balance sheet line items at 31 December is shown in
the following table:
in € million
Intangible assets
Property, plant and equipment
Leased products
-205
Other investments
Tax loss carryforwards and capital losses
Provisions
Liabilities
Eliminations
Deferred tax assets
Deferred tax liabilities
2017
2016
2017
2016
18
13
2,593
88
Sundry other assets
14
and participations
Income from investments in subsidiaries
4,786
26
4
320
-28
-29
-28
Other cost of sales
2,893
3,067
Sundry operating expenses
-359
-267
Cost of sales
78,744
75,442
Other operating expenses
-1,214
-847
Other operating income and expenses
-494
-177
Cost of sales is reduced by public-sector subsidies
in the form of reduced taxes on assets and reduced
consumption-based taxes amounting to €61 million
(2016: €69 million).
139
140
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Notes to the
Income Statement
6,154
5,915
25,891
-100
2,834
3,306
19
7,308
Advance payments made and
construction in progress
Property, plant and equipment
660 Other facilities, factory and office equipment
Plant and machinery
Land, titles to land, buildings, including
buildings on third party land
1,591
17,759
17,960
33,829
1,806
3,403
-119
Income from the reversal of and expenses for the rec-
ognition of impairment losses and write-downs relate
primarily to impairment allowances on receivables.
32,351
2
721
1,951
214
-4
218
9
1,942
9,593
8,832
27,092
1,566
2
2,865
2,2532
The expense for additions to provisions includes liti-
gation and other legal risks. Income from the reversal
of provisions includes legal disputes that have been
resolved.
12
Income taxes
201
196
Expense relating to interest impact
on other long-term provisions
-66
-84
Net interest expense on the net defined
benefit liability for pension plans
-81
-78
Other interest and similar expenses
-265
-327
thereof subsidiaries:
Interest and similar income
-2
-412
-4
-489
Net interest result
-211
-293
11
Other financial result
in € million
2017
2016
Current tax expense includes tax income of €104 mil-
lion (2016: €174 million) relating to prior periods.
The tax expense was reduced by €91 million (2016:
€49 million) as a result of utilising tax loss carryfor-
wards, for which deferred assets had not previously
been recognised and in conjunction with previously
unrecognised tax credits and temporary differences.
The tax expense resulting from the change in the val-
uation allowance on deferred tax assets relating to tax
losses available for carryforward and temporary dif-
ferences amounted to €67 million (2016: €38 million).
Deferred taxes are determined on the basis of tax
rates which are are currently applicable or expected
to apply in the relevant national jurisdictions when
the amounts are recovered. After taking account of an
average municipal trade tax multiplier rate (Hebesatz)
of 425.0% (2016: 425.0%), the underlying income tax
rate for Germany was as follows:
Interest and similar expenses
-502
12
thereof from subsidiaries:
Taxes on income of the BMW Group comprise the
following:
in € million
2017
2016
10
Net interest result
in € million
Current tax expense
2,558
2,670
Deferred tax expense (+)/
deferred tax income (-)
-609
85
9
thereof relating to temporary
-553
80
thereof relating to tax loss
carryforwards and tax credits
-56
5
Income taxes
1,949
2,755
2017
2016
Other interest and similar income
201
196
differences
Netting
Variances due to different tax rates
Deferred taxes
2016
Remeasurement of the net defined benefit liability for pension plans
693
-1,858
Deferred taxes
-218
529
Items not expected to be reclassified to the income statement in the future
475
-1,329
Available-for-sale securities
thereof gains/losses arising in the period under report
39
40
83
79
thereof reclassifications to the income statement
Financial instruments used for hedging purposes
thereof gains/losses arising in the period under report
thereof reclassifications to the income statement
-44
-39
1,914
2,008
2,017
1,458
-103
550
Other comprehensive income from equity accounted investments
Deferred taxes
2017
in € million
Other comprehensive income for the period after tax
comprises the following:
Disclosures relating to the statement of
comprehensive income
Audit of financial statements
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Other attestation services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Tax advisory services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Other services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Fee expense
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
* Prior year figures have been adjusted.
5
4
4
4
-30
32
4
2
1
25
23
9
8
Services provided by KPMG AG Wirtschaftsprüfungs-
gesellschaft, Berlin, on behalf of BMW AG and sub-
sidiaries under its control relate to the audit of the
financial statements, other attestation services, tax
advisory services and other services.
The audit of financial statements comprises mainly the
audit of the Group financial statements and Company
financial statements of BMW AG and its subsidiaries,
and, following the introduction of new regulations,
all work related thereto, including the review of the
Group Interim Financial Statements.
Other attestation services include mainly project-relat-
ed audits, comfort letters as well as legally prescribed,
contractually agreed or voluntarily commissioned
attestation work.
Tax advisory services were performed particularly in
conjunction with tax compliance.
Other services include mainly preparation of studies.
NOTES TO THE STATEMENT
OF COMPREHENSIVE
INCOME
17
2
These amounts mainly relate to public sector grants
aimed at the promotion of regional structures as well
as subsidies received for plant expansions.
43
-721
28
Financial instruments used for hedging purposes
1,914
-568
Other comprehensive income from equity accounted investments
-30
-31
1,346
-61
2,008
-680
1,328
43
-29
14
Currency translation foreign operations
-1,171
Other comprehensive income
1,445
-815
-1,171
630
-230
3
-230
-192
-189
Other comprehensive income arising from equity
accounted investments is reported in the Statement
of Changes in Equity within currency translation
differences with an amount of € −152 million
(2016: € 73 million) and within derivative finan-
cial instruments used for hedging purposes with an
amount of €91 million (2016: €87 million).
145
NOTES TO THE BALANCE SHEET
146
-12
40
-1,329
529
Currency translation foreign operations
-1,171
-230
Items expected to be reclassified to the income statement in the future
155
1,140
Other comprehensive income for the period after tax
630
-189
Deferred taxes on components of other comprehen-
sive income are as follows:
in € million
2017
2016
Before
-597
tax
After
tax
Before
tax
Deferred
taxes
After
tax
Remeasurement of the net defined benefit liability for pension plans
693
-218
Available-for-sale securities
39
2
475
41
-1,858
-10,013
Government grants and government assistance
Income from asset-related and performance-related
grants, amounting to €30 million (2016: €31 million)
and €112 million (2016: €126 million) respectively,
was recognised in the income statement in 2017.
Deferred
taxes
16
-561
-317
49
Deferred taxes at 31 December (assets (-)/liabilities (+))
314
468
As a result of currency translation, deferred taxes
recognised directly in equity in the financial year
decreased by €43 million (2016: €29 million).
Deferred taxes are not recognised on retained prof-
its of €42.8 billion (2016: €38.7 billion) of foreign
subsidiaries, as it is intended to invest these profits
to maintain and expand the business volume of the
relevant companies. No calculation was made of the
potential impact of income taxes on the grounds of
proportionality.
The tax returns of BMW Group entities are checked
regularly by German and foreign tax authorities.
Taking account of numerous factors including
interpretations, commentaries and legal decisions
relating to the various tax jurisdictions as well as past
experience - adequate provision has been made, to the
extent identifiable and probable, for potential future
tax obligations.
13
Earnings per share
Net profit attributable to the shareholders of BMW AG
Profit attributable to common stock
Profit attributable to preferred stock
Average number of common stock shares in circulation
Average number of preferred stock shares in circulation
Basic earnings per share of common stock
Basic earnings per share of preferred stock
Dividend per share of common stock
Dividend per share of preferred stock
*Proposal by management.
2017
2016
€ million
8,619.9
6,862.9
€ million
7,895.9
6,289.2
€ million
724.0
573.7
number
number
601,995,196 601,995,196
55,114,290
181
724
591
thereof relating to fair value gains and losses on financial instruments and marketable securities recognised directly in equity
thereof relating to the remeasurements of net liabilities for defined benefit pension plans
Exchange rate impact and other changes
16
1,927
-485
-10,888
2,327
Net
-10,013
2,241
314
-10,888
2,795
468
142
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Notes to the
Income Statement
-
54,809,375
Tax loss carryforwards - for the most part usable with-
out restriction amounted to €928 million (2016:
€637 million). This includes an amount of €548 million
(2016: €464 million), for which a valuation allowance
of €186 million (2016: €158 million) was recognised on
the related deferred tax asset. For entities with tax loss-
es available for carryforward, a net surplus of deferred
tax assets over deferred tax liabilities is reported at
31 December 2017 amounting to €131 million (2016:
€90 million). Deferred tax assets are recognised on the
basis of the management's assessment that there is
material evidence that the entities will generate future
taxable profits, against which deductible temporary
differences can be offset.
decreased to €1,854 million (2016: €1,926 million) due
to currency factors. As in previous years, deferred tax
assets recognised on these tax losses - amounting to
€315 million at the end of the reporting period (2016:
€327 million) - were fully written down since they can
only be utilised against future capital gains.
Netting relates to the offset of deferred tax assets and
liabilities within individual entities or tax groups to
the extent that they relate to the same tax authorities.
Deferred taxes recognised directly in equity amounted
to €997 million (2016: €1,812 million).
Changes in deferred tax assets and liabilities during
the reporting period can be summarised as follows:
in € million
2017
2016
Deferred taxes at 1 January (assets (-)/ liabilities (+))
468
171
-609
85
Change in deferred taxes recognised directly in equity
772
163
Capital losses available for carryforward in the United
Kingdom which do not relate to ongoing operations
€
Deferred tax expense (+)/income (-) recognised through income statement
10.45
2016
Wages and salaries
10,022
9,581
Pension and welfare expenses
1,211
1,152
Social insurance expenses
819
Personnel expenses
12,052
802
11,535
Personnel expenses include €54 million (2016:
€61 million) of costs relating to workforce measures.
The total pension expense for defined contribution
plans of the BMW Group amounted to €105 million
(2016: €90 million). Employer contributions paid to
state pension insurance schemes totalled €630 million
(2016: €607 million).
The number of employees at the end of the reporting
period is disclosed in the Combined Management
Report.
2017
143
Group
Financial
Statements
Notes to the Group
Financial Statements
Notes to the
Income Statement
→ Notes to the
Statement of
Comprehensive
Income
15
Fee expense for the Group auditor
The fee expense pursuant to § 314 (1) no. 9 HGB recog-
nised in the financial year 2017 for the Group auditor
and its network of audit firms amounted to €25 million
(2016: €23 million) and consists of the following:
in € million
2017
2016*
13.12
17
144
in € million
↑ ↑
127,524
13.14
123,755
10.47
€
4.00*
3.50
4.02*
3.52
€
The average number of employees during the year was:
2017
2016
Employees
119,611
115,842
Earnings per share of preferred stock are calculated
on the basis of the number of shares of preferred stock
entitled to receive a dividend in each of the relevant
financial years. As in the previous year, diluted earn-
ings per share correspond to basic earnings per share.
14
1
1
Personnel expenses
The income statement includes personnel expenses
as follows:
proportionately-consolidated entities
Average number of employees
proportionately-consolidated entities
Apprentices and students gaining work
experience
182
204
7,913
7,913
thereof at
thereof at
in € million
Net carrying amount
2,667
2016
2,882
-57
-56
2,825
Allowance for impairment
Total
specific
item basis
group basis
Balance at 1 January
Allocated (+)/reversed (-)
Utilised
96
12
84
recognised on a
Allowance for impairment
49
Gross carrying amount
Exchange rate impact
and other changes
-5
-21
-1
-1
-2
Balance at 31 December
2,723
7
Out of the total amount recognised for inventories
at 31 December 2017, inventories measured at net
realisable value amounted to €541 million (2016:
€871 million). Write-downs to net realisable value
amounting to €27 million (2016: €101 million) were
recognised in 2017.
The expense recorded in conjunction with inven-
tories during the financial year 2017 amounted to
€55,969 million (2016: €55,129 million).
28
Trade receivables
Trade receivables comprise the following:
in € million
31.12.2017
31.12.2016
56
-21
In the case of trade receivables, collateral is generally
held in the form of vehicle documents and bank guar-
antees so that the risk of bad debt loss is very limited.
-1
g|༢|གླ←༄
23
17
64
349
307
29
Equity
75
Number of shares issued
2017
Shares issued/in circulation at 1 January
Shares issued in conjunction with Employee Share Programme
55,114,404
Less: shares repurchased and re-issued
-1
Common stock
Shares issued/in circulation at 31 December
Preferred stock
-19
More than 120 days overdue
Balance at 31 December
91-120 days overdue
-20
Exchange rate impact and
other changes
2
2
Balance at 31 December
46
11
57
25
In addition, trade receivables exist which are overdue
but for which no impairment allowance has been rec-
ognised. Receivables that are overdue by between one
and 30 days do not normally result in bad debt losses
since the overdue nature of the receivables is mainly
due to the timing of receipts. Overdue balances fall
into the following time windows:
31.12.2017
31.12.2016
1-30 days overdue
31-60 days overdue
187
43
174
61-90 days overdue
19
in € million
-4
recognised on a
6
item basis
group basis
Total
Balance at 1 January
8
Allocated (+)/reversed (-)
8
Utilised
specific
-8
8
-8
Exchange rate impact
and other changes
1
1
Balance at 31 December
9
8
9
Allowance for impairment
in € million
832
2016
828
Exchange rate impact and
other changes
-1
Other assets
7,160
2016
6,682
10
10
thereof non-current
thereof current
1,635
1,595
5,525
5,087
Balance at 31 December
Utilised
Prepayments relate mainly to prepaid interest, com-
mission paid to dealerships and amounts paid in
advance to suppliers and contract manufacturers.
Prepayments of €1,136 million (2016: €1,018 million)
have a maturity of less than one year.
153
item basis
group basis
Total
Work in progress, unbilled contracts
1,125
1,157
Raw materials and supplies
Inventories
1,146
specific
1,000
46
11
57
12,707
11,841
Allocated (+)/reversed (-)
8
-2
Balance at 1 January
Collateral receivables comprise mainly customary
collateral (banking deposits) arising on the sale of
receivables.
in € million
10,436
154
27
Inventories
Inventories comprise the following:
Group
Financial
Statements
Notes to the Group
Financial Statements
9,684
in € million
Balance Sheet
31.12.2017
31.12.2016
Impairment allowances on trade receivables devel-
oped during the year under report as follows:
2017
Allowance for impairment
recognised on a
Finished goods and goods for resale
→ Notes to the
2017
-1
491,114
114
31.12.2016
Present value of defined benefit
obligations
11,641
11,112
9,594
10,311
1,475
31.12.2017
1,476
Fair value of plan assets
9,604
8,643
8,908
8,714
965
958
19,477
22,710
22,899
18,315
31.12.2016
31.12.2017
2.44
2.55
20.8
21.3
21.3
20.9
18.3
17.6
31.12.2016 31.12.2017
Mortality Table 2005 G issued by Prof. K. Heubeck (with invalidity rates reduced by 50%)
S2PA tables and S2PA light tables with weightings
Based on the measurement principles contained in
IAS 19, the following balance sheet carrying amounts
apply to the Group's pension plans:
in € million
Germany
United Kingdom
Other
Total
31.12.2017
31.12.2016
In Germany, the so-called "pension entitlement trend"
(Festbetragstrend) also represents a significant actuari-
al assumption for the purposes of determining benefits
payable at retirement and was left unchanged at 2.0%.
1.78
Effect of limiting net defined benefit
3
-16
-16
157
158
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
Numerous defined benefit plans exist within the
BMW Group.
thereof assets
The most significant of the BMW Group's pension
plans are described below.
Both employer- and employee-funded benefit plans
exist in Germany. Benefits paid in conjunction with
these plans comprise old-age retirement pensions as
well as invalidity and surviving dependants' benefits.
The defined benefit plans have been closed to new
entrants. With effect from 1 January 2014, new
employees receive a defined contribution entitlement
with a minimum rate of return. In addition, employees
are given the option of transferring deferred remuner-
ation to a "deferred remuneration retirement plan”.
The fact that the plan involves a minimum rate of
return means that both the defined contribution
entitlement and the deferred remuneration retire-
ment plan are classified in accordance with IAS 19 as
defined benefit plans. In the case of defined benefit
plans involving the payment of a pension, the amount
of benefits to be paid is determined by multiplying a
fixed amount by the number of years of service.
The assets of the German pension plans are adminis-
tered by BMW Trust e. V., Munich, in accordance with
a CTA. The representative bodies of this entity are the
Board of Directors and the Members' General Meeting.
BMW Trust e. V., Munich, currently has seven mem-
bers and three members of the Board of Directors
elected by the Members' General Meeting. The Board
of Directors is responsible for investments, drawing
up and deciding on investment guidelines as well as
monitoring compliance with those guidelines. The
members of the association can be employees, senior
executives and members of the Board of Directors. An
ordinary Members' General Meeting takes place once
every calendar year, and deals with a range of matters,
including receiving and approving the association's
annual report, ratifying the activities of the Board of
Directors and adopting changes to the association's
statutes.
United Kingdom
In the United Kingdom, the BMW Group has defined
benefit plans, which are primarily employer-funded
combined with employee-funded components based
on the conversion of employee remuneration. These
plans are subject to statutory minimum funding
requirements. Benefits paid in conjunction with these
plans comprise old-age retirement pensions as well
as invalidity and surviving dependants' benefits. On
30 September 2017, the defined benefit plans were
closed for all plan participants, with vested benefits
remaining in place. New benefits will be covered by
contributions made to a defined contribution plan.
The pension plans are administered by BMW Pension
Trustees Limited, Hams Hall, and BMW (UK) Trustees
Limited, Hams Hall, both trustee companies which
act independently of the BMW Group. BMW (UK)
Trustees Limited, Hams Hall, is represented by nine
trustees, and BMW Pension Trustees Limited, Hams
Hall, by five trustees. A minimum of one third of the
trustees must be elected by plan participants. The
trustees represent the interests of plan participants
and decide on investment strategies. Funding con-
tributions are determined in agreement with the
BMW Group.
Sundry other assets
Germany
asset to asset ceiling
4,587
521
3
3
3
Carrying amounts at 31 December
2,037
2,469
686
1,597
3,252
513
3,236
4,587
thereof pension provision
2,037
2,469
702
1,597
513
521
2016
1.82
3.13
156
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
Capital management disclosures
The BMW Group's objectives with regard to capital
management are to safeguard over the long-term the
Group's ability to continue as a going concern and to
provide an adequate return to shareholders.
The capital structure is managed in order to meet
needs arising from changes in economic conditions
and the risks of the underlying assets.
155
The BMW Group is not subject to any unified external
minimum equity capital requirements. Within the
Financial Services segment, however, there are a
number of individual entities which are subject to
equity capital requirements of relevant regulatory
banking authorities.
The capital structure at the end of the reporting period
was as follows:
in € million
31.12.2017
31.12.2016
Equity attributable to shareholders
of BMW AG
54,112
47,108
In order to manage its capital structure, the
BMW Group uses various instruments, including the
amount of dividends paid to shareholders and share
buybacks. Moreover, the BMW Group actively manag-
es its debt capital, carrying out funding activities with
a target debt structure in mind. A key aspect in the
selection of financial instruments is the objective to
achieve matching maturities for the Group's financing
requirements. In order to reduce non-systematic risk,
the BMW Group uses a variety of financial instru-
ments available on the world's capital markets to
achieve diversification.
Proportion of total capital
Accumulated other equity comprises amounts recog-
nised directly in equity resulting from the translation
of the financial statements of foreign subsidiaries,
changes in the fair value of derivative financial
instruments and marketable securities and the related
deferred taxes.
The proposed distribution was not recognised as a
liability in the Group Financial Statements.
54,809,404
305,029
29
601,995,196
601,995,196
55,605,404
55,114,404
601,995,196
601,995,196
All Company stock is issued to bearer and each share
has a par value of €1.00. Preferred stock, to which no
voting rights are attached, bear an additional dividend
of €0.02 per share.
Accumulated other equity
In 2017, a total of 491,114 shares of preferred stock
was sold to employees at a reduced price of €55.05 per
share in conjunction with the Company's Employee
Share Programme. These shares are entitled to receive
dividends for the first time with effect from the finan-
cial year 2018.
In addition, 114 previously issued shares of preferred
stock were acquired and re-issued to employees.
Capital reserves
Capital reserves include premiums arising from the
issue of shares and totalled €2,084 million (2016:
€2,047 million). The change related to the share
capital increase arising in conjunction with the issue
of shares of preferred stock to employees amounting
to €37 million.
Revenue reserves
Revenue reserves comprise the non-distributed earn-
ings of companies consolidated in the Group financial
statements. In addition, remeasurements of the net
defined benefit liability for pension plans are also
presented in revenue reserves.
It is proposed that the unappropriated profit of
BMW AG for the financial year 2017 amounting
to €2,630 million according to HGB be utilised as
follows:
Distribution of a dividend of €4.02 per share of
preferred stock (€222 million).
Distribution of a dividend of €4.00 per share of
common stock (€2,408 million).
Issued share capital increased by €0.5 million as a
result of the issue to employees of 491,000 shares of
non-voting preferred stock. BMW AG is authorised up
to 14 May 2019 to issue 5 million shares of non-voting
preferred stock amounting to nominal €5.0 million.
At the end of the reporting period, 3.7 million of
these shares amounting to nominal €3.7 remained
available for issue.
3.70
36.4%
Non-current financial liabilities
Pension level trend
Weighted duration of all pension obligations in years
The following mortality tables are applied in countries,
in which the BMW Group has significant defined
benefit plans:
Germany
United Kingdom
Germany
United Kingdom
Other
Discount rate
31.12.2017
31.12.2017
31.12.2016
31.12.2017
31.12.2016
1.79
1.80
2.34
2.51
31.12.2016
32.5%
in %
entrants.
53,548
55,405
Current financial liabilities
Total financial liabilities
41,100
42,326
94,648
97,731
Proportion of total capital
Total capital
The assumptions stated below, which depend on the
economic situation in the relevant country, are used
to measure the defined benefit obligation of each
pension plan. The following weighted average values
have been used for Germany, the United Kingdom
and other countries:
63.6%
148,760
144,839
The equity ratio attributable to shareholders of
BMW AG increased during the financial year by
3.9 percentage points, primarily reflecting the increase
in revenue reserves.
30
Pension provisions
In the case of defined benefit plans, the BMW Group
is required to pay the benefits it has granted to present
and past employees. Defined benefit plans may be
covered by provisions or pension assets. Pension
commitments in Germany are mostly covered by
assets contributed to BMW Trust e. V., Munich, in
conjunction with a contractual trust arrangement
(CTA). Funded plans also exist in the UK, the USA, ¬
Switzerland, Belgium and Japan. In the meantime,
most defined benefit plans have been closed to new
67.5%
-9
specific
Utilised
40
Non-current financial liabilities
525
Non-current provisions and liabilities
962
670
1,044
Current financial liabilities
6
87
73
Current provisions and liabilities
151
4,783
518
22
18
10
RECONCILIATION OF
AGGREGATED FINANCIAL
INFORMATION
Assets
11,122
10,183
2,195
3,394
4,835
41
1,832
2,195
2017
2016
THE BALANCE SHEET
Non-current assets
5,910
5,779
1,906
2,802
4
Cash and cash equivalents
2,617
2,106
289
209
9
20
45
Current assets
5,212
4,405
289
26
33
46
Equity
5,377
4,678
26
33
50
Provisions and liabilities
10
10
1 Corresponds to the consolidated equity capital provided by the shareholders of Drive Now GmbH & Co. KG and its subsidiaries.
² The BMW Group holds 52.8% (2016: 67.2%) of the net assets at 31 December 2017. Due to the allocation of voting power within the decision-making
bodies of the two entities, operations remain subject to joint control.
23
Receivables from sales financing
Receivables from sales financing comprise the fol-
lowing:
Allowances on receivables from sales financing, which
arise only within the Financial Services segment,
developed as follows:
in € million
Credit financing for retail customers
and dealerships
Finance lease receivables
Receivables from
sales financing
31.12.2017
31.12.2016
2017
Allowance for impairment
recognised on a
62,401
61,602
in € million
item basis
group basis
Total
18,033
16,658
Balance at 1 January*
943
2
2016
611
1,925
5,745
5,505
1,562
22
18
10
Net assets
5,377
4,678
2,195
1,832
4
15
40
Group's interest in net assets
2,689
2,339
732
611
22
102
10
Eliminations
-666
-414
Carrying amount
2,023
732
2017
2016
2017
→ Notes to the
impact on the results of operations, financial position
and net assets of the BMW Group.
Balance Sheet
in € million
7
Financial information relating to equity accounted
investments is summarised in the following tables:
BMW Brilliance
THERE
DriveNow
IONITY
2017
2016
2017
2016
2017
2016
2017
2016
DISCLOSURES RELATING TO
THE INCOME STATEMENT
Revenues
Scheduled depreciation
14,628
637
12,991
71*
-9
1,240
Notes to the Group
Financial Statements
71
Group
Financial
Statements
149
21
Leased products
Minimum lease payments of non-cancellable oper-
ating leases amounting to €17,982 million (2016:
€17,850 million) fall due as follows:
in € million
31.12.2017
31.12.2016
within one year
8,586
between one and five years
9,383
8,692
9,154
later than five years
13
Minimum lease payments
17,982
17,850
4
Contingent rents of €52 million (2016: €46 million),
based principally on the distance driven, were rec-
ognised in income. The agreements have, in part,
extension and purchase options.
Impairment losses amounting to €148 million (2016:
€384 million) were recognised on leased products in
2017 as a consequence of changes in residual value
expectations. No income was recognised in 2017 from
the reversal of impairment losses (2016: € – million).
22
Investments accounted for using the equity method
Investments accounted for using the equity
method comprise the joint venture BMW Brilliance
Automotive Ltd. (BMW Brilliance), the joint ven-
tures DriveNow GmbH & Co. KG and DriveNow
Verwaltungs GmbH (DriveNow), the joint venture
IONITY Holding GmbH & Co. KG (IONITY) and
the interest in the associated company THERE
Holding B.V. (THERE).
BMW Brilliance produces mainly BMW brand models
for the Chinese market and also has engine manufac-
turing facilities, which supply the joint venture's two
plants with petrol engines.
The BMW Group maintains the joint ventures
DriveNow GmbH & Co. KG and Drive Now Verwal-
tungs GmbH together with Sixt SE, Pullach. DriveNow
offers car-sharing services in major German cities and
abroad. In January 2018, the BMW Group signed an
agreement with Sixt SE for the complete acquisition
of the shares in DriveNow. The agreement was signed
subject to the approval of the antitrust authorities.
DriveNow is valued at €418 million in total. Apart
from a one-time positive earnings impact, the pur-
chase is not expected to have a significant impact on
the results of operations, financial position or net
assets of the BMW Group.
During the financial year under report, the
BMW Group, Daimler AG, Stuttgart (Daimler AG),
the Ford Motor Company and the Volkswagen Group,
each with equal shareholdings, founded the joint
venture IONITY Holding GmbH & Co. KG. IONITY'S
business model envisages the construction and opera-
tion of high-performance charging stations for battery
electric vehicles in Europe. The plan is to build some
400 fast-charging stations by 2020 in order to support
electric mobility on long-haul routes and thereby
establish the market.
In the financial year 2015, BMW AG, Daimler AG
and AUDI AG, Ingolstadt (Audi AG) jointly acquired
the mapping and location-based services business
(HERE Group) of Nokia Corporation, Helsinki. HERE'S
digital maps are laying the foundations for the next
generation of mobility and location-based services,
providing the basis for new assistance systems and,
ultimately, fully automated driving.
In December 2016, THERE signed contracts relating
to the sale of shares in HERE International B.V.,
Amsterdam (HERE). The sale of 15% of the shares to
Intel Holdings B.V., Schiphol-Rijk was completed on
31 January 2017. The sale of the shares resulted in a
loss of control, as defined by IFRS 10, at the level of
THERE. For this reason, at 31 December 2016 THERE
reported its investment in HERE as "held-for-sale".
Since THERE continues to have a significant influ-
ence over HERE, the latter is included in THERE'S
consolidated financial statements as an associated
company using the equity method. The loss of control
and the subsequent deconsolidation of HERE and its
subsidiaries led to a positive earnings effect at the
level of THERE. The BMW Group portion amounted
to €183 million, which was recognised in the result
from equity accounted investments.
It was planned to sell a 10% stake in HERE to a consor-
tium consisting of NavInfo Co. Ltd., Beijing, Tencent
Holdings Ltd., Shenzhen, and GIC Private Ltd. of
Singapore. The sale will not be completed, howev-
er, as no practicable approach was found to obtain
approval from the relevant authorities during a regu-
latory review process. The transaction will therefore
not be pursued.
In December 2017, BMW AG, Audi AG and Daimler AG
signed contracts for the sale of shares in THERE. It
is planned to sell 5.9% stakes each to Robert Bosch
Investment Nederland B. V., Boxtel, and Continental
Automotive Holding Netherlands B.V., Maastricht.
The sale is to be executed in equal parts by BMW AG,
Audi AG and Daimler AG. Completion of the transac-
tion depends on approval from the relevant authori-
ties and is expected to take place in the first quarter
of 2018. The sale is expected to have no significant
150
469
58
52
513
-166
Other comprehensive income
-121
30
2
-4
Total comprehensive income
1,216
1,061
364
-171
-17
-15
-10
Dividends received by the Group
258
134
* Revenues relate only to the month of January up to the time of loss of control of HERE.
in € million
DISCLOSURES RELATING TO
BMW Brilliance
THERE
DriveNow
IONITY
2017
2016
thereof from discontinued operations
486
-1
thereof from continuing operations
Profit/loss before financial result
1,619
1,328
-149
-17
-15
-12
Interest income
46
30
1
Interest expenses
2
22
Income taxes
454
363
3
2
Profit/loss after tax
1,337
1,031
362
-167
-17
-15
-10
-151
1,412
592
78,260
104
due later than three months
Debt securities
4,913
4,553
31.12.2017
31.12.2016
Marketable securities and
investment funds
5,447
5,287
Derivative instruments
4,341
3,922
Credit card receivables
248
Loans to third parties
114
129
Other
184
145
Financial assets
10,334
9,770
thereof non-current
thereof current
251
2,369
due within three months
3,669
due within one year
5,655
due between one and five years
12,358
5,348
11,278
The contracted maturities of debt securities are as
follows:
due later than five years
20
32
18,033
16,658
in € million
Unrealised interest income
1,882
1,869
24
Financial assets
Financial assets comprise:
in € million
31.12.2017
31.12.2016
Fixed income securities
due within three months
628
780
due later than three months
4,034
Other debt securities
lease payments
2,705
7,065
Other taxes
1,537
1,135
specific
Receivables from companies in which
in € million
item basis
group basis
Total
an investment is held
1,334
1,217
Expected reimbursement claims
847
779
Balance at 1 January
9
9
Collateral receivables
316
387
Allocated (+)/reversed (-)
11
11
Receivables from subsidiaries
276
422
1,914
7,965
2,018
recognised on a
With effect from the financial year 2017, credit
balances arising in conjunction with pre-retirement
part-time working arrangements are secured by
bank guarantees. For this reason, the corresponding
assets are not reported at the balance sheet date. In
the previous year, the amount by which the value of
investment funds exceeded obligations for part-time
working arrangements (€17 million) was reported
under other financial assets.
Allowances for impairment and credit risk
80,434
Receivables relating to credit card business comprise
the following:
in € million
31.12.2017
31.12.2016
Gross carrying amount
258
Allowance for impairment
-10
296
-9
Net carrying amount
248
287
25
Income tax assets
Income tax assets totalling €1,566 million (2016:
€1,938 million) include claims amounting to €364 mil-
lion (2016: €351 million), which are expected to be
settled after more than one year. Claims may be
settled earlier than this depending on the timing of
proceedings.
Allowances for impairment losses on receivables
relating to credit card business developed as follows
during the year under report:
26
Other assets
Other assets comprise:
in € million
31.12.2017
31.12.2016
2017
Allowance for impairment
Prepayments
Present value of future minimum
287
5,447
31.12.2016
Balance at 1 January
963
535
1,498
Allocated (+)/reversed (-)
248
-25
223
Gross carrying amount of items with
Utilised
-304
-41
-345
impairment allowances recognised
on a specific-item basis
12,983
14,440
5,287
Impairment allowances recognised
and other changes
27
-2
25
on a specific-item basis
-701
-934
31.12.2017
Balance at 31 December
in € million
group basis
Allocated (+)/reversed (-)
143
2
145
Utilised
-337
-8
-345
Exchange rate impact
and other changes
-48
-17
-65
Balance at 31 December
701
446
1,147
Non-guaranteed residual values that fall to the ben-
efit of the lessor amounted to €140 million (2016:
€118 million).
In December 2017, the Financial Services segment
sold a multi-brand portfolio amounting to €939 mil-
lion for strategic reasons.
Impairment allowances
*Balance at 1 January adjusted due to initial consolidation of entities.
in € million
2016
Allowance for impairment
recognised on a
specific
item basis
Total
934
Exchange rate impact
1,401
in € million
31.12.2016
31.12.2017
Marketable securities and investment funds relate to
available-for-sale financial assets and comprise:
Balance Sheet
→ Notes to the
in € million
Notes to the Group
Financial Statements
Finance leases are analysed as follows:
Statements
Group
Financial
152
151
78,260
80,434
Net carrying amount
The estimated fair value of collateral for receivables
on which impairment losses were recognised totalled
€35,060 million (2016: €30,542 million) at the report-
ing date. This collateral related primarily to vehicles.
The carrying amount of assets held as collateral and
taken back as a result of payment default amounted
to €45 million (2016: €153 million).
12,270
9,010
allowances
Carrying amount without impairment
31.12.2017
-467
31.12.2016
due within one year
investment funds
Marketable securities and
18,527
19,915
104
251
Other debt securities
32
21
due later than five years
734
534
capital instruments
Stocks and other equity
4,449
4,662
Fixed income securities
5,921
12,574
467
due between one and five years
6,122
Gross investment in finance leases
-446
13,772
Gross carrying amount of items with
-141
-105
thereof for finance lease receivables
Impairment allowances recognised
on a group basis
impairment allowances recognised
on a group basis
59,588
52,951
434
4,923
10,198
4,659
Other liabilities
4,816
10
147
15,555
Other
Maturity between one and five years
21
71
Sundry other liabilities include mainly bonuses for
services already performed as well as sales promotions,
commission payable and credit balances on customers'
99
99
Payables to subsidiaries
615
615
Payables to other companies in which an investment is held
92
Social security
165
893
8,512
9,731
Maturity within one year
31.12.2016
31.12.2017
in € million
Trade payables have the following maturities:
Trade payables
35
Grants comprise mainly public sector funds to support
regional structures and which have been invested
in the production plants in Brazil, Mexico, Leipzig
and Berlin. The grants are partly subject to holding
periods for the assets concerned of up to five years
and/or minimum employment figures. Grant income
is recognised in the income statement over the useful
lives of the assets to which they relate.
Deferred income relating to service contracts com-
prises service and repair work as well as telematics
services and roadside assistance agreed to as part of
the sale of a vehicle (in some cases multi-component
arrangements). Deferred income from lease financing
relates primarily to down payments on leases.
accounts.
Deferred income
Grants
Deferred income from lease financing
Deferred income relating to service contracts
in € million
→ Other Disclosures
Balance Sheet
Financial Statements
Notes to the
Notes to the Group
Group
Financial
Statements
166
Deferred income comprises the following items:
Other deferred income
5
807
501
Other
Other liabilities
5,031
160
7
5,198
10,779
4,927
483
16,189
98
31.12.2016
in € million
one year
Maturity between
one and five years
Maturity later
than five years
Total
Deferred income
2,599
4,238
419
7,256
Maturity within
387
Other taxes
75
Deposits received
807
Other taxes
977
130
847
934
Advance payments from customers
934
Deposits received
23
505
1,056
5
856
Payables to other companies in which an investment is held
744
744
Payables to subsidiaries
129
129
Social security
346
Maturity later than five years
Commercial paper
9,731
Liabilities from customer deposits (banking)
10,063
3,316
133
13,512
Liabilities to banks
10,251
3,997
644
14,892
16,474
3,852
Derivative instruments
Other
1,656
513
1,496
179
3,331
497
130
622
3,852
1,249
9,709
Asset-backed financing transactions
150
122
469
1,132
41,100
43,865
9,683
94,648
31.12.2016
Maturity within
6,765
Maturity between
in € million
one year
one and five years
than five years
Total
Bonds
9,242
25,496
9,683
44,421
Maturity later
Trade payables
Financial liabilities
44,144
656
-596
Liabilities to banks
14,892
28
332
1,037
2,241
973
2,361
13,512
1,474
1,371
4,167
within one year
Total
thereof due
thereof due
within one year
Total
31.12.2016
31.12.2017
8,512
4,412
42,326
Liabilities from customer deposits (banking)
1,338
11,261
97,731
Customer deposit liabilities arise in the BMW Group's
own banks, notably in Germany and the USA, which
offer deposit and investment products.
7
in € million
Liabilities related to financing activities can be rec-
onciled as follows:
Cash inflows/
1.1.2017
outflows
-957
Changes due to
the acquisition
or disposal of
companies
Changes in
fair values
Other changes
31.12.2017
Bonds
44,421
2,687
-1,901
-328
Asset-backed financing transactions
16,474
Changes due to
exchange rate
factors
934
4,023
471
fixed
1.5
6.8
EUR 17,450 million
fixed
4.3
3.0
CNH 1,300 million
fixed
2.6
GBP 1,900 million
4.0
fixed
3.8
5.9
AUD 490 million
fixed
2.1
2.0
USD 40 million
variable
0.6
USD 300 million
1.1
6.2
fixed
NZD 30 million
variable
0.1
3.0
EUR 1,500 million
variable
1.9
5.0
SEK 1,750 million
fixed
2.3
BMW Finance N.V.
3.8
NOK 2,400 million
fixed
0.4
5.8
JPY 19,100 million
fixed
2.0
4.2
HKD 1,842 million
1.9
3.0
GBP 220 million
0.0
151
-88
718
Liabilities relating to financing activities
94,577
151
-4,541
-328
1
93,883
-156
163
Group
Financial
Statements
Bonds comprise:
Notes to the Group
Financial Statements
→ Notes to the
Issuer
Balance Sheet
Interest
Issue volume
in relevant currency
(ISO-Code)
1,090
Weighted average
164
variable
811
739
2.1
EUR 6,519 million
variable
(in %)
Weighted average
nominal interest rate
maturity period
(in years)
-1,579
-655
Commercial paper
3,852
Other (excluding interest payable)
953
1
44,880
16,855
13,572
12,658
4,461
Financial liabilities towards companies in which an
investment is held
615
124
-344
7,174
1.9
USD 958 million
-0.4
60
EUR 1,125 million
BMW Finance N.V.
(in %)
Weighted average
nominal interest rate
Weighted average
maturity period
(in days)
in relevant currency
(ISO-Code)
Issue volume
paper:
BMW International Investment B.V.
Issuer
2.7
3.6
KRW 380,000 million
fixed
Other
1.1
4.5
GBP 250 million
fixed
8.0
The following details apply to commercial
2.0
GBP 450 million
0.5
4,276
2,427
Advance payments from customers
Deferred income
Total
Maturity later
than five years
Maturity between
one and five years
one year
Maturity within
31.12.2017
59
in € million
Other liabilities
34
7.1
155
INR 4,500 million
BMW India Financial Services Private Ltd.
1.4
22
USD 3,325 million
BMW US Capital, LLC
Other liabilities comprise the following items:
variable
INR 8,000 million
3.3
3.0
JPY 30,000 million
fixed
2.0
3.0
HKD 334 million
fixed
20
2.0
5.0
0.2
GBP 300 million
3.2
7.6
EUR 2,500 million
fixed
2.8
3.5
AUD 130 million
fixed
1.4
3.9
fixed
fixed
BMW US Capital, LLC
USD 9,270 million
3.0
CNY 2,000 million
fixed
0.8
1.8
GBP 925 million
variable
2.5
3.0
AUD 500 million
fixed
variable
4.2
CAD 1,850 million
fixed
BMW Canada Inc.
2.2
3.0
CAD 300 million
variable
2.1
6.1
2.0
173
2,782
373
100.0
The sensitivity analysis provided below shows the
extent to which changes in individual factors at the
end of the reporting period influence the defined
benefit obligation.
It is only possible, however, to aggregate sensitivities
to a limited extent. Since the change in obligation 7
follows a non-linear pattern, estimates made on the
basis of the specified sensitivities are only possible
with this restriction. The calculation of sensitivities
using ranges other than those specified could result
in a disproportional change in the defined benefit
obligation.
Discount rate
Pension level trend
Average life expectancy
Pension entitlement trend
In the UK, the sensitivity analysis for the pension
level trend also takes account of restrictions due to
caps and floors.
Change in defined benefit obligation
31.12.2017
in € million
31.12.2016
100.0
in %
in %
increase of 0.75%
-3,055
-13.5
-2,939
-12.8
decrease of 0.75%
increase of 0.25%
3,878
17.1
4,031
17.6
712
3.1
in € million
100.0
100.0
100.0
Former employees with vested benefits
Defined benefit obligation
Germany
United Kingdom
Other
31.12.2017 31.12.2016
31.12.2017
31.12.2016
31.12.2017
31.12.2016
66.6
67.3
23.9
26.7
78.5
79.1
28.3
27.8
45.0
43.1
17.8
17.5
5.1
4.9
31.1
30.2
3.7
3.4
100.0
747
3.3
decrease of 0.25%
-672
489
-408
81
81
-2
-2
-2
-212
-212
-212
-590
-590
-590
Gains (-) or losses (+) arising from changes in financial assumptions
Gains (-) or losses (+) arising from changes in demographic assumptions
322
322
322
-152
-152
-152
Gains (-) or losses (+) arising from experience adjustments
Changes in the limitation of the net defined benefit asset to the
asset ceiling
-134
-134
-134
Transfers to fund
Employee contributions
Pensions and other benefits paid
Translation differences and other changes
31 December 2017
581
Pensioners
581
4,587
-3.0
-713
-3.1
increase of 1 year
856
3.8
853
3.7
decrease of 1 year
The change in the net defined benefit liability for pension
plans can be derived as follows:
in € million
1 January 2017
EXPENSE/INCOME
Current service cost
Interest expense (+)/income (-)
Past service cost
Gains (-) or losses (+) arising from settlements
REMEASUREMENTS
Gains (-) or losses (+) on plan assets, excluding amounts included
in interest income
Defined
benefit
obligation
Plan assets
Total
22,899
-18,315
4,584
Limitation of
the net defined
benefit asset to
the asset ceiling
Net defined
benefit liability
3
581
Current employees
in %
The defined benefit obligation relates to current
employees, pensioners and former employees with
vested benefits as follows:
5
5
Total with quoted market price
7,350
7,165
7,074
6,790
831
734
15,255
14,689
Debt instruments
935
543
404
408
3
1,340
954
thereof investment grade
198
195
2
1
198
198
thereof mixed funds
(funds without a rating)
737
5
348
5
82
434
422
9,399
9,738
thereof non-investment grade
2,437
1,687
620
507
35
36
3,092
2,230
Real estate funds
93
25
93
25
Money market funds
191
26
42
11
233
37
Absolute return funds
51
82
51
Other
thereof pension provision
404
1,141
354
316
141
65
86
51
581
432
Total without quoted market price
2,253
1,478
1,834
1,924
135
224
4,222
3,626
31 December
9,603
8,643
8,908
8,714
966
958
19,477
18,315
Employer contributions to plan assets are expected to
amount to €573 million in the coming year.
The BMW Group is exposed to risks arising both from
defined benefit plans and defined contribution plans
with a minimum return guarantee. The discount rates
used to calculate pension obligations are subject to
market fluctuation and therefore influence the level of
the obligations. Furthermore, changes in other actu-
arial parameters, such as expected rates of inflation,
also have an impact on pension obligations. In order
to reduce currency exposures, a substantial portion
of plan assets is either invested in the same currency
as the underlying plan or hedged by means of cur-
rency derivatives. As part of the internal reporting
procedures and for internal management purposes,
financial risks relating to the pension plans are report-
ed using a value-at-risk approach by reference to the
pension deficit. The investment strategy is also subject
to regular review together with external consultants,
with the aim of ensuring that investments are struc-
tured to match the timing of pension payments and
the expected development of pension obligations. In
this way, fluctuations in pension funding shortfalls
are reduced.
Other
179
1,210
46
527
thereof non-investment grade
227
2
1
229
Real estate
240
183
662
697
123
902
1,003
Cash and cash equivalents
16
17
10
9
1
1
27
27
Absolute return funds
708
419
617
745
47
1,372
544
thereof assets
1 January 2016
Reversal of
discounting
thereof due
Utilised
Reversed
31.12.2017
within one year
Statutory and non-statutory warranty
obligations, product guarantees
4,813
-307
2,221
43
-1,875
Additions
-70
1,300
Obligations for personnel and
social expenses
2,191
-19
2,261
-1,624
-27
1,933
Other obligations
2,200
-81
1,110
4,825
Translation
differences
1.1.2017
in € million
thereof investment grade
3,231
3,752
382
-855
-3.8
-854
-3.7
increase of 0.25%
162
0.7
165
0.7
decrease of 0.25%
-155
-0.7
-158
-0.7
161
162
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Notes to the
31
Other provisions
Other provisions changed during the year as follows:
Balance Sheet
-459
-247
2,523
1,738
one year
Maturity between
one and five years
Maturity later
than five years
Total
Bonds
11,132
25,887
7,861
44,880
Asset-backed financing transactions
6,037
10,818
16,855
Liabilities from customer deposits (banking)
10,144
3,296
132
13,572
Liabilities to banks
8,440
3,170
1,048
12,658
Commercial paper
Derivative instruments
Other
Financial liabilities
4,461
4,461
Maturity within
11,968
31.12.2017
Financial liabilities of the BMW Group comprises the
following:
Other obligations for ongoing
operational expenses
1,714
-119
755
-614
-116
1,620
1,342
Other provisions
10,918
-526
6,347
43
-4,572
-460
11,750
6,313
Depending on when claims occur, it is possible that the
BMW Group may be called upon to fulfil the warranty
or guarantee obligations over the whole period of
the warranty or guarantee. Expected reimbursement
claims at 31 December 2017 amounted to €847 million
(2016: €779 million).
Provisions for obligations for personnel and social
expenses comprise mainly performance-related
remuneration components, early retirement part-time
working arrangements and employee long-service
awards.
Provisions for other obligations cover numerous spe-
cific risks and uncertain obligations, in particular for
litigation and liability risks.
Other obligations for ongoing operational expenses
include in particular expected payments for bonuses
and other price deductions.
Income from the reversal of other provisions amount-
ing to €322 million (2016: €480 million) is recorded
in cost of sales and in selling and administrative
expenses.
32
Income tax liabilities
Current income tax liabilities totalling €1,124 million
(2016: €1,074 million) include liabilities of €68 million
(2016: €33 million) which are expected to be settled
after more than twelve months. Liabilities may be
settled earlier than this depending on the timing of
proceedings.
33
Financial liabilities
in € million
12,491
458
469
Net defined
benefit liability
3
2,999
557
557
557
557
-479
78
78
-171
-171
-171
-8
-8
-8
Gains (-) or losses (+) on plan assets, excluding amounts included
in interest income
-1,836
-1,836
-1,836
Gains (-) or losses (+) arising from changes in financial assumptions
Gains (-) or losses (+) arising from changes in demographic assumptions
Gains (-) or losses (+) arising from experience adjustments
Changes in the limitation of the net defined benefit asset to the
asset ceiling
4,093
4,093
4,093
-40
-40
-40
-118
-118
the net defined
benefit asset to
the asset ceiling
-118
Limitation of
2,996
EXPENSE/INCOME
Current service cost
Interest expense (+)/income (−)
Past service cost
Gains (-) or losses (+) arising from settlements
REMEASUREMENTS
-1,165
-1,165
-1,165
86
-86
-619
637
18
18
-548
450
-98
-98
22,710
-19,477
3,233
3,236
3,252
Defined
benefit
obligation
Plan assets
Total
19,926
-16,930
-16
in € million
Transfers to fund
Pensions and other benefits paid
Plan assets in Germany, the UK and other countries
comprised the following:
in € million
Germany
United Kingdom
2017
2016
2017
Other
Total
2016
2017
2016
2017
2016
COMPONENTS OF PLAN ASSETS
Equity instruments
1,682
1,726
478
611
222
235
2,382
2,572
Debt instruments
5,668
5,439
6,354
6,071
Depending on the cash flow profile and risk structure
of the pension obligations involved, pension plan
assets are invested in various investment classes.
Employee contributions
7
Balance Sheet
Translation differences and other changes
31 December 2016
thereof pension provision
thereof assets
-827
-827
-827
85
-85
-643
676
33
33
-1,339
1,166
-173
-173
22,899
-18,315
4,584
4,587
4,587
Allocations to pension plans in the financial year 2017
include a transfer from plan assets for pre-retirement
part-time working arrangements to plan assets for
pension plans amounting to €353 million.
159
160
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Notes to the
Gains on plan settlements resulted from the closure of
defined benefit plans in the UK. Vested benefits from
these plans will be increased in line with inflation in
the future. Compensation amounting to €140 million
was paid in conjunction with the closure of the plans.
The net gain arising on plan settlement amounted to
€72 million.
30
5,564
55
78,260
5,447
5,287
112
129
248
287
184
145
9,039
7,880
2,667
2,825
Other assets
Receivables from subsidiaries
80,434
534
366
31.12.2017
Fair value hedges
Other derivative instruments
Marketable securities and investment funds
Loans to third parties
Credit card receivables
Other
Cash and cash equivalents
276
Trade receivables
31.12.2016
31.12.2017
31.12.2016
Cash funds
Loans and receivables
31.12.2017
31.12.2016
Available for sale
422
Receivables from companies in which an investment is held
1,334
Liabilities from customer deposits (banking)
Commercial paper
Asset-backed financing transactions
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Liabilities to banks
Other
Other liabilities
Payables to subsidiaries
Payables to other companies in which an investment is held
Other
Total
*The carrying amounts of cash flow and fair value hedges are allocated to the category "Held for trading" for the sake of clarity.
5,734
Trade payables
Cash flow hedges
Bonds
LIABILITIES
1,217
Collateral receivables
219
287
97
100
Other
Financial liabilities
1,108
Total
9,258
8,167
86,363
84,409
5,910
5,921
1,124
Derivative instruments
314
Receivables from sales financing
204
199
Guarantees*
10
11
Other
203
249
Contingent liabilities
816
485
* Prior year's figure has been adjusted.
Other contingent liabilities comprise mainly risks
relating to taxes and customs duties.
The BMW Group determines its best estimate of con-
tingent liabilities on the basis of information available
at the reporting date. This assessment may change
over time and is adjusted regularly on the basis of
new information and circumstances. A part of risks
is covered by insurance.
In June 2016, Germany's Federal Cartel Agency con-
ducted searches at various carmakers and suppliers,
including BMW AG, in relation to the purchase of steel.
The respective official investigations have not yet been
completed. Further disclosures pursuant to IAS 37.86
cannot be provided at present.
26
31.12.2016
31.12.2017
Litigation
Financial assets
221
58
7,174
2,427
7,256
2,599
In July 2017, cartel allegations against five German car
manufacturers appeared in the press. The BMW Group
subsequently launched an internal investigation,
which has not yet been completed. In October 2017,
the European Commission began an inspection at the
BMW Group. A number of class action lawsuits were
brought in the USA and Canada. Possible risks for the
BMW Group cannot be quantified at present; further
disclosures pursuant to IAS 37.86 cannot be provided
at present.
OTHER DISCLOSURES
Contingent liabilities and other financial
commitments
Contingent liabilities
The following contingent liabilities existed at the
balance sheet date:
in € million
Investment subsidies
36
Regulatory agencies have ordered the BMW Group
to recall various vehicle models in connection with
airbags supplied by the Takata group of companies.
Provision for the costs involved has been recognised
within warranty provisions. In addition to the risks
already covered by warranty provisions, it cannot be
ruled out that further BMW Group vehicles will be
affected by future recall actions. Further disclosures
pursuant to IAS 37.86 cannot be provided at present.
399
In addition to liabilities, provisions and contingent
liabilities, other financial commitments consist in
particular of rental and leasing contracts for buildings,
property, machinery, tools, offices and other facilities.
Contracts have a term of between one and 84 years
and include in part renewal and purchase options
or price adjustments in the form of index-linked or
graduated rent, for example to compensate inflation.
Purchase commitments for
property, plant and equipment
4,137
3,141
Purchase commitments for
intangible assets
1,804
1,363
168
31.12.2016
Group
Financial
Statements
→ Other Disclosures
37
Financial instruments
The carrying amounts of financial instruments are
assigned to IAS 39 categories and cash funds as fol-
lows:*
in € million
ASSETS
Other financial commitments
Notes to the Group
Financial Statements
31.12.2017
167
Other investments
in € million
The total minimum future leasing payments from
uncancellable rental contracts and operating leases
is represented by maturity as follows:
in € million
31.12.2017
31.12.2016
due within one year
446
447
In 2017, an expense amounting to €430 million (2016:
€432 million) was recognised for payments on oper-
ating leases.
1,179
1,102
849
895
2,474
2,444
In addition, the following commitments exist for the
BMW Group at the reporting date:
due between one and five years
due later than five years
Other financial obligations
99
744
615
5,949
5,535
110,111
109,161
Other
3,331
Payables to other companies in which an investment is held
Total
169
170
Group
Financial
Statements
129
1,090
Payables to subsidiaries
Asset-backed financing transactions
Trade payables
Notes to the Group
Financial Statements
→ Other Disclosures
Derivative instruments
190
1,694
Cash flow hedges
571
870
Other liabilities
Fair value hedges
767
Other derivative instruments
1,132
1,249
Other
9,731
8,512
329
The following table shows the fair values and carry-
ing amounts of financial assets and liabilities that
are measured at cost or amortised cost and whose
carrying amounts differ from their fair value. For
16,474
in € million
45,566
44,880
45,140
44,421
12,724
12,658
14,942
78,260
14,892
13,572
13,545
13,512
17,005
16,855
16,556
Commercial paper
13,588
some balance sheet items it is assumed, due to their
generally short maturity, that their fair value corre-
sponds to the carrying amount.
81,621
83,853
Receivables from sales financing
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Asset-backed financing transactions
Fair value measurement of financial instruments
The following interest rate curves were used to dis-
count financial instruments at 31 December 2017:
in %
80,434
Interest rate for six months
Interest rate for five years
Interest rate for ten years
31.12.2017
Fair value
31.12.2016
Carrying amount
Fair value
Carrying amount
Interest rate for one year
Liabilities from customer deposits (banking)
44,880
Bonds
-103
-1,337
1,415
1,437
Total changes during the year
78
Balance at 1 January
2016
Fair value option
31.12.2017
Other liabilities
31.12.2016
31.12.2017
29
26
31
550
Balance at 31 December
1,515
78
ISO Code
134
-158
-335
328
Gains/losses from hedged items
Ineffectiveness of fair value hedges
31.12.2016
31.12.2017
26
Gains/losses on hedging instruments
designated as part of a fair value hedge
relationship
No effects were recognised in financial result in 2017
in connection with forecasting errors and resulting
overhedging (2016: losses of €2 million). Gains due
to the ineffective portion of cash flow hedges amount-
ing to €17 million were recognised in financial result
(2016: losses of €11 million). As in the previous year,
no effects were recognised in financial result in con-
nection with forecasting errors relating to cash flow
hedges for commodities. Losses attributable to the
ineffective portion of cash flow hedges amounting to
€1 million were recognised in financial result (2016:
gains of €17 million).
The following table shows gains and losses from fair
value hedge relationships on hedging instruments
and hedged items:
Fair value hedges
At 31 December 2017, the BMW Group held deriva-
tive financial instruments, mainly commodity swaps,
with terms of up to 46 months (2016: 58 months) to
hedge raw materials price risks. The income statement
impact of the hedged cash flows will be recognised
as a general rule in the same periods in which the
derivative instruments mature. It is expected that
€55 million of net gains, recognised in equity at the
end of the reporting period, will be reclassified to
profit and loss in the new financial year (2016: net
losses of €94 million).
As in the previous year, the BMW Group held no
derivative financial instruments at 31 December 2017
which were designated as cash flow hedges to hedge
against interest rate risks.
At 31 December 2017, the BMW Group held deriva-
tive financial instruments (mainly forward currency
contracts) in order to hedge currency risks attached
to future or existing transactions. These derivative
instruments are intended to hedge forecast sales
denominated in a foreign currency over the coming
32 months (2016: 44 months). The income statement
impact of the hedged cash flows will be recognised as
a general rule in the same periods in which external
revenues are recognised. It is expected that €336 mil-
lion of net gains, recognised in equity at the end of
the reporting period, will be reclassified to profit
and loss in the new financial year (2016: net losses
of €113 million).
Fair value gains and losses recognised on derivatives
and recorded initially in accumulated other equity
are reclassified to cost of sales when the derivatives
mature.
in € million
Held for trading
31.12.2016
31.12.2016
Fair value hedges
Other derivative instruments
Marketable securities and investment funds
Loans to third parties
Credit card receivables
Other
Cash and cash equivalents
Cash flow hedges
Trade receivables
Receivables from subsidiaries
Receivables from companies in which an investment is held
Collateral receivables
Other
Total
LIABILITIES
Financial liabilities
Other assets
Liabilities to banks
Derivative instruments
Receivables from sales financing
31.12.2017
44,421
12,658
14,892
13,572
13,512
4,461
Financial assets
3,852
16,474
2,187
814
1,340
1,758
949
1,215
4,341
3,922
ASSETS
Other investments
16,855
EUR
netting agreements or similar contracts are in place,
actual offsetting would be possible in principle, for
instance in the case of insolvency. Offsetting would
have the following impact on the carrying amounts
of derivatives:
Level hierarchy in accordance with IFRS 13
255
2,753
2,162
2017
2016
Gains/losses from the use of derivative instruments
961
1,265
Fair value option
Gains/losses on investments measured at fair value through profit and loss
3
Available-for-sale
Gains and losses on sale and fair value measurement of marketable securities held for sale
(including investments in subsidiaries and participations measured at cost)
48
-155
3,506
-1,169
-1,169
-835
Gains and losses on financial instruments
The following table shows the net gains and losses
arising for each of the categories of financial instru-
ment defined by IAS 39:
in € million
Held for trading
31.12.2017
Reported on Reported on equity
assets side
Net income from participations and investments in subsidiaries
31.12.2016
Reported on
assets side
Reported on equity
and liabilities side
4,341
1,090
3,922
3,331
-835
and liabilities side
14
13
Accumulated other equity
-38
162
586
Gains/losses from the use of derivatives relate primari-
ly to fair value gains or losses arising on stand-alone
derivatives.
In the case of financial instruments for which the
fair value option is applied, no significant changes in
fair values arose in the financial year 2017 or on an
accumulated basis which were attributable to changes
in the default risk. Such credit-risk related changes in
fair values are calculated as a general rule by deducting
changes relating to the market risk from the change
in fair value.
Net interest expenses from interest rate and interest
rate/currency swaps amounted to €108 million (2016:
€120 million).
-94
174
Notes to the Group
Financial Statements
→ Other Disclosures
No impairment losses were recorded in the income
statement during the year under report (2016:
€76 million) on available-for-sale marketable securities
reported as investments for which value changes are
recognised directly in equity. Reversals of impairment
losses on marketable securities reported as invest-
ments amounting to €67 million (2016: € - million)
were recognised directly in equity.
The disclosure of interest income resulting from the
unwinding of discount on future expected receipts
applies at BMW Group only where assets have been
discounted as part of the process of determining
impairment losses of financial assets. Due to the
assumption that the major part of income that is
subsequently recovered is received within one year,
the discounted interest is considered insignificant and
is not taken into account in determining impairment
losses.
Cash flow hedges
The impact of cash flow hedges on accumulated other
equity is shown as follows:
in € million
2017
Group
Financial
Statements
Gross amount of derivatives which can be offset in case of insolvency
Net amount after offsetting
-210
Income/expenses
Balance at 1 January
52
24
Total change during the year
41
28
thereof recognised in the income statement during the period under report
-162
-44
93
52
Balance at 31 December
Loans and receivables
Impairment losses/reversals of impairment losses
Other income/expenses
Other liabilities
-39
Balance sheet amounts as reported
in € million
173
31.12.2017
Level 3. Fair values are determined in accordance with
the following table:
Valuation method
Input Parameter
105
Last financing round
Milestone analysis (quantitative and
Fair value
qualitative factors)
Company performance
Contractual rights by share class
Price per share
2
Last financing round
Milestone analysis (quantitative and
qualitative factors)
Company performance
Price per share
Contractual rights by share class
7
Unquoted equity instruments
Level 1
5,387
213
Level 2
1,933
1,842
147
1,402
1,479
Convertible bonds
450
171
172
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Other Disclosures
Financial instruments recognised at fair value for
which no market price is available are allocated to
in € million
Level 3
91
Last financing round
Milestone analysis (quantitative and
qualitative factors)
Consideration of exercise price
Company performance
Contractual rights by share class
Exercise price
Financial Instru-
ments Level 3
105
8
8
3
3
-6
2
-1
105
2
2
109
Offsetting of financial instruments
In the BMW Group, offsetting of financial assets and
liabilities relating to derivative financial instruments is
generally to be considered. No offsetting is recognised
in the financial statements, however, as the necessary
criteria are not met. Since legally enforceable master &
-7
-7
Price per share
103
Convertible bonds
Options on unquoted equity instruments
2
Level 3 financial assets relate to investments within a
private equity fund that was newly established dur-
ing the financial year under report. Private equity
companies are valued on the basis of net asset value,
which is determined using relevant information that
is not available in the public domain. The fund man-
ager assesses the underlying individual companies
in accordance with the guidelines for international
private equity and venture capital valuations (IPEV).
7
Detailed listing and quantification of potential sen-
sitivities of the input parameters is not considered
meaningful in view of the valuation methodology
applied. An increase in input parameters would
generally also lead to a similar increase in valuation.
The balance sheet carrying amount of Level 3 financial
instruments developed as follows:
in € million
Options on
unquoted equity
instruments
1. January 2017
Disposals
Gains (+)/losses (-) recognised in accumulated other equity
Gains (+)/losses (-) recognised in the income statement
Currency translation differences
31. December 2017
No Level 3 financial instruments existed at the end
of the previous financial year.
Unquoted equity
instruments
Additions
-24
thereof reclassified to the income
statement
Credit risk
in € million
As stated there, the BMW Group applies a value-at-risk
approach throughout the Group for internal reporting
purposes and to manage interest rate risks. This is
based on an advanced historical simulation, in which
the potential future fair value losses of the interest
rate portfolios compared to expected amounts are
measured throughout the Group on the basis of a
holding period of 250 days and a confidence level
of 99.98%. Through the aggregation, risk reduction
effects are identified which are due to correlations
between the various portfolios.
Interest rate risks can be managed by the use of inter-
est rate derivatives. The interest rate contracts used
for hedging purposes comprise mainly swaps, which,
if hedge accounting is applied, are accounted for as
fair value hedges. A description of the management
of interest rate risks is provided in the Combined
Management Report.
The starting point for the analysis of raw materials
price risk are planned purchases of raw materials or
components containing raw materials, i.e. the expo-
sure. At the reporting date exposures for the following
financial
year amounted to:
The BMW Group is exposed to the risk of price fluc-
tuations for raw materials. A description of the man-
agement of these risks is provided in the Combined
Management Report.
14
19
16
29
244
253
545
504
532
557
Raw material price exposures
31.12.2017
31.12.2016
3,969
Raw materials price risks
As in the previous year, there were no reclassifica-
tions within the level hierarchy during the financial
year 2017.
In situations where a fair value was required for dis-
closure purposes only, this was determined using the
discounted cash flow method and taking account of
the BMW Group's own credit risk. For this reason,
the fair values calculated can be allocated to Level 2.
Level 3
105
2
1,797
31.12.2016
2,008
2
31.12.2016
778
221
The potential negative impact on earnings is calculated
at the reporting date for each raw materials category
for the following financial year on the basis of current
market prices and exposure with a confidence level of
95% and a holding period of up to one year. The risk
mitigating effect of correlations between the various
categories of raw materials is taken into account when
the risks are aggregated.
These exposures are compared to all hedges that are in
place. The net cash flow surplus represents an uncov-
ered risk position. The cash-flow-at-risk approach
involves allocating the impact of potential fluctuations
in raw material prices to operating cash flows on the
basis of probability distributions. Volatilities and
correlations serve as input factors to determine the
relevant probability distributions.
3,150
534
31.12.2017
Raw material price risk
Japanese Yen
US Dollar
Euro
in € million
The fair values of the Group's interest rate portfolios
for the five main currencies were as follows at the end
of the reporting period:
Interest rate risks arise when funds are borrowed and
invested with differing fixed-rate periods or differing
terms. All items subject to interest are exposed to
interest rate risk. Interest rate risks can affect either
side of the balance sheet.
The BMW Group's financial management involves
the use of standard financial instruments such as
short-term deposits, investments in variable and
fixed-income securities as well as securities funds.
The BMW Group is therefore exposed to risks resulting
from changes in interest rates.
Interest rate risks
British Pound
Notes to the Group
Financial Statements
→ Other Disclosures
178
177
the currencies referred to above.
Currency risk for the BMW Group is concentrated on
30
35
Euro/Korean Won
Group
Financial
Statements
Currency risks
Chinese Renminbi
31.12.2017 31.12.2016
Chinese Renminbi
British Pound
US Dollar
Euro
in € million
The following table shows for interest-rate-sensitive
exposures of the BMW Group the potential fair value
fluctuation compared with the expected value, meas-
ured on the basis of the value-at-risk approach:
571
Japanese Yen
691
4,326
5,708
5,262
14,340
15,454
28,063
28,374
3,124
Interest rate risks
Derivative instruments (liabilities)
Other risks
2.40
1.29
0.33
4.88
Interest rates taken from interest rate curves were
adjusted, where necessary, to take account of the
credit quality and risk of the underlying financial
instrument.
Commodity derivatives were measured on the basis
of the following quoted market prices:
Raw material
0.91
31.12.2017 31.12.2016
USD/t 7,212.25 5,537.00
Aluminium
USD/t 2,258.75
1,695.13
Palladium
USD/oz 1,057.00
Platinum
Copper
USD/oz
4.74
1.04
USD
GBP
JPY
CNY
-0.33
1.82
0.86
0.12
-0.08
-0.26
1.88
0.65
0.03
4.71
0.32
2.24
4.87
278
925.00
Iron ore
Interest rate risks
Currency risks
Raw materials price risks
Other risks
Derivative instruments (liabilities)
Interest rate risks
Currency risks
5,544
284
Raw materials price risks
Marketable securities, investment funds and collateral assets - available-for-sale
Other investments - available-for-sale/fair value option
Loans to third parties
Derivative instruments (assets)
Interest rate risks
Currency risks
Raw materials price risks
in € million
Coking coal
Derivative instruments (assets)
Other investments - available-for-sale/fair value option
USD/t
USD/t
265.00
680.96
903.50
230.00
72.40
79.65
Financial instruments measured at fair value are allo-
cated to different measurement levels in accordance
with IFRS 13. This includes financial instruments that
are
The difference between the gains/losses on hedging
instruments, mainly interest rate swaps and combined
interest rate/currency swaps, and the results recog-
nised on the underlying hedged items represents the
ineffective portion of fair value hedges.
1. measured at their fair values in an active market
for identical financial instruments (Level 1),
3. using input factors not based on observable
market data (Level 3).
The following table shows the amounts allocated to
each measurement level at the end of the reporting
period:
in € million
31.12.2017
Level hierarchy in accordance with IFRS 13
Level 1
Level 2
Marketable securities, investment funds and collateral assets - available-for-sale
2. measured at their fair values in an active market
for comparable financial instruments or using
measurement models whose main input factors
are based on observable market data (Level 2), or
50
Loans to third parties
70
466
Total
Other financial liabilities
Derivative instruments
4,463
4,463
Commercial paper
9,731
9,731
Trade payables
13,773
130
3,418
10,225
Liabilities from customer deposits (banking)
637
111
1,214
110
9,954
Bonds
Total
Maturity later
than five years
Maturity between
one and five years
one year
in € million
13,973
Maturity within
109,115
9,748
46,004
53,363
752
451
191
31.12.2016
771
3,656
9,546
Group
Financial
Statements
176
175
-
Further disclosures relating to credit risk - in particu-
lar with regard to the amounts of impairment losses
recognised are provided in the explanatory notes
to the relevant categories of receivables in → notes 23,
24 and 28.
A concentration of credit risk with particular borrow-
ers or groups of borrowers has not been identified in
conjunction with financial instruments.
The credit risk relating to derivative financial instru-
ments is minimised by the fact that the Group only
enters into such contracts with parties of first-class
credit standing. The general credit risk on derivative
financial instruments utilised by the BMW Group is
therefore considered to be insignificant.
Notes to the Group
Financial Statements
→ Other Disclosures
→ see
note 4
Creditworthiness testing is an important aspect of
the BMW Group's credit risk management. Every
borrower's creditworthiness is tested for all credit
financing and lease contracts entered into by the
BMW Group. In the case of retail customer financing,
creditworthiness is assessed using validated scoring
systems integrated into the acquisition process. In
the area of dealership financing, creditworthiness is
assessed by means of ongoing credit monitoring and
an internal rating system that takes account not only
of the material credit standing of the borrower, but
also of qualitative factors such as past reliability in
business relations.
→ note 4.
Impairment losses are recorded as soon as credit risks
are identified on individual financial assets, using a
methodology specifically designed by the BMW Group.
More detailed information regarding this methodol-
ogy is provided in the section on accounting policies
Within the financial services business, in the retail
customer and dealership areas, financed items, for
example vehicles, equipment and property, serve
as first-ranking collateral with a recoverable value.
Security is also put up in the form of collateral asset
pledges, asset assignment and first-ranking mortgages,
supplemented where appropriate by warranties and
guarantees. If an item previously accepted as collat-
eral is acquired, it undergoes a multi-stage process
of repossession and disposal in accordance with the
legal situation prevailing in the relevant market. As
the assets involved are mainly vehicles, they can be
converted into cash at any time through the dealership
organisation.
In the case of all relationships underlying primary
financial instruments, in order to minimise the cred-
it risk and depending on the nature and amount of
exposure, collateral is required, credit information and
references obtained or historical data based on the
existing business relationship, in particular payment
behaviour, reviewed.
Notwithstanding the existence of collateral, the
carrying amounts of financial assets generally take
account of the maximum credit risk arising from
the possibility that counterparties will not be able
to fulfil their contractual obligations. The maximum
credit risk for irrevocable credit commitments
amounts to €1,217 million for the credit card busi-
ness (2016: €1,461 million) and €27,953 million (2016:
€27,494 million) for dealership financing.
Euro/US Dollar
→ see
notes 23, 24
and 28
26,766
Liquidity risk
in € million
Liabilities to banks
17,988
10,901
7,087
Asset-backed financing transactions
47,221
8,285
The following table shows the maturity structure of
11,735
Total
Maturity later
than five years
Maturity between
one and five years
one year
Maturity within
31.12.2017
expected contractual cash flows (undiscounted) for
financial liabilities:
Bonds
10,089
27,201
Asset-backed financing transactions
2,460
4,785
4,425
10,467
10,160
Euro/Chinese Renminbi
Euro/British Pound
Euro/Korean Won
31.12.2016
1,926
31.12.2017
The starting point for analysis of currency risk in this
model are the planned foreign currency transactions
or "exposures". At the end of the reporting period,
the main exposures for the relevant coming year were
as follows:
A description of the management of this risk is
pro-
vided in the Combined Management Report. The
BMW Group measures currency risk using a cash-
flow-at-risk model.
contracts.
In order to hedge currency risks, the BMW Group
holds, as at 31 December 2017, derivative financial
instruments mostly in the form of forward currency
As an enterprise with worldwide operations, the
BMW Group conducts business in a variety of cur-
rencies, from which currency risks arise. Since a
significant portion of Group revenues is generated
outside the euro currency region and procurement of
production materials and funding is also carried out
on a worldwide basis, currency risk is an extremely
important factor for Group earnings.
Currency risks
Further information is provided in the "Report on
outlook, risks and opportunities" section of the Com-
bined Management Report.
in € million
The scope of action, responsibilities, financial report-
ing procedures and control mechanisms used for
financial instruments are set out in detailed internal
guidelines. This includes, in particular, a clear sepa-
ration of duties between trading and processing of
transactions. Currency, interest rate and raw materi-
als price risks of the BMW Group are managed at a
corporate level.
Euro/Japanese Yen
Euro/US Dollar
1,152
98
46,809
Euro/Japanese Yen
134
154
Euro/British Pound
249
1,618
193
31.12.2017
Euro/Chinese Renminbi
in € million
The following table shows the potential negative
impact for the BMW Group resulting from unfavour-
able changes in exchange rates, measured on the
basis of the cash-flow-at-risk approach. The impact
for the main currencies, in each case for the following
financial year, is as follows:
The potential negative impact on earnings is calculated
at the reporting date for each currency for the follow-
ing financial year on the basis of current market prices
and exposures with a confidence level of 95% and a
holding period of up to one year. The risk mitigating
effect of correlations between the various currencies
is taken into account when the risks are aggregated.
These exposures are compared to all hedges that
are in place. The net cash flow surplus represents
an uncovered risk position. The cash-flow-at-risk
approach involves allocating the impact of potential
exchange rate fluctuations to operating cash flows on
the basis of probability distributions. Volatilities and
correlations serve as input factors to determine the
relevant probability distributions.
3,319
31.12.2016
Protection against such risks is provided in the first
instance through natural hedging which arises when
the values of non-derivative financial instruments
have matching maturities and amounts (netting).
Derivative financial instruments are used to reduce
the risk remaining after netting. Financial instruments
are used exclusively to hedge underlying positions or
planned transactions.
1,510
Market risks
Commercial paper
8,512
8,512
Trade payables
13,719
133
3,446
7,161
Liabilities from customer deposits (banking)
16,030
558
4,234
11,238
Liabilities to banks
17,099
The principal market risks to which the BMW Group
is exposed are currency risk, interest rate risk and raw
materials price risk.
9,938
3,853
3,853
10,140
Other financial liabilities
Total
Depending on financing requirements and market
conditions, the BMW Group issues commercial paper
and corporate bonds in various currencies. Asset-
backed securities also continue to be issued in various
currencies. Refinancing is supplemented by customer
deposits at the Group's own banks and loans from
international banks.
Derivative instruments
This is supported by the longstanding long- and short-
term ratings issued by Moody's and Standard & Poor's.
Solvency is assured at all times by managing and moni-
toring the liquidity situation on the basis of a rolling
cash flow forecast. The resulting funding requirements
are secured by a variety of instruments placed on the
world's financial markets, with the aim to minimise
risk by matching maturities with financing require-
ments and in alignment with a dynamic target debt
structure. The BMW Group enjoys favourable access
to capital markets as a result of its continued solid
financial position and a diversified refinancing strategy.
The cash flows comprise principal repayments and
the related interest. The amounts disclosed for deriv-
ative instruments comprise only cash flows relating
to derivatives that have a negative fair value at the
balance sheet date. At 31 December 2017, irrevocable
credit commitments to dealerships which had not
been called upon at the end of the reporting period
amounted to €8,812 million (2016: €9,194 million).
11,568
851
601
111,438
72
52,913
1,983
178
46,957
2,395
As a further reduction of risk, a syndicated credit
line totalling €8 billion (2016: €6 billion) assured by
a consortium of international banks is available to
the BMW Group. Intra-group cash flow fluctuations
are balanced out by the use of daily cash pooling
arrangements.
4,565
187
23,249
10,466
Rest of Asia
11,434
14,807
1,588
30,544
31,473
Rest of Europe
13,910
31,678
85
16,000
17,110
USA
23
29,741
16,619
18,295
13,553
13,776
China
20,766
1,439
64,192
3,838
LIST OF INVESTMENTS AT
31 DECEMBER 2017
→ List of Investments
at 31 December 2017
Germany
Notes to the Group
Financial Statements
Group
Financial
Statements
188
63,906
94,163
98,678
-7,345
-8,028
Group
Eliminations
261
355
3,251
2,975
Other regions
2,628
2,941
3,507
Rest of the Americas
2016
in € million
2016
7,432
7,829
Other Entities segment
Non-operating assets -
96,423
Total for reportable segments
31.12.2016
31.12.2017
Reconciliation of segment assets
8,112
8,455
-6,271
-6,324
14,383
14,779
Reconciliation of depreciation and
amortisation on non-current assets
Total for reportable segments
Elimination of inter-segment items
Total Group depreciation and
amortisation on non-current assets
24,162
25,393
on non-current assets
-6,756
44
Total liabilities-
Financial Services segment
123,088
126,679
Non-current assets
2017
External revenues
in € million
Information by region
187
plant and equipment, intangible assets and leased
products. Eliminations disclosed for non-current
assets relate to leased products.
In the information by region, external sales are based
on the location of the customer. Revenues with major
customers were not material overall. The information
disclosed for non-current assets relates to property,
188,535
193,483
2017
Total Group assets
Elimination of inter-segment items
33,858
35,212
not subject to interest
and Motorcycles segments
Liabilities of Automotive
45,923
48,193
Automotive and Motorcycles segments
Non-operating assets -
-122,390 -121,780
List of investments at 31 December 2017
The List of Investments of BMW AG pursuant to § 285
and § 313 HGB is presented below. Disclosures for
equity and earnings and for investments are not made
100
Affiliated companies (subsidiaries) of BMW AG at 31 December 2017
→ 65
110
999
BMW España Finance S. L., Madrid
100
413
1,489
BMW (UK) Holdings Ltd., Farnborough
100
824
3,026
BMW Österreich Holding GmbH, Steyr
100
15
7,913
BMW International Holding B.V., Rijswijk 10
100
1,959
16,655
BMW Holding B.V., The Hague
Europe 12
FOREIGN²
100
BMW Financial Services (GB) Ltd., Farnborough
894
261
-6,728
100
2
100
g|ལ
594
94
603
100
29
100
728
BMW (UK) Manufacturing Ltd., Farnborough
BMW Malta Ltd., Floriana
100
45
794
BMW (Schweiz) AG, Dielsdorf
100
172
879
BMW Motoren GmbH, Steyr
BMW Coordination Center V.o.F., Bornem
if they are of "minor significance" for the results
of operations, financial position and net assets of
BMW AG pursuant to § 286 (3) sentence 1 no. 1 HGB
and §313 (3) sentence 4 HGB. It is also shown in
the list which subsidiaries apply the exemptions
available in § 264 (3) and § 264 b HGB with regard
to the publication of annual financial statements
and the drawing up of a management report and/or
notes to the financial statements (footnotes 5 and 6).
The Group Financial Statements of BMW AG serve
as exempting consolidated financial statements for
these companies.
100
51
BMW M GmbH Gesellschaft für individuelle Automobile, Munich 3,5,6
BMW Vermögensverwaltungs GmbH, Munich
Rolls-Royce Motor Cars GmbH, Munich 4,5,6
BAVARIA-LLOYD Reisebüro GmbH, Munich
Bavaria Wirtschaftsagentur GmbH, Munich 3,5,6
BMW Anlagen Verwaltungs GmbH, Munich 3,6
Bürohaus Petuelring GmbH, Munich
BMW Fahrzeugtechnik GmbH, Eisenach 3,5,6
BMW Vertriebszentren Verwaltungs GmbH, Munich
LARGUS Grundstücks-Verwaltungsgesellschaft mbH, Munich
BMW High Power Charging Beteiligungs GmbH, Munich 4,6,11
BMW Hams Hall Motoren GmbH, Munich 4,5,6
Parkhaus Oberwiesenfeld GmbH, Munich
Alphabet Fuhrparkmanagement GmbH, Munich4
Alphabet International GmbH, Munich 4,5,6
BMW Verwaltungs GmbH, Munich 3,6
BMW Finanz Verwaltungs GmbH, Munich
BMW Bank GmbH, Munich³
BMW INTEC Beteiligungs GmbH, Munich³,6
BMW Beteiligungs GmbH & Co. KG, Munich
DOMESTIC 1,12
Companies
Equity
in € million
Profit/loss
in € million
Capital invest-
ment in %
100
100
100
100
100
100
100
100
100
100
100
100
153
100
326
100
1,988
100
3,558
100
.5
5,289
100
30,918
101,551
Total for reportable segments
Elimination of inter-segment items
Total Group capital expenditure
The total carrying amount of the provision for the
share-based remuneration component of current
and former Board of Management members and
senior heads of department at 31 December 2017 was
€6,301,785 (2016: €5,473,219).
The total expense recognised in 2017 for the share-
based remuneration component of current and former
Board of Management members and senior heads of
department was €1,642,936 (2016: €1,443,227).
The fair value of the programmes for Board of Man-
agement members and senior heads of department
at the date of grant of the share-based remuneration
components was €2,311,946 (2016: €1,950,853), based
on a total of 25,694 shares (2016: 21,201 shares) of
BMW AG common stock or a corresponding cash-
based settlement measured at the relevant market
share price on the grant date.
Further details on the remuneration of the Board
of Management are provided in the Compensation
Report for the financial year 2017.
40
Declaration with respect to the Corporate
Governance Code
The Board of Management and the Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft have
issued the prescribed Declaration of Compliance
pursuant to § 161 of the German Stock Corporation
Act. It is reproduced in the Annual Report 2017 of
the BMW Group and is also permanently available
to shareholders on the BMW Group website at
→ www.bmwgroup.com/ir.
181
The cash-settlement for the share-based remuneration
component is measured at its fair value at the balance
sheet date (based on the closing price of BMW AG
common stock on the Xetra system at 31 Decem-
ber 2017).
182
Notes to the Group
Financial Statements
→ Other Disclosures
→ Segment Information
41
Compensation of members of the Board of
Management and Supervisory Board
The total compensation of the current members of
the Board of Management and the Supervisory Board
of BMW AG expensed for the financial year 2017 in
accordance with IFRS comprised the following:
42
Events after the end of the reporting period
No events have occurred since the end of the financial
year which could have a major impact on the results
of operations, financial position and net assets of
BMW AG and the BMW Group.
in € million
Group
Financial
Statements
The share-based remuneration component is measured
at its fair value at each balance sheet date between
grant and settlement date, and on the settlement date.
The amounts are recognised as personnel expense
on a straight-line basis over the vesting period and
reported in the balance sheet as a provision.
With effect from the financial year 2012, qualifying
senior heads of department are also entitled to select
a share-based remuneration component, which is
largely comparable to the share-based remuneration
arrangements for Board of Management members.
Each member of the Board of Management is required
to invest 20% of his or her total bonus after tax in
shares of BMW AG common stock, which are record-
ed in a custodian account of the member concerned
(annual tranche). Each annual tranche is subject to a
holding period of four years. On completion of the
holding period, BMW AG grants one additional share
of BMW AG common stock for every three held or pays
the equivalent amount in cash (share-based remuner-
ation component). Separate rules apply in the case of
death or invalidity of a Board of Management member
or early termination of the contractual relationship
before fulfilment of the holding period.
1,435
1,227
255
585
Entrust Datacard Corp.
106
97
5
5
Apart from vehicle leasing and financing contracts
at usual conditions, companies of the BMW Group
concluded no further transactions with members of
the Board of Management or Supervisory Board of
BMW AG. This also applies to close members of the
families of those persons.
BMW Trust e. V., Munich, administers assets on a
trustee basis to secure obligations relating to pen-
sions in Germany and is therefore a related party
of the BMW Group in accordance with IAS 24. This
entity has no assets of its own. It had no income or
expenses during the period under report. BMW AG
bears expenses on an immaterial scale and performs
services for BMW Trust e. V., Munich.
For disclosures relating to key management personnel,
please see → note 41 and the Compensation Report. → see
note 41
note 29
39
Share-based remuneration
The BMW Group provides three share-based pro-
grammes: the Employee Share Programme for enti-
tled employees of the BMW Group, a share-based
remuneration programme for members of the Board
of Management and a share-based remuneration pro-
gramme for senior heads of department of BMW AG.
As part of the Employee Share Programme, non-voting
shares of preferred stock in BMW AG were granted
in 2017 to qualifying employees at favourable con-
→ see ditions (see → note 29 for the number and price of
issued shares). The holding period for these shares is
up to 31 December 2020. In the financial year 2017,
the BMW Group recorded a personnel expense of
€10 million (2016: €7 million) for the Employee Share
Programme, corresponding to the difference between
the market price and the reduced price of the shares
of preferred stock purchased by employees. The Board
of Management reserves the right to decide anew each
year with respect to an Employee Share Programme.
For financial years beginning after 1 January 2011,
BMW AG has added a share-based remuneration
component to the existing compensation system for
Board of Management members.
2017
29
2016
Board of Management
2.0
Variable compensation
3.6
3.4
Total expense
49.8
46.9
thereof due within one year
2.0
45.9
The total remuneration of former members of the
Board of Management and their dependants amount-
ed to €6.7 million (2016: €6.5 million).
Pension obligations to current members of the Board
of Management are covered by provisions amounting
to €22.0 million (2016: €23.6 million), determined in
accordance with IAS 19 (Employee Benefits). Pen-
sion obligations to former members of the Board of
Management and their surviving dependants, also
determined in accordance with IAS 19, amounted to
€90.1 million (2016: €86.4 million).
The compensation systems for members of the
Supervisory Board include no stock options, value
appreciation rights comparable to stock options or
other stock-based compensation components. Apart
from vehicle lease and financing contracts at custom-
ary conditions, no advances or loans were granted
to members of the Board of Management and the
Supervisory Board of BMW AG or its subsidiaries, nor
were any contingent liabilities entered into on their
behalf.
Further details on the remuneration of current mem-
bers of the Board of Management and the Supervisory
Board can be found in the Compensation Report,
which is part of the Combined Management Report.
SEGMENT INFORMATION
43
Explanatory notes to segment information
Information on reportable segments
For the purposes of presenting segment information,
the activities of the BMW Group are divided into oper-
ating segments in accordance with IFRS 8 (Operating
Segments). The segmentation follows the internal
management and reporting system and takes account
of the organisational structure of the BMW Group
based on the various products and services of the
reportable segments.
43.3
Fixed compensation and attendance fees
5.6
Supervisory Board
40.2
37.6
Fixed remuneration
7.7
7.8
Variable remuneration
31.7
29.0
Share-based remuneration component
0.8
0.8
Allocation to pension provisions
3.1
2.8
Benefits in conjunction with the
termination of an employment relationship
0.9
1.1
Compensation to members of the
Compensation to members of the
27
UnternehmerTUM GmbH
50
at 31 December
at 31 December
2016
2017
2016
2017
2016
BMW Brilliance Automotive Ltd.
Payables
5,946
63
50
1,333
1,215
739
615
Business relationships of the BMW Group with other
associated companies and joint ventures as well as
with non-consolidated subsidiaries are small in scale.
Stefan Quandt, Germany, is a shareholder and Deputy
Chairman of the Supervisory Board of BMW AG. He is
also the sole shareholder and Chairman of the Super-
visory Board of DELTON AG, Bad Homburg v.d.H.,
which, via its subsidiaries, performed logistic-related
services for the BMW Group during the financial year
2017. In addition, companies of the DELTON Group
acquired vehicles from the BMW Group by way of
leasing.
5,316
Receivables
2017
2016
32,121
The following table shows the potential negative
cost impact for the BMW Group resulting from
fluctuations in prices across all categories of raw
materials, measured on the basis of the cash-flow-
at-risk approach. The risk at the reporting date for ¬
38
Related parties
Transactions of Group entities with related parties
were carried out without exception in the normal
course of business of each of the parties concerned
and at market conditions.
in € million
Supplies and services
performed
2017
7
the following financial year was as follows:
in € million
Cash flow at risk
31.12.2017
31.12.2016
409
135
A significant proportion of the BMW Group's transac-
tions with related parties relates to the joint venture
BMW Brilliance Automotive Ltd.
Supplies and services
received
Stefan Quandt, Germany, is also the indirect major-
ity shareholder of SOLARWATT GmbH, Dresden. A
cooperation exists between BMW Group and SOLAR-
WATT GmbH, Dresden, within the field of electric
mobility. The focus of the cooperation is the provision
of complete photovoltaic solutions for rooftop systems
and carports to BMW i customers. In 2017, SOLAR-
WATT GmbH, Dresden, acquired vehicles from the
BMW Group by way of leasing.
Susanne Klatten, Germany, is a shareholder and
member of the Supervisory Board of BMW AG and
also a shareholder and Deputy Chairwoman of the
Supervisory Board of ALTANA AG, Wesel. In 2017,
ALTANA AG, Wesel, acquired vehicles from the
BMW Group, mainly by way of leasing.
Susanne Klatten, Germany, is also the sole share-
holder and Chairwoman of the Supervisory Board
of UnternehmerTUM GmbH, Garching. In 2017,
the BMW Group bought in services from Unterne-
hmerTUM GmbH, Garching, mainly in the form of
consultancy and workshop services.
In addition, Susanne Klatten, Germany, and Stefan
Quandt, Germany, are indirectly sole shareholders of
Entrust Datacard Corp., Shakopee, Minnesota. Stefan
Quandt is also a member of the supervisory board of
this entity. In 2017, Entrust Datacard Corp., Shakopee,
Minnesota, acquired vehicles from the BMW Group
by way of leasing.
29,816
22,554
94
64
4,464
1,331
SOLARWATT GmbH
36
309
5
1
ALTANA AG
2,421
2,690
296
458
360
337
36
3,546
The activities of the BMW Group are broken down
into the operating segments Automotive, Motorcycles,
Financial Services and Other Entities.
3,393
2016
179
180
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Other Disclosures
Seen from the perspective of BMW Group entities,
the volume of transactions with the above-mentioned
entities was as follows:
in € thousand
Supplies and services
performed
2017
Supplies and services
received
2016
2017
2016
Receivables
at 31 December
2017
2016
Payables
at 31 December
2017
DELTON AG
Within the Automotive segment the BMW Group devel-
ops, manufactures, assembles and sells automobiles
and off-road vehicles, under the brands BMW, MINI
and Rolls-Royce as well as spare parts, accessories
and mobility services. BMW and MINI brand products
are sold in Germany through branches of BMW AG
and by independent, authorised dealerships. Sales
outside Germany are handled mainly by subsidiary
companies and by independent import companies in
some markets. Rolls-Royce brand vehicles are sold in
the USA, China, Korea, Italy and Russia via subsidiary
companies and elsewhere by independent, authorised
dealerships.
5.4
Automobile leasing, fleet business, multi-brand busi-
ness, retail and dealership financing, customer deposit
business and insurance activities are the main activities
allocated to the Financial Services segment.
94,163
80
170
298
-553
10,655
9,665
738
98,678
-6,728
-6,324
-6,271
25,393
8,455
441
24,162
8,112
Other Entities
Reconciliation to Group figures
31.12.2017
-6,756
-19,760 -20,017
Activities relating to the development, manufacture,
assembly and sale of motorcycles as well as spare
parts and accessories are reported in the Motorcycles
segment.
7
2,767
2,546
Other Entities
2017
2016
Reconciliation to Group figures
2017
Group
2016
2016
2017
3
2
98,678
94,163
4
4
-19,760
-20,017
31.12.2016
11,049
31.12.2017
31.12.2016
The total of the segment figures can be reconciled to
the corresponding Group figures as follows:
in € million
Reconciliation of segment result
Total for reportable segments
2017
2016
10,357
10,218
The information disclosed on capital expenditure and
depreciation and amortisation relates to non-current
property, plant and equipment, intangible assets and
leased products.
Financial result of Automotive
segment and Motorcycles segment
Elimination of inter-segment items
219
-528
-772
Group profit before tax
10,655
9,665
Reconciliation of capital expenditure
on non-current assets
826
The Other Entities' segment result includes interest
and similar income amounting to €1,110 million (2016:
€1,250 million) and interest and similar expenses
amounting to €986 million (2016: €1,006 million).
The segment result includes no impairment losses
on other investments (2016: €18 million).
Financial Services segment result was negatively
impacted by impairment losses totalling €215 million
(2016: €384 million) recognised on leased products.
Income from the reversal of impairment losses on leased
products totalled €11 million (2016: €211 million).
Write-downs on inventories to their net realisable
value amounting to €27 million (2016: €101 million)
were recognised by the Automotive segment in the
financial year 2017. The write-downs recorded in the
previous year related mainly to accidents and natural
disasters.
31.12.2017
31.12.2016
SEGMENT INFORMATION
BY OPERATING SEGMENT
External revenues
Inter-segment revenues
Total revenues
Segment result
Result from equity accounted investments
Capital expenditure on non-current assets
Depreciation and amortisation on non-current assets
75,121
75,363
91,932
92,112
193,483
2,767
188,535
2,546
Segment assets
Investments accounted for using the equity method
185
186
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Segment Information
Group
14,740
6
618
2016
2017
2016
SEGMENT INFORMATION
BY OPERATING SEGMENT
External revenues
70,546
67,977
Financial Services
2,272
24,122
Inter-segment revenues
18,035
18,447
11
7
1,710
1,559
2,062
2017
600
2016
Holding and Group financing companies are report-
ed in the Other Entities segment. This segment also
includes operating companies BMW Services Ltd.,
BMW (UK) Investments Ltd. and Bavaria Lloyd Rei-
sebüro GmbH, which are not allocated to one of the
other segments.
Internal management and reporting
Segment information is prepared as a general rule
in conformity with the accounting policies adopted
for preparing and presenting the Group Financial
Statements. Exceptions to this general principle are
the treatment of inter-segment warranties, the earn-
ings impact of which is allocated to the Automotive
and Financial Services segments on the basis used
internally to manage the business, and cross-segment
impairment losses on investments in subsidiaries.
Inter-segment receivables and payables, provisions,
income, expenses and profits are eliminated upon
consolidation. Inter-segment sales take place at mar-
ket prices.
The role of "chief operating decision maker" with
respect to resource allocation and performance
assessment of the reportable segment is embodied
in the full Board of Management. For this purpose,
different measures of segment performance as well as
segment assets are taken into account in the operating
segments.
The Automotive and Motorcycles segments are
managed on the basis of return on capital employed
(ROCE). The relevant measure of segment earnings
is therefore profit before financial result. Capital
employed is the corresponding measure of segment
assets used to assess allocation of resources and com-
prises all current and non-current operational assets
after deduction of liabilities used operationally which
are not subject to interest (e.g. trade payables).
The success of the Financial Services segment is meas-
ured on the basis of return on equity (RoE). Profit
before tax therefore represents the relevant measure
of segment earnings. The measure of segment assets
in the Financial Services segment corresponds to net
assets, defined as total assets less total liabilities.
The success of the Other Entities segment is assessed
on the basis of profit or loss before tax. The corre-
sponding measure of segment assets used to manage
the Other Entities segment is total assets less asset-
side income tax items and intragroup investments.
183
184
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Segment Information
Segment information by operating segment is as
follows:
in € million
Automotive
Motorcycles
2017
Total revenues
Segment result
25,857
86,424
4,702
88
75
9,992
9,606
in € million
Segment assets
88,581
Automotive
Motorcycles
Financial Services
31.12.2017
31.12.2016
31.12.2017
31.12.2016
31.12.2017
31.12.2016
11,072
9,411
4,699
Depreciation and amortisation on non-current assets
Investments accounted for using the equity method
25,024
25,105
2,069
27,567
25,681
7,863
7,695
207
187
2,207
2,283
Result from equity accounted investments
2,166
125
5,699
6,972
114
441
738
Capital expenditure on non-current assets
To Our
Shareholders
Composition of the Supervisory Board,
16
15
Examination of financial statements and the profit distribution proposal
KPMG AG Wirtschaftsprüfungsgesellschaft has audited the Company and Group Financial
Statements of Bayerische Motoren Werke Aktiengesellschaft (BMW AG). It also conducted a
review of the abridged Interim Group Financial Statements and Interim Group Management
Report for the six-month period ended 30 June 2017. The results of the review were presented
to the Audit Committee by representatives of KPMG AG Wirtschaftsprüfungsgesellschaft. No
issues were identified that might indicate that the abridged Interim Group Financial Statements
and Interim Group Management Report had not been prepared in all material respects in
accordance with the applicable provisions.
The composition of the Presiding Board and the committees of the Supervisory Board remained
unchanged during the financial year. The Corporate Governance Report includes a summary
of the composition of the Supervisory Board and its committees.
In view of the applicable age limit, with effect from the end of the Annual General Meeting
2017, Professor Henning Kagermann stepped down from the Supervisory Board, of which he
had been a member since 2010. We thank Professor Kagermann for his valuable work and the
trustful cooperation with which he served on the Supervisory Board. At the Annual General
Meeting 2017, Dr.-Ing. Heinrich Hiesinger was elected as new shareholder representative for
a five-year term of office.
→ Report of the
the Presiding Board and Supervisory Board Committees
In addition, we decided in three cases to renew the appointment of members of the Board of
Management.
In individual cases, we also gave our approval to Board of Management members to assume
mandates outside the Group.
The statutory Mediation Committee did not need to convene during the financial year 2017.
The Nomination Committee convened once during the financial year 2017. We reviewed the
succession planning for shareholder representatives and made recommendations for the proposal
of candidates for the Supervisory Board election of the Annual General Meeting 2018, taking
into account the composition targets previously resolved by the Supervisory Board.
The Personnel Committee also undertook the preparatory work for the Supervisory Board's
decision to appoint a new Board of Management member to head the Sales and Brand BMW,
Aftersales BMW Group, taking account of the requirements profile and diversity concept agreed
upon for the Board of Management.
The Personnel Committee convened four times during the financial year 2017. The meetings
focused on preparations for revising the Board of Management compensation system and related
service contracts.
In conjunction with the Employee Share Programme, the Audit Committee approved the decision
of the Board of Management to raise the Company's share capital in accordance with § 4 (5) of
the Articles of Incorporation (Authorised Capital 2014) by €491,000 and to issue a corresponding
number of new non-voting bearer shares of preferred stock, each with a par value of €1, at
favourable conditions to employees.
An independent auditor engaged by us to conduct the mandatory audit of over-the-counter
derivative transactions confirmed the effectiveness of the system that BMW AG currently employs
to ensure compliance with regulatory requirements.
Another area of focus for the Audit Committee was preparing for the change in external auditor
with effect from the 2019 financial year. In this context, we organised a tender procedure in
accordance with new statutory requirements and, after carefully examining the applicants,
made a recommendation to the full Supervisory Board. The non-audit services provided by the
auditor were also regularly scrutinised.
Supervisory Board
Supervisory Board
Composition of the Board of Management
The composition of the Board of Management changed at the turn of the year following the appoint-
ment of Pieter Nota as a Member of the Board of Management with effect from 1 January 2018.
Mr Nota has joined the BMW Group with a wealth of international experience in the areas of sales
and marketing. He succeeds Dr Ian Robertson as Board member responsible for Sales and Brand
BMW, Aftersales BMW Group. In agreement with the Supervisory Board, Dr Robertson retired
from the Board of Management with effect from the end of 31 December 2017. He will continue
to support the BMW Group with his expertise as ambassador of the BMW Group in the United
Kingdom until 30 June 2018. With his energy and commitment, Dr Robertson contributed to the
BMW Group's outstanding growth and success during an almost ten-year term of office on the
Board. We wish to express our appreciation and thank Dr Robertson for his dedicated services.
The Group and Company Financial Statements of BMW AG for the year ended 31 December 2017
and the Combined Management Report - as authorised for issue by the Board of Management
on 15 February 2018 – were audited by KPMG AG Wirtschaftsprüfungsgesellschaft and given
an unqualified audit opinion.
→ Report of the
The Audit Committee closely examined and discussed these documents at a meeting held on
26 February 2018. The Audit Committee reviewed in detail the key audit matters raised in
the auditor's report of the Company and Group Financial Statements and the related audit
procedures performed by KPMG.
Harald Krüger
Chairman of the Board of Management
Management
of the Board of
→ Statement of the
Chairman
Shareholders
To Our
18
17
Chairman of the Supervisory Board
Norbert Reithofer
Man
Yours
On behalf of the Supervisory Board
Munich, 8 March 2018
We wish to express our appreciation to the members of the Board of Management and the
entire workforce worldwide of the BMW Group for their joint efforts and hard work, which have
contributed to the outstanding performance for the financial year 2017.
Expression of appreciation by the Supervisory Board
On presentation of the Sustainable Value Report, the Audit Committee and the Supervisory
Board also reviewed the separate non-financial report of BMW AG (Company and Group) at
31 December 2017, which has been drawn up for the first time by the Board of Management. The
audit firm PricewaterhouseCoopers GmbH has performed a “limited assurance" review of these
reports and issued an unqualified opinion thereon. The documents were carefully examined
by the Audit Committee at its meeting on 26 February 2018 and by the Supervisory Board at
its meeting on 8 March 2018. The Board of Management gave a detailed explanation of the
reports at both meetings. Representatives of the auditors attended both meetings, reported on
significant findings and answered additional questions raised by the members of the Supervisory
Board. The Supervisory Board acknowledged and approved the separate non-financial report
(Company and Group) drawn up by the Board of Management.
We also examined the proposal of the Board of Management to use the unappropriated profit to
pay an increased dividend of €4.00 per share of common stock and €4.02 per share of non-voting
preferred stock. We consider the proposal appropriate and have therefore approved it.
Based on thorough examination by the Audit Committee and the full Supervisory Board, we
concurred with the results of the external audit. In accordance with the conclusion reached
after the examination by the Audit Committee and the full Supervisory Board, no objections
were raised. The Group and Company Financial Statements of BMW AG for the financial year
2017 prepared by the Board of Management were approved at the Supervisory Board meeting
held on 8 March 2018. The financial statements have therefore been adopted.
The representatives of the external auditor confirmed that the risk management system estab-
lished by the Board of Management is capable of identifying at an early stage developments that
might threaten the Company's going-concern status. They confirmed that no material weaknesses
in the internal control system and risk management system with regard to the financial reporting
process were identified. Similarly, they did not identify in the course of their audit work any
facts that were inconsistent with the contents of the Declaration of Compliance pursuant to
§ 161 AktG, issued by the Board of Management and the Supervisory Board.
The Supervisory Board examined the relevant drafts of the Board of Management at its meeting
on 8 March 2018, after hearing the committee chairman's report on the meeting of the Audit
Committee. In both meetings, the Board of Management gave a detailed explanation of the
financial reports it had prepared. Representatives of the external auditor were present at both
meetings. They reported on the main findings of their audit, explained the key audit matters in
the audits of the Company and Group Financial Statements and answered additional questions
of members of the Supervisory Board.
The Auditor's Report has been signed since the financial year 2016 by Christian Sailer, as
independent auditor (Wirtschaftsprüfer), and since the financial year 2014 by Andreas Feege,
as independent auditor (Wirtschaftsprüfer) responsible for the performance of the engagement.
The financial statements for the financial year 2017, the Combined Management Report, the
reports of the external auditors and the Board of Management's profit distribution proposal
were made available to all members of the Supervisory Board in a timely manner.
To Our
Shareholders
Regarding the Chinese market, the Board of Management provided us with detailed information
on business developments and specific local requirements and explained the strategy pursued
in this region.
13
We also took a close look at the BMW Group's IT strategy. The Board of Management explained
the steps already taken towards further digitalisation of the BMW Group. At the same time, it
informed us on the threat of cyberattacks and outlined the safeguards and defence measures
within the IT security management system.
In the second part of the meeting, we reviewed in detail the long-term corporate plan for the
years 2018 to 2023 and discussed in depth various risk scenarios with the Board of Management.
The Board of Management explained the Performance NEXT programme, which will support
the financing of future topics by leveraging potential on the performance and cost side. After
careful examination and discussion, we approved the plan and urged the Board to implement
systematically the measures proposed and to drive ahead with electric mobility at the BMW Group,
in order to act from a position of strength.
In the course of a vehicle presentation, we had the opportunity to drive the current BMW Group
models with various drivetrain concepts on a test track. We were able to see for ourselves
the progress made in the field of autonomous driving. Selected vehicles, including various
battery-electric vehicles (BEVs), and technologies were also presented and explained to us
through models and exhibits.
During the first part of the meeting we discussed the annual review of Strategy NUMBER ONE > NEXT
with the Board of Management. The Board of Management explained the decisions taken in each
strategic area, such as the expansion of digital services and products and developments in the
field of autonomous driving. It also presented various scenarios for the development of drivetrain
systems and outlined the measures it has taken to respond flexibly to customer requirements. The
Board of Management also provided us with a detailed account of the competitive environment
in the electric mobility sector. We support the Board of Management's initiatives to expand the
charging infrastructure.
One Supervisory Board meeting was held at the Dingolfing plant. A major focus of this
meeting was the report of the Board of Management on the development of the worldwide
production network, highlighting in particular international cooperation between the plants.
It also explained how Industry 4.0 innovations are being applied in production, for example
in the field of logistics, where components tracking increases supply reliability. The Group
has already been exploiting the possibilities of additive manufacturing (3D printing) in pro-
duction for several years. A further topic of the meeting was BMW Group's strategy in the
area of taxes and customs duties. The Board of Management presented a range of scenarios
on the operational and financial impact for the BMW Group of the United Kingdom's exit
from the European Union. We were also briefed by the Board on the US administration's
announcements regarding taxes and duties and the possible consequences for the BMW Group.
We also discussed the CSR Directive Implementation Act and its impact on non-financial
reporting for the BMW Group. In this context, the Supervisory Board has amended its rules
of procedure and expanded the tasks of the Audit Committee. We commissioned the audit
firm PricewaterhouseCoopers GmbH to perform a voluntary, limited assurance review of the
separate report on non-financial information. During a guided tour of the Dingolfing plant,
we were able to learn about the future production of the BMW i NEXT, amongst others.
The two-day Supervisory Board meeting focused in particular on the Group's strategy and the
long-term corporate plan.
At the beginning of the year, the Board of Management presented to us the new models and
model revisions due for market launch in 2017.
Supervisory Board
→ Report of the
To Our
Shareholders
At our final meeting of the financial year 2017, the Board of Management presented the annual
planning for the financial year 2018. We reviewed in detail the opportunities and risks and
discussed them with the Board of Management.
10
The Board of Management also highlighted in its situation reports important current transactions
and projects, which we then followed up in our in-depth discussions. These included, for
example, progress made in the areas of product quality and customer satisfaction. The Board of
Management also reported on events such as the "diesel summit” in Berlin and the International
Motor Show (IAA Cars) in Frankfurt. In addition, the Board of Management explained the status
of various cooperation negotiations and transactions, such as the establishment of a joint venture
with other manufacturers to build a European network of fast charging stations.
In its regular reports on the BMW Group's current situation, the Board of Management provided
us with information on the deliveries trend and the competitive environment in the Automotive
and Motorcycles segments as well as the development of new contracts and business volumes
in the Financial Services segment, also explaining any variances against forecast. The Board of
Management also provided us with the latest workforce figures, reported on developments on
key markets and explained business forecasts.
Between meetings, the Chairman of the Board of Management, Mr Harald Krüger, informed
me directly and promptly in our regular consultations on the current state of major business
transactions and projects.
The Company's situation and development have been continually in our focus, also outside of
meetings. The Board of Management reported to us regularly on the latest sales and workforce
figures and provided us with information on matters of particular importance as they arose.
The Board of Management reported regularly to us on the implementation of Strategy
NUMBER ONE > NEXT. Key areas of focus included the BMW Group's strategy for drivetrain
technology and progress in the field of electric mobility. Further major activities were the revised
Board of Management compensation system and the Group business plan. At each of our five
Supervisory Board meetings, we discussed in detail the current situation of the BMW Group
with the Board of Management.
Monitoring and advisory activities of the Supervisory Board
Throughout the financial year 2017, the Supervisory Board performed its duties with the utmost
care in accordance with the law and the Articles of Incorporation. We provided the Board
of Management in their strategic development and management of the BMW Group with
constructive advice and closely and continuously monitored its running of the business.
The BMW Group sold more than 100,000 electrified vehicles during the past year. With the
move towards electrification of the fleet and the biggest model offensive ever undertaken in the
company's history, the BMW Group is getting ready for the future. The BMW Group delivered
an outstanding earnings performance in the financial year 2017 and once again confirmed its
leading position in the premium segment with record deliveries.
Dear Shareholders,
14
9
With respect to vehicle architecture, the Board of Management explained measures taken to
implement the electrification strategy and presented the specific benefits.
Furthermore, when necessary, the Chairman of the Audit Committee, Dr Karl-Ludwig Kley,
liaised directly with the Member of the Board of Management responsible for Finance, Dr Nicolas
Peter, outside scheduled meetings.
Furthermore, the Board of Management reported in detail on the performance, risk situation
and business strategies of the Financial Services segment. It described the measures in place
to comply with regulatory requirements and provided information on the status of regulatory
proceedings against a locally based financial services company.
A key focus of the Audit Committee's work was on compliance. The Chairman of the BMW Group
Compliance Committee informed us about the status of compliance within the Group, initially
in the regular report at the end of June. He presented here new IT systems designed to support
compliance management. Immediately after the appearance of media reports on cartel allegations
at the end of July in connection with the so-called "circle of five", we held a meeting of the Presiding
Board and the Audit Committee. The Board of Management informed us in detail of the status of
the internal investigation that it had immediately launched and which is being conducted with the
support of an international law firm. The Head of Legal Affairs and Patents explained the legal
background of the allegations. We also discussed the BMW Group Compliance Management's
existing preventive measures with respect to antitrust compliance. The progress of the internal
investigation was analysed in detail at the two subsequent Audit Committee meetings, both of
which were attended by a representative of the appointed law firm. As a precautionary measure,
the Chairman of the Audit Committee also had the representative of the appointed law firm
report on the progress of the investigation without members of the Board of Management or
myself being present. These issues were discussed at length at the subsequent meetings of the
Supervisory Board.
In addition, the Board of Management addressed the allegations made against BMW in various
media outlets with regard to emissions treatment and confirmed that the BMW Group engages
in no activities or technical measures to influence the test mode for measurement of emissions.
The Head of Group Internal Audit presented the main findings of Group internal audits per-
formed during the year under report and outlined the areas of focus for planned audits. He also
informed us about an external quality assessment of Group audit activities, which concluded
that the relevant German and international standards were met.
The Head of Group Financial Reporting presented to us current developments in the internal
control system (ICS) underlying financial reporting. The tests performed highlighted no material
ICS weaknesses which would jeopardise the system's effectiveness.
During the financial year 2017, the Head of Group Controlling reported to the Audit Committee
on the current risk profile of the BMW Group. In this context, we reviewed in depth a number
of individual topics, such as risk management with regard to suppliers.
The Audit Committee's meeting in spring 2017 focused primarily on preparing for the Supervisory
Board meeting at which the financial statements were to be examined. Before recommending
to the full Supervisory Board that KPMG AG Wirtschaftsprüfungsgesellschaft be elected as
Company and Group auditor at the Annual General Meeting 2017, we obtained a Declaration
of Independence from KPMG. We also considered the scope and composition of non-audit
services, including tax advisory services provided by KPMG entities to the BMW Group. We
found no indications of grounds for exclusion, conflicts of interest, or risk to the independence
of the auditor.
The Audit Committee held five meetings and two telephone conference calls during the finan-
cial year 2017. In the course of those conference calls and at one meeting together with the
Board of Management, we reviewed the Quarterly Financial Reports prior to their publication.
Representatives of the external auditors were present during the presentation of the Half-Year
Financial Report.
Description of Presiding Board activities and committee work
In order to increase efficiency and ensure better preparation of its plenary meetings, the Super-
visory Board has established a Presiding Board and four committees. Committee chairpersons
reported in detail and in a timely manner on Presiding Board and committee work at the following
meeting of the Supervisory Board. The shareholder representatives were informed by myself of
the activities of the Nomination Committee. A detailed description of the duties, composition
and work procedures of the various committees is provided in the Corporate Governance Report.
The Presiding Board convened five times during the financial year under report. Assuming
no other committee was responsible, the focus of our activities was on preparing the detailed
agenda for the meetings of the full Supervisory Board. Complex and wide-ranging topics, such
as the long-term plan, were prepared together in detail with the Board of Management and
senior heads of department on the basis of written and oral reports. We also selected further
topics for full Supervisory Board meetings and made suggestions for reports submitted to
the full Supervisory Board.
Average attendance of the five Supervisory Board meetings held in the financial year 2017 was 94%.
An individualised overview of attendance at meetings of the Supervisory Board and its committees
for the financial year 2017 has been published on the BMW Group's website. All members of the
Supervisory Board attended more than half of the meetings of the Supervisory Board and those
committees to which they belonged during their term of office in the financial year 2017.
Following a detailed efficiency examination in the previous year, the Supervisory Board reviewed
the efficiency of its activities in 2017 on the basis of a structured questionnaire. Moreover, mem-
bers of the Supervisory Board had the opportunity to discuss matters with me individually. The
self-review was discussed in the full Supervisory Board. Overall, the work of the Supervisory Board
was deemed efficient. No significant need for change was identified. Proposals, for example with
respect to the reports provided by the Board of Management, were taken into account.
The fee proposals for the audit of the year-end Company and Group Financial Statements 2017 and
the review of the Half-year Financial Report were deemed appropriate. Subsequent to the Annual
General Meeting 2017, we therefore appointed KPMG AG Wirtschaftsprüfungsgesellschaft for
the relevant engagements and specified additional audit focus areas.
Together with the Board of Management, we gave careful consideration to the corporate governance
standards of the BMW Group as well as the provisions of the German Corporate Governance
Code. The same also applies to the proposal that the Chairman of the Supervisory Board should
engage in dialogue with investors on subjects specific to the Supervisory Board. As a result of the
revision of the compensation system with effect from the financial year 2018, it was necessary to
retrospectively cancel the previous performance targets for variable compensation for the years 2018
and 2019 and replace them with the new, more ambitious target system. The current Declaration
of Compliance pursuant to § 161 AktG is included in the Corporate Governance Report.
The Supervisory Board had already adopted detailed targets for its own composition which
included competence-related criteria. These targets were confirmed in the form of the “competency
profile". Based on a self-review conducted by the Supervisory Board, it was concluded that the
current composition of the Supervisory Board is in line with the targets of the diversity concept
and competency profile, as well as other targets set for its composition at 31 December 2017.
Supervisory Board
Within the Personnel Committee and Supervisory Board, we closely examined the structure
and amounts of compensation for members of the Board of Management. In our review, we
took into account the development of the Group, as well as compensation of the executive
management and the overall workforce in Germany over time. In addition, we consulted studies
of the compensation at DAX-listed companies. We were assisted here by an independent external
compensation consultant. After a detailed examination and discussion, we concluded that
the compensation of the Board of Management for the financial year 2017, including pension
entitlements, is appropriate.
→ Report of the
To Our
Shareholders
12
11
No conflicts of interest arose on the part of Members of the Board of Management or Supervisory
Board during the year under report. Significant transactions with Supervisory Board members
and other related parties as defined by IAS 24, including close relatives and intermediary entities,
were examined on a quarterly basis.
A further topic reported on by the Board of Management was the current status of the diversity
concept. The Board informed us on the targets they have set for increasing the proportion
of women in the workforce, particularly in the management, and the current level of target
achievement. In addition, the Board of Management explained the measures it has taken to
encourage cultural diversity and a mixed age structure in the workforce.
While leaving the existing overall upper limits unchanged, we have revised the compensation
system for the Board of Management. Apart from an increase in Board members' base salary,
the focus was on revising the system for variable remuneration. We have paid special attention
to linking variable remuneration even more closely to sustainable business development and
the long-term business plan. A new multi-year component has been introduced, in the form of
a performance cash plan. Other provisions contained in the standard service contract for Board
members were also updated. With the agreement of its members, all Board of Management
service contracts have been amended with effect from 1 January 2018. Further information on
Board of Management compensation and on the new compensation system with effect from
the financial year 2018 is provided in the Compensation Report (see section Statement on
Corporate Governance).
0
2015-2 ABL, Tokyo 14
2016-1 ABL, Tokyo 14
2016-2 ABL, Tokyo 14
2017-1 ABL, Tokyo 14
2017-2 ABL, Tokyo 14
0
0
0
0
0
2015-1 ABL, Tokyo 14
0
0
2014-2 ABL, Tokyo 14
༄༄ ༅g 6「 g རྞ g g g| g g g| g| g g| ༠༐ ༠༐ ༠༐ ༠」
Bavarian Sky China 2017-2, Beijing 14
100
0
100
100
100
100
Bavarian Sky China 2017-3, Beijing 14
100
192
Group
Financial
Statements
Notes to the Group
Financial Statements
→ List of Investments
at 31 December 2017
Bavarian Sky China 2016-2, Beijing 14
Bavarian Sky China 2017-1, Beijing 14
100
0
ParkNow GmbH, Munich
0
100
PM Parking Ventures GmbH, Munich
FOREIGN7
Europe
Alphabet Insurance Services Polska Sp. z o.o., Warsaw
BMW (GB) Ltd., Farnborough
BMW Car IT GmbH, Munich4
BMW (P+A) Ltd., Farnborough
BMW Car Club Ltd., Farnborough
BMW Drivers Club Ltd., Farnborough
BMW Group Benefit Trust Ltd., Farnborough
BMW i Ventures B.V., The Hague
BMW Motorsport Ltd., Farnborough
Cobalt Holdings Ltd., Basingstoke
BMW (UK) Pensions Services Ltd., Hams Hall
0
Digital Charging Solutions GmbH, Munich
BMW i Ventures GmbH, Munich
2017-3 ABL, Tokyo 14
Oceania
BMW Australia Finance Ltd., Mulgrave
BMW Australia Ltd., Melbourne
BMW Financial Services New Zealand Ltd., Auckland
BMW New Zealand Ltd., Auckland
Automag GmbH, Munich
BMW Sydney Pty. Ltd., Sydney
BMW Australia Trust, Mulgrave, Victoria 14
BMW AG's non-consolidated companies at 31 December 2017
→ 66
Companies
DOMESTIC7
Alphabet Fleetservices GmbH, Munich
BMW Melbourne Pty. Ltd., Melbourne
100
68
63
BMW Malaysia Sdn Bhd, Kuala Lumpur
BMW Asia Pte. Ltd., Singapore
BMW Leasing (Thailand) Co., Ltd., Bangkok
BMW India Private Ltd., Gurgaon
BMW China Services Ltd., Beijing
BMW Asia Technology Centre Sdn Bhd, Kuala Lumpur
Herald International Financial Leasing Co., Ltd., Tianjin 11
BMW Holding Malaysia Sdn Bhd, Kuala Lumpur
BMW Asia Pacific Capital Pte Ltd., Singapore
BMW Credit (Malaysia) Sdn Bhd, Kuala Lumpur
BMW Tokyo Corp., Tokyo
BMW Lease (Malaysia) Sdn Bhd, Kuala Lumpur
Bavarian Sky Korea Auto Receivable 1 Pte. Ltd., Singapore 14
Bavarian Sky Korea 2016-1, Seoul 14
PT BMW Indonesia, Jakarta
Bavarian Sky Korea 2017-1, Seoul 14
BMW Manufacturing (Thailand) Co., Ltd., Rayong
BMW India Financial Services Private Ltd., Gurgaon
0
0
0
0
0
0
BMW (Thailand) Co., Ltd., Bangkok
Africa
BMW Financial Services (South Africa) (Pty) Ltd., Midrand
Bavarian Sky South Africa (RF) Ltd., Johannesburg 14
SuperDrive Investments (RF) Limited, Cape Town 14
Asia
BMW Automotive Finance (China) Co., Ltd., Beijing
BMW China Automotive Trading Ltd., Beijing
BMW Financial Services Korea Co., Ltd., Seoul
BMW Japan Finance Corp., Chiba
BMW Japan Corp., Tokyo
BMW Korea Co., Ltd., Seoul
BMW (South Africa) (Pty) Ltd., Pretoria
100
Bavarian Sky China 2016-1, Beijing 14
54
18
100
0
100
214
16
280
100
10
100
114
88
100
106
122
721
63
100
100
167
-6
100
0
0
414
1,860
58
799
752
100
475
380
289
13
100
134
100
100
100
100
100
65
100
65
100
100
Africa
BMW Automobile Distributors (Pty) Ltd., Midrand
BPF Midrand Property Holdings (Pty) Ltd., Midrand
Multisource Properties (Pty) Ltd., Midrand
100
100
100
100
100
The Americas
217-07 Northern Boulevard Corporation, Wilmington, Delaware
BMW Experience Centre Inc., Richmond Hill, Ontario
BMW i Ventures, LLC, Wilmington, Delaware
BMW i Ventures, Inc., Wilmington, Delaware
BMW Leasing de Argentina S.A., Buenos Aires
100
BMW Operations Corp., Wilmington, Delaware
BMW Technology Corporation, Wilmington, Delaware
Designworks/USA, Inc., Newbury Park, California
Parkmobile Montgomery County, LLC, Baltimore, Maryland 13
Parkmobile, LLC, Wilmington, Delaware 13
Parkmobile USA, Inc., Atlanta, Georgia
Parkmobile Electronic Parking Solutions Canada, Inc., Vancouver
Toluca Planta de Automoviles, S.A. de C.V., Mexico City
100
100
MINI Business Innovation, LLC, Wilmington, Delaware
Mini Urban X Accelerator SPV, LLC, Wilmington, Delaware
Reach Now, LLC, Wilmington, Delaware
U.T.E. Alphabet España-Bujarkay, Sevilla
100
BMW Finance (United Arab Emirates) Ltd., Dubai
BMW Financial Services Hong Kong Limited, Hong Kong
Oceania
Parkmobile International (Australia) Pty. Ltd., Sydney
100
194
Group
Financial
Statements
49
Notes to the Group
Financial Statements
→ List of Investments
BMW AG's associated companies, joint ventures and joint operations at 31 December 2017
→ 67
Companies
Joint ventures - equity accounted
DOMESTIC
DriveNow GmbH & Co. KG, Munich³
0
at 31 December 2017
Asia
100
100
BMW Hong Kong Services Limited, Hong Kong
BMW Financial Services Singapore Pte Ltd., Singapore
BMW India Leasing Pvt. Ltd., Gurgaon
BMW India Foundation, Gurgaon
BMW Insurance Services Korea Co. Ltd., Seoul
BMW Philippines Corp., Manila
70
Herald Hezhong (Beijing) Automotive Trading Co., Ltd., Beijing
100
51
100
100
100
100
THEPSATRI Co., Ltd., Bangkok
100
ParkNow Suisse SA, Bulle
Parkmobile Ltd., Basingstoke
100
100
100
100
100
100
100
100
100
100
Cobalt Telephone Technologies Ltd., Basingstoke
Content4all BV, Amsterdam
John Cooper Garages Ltd., Farnborough
John Cooper Works Ltd., Farnborough
100
000 BMW Leasing, Moscow
100
100
15
100
100
100
100
100
100
0
in € million
Profit/loss
in € million
Capital invest-
ment in %
100
100
Equity
Parkmobile Software BV, Amsterdam
100
100
100
100
100
90
BMW Russland Automotive 000, Kaliningrad
Park-line Aqua B.V., The Hague
100
Park-line B.V., The Hague
Parkmobile International Holding B.V., Utrecht
Parkmobile International B.V., Utrecht
Parkmobile (UK) Ltd., Basingstoke
Parkmobile Belgium BvBa, Antwerpen
Parkmobile Benelux B.V., Amsterdam
ParkNow France SAS, Versailles
Parkmobile Group BV, Amsterdam
Parkmobile Group Holding BV, Amsterdam
Parkmobile Hellas SA, Athens
Parkmobile Licenses B.V., Amsterdam
Park-line Holding B.V., The Hague
100
60
100
100
100
193
100
100
Drive Now Verwaltungs GmbH, Munich³
IONITY Holding GmbH & Co. KG, Munich
100
100
100
100
100
100
100
100
100
0
Alphabet Belgium Long Term Rental NV, Aartselaar
0
100
Swindon Pressings Ltd., Farnborough
BMW Financial Services (Ireland) DAC, Dublin
BMW Financial Services B.V., Rijswijk
BMW Norge AS, Fornebu
Alphabet France Fleet Management S.N.C., Rueil-Malmaison
BMW Financial Services Belgium S.A./N.V., Bornem
BMW Services Ltd., Farnborough
BMW Portugal Lda., Porto Salvo
Alphabet Austria Fuhrparkmanagement GmbH, Salzburg
BMW Retail Nederland B.V., Delft
BMW Hellas Trade of Cars A. E., Kifissia
Alphabet Fuhrparkmanagement (Schweiz) AG, Dielsdorf
BMW Nederland B.V., Rijswijk
Alphabet Italia Fleet Management S.p.A., Rome
BMW Financial Services Polska Sp. z o.o., Warsaw
100
100
100
Bavaria Reinsurance Malta Ltd., Floriana
100
APD Industries plc, Farnborough
100
BMW Austria Ges.m.b.H., Salzburg
100
100
100
100
BMW Bank 000, Moscow
Alphabet España Fleet Management S.A.U., Madrid
BMW Finanzdienstleistungen (Schweiz) AG, Dielsdorf
BMW Northern Europe AB, Stockholm
Alphabet UK Ltd., Glasgow
27
BMW Automotive (Ireland) Ltd., Dublin
BMW Amsterdam B.V., Amsterdam
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Alphabet France SAS, Rueil-Malmaison
100
100
Alphabet Polska Fleet Management Sp. z o.o., Warsaw
BMW Financial Services Denmark A/S, Copenhagen
Park Lane Ltd., Farnborough
BMW Distribution S.A.S., Montigny-le-Bretonneux
BMW Services Belgium N.V., Bornem
BMW Renting (Portugal) Lda., Porto Salvo
100
BMW Roma S.r.l., Rome
Oy BMW Suomi AB, Helsinki
BMW Den Haag B.V., The Hague
100
100
100
100
BMW Danmark A/S, Copenhagen
100
102
100
ALPHABET (GB) Ltd., Farnborough
244
50
100
BMW France, Montigny-le-Bretonneux
223
100
23
BMW Financial Services Scandinavia AB, Sollentuna
218
11
100
BMW Iberica S.A., Madrid
210
100
19
22
BMW Belgium Luxembourg S.A./N.V., Bornem
Equity
189
BMW Finance S.N.C., Guyancourt
BMW Italia S.p.A., San Donato Milanese
BMW (UK) Ltd., Farnborough
419
298
56
360
15
100
330
77
100
100
BMW Vertriebs GmbH, Salzburg
100
154
BMW i Ventures SCS SICAV-RAIF, Senningerberg11
115
-3
100
BMW Austria Bank GmbH, Salzburg
115
100
12
113
17
100
BMW International Investment B.V., The Hague
107
7
100
BMW Finance N.V., The Hague
150
100
20
100
BMW Austria Leasing GmbH, Salzburg
136
13
100
130
Rolls-Royce Motor Cars Ltd., Farnborough
BMW Russland Trading 000, Moscow
135
24
100
131
41
Alphabet Nederland B.V., Breda 10
100
100
100
BMW Facility Partners, LLC, Wilmington, Delaware
BMW FS Securities LLC, Wilmington, Delaware
BMW FS Funding Corp., Wilmington, Delaware
BMW Manufacturing LP, Woodcliff Lake, New Jersey
BMW FS Receivables Corp, Wilmington, Delaware
SB Acquisitions, LLC, Wilmington, Delaware
100
BMW Consolidation Services Co., LLC, Wilmington, Delaware
BMW Leasing de Mexico S.A. de C.V., Mexico City
BMW Insurance Agency, Inc., Wilmington, Delaware
BMW Manufacturing Indústria de Motos da Amazônia Ltda., Manaus
BMW Leasing do Brasil, S.A., São Paulo
BMW de Argentina S.A., Buenos Aires
BMW Financial Services de Mexico S.A. de C.V. SOFOM, Mexico City
BMW Acquisitions Ltda., São Paulo
BMW de Mexico, S.A. de C.V., Mexico City
BMW Auto Leasing, LLC, Wilmington, Delaware
Rolls-Royce Motor Cars NA, LLC, Wilmington, Delaware
100
226
10
100
BMW SLP, S.A. de C.V., Villa de Reyes
187
100
-84
BMW of North America, LLC, Wilmington, Delaware
-288
-679
100
BMW Extended Service Corporation, Wilmington, Delaware
100
100
41
100
100
BMW of Manhattan, Inc., Wilmington, Delaware
BMW Canada Inc., Richmond Hill, Ontario
BMW Vehicle Lease Trust 2015-2, Wilmington, Delaware 14
BMW Vehicle Lease Trust 2016-1, Wilmington, Delaware 14
BMW Vehicle Lease Trust 2016-2, Wilmington, Delaware 14
BMW Vehicle Lease Trust 2017-1, Wilmington, Delaware14
BMW Vehicle Lease Trust 2017-2, Wilmington, Delaware 14
BMW Vehicle Lease Trust 2016-A, Wilmington, Delaware 14
BMW Vehicle Lease Trust 2017-A, Wilmington, Delaware¹4
BMW Vehicle Owner Trust 2014-A, Wilmington, Delaware 14
BMW Vehicle Owner Trust 2016-A, Wilmington, Delaware 14
BMW Floorplan Master Owner Trust, Wilmington, Delaware 14
BMW Canada 2015-A, Richmond Hill, Ontario 14
BMW Canada Auto Trust 2015, Richmond Hill, Ontario 14
BMW Canada Auto Trust 2016, Richmond Hill, Ontario 14
BMW Canada Auto Trust 2017-1, Richmond Hill, Ontario 14
100
BMW Receivables 1 Inc., Richmond Hill, Ontario
100
100
100
0
0
0
0
100
100
BMW Receivables Limited Partnership, Richmond Hill, Ontario
100
100
100
100
100
100
100
191
100
100
100
100
100
BMW Financeira S.A. Credito, Financiamento e Investimento, São Paulo
BMW Receivables 2 Inc., Richmond Hill, Ontario
100
333
100
247
BLMC Ltd., Farnborough
Bavarian Sky FTC, Pantin 14
Bavarian Sky UK 1 PLC, London 14
Bavarian Sky UK A Limited, London 14
Bavarian Sky S.A., Compartment German Auto Loans 3, Luxembourg 14
Bavarian Sky S.A., Compartment German Auto Loans 4, Luxembourg 14
Bavarian Sky S.A., Compartment German Auto Loans 5, Luxembourg 14
Bavarian Sky S.A., Compartment German Auto Loans 6, Luxembourg 14
Bavarian Sky S.A., Compartment German Auto Loans 7, Luxembourg 14
Bavarian Sky S.A., Compartment German Auto Leases 4, Luxembourg 14
Bavarian Sky S.A., Compartment A, Luxembourg 14
Bavarian Sky S.A., Compartment B, Luxembourg 14
Triumph Motor Company Ltd., Farnborough
Bavarian Sky Europe S.A. Compartment A, Luxembourg 14
100
100
100
100
100
100
Bavarian Sky Europe S.A., Luxembourg 14
100
BMW Central Pension Trustees Ltd., Farnborough
BMW (UK) Capital plc, Farnborough
100
190
Group
Financial
Statements
Notes to the Group
Financial Statements
→ List of Investments
Riley Motors Ltd., Farnborough
at 31 December 2017
BMW Milano S.r.I., San Donato Milanese
Société Nouvelle WATT Automobiles SARL, Rueil-Malmaison
Alphabet Luxembourg S.A., Leudelange
BMW (UK) Investments Ltd., Farnborough
BMW Malta Finance Ltd., Floriana
BiV Carry ISCS, Senningerberg11
BMW Madrid S.L., Madrid
100
100
100
BMW do Brasil Ltda., São Paulo
2,444
2,320
100
2,280
220
BMW US Capital, LLC, Wilmington, Delaware
100
303
100
1,358
121
100
1,135
1,431
Financial Services Vehicle Trust, Wilmington, Delaware
BMW Financial Services NA, LLC, Wilmington, Delaware
BMW (US) Holding Corp., Wilmington, Delaware
BMW Manufacturing Co., LLC, Wilmington, Delaware
BMW Bank of North America, Inc., Salt Lake City, Utah
The Americas
100
100
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Profit/loss
⁹ Including power to appoint representative bodies.
in € million
13 100% acquisition on 3 January 2018.
14 Control on basis of economic dependence.
195
196
Group
Financial
Statements
Notes to the Group
Financial Statements
→ List of Investments
12 Deconsolidation in the financial year 2017: BMW Osaka Corp., Tokyo, MITEC Mikroelektronik Mikrotechnik Informatik GmbH, Munich (merger).
at 31 December 2017
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management
Harald Krüger
Milagros Caiña Carreiro-Andree Markus Duesmann
Klaus Fröhlich
Pieter Nota
Dr. Nicolas Peter
Munich, 15 February 2018
Peter Schwarzenbauer
11 First-time consolidation.
IFRS rules. Equity not denominated in euro is translated into euro using the closing exchange rate at the balance sheet date, earnings are translated using the average rate.
17.8
18.9
9.8
16.7
6.2
10.5
9.1
1º Exemption pursuant to Article 2:403 of the Civil Code of the Netherlands (Burgerlijk Wetboek).
18.3
2 The amounts shown for the foreign subsidiaries correspond to the annual financial statements drawn up in accordance with uniform IFRS rules. Equity and earnings not denominated in euro are translated into
euro using the closing exchange rate at the balance sheet date.
3 Profit and Loss Transfer Agreement with BMW AG.
4 Profit and Loss Transfer Agreement with a subsidiary of BMW AG.
5 Exemption from drawing up a management report applied in accordance with § 264 (3) and § 264 b HGB.
6 Exemption from publication of financial statements applied in accordance with § 264 (3) and § 264 b HGB.
7 These entities are neither consolidated nor accounted for using the equity method due to their overall immateriality for the Group Financial Statements.
8 The amounts shown for entities accounted for using the equity method and for proportionately consolidated entities correspond to the annual financial statements drawn up in accordance with uniform
12.0
Oliver Zipse
CORPORATE
GOVERNANCE
→Page 198 Statement on Corporate Governance
(Part of the Combined Management Report)
→ Page 198 Information on the Company's Governing Constitution
→Page 199 Declaration of the Board of Management and
Management
Supervisory Board
Compliance
Compensation
Report
198
Statement on
Corporate
Governance
→Information on the
Company's
Governing
Board of
Constitution
CORPORATE
GOVERNANCE
Good corporate governance - acting in accordance
with the principles of responsible management aimed
at increasing the value of the business on a sustainable
basis - is an essential requirement for the BMW Group
embracing all areas of the business. Corporate culture
within the BMW Group is founded on transparent
reporting and communication, corporate governance
in the interest of all stakeholders, trustful cooperation
both of the Board of Management and the Supervisory
Board as well as among employees, and compliance
with applicable law. The Board of Management and
Supervisory Board report in this statement on impor-
tant aspects of corporate governance pursuant to
§§ 289 f, § 315 d HGB and section 3.10 of the German
Corporate Governance Code (GCGC).
Information on the Company's
Governing Constitution
its
The designation BMW Group comprises Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) and
group entities. BMW AG is a stock corporation
(Aktiengesellschaft) within the meaning of the
German Stock Corporation Act (Aktiengesetz) and
has its registered office in Munich, Germany. It has
three representative bodies: the Annual General
Meeting, the Supervisory Board and the Board of
Management. The duties and powers of those bodies
derive from the Stock Corporation Act and the
Articles of Incorporation of BMW AG. Shareholders,
as the owners of the business, exercise their rights at
the Annual General Meeting. The Annual General
Meeting decides in particular on the utilisation of
unappropriated profit, the ratification of the acts of
the members of the Board of Management and the
Supervisory Board, the appointment of the external
auditor, changes to the Articles of Incorporation and
certain capital measures, and elects the shareholders'
representatives to the Supervisory Board. The Board of
Management is responsible for managing the Company
and is monitored and advised by the Supervisory
Board. The Supervisory Board appoints the members
of the Board of Management and can, for an important
reason, revoke an appointment at any time. The Board
of Management informs the Supervisory Board and
reports to it regularly, promptly and comprehensively,
in line with the principles of conscientious and faithful
accounting and in accordance with the law and the
reporting duties determined by the Supervisory Board.
The Board of Management requires the approval of
the Supervisory Board for certain major transactions.
The Supervisory Board is not, however, authorised to
undertake management measures itself.
in € million
STATEMENT ON
Company's Govern-
ing Constitution
Corporate
Governance
4
→ Page 200
→ Page 201
→ Page 204
of the Supervisory Board pursuant to § 161 AktG
Members of the Board of Management
Members of the Supervisory Board
Composition and Work Procedures of the Board of Management
of BMW AG and its Committees
→ Page 206 Composition and Work Procedures of the Supervisory Board
of BMW AG and its Committees
→ Page 213
→ Page 214
Disclosures pursuant to the Act on Equal Gender Participation
Information on Corporate Governance
Practices Applied beyond Mandatory Requirements
→Page 216 Compliance in the BMW Group
→Page 221 Compensation Report
(Part of the Combined Management Report)
→ Page 239 Responsibility Statement by the Company's
Legal Representatives
→ Page 240 Independent Auditor's Report
4
3.1
4.6
The close interaction between Board of Management
and Supervisory Board in the interests of the Company
as described above is also known as a "two-tier board
structure".
Gios Holding B.V., Oss
1 The amounts shown for the German subsidiaries correspond to the annual financial statements drawn up in accordance with German accounting requirements (HGB).
Not equity accounted or proportionately consolidated entities
DOMESTIC7
Encory GmbH, Unterschleißheim
Digital Energy Solutions GmbH & Co. KG, Munich
The Retail Performance Company GmbH, Munich
Abgaszentrum der Automobilindustrie GbR, Weissach
FOREIGN
PDB - Partnership for Dummy Technology and Biomechanics GbR, Gaimersheim
BMW Albatha Leasing LLC, Dubai
BMW Albatha Finance PSC, Dubai
BMW AVTOTOR Holding B.V., Amsterdam
Stadspasparkeren B.V., Deurne
IP Mobile N.V., Brussels
DSP Concepts, Inc., Dover, Delaware
Bavarian & Co. Ltd., Incheon
FOREIGN7
2,195
SGL Automotive Carbon Fibers GmbH & Co. KG, Munich
Joint operations - proportionately consolidated entities
Capital invest-
ment in %
42
-2
50
50
39
-11
DOMESTIC
25
BMW Brilliance Automotive Ltd., Shenyang³
5,377
1,337
50
Associated companies - equity accounted
FOREIGN
THERE Holding B.V., Amsterdam
FOREIGN
362
SGL Automotive Carbon Fibers, LLC, Dover, Delaware
52
Equity
in € million
Profit/loss
in € million
Capital invest-
ment in %
DOMESTIC
GSB Sonderabfall-Entsorgung Bayern GmbH, Baar-Ebenhausen
Hubject GmbH, Berlin
Companies
IVM Industrie-Verband Motorrad GmbH & Co. Dienstleistungs KG, Essen
Joblinge gemeinnützige AG Leipzig, Leipzig
Joblinge gemeinnützige AG München, Munich
RA Rohstoffallianz GmbH i.L., Berlin
Racer Benchmark Group GmbH, Landsberg am Lech
SGL Carbon SE, Wiesbaden
33
FOREIGN7
Joblinge gemeinnützige AG Berlin, Berlin
→ 68
Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern
20
9
BMW AG's participations at 31 December 2017
41
2
49
50
50
50
25
49
40
40
50
2222
30
25
20
20
Ralf Hattler³ (*1968)
Member since 2017
Head of Purchasing Indirect Goods and Services,
Raw Material, Production Partner
Stefan Schmid¹ (*1965)
Member since 2007
Deputy Chairman
Chairman of the Board of Management
Dr.-Ing. Heinrich Hiesinger (*1960)
Member since 11 May 2017
of thyssenkrupp AG
Mandates
thyssenkrupp Elevator AG (Chairman)
thyssenkrupp Steel Europe AG (Chairman)
thyssenkrupp (China) Ltd. (Chairman)
1 Employee representatives (company employees).
Entrust Datacard Corp.
Chairman of the Works Council, Dingolfing
AQTON SE (Chairman)
Mandates
Mandates
― E.ON SE (Chairman)
Deutsche Lufthansa Aktiengesellschaft
(Chairman, since 25 September 2017)
Verizon Communications Inc. (until 3 May 2018)
Christiane Benner² (*1968)
Member since 2014
Second Chairman of IG Metall
Franz Haniel (*1955)
Member since 2004
Entrepreneur
DELTON AG (Chairman)
Mandates
DELTON AG (Deputy Chairman)
Franz Haniel & Cie. GmbH (Chairman)
Heraeus Holding GmbH
TBG Limited
Stefan Quandt (*1966)
Member since 1997
Deputy Chairman
Entrepreneur
-
2 Employee representatives (union representatives).
Member since 1999
Membership of other statutory supervisory boards.
Technikwissenschaften e. V.
Mandates
-
Deutsche Bank AG
Deutsche Post AG
Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft in München
President of acatech - Deutsche Akademie der
Horst Lischka² (*1963)
General Representative of IG Metall Munich
Mandates
KraussMaffei Group GmbH
MAN Truck & Bus AG
Städtisches Klinikum München GmbH
Willibald Löw¹ (*1956)
Chairman of the Supervisory Board of the E.ON SE
and of the Deutsche Lufthansa Aktiengesellschaft
Member since 2009
3 Employee representatives (members of senior management).
Member from 2010 until 11 May 2017
Prof. Dr. rer. nat. Dr.-Ing. E.h.
Membership of equivalent national or foreign boards of business enterprises.
201
202
Statement on
Corporate
Governance
→ Members of the
Supervisory Board
Prof. Dr. rer. nat. Dr. h.c. Reinhard Hüttl (*1957)
Henning Kagermann (*1947)
Member since 2008
of Helmholtz-Zentrum Potsdam
Deutsches GeoForschungsZentrum - GFZ
University Professor
Dr. h.c. Robert W. Lane (*1949)
Member since 2009
Former Chairman and Chief Executive Officer of
Deere & Company
Mandates
General Electric Company (until 8 October 2017)
Chairman of the Executive Board
Deputy Chairman
Weybourne Group Limited
Dr. jur. Karl-Ludwig Kley (*1951)
→ Members of the
Board of
Management
→ Members of the
Supervisory Board
MEMBERS OF THE
BOARD OF MANAGEMENT
Dr. Nicolas Peter (*1962)
Statement on
Corporate
Governance
Finance
BMW Brilliance Automotive Ltd.
(Deputy Chairman)
BMW Nederland B.V. (until 14 February 2017)
Harald Krüger (*1965)
Chairman
Milagros Caiña Carreiro-Andree (*1962)
Human Resources, Industrial Relations Director
Dr. Ian Robertson (HonDSc) (*1958)
Sales and Brand BMW,
Aftersales BMW Group
Mandates
(until 31 December 2017)
200
Chairman
Chairman of the Works Council, Landshut
Declaration of the Board of Management and of the
Supervisory Board of Bayerische Motoren Werke
Aktiengesellschaft with respect to the recommen-
dations of the "Government Commission on the
German Corporate Governance Code" pursuant to
§ 161 German Stock Corporation Act
The Board of Management and Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft
("BMW AG") declare the following regarding the
recommendations of the "Government Commission
on the German Corporate Governance Code":
1. Since issuance of the last Declaration in Decem-
ber 2016, BMW AG has complied with all of the
recommendations published officially on 12 June
2015 in the Federal Gazette (Code version dated
5 May 2015), with the exception - as previously
reported of section 4.2.5 sentences 5 and 6.
-
2. BMW AG will in future comply with all of the recom-
mendations published officially on 24 April 2017 in
the Federal Gazette (Code version dated 7 February
2017), with the exception of section 4.2.3 sentence 9
and section 4.2.5 sentences 5 and 6.
3. It is recommended in section 4.2.3 sentence 9 of
the Code that subsequent amendments to per-
formance targets or comparison parameters for
variable remuneration components be excluded.
BMW AG remains committed to this principle.
A one-off departure from the recommendation is,
however, planned for the financial year 2018 in
conjunction with the implementation of a new
remuneration system for the Board of Manage-
ment: in order to implement the new remuneration
system with effect from the coming financial
year 2018 rather than with effect from the finan-
cial year 2020 – it is intended to cancel the targets
previously set for the variable remuneration com-
ponents for the financial years 2018 and 2019
and to replace them for the financial
year 2018
onwards with targets based on the target system
specified in the new remuneration system.
199
4. It is recommended in section 4.2.5 sentences 5
and 6 of the Code that specified information
pertaining to management board compensation
be disclosed in the Compensation Report. These
recommendations have not been and will not be
complied with, due to uncertainties as to whether
the supplementary use of model tables - -particularly
Munich, December 2017
Bayerische Motoren Werke
Aktiengesellschaft
On behalf of the
Supervisory Board
Dr.-Ing. Dr.-Ing. E. h.
Norbert Reithofer
Chairman
On behalf of the
Board of Management
Harald Krüger
in view of the transition from one remuneration
system to a new system - would be instrumental
in making the BMW AG's Compensation Report
transparent and generally understandable in
accordance with generally applicable financial
reporting requirements (see section 4.2.5 sen-
tence 3 of the Code).
Member since 2008
Mandates
Weybourne Investments Holdings
General Counsel:
Dr. Jürgen Reul
MEMBERS OF THE
SUPERVISORY BOARD
Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer (*1956)
Member since 2015
Former Chairman of the Board of
Management of BMW AG
Membership of equivalent national or foreign boards of business enterprises.
Mandates
Henkel AG & Co. KGaA (Shareholders' Committee)
Manfred Schoch¹ (*1955)
Member since 1988
Deputy Chairman
Chairman of the European
and General Works Council
Industrial Engineer
Siemens Aktiengesellschaft
Weybourne Limited (from 3 January 2017
until 19 October 2017)
Membership of other statutory supervisory boards.
Mandates
(until 19 October 2017)
Weybourne Management Limited
Markus Duesmann (*1969)
Purchasing and Supplier Network
Klaus Fröhlich (*1960)
Development
Mandates
HERE International B.V. (until 28 February 2018)
BMW (South Africa) (Pty) Ltd. (Chairman)
BMW Motoren GmbH (Chairman)
Peter Schwarzenbauer (*1959)
Digital Business Innovation BMW Group
Mandates
Scout24 AG (since 8 June 2017)
Rolls-Royce Motor Cars Limited (Chairman)
Pieter Nota (*1964)
Sales and Brand BMW, Aftersales BMW Group
(since 1 January 2018)
Oliver Zipse (*1964)
Production
MINI, Rolls-Royce, BMW Motorrad,
Customer Engagement and
Susanne Klatten (*1962)
Chairman
Entrepreneur
Following the election of a new Supervisory Board
member, the Corporate Governance Officer informs
the new member of the main framework for performing
duties, in particular the BMW Group Corporate Gov-
ernance Code and individual contributions required in
circumstances which trigger reporting obligations or are
subject to Supervisory Board approval.
Following its meetings, the Supervisory Board generally
requests information on new vehicle models in the form
of a short presentation.
In practice, resolutions are regularly passed by the
Supervisory Board and its committees at meetings.
Supervisory Board members who are not present can
submit their vote via another Supervisory Board member
in written, fax or electronic form. This rule also applies
for the second vote of the Chairman of the Supervisory
Board. The Chairman of the Supervisory Board can also
grant a period of time in which all members not present
at a meeting may retrospectively vote. In special cases,
resolutions may also be passed outside of meetings, in
particular in writing, by fax or by electronic means.
Resolutions and meetings are recorded in minutes,
which are signed by the relevant Chairman.
Resolutions of the Supervisory Board are generally
passed by a simple majority. The German Co-determina-
tion Act contains specific legal requirements with regard
to majorities and technical procedures, particularly with
regard to the appointment and removal of management
Board members and the election of Chairman or Deputy
Chairman of the Supervisory Board. In the event of a
tied vote in the Supervisory Board, the Chairman of
the Supervisory Board has two votes in a renewed vote,
assuming it also results in a tie.
The Supervisory Board is quorate if all members have
been invited to the meeting and at least half the mem-
bers of whom it is required to comprise participate
in the vote. A resolution relating to an agenda item
not included in the invitation is only valid if none of
the members of the Supervisory Board who were not
present at the meeting object to the resolution and if
a minimum of two-thirds of the members are present.
The Chairman of the Supervisory Board coordinates
work within the Supervisory Board, convenes and
chairs its meetings, handles the external affairs of the
Supervisory Board and represents it before the Board
of Management.
The Supervisory Board holds a minimum of two meet-
ings per calendar half-year. Normally, five plenary
meetings are held per calendar year. One meeting each
year is planned to extend to several days and is used,
among other things, to enable an in-depth exchange on
strategic and technological matters. The main topics of
meetings in the period under report are summarised
in the Report of the Supervisory Board. Shareholder
representatives and employee representatives generally
prepare Supervisory Board meetings separately and
occasionally with members of the Board of Manage-
ment. Members of the Supervisory Board are specif-
ically legally bound to maintain secrecy with respect
to confidential reports they receive and confidential
discussions in which they partake.
reasons.
BMW AG's Supervisory Board is composed of ten share-
holder representatives (elected by the Annual General
Meeting) and ten employee representatives (elected in
accordance with the Co-Determination Act). The ten
Supervisory Board members representing employees
comprise seven Company employees, including one
executive staff representative, and three members elect-
ed following nomination by unions. The Supervisory
Board has the task of advising and supervising the Board
of Management in its management of the BMW Group.
It is involved in all decisions of fundamental importance
for the BMW Group. The Supervisory Board appoints
the members of the Board of Management and decides
upon the level of compensation they receive. The Super-
visory Board can revoke appointments for important
COMPOSITION AND WORK
PROCEDURES OF THE
SUPERVISORY BOARD OF
BMW AG AND ITS
COMMITTEES
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
→ Composition and
Members of the Supervisory Board of BMW AG take
care to ensure that they have sufficient time to perform
their mandate. If members of the Supervisory Board of
BMW AG are also members of the management board of
a listed company, they may not accept more than three
mandates on non-BMW Group supervisory boards of
listed companies or in other bodies with comparable
requirements.
Statement on
Corporate
Governance
205
The Board of Management is represented by its Chair-
man in its dealings with the Supervisory Board. The
Chairman of the Board of Management maintains
regular contact with the Chairman of the Supervisory
Board and keeps him informed of all important mat-
ters. The Supervisory Board has passed a resolution
specifying the information and reporting duties of the
Board of Management. As a general rule, in the case
of reports required by law, the Board of Management
submits its reports to the Supervisory Board in writing.
To the extent possible, documents required as a basis
for taking decisions are sent to the members of the
Supervisory Board in good time before the relevant
meeting. Regarding transactions of fundamental
importance, the Supervisory Board has resolved
that a specific approval from the Supervisory Board
is required. Whenever necessary, the Chairman of
the Board of Management obtains the approval of
the Supervisory Board and ensures that reporting
duties to the Supervisory Board are complied with. In
order to fulfil these tasks, the Chairman is supported
by all members of the Board of Management. The
fundamental principle followed when reporting to
the Supervisory Board is that the latter should be kept
informed regularly, without delay and comprehen-
sively of all significant matters relating to planning,
business performance, risk exposures, risk manage-
ment and compliance, as well as any major variances
between actual business development and plans and
targets, and the relevant reasons.
their entirety or individually (such as the executive
management structure, potential candidates for exec-
utive management, nominations for or promotions to
senior management positions). This committee has,
on the one hand, an advisory and preparatory role
(e.g. making suggestions for promotions to the two
remuneration groups below Board level and preparing
decisions to be taken at Board meetings with regard
to human resources principles with the emphasis on
executive management issues) and a decision-making
function on the other (e.g. deciding on appointments
to senior management positions and promotions to
higher remuneration groups or the wording of human
resources principles decided on by the full Board). The
Committee has two members who are entitled to vote
at meetings, namely the Chairman of the Board of
Management (who also chairs the meetings) and the
Board member responsible for Human Resources. The
Head of Human Resources Management and Services
as well as the Head of Human Resources Executive
Management also participate in these meetings in an
advisory function. At the request of the Chairman,
resolutions may also be passed outside of committee
meetings by casting votes in writing, by fax or by
telephone if the other member entitled to vote does
not object immediately. The Committee for Executive
Management Matters convenes up to six times a year.
The Board's Committee for Executive Management
Matters deals with enterprise-wide issues affecting
executive managers of the BMW Group, either in
The full Board usually convenes up to twice a year in
its function as Sustainability Board in order to define
strategy with regard to sustainability and decide upon
measures to implement that strategy. The Head of
Corporate Affairs and the Representative for Sus-
tainability and Environmental Protection participate
in these meetings in an advisory capacity.
At meetings of the Operations Committee (general-
ly held every two weeks), decisions are reached in
connection with automobile product projects, based
on the strategic orientation and decision framework
stipulated at Board of Management meetings. The
Operations Committee comprises the Board of
Management member responsible for Development
(who also chairs the meetings), together with the
Board members responsible for the following areas:
Purchasing and Supplier Network; Production; Sales
and Brand BMW, Aftersales BMW Group (until 28 Feb-
ruary 2018); and MINI, Rolls-Royce, BMW Motorrad,
Customer Engagement and Digital Business Innovation
BMW Group (until 28 February 2018). If the committee
chairman is not present or unable to attend a meeting,
the member of the Board responsible for Production
represents him. Resolutions taken at meetings of the
Operations Committee are made online.
A secretariat for Board of Management matters has
been established to assist the Chairman and other
Board members with the preparation and follow-up
work connected with Board meetings.
Members of the Board of Management not represent-
ed in a committee are provided with the agendas and
minutes of committee meetings. Committee matters
are dealt with in full Board meetings if the committee
considers it necessary or at the request of a member
of the Board of Management.
for its committees.
The rules relating to meetings and resolutions taken
by the full Board of Management are also applicable
Minutes are taken of all meetings and the Board of
Management's resolutions and signed by the Chair-
man. Decisions taken by the Board of Management
are binding for all employees.
In the event that the Chairman of the Board of
Management is not present or is unable to attend
a meeting, the member of the Board responsible for
Finance will represent him.
206
The Supervisory Board regularly assesses the efficiency
of its activities. To this end, shared discussion is con-
ducted within the Supervisory Board and individual
meetings held with the Chairman, prepared on the basis
of a questionnaire sent in advance, which is drawn up
by the Supervisory Board.
Members of the Supervisory Board of BMW AG are
obliged to act in the best interest of the organisation as
a whole. They may not pursue personal interests in their
decisions or take advantage of business opportunities
intended to benefit the BMW Group.
Members of the Supervisory Board are obliged to inform
the Supervisory Board of any conflicts of interest, in
particular those resulting from a consulting or executive
role with clients, suppliers, lenders or other business
partners, so that the Supervisory Board can report to
the shareholders at the Annual General Meeting on
its treatment of the issue. Material and non-temporary
conflicts of interest of a Supervisory Board member
result in a termination of mandate.
Member since 1997
The establishment and composition of a mediation com-
mittee are prescribed by the German Co-determination
Act. The Mediation Committee has the task of making
proposals to the Supervisory Board if a resolution for the
appointment of a member of the Board of Management
has not been carried by the necessary two-thirds major-
ity of members' votes. In accordance with statutory
requirements, the Mediation Committee comprises the
Chairman and the Deputy Chairman of the Supervisory
Board, one member selected by shareholder represent-
atives and one by employee representatives.
The Nomination Committee is charged with the task of
finding suitable candidates for election to the Super-
visory Board as shareholder representatives and to
propose them to the Supervisory Board for election at
the Annual General Meeting. In line with the recom-
mendations of the German Corporate Governance Code,
the Nomination Committee is exclusively composed of
shareholder representatives.
In line with the recommendations of the German Cor-
porate Governance Code, the Chairman of the Audit
Committee is independent, and not a former Chairman
of the Board of Management, and has special knowledge
and experience in the application of financial reporting
standards and internal control procedures. He also
fulfils the requirement of being a financial expert as
defined by § 100 (5) and § 107 (4) AktG.
The Audit Committee deals in particular with the super-
vision of the financial reporting process, effectiveness
of the internal control system, the risk management
system, internal audit system and compliance as well
as the performance of Supervisory Board duties in
connection with audits pursuant to § 32 of the German
Securities Trading Act (WpHG). It also oversees the
audit of financial statements, auditor independence
and any additional work performed by the auditor. It
prepares the proposal for the election of the auditor at
the Annual General Meeting, makes a relevant recom-
mendation, issues the audit engagement and agrees on
additional areas of audit focus as well as the auditor's fee.
The Audit Committee prepares the Supervisory Board's
resolution relating to the Company and Group Financial
Statements and discusses interim reports with the Board
of Management prior to publication. Additionally, the
Audit Committee deals with the non-financial report-
ing, prepares the audit of the Supervisory Board and
the engagement of an external auditor and issues the
audit engagement. The Audit Committee also decides
on the Supervisory Board's agreement on the use of
Authorised Capital 2014 (Article 4 no. 5 of the Articles
of Incorporation) and on amendments to the Articles
of Incorporation which only affect its wording.
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
→ Composition and
Statement on
Corporate
Governance
208
207
In accordance with rules of procedure, the Presiding
Board comprises the Chairman of the Supervisory Board
and Deputies. The Presiding Board prepares Superviso-
ry Board meetings to the extent that the subject matter
does not fall within the remit of a committee. This
includes, for example, preparing the annual Declaration
of Compliance with the German Corporate Governance
Code and assessment of Supervisory Board efficiency.
coordination work.
BMW AG ensures that the Supervisory Board and its
committees are appropriately equipped to carry out
their duties. This includes providing a central Supervi-
sory Board office to support the chairpersons in their
The Supervisory Board, the Presiding Board and com-
mittees also meet without the Board of Management
when necessary.
Members of the Supervisory Board may not delegate
their duties to others. However, the Supervisory Board,
the Presiding Board and the committees may call on
experts and informed persons to attend meetings and
advise on specific matters.
In line with the rules of procedure for the activities of
the plenum, the Supervisory Board has set out proce-
dural rules for the Presiding Board and committees.
Committees are quorate only when all members par-
ticipate. Committee resolutions are passed by a simple
majority, unless otherwise stipulated by law.
→ The number of meetings held by the Presiding Board
and committees depends on requirements. The Pre-
siding Board, the Personnel Committee and the Audit
Committee generally hold several meetings in the course
of the year.
According to the rules of procedure, the Chairman of the
Supervisory Board is, by virtue of this function, member
and Chairman of the Presiding Board, the Personnel
Committee and the Nomination Committee.
→ see "Overview
of Supervisory
Board commit-
tees and their
composition"
"Composition
targets for the
Supervisory
Board"
Composition of the Presiding Board and the committees
is based on legal requirements, the Articles of Incor-
poration, rules of procedure and corporate governance
principles, while taking into particular account the
expertise of Board members.
→ Taking into account the specific circumstances of
the BMW Group and the number of Board members,
the Supervisory Board has set up a Presiding Board
and four committees: the Personnel Committee, the
Audit Committee, the Nomination Committee and the
Mediation Committee. These serve to raise the efficiency
of the Supervisory Board's work and facilitate handling
of complex issues. Establishment and function of a
mediation committee is prescribed by law. Committee
chairpersons report in detail on committee work at each
plenary meeting of the Supervisory Board.
Members of the Supervisory Board are responsible for
undertaking any training required for the performance
of their duties. The Company provides them with appro-
priate assistance therein.
→ The Supervisory Board has stated specific targets → see section
for its composition, agreed to a diversity concept and
determined a competency profile.
number of
meetings during
the year 2017
→ see Report of
the Supervisory
Board for the
In proposing candidates for election as members of the
Supervisory Board, care is taken that the Supervisory
Board collectively has the required knowledge, skills and
expertise to perform its tasks appropriately.
unanimously. A Board meeting may only be held if
more than half of the Board members are present.
Unless stipulated otherwise by law or in BMW AG's
statutes, the Board of Management makes decisions
on the basis of a simple majority of votes cast at meet-
ings. Outside of Board meetings, decisions are taken
on the basis of a simple majority of Board members.
In the event of a tied vote, the Chairman of the Board
of Management has the casting vote. Any changes
to the Board's terms of reference must be passed
The Personnel Committee prepares decisions of the
Supervisory Board with regard to the appointment and,
where applicable, removal of members of the Board of
Management and, together with the full Supervisory
Board and the Board of Management, ensures long-
term succession planning. The Personnel Committee
also
prepares s decisions of the Supervisory Board with
regard to Board of Management compensation and the
regular review of the compensation system for the Board
of Management. In conjunction with resolutions taken
by the Supervisory Board regarding the compensation
of the Board of Management, the Personnel Committee
is responsible for drawing up, amending and revoking
employment contracts or, when necessary, to prepare
and conclude other relevant contracts with members
of the Board of Management. In certain cases, the
Personnel Committee is also authorised to grant the
necessary approval of a business transaction on behalf of
the Supervisory Board. This includes cases of providing
loans to members of the Board of Management or Super-
visory Board, certain contractual arrangements with
members of the Supervisory Board, taking into account
related parties, as well as ancillary activities of members
of the Board of Management, in particular acceptance
of non-BMW Group supervisory board mandates.
At the request of the Chairman, decisions can also
be taken outside of Board meetings if none of the
Board members object to this procedure. A meeting
is quorate if all Board of Management members are
invited to the meeting in good time. Members unable
to attend any meeting are entitled to vote in writing,
by fax or by telephone. Votes cast by phone must be
subsequently confirmed in writing. Except in urgent
cases, matters relating to a division for which the
responsible Board member is not present will only
be discussed and decided upon with that member's
Brigitte Rödig¹ (*1963)
Member of the Works Council, Munich
Dr. Dominique Mohabeer¹ (*1963)
Member since 2012
Membership of equivalent national or foreign boards of business enterprises.
Membership of other statutory supervisory boards.
³ Employee representatives (members of senior management).
2 Employee representatives (union representatives).
Employee representatives (company employees).
- Deutsche Post AG
Mandates
Boehringer Ingelheim Gruppe
Former Member of Management of
Member since 2013
Member since 2015
Robert Bosch GmbH
Nestlé Deutschland AG
Allianz SE (until 3 May 2017)
Infineon Technologies AG
Mandates
Allensbach Gesellschaft zum Studium der
öffentlichen Meinung mbH
Director of Institut für Demoskopie
Member since 2008
Prof. Dr. rer. pol. Renate Köcher (*1952)
SGL Carbon SE (Chairman)
ALTANA AG (Deputy Chairman)
Mandates
consent.
Simone Menne (*1960)
Member of the Works Council, Dingolfing
UnternehmerTUM GmbH (Chairman)
Member since 2011
Terms of reference approved by the Board of Man-
agement contain a planned allocation of divisional
responsibilities between the individual Board mem-
bers. These terms of reference also incorporate the
principle that the full Board of Management bears
joint responsibility for all matters of particular impor-
tance and scope. In addition, members of the Board of
Management manage the relevant portfolio of duties
under their responsibility, whereby case-by-case rules
can be put in place for cross-divisional projects. Board
members continually provide the Chairman of the
Board of Management with all information regarding
major transactions and developments within their
area of responsibility. The Chairman of the Board
of Management coordinates cross-divisional matters
with the overall targets and plans of the BMW Group,
involving other Board members to the extent that divi-
sions within their area of responsibility are affected.
Jürgen Wechsler² (*1955)
the Operations Committee and the Committee for
Executive Management Matters. At its meetings, the
Board of Management defines the overall framework
for business strategies and the use of resources, takes
decisions regarding the implementation of strategies
and deals with issues of particular importance to the
BMW Group. The full Board also takes decisions at a
basic policy level relating to the Group's automobile
product strategies and product projects inasmuch as
these are relevant for all brands. The Board of Man-
agement and its committees may, as required and
depending on the subject matters being discussed,
invite non-voting advisers to participate at meetings.
The Board of Management consults and takes
decisions as a collegiate body in meetings of the
Board of Management, the Sustainability Board,
Following the appointment of a new member to the
Board of Management, the BMW Group Corporate
Governance Officer informs the new member of the
framework conditions under which the Board mem-
ber's duties are to be carried out - in particular those
enshrined in the BMW Group's Corporate Govern-
ance Code - as well as the duty to cooperate when a
transaction or event triggers reporting requirements
or requires the approval of the Supervisory Board.
During their period of employment for BMW AG,
members of the Board of Management are bound by
a comprehensive non-competition clause. They are
required to act in the enterprise's best interests and
may not pursue personal interests in their decisions
or take advantage of business opportunities intended
for the enterprise. They may only undertake ancillary
activities, in particular supervisory board mandates
outside the BMW Group, with the approval of the
Supervisory Board's Personnel Committee. Each
member of the Board of Management of BMW AG is
obliged to disclose conflicts of interest to the Super-
visory Board without delay and inform the other
members of the Board of Management accordingly.
The Board of Management determines the strategic
orientation of the enterprise, agrees upon it with the
Supervisory Board and ensures its implementation.
The Board of Management is responsible for ensuring
that all provisions of law and internal regulations are
complied with. Further details about compliance
within the BMW Group can be found in the Corporate
Governance section of the Annual Report. The Board
of Management is also responsible for ensuring that
appropriate risk management and risk controlling
systems are in place throughout the Group.
The Board of Management manages the enterprise
under its own responsibility, acting in the interests
of the BMW Group with the aim of achieving sustain-
able growth in value. The interests of shareholders,
employees and other stakeholders are also taken into
account in the pursuit of this aim.
COMPOSITION AND WORK
PROCEDURES OF THE
BOARD OF MANAGEMENT
OF BMW AG AND ITS
COMMITTEES
Management of
BMW AG and its
Committees
→Composition and
Work Procedures
of the Board of
Statement on
Corporate
Governance
204
203
In the financial year 2017, the Board of Management
made its decisions at meetings generally held on a
weekly basis which were convened, coordinated and
headed by the Chairman of the Board of Management.
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
Mandates
Regional Head of IG Metall Bavaria
Schaeffler AG (Deputy Chairman)
Siemens Healthcare GmbH (Deputy Chairman)
-
Member since 2001
Chairman of the Works Council, Regensburg
1 Employee representatives (company employees).
2 Employee representatives (union representatives).
3 Employee representatives (members of senior management).
Werner Zierer¹ (*1959)
211
212
The Supervisory Board is to be composed in such a way
that its members collectively possess the knowledge,
skills and experience required to properly perform
its tasks.
Statement on
Corporate
Governance
The time schedule set by the Supervisory Board for
achieving the above-mentioned composition targets is
the period up to 31 December 2018. The nomination
committee of the Supervisory Board already takes
into account the composition targets in its proposal
of potential candidates as representatives of the share-
holders. This enables diversity in the composition of
the Supervisory Board and ensures that the Super-
visory Board collectively possesses the knowledge,
skills and experience required to properly perform
its duties. Proposals for nomination made by the
Supervisory Board to the Annual General Meeting -
insofar as they apply to shareholder Supervisory Board
members should take account of these objectives in
such a way that they can be achieved with the support
of the appropriate resolutions of the Annual General
Meeting. The Annual General Meeting is not bound
by proposed nominations for election. The voting
freedom of employees in the vote for the employee
members of the Supervisory Board is also protected.
Under the rules stipulated by the German Co-Determi-
nation Act, the Supervisory Board does not have
the right to nominate employee representatives for
election. The objectives which the Supervisory Board
has set itself with regard to its composition are there-
fore not intended to be instructions to those entitled
to vote or restrictions on their voting freedom.
-
In the Supervisory Board's opinion, its composition
as at 31 December 2017 fulfilled the composition
objectives detailed above. For ease of comparison
with composition targets, brief curricula vitae of
the current members of the Supervisory Board are
available on the Company's website at → www.bmwgroup.com.
Information relating to members' practised profes-
sions and mandates in other statutory supervisory
boards and equivalent national or foreign company
boards, including the length of periods of service on
the Supervisory Board, is provided in the section
Statement on Corporate Governance. Based on this
information, it is evident that the Supervisory Board of
BMW AG is highly diversified, with significantly more
than the targeted four members having international
experience or specialist knowledge with regard to one
or more of the non-German markets important to the
BMW Group. In-depth knowledge and experience
from within the Company are provided by seven
employee representatives, as well as the Chairman
of the Supervisory Board. Only one previous Board of
Management member holds office in the Supervisory
Board. At least four members of the Supervisory Board
have experience in managing another company. The
Supervisory Board also has three entrepreneurs as
members. Most of the members of the Supervisory
Board - including employee representatives - have
experience in supervising another medium-sized or
large company. Moreover, more than three members of
the Supervisory Board have experience and specialist
knowledge in subjects relevant for the future of the
BMW Group, such as customer requirements, mobility,
resources, sustainability and information technology.
For the purpose of assessing the independence of its
members, the Supervisory Board follows the recom-
mendations of the German Corporate Governance
Code. In the opinion of the Supervisory Board, nei-
ther ownership of a substantial shareholding in the
Company, or office as an employee representative, or
previous membership of the Board of Management,
rules out independence of a Supervisory Board mem-
ber. A substantial and not merely temporary conflict
of interests within the meaning of section 5.4.2 of the
German Corporate Governance Code does not apply
to any of the Supervisory Board members. Employees
holding office in the Supervisory Board are protected
by applicable law when performing their duties. All
other Supervisory Board members have a sufficient
degree of economic independence from the Company.
Business with entities, in which the members of the
Supervisory Board carry out a significant function, is
conducted on an arm's length basis. The Supervisory
Board has therefore concluded that all of its mem-
bers are independent. These are: Dr.-Ing. Norbert
Reithofer, Manfred Schoch, Stefan Quandt, Stefan
Schmid, Dr. Karl-Ludwig Kley, Christiane Benner,
Franz Haniel, Ralf Hattler, Dr.-Ing. Heinrich
Hiesinger, Prof. Dr. Reinhard Hüttl, Susanne Klatten,
Prof. Dr. Renate Köcher, Dr. Robert W. Lane, Horst
Lischka, Willibald Löw, Simone Menne, Dr. Dominique
Mohabeer, Brigitte Rödig, Jürgen Wechsler and Werner
Zierer. At least two members meet the requirements
of an independent financial expert. These are
Dr. Karl-Ludwig Kley and Simone Menne. At the end
of the reporting period, the Supervisory Board had six
female members (30%), comprising three shareholder
representatives and three employee representatives.
The Supervisory Board has 14 male members (70%),
comprising seven shareholder representatives and
seven employee representatives. The Company there-
fore complies with the statutory gender quota of at
least 30% female members applicable in Germany
since 1 January 2016. At present, no member of the
Supervisory Board is older than 70 years.
Composition and
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
→ Disclosures pursuant
to the Act on Equal
Gender Participation-
Targets for the
Proportion of Women
on the Board of
Management and at
Executive Manage-
ment Levels I and II
As a general rule, members of the Supervisory
Board should not hold office for longer than
until the end of the Annual General Meeting at
which the resolution is passed ratifying the
member's activities for the 14th financial year
after the beginning of the member's first period
of office. This excludes the financial year in which
the first period of office began. This rule does
not apply to natural persons who either directly
or indirectly hold significant investments in the
Company. In the Company's interest, deviation
from the general maximum period is possible,
for instance in order to work towards another
composition target, in particular diversity of
gender and technical, professional and personal
backgrounds.
Three members of the Supervisory Board should
if possible be persons from the fields of business,
science or research who have experience in areas
relevant to the BMW Group, for example chem-
istry, energy supply, information technology, or
who have specialist knowledge in fields relevant
for the future of the BMW Group, for example
customer requirements, mobility, resources or
sustainability.
No persons carrying out directorship functions
or advisory tasks for important competitors of
the BMW Group may belong to the Supervisory
Board. In compliance with applicable law, mem-
bers of the Supervisory Board are to take care
that no persons will be nominated for election
for whom a significant, non-temporary conflict
of interests could arise due to other activities
and functions carried out by them outside the
BMW Group, in particular advisory activities
or directorships with customers, suppliers, credi-
tors or other business partners.
Two independent members of the Supervisory
Board should have expert knowledge of account-
ing or auditing.
Of the 20 members of the Supervisory Board at
least 12 should be independent members within
the meaning of section 5.4.2 of the German
Corporate Governance Code, including at least
six as representatives of the Company's share-
holders.
When seeking qualified individuals for the Super-
visory Board whose specialist skills and leader-
ship qualities are most likely to strengthen the
Board as a whole, consideration is also to be
given to diversity. When preparing nominations,
the extent to which the work of the Supervisory
Board benefits from diversified professional and
personal backgrounds (including international
aspects) and from an appropriate gender repre-
sentation is also to be taken into account. It is
the joint responsibility of all those participating
in the nomination and election process to ensure
that qualified women are considered for Super-
visory Board membership.
Three of the shareholder representatives in the
Supervisory Board should if possible be entrepre-
neurs or persons who have previous experience in
the management or supervision of another
medium or large-sized company.
The Supervisory Board should include if possible
seven members who have acquired in-depth
knowledge and experience within the
BMW Group, though no more than two former
members of the Board of Management.
-
-
-
DISCLOSURES PURSUANT
TO THE ACT ON EQUAL
GENDER PARTICIPATION -
TARGETS FOR THE PROPOR-
TION OF WOMEN ON THE
BOARD OF MANAGEMENT
AND AT EXECUTIVE MAN-
AGEMENT LEVELS I AND II
To this end, the Supervisory Board of BMW AG has
approved the following objectives for its composition,
including a competency profile. These objectives also
describe the concept for achieving diversity in the com-
position of the Supervisory Board (diversity concept):
An age limit for membership of the Supervisory
Board of 70 years is generally to be applied. In
exceptional cases, members may remain on the
Board until the end of the next Annual General
Meeting after reaching the age of 73, in order to
fulfil legal requirements or to facilitate smooth
succession in the case of key roles or specialist
qualifications.
Four members of the Supervisory Board should
if possible have international experience or
specialist knowledge of one or more non-German
markets important to the BMW Group.
Diversity contributes to greater competitiveness and
innovation at the BMW Group. Working together in
mixed, complementary teams raises performance
levels and increases customer focus. Promoting
an appropriate gender ratio is seen as an essential
component of the BMW Group's diversity concept.
Increasing the proportion of women therefore remains
an objective of the Board of Management.
Proportion of female executives within
management/function levels I and II
at BMW AG
We take consistent decisions and commit to them
personally. This allows us to work freely and more
effectively.
Responsibility
Composition objectives of the Supervisory Board,
competency profile, diversity concept
Within the BMW Group, the Board of Management,
the Supervisory Board and the employees base their
actions on five core values which are the cornerstone
of the success of the BMW Group:
Core values
BEYOND MANDATORY
REQUIREMENTS
CORPORATE GOVERNANCE
PRACTICES APPLIED
INFORMATION ON
Practices Applied
Beyond Mandatory
Requirements
→Information on Cor-
porate Governance
Governance
Statement on
Corporate
214
213
The proportion of women in the workforce as a whole
increased again during the financial year under report,
as a result of long-term measures, dialogue and infor-
mation events. Further information on the topic of
diversity within the BMW Group can be found in the
section "Workforce".
Function level II
Function levell
In accordance with this legislation, the Supervisory
Board of BMW AG is required to set a target for the
proportion of women on its Board of Management
and a time frame for meeting this target. Likewise,
the Board of Management of BMW AG is required to
establish targets for the two executive management
levels below the Board of Management and a time
frame for attaining these targets. As its target for
the Board of Management for the time frame from
1 January 2017 to 31 December 2020, the Supervisory
Board has stipulated that the Board of Management
should continue to have at least one female member.
Assuming that the Board of Management continues
to comprise eight members, this would correspond to
a proportion of at least 12.5%. At 31 December 2017,
the Board of Management had one female member
(12.5%). The Supervisory Board considers it desirable
to increase the proportion of women on the Board of
Management and fully supports the Board of Man-
agement's endeavours to increase the proportion of
women at the highest executive management levels
within the BMW Group.
The Act on Equal Participation of Women and Men
in Executive Positions in the Private and the Public
Sector ("Act on Equal Gender Participation") was
passed into German law in 2015.
7.5
8.0
10
.......................
in %
→ 69
Management level is defined in terms of functional
level and follows a comprehensive job evaluation
system based on Mercer.
When selecting an individual for a particular Board
of Management position, the Supervisory Board
decides in the best interests of the Group and after
due consideration of all relevant circumstances. The
Personnel Committee takes into account the diversity
concept described above when selecting candidates,
in order to ensure that the Board of Management has
a diverse composition. In the Supervisory Board's
opinion, the composition of the Board of Management
as at 31 December 2017 is in line with the defined
diversity concept. For ease of comparison with the
diversity concept, the curricula vitae of members of
the Board of Management are available on the inter-
net. In particular, the Board of Management has one
female member and the various work, educational
and life experiences of the members of the Board of
Management complement each other.
― establishment in accordance with the recommendation contained in the German Corpo-
rate Governance Code, activities based on terms of reference
The Supervisory Board has stipulated a target
for the proportion of women on the Board of
Management. This is outlined in the section
"Disclosures pursuant to the Act on Equal
Gender Participation”. The Board of Management
reports to the Personnel Committee and the
Supervisory Board at regular intervals on the
proportion and development of women in
senior management positions, in particular at
executive levels.
― amendments to Articles of Incorporation only affecting wording
― decision on approval for utilisation of Authorised Capital 2014
preparation of the Supervisory Board's audit of the non-financial reporting, preparation of
the selection of the auditor for non-financial reporting and engagement of the auditor
discussion of interim reports with Board of Management prior to publication
Group Financial Statements
preparation of proposals for election of external auditor at Annual General Meeting,
engagement of external auditor and compliance of audit engagement, determination of
additional areas of audit emphasis and fee agreements with external auditor
preparation of Supervisory Board's resolution on Company and
― supervision of external audit, in particular auditor independence and additional work
performed by external auditor
supervision of the financial reporting process, the effectiveness of the internal control
system, the risk management system, internal audit arrangements and compliance as
well as the performance of Supervisory Board duties in connection with audits pursuant
to § 32 of the German Securities Trading Act (WpHG)
AUDIT COMMITTEE
Norbert Reithofer¹
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
― set up in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of reference
members, including acceptance of non-BMW Group supervisory mandates as well as the
approval of transactions requiring Supervisory Board approval by dint of law (e.g. loans
to Board of Management or Supervisory Board members)
conclusion, amendment and revocation of employment contracts (in conjunction with
the resolutions taken by the Supervisory Board regarding the compensation of the Board
of Management) and other contracts with members of the Board of Management
― decisions relating to the approval of ancillary activities of Board of Management
preparation of decisions relating to the appointment and revocation of appointment of
members of the Board of Management, the compensation and the regular review of the
Board of Management's compensation system
-
PERSONNEL COMMITTEE
Norbert Reithofer¹
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
Members
preparation of Supervisory Board meetings to the extent that the subject matter to be
discussed does not fall within the remit of a committee
-activities based on terms of reference
-
PRESIDING BOARD
Principal duties, basis for activities
and their composition
Appreciation
Overview of Supervisory Board committees
― establishment in accordance with the recommendation contained in the
German Corporate Governance Code, activities based on terms of reference
In accordance with the recommendation of the
German Corporate Governance Code, the
Supervisory Board has set a standard age limit
for Board of Management membership. This
aims at a retirement age of 60. Consideration is
also given to achieving an appropriate age: mix
within the Board of Management.
NOMINATION COMMITTEE
Karl-Ludwig Kley 1,2
Norbert Reithofer
Manfred Schoch
Stefan Quandt
The Board of Management should collectively
have extensive experience in the fields of deve-
lopment, production, sales and marketing, fi-
nances and human resources.
At least two members of the Board of Manage-
ment should have a technical background.
At least two members should have international
management experience.
The members of the Board of Management should
have a long-standing track record of manage-
ment experience, ideally with experience in
different professional fields.
-
-
-
-
The Supervisory Board, in collaboration with the
Personnel Committee and the Board of Management,
ensures long-term succession planning. In their assess-
ment of candidates for Board of Management posi-
tions, the underlying suitability criteria applied by the
Supervisory Board are expertise in the relevant function,
outstanding leadership qualities, proven track record
and knowledge of the Company. The Supervisory Board
has adopted a diversity concept for the composition
of the Board of Management, which is also aligned
with recommendations of the German Corporate
Governance Code. In considering which individuals
would best complement the Board of Management, the
Supervisory Board also takes diversity into account. The
criteria diversity is taken by the Supervisory Board to
encompass in particular different, mutually comple-
mentary profiles, professional and life experiences also
at the international level and an appropriate gender
representation. In reaching its decisions, the Supervi-
sory Board also considers the following:
Board of Management succession planning,
diversity concept
→ Composition and
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
Statement on
Corporate
Governance
210
209
2 (Independent) financial expert within the meaning of §§ 100 (5) and 107 (4) AktG, no. 5.3.2 GCGC.
1 Chair.
(In accordance with statutory requirements, the Mediation Committee
comprises the Chairman and Deputy Chairman of the Supervisory Board
and one member each selected by shareholder representatives and
employee representatives.)
Manfred Schoch
Stefan Quandt
Stefan Schmid
Norbert Reithofer
- committee required by law
proposal to Supervisory Board if resolution for appointment of Board of Management
member has not been carried by the necessary two-thirds majority of Supervisory Board
members' votes
MEDIATION COMMITTEE
(In line with the recommendations of the German Corporate Governance
Code, the Nomination Committee comprises only shareholder
representatives.)
Norbert Reithofer¹
Susanne Klatten
Karl-Ludwig Kley
Stefan Quandt
Stefan Schmid
- identification of suitable candidates (male/female) as shareholder representatives on the
Supervisory Board to be put forward for inclusion in the Supervisory Board's proposals for
election at the Annual General Meeting
We reflect on our actions, respect each other, offer
clear feedback and celebrate success.
For the time frame from 11 January 2017 to 31 Decem-
ber 2020, the Board of Management has set a target
range of 10.2% to 12.0% for the first level of executive
management and 8.0% to 10.0% for the second. At
31 December 2017, the proportion of women within
the first executive management level stood at 8.0%
and at 7.5% within the second.
We acknowledge concerns and identify inconsisten-
cies in a constructive way. We act with integrity.
More than 41,000 managers and staff worldwide have
received training in essential compliance matters since
the introduction of the BMW Group Compliance Man-
agement System. The training material is available on
an Internet-based training platform in German and
English and includes a final test. Successful comple-
tion of the training programme, which is documented
by a certificate, is mandatory for all BMW Group man-
agers. Appropriate human resources processes are in
place to ensure that all newly recruited managers and
promoted staff undergo compliance training. In this
way, the BMW Group ensures full training coverage
for its managers in compliance matters.
Compliance measures are determined and priori-
tised on the basis of a group-wide compliance risk
assessment that is updated annually. Measures are
realised with the aid of a regionally structured com-
pliance management team, covering all parts of the
BMW Group and oversees a network of more than
210 compliance responsibles with 72 local compliance
functions.
The BMW Group Legal Compliance Code is supple-
mented by a range of internal policies, guidelines and
instructions, which in part reflect applicable legal
requirements. The BMW Group Policy “Corruption
Prevention" and the BMW Group Instruction "Corpo-
rate Hospitality and Gifts" deserve particular mention:
these documents explain lawful handling of gifts and
benefits and define appropriate assessment criteria
and approval procedures. The BMW Group Policy
"Antitrust Compliance" establishes binding rules of
conduct for all employees across the BMW Group
to prevent unlawful restriction of competition. In
response to the entry into force of the EU's Fourth
Anti-Money-Laundering Directive, specific anti-
money-laundering rules have been revised or intro-
duced locally in 13 organisational units.
The various elements of the BMW Group Compliance
Management System are shown in the diagram on the
previous page and are applicable to all BMW Group
organisational units worldwide. The BMW Group
Legal Compliance Code forms the core of the Group's
Compliance Management System, in which the Board
of Management affirms its joint commitment to com-
pliance ("tone from the top"). The Code also explains
the significance of legal compliance and provides an
overview of the various areas of relevance for the
BMW Group. It is available both as a printed brochure
and for download in German and English. In addition,
translations into nine other languages are available
in the BMW Group intranet.
The BMW Group Compliance Committee Office is
supported by local compliance functions, especially
in connection with operational implementation of
compliance topics. Establishment of 72 local compli-
ance functions was completed in 2017. Their activities
follow a standardised management process with
clearly defined tasks and responsibilities. The heads
of these functions serve as the Compliance Officer
for the respective organisational unit.
The decisions taken by the BMW Group Compliance
Committee are drafted in concept, and implemented
operationally, by the BMW Group Compliance Com-
mittee Office. The BMW Group Compliance Com-
mittee Office comprises 14 employees and reports
organisationally to the Chairman of the Board of
Management.
The Chairman of the BMW Group Compliance
Committee reports to the Audit Committee of the
Supervisory Board on the current status of compliance
activities within the BMW Group, both on a regular
and a case-by-case basis.
The Board of Management keeps track of and analyses
compliance-related developments and trends on the
basis of the Group's compliance reporting and advice
from the BMW Group Compliance Committee. Meas-
ures to improve the Compliance Management System
are initiated on the basis of identified requirements.
Compliance
Governance and
Processes
Compliance
Training
SpeakUP Line
Contact and
Compliance
Compliance
Reporting
Compliance
Communication
In addition to basic learning, training for specific
target groups is also provided on special compliance
issues, such as antitrust compliance. Since 2011, a
total of more than 24,000 managers and staff whose
functions or specific tasks involve exchange with com-
petitors have completed online training in antitrust
compliance.
Legal Compliance Code
and Regulations
Additional classroom training has also been provid-
ed to make employees who participate in meetings
with competitors or work with suppliers or sales
partners sufficiently aware of antitrust risks. In 2017,
over 1,900 managers and staff attended these face-to-
face training sessions.
The BMW Group held its first global Compliance Con-
ference in 2017. The event was attended by around
120 Compliance Officers and staff with compliance-re-
lated responsibilities from roughly 50 organisational
units. The main focus was on strengthening the
compliance network and sharing ideas on current
and future compliance topics.
Transparency
Observation and implementation of compliance rules
and processes are audited regularly by Corporate
Audit and subject to control checks by Corporate
Security and the BMW Group Compliance Commit-
tee Office. As part of its regular activities, Corporate
Audit carries out on-site audits. The BMW Group
Compliance Committee also engages Corporate Audit
to perform compliance-specific checks. In addition,
two BMW Group Compliance spot checks - sam-
ple tests specifically designed to identify potential
corruption and antitrust risks - were carried out in
2017. Compliance control activities are coordinated
by the BMW Group Panel Compliance Controls. Any
necessary follow-up measures are organised by the
BMW Group Compliance Committee Office.
Through the group-wide compliance reporting system,
compliance responsibles throughout the BMW Group
provide information on compliance-relevant issues to
the Compliance Committee on a regular basis, and, if
necessary, on an ad hoc basis. This includes reporting
on the compliance status of the relevant organisa-
tional units, on identified legal risks or incidences of
non-compliance, as well as sanctions and corrective
or preventative measures implemented.
units.
As part of expanded anti-money-laundering measures,
an IT system has been developed to verify customer
integrity and introduced in around 30 organisational
The BMW Group also uses an IT-based Business
Relations Compliance programme aimed at ensur-
ing the reliability of its business relations. Relevant
business partners are checked and evaluated with a
view to identifying potential compliance risks. These
procedures are particularly relevant for relations with
sales partners and service providers, such as agencies
and consultants. Depending on the results of the eval-
uation, appropriate measures are taken to prevent
compliance risks, such as communication measures,
training and possible monitoring.
For example, since 2017, all exchanges with compet-
itors must be documented and approved in a special
compliance IT system. All employees can also use IT
tools to verify legal admissibility and documentation
of benefits, especially in connection with corporate
hospitality.
In addition to these communications measures, appro-
priate IT systems also support BMW Group employees
with the assessment, approval and documentation of
compliance-relevant matters.
Various internal channels and means of communi-
cation, including newsletters, employee newspapers
and intranet portals, are used to keep BMW Group
employees fully up-to-date with the instruments and
measures employed by the Compliance Management
System. The central communications channel is the
compliance website within the BMW Group intranet,
where employees can find compliance-related infor-
mation, training materials and where they can access
trainings in both German and English. The website
contains a special service area where various practical
tools are made available to employees to help them
deal with typical compliance-related situations. A
group-wide communications campaign was launched
in 2017 to boost employee awareness of the impor-
tance of creating a culture of transparency and trust.
All compliance-related queries and concerns are
documented and processed by the BMW Group
Compliance Committee Office using an electronic
Case Management System. If necessary, Corporate
Audit, Corporate Security, the legal departments or
the Works Council may be consulted to assist with
investigations.
Employees also have the opportunity to submit infor-
mation about possible compliance violations within
the company - anonymously and confidentially - via
the BMW Group SpeakUP Line. The BMW Group
SpeakUP Line is available in a total of 34 languages
and can be reached via local toll-free numbers in all
countries in which BMW Group employees are in
operation.
Any member of staff with questions or concerns
relating to compliance may discuss these matters
with their managers and with the relevant depart-
ments within the BMW Group, in particular Legal
Affairs, Corporate Audit and Corporate Security. The
BMW Group Compliance Contact serves as a further
point of contact for both employees and external
partners for any questions regarding compliance.
Communication with the BMW Compliance Contact
may remain anonymous, if preferred.
→ Compliance in the
BMW Group
218
217
Additional compliance coaching has also been imple-
mented for international sales and financial service
units in local markets. These multi-day classroom
seminars strengthen the awareness in selected organ-
isational units and enhance cooperation between the
central BMW Group Compliance Committee Office
and the local compliance functions. In 2017, mar-
ket coaching was conducted in Australia, Belgium,
China, Ireland, the Netherlands, Austria, Poland,
Switzerland, Thailand, the UK and the US.
Compliance Instruments and
Measures of the BMW Group
Statement on
Corporate
Governance
Network
Governance
Statement on
Corporate
216
215
We also work in close partnership with our suppliers
and promote their commitment to sustainability.
Sustainable business management can only be
effective, however, if it covers the entire value-added
chain. That is why the BMW Group not only sets high
standards for itself, but also expects its suppliers and
partners to meet the ecological and social standards it
sets and strives continually to improve the efficiency
of processes, measures and activities. For instance,
we consistently require our dealers and importers
to comply with ecological and social standards on a
contractual basis. Moreover, corresponding criteria
are embedded throughout the entire purchasing
system – including in enquiries to suppliers, in the
sector-wide OEM Sustainability Questionnaire, in our
purchasing terms and in our evaluation of suppli-
ers in order to promote sustainability aspects in
line with the BMW Group Sustainability Standard.
The BMW Group expects suppliers to ensure that
the BMW Group's sustainability criteria are also
adhered to by their sub-suppliers. A spot check of
supplier facilities is conducted with sustainability
audits and assessments. In 2017, the Human Rights
Contact Supply Chain was established for reporting of
sustainability infringements in the supply chain. Pur-
chasing terms and conditions and other information
relating to purchasing can be found in the publicly
available section of the BMW Group Partner Portal
at https://b2b.bmw.com.
Further information on social responsibility towards
employees can be found in the section "Workforce".
The Board of Management signed the United Nations
Global Compact in 2001 and, in 2005, together with
employee representatives, issued a "Joint Declaration
on Human Rights and Working Conditions in the
BMW Group". This Joint Declaration was reconfirmed
in 2010. With the signature of these documents, we
have given our commitment to abide worldwide by
internationally recognised human rights and with the
fundamental working standards of the International
Labour Organization (ILO). These include in particular
freedom of employment, the principle of non-dis-
crimination, freedom of association and the right to
collective bargaining, the prohibition of child labour,
appropriate remuneration, regulated working times
and compliance with work and safety regulations.
The complete text of the UN Global Compact and
the recommendations of the ILO and other relevant
information can be found at www.unglobal.compact.org and
→ www.ilo.org. The Joint Declaration on Human Rights
and Working Conditions in the BMW Group can
be found at www.bmwgroup.com under the menu items
"Downloads" and "Responsibility".
The BMW Group stands by its social responsibilities.
Our corporate culture combines the drive for success
with openness, trust and transparency. We are well
aware of our responsibility towards society. Socially
sustainable human resource policies and compliance
with social standards are based on various interna-
tionally recognised guidelines. The BMW Group is
committed to the OECD's guidelines for multinational
companies and the contents of the ICC Business
Charter for Sustainable Development. Details of the
contents of these guidelines and other relevant infor-
mation can be found at → www.oecd.org and www.iccwbo.org.
Social responsibility towards employees and
along the supplier chain
We are excited by change and open to new opportu-
nities. We learn from our mistakes.
Openness
We trust and rely on each other. This is essential if we
are to act swiftly and achieve our goals.
Annual
Compliance
Reporting
Trust
→ Compliance in the
BMW Group
For the BMW Group, worldwide compliance of these
fundamental principles and rights is self-evident.
Since 2005 employees' awareness of this issue has
therefore been raised by means of regular internal
communications and training on recent developments
in this area. The "Compliance Contact" helpline
and the BMW Group SpeakUP Line are available to
employees wishing to raise queries or complaints
relating to human rights issues. With effect from 2016,
human rights have been incorporated as an integral
component of the BMW Group's worldwide Compli-
ance Management System, representing a further step
in the systematic implementation of the UN Guiding
Principles on Business and Human Rights.
Responsible and lawful conduct is fundamental to the
success of the BMW Group. It is an integral part of
our corporate culture and the reason why customers,
shareholders, business partners and the general public
place their trust in us. The Board of Management and
all employees of the BMW Group are obliged to act
responsibly and in compliance with applicable laws
and regulations. The BMW Group expects its competi-
tors and business partners to do the same.
BMW Group Compliance Committee
Office
COMPLIANCE IN THE
BMW GROUP
BMW Group Compliance Committee
Annual
Report
Board of Management BMW AG
Company-wide Compliance
Supervisory Board BMW AG
Compliance
Investigations
and Controls
Annual
Report
Compliance
Risk Analysis
→ 70
BMW Group Compliance Management System
The BMW Group Compliance Committee reports
regularly to the Board of Management on all compli-
ance-related issues, including the progress made in
refining the BMW Group Compliance Management
System, details of investigations performed, known
infringements of the law, sanctions imposed and cor-
rective or preventative measures implemented. This
also ensures that the Board of Management is imme-
diately notified of any cases of particular significance.
The BMW Group Compliance Committee comprises
the heads of the following departments: Legal Affairs,
Corporate and Governmental Affairs, Corporate
Audit, Group Reporting, Organisational Development
and Corporate Human Resources. It manages and
monitors activities necessary to avoid violations of
the law. These include communication and training
measures, compliance controls and subsequent sanc-
tions in cases of non-compliance.
The BMW Group Compliance Management System
consists of a programme of instruments and measures,
employed to ensure that the BMW Group, its repre-
sentative bodies, its managers and staff act in a lawful
manner. Particular emphasis is placed on measures to
avoid risks relating to antitrust legislation, corruption
and money laundering.
In order to protect itself systematically against com-
pliance-related and reputational risks, the Board of
Management created a Compliance Committee several
years ago and mandated the establishment of a Com-
pliance Management System within the BMW Group.
Qualitative, mainly non-financial parameters
Basis for performance factor:
x 0.7 of target amount
Performance factor
PERFORMANCE COMPONENT
- Value between 0-1.8
Group post-tax return on sales
Contribution to sustainable and long-term
business development over a period of
at least three financial years
Group net profit
225
x 0.3 of target amount
Earnings factor
EARNINGS COMPONENT BONUS
→ 73
Bonus overview
The criteria correspond to the measurement values
used previously for the performance bonus and
include in particular innovation (economic and
ecological, for example in the reduction of carbon
dioxide emissions), the Group's market position
compared to its competitors, customer focus, ability
to adapt, leadership, corporate culture, promotion of
compliance and integrity, contribution to the Group's
attractiveness as an employer, progress in implement-
ing the diversity concept, and activities that foster
corporate social responsibility. The performance factor
lies between zero and a maximum of 1.8.
구
The performance-related component is calculated
using a performance factor which the Supervisory
Board sets for each member of the Board of Manage-
ment and which is multiplied by 70% of the target
bonus amount. The Supervisory Board sets the perfor-
mance factor on the basis of a detailed evaluation of
the contribution made by Board members to sustaina-
ble and long-term business development over a period
of at least three financial years. The evaluation by the
Supervisory Board is based on predefined criteria that
take into account the Group's long-term success, the
interests of shareholders, the interests of employees
and social responsibility.
- Value between 0-1.8
An earnings factor of 1.0 would give rise to an earn-
ings-related component of €0.255 million for a mem-
ber of the Board of Management in the first period of
office, €0.3 million from the second period of office or
the fourth year of mandate, and €0.54 million for the
Chairman of the Board of Management. The earnings
factor is 1.0, for instance, in the event of Group net
profit of €5.3 billion and a post-tax return on sales of
5.6%. If the Group net profit were below €3 billion or
the post-tax return on sales below 3%, the earnings
factor would be zero. In this case, an earnings-related
component would not be paid. The maximum value of
the earnings factor is reached in the event of a Group
net profit of €11 billion and a post-tax return on sales
of 9%. As before, in exceptional circumstances, for
instance major acquisitions or disposals, the Super-
visory Board may adjust the earnings factor.
Basis for earnings factor:
TOTAL
PCP FACTOR
- Capped at 180%
of target amount
In order to calculate the earnings-related component,
an earnings factor is determined on the basis of the
target parameters and multiplied by 30% of the target
bonus amount. The level of the earnings-related com-
ponent depends on the degree to which the targets
set by the Supervisory Board for Group net profit and
post-tax return on sales are achieved. The degree of
achievement is expressed in an earnings factor. The
underlying measurement values are determined in
advance for a period of three financial years and may
not be changed retrospectively. The earnings factor is
capped at a maximum value of 1.8.
Capped at 180% of target amount
Cash payment at end of evaluation period
CASH PAYMENT
TARGET AMOUNT
→ 75
PCP factor overview
→ 74
Performance Cash Plan overview
Report
→ Compensation
Governance
Variable remuneration
226
In addition to the multi-year earnings factor, the
Supervisory Board also determines a multi-year per-
formance factor after the end of the evaluation period.
To this end, the Supervisory Board takes account in
particular of the business development during the
evaluation period, the forecast trend in the business
development, the Board member's individual contri-
bution to profitability and the status of compliance
within the Board member's area of responsibility.
The multi-year performance factor can be between
0.9 and 1.1.
In order to determine the multi-year earnings factor,
an earnings factor is calculated for each year of the
three-year evaluation period and an average is then
calculated for the evaluation period. As for the earn-
ings-related component of the bonus, the earnings
factor for each individual year within the evaluation
period is determined on the basis of Group net profit
and post-tax return on sales for the relevant year. The
maximum earnings factor is 1.8.
In order to determine the PCP factor, a multi-year
earnings factor is multiplied by a multi-year perfor-
mance factor. The PCP factor is capped at a maximum
value of 1.8.
The PCP evaluation period comprises three years,
grant year and the two subsequent years. The PCP is
paid out after the end of the three-year evaluation
period.
the
With effect from the financial year 2018, variable
cash compensation will include a multi-year and
future-oriented Performance Cash Plan (PCP). The
PCP is calculated at the end of a three-year evaluation
period, by multiplying a predefined target amount by
a factor that is based on multi-year target achievement
(the PCP factor). PCP entitlements are paid in cash.
The PCP target amount (100%) amounts to €0.85 mil-
lion p.a. for a Board member in the first period of
office, €0.95 million p.a. for a Board member from the
second period of office or the fourth year of mandate.
The target amount for the Chairman of the Board
of Management is €1.6 million p.a. The maximum
amount that can be paid to a Board member is capped
at 180% of the PCP target amount p.a.
Performance Cash Plan
Cash payment
The structure and target amounts of the previous
bonus system have been revised and the weighting
of the earnings-related and performance-related com-
ponents included in the target changed. In future, for
100% target achievement, the bonus will comprise
an earnings-related component of 30% and perfor-
mance-related component of 70%. Compared to the
bonus payable in the previous compensation system,
the target bonus (100%) for a member of the Board
of Management in the first period of office has been
reduced for both components of the bonus to a total
of €0.85 million p.a. and to a total of €1.0 million p.a.
from the second period of office or the fourth year of
mandate. In future, the bonus payable to the Chairman
of the Board of Management will amount to €1.8 mil-
lion p.a. The upper limit has been reduced for all Board
members to 180% of the respective target bonus.
→ 71
The weighting of individual components included
in the target is shown in the overview. The new
compensation system does not include the option of
paying a discretionary additional bonus. An upper
limit has been set for each component of variable
remuneration (see "Overview of compensation system
and compensation components for financial years
from 2018 onwards").
→ 72
Overview of compensation system financial year
2018: simplified depiction of split of cash remu-
neration (target remuneration)*
Earnings-
related bonus
approx. 28
approx. 29
Base salary
Performance-
related bonus
approx. 28
Share-based remuneration
approx. 15
in %
MULTI-YEAR EARNINGS FACTOR
Overview of compensation system financial year
2017: simplified depiction of split of cash remu-
neration (target remuneration)*
As previously, Board of Management compensation
comprises fixed and variable cash elements as well as
a share-based component. The compensation compo-
nents are described in more detail below. Retirement
and surviving dependants' benefits remain unchanged
in the new compensation system applicable from
1 January 2018.
Variable cash remuneration, in particular bonuses
Variable cash remuneration consists of a bonus and a
cash component for investment in BMW AG common
stock equivalent to 20% of a Board member's total
bonus after taxes, which the Board member receives
from the Company along with the related taxes and
social insurance. Furthermore, up to 31 Decem-
ber 2017, the Supervisory Board could, in justified
cases, stipulate the payment of a discretionary addi-
Compensation system, compensation components
for financial years from 2018 onwards
In December 2017, the Supervisory Board resolved
to revise the compensation system for financial years
from 2018 onwards. A focus was to align the remuner-
ation structure even more strongly with sustainable
Company development. The base salary, which had
remained at the same level since 1 January 2012, was
raised. The bonus was revised, both in terms of its
structure and target setting. Targets values for the
parameters Group net income and post-tax return on
sales used to determine the earnings-related bonus
were adjusted in line with the Group's current business
plan and revised. The dividend is no longer included
as a parameter, thus ensuring that the earnings-related
bonus is even more closely aligned to business per-
formance. A new multi-year and future-oriented com-
ponent was introduced in the form of a performance
cash plan, in order to further strengthen the long-term
orientation of the compensation system. The overall
upper limits remain unchanged. The appropriateness
of the planned levels of compensation was reviewed
by an independent external compensation expert.
The changes apply to all members of the Board of
Management with effect from the financial year 2018.
Service contracts of the Board of Management have
been modified in agreement with Board members
with effect from 1 January 2018.
Revised system of Board of Management compensa-
tion for financial years from 2018 onwards
This programme specifies that each member of the
Board of Management is required to invest in BMW AG
common stock an amount equivalent to 20% of the
Board member's total bonus after taxes, which the
Board member receives as an additional cash compo-
nent from the Company with the related taxes and
social insurance. As a general rule, the shares must
be held for four years. Under a matching plan, at the
end of the holding period the Board of Management
members receive from the Company, for every three
shares of common stock held, either one additional
share of common stock or an equivalent cash amount,
to be decided at the discretion of the Company
(share-based remuneration component/matching
component). Special rules apply in the case of death
or invalidity of a Board of Management member or
premature termination of the contractual relationship
before fulfilment of the holding period.
Share-based remuneration programme
The compensation system also includes a share-based
remuneration programme, which is based on the
amount of bonus paid. The system is aimed at creating
further long-term incentives to encourage sustainable
governance.
The performance-related bonus is derived by multi-
plying the target amount set for each member of the
Board of Management by a performance factor. The
Supervisory Board sets the performance factor on
the basis of a detailed assessment of the contribution
made by members of the Board of Management to
sustainable and long-term oriented business devel-
opment. In setting the factor, consideration is given
to performance and decisions over the previous
three financial years, as well as strategic decisions
affecting the future development of the business,
the effectiveness and efficiency of measures taken in
response to changing external conditions and other
activities aimed at safeguarding the future viability
of the business which cannot be directly measured
in values. Accordingly, performance factor criteria
include innovation (economic and ecological, for
example the reduction of carbon dioxide emissions),
customer focus, ability to adapt, leadership, corporate
culture, promotion of compliance and integrity, con-
tributions to the Group's attractiveness as an employer,
progress in implementing the diversity concept and
activities that foster corporate social responsibility.
The target bonus and the criteria used to determine
the earnings-related bonus are fixed in advance for a
period of three financial years. During this time, as
a general rule, target bonuses and the key criteria
applied may not be amended retrospectively.
An earnings factor and dividend factor of 1.0 would
give rise to an earnings-related bonus of €0.75 million
for a member of the Board of Management in the first
period of office, €0.875 million from the second period
of office or the fourth year of mandate and €1.5 mil-
lion for the Chairman of the Board of Management.
The earnings factor is 1.0 for example in the event of a
Group net profit of €3.1 billion and a post-tax return
on sales of 5.6%. The dividend factor is 1.0 when the
dividend paid on shares of common stock is between
101 and 110 cents. If the Group net profit were below
€2 billion or the post-tax return on sales below 2%, the
earnings factor for 2017 would be zero. In this case,
no earnings-related bonus would be payable.
The earnings-related bonus is based on Group
net profit and post-tax return on sales, which are
combined in a single earnings factor, and
up to
the financial year 2017 – on the dividend (common
stock). The earnings-related bonus is derived from a
target amount defined for each member of the Board
of Management multiplied by the earnings factor and
the dividend factor. In exceptional circumstances, for
instance major acquisitions or disposals, the Super-
visory Board may adjust the earnings-related bonus.
-
in %
Bonus
Share-based remuneration
approx. 17
Base salary
share-based remuneration.
Performance Cash Plan and
bonus,
-
-
The variable remuneration of the Board of Manage-
ment comprises in future three components:
Variable remuneration
Fixed remuneration consists, as before, of a base
salary, which is paid monthly, and fringe benefits
(other remuneration elements such as the use of
company cars, the payment of insurance premiums
and contributions towards security systems). From
the financial year 2018, the base salary of Board of
Management members amounts to €0.8 million p.a.
during the first period of office, €0.95 million p.a.
from the second period of office or the fourth year of
mandate and €1.8 million p.a. for the Chairman of
the Board of Management.
Fixed remuneration
Report
→ Compensation
Statement on
Corporate
Governance
224
*Simplified depiction of target amounts for the cash remuneration of the Chairman of the
Board of Management. Excludes other remuneration. Based on the assumption that the
share price remains unchanged for the calculation of the matching component.
223
Performance component
of the bonus approx. 20
approx. 9
the bonus
component of
Earn-
ings-based
approx. 29
Performance
Cash Plan
approx. 25
MULTI-YEAR PERFORMANCE FACTOR
(sum of earnings-related bonus and performance-related bonus)
X
Share-based compensation programmes for
employees and members of the Board of
Management
Pursuant to Article 19 of the EU Market Abuse Regu-
lation (MAR), members of the Board of Management
and the Supervisory Board and any persons closely
related to those members are required to give notice
to BMW AG and the Federal Agency for the Super-
vision of Financial Services (BaFin) of transactions
with equity or debt instruments of BMW AG or with
related derivatives or other financial instruments, if
the total sum of such transactions reaches or exceeds
an amount of €5,000 during any given calendar year.
BMW AG publishes such information without delay
and communicates it to the Companies Register
for archiving. Notice of publication is issued to the
Federal Agency for the Supervision of Financial Ser-
vices. Securities transactions notified to BMW AG
during the financial year 2017 are also reported on
the Company's website.
Reportable securities transactions
("Managers' transactions")
→ Compliance in the
BMW Group
→ Compensation
Report
Statement on
Corporate
Governance
220
219
To ensure that the BMW Group complies with reg-
ulations relating to insider information, the Board
of Management established an Ad-hoc Committee
back in 1994, consisting of representatives of various
specialist departments, whose members determine
whether information displays the characteristics of
insider information, which is required to be disclosed,
and handle the publication and legal notices required
by law. All persons who perform duties on behalf of
BMW AG through which they have access to insid-
er information are included on an insider list and
informed of the duties arising from insider rules.
Compliance is also an important factor in safeguard-
ing the future of the BMW Group workforce. With
this in mind, the Board of Management and the
national and international employee representative
bodies of the BMW Group have agreed on a binding
set of Joint Principles for Lawful Conduct. In doing
so, all parties involved made a commitment to the
principles contained in the BMW Group Legal Com-
pliance Code and to trustful cooperation in matters
relating to compliance. Employee representatives are
therefore regularly consulted in the process of refining
compliance measures within the BMW Group.
The BMW Group clarified its position back in 2005,
with the Joint Declaration on Human Rights and
Working Conditions at the BMW Group. This was
followed by systematic introduction and continuous
upgrading of measures to protect human rights. These
measures, which were already firmly established
within the organisation, were integrated into the
BMW Group's group-wide Compliance Management
System in 2016. A group-wide human rights compli-
ance assessment was conducted in 2017.
The BMW Group is committed to respecting interna-
tionally recognised human rights, in particular as set
out in the ten principles of the UN Global Compact
and the ILO Core Labour Conventions. The Com-
pany's due diligence process is aligned with the UN
Guiding Principles on Business and Human Rights,
focusing on topics and areas of activity where it can
leverage its influence as a commercial enterprise.
It is essential for compliance in the BMW Group that
employees are aware of and comply with applicable
legal requirements. The BMW Group does not tolerate
any violations of the law by its employees. Culpable
violations of the law result in employment law-related
sanctions and may lead to personal liability of relevant
employees.
Managers have a particular responsibility and role
model function with regard to preventing infringe-
ments. Managers throughout the BMW Group
acknowledge this principle by signing a written
declaration and undertaking to inform their staff of
the content and significance of the Legal Compliance
Code, to convey the values it embodies and make
employees aware of legal risks. Managers must, at
regular intervals and on their own initiative, verify
compliance with the law and communicate with staff
on this issue. They signal to employees that they take
compliance risks seriously and that relevant infor-
mation is extremely valuable. In their dealings with
staff members, managers remain open to discussion
and listen to differing opinions. Any indication of
non-compliance with the law must be rigorously
investigated.
The bonus comprises two components, each equally
weighted: an earnings-related bonus and a perfor-
mance-related bonus. The target bonus (100%) for a
Board of Management member in the first period of
office is €1.5 million p.a. in total for the two compo-
nents of variable compensation and €1.75 million p.a.
from the second period of office or the fourth year
of mandate. For the Chairman of the Board of Man-
agement the amount is €3 million p.a. The bonus is
capped for all Board of Management members at 200%
of the respective target bonus.
Contractual agreement, main points: use of Company cars, insurance premiums,
contributions towards security systems
OTHER REMUNERATION
Once the four-year holding period requirement is fulfilled, Board of Management members
receive for each three common stock shares held either - at the Company's option - one
further share of common stock or the equivalent amount in cash
Earmarked cash remuneration equivalent to the amount required to be invested in
BMW AG shares, plus taxes and social insurance contributions
Requirement for Board of Management members to each invest an amount equivalent to
20% of their total bonus (after tax) in BMW AG common stock
b) Share-based remuneration component
(matching component)
a) Cash compensation component
Three share-based remuneration schemes were
in place at BMW AG during the year under report,
namely the Employee Share Programme (under which
entitled employees of BMW AG have been able to
participate in the enterprise's success since 1989 in
the form of non-voting shares of preferred stock), a
share-based remuneration programme for Board of
Management members, and a share-based remuner-
ation programme for senior heads of department
(relating in both cases to shares of common stock).
The share-based remuneration programme for Board
of Management members is described in detail in
the Compensation Report (see also the "Share-based
remuneration" section in the Compensation Report
and → note 39 to the Group Financial Statements).
Share-based remuneration programme
The share-based remuneration programme for qual-
ifying heads of department, introduced with effect
for financial years beginning after 1 January 2012, is
closely based on the programme for Board of Manage-
ment members and is aimed at rewarding a long-term,
entrepreneurial approach to running the business on
a sustainable basis.
-
→ Compensation
Report
Statement on
Corporate
Governance
222
221
The base salary of members of the Board of Mana-
gement remained unchanged in 2017 from the
previous year. The base salary is €0.75 million p.a.
for a Board member during the first period of office,
€0.9 million p.a. for a Board member from the second
period of office or the fourth year of mandate and
€1.5 million p.a. for the Chairman of the Board of
Management.
Fixed remuneration consists of a base salary, which is
paid monthly, and fringe benefits (other remuneration
elements such as the use of company cars, insurance
premiums and contributions towards security sys-
tems). Members of the Board of Management are also
entitled to purchase vehicles and other products and
services of the BMW Group at conditions that also
apply for employees.
Fixed remuneration
The compensation of the Board of Management com-
prises both fixed and variable elements as well as a
share-based component. Provisions are also in place
for retirement and surviving dependants' entitlements.
Compensation system, compensation components
up to the financial year 2017
and relevant parameters as the basis for variable
compensation. It also ensures that variable compo-
nents based on multi-year criteria take account of
both positive and negative developments and that
the overall incentive is on the long term. As a general
rule, targets and comparative parameters may not
be changed retrospectively. In conjunction with the
revised compensation system for the Board of Manage-
ment (see the section "Revised Board of Management
compensation system for financial years from 2018
onwards"), the targets originally set for the variable
compensation components for the financial years 2018
and 2019 were revoked exceptionally and replaced
by the more ambitious targets stipulated in the new
compensation system. The Supervisory Board reviews
the appropriateness of the compensation system
annually. In preparation, the Personnel Committee
also consults remuneration studies. In order to check
that the compensation system is in line with peers, the
Supervisory Board compares compensation paid by
other DAX companies. For a vertical view, it compares
Board compensation with the salaries of executive
managers and with the average salaries of employees
of BMW AG based in Germany, also with regard to the
development over time. Recommendations made by
an independent external remuneration expert and
suggestions made by investors and analysts are also
considered in the consultative process.
The compensation of members of the Board of Man-
agement is determined by the full Supervisory Board
on the basis of performance criteria and after taking
into account any remuneration received from Group
companies. The principal performance criteria are
the tasks and exercise of mandate of the member of
the Board of Management, the economic situation
and the performance and future prospects of the
BMW Group. The Supervisory Board sets ambitious
The compensation system for the Board of Management
at BMW AG is designed to encourage a management
approach focused on the sustainable development
of the BMW Group. A further principle of the remu-
neration system at BMW Group is that of consistency.
This means that compensation systems for the Board
of Management, senior management and employees
of BMW AG are composed of similar elements. The
Supervisory Board performs an annual review to
ensure that all Board of Management compensation
components are appropriate, individually and in total,
and do not encourage the Board of Management to
take inappropriate risks for the BMW Group. At the
same time, the compensation model for the Board of
Management needs to be attractive for highly qualified
executives in a competitive environment.
Principles of compensation
The full Supervisory Board is responsible for deter-
mining and regularly reviewing Board of Management
compensation. The preparation for these tasks is
undertaken by the Supervisory Board's Personnel
Committee.
Responsibilities
1. Board of Management compensation
The following section describes the principles govern-
ing the compensation of the Board of Management
for the financial year 2017 and, in its revised form, for
financial years from 2018 onwards. A description of the
stipulations set out in the statutes relating to the com-
pensation of the Supervisory Board is also provided.
In addition to explaining the system of compensation,
details of components of compensation are also pro-
vided with figures. Furthermore, the compensation of
each individual member of the Board of Management
and the Supervisory Board for the financial year 2017
is disclosed with its component parts.
COMPENSATION REPORT
(PART OF THE COMBINED
MANAGEMENT REPORT)
Under the terms of the Employee Share Programme,
in 2017 employees were entitled to acquire packages
of between seven and 17 shares of non-voting pre-
ferred stock with a discount of €20.00 (2016: €22.72)
per share compared to the market price (average
closing price in Xetra trading during the period from
8 to 13 November 2017: €75.05). All employees of
BMW AG and its (directly or indirectly) wholly owned
German subsidiaries (if agreed to by the directors
of those entities) were entitled to participate in the
programme. Employees were required to have been
in an uninterrupted employment relationship with
BMW AG or the relevant subsidiary for at least one
year at the date on which the allocation for the year
was announced. Shares of preferred stock acquired in
conjunction with the Employee Share Programme are
subject to a blocking period of four years, starting from
1 January of the year in which the employees acquired
the shares. A total of 491,114 (2016: 305,018) shares of
preferred stock were acquired by employees under the
programme in 2017; 491,000 (2016: 305,000) of these
shares were drawn from Authorised Capital 2014, the
remainder were acquired via the stock exchange or
as a result of cancelled employee purchases relating
to the previous year. Every year the Board of Man-
agement of BMW AG decides whether the scheme is
to be continued. Further information is provided in
→ notes 29 and 39 to the Group Financial Statements.
→ see
notes
29 and 39
→ see
note 39
Under the terms of the programme, participants give
a commitment to invest an amount equivalent to 20%
of their performance-based bonus in BMW common
stock and to hold the shares so acquired for a min-
imum of four years. In return for this commitment,
BMW AG pays 100% of the investment amount as a net
subsidy. Once the four-year holding period require-
ment has been fulfilled, the participants receive - for
each three common stock shares held and at the
Company's option one further share of common
stock or the equivalent amount in cash.
PCP FACTOR
Payment possible in justified cases on basis of appropriateness, contractual basis,
no entitlement
·Primarily qualitative, non-financial criteria, expressed in terms of a performance factor
aimed at measuring the Board members' contribution to sustainable and long-term
business development over a period of at least three financial years
Formula: 50% target amount x performance factor
228
227
In the event of termination of mandate, a member
of the Board of Management appointed for the first
time prior to 1 January 2010 has pension entitlements
based on the older (defined benefit) pension plan.
The entitlement to receive benefits under the defined
benefit plan arises at the earliest on reaching the age
of 60 or in the case of invalidity. The amount of the
pension comprises a basic monthly amount of €8,000
plus an additional fixed amount. The fixed amount is
€400 for each full year of service on the Board up to a
maximum of 15 years. Pension payments are adjusted
in line with the adjustment of civil servants' pensions
following an increase of more than 5% in the pay
group B6 (excluding allowances) or in accordance
with the Company Pension Act.
Retirement and surviving dependants' benefits
With effect already from 1 January 2010, the provision
of retirement and surviving dependants' benefits
for Board of Management members was changed
to a defined contribution system with a guaranteed
minimum return. Commitments previously made are
in part subject to legal protection, therefore Board
members appointed for the first time prior to 1 Jan-
uary 2010 were given the option to choose between
the previous system and the new one. Retirement and
surviving dependants' benefits remain unchanged as
part of the new compensation system from 1 Janu-
ary 2018 onwards, as they are appropriate and in line
with customary market practice.
A one-year post-contractual non-competition clause
has been agreed with Board members for specified
cases. During that one-year period, the former Board
member is entitled to receive monthly compensation
equivalent to 60% of his or her previous monthly basic
remuneration, reduced by any amount of other income
exceeding 40% of the basic remuneration. The Compa-
ny may unilaterally waive the requirement to comply
with the post-contractual non-competition clause.
In the event of death or invalidity, special rules apply
for early payment of performance cash plans and
share-based remuneration components based on
the target amounts. Insofar as the service contract
is prematurely terminated and the Company has an
extraordinary right of termination, or if the Board
member resigns without the Company's agreement,
entitlements to amounts as yet unpaid relating to per-
formance cash plans and share-based remuneration
are forfeited.
Other
As before, at the end of the holding period, Board
members receive from the Company, for every three
shares of common stock held, either one additional
share of common stock or the cash equivalent, to
be decided at the Company's discretion (matching
component). Upper limits have been defined for both
the investment component and the matching compo-
nent (see "Compensation system and compensation
components for financial years from 2018 onwards").
Members of the Board of Management continue to
receive a cash compensation (investment component)
for the specific purpose of investment after tax and
contributions in BMW AG common stock. In future,
the investment component will correspond to 45% of
the
gross
bonus. Shares of common stock purchased
in this way by members of the Board of Management
are to be held, as before, for a period of four years.
Share-based remuneration
In accordance with a mutually agreed modification to
their contracts with effect from 1 January 2018, Board
members will receive advance payments out of the
Performance Cash Plan 2018 and the Performance
Cash Plan 2019 in the years 2019 and 2020. At the end
of the evaluation period, the advance payment will be
set off or reclaimed, depending on the amount then
determined. The advance payment for each year will
be €0.5 million for a member of the Board of Mana-
gement in the first period of office and €0.6 million
from the second period of office or the fourth year of
mandate. For the Chairman of the Board of Manage-
ment the amount is €0.9 million
p.a.
Forecast trend in business development
Value between 0.9-1.1
Individual contribution to profitability
- Status of compliance in each Board member's
area of responsibility
Trend in business development
multi-year performance factor:
- Value between 0-1.8
Group post-tax return on sales
- Based on Group net profit and
Measurement based on
Average earnings factor
Statement on
Corporate
Governance
Criteria for the performance factor include: innovation (economic and ecological, for
example in the reduction of carbon dioxide emissions), the Group's market position
compared to its competitors, customer focus, ability to adapt, leadership, corporate
culture, promotion of compliance and integrity, contribution to the Group's attractiveness
as an employer, progress in implementing the diversity concept, and activities that
foster corporate social responsibility
Overview of compensation system and compensation
components for the financial year 2017
Component
― The earnings factor is 1.0, for instance in the event of a Group net profit of €3.1 billion
and a post-tax return on sales of 5.6%
• Quantitative criteria, fixed in advance for a period of three financial years
Formula: 50% target amount x earnings factor x dividend factor (common stock)
Earnings factor is derived from Group net profit and Group post-tax return on sales
Capped at 200% of target amount
€3.00 million (Chairman of the Board of Management)
€1.75 million (from 2nd period of office or 4th year of mandate)
€1.50 million (1st period of office)
Target amount p.a. (at 100% target achievement):
Possible special bonus payment
(at 100% target achievement corresponds to 50% of target amount)
b) Performance-related bonus
(at 100% target achievement corresponds to 50% of target amount)
a) Earnings-related bonus
Bonus
VARIABLE REMUNERATION
€1.50 million
Chairman of the Board of Management:
- €0.90 million (from 2nd period of office or 4th year of mandate)
€0.75 million (1st period of office)
Member of the Board of Management:
Parameter/measurement base
BASE SALARY P.A.
→ Compensation
Report
tional bonus.
Statement on
Corporate
The variable remuneration of Board of Management
members comprises variable cash remuneration and
a share-based remuneration component.
Markus Duesmann
(1,097)
2,017
(1,752)
1,263
21,464 1,521,464 6,679,776
(18,719) (1,518,719) (5,947,178)
75,775 975,775 3,896,565
(74,461) (974,461) (3,469,214)
(900,000)
900,000
Milagros Caiña Carreiro-Andree
750,000
(1,500,000)
Harald Krüger
Number Monetary value
Total value of
benefits
allocated in
financial year²
Compensation
Total
compensation component
(matching component)'
Variable cash
compensation
Total
1,500,000
(187,500)
Klaus Fröhlich
750,000
917,158 3,896,565
(918,735) (3,469,214)
(18,735)
(900,000)
17,158
900,000
Ian Robertson³
(80,811) (3,861,711) (3,780,900)
90,700 4,272,838 4,182,138
1,008
842,250 3,339,888
92,250
750,000
Nicolas Peter
(21,629) (966,461) (944,832)
90,700 4,246,471 4,155,771
181,490 8,382,730 8,295,070
(161,622) (7,627,519) (7,545,122)
113,645 4,985,985 4,915,446
(101,198) (4,544,873) (4,443,675)
97,448 4,289,829 4,192,381
1,083
(288)
1,008
(876)
102,468 852,468 3,339,913
(13,929) (201,429) (743,403)
65,883 815,883 3,339,888
(57,311) (807,311) (2,973,589)
(750,000)
Other
compensation
Base salary
number of matching shares
in € or
7.7
Variable cash compensation
Fixed compensation
Proportion in %
Amount
Proportion in %
Amount
2016
2017
in € million
The total compensation of the current members of the
Board of Management of BMW AG for the financial
year 2017 amounted to €40.3 million (2016: €37.6 mil-
lion), of which €7.7 million (2016: €7.8 million) relates
to fixed components including other remuneration.
Variable components amounted to €31.7 million (2016:
€29.0 million) and the share-based remuneration com-
ponent amounted to €0.9 million (2016: €0.8 million).
As in the previous year, the option of paying a special
bonus in 2017 was not exercised.
Total compensation of the Board of Management for
the financial year 2017 (2016)
The Supervisory Board has stipulated upper limits
for all variable remuneration components and for the
remuneration of Board of Management members in
total. These upper limits are shown in the tables Over-
view of compensation system and compensation com-
ponents for the financial year 2017 and Overview of
compensation system and compensation components
for financial years from 2018 onwards. The overall
upper limits have not been changed in conjunction
with the revised compensation system for financial
years from 2018 onwards.
Remuneration caps
No commitments or agreements exist for payment of
compensation in the event of early termination of a
Board member's mandate due to a change of control or
a takeover offer. No members of the Board of Manage-
ment received any payments or relevant commitment
from third parties in 2017 on account of their activities
as members of the Board of Management.
7
Board of Management and the Supervisory Board by
BMW AG or its subsidiaries, nor were any contingent
liabilities entered into on their behalf.
19.1
Peter Schwarzenbauer
7.8
31.7
Fixed compensation
Share-based
Compensation of the individual members
of the Board of Management for the
financial year 2017 (2016)
* Matching component; provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is determined in
each case when the requirement to invest in BMW AG common stock has been fulfilled.
100.0
37.6
100.0
40.3
Total compensation
2.1
0.8
2.2
0.9
Share-based compensation component*
77.1
29.0
78.7
20.8
Termination benefits on premature termination of
Board activities, benefits paid by third parties
In conjunction with the agreed early termination of
Dr Robertson's Board of Management mandate with
effect from 31 December 2017, the Company also
agreed with Dr Robertson on an amendment to his
service contract, which ends on 30 June 2018. For the
period from the termination of his Board mandate
through to 30 June 2018, he continues to receive fixed
compensation totalling €0.45 million. During this
time, Dr Robertson is supporting the Company as
a BMW Group ambassador in the UK. An amount of
€0.875 million, payable in 2018, was agreed to settle all
further compensation entitlements for the remainder
of the contractual period. The Company will make a
final pension contribution of €0.2 million on behalf
of Dr Robertson for the financial year 2018.
900,000
Oliver Zipse
(95,615)
382,640
186,278
(435,753)
(68,865)
474,439
141,903
(196,362)
29,175
(111,253)
(76,878)
273,688
162,436
(2,130)
(2,130)
43,131
29,175
122,484
193,769
(61,370)
Oliver Zipse
Peter Schwarzenbauer
Ian Robertson³
Nicolas Peter
Klaus Fröhlich
Markus Duesmann
Milagros Caiña Carreiro-Andree
Harald Krüger
in €
Pension entitlements
Disclosures for the previous year include amounts relating to members of the Board of Management who left office during the financial year 2016.
1 Provisional number or provisional monetary value calculated on the basis of the closing price of BMW common stock in the Xetra trading system on 29 December 2017 (€86.83) (fair value at reporting date)
² Member of the Board of Management until 31 December 2017.
(2,614,266)
(829,579)
2,215,688
800,435
(71,285)
41,001
(284,247)
(15,276)
303,169
Report
→ Compensation
Statement on
Corporate
Governance
234
233
Pension obligations to former members of the Board of
Management and their surviving dependants are cov-
ered by pension provisions amounting to €90.1 million
(2016: €86.4 million), recognised in accordance with
IAS 19.
Total benefits paid to former members of the Board of
Management and their surviving dependants for the
financial year 2017 amounted to €6.7 million (2016:
€6.5 million).
An expense of €3.1 million (2016: €2.8 million) was
recognised in the financial year 2017 for current
members of the Board of Management for the period
after the end of their service relationship. This relates
to the expense for allocations to pension provisions.
4 Disclosures for the previous year include amounts relating to members of the Board of Management who left office during the financial year 2016.
3 Member of the Board of Management until 31 December 2017.
1 Provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is determined in each case when the
requirement to invest in BMW AG common stock has been fulfilled. See note 39 to the Group Financial Statements for a description of the accounting treatment of the share-based compensation component.
² Value of benefits granted for work performed on the Board of Management during the financial year 2017 plus the amount falling due for payment in conjunction with a share-based remuneration component
granted in a previous year and for which the holding period requirements were met.
(8,964)
(821,990) (37,625,005) (37,172,944)
113,645 4,927,368 4,914,391
(101,198) (4,489,147) (4,483,005)
113,645 4,951,164 4,837,519
(97,601) (4,338,103) (4,240,502)
90,700 4,206,340 4,115,640
(80,811) (3,919,094) (3,838,283)
891,973 40,262,725 39,608,356
1,263
(1,097)
1,263
(1,058)
1,008
(876)
9,913
40,954 940,954 3,896,565
(32,689) (895,189) (3,345,313)
750,000 25,752 775,752 3,339,888
(750,000) (114,694) (864,694) (2,973,589)
7,200,000 441,704 7,641,704 31,729,048
(7,425,000) (385,391) (7,810,391) (28,992,624)
Total4
Share-based component of the individual members
(862,500)
of the Board of Management for the
in €
63,120
(557,844)
(279,932)
515,677
54,038
Provision at
31.12.2017 in
accordance with
HGB and IFRS¹
in accordance with
HGB and IFRS
Expense in 2017
Total³
Oliver Zipse
Peter Schwarzenbauer
Ian Robertson²
Nicolas Peter
Klaus Fröhlich
Markus Duesmann
Milagros Caiña Carreiro-Andree
Harald Krüger
financial year 2017 (2016)
Report
→ Compensation
Statement on
Corporate
Governance
Requirement for Board of Management members to invest an amount of 45% of the
gross bonus after tax and contributions in BMW AG common stock
Criteria include in particular the trend in business development during the evaluation peri-
od, the forecast trend in business development, individual contribution to profitability and
the status of compliance within the Board member's area of responsibility
Multi-year performance factor can be between 0.9 and 1.1
Determined by Supervisory Board at end of evaluation period
Average for evaluation period calculated
Earnings factor for each year may not exceed 1.8
and Group post-tax return on sale
Earnings factor for each year of three-year evaluation period derived from Group net profit
Earmarked cash remuneration amounting to 45% of the gross bonus
PCP factor may not exceed 1.8
Formula: PCP factor x target amount
Capped at 180% of target amount
3-year evaluation period
€1.6 million (Chairman of the Board of Management)
€0.95 million (from 2nd period of office or 4th year of mandate)
€0.85 million (1st period of office)
-
PCP factor: multi-year earnings factor x multi-year performance factor
Once the four-year holding period requirement is fulfilled, Board of Management members
receive for each three common stock shares held either - at the Company's option - one
further share of common stock or the equivalent amount in cash
OTHER REMUNERATION
Contractual agreement, main points: use of Company car, insurance premiums, contributions
towards security systems
Chairman of the Board of Management: €500,000
Member of the Board of Management: €350,000 - €400,000
Pension contributions p.a.:
Pension based on amounts credited to individual savings accounts for contributions paid
and interest earned, various forms of disbursement
Pension of €120,000 p. a. plus fixed amounts based on length of Company
and Board service
Principal features
b) Defined contribution system with guaranteed minimum rate of return
(only applies to Board members appointed for the first time before
1 January 2010; based on legal right to receive the benefits already
promised to them, this group of persons is entitled to opt between
(a) and (b)
a) Defined benefits
Model
RETIREMENT AND SURVIVING DEPENDANTS' BENEFITS
Overview of compensation system and compensation
components for the financial year 2017
Report
→ Compensation
Statement on
Corporate
Governance
230
229
| | || |
Target amount p.a. (at 100% target achievement):
No longer applicable
Performance factor may not exceed 1.8
Possible special bonus payments
(at 100% target achievement corresponds to 70% of target amount)
b) Performance component
(at 100% target achievement corresponds to 30% of target amount)
a) Earnings-related bonus
(sum of earnings component and performance component)
Bonus
VARIABLE REMUNERATION
€1.8 million
Chairman of the Board of Management:
- €0.95 million (from 2nd period of office or 4th year of mandate)
€0.80 million (1st period of office)
Member of the Board of Management:
Parameter/measurement base
BASE SALARY P.A.
Component
Overview of compensation system and compensation
components for the financial year 2018 onwards
Performance Cash Plan
REMUNERATION CAPS (MAXIMUM REMUNERATION)
a) Multi-year earnings factor
Share-based remuneration programme
Formula: 70% target amount x performance factor
-
― Primarily qualitative, non-financial criteria, expressed in terms of a performance factor aimed
at measuring the Board member's contribution to the sustainable and long-term develop-
ment and the future viability of the Company over a period of at least three financial years
Criteria for the performance factor include: innovation (economic and ecological, for
example in the reduction of carbon dioxide emissions), the Group's market position
compared to its competitors, customer focus, ability to adapt, leadership, corporate
culture, promotion of compliance and integrity, contribution to the Group's attractiveness
as an employer, progress in implementing the diversity concept, and activities that
foster corporate social responsibility
Earnings factor may not exceed 1.8
The earnings factor is 1.0 in the event of a Group net profit of €5.3 billion and a post-tax
return on sales of 5.6%
Earnings factor is derived from Group net profit and Group post-tax return on sales
Formula: 30% target amount x earnings factor
Quantitative criteria fixed in advance for a period of three financial years
Capped at 180% of target amount
€1.8 million (Chairman of the Board of Management)
€1.0 million (from 2nd period of office or 4th year of mandate)
€0.85 million (1st period of office)
-
-
Target amount p.a. (at 100% target achievement):
b) Share-based remuneration component
(matching component)
a) Cash remuneration component
b) Multi-year performance factor
in € p. a.
Member of the Board of Management
in the first period of office
1,530,000
Total*
Monetary value
of matching
component
acquisition
Cash compen-
sation for share
Performance
Cash Plan
Bonus
Share-based compensation programme
Chairman of the Board of Management
in the second period of office or from fourth year of mandate
Member of the Board of Management
in the first period of office
Member of the Board of Management
in € p. a.
REMUNERATION CAPS (MAXIMUM REMUNERATION)
Chairman of the Board of Management: €500,000
Member of the Board of Management: €350,000 - €400,000
1,530,000
Pension contributions p. a.:
688,500
4,925,000
232
231
Board of Management members who retire imme-
diately after their service on the Board are entitled
to acquire vehicles and other BMW Group products
and services at conditions that also apply to BMW
pensioners and to lease BMW Group vehicles in
accordance with the guidelines applicable to senior
heads of department. Retired Chairmen of the Board
of Management are entitled to use a BMW Group
vehicle as a company car on a similar basis to senior
heads of department, and depending on availability
and against payment, use BMW chauffeur services.
In the event of the death of a member of the Board
of Management during the service contract term, the
base salary for the month of death and a maximum
of three further calendar months are paid to entitled
surviving dependants.
Income earned on an employed or a self-employed
basis up to the age of 63 may be offset against pension
entitlements. In addition, certain circumstances have
been specified, in the event of which the Company no
longer has any obligation to pay benefits. Transitional
payments are no longer provided.
Contributions falling due under the defined con-
tribution model are paid into an external fund in
conjunction with a trust model that is also used to
fund pension obligations to employees.
*Including base salary, other fixed remuneration elements and pension contribution. The overall cap is lower than the sum of the maximum amounts for each of the individual components.
9,850,000
729,000
1,458,000
2,880,000
3,240,000
5,500,000
405,000
810,000
1,710,000
1,800,000
344,500
Total4
Pension based on amounts credited to individual savings accounts for contributions paid
and interest earned, various forms of disbursement
b) Defined contribution system with guaranteed minimum rate of return
3,500,000
4,925,000
1,000,000
700,000
700,000
3,000,000
Total*
special bonus
Possible
Monetary value
of matching
component
acquisition
Bonus
Cash compen-
sation for share
Share-based compensation programme
Chairman of the Board of Management
in the second period of office or from fourth year of mandate
Member of the Board of Management
800,000
Pension of €120,000 p. a. plus fixed amounts based on length of Company
and Board service
800,000
5,500,000
(only applies to Board members appointed for the first time before
1 January 2010; based on legal right to receive the benefits already
promised to them, this group of persons is entitled to opt between
(a) and (b)
a) Defined benefit
Principal features
Model
RETIREMENT AND SURVIVING DEPENDANTS' BENEFITS
Overview of compensation system and compensation
components for the financial year 2018 onwards
Depending on the length of membership in the Board
of Management and previous activities, the annual
contribution paid by the Company for each member
of the Board of Management is between €350,000 and
€400,000, and €500,000 for the Chairman of the Board
of Management. The guaranteed minimum rate of
return p.a. corresponds to the maximum interest rate
used to calculate insurance reserves for life insurance
policies (guaranteed interest on life insurance policies).
When granting pension entitlements, the Supervisory
Board considers the targeted level of pension provision
in each case as well as the resulting expense for the
BMW Group.
In the case of death or invalidity, a minimum benefit is
payable based on the number of annual contributions
possible up to the age of sixty (up to a maximum
of ten). Furthermore, in the case of a commitment
made before 2016 and election of a lifelong pension,
a 60% widow's pension is paid following the death of
a retired member of the Management Board. Pensions
are increased annually by at least 1%.
If a member of the Board of Management with a vested
entitlement dies prior to the commencement of bene-
fit payments, a surviving spouse or registered partner,
or otherwise surviving children – in the latter case
depending on their age and education - are entitled
to receive benefits as surviving dependants.
The amount of the benefits to be paid is determined
on the basis of the amount accrued in each Board
member's individual pension savings account. The
amount on this account results from annual contri-
butions paid in, plus interest earned depending on
the type of investment.
If a mandate is terminated, the new defined con-
tribution system provides, in the case of death or
invalidity, for amounts accumulated on individual
pension accounts to be paid out as a one-off amount
or in instalments. The option to receive payment as a
lifelong pension or in a combined form only applies to
entitlements arising before 2016. Former members of
the Board of Management are entitled to receive the
retirement benefit at the earliest upon reaching the
age of 60, or in the case of entitlements awarded after
1 January 2012, upon reaching the age of 62.
* Including base salary, other fixed remuneration elements and pension contribution. The overall cap is lower than the sum of the maximum amounts for each of the individual components.
9,850,000
1,500,000
1,400,000
1,400,000
6,000,000
1,200,000
Service cost in
accordance with
Apart from vehicle lease and financing contracts
entered into on customary market conditions, no
advances or loans were granted to members of the
Service cost in
accordance with
HGB for the
(208,220)
(130,220)
(8,000)
(70,000)
78,209
50,806
2,000
Susanne Klatten
25,403
(210,220)
(130,220)
(10,000)
(70,000)
189,780
109,7804
10,000
Henning Kagermann³
70,000
10,000
140,000
8,000
70,000
Robert W. Lane
(210,220)
(130,220)
(10,000)
(70,000)
220,000
140,000
10,000
70,000
Renate Köcher
(210,220)
(130,220)
(10,000)
(70,000)
220,000
70,000
Reinhard Hüttl
(-)
(-)
(210,220)
(130,220)
(10,000)
(70,000)
216,000
140,000
6,000
70,000
Christiane Benner¹
(408,440)
(260,440)
(8,000)
(140,000)
430,000
280,000
10,000
140,000
Franz Haniel
140,000
70,000
140,000
140,355
89,570
6,000
44,785
Heinrich Hiesinger²
(-)
(-)
220,000
140,000
10,000
70,000
Ralf Hattler
(208,220)
(130,220)
(8,000)
(70,000)
220,000
10,000
218,000
(70,000)
(8,000)
70,000
Werner Zierer¹
(208,220)
(130,220)
(8,000)
(70,000)
218,000
140,000
8,000
70,000
Jürgen Wechsler¹
(208,220)
(130,220)
(8,000)
(70,000)
220,000
140,000
10,000
10,000
140,000
(70,000)
3. Other
5 Disclosures for the previous year include amounts relating to a member of the Supervisory Board who left office during the financial year 2016.
"Due to the requirements of his employer, Prof. Dr. Hüttl has waived his Supervisory Board compensation until further notice, to the extent that this would exceed the amount of €200,000 (excluding value added tax) p.a.
The share of the Supervisory Board compensation for the 2016 financial year, which exceeds this amount and should therefore be reimbursed, has been offset against the earnings-related component of
Supervisory Board compensation for the 2017 financial year.
3 Member of Supervisory Board until 11 May 2017.
1 These employee representatives have - in line with the guidelines of the Deutsche Gewerkschaftsbund-requested that their remuneration be paid into the Hans Böckler-Stiftung.
2 Member of Supervisory Board since 11 May 2017.
(5,393,720)
(3,385,720)
(188,000)
(1,820,000)
5,618,344
3,610,156
188,000
1,820,188
Total5
(210,220)
(130,220)
(10,000)
220,000
Karl-Ludwig Kley (Deputy Chairmann)
IFRS for the
Brigitte Rödig¹
(70,000)
220,000
140,000
10,000
70,000
Willibald Löw¹
(210,220)
(130,220)
(10,000)
(70,000)
220,000
140,000
10,000
70,000
Horst Lischka¹
(208,220)
(130,220)
(10,000)
70,000
(130,220)
Simone Menne
(210,220)
(130,220)
(10,000)
(70,000)
220,000
140,000
10,000
70,000
Dominique Mohabeer¹
(210,220)
(130,220)
(10,000)
(70,000)
218,000
140,000
8,000
70,000
(210,220)
(410,440)
In accordance with the recommendation of the German
Corporate Governance Code, Board of Management
service contracts provide for severance pay to be paid
to the Board member in the event of premature ter-
mination by the Company without important reason,
the amount of which is limited to a maximum of two
years' compensation (severance payment cap). If the
remaining term of the contract is less than two years,
the severance payment is reduced proportionately.
For these purposes, annual compensation comprises
the basic remuneration, the target bonus amount and
the target PCP amount for the last full financial year
before termination.
(10,000)
353,536
(1,480,940)
(1,481,134)
(359,548)
(357,203)
1,893,216
1,893,252
357,339
357,918
(4,469,741) (3,502,860)
(408,564)
(424,411)
4,052,788
4,965,162
407,941
508,865
354,117
2,071,748
2,071,560
(355,045)
3,136,302
(2,634,212)
Responsibilities, provisions of Articles of
2. Supervisory Board compensation
Report
→ Compensation
Statement on
Corporate
Governance
236
235
* Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2016.
3 Member of the Board of Management until 31 December 2017.
2 Based on a legal right to receive the benefits already promised to them, one member of the Board of Management appointed for the first time prior to 1 January 2010 was given the option of choosing between
the previous defined benefit model and the new defined contribution model.
1 Service cost differs due to the different valuation bases used to measure pension obligations for HGB purposes (expected settlement amount) and for IFRS purposes
(present value of the defined benefit obligation).
(21,425,612)
(23,630,940)
(2,849,067)
3,059,645 21,987,289 21,072,823
(1,621,507) (1,620,978)
(357,410)
(-)
(-)
financial year 2017¹ financial year 20171
Present value of
pension obliga-
tions (defined
benefit plans),
in accordance
with IFRS2
1,018,857
(87,500)
(87,500)
(622,236)
(620,307)
353,136
2,373,842
2,373,842
(354,365)
(356,743)
(1,935,142)
(1,935,142)
350,000
350,000
1,757,454
1,757,459
(260,440)
1,020,053
Incorporation
359,521
(1,879,263)
Present value of
pension obliga-
tions (defined
benefit plans),
in accordance
with HGB2
505,281
510,702
5,558,607
5,558,200
(507,444)
(510,811)
(4,764,941)
(4,763,838)
355,527
359,275
2,347,166
2,346,906
(358,490)
(360,785)
(1,879,851)
355,840
The compensation of the Supervisory Board is speci-
fied by resolution of the shareholders at the Annual
General Meeting or in the Articles of Incorporation.
The compensation provisions valid for the financial
year under report were resolved by shareholders at
the Annual General Meeting on 14 May 2013 and are
set out in Article 15 of BMW AG's Articles of Incorpo-
ration, which can be viewed and/or downloaded at
→ www.bmwgroup.com/ir under the menu items "Facts about
the BMW Group" and "Corporate Governance".
356,949
The fixed and earnings-related components in combi-
nation are intended to ensure that the compensation of
Supervisory Board members is appropriate in relation
to the tasks of Supervisory Board members and the
Company's financial condition and also takes account
of the Company's performance over several years.
10,000
140,000
Manfred Schoch (Deputy Chairmann)1
(610,660)
(390,660)
(10,000)
(210,000)
640,000
420,000
10,000
210,000
Norbert Reithofer (Chairmann)
Total
compensation
Attendance fee
compensation
in €
280,000
Variable
430,000
(10,000)
(140,000)
Compensation principles, compensation components
The Supervisory Board of BMW AG receives a fixed
compensation component as well as an earnings-re-
lated compensation component, which is oriented
toward sustainable growth. The earnings-related
component is based on average earnings per share
of common stock for the remuneration year and the
two preceding financial years.
430,000
280,000
10,000
140,000
Stefan Schmid (Deputy Chairmann)¹
(260,440)
(10,000)
(140,000)
430,000
280,000
10,000
140,000
Stefan Quandt (Deputy Chairmann)
(410,440)
(260,440)
(140,000)
Fixed
(410,440)
→ Responsibility
Statement by the
Company's Legal
Representatives
2017
Supervisory Board members did not receive any fur-
ther compensation or benefits from the BMW Group
for advisory or agency services personally rendered.
Fixed compensation
Variable compensation
Total compensation
in € million
237
compensation of €2.0 million (2016: €2.0 million)
and variable compensation of €3.6 million (2016:
€3.4 million). The earnings-related compensation for
the financial year 2017 was capped at the maximum
amount stipulated in the Articles of Incorporation.
In accordance with Article 15 of the Articles of Incor-
poration, the compensation of the Supervisory Board
for activities during the financial year 2017 totalled
€5.6 million (2016: €5.4 million). This includes fixed
Total compensation of the Supervisory Board for the
financial year 2017
In order to perform his duties, the Chairman of the
Supervisory Board has the use of an office, with
administrative support, as well as access to the BMW
car service.
The Company also reimburses to each member of the
Supervisory Board reasonable expenses and any value-
added tax arising on the member's remuneration. The
amounts disclosed below are net amounts.
In addition, each member of the Supervisory Board
receives an attendance fee of €2,000 for each full
meeting of the Supervisory Board (Plenum) which
the member has attended, payable at the end of the
financial year. Attendance at more than one meeting
on the same day is not remunerated separately.
of the remuneration of a Supervisory Board mem-
ber, provided the relevant committee convened for
meetings on at least three days during the financial
year. If a member of the Supervisory Board exercises
more than one of the functions referred to above, the
compensation is measured only on the basis of the
function that is remunerated with the highest amount.
The German Corporate Governance Code also recom-
mends in section 5.4.6 paragraph 1 sentence 2 that
the exercising of chair and deputy chair positions in
the Supervisory Board as well the chair and member-
ship of committees should also be considered in the
compensation.
With fixed compensation elements and an earnings-re-
lated compensation component oriented toward sus-
tainable growth, the compensation structure in place
for BMW AG's Supervisory Board complies with the
recommendation on supervisory board compensation
contained in section 5.4.6 paragraph 2 sentence 2 of
the German Corporate Governance Code, in the
version dated 7 February 2017.
In accordance with the Articles of Incorporation, each
member of BMW AG's Supervisory Board receives, in
addition to the reimbursement of reasonable
expenses,
Compensation of the individual members of the Supervisory Board for the financial year 2017 (2016)
a fixed amount of €70,000, payable at the end of the
year, as well as earnings-related compensation of €170
for each full €0.01 by which the average amount of
(undiluted) earnings per share (EPS) of common stock
reported in the Group Financial Statements for the
remuneration year and the two preceding financial
years exceed a minimum amount of €2.00, payable
after the Annual General Meeting held in the fol-
lowing year. An upper limit corresponding to twice
the amount of the fixed compensation is in place for
the Group performance-related compensation. The
limit for a member of the Supervisory Board with no
additional compensation-relevant function is there-
fore set at €140,000.
2016
Amount
Accordingly, the Articles of Incorporation of BMW AG
stipulate that the Chairman of the Supervisory Board
shall receive three times the amount and each Dep-
uty Chairman shall receive twice the amount of the
remuneration of a Supervisory Board member. Each
chairman of the Supervisory Board's committees
receives twice the amount and each member of a
committee receives one-and-a-half times the amount
Amount
Proportion in %
Statement on
Corporate
238
5.4
100.0
5.6
63.0
3.4
100.0
→Compensation
Report
Proportion in %
2.0
64.3
35.7
Governance
2.0
37.0
3.6
Non-current assets
BALANCE SHEET
5,817
6,396
6,910
8,706
€ million
2,890
Net profit for the year
33.2
28.5
18.3
%
Effective tax rate
30.7
Balance sheet total
Capital expenditure (excluding capitalised development costs)
66,864
71,582
2,828
€ million
97,959
110,343
Current assets
121,671
€ million
Current provisions and liabilities
Non-current provisions and liabilities
Equity ratio
Equity
Capital expenditure ratio (capital expenditure/revenues)
121,901
2,755
€ million
€ million
19.7
19.9
20.2
%
Gross profit margin
80,401
21.2
92,175
98,678
€ million
Revenues
INCOME STATEMENT
61,831
96,390
94,163
Earnings before financial result
Earnings before tax
9,880
Income taxes
10.8
10.0
10.3
10.8
%
Return on sales (earnings before tax/revenues)
8,707
9,224
9,665
10,655
€ million
9,118
9,593
9,386
1,949
56,844
7,880
4,688
Dividend per share of common stock/preferred stock
Dividend total
DIVIDEND
Personnel cost per employee
Workforce at year-end²
PERSONNEL
1 Excluding Husqvarna, deliveries up to 2013: 59,776 units; production up to 2013: 59,426 units.
3,481
5,792
4,459
€ million
Free cash flow Automotive segment
7,688
6,122
5,404
9,039
€
124,729
99,575
4,359,572
3 Proposal by management.
2 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners.
1,904
2.90/2.92
2,102
3.20/3.22
3.50/3.52
129,932
100,760
4.00³/4.023
2,300
2,630
€ million
92,337
116,324
122,244
97,136
€
€ million
Cash and cash equivalents at balance sheet date
CASH FLOW STATEMENT
%
37,437
42,764
47,363
54,548
€ million
28.2
5.7
4.0
4.8
%
4,601
3,826
3,731
4.2
25.1
24.8
24.2
154,803
172,174
188,535
193,483
€ million
59,078
65,591
67,989
69,047
€ million
58,288
63,819
73,183
69,888
€ million
€ million
4,718,970
111,191
245
€ million
Financial statement risk
Valuation of provisions for statutory and non-statutory
warranty obligations and product guarantees
The "accounting principles and policies" as well as the
assumptions, judgements and estimations made are
disclosed in the notes to the consolidated financial
statements in note 4. Disclosure of "Other provisions"
is provided in the notes to the consolidated financial
statements in note 31.
The assumptions and parameters incorporated in the
determination of receivables from sales financing are
appropriate as a whole.
Our conclusions
A key component of our audit was to assess the appro-
priateness of the risk classification procedures as well
as the risk provisioning parameters used, which are
derived from historical default probabilities and loss
rates. We also analysed the validations of parameters
that are regularly conducted. To assess the default
risk, we also used purposive sampling of individual
cases to verify that the attributes for assignment to the
respective risk categories were suitably available and
the impairment losses had been calculated using the
parameters defined for these risk categories.
We audited the appropriateness and effectiveness of the
internal control system in relation to the risk classifica-
tion procedures. In addition, we evaluated the relevant
IT systems and internal processes. The audit included
a review by our IT specialists of the appropriateness
of the systems concerned and associated interfaces to
ensure the completeness of data as well as the audit
of automated controls for data processing.
Auditor's Report
→ Independent
Statement on
Corporate
Governance
242
241
By means of inquiries, inspecting internal calcula-
tion methods and analysis, among other methods,
we obtained a comprehensive understanding of the
development of credit portfolios, the associated
counterparty-related risks and the business processes
for the identification, management, monitoring and
measurement of counterparty risks.
Our audit approach
There is a risk for the financial statements that the
creditworthiness of the dealerships, importers and
end customers, as well as any loss rates, is estimated
incorrectly, the risk provisioning parameters are
derived incorrectly and an impairment loss required
on receivables from sales financing is not recognised
or not recognised in a sufficient amount.
The determination of impairment losses requires
considerable judgement due to a number of value
determinants such as risk classifications, the deter-
mination of default probabilities as well as loss rates.
BMW Group offers end customers, dealerships and
importers various financing models for vehicles
and other assets. In this regard, current and non-
current receivables from sales financing totalling
EUR 80.434 million were recognised as at the reporting
date. Impairment losses amounting to EUR 1,147 mil-
lion were recognised on these receivables as at the
reporting date.
Financial statement risk
statements in note 23.
The methods and processes for determining the
expected residual values of the leased products under-
lying the valuation are appropriate. The assumptions
and parameters incorporated in the forecast model for
the residual value are appropriate as a whole.
Valuation of receivables from sales financing
The "accounting principles and policies" as well as the
assumptions, judgements and estimations made are
disclosed in the notes to the consolidated financial
statements in note 4. Disclosure of "sales financing"
is provided in the notes to the consolidated financial
Provisions for statutory and non-statutory warranty
obligations and product guarantees are included in
the consolidated financial statements of BMW Group
as a significant component in “Other provisions". The
provisions for statutory and non-statutory warranty
obligations and product guarantees amounted to
EUR 4,825 million on 31 December 2017.
Our conclusions
BMW Group is responsible for the legally prescribed
product liability and the warranty in the respective
sales market. Moreover, additional warranties are
granted to differing extents. In order to assess the
liabilities arising from warranty, guarantee and
goodwill for vehicles sold, information on the type
and volume of damages arising and on remedial
measures is recorded and evaluated at vehicle model
level. The expected amount of obligations arising
from warranty claims is extrapolated from costs of
the past and provided for. For specific or anticipated
individual circumstances, for example recalls, addi-
tional provisions are set aside provided they have not
already been taken into account. The determination
There is a risk for the financial statements that the
valuation of provisions for statutory and non-statutory
warranty obligations and product guarantees is not
appropriate.
The parameters underlying the measurement for
current income tax liabilities in relation to transfer
pricing risk are appropriate as a whole.
Our conclusions
For sales companies selected according to risk, we
examined whether risks that had not previously
been considered in the determination of the current
income tax liabilities could be identified on the basis
of the margins generated. We mathematically verified
the income tax liabilities amount resulting from the
difference between the margin and the arm's length
values.
Using inquiries, we obtained an understanding of the
parameters set. We compared arm's length values with
available benchmark studies, empirical values and the
results of past tax audits, as well as with completed
mutual agreement procedures. Furthermore, we
inspected the correspondence with tax authorities
related to concluded mutual agreement procedures
and tax audits and evaluated whether their consid-
eration in the determination of transfer pricing was
appropriate.
In order to audit the current income tax liabilities in
relation to transfer pricing, we involved staff special-
ising in transfer pricing law and those specialising in
national and international tax law.
Our audit approach
There is a risk for the financial statements that the
current income tax liabilities in relation to transfer
pricing were not measured at an appropriate amount.
Transfer pricing is calculated by exercising judgement
on the determination of the related parameters and
requires discretionary interpretation of the prevailing-
regulatory frameworks of countries concerned in
respect of the transfer pricing utilised.
The business operations of BMW Group in respect of
the production and sale of vehicles require extensive
cross-border relationships with affiliated companies.
In this regard, the varying requirements under tax
legislation as well as the specifications of the respon-
sible tax authorities for the respective countries must
be observed; the corresponding tax determinations
are subject to review by the competent tax authorities
over several years.
In the consolidated financial statements of BMW Group,
current income tax liabilities in the amount of
EUR 1,124 million are reported as at 31 December 2017,
which also include risks arising from transfer pricing.
Financial statement risk
The “accounting principles and policies" as well as
the assumptions, judgements and estimations made
are disclosed in the notes to the consolidated finan-
cial statements in note 4. Disclosure of "income tax
liabilities” is provided in the notes to the consolidated
financial statements in note 32.
Valuation for current income tax liabilities in
relation to transfer pricing risks
The method for the valuation of provisions for statu-
tory and non-statutory warranty obligations and
product guarantees is appropriate and has been
applied consistently. The measurement parameters
and assumptions applied are appropriate as a whole.
Our conclusions
Selecting specific vehicle models, the computational
accuracy of the valuation model used across the Group
including a tool for rate-based planning was verified
with the support of our actuaries. The measurement
parameters included therein, such as cost items, were
reconciled with actual costs. We evaluated the assump-
tions concerning the extent to which the historical
values are representative for the expected damage
susceptibility, for the expected value of damage per
vehicle in terms of material and labour cost and for
the anticipated claim.
We compared the amount of provisions from prior
year with expenses selected according to risk and
which actually arose for damage claims, as well as with
technical measures, in order to arrive at a conclusion
on the forecast accuracy.
In order to evaluate the appropriateness of the val-
uation method used for the determination of the
provisions for statutory and non-statutory warranty
obligations and product guarantees including the
assumptions and parameters, through discussions
with the departments responsible, we primarily
obtained an understanding of the process for deter-
mining the assumptions and parameters. We audited
the appropriateness and effectiveness of controls to
determine the assumptions and parameters. With
the involvement of our IT specialists, we reviewed
the IT systems utilised to verify their appropriateness.
Our audit approach
of provisions is associated with unavoidable estima-
tion uncertainties, is complex and is subject to a high
degree of risk of change, depending on factors such
as detected deficiencies becoming known and claims
made by vehicle owners.
Other information
developments and residual value forecasts as well as
the validation results. Furthermore, we evaluated the
processes for processing external forecast values from
market research institute. We ensured the computa-
tional accuracy of the forecast values by verifying key
calculation steps.
We reviewed the appropriateness and effectiveness of
the internal control system, particularly in relation to
the determination of expected residual values. This
included the audit of the compliance of the relevant IT
systems as well as the implemented interfaces therein
by our IT specialists.
AUDITOR'S REPORT
INDEPENDENT
→ Independent
Auditor's Report
Statement on
Corporate
Governance
240
239
Oliver Zipse
Peter Schwarzenbauer
Dr. Nicolas Peter
Pieter Nota
Klaus Fröhlich
Milagros Caiña Carreiro-Andree Markus Duesmann
Harald Krüger
The Board of Management
Aktiengesellschaft
Bayerische Motoren Werke
Munich, 15 February 2018
Statement pursuant to § 37y No. 1 of the
Securities Trading Act (WpHG) in conjunction
with § 297 (2) sentence 4 and § 315 (1) sentence
6 of the German Commercial Code (HGB)
"To the best of our knowledge, and in accordance with
the applicable reporting principles, the Consolidated
Financial Statements give a true and fair view of the
assets, liabilities, financial position and profit of the
Group, and the Group Management Report includes
a fair review of the development and performance of
the business and the position of the Group, together
with a description of the principal opportunities and
risks associated with the expected development of
the Group."
RESPONSIBILITY
STATEMENT BY THE
COMPANY'S LEGAL
REPRESENTATIVES
To Bayerische Motoren Werke
Aktiengesellschaft, Munich
In addition, we evaluated the appropriateness of
the forecasting methods, the model assumptions as
well as the parameters used for the determination of
the residual values based on the validations carried
out by BMW Group. For this purpose, we inquired
with BMW Group's experts responsible for the
management and monitoring of residual value risks
and inspected the internal analysis on residual value
Report on the Audit of the Consoli-
dated Financial Statements and the
Group Management Report
We have audited the consolidated financial statements
prepared by Bayerische Motoren Werke Aktien-
gesellschaft, Munich, and its subsidiaries (Group or
BMW Group, respectively), comprising the balance
sheet for group, income statement for group and
statement of comprehensive income for group, group
statement of changes in equity, cash flow statement
for
By means of inquiries, inspecting internal calcula-
tion methods and analysing the disposal proceeds
of vehicles, among other methods, we obtained an
understanding of the development of leased prod-
ucts, the underlying residual value risks as well as
the business processes for the identification, man-
agement, monitoring and measurement of residual
value risks.
Our audit approach
amounts.
There is a risk for the financial statements that the
residual values expected for the end of the lease terms
are not appropriately assessed and the impairment
losses or reversal of impairment losses required for
the leased products are not recognised in sufficient
The key estimated value for the purposes of subse-
quent measurement is the expected residual value at
the end of the lease term.
BMW Group leases vehicles to end customers as part
of operating leases. As at the reporting date, the value
of leased products amounted to EUR 36,257 million.
Financial statement risk
The "accounting principles and policies" are disclosed
in the notes to the consolidated financial statements
in note 4. Disclosure of "leased products" is provided
in the notes to the consolidated financial statements
in note 21.
Valuation of residual values of leased products
Key audit matters are those matters that, in our pro-
fessional judgment, were of most significance in our
audit of the consolidated financial statements for the
financial year from 1 January to 31 December 2017.
These matters were addressed in the context of our
audit of the consolidated financial statements as a
whole, and in forming our opinion thereon, we do not
provide a separate opinion on these matters.
Key Audit Matters in the Audit of the Consolidated
Financial Statements
We conducted our audit of the consolidated financial
statements and of the group management report in
accordance with Section 317 HGB and the EU Audit
Regulation No. 537/2014 (referred to subsequently
as "EU Audit Regulation") and in compliance with
German Generally Accepted Standards for Financial
Statement Audits promulgated by the Institut der
Wirtschaftsprüfer [Institute of Public Auditors in
Germany] (IDW). Our responsibilities under those
requirements and principles are further described
in the “Auditor's Responsibilities for the Audit of
the Consolidated Financial Statements and of the
Group Management Report" section of our auditor's
report. We are independent of the group entities in
accordance with the requirements of European law
and German commercial and professional law, and we
have fulfilled our other German professional respon-
sibilities in accordance with these requirements. In
addition, in accordance with Article 10 (2) point (f)
of the EU Audit Regulation, we declare that we have
not provided non-audit services prohibited under
Article 5 (1) of the EU Audit Regulation. We believe
that the evidence we have obtained is sufficient and
appropriate to provide a basis for our opinions on the
consolidated financial statements and on the group
management report.
Basis for the Opinions
Pursuant to Section 322 (3) sentence 1 HGB, we declare
that our audit has not led to any reservations relating
to the legal compliance of the consolidated financial
statements and of the group management report.
the accompanying group management report as
a whole provides an appropriate view of the
Group's position. In all material respects, this
group management report is consistent with
the consolidated financial statements, complies
with German legal requirements and appro-
priately presents the opportunities and risks of
future development. Our opinion on the group
management report does not cover the contents
of the corporate governance statement men-
tioned above.
the accompanying consolidated financial state-
ments comply, in all material respects, with the
IFRSS as adopted by the EU, and the additional
requirements of German commercial law pursu-
ant to Section 315e (1) HGB and, in compliance
with these requirements, give a true and fair view
of the assets, liabilities, and financial position
of the Group as at 31 December 2017, and of its
financial performance for the financial year from
1 January to 31 December 2017, and
-
In our opinion, on the basis of the knowledge obtained
in the audit,
group and the notes to the group financial state-
ments including accounting principles and policies. In
addition, we have audited the combined management
report (subsequently referred to as group manage-
ment report) for the financial year from 1 January to
31 December 2017. In accordance with the German
legal requirements we have not audited the content
of the statement on Corporate Governance which is
included in section "Statement on Corporate Gov-
ernance (§ 289 f HGB)" [Handelsgesetzbuch: German
Commercial Code] of the group management report.
Opinions
5,380,785 5,114,906
124,719 123,394
The legal representatives are responsible for the other
information. Other information includes:
the Statement on Corporate Governance and
→ BMW Group
Ten-year
Comparison
Other
Information
248
Financial Calendar
Contacts
Index of Graphs
Index
of Key Figures
Glossary-
Explanation
Ten-year
Comparison
Other
Information
5
5
→Page 256 Contacts
→ Page 255 Financial Calendar
→ Page 254 Index of Graphs
→Page 252 Index
→Page 250 Glossary - Explanation of Key Figures
→Page 248 BMW Group Ten-year Comparison
OTHER
INFORMATION
BMW GROUP
[Certified Public Auditor]
TEN-YEAR COMPARISON
Automobiles
Business volume (based on balance sheet carrying amounts)
contracts
Contract portfolio
FINANCIAL SERVICES
2,165,566
133,615
2,279,503
151,004
2,359,756
145,555
2,505,741
185,682
units
units
units 2,463,526 2,367,603 2,247,485 2,117,965
164,153 145,032 136,963 123,495
units
2014
2015
2016
2017
Motorcycles¹
Automobiles
PRODUCTION VOLUME
Motorcycles¹
DELIVERIES
-
Feege
Wirtschaftsprüfer
Wirtschaftsprüfer
- Obtain an understanding of internal control
relevant to the audit of the consolidated finan-
cial statements and of arrangements and meas-
ures (systems) relevant to the audit of the group
management report in order to design audit
procedures that are appropriate in the circum-
stances, but not for the purpose of expressing
an opinion on the effectiveness of these systems.
Identify and assess the risks of material misstate-
ment of the consolidated financial statements
and of the group management report, whether
due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropri-
ate to provide a basis for our opinions. The risk
of not detecting a material misstatement result-
ing from fraud is higher than for one resulting
from error, as fraud may involve collusion, for-
gery, intentional omissions, misrepresentations,
or the override of internal control.
We exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with Section 317 HGB and the EU Audit Regulation
and in compliance with German Generally Accepted
Standards for Financial Statement Audits promulgated
by the Institut der Wirtschaftsprüfer (IDW) will always
detect a material misstatement. Misstatements can
arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of
users taken on the basis of these consolidated financial
statements and this group management report.
Our objectives are to obtain reasonable assurance
about whether the consolidated financial statements
as a whole are free from material misstatement,
whether due to fraud or error, and whether the
group management report as a whole provides an
appropriate view of the Group's position and, in all
material respects, is consistent with the consolidated
financial statements and the knowledge obtained in
the audit, complies with the German legal require-
ments and appropriately presents the opportunities
and risks of future development, as well as to issue
an auditor's report that includes our opinions on the
consolidated financial statements and on the group
management report.
Auditor's Responsibilities for the Audit of the
Consolidated Financial Statements and of the
Group Management Report
The Supervisory Board is responsible for overseeing
the Group's financial reporting process for the prepa-
ration of the consolidated financial statements and of
the group management report.
Furthermore, management is responsible for the
preparation of the group management report that, as
a whole, provides an appropriate view of the Group's
position and is, in all material respects, consistent
with the consolidated financial statements, complies
with German legal requirements, and appropriately
presents the opportunities and risks of future devel-
opment. In addition, management is responsible for
such arrangements and measures (systems) as they
have considered necessary to enable the preparation
of a group management report that is in accordance
with the applicable German legal requirements, and
to be able to provide sufficient appropriate evidence
for the assertions in the group management report.
In preparing the consolidated financial statements,
management is responsible for assessing the Group's
ability to continue as a going concern. They also
have the responsibility for disclosing, as applicable,
matters related to going concern. In addition, they
are responsible for financial reporting based on the
going concern basis of accounting unless there is an
intention to liquidate the Group or to cease operations,
or there is no realistic alternative but to do so.
Responsibilities of Management and the
Supervisory Board for the Consolidated Financial
Statements and the Group Management Report
Management is responsible for the preparation of the
consolidated financial statements that comply, in all
material respects, with IFRSS as adopted by the EU and
the additional requirements of German commercial
law pursuant to Section 315e (1) HGB and that the
consolidated financial statements, in compliance
with these requirements, give a true and fair view of
the assets, liabilities, financial position, and financial
performance of the Group. In addition, management
is responsible for such internal controls as they have
determined necessary to enable the preparation of
consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
→ Independent
Auditor's Report
Statement on
Corporate
Governance
244
243
otherwise appears to be materially misstated.
is materially inconsistent with the consolidated
financial statements, with the group manage-
ment report or our knowledge obtained in the
audit, or
In connection with our audit, our responsibility is
to read the other information and, in so doing, to
consider whether the other information
Our opinions on the consolidated financial statements
and on the group management report do not cover
the other information, and consequently we do not
express an opinion or any other form of assurance
conclusion thereon.
the remaining parts of the annual report, with
the exception of the audited consolidated
financial statements and group management
report as well as our Independent
Auditor's Report
Evaluate the appropriateness of accounting pol-
icies used by management and the reason-
ableness of estimates made by management
and related disclosures.
[Certified Public Auditor]
Conclude on the appropriateness of manage-
ment's use of the going concern basis of account-
ing and, based on the audit evidence obtained,
whether a material uncertainty exists related to
events or conditions that may cast significant
doubt on the Group's ability to continue as a go-
ing concern. If we conclude that a material un-
certainty exists, we are required to draw attention
in the auditor's report to the related disclosures
in the consolidated financial statements and in
the group management report or, if such disclo-
sures are inadequate, to modify our respective
opinions. Our conclusions are based on the
audit evidence obtained up to the date of our au-
ditor's report. However, future events or condi-
tions may cause the Group to cease to be able to
continue as a going concern.
Obtain sufficient appropriate audit evidence re-
garding the financial information of the entities
or business activities within the Group to express
opinions on the consolidated financial statements
and on the group management report. We are
responsible for the direction, supervision and per-
formance of the group audit. We remain solely
responsible for our opinions.
Sailer
Wirtschaftsprüfungsgesellschaft
KPMG AG
Munich, 26 February 2018
The Certified Public Auditor responsible for the
engagement is Andreas Feege.
Certified Public Auditor Responsible
for the Engagement
We declare that the opinions expressed in this audi-
tor's report are consistent with the additional report
to the audit committee pursuant to Article 11 of the
EU Audit Regulation (long-form audit report).
We were elected as group auditor by the annual
general meeting on 11 May 2017 for the financial
year from 1 January to 31 December 2017 and on
22 June 2017 we were engaged by the audit commit-
tee of the supervisory board. Taking into consider-
ation the Article 41 (1) EU APrVO we have been the
group auditor of the Bayerische Motoren Werke
Aktiengesellschaft without interruption for more
than 30 years.
Further Information pursuant to Article 10 of the
EU Audit Regulation
Other Legal and Regulatory
Requirements
Auditor's Report
→ Independent
Statement on
Corporate
Governance
246
From the matters communicated with those charged
with governance, we determine those matters that
were of most significance in the audit of the consoli-
dated financial statements of the current period and
are therefore the key audit matters. We describe these
matters in our auditor's report unless law or regulation
precludes public disclosure about the matter.
We also provide those charged with governance with
a statement that we have complied with the relevant
independence requirements, and communicate with
them all relationships and other matters that may
reasonably be thought to bear on our independence,
and where applicable, the related safeguards.
We communicate with those charged with governance
regarding, among other matters, the planned scope
and timing of the audit and significant audit findings,
including any significant deficiencies in internal con-
trol that we identify during our audit.
― Perform audit procedures on the prospective in-
formation presented by management in the
group management report. On the basis of suf-
ficient appropriate audit evidence we evaluate,
in particular, the significant assumptions used
by management as a basis for the prospective
information, and evaluate the proper derivation
of the prospective information from these as-
sumptions. We do not express a separate opin-
ion on the prospective information and on the
assumptions used as a basis. There is a substan-
tial unavoidable risk that future events will dif-
fer materially from the prospective information.
Evaluate the consistency of the group manage-
ment report with the consolidated financial
statements, its conformity with [German] law,
and the view of the Group's position it pro-
vides.
Evaluate the overall presentation, structure and
content of the consolidated financial statements,
including the disclosures, and whether the con-
solidated financial statements present the under-
lying transactions and events in a manner that
the consolidated financial statements give a true
and fair view of the assets, liabilities, financial
position and financial performance of the Group
in compliance with IFRSS as adopted by the EU
and the additional requirements of German com-
mercial law pursuant to Section 315e (1) HGB.
The estimation of future residual values is subject
to judgement and complex due to the large number
of assumptions to be made and the amount of data
incorporated in the determination. For the residual
value forecasts, BMW Group uses internally avail-
able data on historical values, current market data
as well as forecasts from external market research
institutes.
→166
Financial result
197
1.30/1.32
0.30/0.32
0.30/0.32
INCOME STATEMENT
Revenues
Gross profit margin
Earnings before financial result
Earnings before tax
Return on sales (earnings before tax/revenues)
Income taxes
Effective tax rate
Net profit for the year
BALANCE SHEET
Non-current assets
Current assets
197
Capital expenditure (excluding capitalised development costs)
Equity
Equity ratio
Non-current provisions and liabilities
Current provisions and liabilities
Balance sheet total
CASH FLOW STATEMENT
Cash and cash equivalents at balance sheet date
Free cash flow Automotive segment
PERSONNEL
Workforce at year-end²
Personnel cost per employee
DIVIDEND
Dividend total
Dividend per share of common stock/preferred stock
249
250
Capital expenditure ratio (capital expenditure/revenues)
852
1,508
2.30/2.32
1,640
2.50/2.52
36,919
39,287
138,377
131,835
123,429
110,164
101,953
101,086
7,671
8,370
7,776
7,432
7,767
7,454
3,003
3,809
3,166
4,471
1,456
197
110,351
89,869
105,876
89,161
100,306
95,453
84,887
83,141
96,230
72,349
100,041
75,612
1,707
2.60/2.62
Other
Information
→ Glossary-
Explanation
of Key Figures
The effective tax rate is calculated by dividing the
income tax expense by the Group profit before tax.
Equity ratio
Equity capital as a percentage of the balance sheet
total.
Fair value
The amount for which an asset could be exchanged,
or a liability settled, between knowledgeable, willing
parties in an arm's length transaction.
Fair value hedge
A hedge against exposures to fluctuations in the fair
value of a balance sheet item.
Return on capital employed (ROCE)
ROCE in the Automotive and Motorcycles segments
is measured on the basis of relevant segment profit
before financial result and the average amount of
capital employed in the segment concerned. Capital
employed corresponds to the sum of all current and
non-current operational assets, less liabilities that do
not incur interest.
Return on equity (ROE)
RoE in the Financial Services segment is calculated as
segment profit before taxes, divided by the average
amount of equity capital attributable to the Financial
Services segment.
Goodwill
Goodwill corresponds to the consideration paid to
acquire an entity, less the fair value of the separate
assets acquired and liabilities assumed. The buyer
is willing to pay the additional amount in return for
future expected earnings.
Value at risk
A measure of the potential maximum loss in value of
an item during a set time period, based on a specified
probability.
Gross margin
Gross profit as a percentage of Group revenues.
Liquidity
Cash and cash equivalents as well as marketable secu-
rities and investment funds.
Post-tax return on sales
Group net profit as a percentage of Group revenues.
Pre-tax return on sales
Group profit/loss before tax as a percentage of Group
revenues.
Research and development expenditure
The sum of research and non-capitalised development
cost and capitalised development cost (not including
the associated scheduled amortisation).
Research and development expenditure ratio
Research and development expenditure as a percent-
age of Group revenues.
251
Effective tax rate
40,134
A hedge against exposures to the variability in fore-
casted cash flows, particularly in connection with
exchange rate fluctuations.
revenues.
-
GLOSSARY EXPLANATION
OF KEY FIGURES
Commercial paper
Short-term debt instruments with a term of less than
one year which are usually sold at a discount to their
face value.
Asset-backed financing transactions
A form of corporate financing involving the sale of
receivables to a financing company.
Consolidation
The process of combining separate financial state-
ments of Group entities into Group Financial State-
ments, depicting the financial position, net assets
and results of operations of the Group as a single
economic entity.
Bond
A securitised debt instrument in which the issuer
certifies its obligation to repay the nominal amount
at the end of a fixed term and to pay a fixed or variable
rate of interest.
Business volume in balance sheet terms
The sum of the balance sheet line items “Leased prod-
ucts” and “Receivables from sales financing" (current
and non-current), as reported in the balance sheet for
the Financial Services segment.
Capital expenditure ratio
Investments in property, plant and equipment and
other intangible assets (excluding capitalised
development costs) as a percentage of Group
revenues.
Capitalisation rate
Capitalised development costs as a percentage of
research and development expenditure.
Cash flow
Liquid funds generated (cash inflows) or used (cash
outflows) during a reporting period.
Cash flow at risk
Similar to "value at risk" (see definition below).
Credit default swap (CDS)
Financial swap agreements, under which creditors of
securities (usually bonds) pay premiums to the seller
of the CDS to hedge against the risk that the issuer of
the bond will default. As with credit default insurance
agreements, the party receiving the premiums gives
a commitment to compensate the bond creditor in
the event of default.
Earnings per share (EPS)
Basic earnings per share are calculated for common
and preferred stock by dividing the net profit after
minority interests, as attributable to each category of
stock, by the average number of shares in circulation.
Earnings per share of preferred stock are computed
on the basis of the number of preferred stock shares
entitled to receive a dividend in each of the relevant
financial years.
EBIT
Abbreviation for "Earnings Before Interest and Taxes",
equivalent in the BMW Group income statement to
"Profit/loss before financial result”.
EBIT margin
Profit/loss before financial result as a percentage of
Cash flow hedge
47,213
48,395
51,134
80,974
75,245
66,233
61,202
60,653
Business volume (based on balance sheet carrying amounts)
76,059
76,848
68,821
60,477
50,681
53,197
20.1
20.2
21.1
18.1
10.5
11.4
7,978
8,275
8,018
5,111
289
921
7,893
7,803
7,383
4,853
413
84,347
351
Contract portfolio
3,085,946
2011
2010
2009
2008
1,963,798 1,845,186 1,668,982
115,215 106,358 104,286
1,461,166
1,286,310
98,047
87,306
1,435,876
101,685
DELIVERIES
Automobiles
Motorcycles¹
PRODUCTION VOLUME
2,006,366
110,127
1,861,826 1,738,160
113,811 110,360
1,481,253
1,258,417
1,439,918
99,236
82,631
104,220
Automobiles
Motorcycles¹
FINANCIAL SERVICES
4,130,002
3,846,364
3,592,093
3,190,353
3,031,935
252
10.4
10.7
4,967
4,151
2,720
2,312
2,980
6.5
5.4
4.0
3.8
4.7
5.6
35,600
30,606
27,103
23,930
19,915
20,273
25.7
23.2
22.0
21.7
19.5
20.1
51,643
52,834
49,113
46,100
45,119
41,526
38,670
10.2
39,944
49,004
8.0
0.8
0.7
2,564
2,692
2,476
1,610
203
21
32.5
34.5
33.5
33.1
49.2
6.0
5,329
5,111
4,907
3,243
210
330
86,193
81,305
74,425
67,013
62,009
62,416
52,184
50,530
43,151
2012
Other
Information
INDEX
Workforce
BMW Group apprentices at 31 December
Employee attrition rate at BMW AG
Proportion of female employees in
functions at BMW AG/BMW Group
→ 66
→ 67
management
67
Proportion of female executives within manage-
ment/function levels I and II at BMW AG
→ 213
Sustainability
Materiality matrix
→ 69
Further information
Exchange rates compared to the euro
Oil price trend → 46
→ 58
Precious metals price trend
Steel price trend → 47
→ 45
BMW Group Compliance Management System
→ 216
Overview of compensation system of the Board of
Management
→ 223
FINANCIAL CALENDAR
2018
21 March 2018
Annual Accounts Press Conference
22 March 2018
Analyst and Investor Conference
4 May 2018
→ 46
→ 52
BMW Group -key automobile markets 2017
BMW Group deliveries of motorcycles → 58
BMW Group - key motorcycle markets 2017
BMW Group locations → 38 et seq.
253
254
Other
Information
→ Index of Graphs
↑ ↑
Financial Calendar
INDEX OF GRAPHS
Finances
BMW Group in figures
Development of BMW stock
BMW Group value drivers
→ 6
→ 24,25
→ 40
Contract portfolio of Financial Services segment
→ 59
BMW Group new vehicles financed or leased by
Financial Services segment → 59
Contract portfolio retail customer financing of
Financial Services segment 2017
→ 60
→ 61
Development of credit loss ratio
Regional mix of BMW Group purchase volumes
2017 → 63
BMW Group change in cash and cash equivalents
→ 78
BMW Group Financial liabilities by maturity → 80
Balance sheet structure - Group → 82
Balance sheet structure - Automotive segment
BMW Group value added 2017
→ 82
→ 85
Risk management in the BMW Group
→ 96
Sales volume and locations
Quarterly Report to 31 March 2018
17 May 2018
Annual General Meeting
2 August 2018
+49 89 382-1 46 61
ir@bmwgroup.com
The BMW Group on the Internet
Further information about the BMW Group is
available online at → www.bmwgroup.com.
Investor Relations information is available directly
at www.bmwgroup.com/ir.
Information about the various BMW Group brands
is available at www.bmw.com, www.mini.com
and
www.rolls-roycemotorcars.com.
A further contribution
towards preserving resources
The BMW Annual Report was printed on paper produced in accordance with the internation-
al FSC® Standard: the pulp is sourced from sustainably managed forests.
The corresponding CO₂ emissions were compensated by additional environmental and cli-
mate protection measures as part of a reforestation project in collaboration with Bergwald-
projekt e. V. (certificate number: DE-250-830816).
FSC
www.fsc.org
MIX
Paper from
responsible sources
FSC C014340
carbon neutral
natureOffice.com | DE-250-830816
print production
This version of the Annual Report is a translation
from the German version. Only the original German
version is binding.
PUBLISHED BY
Bayerische Motoren Werke
Aktiengesellschaft
80788 Munich
Germany
Telephone +49 89 382-0
+49 89 382-2 53 87
→ 154
E-mail
Telephone +49 89 382-3 16 84
Quarterly Report to 30 June 2018
7 November 2018
Quarterly Report to 30 September 2018
2019
20 March 2019
Annual Report 2018
20 March 2019
Annual Accounts Press Conference
21 March 2019
Analyst and Investor Conference
7 May 2019
Quarterly Report to 31 March 2019
16 May 2019
Annual General Meeting
1 August 2019
Quarterly Report to 30 June 2019
6 November 2019
Quarterly Report to 30 September 2019
255
256
Other
Information
→ Contacts
CONTACTS
Business and Finance Press
Telephone +49 89 382-2 45 44
+49 89 382-2 41 18
Fax
E-mail
+49 89 382-2 44 18
presse@bmwgroup.com
Investor Relations
Fax
Trade payables
Trade receivables
→ 146 et seq.
Tangible, intangible and investment assets
→ 198 et seq.
Cost of materials → 84 et seq.
Cost of sales
D
→73, 139
Dealer organisation/dealerships 31,64
Declaration with respect to the
Corporate Governance Code
Digitalisation → 32, 61, 64
Dividend → 26, 143 et seq.
→ 199
→ 70
Income statement
→72, 87, 118 et seq., 139 et seq.
Income taxes
→74, 140 et seq., 162
Intangible assets → 129, 148
Inventories → 82, 89, 154
Investments accounted for using the equity method
and other investments → 149 et seq.
K
Key data
L
per share
→ 27
Lease business
→ 59 et seq.
Leased products → 149
Locations → 38 et seq.
List of investments
→167
M
→ 127
Corporate Governance
A
Accounting policies
Apprentices
→ 66
Automotive segment
→ 128 et seq.
F
→ 82, 88, 152 et seq.
Financial assets
Financial instruments → 168 et seq.
Financial liabilities → 80, 83, 163 et seq.
Financial reporting rules → 135 et seq.
→74,87
Financial Services segment
→ 52 et seq.
G
→ 59 et seq.
B
Balance sheet structure
Bonds → 80, 164
→ 82
Group tangible, intangible and investment
assets → 146 et seq.
C
Capital expenditure → 5, 74 et seq.
Cash and cash equivalents → 77 et seq., 122 et seq.
Cash flow → 5,78 et seq., 122 et seq.
CO2 fleet emissions → 4, 49, 70, 94 et seq.
Compensation Report → 221 et seq.
Compliance → 216 et seq.
Connected Drive
→ 32
Consolidated companies
Consolidation principles
Contingent liabilities
→ 127
→ Index
→ 188 et seq.
Mandates of members of the Supervisory Board
83, 89, 157 et seq.
→ 4 et seq., 40 et seq., 49 et seq.,
→ 143
Production network → 38 et seq., 54 et seq.
Profit before financial result → 5 et seq., 74
Profit before tax → 5 et seq., 49, 72, 74, 93, 95
Property, plant and equipment
Purchasing → 63
R
Rating → 26
→148
Receivables from sales financing
Refinancing → 79 et seq.
→151 et seq.
Related party relationships → 179 et seq.
Remuneration system → 221 et seq.
Report of the Supervisory Board
Research and development
Revenue reserves → 155
→ 8 et seq.
→ 32 et seq., 61 et seq.
Revenues → 5, 50 et seq., 72 et seq., 75 et seq., 87, 94 et seq., 139
Risks and opportunities
→ 96 et seq.
ROCE → 5, 40 et seq., 50 et seq., 94
ROE
→ 5, 40 et seq., 51,95
S
Sales volume
→ 4,49 et seq., 52 et seq., 58, 94 et seq.
Segment information → 183 et seq.
Selling and administrative expenses
Statement of Comprehensive Income
Stock → 24 et seq.
Sustainability → 34, 68 et seq.
→74, 139
→ 118, 145
T
Production → 54 et seq.
Mandates of members of the Board of Management
→ 200
Personnel expenses
Performance indicators
→ 201 et seq.
Dow Jones Sustainability Index World
E
Earnings per share
→ 5,143
EBIT margin/return on sales
50 et seq., 74 et seq., 94 et seq.
Efficient Dynamics
→ 32
Employees → 4, 30, 49, 66 et seq., 93
Equity 83, 155 et seq.
Exchange rates
→ 5 et seq., 41 et seq.,
→45 et seq., 91 et seq., 106, 128, 177 et seq.
Marketable securities
→ 78, 131
Motorcycles segment → 58
N
Net profit
→ 5
0
Other financial result
→ 140
Other investments → 171
Other operating income and expenses
Other provisions →162
Outlook → 90 et seq.
→ 139 et seq.
P
Pension provisions
93 et seq.
2013
2,383
200
This concept car was one of the stars of the Frankfurt Motor Show in 2017. In the BMW i Vision
Dynamics, we are targeting an electric range of 600 kilometres – fifth-generation storage and
battery technology will make this possible.
BMW i Vision Dynamics eagerly awaited
All our brands will gradually be electrified. All electrified BMW models will become part of
BMW i. We have a clear roadmap to 2025: in 2019, a battery-electric MINI; in 2020, the first fully
electric model from the core BMW brand, the X3. These will be followed in 2021 by the iNEXT,
our new technology flagship, which the whole company will learn from.
When the BMW i3 was released in 2013, not many would have believed that the BMW Group
would today be leading the market for electrified vehicles in Europe. Today, in this growing
segment, we already have a much larger market share than in traditional drivetrains.
Electrification will remain a top priority for us over the coming years. We aim to sell more than
140,000 electrified vehicles in 2018 and have half a million electrified BMWs and MINIs on the
roads by the end of 2019.
Half a million electrified vehicles in total by the end of 2019
2018 will also be our “X year”, with the expansion of our highly successful BMW X family. As
well as the X7, this will include the new X3 available since late last year, the cool new X2 and
the new X4. I am sure our new X vehicles will totally appeal to our customers.
We are focusing on two segments in particular: first, the highly profitable luxury class. Here, we
will be launching new luxury models like the BMW 8 Series, the BMW X7 and the Rolls-Royce
Phantom onto the market. These will bring us closer to our goal of occupying the leading position
in the luxury segment.
In 2018, we will enter the second year of the biggest model offensive in our history. We will
continue moving forward, with highly emotional new models like the BMW i8 Roadster and
the BMW Z4.
Phase II of the biggest model offensive in our history
The momentum will continue in financial year 2018
24
21
Electrification pays off:
Dear shareholders, your company remains on track for success - and it is only fitting that you
should share in that success. The Board of Management and Supervisory Board will therefore
propose to the Annual General Meeting that the unappropriated profit of BMW AG for the
financial year 2017 be used to issue a dividend of 4.00 euros per share of common stock and
4.02 euros per share of preferred stock. That is the highest dividend the company has ever paid.
BMW AG associates in Germany will also benefit from the company's positive performance
through our profit-sharing programme.
The Group financial statements also reflect the positive impact of the tax reform in the US. The
EBIT margin in the Automotive segment stands at 8.9 per cent and therefore remains within
our target range. The Financial Services segment once again made a significant contribution to
the Group result, with pre-tax earnings of more than 2 billion euros.
In the financial year 2017, Group revenues rose slightly to reach a new all-time high of 98.7 billion
euros. Earnings before tax posted a significant increase of 10.2 percent year-on-year and exceeded
10 billion euros for the first time. Annual net profit was up 26 percent to 8.7 billion euros.
Financial indicators reach new highs
In San Luis Potosí, Mexico, plant construction is proceeding according to schedule. We are already
qualifying young specialists at our new training centre there. Over the next few years, we will
see different types of drivetrains on the roads. We are preparing our sites for this diversity by
creating flexible architectures and plants. This will allow us to produce models with efficient
combustion engines alongside electric vehicles and plug-in hybrids. From 2020 on, the use of
scalable modular electric construction kits will enable us to fit all model series with any type of
drivetrain. This will make us extremely flexible, whichever way demand develops.
The high flexibility of our global production network lays the foundation for the BMW Group's
continued growth. In 2017, twice as many vehicles came off the production line than in 2009.
The company currently operates 31 facilities in 14 countries, and we continue to invest in our
locations in Germany and worldwide. A good example of this is the major expansion of our
Dadong plant in Shenyang, China, which we operate as part of our joint venture with Brilliance
China Automotive Holdings Ltd.
Our value creation is as global as it is flexible
Asia was the main growth driver in 2017 and China the most important single market. In
Mainland China, deliveries climbed to more than 590,000 vehicles. In Europe, sales remained
on a par with the previous year, at around 1.1 million units, despite a downturn in the UK,
with ongoing Brexit negotiations. In the Americas and the US, we saw slight decreases, with
total sales of around 450,000 vehicles for the region. However, the trend has reversed in the US
since late 2017.
It is part of our philosophy that every customer counts – and so does every market. We aim for a
balanced distribution of sales across the main market regions of Europe, Asia and the Americas.
This enables us to balance out regional market fluctuations.
Every customer and every market counts
of the Board of
Management
→ Statement of the
Chairman
Shareholders
To Our
Significantly higher dividend
European fleet CO2 emissions continue to fall
By stepping up the pace on sustainable drivetrains, we are also reducing our fleet CO2 emissions.
This was also the case in 2017, even though the percentage of diesel vehicles decreased, partly
due to the current discussions in Germany. Emissions figures for our new vehicle fleet in Europe
currently stand at 122 grams of CO2 per kilometre. We have a clear objective to meet the European
Union's emissions requirements from 2021.
To Our
Shareholders
14
24
23
Chairman of the Board of Management
Harald Krüger
H. 35"
Yours
company with a promising future.
We will continue to follow our path, taking advantage of the opportunities that arise. By doing
so, we can ensure that BMW AG remains an attractive investment over the long term and a
Our sharp focus on the future, combined with solid financials, enables us to have easier
access to international capital markets. Moody's has upgraded BMW AG's long-term rating to
A1. Our company also has the highest Standard & Poor's rating of any European automobile
manufacturer.
Top-rated European automobile manufacturer
Of course, dear shareholders, that also means ensuring your company remains profitable. The
BMW Group has the financial resources to fund these upfront investments in the future – which
gives us a clear competitive edge. Our R&D ratio will increase in 2018, from 6.5 to 7 percent, or
around 7 billion euros. Expenditure will also remain high in 2019. For the past eight years, we
have kept the EBIT margin in the Automotive segment within our target range of 8 to 10 percent,
or higher, from one quarter to the next. We intend to maintain this high-level of consistency.
Your company delivers consistently high profitability
According to our most recent employee survey, 90 percent of our associates say they are proud
to work for the BMW Group. More than 80 percent say they are familiar with the target and
content of our strategy. This shared understanding will give us even greater momentum. We all
want the BMW Group to be the first place customers turn to for individual premium mobility
experiences. We aim to be the clear number one.
Our associates stand behind Strategy NUMBER ONE > NEXT
These examples show how we are successfully shaping the future of mobility in all its different
facets. With your support, we are transforming ourselves into a tech company for mobility
with a clear focus on customers and service. You have given us your backing for our long-term
approach with Strategy NUMBER ONE > NEXT. For that, I would like to thank you personally,
and on behalf of the entire Board of Management and our associates worldwide.
Dear Shareholders,
Finding a parking space is a problem for many drivers. Earlier this year, the BMW Group acquired
Parkmobile LLC, in a move that makes us the largest provider of mobile parking services in
North America and Europe, with 22 million customers in 1,000 cities.
Systematic expansion of our mobility services is firmly anchored in our Strategy NUMBER ONE > NEXT.
In early 2018, we signed a contract to acquire 100 percent of DriveNow. Our premium car-sharing
service already has over a million customers in 13 cities. A growing number of older people,
families and business travellers are also using DriveNow. Our ReachNow service is available in
the US and, since late 2017, also in China, in collaboration with a local partner.
Global expansion of the NOW family
Ten million BMW Group vehicles are already connected via Connected Drive. It takes about
25 million test kilometres to get an autonomous vehicle ready for series production. In 2018, our
fleet of autonomous BMW 7 Series models will continue to collect data on the roads, mainly in
Germany, Israel and California.
We will officially open our campus for autonomous driving, just outside Munich, in spring 2018.
Here, we will work with our partners, Intel and Mobileye, to develop autonomous driving – which
we see as one of the main driving forces for the mobility of tomorrow. A growing number of
renowned companies from different industries are joining our shared platform. We believe
that security is vital to autonomous driving – not just with respect to the vehicles themselves,
but also customer data.
The future belongs to autonomous driving
22
22
Against this backdrop, we are actively supporting infrastructure development. We aim to be a
system provider for electric mobility: with ChargeNow and IONITY for charging infrastructure,
the new BMW Energy Services business segment and our Battery Cell Competence Centre
in Munich.
Developing electric mobility infrastructure
of the Board of
Management
→ Statement of the
Chairman
67.29
20
19
In 2017, we delivered 103,080 cars with electrified drivetrains to customers. Overall, sales of our
BMW i models together with BMW iPerformance and MINI Electric plug-in hybrids increased
by two-thirds over the previous year.
8.83
8.08
Earnings per share of preferred stock4
13.14
10.47
9.72
8.85
8.10
Free cash flow Automotive segment
6.78
8.81
8.23
5.30
4.58
Equity
82.95
72.08
65.11
57.03
54.25
1 Xetra closing prices.
2 Proposed by management.
3 Weighted average number of shares for the year.
4 Stock weighted according to dividend entitlements.
28
To Our
Shareholders
BMW Stock and
Capital Markets
in 2017
Intensive communication with capital markets
continued
9.70
To Our
10.45
Earnings per share of common stock³
Electric mobility is currently our main strategic focus. We reached an important milestone
on the road to sustainable mobility last year, when I presented the 100,000th electrified
vehicle sold by the BMW Group to its new owner at BMW Welt in Munich. It was a BMW i3,
purchased by an 80-year-old customer – which just goes to show that it is never too late to
switch to an electric car.
Milestone: over 100,000 electrified vehicles sold
MINI sales climbed more than 3 percent to over 370,000 vehicles. BMW Motorrad saw a significant
increase, with deliveries of motorcycles and scooters up more than 13 percent to 164,000 units.
In the ultra-luxury segment, Rolls-Royce was unable to match the previous year's strong result.
With the Phantom model changeover and in a difficult environment, sales decreased by around
16 percent to 3,362 vehicles.
All-time highs for BMW, BMW M, MINI and BMW Motorrad
Our core BMW brand once again sold more than two million vehicles in 2017 - over four percent
more than the previous year. BMW M GmbH also contributed to this, reporting record deliveries
of more than 80,000 M and M Performance models for the first time.
Our strong, emotional brands are extremely desirable to customers. In Fortune Magazine's
"World's Most Admired Companies", the BMW Group is now the highest-ranked automobile
manufacturer in the top 20 and the most admired European company.
More and more customers are buying vehicles built by the BMW Group. Our customers have made
this company a leading manufacturer in the global premium segment for the past 14 years. For
the seventh consecutive year, sales reached a new all-time high in 2017. As forecast, automotive
deliveries rose slightly to 2.46 million vehicles. This represents an increase of 4.1 percent in a
highly competitive environment.
BMW Group leads global premium segment in 2017
At the BMW Group, we stand by our promises. And we deliver! We achieved our targets for the
financial year 2017, with new all-time highs for automobile and motorcycle deliveries, as well as
Group pre-tax earnings.
Financial year 2017: goals accomplished
Progress is not possible without change. Change is a constant in all of our lives. The BMW Group
charts its own course - with innovation, determination and foresight. We want to offer
solutions for the challenges of today and tomorrow. Each and every one of our associates is
giving their all. Our corporate culture encourages values of openness and transparency in
our everyday actions.
Dear Shareholders,
56.53
58.96
59.08
48.69
KEY DATA PER SHARE IN €
Dividend
Common stock
4.00²
3.50
3.20
2.90
2.60
Preferred stock
4.022
3.52
3.22
2.92
2.62
13.12
The BMW Group continued to inform analysts, inves-
tors, and rating agencies throughout 2017 with regular
quarterly and year-end financial reports. The com-
prehensive information package provided for capital
market participants included numerous one-on-one
and group meetings, dedicated socially responsible
investment (SRI) roadshows for investors using sustain-
ability criteria in their investment decisions, and debt
roadshows for fixed-income investors and credit ana-
lysts. Communication focused on the BMW Group's
new model offensive and answers to the challenges
facing the automobile industry going forward. Topics
discussed included autonomous driving and electric
mobility. A further focus was the profitability of the
BMW Group's business models. In addition to partici-
pating in various conferences and roadshows, product
presentations and a technology workshop were held
for analysts and investors in Munich.
Shareholders
in 2017
88.75
86.83
Low
High
Year-end closing price
Stock exchange price in €¹
601,995
601,995
601,995
601,995
601,995
Number of shares in 1,000
COMMON STOCK
97.63
2013
2015
2016
2017
→ 11
BMW stock
Due to the positive earnings development, the
Board of Management and the Supervisory Board
are proposing to the Annual General Meeting to use
the net profit of BMW AG of €2,630 million (2016:
€2,300 million) for the payment of a dividend of
€4.00 per share of common stock (2016: €3.50) and a
dividend of €4.02 per share of preferred stock (2016:
€3.52). The payout ratio for the year 2017 therefore
stands at 30.2% (2016: 33.3%).
Significant increase in dividend
In this context, and with the approval of the Super-
visory Board, the Board of Management increased
BMW AG's share capital in 2017 by €491,000 from
€657,109,600 to €657,600,600 by issuing 491,000 new
non-voting shares of preferred stock. This increase
was executed on the basis of Authorised Capital 2014
in Article 4 (5) of the Articles of Incorporation. The
new shares of preferred stock carry the same rights as
existing shares of preferred stock. The newly issued
shares of preferred stock for employees are entitled to
receive dividends with effect from the financial year
2018. In addition, 114 shares of preferred stock were
acquired via the stock market or as a result of cancelled
employee purchases relating to the previous year.
For more than 40 years, BMW AG has enabled its
employees to participate in its success. Since 1989,
this participation has taken the form of an Employee
Share Programme. A total of 491,114 shares of pre-
ferred stock were issued to employees as part of this
programme in 2017.
Employee Share Programme
The ratings underline the BMW Group's robust
financial profile and excellent creditworthiness. As
a result, the Company not only enjoys good access to
international capital markets, but also benefits from
attractive refinancing conditions.
In January 2017, Moody's raised its long-term rating
for BMW AG from A2 (positive outlook) to A1 (stable
outlook). The P-1 short-term rating was confirmed.
The improved assessment reflects the attractive
product launches as part of the model offensive, the
good position of the BMW Group with regard to the
challenges faced by the automobile industry, a con-
sistently strong operating performance and a solid
financial and capital structure.
Since December 2013, BMW AG has had a long-term
rating of A+ (stable outlook) and a short-term rating
of A-1 from the rating agency Standard & Poor's.
This represents currently the highest rating given by
Standard & Poor's to a European car manufacturer.
2014
89.77
85.22
90.83
74.15
78.89
62.09
67.84
77.41
72.70
74.64
Low
High
Year-end closing price
Stock exchange price in €1
54,260
54,500
54,809
55,114
55,605
Number of shares in 1,000
PREFERRED STOCK
27
27
63.93
77.41
75.68
65.10
77.71
85.42
95.51
122.60
92.25
stable
stable
A+
A-1
P-1
250
100
150
64.65
250
Index: December 2012 = 100
→ 10
BMW AG development of stock
A variety of factors influenced developments on
stock markets during the period under report. The
year began with considerable political uncertainty
concerning future developments in the European
Union (EU). Consequently, the German stock index
(DAX) recorded its low point for the year in February at
11,510 points. Concerns about the stability of the EU
abated following the strong election performance of
pro-European parties in the Netherlands and France,
providing the DAX with renewed upward momentum
towards the middle of the year. Nevertheless, the
ongoing tension between the USA and North Korea
dampened the mood on stock markets perceptibly.
In the autumn months, positive economic and job
market figures in Germany contributed to an upswing
on the stock market. Despite uncertainty surrounding
the formation of a new government in Germany, the
DAX remained stable during the final months of the
year. Furthermore, the European Central Bank's (ECB)
decision to keep benchmark interest rates low- and
thus maintain its expansionary monetary policy - had
a beneficial impact on investor sentiment. In the USA,
the Federal Reserve gradually raised the reference
interest rate. Likewise, the Bank of England increased
interest rates for the first time in a decade. The reform
bill passed to cut tax rates in the USA also fuelled
hopes of further economic growth.
Favourable year on stock markets
DAX
Prime
Auto-
mobile
BMW
common
stock
BMW
preferred
stock
Till
119.1
153.1
100
→ www.bmwgroup.com/ir
169.7
172.9
200
in %
Development of BMW stock compared to stock
market indices since 28 December 2012
→ 09
Over the course of 2017, capital markets were influ-
enced by a favourable global economy. Positive growth
signals coming from emerging markets as well as robust
economic developments in industrialised countries
made for an encouraging year on worldwide exchanges.
significant increase
Dividend proposal foresees
Ratings at top level
BMW STOCK
AND CAPITAL
MARKETS
IN 2017
200
BMW Stock and
Capital Markets
Prime Automobile
DAX
150
A1
Non-current financial liabilities
Current financial liabilities
Outlook
Standard &
Poor's
Moody's
Company rating
Thanks to its consistent future-oriented approach and
solid financials, the BMW Group continues to be the
best-rated carmaker in Europe.
Ratings remain at top level
in 2017
BMW Stock and
Capital Markets
To Our
Shareholders
26
At the end of 2017, with market capitalisation amount-
ing to some €56.3 billion, the BMW Group was among
the ten most valuable German enterprises listed on
the stock market.
BMW common stock followed the downward trend
of the sector index during the first seven months of
the year, finishing July 12.4% down on the previous
year-end level. Its value picked up after the IAA, rising
to an interim high of €89.97 in November 2017. After
losing some ground during the remainder of the year,
BMW common stock closed at €86.83, 2.2% down over
the year. BMW preferred stock finished the year at
€74.64, 2.7% up on its market price one year earlier.
Investor uncertainty caused the Prime Automobile
Index to lose ground significantly during the first half
of the year, driven by doubt as to whether the business
models of German automobile manufacturers will
remain profitable going forward. The debate about
diesel engines had a further negative impact on the
German automobile sector. The IAA motor show in
Frankfurt am Main in September 2017 strengthened
confidence on capital markets with the presentation
of numerous initiatives in the field of electric mobility.
The improvement in investor sentiment was reflect-
ed in the sector index, which finished the
year at
1,687 points, 12.0% up over the previous year.
The EURO STOXX 50 recorded a 6.5% rise over the
same period, finishing the year at 3,504 points.
The DAX remained above the previous year's closing
level throughout the year. After the elections in the
Netherlands and France, the index rose in June 2017
to its then high for the year of 12,889 points before
retreating somewhat during the summer months.
Thanks to a strong upturn lasting through to early
October, the DAX closed the year at 12,918 points,
posting a significant gain for the period (+12.5%).
25
25
Source: Reuters.
2018
2017
2016
2015
2014
2013
50
50
100
BMW common stock
BMW preferred stock
92.19
74.60
→Page 96 Risks and Opportunities
Country
Wackersdorf
Moses Lake
SGL AUTOMOTIVE CARBON FIBERS
JOINT OPERATION
Locations
USA
In November 2017, the SGL Group and the BMW Group
signed an agreement, under which SGL Carbon SE will
gradually acquire the BMW Group's 49% stake in the
joint operation SGL ACF. At the same time, an agreement
exists for the continuation of the business relationship
in future projects involving the use of carbon.
SGL Automotive Carbon Fibers (ACF) is a joint oper-
ation of the BMW Group and the SGL Group. At the
Moses Lake site in the state of Washington, USA, carbon
fibres are produced for subsequent use in manufactur-
ing carbon fibre fabrics in Wackersdorf.
BMW 1 Series, BMW 2 Series, BMW 3 Series (and Extended-Wheelbase Version),
BMW X1 Extended-Wheelbase Version
Petrol engines, production of core engine parts
BMW 5 Series Extended-Wheelbase Version
China
China
China
7
Tiexi (Shenyang)
Germany
Carbon fibres
Sales subsidiaries and
Financial Services
locations worldwide
*Sales locations only.
Russia
India
China
South Korea
Products
Japan
Thailand
Malaysia
Singapore*
Indonesia*
Australia
Carbon fibre fabrics
Hong Kong
Tiexi (Shenyang)
Dadong (Shenyang)
Products
MINI Hatch, MINI Clubman
Core engine parts
Petrol and diesel engines, high-performance engines for M models
BMW 3 Series, BMW 4 Series, BMW M
Motorcycles
Lightweight construction components, electric drivetrain systems and special engines
BMW 1 Series, BMW 2 Series, BMW i, BMW M
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X4, BMW X5
Motorcycles
Petrol engines for BMW, MINI
BMW i8 plug-in hybrid engines
Core engine parts
Chassis and drivetrain components
Components for electric mobility
Rolls-Royce bodywork, pressed parts
BMW 7 Series, BMW M
BMW 3 Series, BMW 4 Series, BMW 5 Series, BMW 6 Series,
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 6 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X5
BMW 3 Series, BMW X1, BMW X3, BMW X4
BMW motorcycles, Maxi-Scooters, car brake discs
United Kingdom
Toolmaking, outer body parts for Rolls-Royce, aluminium tanks for BMW Motorrad
BMW 1 Series, BMW 2 Series, BMW 3 Series, BMW 4 Series,
BMW X1, BMW X2, BMW M
BMW 3 Series
BMW X3, BMW X4, BMW X5, BMW X6, BMW M
Petrol and diesel engines for BMW and MINI
Core engine parts
High-performance engines for M models
Pressed parts and bodywork components
Distribution centre for parts and components
Cockpit assembly
Dadong and Tiexi automobile plants as well as an
engine plant complete with foundry and battery
factory.
Country
JOINT VENTURE BMW BRILLIANCE
AUTOMOTIVE HOLDINGS LTD.
Locations
The plants in Shenyang (China) are operated within
the joint venture with Brilliance China Automotive
Holdings Ltd. The Shenyang site comprises the ¬
→ Production Network
Organisation and
Business Model
General Information
and Group Profile
Combined
Management
Report
36
36
35
35
Rolls-Royce Phantom, Ghost, Wraith, Dawn
Processing of carbon fibre components
BMW Technology, Chicago, USA
Rolls-Royce Manufacturing Plant Goodwood
BMW Group Engineering USA,
Woodcliff Lake, USA
BMW Group Engineering China,
Beijing, China
Country
Netherlands
Austria
India
Products
MINI Hatch, MINI Convertible, MINI Countryman, BMW X1
BMW 5 Series Sedan
Hosur
Motorcycles
37
88
38
Combined
Management
Report
General Information
and Group Profile
36
→ Organisation and
Graz
CONTRACT PRODUCTION
Locations
PARTNER PLANTS
Jakarta
Cairo
Kaliningrad
Kulim
Country
Born
Products
Egypt
BMW 3 Series, BMW 5 Series, BMW 7 Series, BMW X1, BMW X3, BMW X5
BMW 3 Series, BMW 5 Series, BMW X1, BMW X3, BMW X4, BMW X5, BMW X6
Russia BMW 3 Series, BMW 5 Series, BMW 7 Series, BMW X1, BMW X3, BMW X4, BMW X5, BMW X6
Malaysia
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X4, BMW X5, BMW X6, MINI Countryman
The BMW Group also awards production contracts
to external partners for specific vehicle types and
motorcycles. During the period under report, BMW
and/or MINI models were produced by Magna
Steyr AG & Co KG, Graz (Austria) and VDL Nedcar
bv, Born (Netherlands). In addition, BMW motorcycles
were manufactured by TVS Motor Company Limited,
Hosur (India).
Locations
Indonesia
Business Model
BMW Group locations worldwide
→ 12
outside Europe
■BMW Group plant Araquari, Brazil
BMW Group plant Chennai, India
BMW Group plant Manaus, Brazil
BMW Group plant Rayong, Thailand
BMW Group plant Rosslyn, South Africa
BMW Group plant Spartanburg, USA
BMW Brilliance Automotive, China
(joint venture-3 plants)
SGL Automotive Carbon Fibers
(joint operation-2 plants)
Partner plants
outside Europe
Partner plant, Hosur, India
Partner plant, Jakarta, Indonesia
Partner plant, Cairo, Egypt
Partner plant, Kaliningrad, Russia
Partner plant, Kulim, Malaysia
Production
▲ Research and development
network outside Europe
BMW Group Technology Office USA,
Mountain View, USA
BMW Group Engineering and
Emission Test Center,
Oxnard, USA
BMW Group ConnectedDrive Lab
China, Shanghai, China, and
BMW Group Designworks Studio
Shanghai, China
BMW Group Technology Office,
Shanghai, China
BMW Group Designworks, Newbury
Park, USA
☐
New Zealand
South Africa
43
7 Sales subsidiaries and
Financial Services
locations worldwide
31
Production and
assembly plants
16
Research and
development
locations
Headquarters
Canada
USA
Mexico
United Arab
Emirates
Brazil
Argentina*
BMW Group Engineering Japan,
Tokyo, Japan
→ Page 111 Internal Control System Relevant for Accounting
and Financial Reporting Processes
Germany
USA
Austria
In 2016, the BMW Group presented its Strategy
NUMBER ONE > NEXT. This builds on the previous
strategy and expands its scope in light of new develop-
ments and the social responsibility of the BMW Group.
At the heart of Strategy NUMBER ONE > NEXT is a
commitment to future-oriented activity with develop-
ment of products, brands and services in the premium
segment for individual mobility. New technologies such
as alternative drivetrains, digitalisation and connec-
tivity are further key areas of focus. The BMW Group
is currently in the process of transformation from a
traditional automobile maker to a customer-oriented
mobility company. This means that customer focus will
be given greater emphasis. All activities of the Group
are oriented towards the customer.
services business. Moreover, the BMW Group has
developed in recent years into one of the leading
providers of premium services for individual mobility.
With the three automobile brands BMW, MINI and
Rolls-Royce, as well as the motorcycles business
BMW Motorrad and the Financial Services busi-
ness, the BMW Group gives its customers and their
demands always the highest priority. The BMW Group
is therefore one of the most successful makers of
automobiles and motorcycles worldwide and among
the largest industrial companies in Germany. It is the
only manufacturer that focuses exclusively on the
premium segment with all its brands. With BMW,
MINI and Rolls-Royce, the BMW Group owns three
of the best-known premium brands in the automotive
industry. In addition to its strong market position in
the premium segment of the global motorcycles sector,
the BMW Group is also successful in the financial
Founded in 1916 as Bayerische Flugzeugwerke AG
(BFW), Bayerische Motoren Werke G.m.b.H. came
into being in 1917 before finally becoming Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) in 1918.
The BMW Group comprises BMW AG and all subsidi-
aries over which BMW AG has either direct or indirect
control. BMW AG is also responsible for managing the
BMW Group as a whole.
Bayerische Motoren Werke Aktiengesellschaft
(BMW AG), based in Munich, Germany, is the parent
company of the BMW Group. The general purpose of
the Company is the production and sale of engines,
engine-equipped vehicles, related accessories and
products of the machinery and metal-working
industry as well as the rendering of services related
to the aforementioned items. The BMW Group is
subdivided into the Automotive, Motorcycles and
Financial Services operating segments. The seg-
ment Other Entities primarily comprises holding
companies and Group financing companies. The
BMW Group operates on a global scale and is rep-
resented in more than 150 countries. At the end of
the reporting period, the BMW Group employed a
workforce of 129,932 people.
General information on the BMW Group is provided
below. There have been no significant changes com-
pared to the previous year.
Presentation of segments
This Combined Management Report incorporates the
management reports of Bayerische Motoren Werke
Aktiengesellschaft (BMW AG) and the BMW Group.
ORGANISATION AND
BUSINESS MODEL
significantly
Research and develop-
ment expenditure up
71 +18.3%
€6,108 million
Fleet CO2 emissions again reduced
→ www.bmwgroup.com/company
AND GROUP
PROFILE
In order to provide a better insight into the Group, this
report also includes a presentation of the operating
segments Automotive, Motorcycles and Financial
Services.
The core BMW brand caters to a broad array of cus-
tomer requirements, ranging from fuel-efficient and
innovative models equipped with Efficient Dynamics
to efficient, high-performance BMW M vehicles. At the
same time, the BMW Group continues to redefine the
boundaries of premium with BMW i. With an even
greater focus on innovation and sustainability, BMWi
embodies the vehicle of the future, with electric drive-
train, intelligent lightweight construction, exceptional
design and newly developed mobility services.
Research and Development
→ Research and
Development
General Information
and Group Profile
Organisation and
Business Model
Combined
Management
Report
32
32
Automotive segment
31
Financial Services segment
The Motorcycles business is also clearly focused on
the premium segment. The model range currently
comprises motorcycles for the Sport, Tour, Roadster,
Heritage, Adventure and Urban Mobility segments.
BMW Motorrad also offers a broad range of equip-
ment options to enhance rider safety and comfort.
The motorcycles sales network is organised similarly
to that of the automobiles business. Currently, BMW
motorcycles are sold by more than 1,200 dealerships
and importers in over 90 countries.
Motorcycles segment
The global sales network of the automobile business
currently comprises around 3,400 BMW, 1,580 MINI
and 140 Rolls-Royce dealerships. Within Germany, sales
are conducted through branches of the BMW Group
and independent authorised dealerships. Sales outside
Germany are handled primarily by subsidiary compa-
nies and by independent import companies in some
markets. The BMWi dealership and agency network
currently covers more than 1,500 locations.
100
The MINI brand is an icon promising supreme
driving pleasure in the premium small car segment.
Rolls-Royce is the strongest brand in the ultra-luxury
segment with a tradition stretching back well over
years. Rolls-Royce Motor Cars is specialised in
bespoke customer experiences and offers the highest
level of quality and service.
The BMW Group is also a leading provider of finan-
cial services in the automobile sector, operating
more than 50 entities and cooperation arrangements
with local financial services providers and importers
worldwide. The segment's main business is credit
financing and the leasing of BMW Group brand cars
and motorcycles to retail customers. Customers can
also choose from an attractive array of insurance and
banking products. Operating under the brand name
Alphabet, the BMW Group's international multi-brand
fleet business provides financing and comprehen-
sive management services for corporate car fleets
in 19 countries. Through its multi-brand business
Alphera, the BMW Group provides credit financing,
leasing and other services to retail customers. The
segment also supports the BMW Group's dealership
organisation, for example by financing dealership
vehicle inventories.
GENERAL
INFORMATION
→ Organisation and
Business Model
General Information
and Group Profile
→Page 112 Disclosures Relevant for Takeovers
→Page 52 Automotive Segment
→ Page 58 Motorcycles Segment
Financial Services Segment
→ Page 59
→Page 61
General Information
Research and Development
→Page 64 Sales and Marketing
→Page 66 Workforce
→Page 68 Sustainability
→Page 72 Results of Operations, Financial Position and Net Assets
→ Page 86 Comments on Financial Statements of BMW AG
→ Page 90 Report on Outlook, Risks and Opportunities
→Page 90 Outlook
→Page 63 Purchasing and Supplier Network
Combined
Management
Report
2
→Page 52 Review of Operations
Management
Report
Combined
30
2
COMBINED MANAGEMENT
REPORT
→Page 30 General Information and Group Profile
→ Page 30 Organisation and Business Model
→Page 40 Management System
→Page 44 Report on Economic Position
→Page 44
→Page 48
General and Sector-specific Environment
Overall Assessment by Management
→ Page 49
Financial and Non-financial Performance Indicators
A major factor in the success of the BMW Group is
its consistent focus on the future. A long tradition of
innovation is not only the basis of the BMW Group's
economic success, but an integral part of its corporate
philosophy. Shaping individual mobility and finding
innovative solutions today for the needs of tomorrow
is a key driving force for the BMW Group. Research
and development (R&D) are therefore of key import-
ance for the BMW Group as a premium provider.
United Kingdom
With its Strategy NUMBER ONE > NEXT, the
BMW Group is focusing on the topics of electric
mobility, digitalisation and autonomous driving. The
key trends of individual mobility are summarised
at the BMW Group in the term ACES (Autonomous,
Connected, Electrified, Services).
1. Autonomous
Hams Hall
Eisenach
Dingolfing
Chennai
Berlin
Araquari
Landshut
BMW GROUP PLANTS
Country
Locations
The 19 BMW Group plants comprise 13 automobile and
engine plants, two plants for BMW motorcycles, three
sites for producing components, pressed parts and
tools and one supply centre. In 2017, the BMW Group
was already producing electrified vehicles at a total
of nine locations.
7
At the end of the reporting period, the Group's pro-
duction network totalled 31 locations in 14 countries.
These comprise 19 BMW Group plants, five joint
ventures, four partner plants and three contract
production plants. The same quality, safety and sus-
tainability standards apply for all plants throughout
the BMW Group production network worldwide.
Production Network
Products
Further information on sustainability and human
resources can be found in the sections "Workforce"
and "Sustainability" in the Group Management Report
and in the Sustainable Value Report 2017 published
on the Company's website at → https://www.bmwgroup.com/svr.
Leipzig
Munich
South Africa
Germany
Thailand
United Kingdom
Germany
Germany
Brazil
Germany
Germany
United Kingdom
Manaus
Germany
Wackersdorf
Swindon
Steyr
Rosslyn
Spartanburg
Regensburg
Oxford
Rayong
Brazil
Germany
India
The principles and importance of sustainable business
management are emphasised in the new Strategy
NUMBER ONE > NEXT, which includes a clear com-
mitment to preserving resources. The BMW Group
remains fully committed to ecological and social
sustainability along the entire value chain as well as
to comprehensive product responsibility.
For several years now, the BMW Group has supported
intercultural exchange. In partnership with the UN
Alliance of Civilizations, the BMW Group presents
the Intercultural Innovation Award for exemplary
projects in this field.
The BMW Group attaches great importance to training
and development of its workforce. In 2017, investment
in training and development programmes across the
Group amounted to €349 million (2016: €352 million).
In addition, 1,554 trainees were hired worldwide. A
total of 4,750 young people are currently undergoing
vocational training or participating in internal pro-
grammes to develop young talent.
A total of 14,047 people at 16 locations in five coun-
tries worked in the BMW Group's global research and
development network at 31 December 2017.
Against a backdrop of rapid technological change
within the automotive industry, the BMW Group
also enters into specific cooperation agreements with
selected technology partners. The aim of collabor-
ation with external partners, also across sectors, is
to combine expertise in order to bring innovations to
customers within the shortest time possible.
The fourth strategic direction relates to individual
mobility services. The BMW Group aims to be
the leading provider of premium mobility services
going forward. To achieve this, it is essential to
understand clearly the needs of its customers
worldwide. This knowledge is the basis for
viding customers with an attractive, comprehen-
sive range of services. This includes easy-to-use,
digitally supported mobility services that also
feature bring-and-collect services or help custom-
ers find free parking spaces in urban environ-
ments. Further information can be found in the
section "Sales and Marketing".
pro-
4. Services
The Vision 100 study presented for the Rolls-Royce
brand in 2016 gave customers a first glimpse into
the future of automobile luxury powered by electric
drivetrains.
Research and development expenditure rose sig-
nificantly year-on-year to €6,108 million (2016:
€5,164 million; +18.3%). The research and develop-
ment expenditure ratio stood at 6.2% (2016: 5.5%).
The ratio of capitalised development costs to total
research and development expenditure for the peri-
od (capitalisation rate) stood at 39.7% (2016: 40.5%).
Amortisation of capitalised development costs totalled
€1,236 million (2016: €1,222 million; +1.1%). Further
information on research and development expendi-
ture is provided in the Report on Economic Position
→ see (Results of Operations) and in → note 7 of the Group
Financial Statements.
With its MINI Electric, MINI is reinterpreting the
urban tradition of the brand for the electric age
and reinventing individual mobility for the city.
The market launch of the first plug-in hybrid of
the MINI brand (MINI Cooper S E Countryman
ALL4: fuel consumption in 1/100 km (com-
bined) 2.3-2.1//CO2 emissions in g/km (com-
bined) 52-49//Electric power consumption
in kWh/100 km (combined) 14.0 – 13.2) in sum-
mer 2017 was followed by the presentation of
the all-electric MINI Electric Concept at the IAA
Cars in 2017. The series launch of all-electric
MINI vehicles is scheduled to begin in 2019.
The BMW i brand reflects Efficient Dynamics in its
most systematic form. Flexible vehicle architec-
ture, innovative electric and plug-in hybrid drive-
trains and the use of new materials are the results
of an integrated approach that is also reflected in
a resource-efficient selection of materials and the
intensive use of renewable energy in the production
process. This contributes to a very favourable
environmental footprint in BMW i vehicles over the
entire product life cycle.
One of the strategic objectives of the BMW Group
is to continuously optimise the energy efficiency
of automobiles and motorcycles, including elec-
trification of the product range across all brands.
Under the term Efficient Dynamics, the
BMW Group has been successfully working on
reducing fuel consumption and vehicle emissions
through the development of highly efficient com-
bustion engines, increasing electrification of drive-
trains, intelligent lightweight construction,
improved aerodynamics and coordinated energy
management.
3. Electrified
The second strategic direction is summarised un-
der the term Connected Drive, an integrated digi-
tal concept in which the driver, the vehicle and
the outside world are all able to interact with one
another. The vehicle can be attuned to the individ-
ual needs of each driver, thus making it a smart
companion. In future, transferring certain tasks to
the vehicle will broaden the range of options avail-
able to the customer when driving. The time saved
can be used for other purposes. This results in
increased comfort for the driver and greater safety
for road users in general. Numerous safety and
comfort features already exist in BMW, MINI and
Rolls-Royce brand automobiles as well as BMW
Motorrad brand motorcycles. In 2021, the
BMW iNEXT will take to the roads with an elec-
tric drivetrain and full connectivity. It will also
reach a new level on the way to autonomous
driving.
2. Connected
Since 2017, the BMW Group has pooled its devel-
opment expertise in the fields of vehicle connec-
tivity and autonomous driving at its own develop-
ment centre. More than 600 BMW Group
employees are now working in cooperation with
other partners at a campus near Munich, thereby
developing and expanding the open platform
for autonomous driving. By the end of the expan-
sion, more than 2,000 employees will be work-
ing at the new site towards achieving fully auto-
nomous driving in fields ranging from software
development to road testing.
As part of the BMW i brand, the BMW iPerformance
range forms a model family of its own with plug-in
hybrid drivetrains. All BMW iPerformance models
are equipped with a smart energy management
system that ensures ideal interaction between the
combustion engine and the electric motor. The
option to drive all-electric, added efficiency gained
through electric assistance features and the
spontaneous response characteristics provided by
the additional electric drivetrain lead to a new
harmony of driving pleasure and sustainability.
The flexibility of the technologies used makes
it possible to rapidly expand the broad range of
iPerformance models to include further series
as required.
note 7
In 2017, numerous awards and prizes once again
underscored the BMW Group's high level of inno-
vation competence, above all in the areas of design,
the use of innovative technologies and intelligent
connectivity.
33
In view of increasingly complex supplier relationships,
it is important for the BMW Group to work together
with suppliers to increase transparency and resource
efficiency along the supply chain. The aim is to require
suppliers to comply with environmental and social
standards across the value chain.
The BMW Group has set itself the goal of being a
leader in the use of renewable energy in production
and the value chain. In 2017, 81% (2016: 63%) of
the BMW Group's electricity worldwide came from
renewable sources.
Since 1995, the BMW Group has cut the CO2 emis-
sions of new cars sold in Europe (EU-28) by more than
42%. Average CO2 emissions in Europe (EU-28) in 2017
amounted to 122 g/km (2016: 124 g/km; −1.6%). The
systematic expansion of the Group's vehicle fleet with
alternative drivetrains as well as innovative mobility
services have contributed significantly to the progress
made. In 2017, for the first time more than 100,000
electrified vehicles were sold in one year.
The BMW Group takes a holistic approach to sus-
tainability management that encompasses the entire
value chain. Apart from reduction of CO2 emissions,
key components of the sustainability strategy include
operational environmental protection, sustainability
in the supply chain, employee orientation and social
commitment.
For years, the BMW Group has ranked among t the most
sustainable companies in the automotive industry and
is the only carmaker to have been listed consecutively
in the renowned Dow Jones Sustainability Index since
1999.
Long-term thinking and responsible action have long
been the foundations of the BMW Group's identi-
ty and its economic success. As early as 1973, the
BMW Group appointed an environmental officer in
what was then a pioneering development within the
automobile sector. Today, the Sustainability Board,
comprising all members of the Board of Management,
sets the strategic direction along with binding targets.
Since 2001, the BMW Group has been committed to
the United Nations Environment Programme, the
UN Global Compact and the Cleaner Production
Declaration.
Sustainability
→ Production Network
Organisation and
Business Model
Sustainability
General Information
and Group Profile
Management
Report
Combined
↑↑
34
33
Accordingly, the BMW Group's R&D activities include
the following four topics:
and Group Profile
Economic Position
Outlook, Risks and
Opportunities
The main function of the BMW Group's four part-
ner plants is to serve regional markets. During the
year under report, BMW and MINI vehicles were 7
manufactured in Kaliningrad (Russia), Cairo (Egypt),
Jakarta (Indonesia) and Kulim (Malaysia).
in € million
250
Russian Rouble
100
150
200
250
Index: December 2012= 100
200
→ 18
By contrast, the currencies of major emerging econ-
omies rose in value during the reporting period. The
Russian rouble and the Brazilian real gained some
12% and 7% respectively against the euro. The Indian
rupee appreciated by just 1% against the euro.
The Chinese renminbi again lost value year-on-year,
with an average exchange rate of 7.63 renminbi to the
euro for the period. The Japanese yen fell by about
5% in 2017. The average exchange rate for the year
was 127 yen to the euro.
Fluctuations in the value of the British pound currently
also reflect political uncertainty. At the beginning of
2017, the pound was able to regain some ground. With
new elections resulting in a minority government,
doubts emerged regarding the United Kingdom's
future political course and its economic performance.
The value of the British currency fell from 0.84 to an
interim rate of 0.93 pounds to the euro, ending the
year with an average rate of 0.88 pounds to the euro.
The US dollar/euro exchange rate fluctuated between
1.04 and 1.20 US dollars to the euro during 2017 and
weakened slightly on average to 1.13 US dollars to the
euro. As announced, the US Federal Reserve raised its
benchmark interest rates during the year under report,
thus continuing on its less expansionary monetary
course. The ECB reduced the volume of its purchases
of securities during the same period.
Currency markets
7
After a relatively weak first half of 2017 in India, due
to the impact of the switch to new banknotes, the
economy experienced a turnaround during the second
half of the year. Over the year as a whole, the Indian
economy recorded a 6.6% increase in GDP.
Solid GDP growth was also registered for emerging
markets overall. Russia (+1.5%) and Brazil (+0.9%)
both returned to growth. The upswing in Russia
was broadly based, with private demand picking
up noticeably and both investment and industrial
production also recovering. By contrast, economic
growth in Brazil was able to gain only moderate
momentum. Although industrial production rose
moderately, domestic consumer spending remained
flat and investment spending even fell for the fourth
year in succession.
Exchange rates compared to the euro
150
45
45
Report on
Report
Management
Combined
46
Source: Reuters.
2018
2017
At 1.7%, the Japanese economy grew far more dy-
namically in 2017 than in previous years. Consumer
spending and demand for capital goods increased,
in part substantially. Exports also increased strongly
due to the weak yen. Industrial production grew at
the fastest rate since 2010.
2016
2014
2013
50
50
100
Chinese Renminbi
US Dollar
British Pound
Japanese Yen
2015
China's GDP grew by 6.9% in 2017, driven by further
year-on-year growth in industrial production. Demand
from private households remained at a similarly high
level to previous years. However, rising levels of debt
within the private sector prompted the central bank to
tighten monetary policy. As a result, the increase in the
price of real estate in China's largest cities was halved.
Economic output in the USA continued to expand
at a robust rate of 2.3% in 2017. Private domestic
demand, boosted in part by low unemployment, was
a key source of momentum for the economy. Exports
and industrial production also grew strongly. In light
of these factors, the US Federal Reserve raised interest
rates further over the course of the year and changed
its reinvestment policy for securities.
In the United Kingdom, uncertainty regarding the
country's future relations with the EU continued to
dominate. Previously favourable consumer sentiment
within private households subsided perceptibly and
the public sector was able to make only a moderate
contribution to economic growth. As a consequence,
economic growth slowed for the third time in succes-
sion to stand at 1.8%. The situation was aggravated by
the Bank of England's raising interest rates in order
to dampen price inflation. The weak pound, on the
other hand, caused exports to pick up significantly
during the period under report and restricted import
growth, resulting in a lower current account deficit.
Operational business in the Automotive and Motor-
cycles segments is largely shaped by its life-cycle-
dependent project character. Projects have a substantial
influence on future business performance. Project
decisions are therefore a crucial component of financial
management in the BMW Group.
Value-based project management
Capital employed comprises the average amount of
Group equity employed during the year as a whole,
the financial liabilities of the Automotive and Motor-
cycles segments, and pension provisions. The earnings
amount corresponds to Group profit before tax, adjust-
ed for interest expense incurred in conjunction with
the pension provision and on the financial liabilities of
the Automotive and Motorcycles segments (earnings
before interest expense and taxes). The cost of capital
is the minimum rate of return expected by capital
providers in return for the capital employed. Since
capital employed comprises an equity capital (e.g.
share capital) and a debt capital element (e.g. bonds),
the overall cost of capital rate is determined on the
basis of the weighted average rates for equity and debt
capital, measured using standard market procedures.
The pre-tax average weighted cost of capital for the
BMW Group in 2017 was 12%, unchanged from the
previous year.
3,593
4,115
6,407
6,843
10,000
10,958
2016
2017
2016
2017
2016
2017
Value added Group
Cost of capital (equity + debt capital)
Project decisions are based on calculations derived
from the expected cash flows of the individual project.
Calculations are made for the full term of a project,
incorporating future years in which the project is
expected to generate cash flows. Project decisions
are taken on the basis of net present value and the
internal rate of return calculated for the project.
The net present value of a project indicates the extent
to which a project will be able to generate a positive
contribution to earnings over and above the cost of
capital. A project with a positive net present value
enhances value added and therefore results in an
increase in enterprise value. The internal rate of return
of the project corresponds to the average return on
capital employed in the project. It is equivalent to the
multi-year average RoCE for an individual project. It is
therefore consistent with one of the key performance
indicators.
For all project decisions, the project criteria and
long-term periodic results impact are measured and
incorporated in the long-term Group forecast. This
approach enables an analysis of the impact of pro-
ject decisions on periodic earnings and profitability
over the term of each project. The overall result is a
cohesive management model.
43
The eurozone recorded its fourth consecutive year of
growth in 2017. At 2.5%, the region even registered
its biggest increase in gross domestic product (GDP)
since the financial crisis. With economic output up in
Germany (+2.2%), France (+1.9%), Italy (+1.5%) and
Spain (+3.1%), GDP growth within the eurozone was
broadly based. The favourable order-book levels of
industrial companies, rising exports and an increased
willingness to invest contributed to this positive
development. This led, amongst others, to a drop in
unemployment from recent high levels to their low-
est level for several years. Despite rising government
spending, the debt ratio for the 19 eurozone countries
dropped slightly to 88% of GDP.
Compared to the previous year, the global economy
improved noticeably during the period under report
with a growth rate of 3.7%. The economic upturn
extended to all regions of the world, regardless of
political uncertainties. The Chinese economy also
grew at a faster rate.
General economic environment
GENERAL AND
SECTOR-SPECIFIC
ENVIRONMENT
Group profit up
significantly
7 +10.2%
€10,655 million
Best-ever sales volume for
automobiles and motorcycles
Economic Position
ON ECONOMIC
POSITION
specific Environment
→ General and Sector-
Economic Position
Report on
Report
Management
Combined
44
REPORT
Earnings amount
→ General and Sector-
Oil price trend
Platinum
50
0
0
2013
2014
2015
2016
2017
2018
Energy and raw materials prices
The agreement reached between the Organisation
of Petroleum Exporting Countries (OPEC) and other
countries to cut back crude oil production proved
stable during the year under report and was extended
at the end of 2017. Against this backdrop, the price
of Brent crude oil per barrel rose from an average of
44 US dollars in 2016 to 54 US dollars in 2017.
The robust economy also boosted demand for precious
and non-ferrous metals in 2017. The average price of
raw materials relevant for the BMW Group increased
in part significantly by between 15 and 40% year-on-
year. On the production side, stricter environmental
regulations and severe weather events resulted in
reduced supply availability.
Steel markets developed similarly, with prices for
the input materials iron ore and coking coal rising
again in 2017. In addition, both the USA and the EU
continued to apply protectionist measures on steel
products from various countries. At the same time, the
wave of consolidation in the steel industry continued.
Steel price trend
→ 21
Index: January 2013 = 100
Gold
100
Palladium
150
Source: Reuters.
Price in US Dollar
Price in €
2013
2014
2015
2016
2017
2018
120
Precious metals price trend
Index: December 2012 = 100
150
100
50
Source: Reuters.
150
100
50
→ 20
90
60
2013
↑
Financial and Non-
financial Perfor-
mance Indicators
International interest rate environment and
development of pre-owned vehicle prices in the
premium segment
The global economy gained momentum in 2017. Major
central banks supported this development with their
continued expansionary policy. Over the course of
the year, however, they also took measures partly to
tighten monetary policy.
The ECB, on the other hand, continued its monetary
policy. In October, it announced it would halve the
volume of its bond purchases with effect from Janu-
ary 2018. This news was perceived by capital markets
as a sign of a less expansionary monetary policy rather
than a turnaround.
High import costs brought about by the weakening
of the British pound since the Brexit decision caused
inflation in the UK to rise above its target of 2% over
the course of the year. In a bid to counteract this devel-
opment, the Bank of England decided in November
to raise its interest rate by 25 basis points to 0.5%.
During 2017, the US Federal Reserve continued the
process of normalising its monetary policy. In the
course of the year, it resolved on three occasions to
raise the benchmark interest rate, in each case by 0.25%
and to gradually reduce the size of its balance sheet.
→ Overall Assessment
by Management
After a strong performance in the first half of the
year, economic momentum in China dropped slightly
in the second half. At the same time, inflation rose
moderately, driven by rising raw material prices. After
repeated increases in money market interest rates,
the Chinese central bank decided against any further
tightening of its monetary policy in the second half
of the year.
In some European countries, in particular Germany
and the UK, diesel engines were often the subject of
political discussions in 2017. Pre-owned car markets
in the premium segment responded here with price
declines for diesel vehicles. In mainland Europe,
prices for petrol vehicles remained stable or even
rose slightly, resulting in stable price levels overall.
In the UK a similar effect was seen for pre-owned
diesel and petrol vehicles, however the overall market
for pre-owned premium vehicles was slightly down on
previous years. Prices for pre-owned vehicles were also
slightly down in North America. Markets in Asia have
so far been unaffected by discussions about types of
engine. Prices in this region were stable in 2017 and
even slightly up in China.
OVERALL ASSESSMENT
BY MANAGEMENT
Overall assessment of business performance
The BMW Group can look back on a successful
business performance in 2017, despite growing
uncertainties in the international environment and
increased competition. The overall picture for the
results of operations, financial position and net assets
was positive. Overall, the business development met
or even exceeded management expectations. This
assessment also takes into account events after the
end of the reporting period.
150
Price per barrel of Brent Crude
→ 19
The Japanese economy gained pace in 2017 and unem-
ployment fell to a 20-year low. As the inflation rate
remained well below the target of 2%, the Japanese
central bank decided to retain its highly expansionary
monetary policy.
specific Environment
→ General and Sector-
specific Environment
Report on
2014
2015
2016
2017
Source: Working Group for the Iron and Metal Processing Industry.
2018
International automobile markets
Registrations of passenger cars and light commercial
vehicles on international automobile markets grew by
1.9% to 87.7 million units in 2017. The overall positive
trend from the previous year therefore continued,
albeit at a less dynamic pace. Momentum came pri-
marily from Europe (15.6 million units; +3.3%) and
China (24.7 million units; +2.4%). By contrast, regis-
trations in the USA fell by 1.8% to 17.2 million units.
Economic Position
In Europe, Italy (2.0 million units; +8.0%) and Spain
(1.2 million units; +7.7%) recorded robust growth.
French and German markets both performed better
than one year earlier, recording increases of 4.8%
to 2.1 million units and 2.7% to 3.4 million units
respectively. The UK automobile market was domi-
nated during the year under report by uncertainty
regarding the Brexit negotiations, causing the number
of registrations to drop by 5.7% to 2.5 million units.
Automobile markets in major emerging economies
came out of recession in much stronger health in 2017.
Russia saw a 16.1% increase to 1.5 million units, while
registrations in Brazil grew by 9.9% to 1.9 million units.
International motorcycle markets
Motorcycle markets in the 250 cc plus class developed
inconsistently in 2017. Worldwide, motorcycle registra-
tions were slightly down on the previous year (-1.5%).
Motorcycle registrations in Europe increased by 1.8%.
However, declining markets in Germany (-12.9%) and
the UK (-2.1%) had a dampening effect on the overall
performance. By contrast, increases were recorded
for Spain (+3.8%) and France (+6.6%). A particularly
strong rise of 14.3% was registered in Italy. The abso-
lute number of new registrations in Italy was therefore
higher than in Germany for the first time since 2012.
The US market fell short of the previous year's level
for the second year in succession (-5.4%).
47
48
Combined
Management
Report
Japan saw a turnaround on the domestic automobile
market in 2017, with new registrations rising signifi-
cantly by 5.5% to 5.0 million units.
BMW Group
50
= earnings amount
(cost of capital rate ×
capital employed)
→ 14
BMW Group - value drivers
The BMW Group's internal management system
is based on a multi-layered structure with varying ¬
The business management system applied by the
BMW Group follows a value-based approach, with a
clear focus on profitability, consistent growth, value
increase for capital providers and safeguarding jobs.
To ensure the desired degree of corporate autonomy,
the Company's available capital is to be profitably
employed. The prerequisite is that the amount of
profit generated sustainably exceeds the cost of the
Company's equity and debt capital.
MANAGEMENT SYSTEM
→ Management System
General Information
and Group Profile
Management
Report
Combined
40
10
39
Greece
Bulgaria*
Romania*
Hungary*
Slovakia*
degrees of detail, depending on the level of aggre-
gation. Operating management occurs primarily at
segment level. In order to manage long-term Company
performance and assess strategic issues, additional
key performance indicators are taken into account
within the management system at Group level. In this
context, with effect from the beginning of the 2017
financial year, the pre-tax return on sales has been
introduced as a new indicator of earnings quality for
the BMW Group as a whole. Value added continues
to serve as an indicator for the contribution made
to enterprise value during the financial year. This
approach is made operational at both Group and
segment level through key financial and non-finan-
cial performance indicators (value drivers). The link
between value added and the relevant value drivers
is shown in simplified form in the following diagram.
Value added
Return on capital
(ROCE or ROE)
Return on sales
Profit before
financial result
The most comprehensive key performance indica-
tor used for the Automotive segment is RoCE. This
indicator provides information on the profitability of
capital employed and the operational business. ROCE
is measured on the basis of segment profit before
financial result and the average capital employed in
the segment. The strategic target for the Automotive
segment's RoCE is 26%.
Automotive segment
Services segment. These indicators combine a wide
range of relevant economic information, such as prof-
itability (return on sales) and capital efficiency (capital
turnover), to provide a measurement of segment
performance and the development of enterprise value.
→ 15
Return on capital employed
→ Operating performance at segment level is managed
at an aggregated level on the basis of returns on capi-
tal. Depending on the business model, the segments Outlook
are measured on the basis of return on total capital
or equity. Specifically, return on capital employed
(ROCE) is used for the Automotive and Motorcycles
segments and return on equity (ROE) for the Financial &
Performance
Austria
→ see sections
Indicators and
Due to the high level of aggregation, it is impractical
to manage the business on the basis of value added.
This key indicator therefore only serves for reporting
purposes. Relevant value drivers having a significant
impact on business performance and therefore on
enterprise value are defined for each controlling level.
The financial and non-financial value drivers are
reflected in the key performance indicators used to
manage the business. In the case of project decisions,
the system provides a project-oriented management
logic based on value or profitability measures. These
provide a fundamental basis for decision-making.
Revenues
Expenses
Average weighted
cost of capital rate
Capital employed
Profit
Cost of capital
Capital turnover
Management of operating performance
at segment level
ROCE Automotive
Poland*
Czech
BMW Group plant Berlin
■ Production in Europe
Malta
Slovenia*
Italy
Portugal
Spain
Switzerland
France
Belgium
Ireland
UK
Netherlands
Germany
Norway
→ 13
BMW Group locations in Europe
BMW Group plant Dingolfing
BMW Group plant Eisenach
BMW Group plant Landshut
BMW Group plant Leipzig
Denmark
Finland*
Sweden
Sales subsidiaries and
Financial Services
locations Europe
BMW Car IT, Munich, Germany
BMW Innovation and Technology
Centre, Landshut, Germany
BMW Diesel Competence Centre,
Steyr, Austria
BMW Group Autonomous Driving
Campus, Unterschleißheim, Germany
BMW Group Designworks, Munich,
Germany
BMW Group Research and
Technology, Munich, Germany
BMW Group Research and Innovation
Centre (FIZ), Munich, Germany
Republic*
network in Europe
Partner plant, Born,
Netherlands
Partner plant, Graz,
Austria
Partner plants
in Europe
BMW Group plant Oxford, UK
BMW Group plant Swindon, UK
Rolls-Royce Manufacturing Plant,
Goodwood, UK
BMW Group plant Hams Hall, UK
BMW Group plant Steyr, Austria
BMW Group plant Wackersdorf
BMW Group plant Regensburg
BMW Group plant Munich
▲ Research and development
Average capital
employed
Automotive
Average
Return on equity in %
Average equity capital in € million
Profit before tax in € million
Financial Services
Average equity capital
Profit before tax
RoE Financial
Services
of return on equity. RoE is defined as segment profit
before tax, divided by the average amount of equity
capital in the Financial Services segment. In view
of generally increasing regulatory requirements, a
greater amount of equity capital will be allocated to
the segment in future, which will result in a lower
RoE. In this context, the long-term target return will
be changed with effect from 2018 from at least 18%
currently to at least 14%.
→ 17
Return on equity
As is common practice in the banking sector, the
Financial Services segment is managed on the basis ¬
Financial Services segment
In view of the increasing strategic importance of the
segment, the operating return on sales (EBIT margin:
profit/loss before financial result as a percentage of
revenues) was adopted in the year under report as a
key performance indicator. The long-term target range
is between 8 and 10%. In conjunction with the non-
financial value driver sales volume, this will enable
ROCE development to be understood in greater detail.
33.0
34.0
566
609
2017
2016
2017
2016
-
earnings amount
cost of capital
-
=
Value added
Group
capital.
return on sales and value added. Value added, as
a highly aggregated performance indicator, also
provides an insight into capital efficiency and the
(opportunity) cost of capital required to generate
Group profit. A positive value added means that a
company is generating more value than the cost of
The information provided by these two key perfor-
mance indicators is further complemented by pre-tax
187
Strategic management and quantification of financial
implications within the long-term corporate planning
are performed primarily at Group level. The key
performance indicators are Group profit before tax
and the size of the Group's workforce at the year-end.
Group profit before tax provides a comprehensive
measure of the Group's overall performance after
consolidation effects and a transparent basis for com-
paring performance, particularly over time. The size of
the Group's workforce is monitored as an additional
key non-financial performance indicator.
21.2
18.1
10,236
12,167
2,166
2,207
2016
2017
Strategic management at Group level
207
2016
2017
By managing the business on the basis of key value
drivers, it is possible to gain a better understanding
of the causes of changes in the RoCE and to define
suitable measures to influence it.
Due to its key importance for the Group as a whole,
the Automotive segment is managed on the basis of
additional key performance indicators which have a
significant impact on RoCE and hence on segment
performance. These value drivers are sales volume,
segment revenues and the operating return on sales
(EBIT margin: profit/loss before financial result as
a percentage of revenues) as the key performance
indicator for segment profitability. The management
system also takes into account average CO2 emissions
for the fleet, which, through their influence on ongoing
development costs and due to regulatory requirements,
can have a significant long-term impact on Group
performance. Fleet emissions correspond to average
CO2 emissions of new cars sold in the EU-28 countries.
Capital employed corresponds to the sum of all cur-
rent and non-current operational assets, less liabilities
that do not incur interest (e.g. trade payables and
other provisions).
74.3
78.6
10,361
10,009
7,695
41
7,863
2017
2016
2017
2016
2017
Return on capital employed in %
capital employed in € million
Profit before financial result in € million
2016
100
42
Combined
Management
Report
2016
2017
2016
2017
Return on capital employed in %
Average
capital employed in € million
Profit before financial result in € million
Average capital
employed
42
7
Profit before
financial result
Motorcycles
→ 16
Return on capital employed
As with the Automotive segment, the Motorcycles
segment is managed on the basis of RoCE. Capital
employed is determined on the same basis as in the
Automotive segment. The strategic RoCE target for
the Motorcycles segment is 26%.
Motorcycles segment
→Management System
General Information
and Group Profile
ROCE
Motorcycles
6.8 Spain
UK 5.7
29,280
61,514
64,311
BMW 7 Series
0.5
-17.5
13,400
11,052
BMW 6 Series
4.5
16.6
331,410
347,313
BMW 5 Series
6.3
-1.2
133,272
131,688
19.6
4.8
-0.7
3.1
286,743
8.7
88
166,219
180,905
BMW X5
2.5
-10.1
58,055
BMW X1
52,167
7.0
-6.8
157,017
146,395
BMW X3
13.7
30.1
220,378
BMW X4
411,844
409,005
BMW 4 Series
BMW* brand sales at record level
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 384,124 units, 2016: 316,200 units, 2015: 282,000 units, 2014: 275,891 units, 2013: 198,542 units).
1,963.8
2,118.0
2,247.5
2,367.6
2,463.5
Total*
In 2017, the number of BMW brand vehicles deliv-
ered to customers worldwide grew slightly by 4.2%
to 2,088,283 units (2016: 2,003,359), thereby setting
a new deliveries record. Major contributions came
from the BMW 1 Series, the new BMW 5 Series, the
BMW 7 Series, the BMW X1, the BMW X5 and BMW i.
61.8
65.4
67.7
61.8
Other markets
391.7
456.7
464.1
516.8
62.7
Sales of the BMW 1 Series rose significantly by 14.7% to
201,968 units (2016: 176,032 units). By contrast, deliv-
eries of the BMW 2 Series were down year-on-year to
181,113 units (2016: 196,183 units; -7.7%). Sales of the
BMW 3 Series at 409,005 units were close to the
pre-
vious year's level (2016: 411,844 units; -0.7%). Deliv-
eries of the new BMW 5 Series at 347,313 units were 7
up on the previous year (2016: 331,410 units; +4.8%),
with an 11.7% increase in the second half of 2017.
Customers took delivery of 64,311 units of the
BMW 7 Series worldwide (2016: 61,514 units; +4.5%).
Demand for the BMW X family was strong in 2017,
with worldwide sales up by 9.6% to 706,741 units
(2016: 644,992 units). Growth was particularly signifi-
cant for the BMW X1 with sales up by almost one-third
to 286,743 units (2016: 220,378 units; +30.1%). The
BMW X3 model change did not take place until
November 2017, which resulted in sales falling short
of the previous year's high figure (146,395 units; 2016:
157,017 units; - 6.8%). Deliveries of the BMW X5 rose
solidly to 180,905 units (2016: 166,219 units; +8.8%).
BMW 3 Series
8.7
-7.7
196,183
181,113
BMW 2 Series
9.7
14.7
176,032
201,968
BMW 1 Series
Proportion of
BMW sales volume
2017 in %
Change in %
2016
2017
in units
→ 25
Deliveries of BMW vehicles by model variant*
53
BMW X6
595.0
40,531
-6.4
Change in %
2016
2017
Phantom
in units
→ 27
Deliveries of Rolls-Royce vehicles
by model variant
Rolls-Royce affected by political uncertainties
Sales volume development at Rolls-Royce Motor Cars
in 2017 was influenced primarily by ongoing political
uncertainties in the Middle East and unfavourable
market conditions in the USA. Moreover, the top-of-
the-range model, the Phantom, was no longer fully
available. Deliveries of the successor model began in
January 2018 (Rolls-Royce Phantom: fuel consumption
in l/100 km (combined) 13.9//CO2 emissions in g/km
(combined) 318-319). In 2017, Rolls-Royce Motor Cars
delivered 3,362 vehicles to customers worldwide (2016:
4,011 units; -16.2%).
235
100.0
360,233
371,881
22.8
24.3
68,301
84,888
16.0
-6.2
3.2
63,509
389
Ghost
in units
→ 28
Deliveries of electrified models
The BMW Group achieved its target of delivering more
than 100,000 electrified vehicles in 2017, underlining
its position as a worldwide market leader in terms
of combined sales of all-electric and plug-in hybrid
vehicles and market leader in Europe.
For the first time, more than 100,000 electrified
vehicles sold
to customers.
With a total of 103,080 BMW i, BMW iPerformance and
MINI Electric vehicles, deliveries of electrified vehicles
to customers were approximately two-thirds up on the
previous year (2016: 62,255 units; +65.6%). BMW i and
BMW iPerformance deliveries grew by more than one-
half to 97,281 vehicles (2016: 62,255 units; +56.3%).
The BMW i3 (BMW i3 (94 Ah) with fully electric eDrive:
electric power consumption in kWh/100 km (com-
bined) 13.6-13.1//CO2 emissions in g/km (combined) 0)
continued to be in high demand, with deliveries to
customers rising by well over a fifth to 31,482 vehicles
(2016: 25,528 units; +23.3%). A significant contribution
came from the sporty version, the BMW i3s, which
was launched in summer 2017 (BMW i3s (94 Ah) with
fully electric eDrive: electric power consumption in
kWh/100 km (combined) 14.3//CO2 emissions in g/km
(combined) 0). Deliveries of BMW plug-in hybrid mod-
els sold under the iPerformance brand almost doubled
to 63,605 units (2016: 32,975 units; +92.9%). Between
launch in June 2017 and the end of the year under
report, 5,799 units of the MINI Electric were delivered
-16.2
-39.6
4,011
Rolls-Royce total
-17.1
2,447
2,029
Wraith/Dawn
-6.6
1,175
1,098
3,362
59,572
9.0
11.0
Combined
Management
Report
54
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 384,124 units, 2016: 316,200 units).
100.0
4.2
2,003,359
2,088,283
BMW total
Report on
1.6
33,676
BMW i
0.1
-73.9
5,432
1,416
BMW Z4
1.9
15.0
Economic Position
Review of Operations
→ Automotive Segment
Increased deliveries at MINI
The MINI brand also set a new sales volume record
in 2017, with worldwide deliveries up by 3.2%
to 371,881 units (2016: 360,233 units). The new
MINI Countryman made an important contribution,
with growth of almost one-quarter (84,888 units; 2016: ¬
30,050
33,351
52.2
-2.2
198,373
194,070
2017 in %
Change in %
2016
2017
Proportion of
MINI sales volume
MINI total
MINI Countryman/Paceman
MINI Clubman
MINI Convertible
MINI Hatch (3- and 5-door)
in units
Deliveries of MINI vehicles by model variant
→ 26
68,301 units; + 24.3%). The Convertible also remained
successful in 2017 with 33,351 units sold (2016:
30,050 units; +11.0%). The MINI Hatch (3- and 5-door
models) fell slightly short of the previous year's level
with 194,070 units sold (2016: 198,373 units; -2.2%).
43,323
2017
thereof China*
658.4
Workforce at year-end
€ million
Q3: solid increase
slight increase
Profit before tax
GROUP
Actual outcome
in 2017
Forecast revision
during the year
slight increase
in 2016 Annual Report
→ 22
BMW Group comparison of 2017 forecasts with actual outcomes 2017
The key performance indicators of the BMW Group
and its segments can be summarised as below:
the impact of more stringent regulatory requirements
for equity capital. Nevertheless, the internal RoE tar-
get of at least 18% was once more achieved.
As predicted in the Annual Report 2016, the return
on equity of the Financial Services segment was lower
than one year earlier, at 18.1% (2016: 21.2%; -3.1 per-
centage points). The slight decrease mainly reflected
Return on equity: slight decrease
Financial Services segment
The outlook for RoCE, which had been raised in the
Quarterly Report to 30 June 2017 from in line with
last year's level to a slight increase, was achieved. In
the Annual Report 2016, RoCE in line with last year's
level had been foreseen.
Forecast for 2017
The return on capital employed (ROCE) of the Motorcy-
cles segment increased slightly by 1.0 percentage point
to 34.0% (2016: 33.0%), mainly reflecting effective
working capital management and the improvement
in earnings.
10,655 (+10.2%)
129,932 (+4.2%)
Deliveries to customers'
slight decrease
Q2: in line with
8.9 (-)
%
target range
between 8 and 10
88,581 (+2.5%)
€ million
Q2: solid increase
Q3: slight increase
AUTOMOTIVE SEGMENT
slight increase
g CO2/km
slight decrease
Return on capital employed
EBIT margin
Revenues
Fleet emissions²
units
slight increase
2,463,526 (+4.1%)
122(-1.6%)
Return on capital employed: slight increase
EBIT margin in target range of between 8 and 10%
The EBIT margin in the Motorcycles segment (profit
before financial result divided by revenues) came in at
9.1% (2016: 9.0%; +0.1 percentage point). As foreseen
for the financial year 2017, the EBIT margin was within
the target range of between 8 and 10% and therefore
in line with expectations.
As foreseen in the outlook for the financial year 2017,
Motorcycles segment sales volumes increased signif-
icantly and were therefore in line with expectations.
(2017: 384,124
Shenyang
In 2017, the Automotive segment sold a record number
of vehicles for the seventh year in succession. Despite
growing political and economic uncertainties in the
international environment, deliveries to customers
* Including the increased slightly by 4.1% to a total of 2,463,5261
BMW, MINI and Rolls-Royce brand vehicles (2016:
2,367,603¹ units). Dynamic market conditions, par-
ticularly in Asia, had a positive impact on automobile
sales volumes. In Europe, sales volume remained at
the previous year's high level despite slightly lower
deliveries to customers in Germany and the UK. Sales
volume in the Americas region, however, was slightly
down on the previous year.
Deliveries to customers: slight increase
Automotive segment
Automotive Ltd.,
BMW Brilliance
joint venture
units, 2016:
316,200 units).
As foreseen in the outlook for the financial year
2017, there was a slight increase in the size of the
BMW Group's workforce, which was thus in line with
expectations.
Workforce at year-end: slight increase
The BMW Group profited among other things from
strong volume growth in the Automotive and Motor-
cycles segments. The significantly higher financial
result also played an important role. This included a
substantial contribution from the result from equity
accounted investments, which grew as a result of
improved performance of the joint venture BMW
Brilliance Automotive Ltd., Shenyang, as well as
valuation effects arising from the participation of new
investors in the HERE mapping service. Furthermore,
commodity derivatives gave rise to further positive
valuation effects in other financial result, particularly
in the final quarter of the year.
Group profit before tax increased significantly year-
on-year by 10.2% to €10,655 million and therefore
surpassed expectations (2016: €9,665 million). In
the Quarterly Report to 30 September 2017, the
BMW Group predicted a solid increase in Group
profit before tax. In the Annual Report 2016, a slight
increase had been foreseen.
Profit before tax: significant increase
Group
The following section provides information on the key
financial and non-financial performance indicators for
the Group and segments. They are used as the basis for
internal management of the BMW Group. As part of
the analysis of operations and the financial condition
of the BMW Group, forecasts made the previous year
for the financial year 2017 are compared with the
actual business development in 2017.
FINANCIAL PERFORMANCE
INDICATORS
FINANCIAL AND NON-
The BMW Group workforce consisted of 129,932 employ-
ees at the end of the reporting period (31 Decem-
ber 2016: 124,729 employees; +4.2%). Projects relating
to the electrification of vehicles, autonomous driving
and the new model offensive played a major role in
the workforce increase. Growth in automobile and
motorcycle business and the expansion of financial
and mobility services also contributed to the higher
head count.
2 EU-28.
Sales of the core BMW brand increased slightly by
4.2% to 2,088,283¹ units in the year under report
(2016: 2,003,359¹ units). MINI also recorded slight
growth, with deliveries up by 3.2% to 371,881 units
(2016: 360,233 units). Rolls-Royce Motor Cars sold
3,362 units (2016: 4,011 units; -16.2%).
As foreseen in the outlook for the financial year 2017,
Automotive segment sales volumes increased slightly
and were therefore in line with expectations.
Deliveries to customers: significant increase
The Motorcycles segment reported significant growth
in 2017, with deliveries to customers rising by 13.2% to
164,153 units (2016: 145,032 units). This performance
not only set a new record, it also took the single-year
sales volume figure above the 150,000 mark for the
first time.
Motorcycles segment
The outlook for RoCE, which had already been raised
in the Quarterly Report to 30 June 2017 from a slight
decrease to in line with last year's level was once more
exceeded. The RoCE of the Automotive segment in
2017 was therefore once again well above the mini-
mum target of 26%.
The return on capital employed (ROCE) increased to
78.6% (2016: 74.3%; +4.3 percentage points), reflect-
ing the improvement in capital employed and the
positive segment earnings development, which was
better than expected. Higher deferred income from
Connected Drive and service contracts also had an
impact.
Return on capital employed: slight increase
EBIT margin in target range of between 8 and 10%
The EBIT margin in the Automotive segment (profit
before financial result divided by revenues) came in
unchanged at 8.9% compared to the previous year. As
foreseen for the financial year 2017, the EBIT margin
in the Automotive segment was therefore within the
target range of between 8 and 10% and in line with
expectations.
The forecast of a slight rise in Automotive segment
revenues made in the Annual Report 2016 was there-
fore confirmed.
Automotive segment revenues rose by 2.5% in 2017 to
a new high level of €88,581 million and were therefore
slightly up on the previous year (2016: €86,424 million).
The favourable translation effects on foreign currencies,
which led to an upward revision of the outlook for
revenues at the end of the first half-year, could not
be realised, as reported in the Quarterly Report to
30 September 2017.
Revenues: slight increase
Economic Position
→ Financial and Non-
financial Perfor-
mance Indicators
Report on
Report
Management
Combined
50
49
As foreseen in the outlook for the full year 2017, fleet
carbon emissions fell slightly and were therefore in
line with forecast.
The fleet-wide deployment of Efficient Dynamics
technologies and the increasing proportion of
electrified automobiles are effectively reducing
vehicle CO2 emissions. CO2 emissions from the vehi-
cle fleet sold in Europe (EU-28) decreased slightly
in the year under report to 122 g CO2/km (2016:
124 g CO2/km; −1.6%).
Fleet carbon dioxide (CO2) emissions²:
slight decrease
last year's level
578.7
%
MOTORCYCLES SEGMENT
298.9
295.8
859.5
914.6
1,000.4
1,092.2
1,101.8
Americas
286.1
thereof UK
Europe
2013
2014
2015
2016
2017
12.0 Germany
14.4 USA
thereof Germany
Japan 3.2
Italy 3.5
France 3.7
UK 9.8
272.3
241.7
685.8
747.3
848.8
Asia*
376.6
397.0
405.7
366.5
259.2
thereof USA
482.3
495.9
460.4
451.1
189.1
205.1
231.0
252.2
463.8
24.2 China
in 1,000 units
→ 24
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 384,124 units).
2 EU-28.
slight decrease
FINANCIAL SERVICES SEGMENT
Return on equity
34.0 (+1.0%pts)
%
Q2: slight increase
in line with last year's level
9.1 (+0.1%pts)
%
%
164,153 (+13.2%)
units
significant increase
555
51
Return on capital employed
EBIT margin
Deliveries to customers
target range
between 8 and 10
18.1 (-3.1%pts)
52
52
BMW Group deliveries of vehicles by region and market
Other 29.2
Within Europe, the diesel debate in Germany and the
UK and uncertainty surrounding the Brexit negoti-
ations weighed on the generally positive deliveries
trend. The BMW Group sold a total of 1,101,760 units
The BMW Group reported further significant sales
volume growth on Asian markets in 2017. In total,
it sold 848,826* BMW, MINI and Rolls-Royce brand
vehicles, achieving a double-digit increase of 13.6%
(2016: 747,291* units). The Chinese market made
an important contribution to this performance
with 595,020* units delivered to customers (2016:
516,785* units; +15.1 %).
Dynamic growth in Asia, volatility on European
and US markets
as a percentage of deliveries
→ 23
BMW Group - key automobile markets 2017
The highly competitive market environment on the
American continent dampened the Group's sales per-
formance, particularly during the first nine months
of 2017. Deliveries fell by 2.0% to 451,136 units
(2016: 460,398 units). Sales in the USA fell slightly
by 3.5% to 353,819 units (2016: 366,493 units). In the
fourth quarter of 2017, however, a turnaround was
perceptible in both the USA (98,137 units; fourth
quarter 2016: 96,609 units; +1.6%) and on the conti-
nent as a whole (124,547 units; fourth quarter 2016:
122,393 units; +1.8%).
of its three brands, matching the previous year's high
figure (2016: 1,092,155 units; +0.9%). In Germany,
deliveries to customers fell slightly year-on-year to
295,805 units (2016: 298,928 units; -1.0%). In the UK,
sales volume at 241,674 units was also down on the
previous year (2016: 252,205 units; -4.2%).
The BMW Group sold 2,463,526* BMW, MINI and
Rolls-Royce brand vehicles worldwide in 2017, thereby
setting a new record for the seventh year in succession
(2016: 2,367,603* units; +4.1%). BMW brand sales
increased slightly by 4.2% to 2,088,283* units (2016:
2,003,359* units). The number of MINI brand vehicles
sold also grew slightly by 3.2% to 371,881 units (2016:
360,233 units). Rolls-Royce Motor Cars delivered 3,362
limousines to its customers during the period under
report (2016: 4,011 units; -16.2%). A new all-time
high was thus not only recorded at Group level, but
also for the BMW and MINI brands.
Deliveries up slightly to new record level
Automotive Segment
REVIEW OF OPERATIONS
→ Automotive Segment
→ Review of Operations
Economic Position
Report on
Combined
Management
Report
78.6 (+4.3%pts)
2016
353.8
BMWi
55
99
56
Combined
Management
Report
Report on
Economic Position
Review of Operations
→ Automotive Segment
International production network
By expanding its international production network,
the BMW Group follows global market developments
with the aim of ensuring a balanced distribution of
added value.
25 years ago the BMW Group announced its decision
to build a plant in the USA, in Spartanburg, South
Carolina. Marking that anniversary, the first third-
generation BMW X3 came off the production line
in 2017. More than four million vehicles have been
produced at the plant to date.
In San Luis Potosí (Mexico), preparations for con-
structing the new plant are progressing according to
plan. In 2017, the new training centre was opened in
the first of the buildings to be completed at the plant,
which is due to become operational in 2019.
In Europe, the British production cluster compris-
ing the plant in Oxford, the engine plant at Hams
Hall and the pressing plant in Swindon forms part
of the BMW Group's production network. The
MINI Hatch and the MINI Clubman are produced in
Oxford. In order to keep pace with forecast growth,
the MINI Hatch, the MINI Convertible and the
MINI Countryman are also produced under contract
for the BMW Group at the automobile manufacturer
VDL Nedcar bv, Born, the Netherlands. In total,
MINI production increased by 7.4% year-on-year to
378,486 units.
In 2017, production of the new Rolls-Royce Phantom
began at the Rolls-Royce manufacturing plant in
Goodwood (UK). Important construction work was
also carried out at the site during the reporting period.
In order to accommodate future models, Rolls-Royce
Motor Cars is investing in a new single-line production
system at the plant. Furthermore, the technology and
logistics centre in Bognor Regis near Goodwood was
expanded in 2017.
In Rosslyn (South Africa), preparations are currently
underway for producing the next generation of the
BMW X3. The necessary expansion and modification
measures are being carried out during the ongoing
production of the BMW 3 Series.
In Shenyang (China), the two plants of the joint
venture BMW Brilliance Automotive Ltd. (BBA) in
Dadong and Tiexi produced over 396,000 units of five
BMW models, setting a new record in the process. The
new large-scale northern extension at the Dadong
plant was opened in 2017. During the opening cer-
emony, the first extended-wheelbase version of the
new BMW 5 Series Sedan rolled off the production
line. As a result of the expansion, space has been
created at the plant to add a sixth BMW model to the
line-up, the new BMW X3. BBA also opened the High
Voltage Battery Centre in Tiexi during the year under
report. This will also supply batteries to the Dadong
plant, where the BMW 5 Series plug-in hybrid will
be produced for the local market from 2018 onwards.
52
Production competence in Germany
The German plants play a leading role within the
Group's international network. For the seventh
year
in succession, the BMW Group produced over one
million vehicles at its German plants in Munich,
Dingolfing, Regensburg and Leipzig.
In 2017, the BMW Group plants in Dingolfing and
Landshut celebrated their 50th anniversary. The two
locations play a key role within the BMW Group as
competence centres for the future technologies light-
weight construction and electric mobility. Dingolfing
and Landshut are the Group's plants for electric drive-
trains. Battery production and the BMW Group's new
lightweight and engineering centre are also located
there.
In May 2017, a new paint shop was commissioned at
the BMW Group Munich plant. The facility is not only
highly efficient, it also sets new standards for sustain-
able production. The consumption of electricity, gas
and water, as well as the production of waste air, have
been significantly reduced.
55
Flexibility, quality and adaptability are key character-
istics of the Group's production system. Its flexibility
enables the BMW Group to respond rapidly to chang-
ing market situations and fluctuations in regional
sales volumes by adapting its production plans.
Digitalisation, standardised modules and intelligent
composite construction demonstrate the competence
of the Group's production network. At the same time,
the production system offers customers a high degree
of customisation.
success.
The BMW Group's leading production system is well
positioned for the future with its unique flexibility.
In line with the Strategy NUMBER ONE > NEXT, the
system is characterised in particular by efficiency
and robust processes. Production competence thus
provides a crucial competitive edge and contributes
to the BMW Group's profitability and sustained
0.4
3,308
4,179
-20.8
0.1
50,272
53,528
-6.1
2.0
At the end of 2017, production of the BMW X2 started
at the BMW Group plant in Regensburg. At the highly
flexible Regensburg plant eight models are produced
on a single production line.
168,969
92.9
6.7
38,064
2,505,741
32,256
18.0
1.5
2,359,756
6.2
100.0
87,609
The BMW Group's Leipzig plant put into operation
a battery storage farm, demonstrating how batteries
can be both sustainably and profitably reused after
vehicles reach the end of their life cycle. Using on-site
wind turbines, the BMW Group as a major industrial
consumer combines its own decentralised renewable
energy generation with local energy storage. The plant
reached further milestones with the production of the
100,000th BMW i3 and the 15,000th BMW i8 during
the year under report.
The BMW Group Eisenach plant celebrated its 25th
anniversary in 2017. Apart from its toolmaking exper-
tise, the Eisenach plant has specialised in recent years
in the production of almost all sheet metal, aluminium
and stainless steel outer body parts for the Rolls-Royce
plant in Goodwood (UK).
Worldwide network for drivetrain production
123.5
115.2
2013
2014
2015
2016
2017
* Excluding Husqvarna, sales volume up to 5 March 2013: 59,776 units.
BMW Group - key motorcycle markets 2017
137.0
→ 31
16.2 Germany
10.1 France
Other 44.1
Motorcycles production significantly expanded
A total of 185,682 motorcycles rolled off production
lines during the year under report (2016:
145,555 units; +27.6%). The significant increase
in output was mainly driven by high demand
and the start of production by the Indian partner,
TVS Motor Company Limited. Expansion work at the
BMW Group plant in Berlin was largely completed
during the reporting period and will be finalised in
2018. The latest measures will create the capacities
required to achieve planned growth.
R nineT family now complete
BMW Motorrad completed the R nineT product family
line-up in 2017 with the launch of the R nineT Pure,
R nineT Racer and R nineT Urban G/S models. In
August 2017, the K 1600 B was introduced to keep up
with demand on the US motorcycle market. It will be
followed in March 2018 by the K 1600 Grand America,
which was presented at the EICMA motorcycle trade
show. All in all, BMW Motorrad launched six new
motorcycle models and five model revisions during
the period under report.
8.8 Italy
8.3 USA
Change in %
as a percentage of sales volume
4.5
145.0
-90
The engine plants in Munich, Hams Hall (UK) and
Steyr (Austria) supply diesel and petrol engines
for the worldwide network. The Shenyang (China)
engine plant supplies local production facilities. The
BMW Group's largest engine plant in Steyr has pro-
duced engines for 35 years. In 2017, the 20 millionth
engine came off the production line.
Drivetrain production for electrified vehicles is spread
over various locations within the production network.
The technologies used in making electric drivetrain
components are developed at the Prototype Con-
struction Centre in Munich. As competence centres,
Dingolfing and Landshut take a leading role in the
production of electric drivetrain systems. Electric
motors for the BMW Group's electrified vehicles are
also produced at these plants. The batteries required
are produced at the three battery factories in Din-
golfing, Spartanburg and Shenyang. The battery
factory in Shenyang was opened in 2017. At the end
of 2017, the foundation stone was laid in Munich for
a battery cell competence centre, which is scheduled
for completion by the beginning of 2019. The aim is
to continue developing battery cell technology.
58
Combined
Management
Report
Report on
Economic Position
Review of Operations
164.2
→ Motorcycles
Segment
Motorcycles Segment
BMW Motorrad grows significantly
In 2017, the Motorcycles segment profited amongst
others from the launch of numerous attractive new
models and model revisions. Deliveries of BMW
motorcycles worldwide were significantly higher than
the previous year, rising by 13.2% to 164,153 units
(2016: 145,032 units). The segment thus surpassed
the 150,000-unit mark for the first time, setting a new
sales volume record for a financial year.
Dynamic growth in Europe
Motorcycle sales in Europe grew strongly in
2017, exceeding 100,000 units for the first time.
BMW Motorrad delivered a total of 101,524 units to
customers (2016: 87,983 units; +15.4%). In Germany,
sales volume was up by 7.1% to 26,664 units (2016:
24,894 units), despite a contracting motorcycles
market. Sales growth in Italy (14,430 units, 2016:
12,300 units; +17.3%) and Spain (11,193 units, 2016:
9,520 units; 17.6%) was even in the double digits.
Sales in France were particularly strong, with
deliveries up by almost one-quarter to 16,607 units
(2016: 13,350 units; +24.4%). In the USA sales at
13,546 units fell just short of the previous year's
level (2016: 13,730 units; -1.3%) in a difficult mar-
ket environment. However, the market recorded
an upturn in the fourth quarter (3,346 units; 2016:
2,782 units; +20.3%).
BMW Group deliveries of motorcycles*
→ 30
in 1,000 units
180
→Financial Services
Segment
8,568
57
92.9
Dadong²
Oxford
Rosslyn
Rayong
Araquari
Chennai
Goodwood
Graz (Magna Steyr)³
Born (VDL Nedcar)³
Partner plants (Jakarta, Cairo, Kaliningrad, Kulim)
Group
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 396,749 units, 2016: 305,833 units).
2 Joint Venture BMW Brilliance Automotive Ltd., Shenyang.
3 Contract production.
2017
2016
Change in %
Proportion of
production in %
376,580
339,769
Tiexi²
10.8
Munich
Regensburg
29,280
15.0
BMW iPerformance
MINI Electric
Total
63,605
32,975
5,799
103,080
62,255
65.6
High capacity utilisation across production
network
In 2017, strong customer demand and new model
launches resulted in high capacity utilisation across
the BMW Group production network. New production
records were set in 2017, with a total of 2,505,741¹ 7
BMW, MINI and Rolls-Royce brand vehicles manu-
factured (2016: 2,359,756¹ units; +6.2%), comprising
2,123,9471 BMW (2016: 2,002,997¹ units; +6.0%),
378,486 MINI (2016: 352,580 units; +7.3%) and 3,308
Rolls-Royce brand vehicles (2016: 4,179 units; - 20.8%).
Vehicle production of the BMW Group by plant
→ 29
in units
Dingolfing
Spartanburg
Leipzig
33,676
15.0
411,171
6.1
210,971
223,817
5.1
-11.4
143,825
127,440
10.8
66.3
161,901
269,309
7.9
-9.4
216,769
196,455
9.8
246,043
8.9
371,316
19
63,117
-9.7
14.8
338,259
346,291
-2.3
8,952
0.5
-17.1
15,408
12,768
0.9
18.2
13.5
17,844
21,084
2.1
-15.9
53,105
-0.2
246,550
Financial Services
13.5
BMW Group 13.0
14.0
14.3
16
15.3
16.0
in %
2017
2016
2015
2014
2013
ill
2.08
2.64
2.70
1.41
3.5
3.47
7.0
→ 40
Proportion of female employees in manage-
ment functions at BMW AG/BMW Group*
The proportion of women in the workforce as a
whole, as well as in management functions and
young talent development programmes, increased
during the financial year under report. The percent-
age of women in the total BMW Group workforce
rose to 19.3% (BMW AG: 16.1%), above the internal
target range of 15 to 17%. The proportion of women
in management positions rose to 16.0% across the
BMW Group (BMW AG: 14.0%). In the year under
report, female representation on the BMW Group's
trainee programme and in student programmes stood
at approximately 44% and 31% respectively.
Diversity will remain a key factor in ensuring the
BMW Group's continued competitiveness in future.
Focus is given to the three aspects of gender, cultural
background and age/experience. The aim is to ensure
equal opportunities for all employees and at the same
time utilise and promote the diversity of the Group's
workforce. Over the year, the BMW Group again
implemented a broad array of measures to promote
diversity. Further information on this topic is also
provided in the Sustainable Value Report 2017.
Diversity as a competitive factor
as a percentage of workforce
13.3
12.5
11.3
BMWAG 10.6
In order to identify key sustainability topics at an early
stage, the BMW Group also conducts materiality anal-
yses on a regular basis. Moreover, social challenges
are continually monitored and analysed in order to
gauge their significance, from the point of view of both
external and internal stakeholders. The materiality
analysis is used to create a materiality matrix, which
is used as a basis to monitor the strategic direction of
sustainability management. The materiality matrix is
described in greater detail in the Sustainable Value
Report 2017.
The BMW Group is in continual dialogue with a large
number of stakeholders, both in Germany and abroad.
Dialogue helps the Company to recognise global trends
at an early stage, achieve sustainability objectives
more effectively and strengthen social commitment.
In the course of this dialogue, the BMW Group gains
a clear picture of how current trends are changing the
business environment and which role the BMW Group
can play. For example, stakeholder dialogue events on
the topic of urban mobility were held during 2017 in
Milan, Chicago, Hangzhou, Mexico City and Delhi.
Stakeholder dialogues and materiality analysis as
basis for sustainability management
The combined separate non-financial report is avail-
able online within the Sustainable Value Report 2017
at: https://www.bmwgroup.com/svr.
In accordance with the stipulations of the German
CSR Directive Implementation Act, BMW AG is
required to publish a non-financial declaration at
both Company and Group level for the first time
for the reporting year 2017. The declaration is pub-
lished jointly for BMW AG and the BMW Group as a
combined separate non-financial report within the
Sustainable Value Report. The information required
by law is included in the sub-chapters preceding the
voluntary reporting in accordance with GRI standards
and is marked accordingly.
Further information on sustainability within the
BMW Group and related topics is provided in the
Sustainable Value Report, which is published online
at → https://www.bmwgroup.com/svr at the same time as the
Annual Report. The Sustainable Value Report is
drawn up in accordance with the "Comprehensive"
option of the Standards of the Global Reporting
Initiative (GRI) and subject of a limited assurance
engagement in accordance with IASE 3000 (Inter-
national Standard on Assurance Engagements 3000
(Revised): "Assurance Engagements other than Audits
or Reviews of Historical Financial Information").
Through its sustainability policy, the BMW Group
supports the achievement of the UN's Sustainable
Development Goals (SDG), which were adopted in
September 2015.
Responsibility towards employees and society
The efficient use of resources along the entire
value chain
The development of products and services for
sustainable individual mobility (for example
electric mobility and services such as DriveNow
and ReachNow)
-
Economic success, the responsible use of resources
and the assumption of social responsibility form the
basis for long-term growth within the BMW Group.
Through sustainable activity, the Company secures the
future of its business model. With regard to sustain-
ability, the BMW Group concentrates on three areas:
→ www.bmwgroup.com/responsibility
→ 39
Sustainability
Combined
Management
Report
98
68
The workforce at the Group's locations within
Germany is becoming increasingly international.
Employees from over 110 countries work together
successfully in Munich. Moreover, a balanced age
structure in the workforce encourages an exchange
of ideas and knowledge between generations and
plays a key role in reducing the loss of know-how
when valuable employees retire.
62
67
*Since 2017 including maternity leave.
* Number of employees on unlimited employment contracts leaving the Company.
2017
2016
2015
2014
2013
Report on
Economic Position
Review of Operations
Sustainability
Employee attrition rate at BMW AG*
The BMW Group also came out top in the Trendence
Young Professional Barometer Germany. Moreover,
the Group again improved its position in the Trend-
ence Barometer Study for engineering graduates in
Germany, moving up to first place in 2017. In addition,
the Group again achieved strong results in the Uni-
versum study "Young Professionals Germany" with
placings one, three and five in the categories Business,
Engineering and IT respectively. The BMW Group was
therefore among the best-ranked companies in the
studies across all sectors.
In 2017, the BMW Group was once again ranked
among the world's most attractive employers. In the
latest "World's Most Attractive Employers" rankings
published by the agency Universum, the BMW Group
was once again named best German employer across
all sectors and the most attractive automotive company
in the world. In 2017, BMW Group China was named
for the first time most attractive employer across all
sectors in China.
Economic Position
Review of Operations
→ Workforce
Workforce
→ www.bmwgroup.com/careers
Slight increase in workforce
The BMW Group's worldwide workforce increased
to a total of 129,932 employees at the end of the
reporting period (2016: 124,729 employees; +4.2%).
The increase mainly reflects the expansion of the
BMW Group's international production network.
Moreover, in conjunction with the implementation
of the Group's Strategy NUMBER ONE > NEXT, an
increasing number of experts in future-oriented fields
such as artificial intelligence and autonomous driving,
electric mobility, smart production and logistics, data
analysis and software development were hired.
BMW Group employees
8,394
Realignment of dual vocational training
In the context of digitalisation and technological
change, the BMW Group has initiated a strategic
realignment of its dual vocational training. As well
as promoting STEM subjects (science, technology,
engineering and mathematics), the focus is also
on introducing new digital forms of teaching and
learning. In this context, the BMW Group has initi-
ated the process of adapting existing career profiles
and introducing new ones across its national and
international training network. The total number
of apprentices and participants in development
programmes for young talent increased slightly to
4,750 (2016: 4,613; +3.0%).
BMW Group apprentices at 31 December
→ 38
Report on
31.12.2017
Change in %
5,000
4,445
4,595 4,700
4,613 4,750
Automotive
117,664
112,869
4.2
Motorcycles
3,506
3,351
4.6
31.12.2016
8,645
Combined
Management
Report
99
The BMW Group remains a highly attractive
employer
High level of investment in employee qualification
At €349 million, spending on training and develop-
ment remained high (2016: €352 million; -0.9%). By
training its workforce in areas such as electric mobility,
hydrogen, fuel cells, lightweight construction and
robotics, the BMW Group is creating an important
foundation for future activities. Expansion of digital
and agile competences is a further area of focus.
2017
2016
2015
2014
2013
0
4.2
124,729
129,932
Group
On 1 December 2017, "ReachNow powered by
EvCard" was launched in Chengdu, China, offering
in cooperation with local partner EvCard a fleet of
100 BMW i3 vehicles for hire. The vehicles can be
picked up or returned at 25 central locations in the
urban area.
66
1.7
117
Other
2,500
3.0
Other markets are set to follow.
Record year for BMW M
The year 2017 was the strongest in the history of
BMW M GmbH for sales of M and M Performance
models. In view of growing demand in the high-perfor-
mance automobile segment, the dealership network is
being systematically enlarged. In 2017, the number of
BMW M certified dealerships grew to 850 worldwide,
representing a doubling in size over the last four years.
New Rolls-Royce Phantom presented
A highlight of the year 2017 was the presentation
of the new Rolls-Royce Phantom in London in
July. With its Black Badge Edition, Rolls-Royce
Motor Cars is targeting new customer groups
in the super-luxury class. After launching the
Black Badge models Ghost and Wraith, the Dawn
Black Badge was added as a third version in 2017
(Rolls-Royce Ghost Black Badge: fuel consumption
in 1/100 km (combined) 14.6//CO₂ emissions in g/km
(combined) 333; Rolls-Royce Wraith Black Badge:
fuel consumption in 1/100 km (combined) 14.6//
CO2 emissions in g/km (combined) 333; Rolls-Royce
Dawn Black Badge: fuel consumption in 1/100 km
(combined) 14.7//CO2 emissions in g/km (com-
bined) 337).
MINI reports another record year
In 2017, the MINI brand achieved its third record-
breaking year in succession for sales volume. The
successful market launch of the new Countryman
generation in the first quarter 2017 played a major
role in this performance. The second edition of the
popular Countryman range also went on sale as a
plug-in hybrid version in summer of 2017, making
it the first MINI plug-in hybrid in series production.
65
99
115
→ 37
the USA.
20.9
During the year under report, 40 BMW 7 Series test
vehicles were used to conduct trials for highly auto-
mated and autonomous driving on motorways and
in urban environments. These vehicles were tested at
worldwide locations, in particular at the sites of Intel
(USA), Mobileye (Israel) and the BMW Group (Munich).
The joint further development of these BMW 7 Series
prototypes will lead to the BMW Group's first highly
automated series-produced vehicle: the BMW iNext,
which is due to be launched in 2021.
The new development centre aims to promote col-
laboration across companies and individual deci-
sion-making competence. This is achieved through flat
organisational structures, lean processes and teams
working in close proximity. At the new location, more
than 2,000 employees will work across disciplines on
development of the next steps towards fully autono-
mous driving.
New development centre for autonomous driving
At the end of 2016, around 600 BMW Group employees
were already working on developing highly automated
driving technologies. In 2017, the BMW Group began
to pool its entire expertise in vehicle connectivity and
autonomous driving at a new campus near Munich.
→ www.bmwgroup.com/innovation
Research and Development
Further information on the risk situation is provided
in the section Risks and Opportunities.
Sales proceeds generated from BMW and MINI brand
vehicles showed a solid increase from the previous
year, due to volume and mix effects. Despite the
positive development, the level of residual value
losses on remarketed vehicles rose year-on-year. The
expected increase was mainly due to the debate on
diesel engines in parts of Europe. The situation was
also affected by continuing challenges on the North
American pre-owned vehicle market.
The risk profile of the segment's credit financing port-
folio also remained stable at a low level. The credit loss
ratio on the total credit portfolio amounted to 0.34%,
marginally higher than one year earlier (2016: 0.32%).
2017
61
2016
2014
2013
0.34
0.32
0.37
0.25
0.46
0.5
0.50
2015
62
62
Combined
in %, basis: production material
→ 36
Regional mix of BMW Group
purchase volumes 2017
The BMW Group remains committed to its strategy of
maintaining a regional balance with regard to growth
in sales volume, production and purchasing volumes.
The strategy makes an important contribution to nat-
ural hedging against currency fluctuations.
Connecting procurement markets
With its globally oriented organisation, the Purchasing
and Supplier Network ensures access to all necessary
external resources in an environment that remains
highly volatile. Activities include the procurement and
quality assurance of production materials, raw materi-
als, capital goods and services. External suppliers are
selected systematically on the basis of competitiveness
according to the criteria of quality, innovation, flex-
ibility and cost. More recently, activities have been
focused particularly on the ability to respond quickly
to changing demand for various types of drivetrain
technology.
Ensuring access to resources in a
volatile environment
Purchasing and Supplier Network
The joint project is examining every aspect of fast
charging in practice, with the aim of introducing
the required technologies on an industrial scale. The
overall system is to be implemented in prototypes and
presented to the public in the course of the current year.
In July 2016, under the leadership of the BMW Group,
the "FastCharge" project was begun together with
Allego GmbH, Phoenix Contact E-Mobility GmbH,
Dr. Ing. h.c. F. Porsche AG and Siemens AG. The aim
of the three-year project is to conduct research on
electric vehicles with far shorter charging times and
the required charging infrastructure. A further aim
is to demonstrate ways of implementing the findings
for everyday use.
Research project on fast charging technology
The range of supporting services also includes integra-
tion of digital assistants from the user's environment,
for example the already familiar concierge services.
Lifestyle-related services allow the vehicle to be
integrated in the digital life of the user. For example,
third-party services such as entertainment, news or
music can be seamlessly and easily integrated.
Mobility-related services help users to reach their
destinations conveniently and as quickly as possible.
These services help users find the most pleasant route,
not only when in the vehicle, but also when nearby.
For example, drivers can use their smartphones to dis-
play the best time to begin their next journey. Parking
and charging options at the selected destination can
also be displayed via the vehicle's navigation system.
The vehicle-related services field is already extensive
and includes functions such as automatic climate con-
trol via smartphone or a 3D view of the vehicle from
a remote location. It also includes services such as
reminders of the next vehicle service appointment or
individual financial services. Going forward, services
for personalised vehicle settings will also be available,
so that each vehicle will automatically adapt to the
current user and situation.
The customer is the central focus of the Group's per-
sonalised digital services. The range is divided into
four fields: vehicle-related services, lifestyle-related
services, mobility-related services and the integration
of digital assistants.
Connectivity and digital services expanded
At the BMW Innovation Days 2017, the BMW Group
presented the current level of progress and the latest
developments with regard to integrating vehicles in
the customer's digital world. In the context of digitali-
sation, connectivity is a key pillar in the BMW Group's
strategy for the future, NUMBER ONE > NEXT. Today,
around 10 million BMW Group vehicles are already
connected worldwide through Connected Drive.
Review of Operations
→Research and
Development
Purchasing and
Supplier Network
Economic Position
Report on
Management
Report
in %
Leasing 21.5
Financing 22.5
→ 35
The total portfolio of credit financing and leasing con-
tracts with retail customers developed positively again
during the financial year 2017, with a slight increase
of 4.7% year-on-year. In total, 4,926,228 contracts were
in place with retail customers at 31 December 2017
(2016: 4,703,417 contracts). The Asia/Pacific region
continued to grow in 2017, with a 9.6% increase in
the contract portfolio. The Europe/Middle East/Africa
region (+8.8%) and the EU Bank* (+5.1%) also regis- *The EU Bank
tered solid year-on-year growth, while the Americas
region saw a slight decrease in the contract portfo- its branches in
lio (-2.7%).
Contract portfolio retail customer financing
of Financial Services segment 2017
→ 34
Development of credit loss ratio
comprises
BMW Bank GmbH,
Italy, Spain and
Portugal, and its
subsidiary in
France.
Contract portfolio in multi-brand financing
business decreases
The Financial Services segment recorded a slight
increase (+2.8%) in the number of new multi-brand
financing contracts in 2017, with 157,626 contracts
(2016: 153,297 contracts). As a result of a portfolio
sale, the total contract portfolio comprised 406,813
contracts at 31 December 2017, significantly lower
than one year earlier (2016: 466,436 contracts; -12.8%).
Dealership financing up year-on-year
The total volume of dealership financing increased
to €19,161 million in the period under report (2016:
€18,307 million; +4.7%).
in % per region
Asia/Pacific 18.5
32.6 Europe/
Middle East/Africa
Deposit business volume at previous year's level
Customer deposits represent an important source of
refinancing for the Financial Services segment. The
volume of deposits stood at €13,572 million at the end
of the reporting period, in line with the previous year
(2016: €13,512 million; +0.4%).
EU Bank* 21.1
27.8 Americas
* EU Bank comprises BMW Bank GmbH, its branches in Italy, Spain and Portugal, and its
subsidiary in France.
Solid growth in insurance brokerage business
With a solid increase of 5.9% in 2017, the number of
new brokered insurance contracts grew to 1,337,652
contracts (2016: 1,262,973 contracts). At 31 Decem-
ber 2017, the total number of brokered insurance
contracts amounted to 3,649,362 (2016: 3,411,872 con-
tracts; +7.0%).
Solid growth in fleet business
The BMW Group is one of Europe's foremost leasing
and full-service providers. The Financial Services
segment's fleet management business, under the
brand name Alphabet, offers commercial customers
leasing and financing arrangements as well as specific
services. The number of fleet contracts rose by 5.5%
during the financial year 2017. At 31 December 2017,
the segment was thus managing a portfolio of 679,895
fleet contracts (2016: 644,420 contracts).
→ Research and
Development
Asia 7.7
Review of Operations
→Financial Services
Segment
Report on
41.7
22.1
22.3
20.8
HII
20.8
24.2
27.3
26.0
25
25
0
2013
2014
2015
2016
2017
*Until 2015 excluding Rolls-Royce.
60
60
Combined
Management
Report
Economic Position
NAFTA 14.5
Rest of Western
Europe 17.7
Investments ensure expertise in productivity and
technology
Slight growth in new business
Credit financing and leasing business with retail
customers remain a key element of the success of the
Financial Services segment. During the period under
report, 1,828,604 new credit financing and leasing
contracts were concluded with customers, slightly
up (+1.0%) on the previous year (2016: 1,811,157 con-
tracts). Credit financing grew slightly by 2.8%, while
the number of new leasing contracts fell slightly by
2.6%. Overall, leasing accounted for 33.0% and credit
financing for 67.0% of new business.
The proportion of BMW Group new vehicles leased
or financed by the Financial Services segment in the
financial year 2017 amounted to 46.8%, 2.8 percentage
*The calculation points down on the previous year (2016: 49.6%).* The
decrease was due to a cap on new business volume
in China, through which the People's Bank of China
segment is repre- regulates the banking and financial services sector.
only includes
automobile mar-
kets in which the
Financial Services
sented by a con-
solidated entity.
In the pre-owned financing and leasing business for
BMW and MINI brand vehicles, the segment record-
ed a solid increase in the number of new contracts
signed, which was up by 7.2% to 387,937 contracts
(2016: 361,928 contracts).
The total volume of new credit financing and leasing
contracts concluded with retail customers during the
period under report amounted to €55,049 million,
in line with the previous year (2016: €55,327 mil-
lion; -0.5%).
0
2013
2014
2015
2016
2017
BMW Group new vehicles financed or
leased by Financial Services segment*
→ 33
in %
50
44.0
4,360
49.6
4,130
5,115
During the year under report, the BMW Group's
service business was strengthened by investment in
the future logistics network and by measures aimed
at ensuring a high level of customer satisfaction.
Digitalisation of offerings is playing a crucial role in
these developments. Business with spare parts has
also been expanded. The creation of the joint venture
Encory by the BMW Group and the ALBA Group in
September 2016, with additional offerings in reuse
of automotive spare parts, is making a valuable con-
tribution to the BMW Group's sustainability strategy.
A pilot project was initiated in Spain in mid-2017.
Growth in service business
During the period under report, the BMW brand reju-
venated its range with six new models and 15 model
revisions. The market launch of the seventh generation
of the BMW 5 Series played a significant role, with the
Sedan (in February), the extended-wheelbase version
for China and the Touring version (both in June). The
5 Series also includes iPerformance, M Performance
and M5 models. The new BMW 6 Series Gran Turismo
and the new X3 were launched in November. The model
initiative includes revised models of the BMW 1 Series,
2 Series and 4 Series. The revised BMW i3 and the new
BMW i3s came onto the market in autumn 2017.
BMW rejuvenates model range
In February 2017, the BMW Group founded the
company "Digital Charging Solutions", which sells
access to the ChargeNow charging network, as well as
related services, also to third parties. Groupe PSA was
one of ChargeNow's first corporate customers during
the period under report. PSA will provide its electric
vehicle customers in France with charging access via
the network established by ChargeNow.
website.
Through ChargeNow, the BMW Group provides easy
access to a constantly growing network of public
charging stations. With more than 130,000 charging
points in 29 countries, ChargeNow provides access
to the world's largest charging network. Customers
can locate the charging stations directly via the
ConnectedDrive navigation system integrated in the
vehicle, via the ChargeNow app or via the internet
ParkNow is the BMW Group's digital parking service.
It enables ticket-free, cashless parking via app, both
at roadside and in multi-storey car parks. In Janu-
ary 2018, the BMW Group acquired Parkmobile LLC,
the largest provider of mobile parking services in
North America. Parkmobile Group Europe, which
also owns ParkNow amongst its brands, has been
wholly owned by the BMW Group since April 2016.
In Europe and North America, Parkmobile reaches
over 22 million customers and offers digital parking
solutions in more than 1,000 towns and cities.
59
59
Financial Services Segment
Continued growth for the
Financial Services segment
The Financial Services segment continued to perform
well within a highly competitive market environment
and concluded a successful financial year 2017. In
balance sheet terms, business volume grew by 1.1%
to €124,719 million (2016: €123,394 million). Adjusted
for exchange rate factors, business volume amounted
to €131,995 million (+7.0%). The contract portfolio
under management at 31 December 2017 comprised
5,380,785 contracts and therefore grew by 5.2% year-
on-year (2016: 5,114,906 contracts).
Contract portfolio of
Financial Services segment
→ 32
in 1,000 units
6,000
3,000
5,381
4,719
Risk profile
46.3
Despite ongoing political and economic uncertainties
and the debate, particularly in some European coun-
tries, about exhaust emissions from diesel vehicles,
the global economy continued to develop positively
in 2017. This contributed to the continued low level of
risk in the overall Financial Services portfolio.
At 31 December 2017, the DriveNow premium car
sharing service had over one million customers in 13
major European cities. The percentage of electrically
powered vehicles in these fleets stands at around
15% and is due to increase. Since introduction of the
first electrified vehicles into the DriveNow fleet more
than 16 million kilometres with zero local emissions
have been driven. This corresponds to a CO₂ saving
of around 2,500 tonnes.
In the context of the Group's corporate strategy
NUMBER ONE > NEXT, mobility services are given
increasing emphasis. Since 2011, the BMW Group
has offered a growing range of services for individual
mobility, including mobility services such as DriveNow
in Europe and ReachNow in the USA and China. In
addition, ParkNow and ChargeNow provide custom-
ers with digital solutions for parking and charging.
Premium services for individual mobility
During the year under report, the BMW Group togeth-
er with other automobile manufacturers founded the
joint venture IONITY with the aim of establishing a
high-performance, fast-charging network in Europe
along key transport routes. The BMW Digital Charging
Service uses Connected Drive to integrate the vehicle
in the customer's charging infrastructure and automat-
ically charges at the cheapest times, taking electricity
prices into account. The service also provides a con-
stant overview of the vehicle's energy requirements
as well as ongoing and completed charging activities.
Under the brand name BMWi, the BMW Group
has offered customers a range of electric mobility
solutions since 2013. The brand covers BMWi and
BMW iPerformance vehicles as well as a wide array
of services. Under the name 360° ELECTRIC, BMW i
provides a comprehensive range of products and
services for all-electric vehicles and plug-in hybrids
worldwide. In 2016 and 2017, the second generation
of the BMWi Wallbox was introduced for quick and
easy charging at home.
BMW i continues to grow
The BMW Group's sales and distribution network
comprises some 3,400 BMW, 1,580 MINI and
140 Rolls-Royce dealerships worldwide. Sales are
conducted by independent authorised dealerships,
BMW Group branches and subsidiaries, and inde-
pendent importers in certain markets. The dealership
and agency network for BMW i currently comprises
over 1,500 locations.
→ www.bmwgroup.com/brands
Sales and Marketing
Economic Position
Review of Operations
→ Sales and Marketing
Report on
46.8
Combined
Management
Report
64
63
80
21.5 Eastern Europe
37.6
Germany
1.0 Other
During the period under report, logistics processes
at the Group's most important component plant in
Landshut were significantly simplified with the open-
ing of the new supply centre, thus achieving another
important milestone.
Alongside purchasing and quality assurance, the
third pillar of the Purchasing and Supplier Network's
activities remains in-house production of key vehicle
components. In order to ensure over the long term the
flexibility and competitiveness of internal component
production, the BMW Group invests in state-of-the-art
production facilities and efficient structures.
In January 2018, the BMW Group signed an agreement
with Sixt SE for the complete acquisition of the shares
in the car sharing provider DriveNow. The agreement
was signed subject to the approval of the antitrust
authorities.
In 2016, the BMW Group launched the ReachNow
service in the USA, where it is currently available
in Seattle, Portland and Brooklyn. Apart from car
sharing, ReachNow is also offering as a pilot project
in Seattle a service that enables customers to book a
premium vehicle with a driver (ReachNow Ride). Cus-
tomers can also reserve the use of a vehicle for several
days, including delivery of the vehicle to the desired
location (ReachNow Reserve). Moreover, ReachNow
offers individual small fleets for residential complexes
or company solutions (ReachNow Fleet Solutions).
ReachNow currently has around 80,000 members in
The financial result improved by €31 million to a net
amount of €13 million, due, amongst others, to higher
fair value measurement gains within other financial
result.
9.1
The net amount of other operating income and expens-
es improved by €51 million to €-17 million. Income
from the reversal of provisions, amongst others, had
a positive effect.
Segment selling and administrative expenses increased
by €76 million to €1,370 million, mainly due to higher
personnel and IT project costs.
The Financial Services segment recorded solid reve-
nue growth due to positive development in the credit
financing business and the higher volume of returned
leasing vehicles sold. The risk profile remained at a
historically favourable level in the year under report.
Financial Services segment
Profit before tax rose significantly compared to the
previous year thanks to the positive business devel-
opment.
The net amount of other operating income and
expenses deteriorated by €24 million to a net amount
of €−11 million. The previous year's figure benefit-
ed in particular from higher income arising on the
reversal of write-downs than in the year under report.
Motorcycles segment revenues rose significantly,
mainly reflecting year-on-year volume growth. Higher
sales of optional equipment, spare parts and acces-
sories as well as improved pricing also contributed.
Motorcycles segment
Overall, the Automotive segment reported a solid
increase in pre-tax profit.
At €828 million, the financial result was significantly
higher than one year earlier. In addition to the effects
from result from equity accounted investments and
other financial result described above, the net interest
result also had a positive impact on the Automotive
segment's financial result. Thanks to lower year-on-
year interest and similar expenses, the net interest
result improved significantly to a net amount of
€-205 million (2016: €-413 million).
Profit before financial result increased slightly to
€7,863 million (2016: €7,695 million). The positive
effect of volume growth was offset by increases in
research and development expenses, selling and
administrative expenses and other operating expenses.
Automotive segment revenues grew slightly due to
higher sales volumes, with currency factors and a
continued highly competitive business environment
holding revenue growth down. Cost of sales increased
slightly in line with sales volume growth. The gross
profit margin was in line with the previous year.
Automotive segment
Economic Position
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Report on
Management
Report
Combined
15
75
0.1
9.0
Profit before tax in the Financial Services segment
was slightly up on the previous year, mainly reflecting
business volume growth and the improved net amount
of other operating income and expenses.
20.8
0.7
Other Entities segment/Eliminations
2.5
3.9
2,283
2,069
10.3
11.1
27,567
25,681
7.3
8.7
Other Entities
7
6
16.7
Eliminations
Group
-19,760
-20,017
1.3
98,678
94,163
86,424
4.8
88,581
Motorcycles
40.5
-0.8
Due to the continued product offensive, vehicle electri-
fication and development work on autonomous driving,
research and development expenses at €4,920 million
(2016: €4,294 million) were significantly up on the pre-
vious year. As a result, total research and development
expenditure – comprising research costs, non-capital-
ised development costs and capitalised development
costs (excluding amortisation thereon) - amounted
to €6,108 million in the year under report (2016:
€5,164 million). The capitalised development costs
were mainly related to the production start of new
models and modules.
Overall, gross profit amounted to €19,934 million,
reflecting a solid improvement over the previous year.
Selling and administrative expenses were €402 mil-
lion higher at €9,560 million, mainly as a result of
the increased workforce and higher marketing and
IT expenses.
Depreciation and amortisation on property, plant
and equipment and intangible assets recorded in cost
of sales and in selling and administrative expenses
totalled €4,822 million (2016: €4,806 million).
The net amount of other operating income and expens-
es in 2017 was €-494 million (2016: €-177 million),
with, amongst others, higher allocations to provisions
for litigation and other legal risks contributing to the
year-on-year change.
Profit before financial result (EBIT) increased solidly
and amounted to €9,880 million (2016: €9,386 million).
→ see
note 12
At €775 million, the financial result was significantly
higher than one year earlier. This was mainly driven
by a €297 million increase in the result from equity
accounted investments to €738 million. This was due,
amongst others, to a €183 million positive earnings
effect following the sale of 15% of the shares in HERE
International B.V., Amsterdam, by THERE Holding B.V.,
Amsterdam. The earnings contribution from BMW Bril-
liance Automotive Ltd. also increased, driven by sales
volume within a stable competitive environment. In
addition, other financial result improved by €117 mil-
lion to €248 million. In contrast to the previous year, the
result on investments in 2017 included no impairment
losses on other investments. Furthermore, the net inter-
est result improved by €82 million to a net amount of
€−211 million. This was mainly due to the lower interest
expense arising from the unwinding of the discount
on non-current provisions and higher liquidity, which
resulted in lower financing requirements in selected
countries.
Overall, profit before tax increased significantly year-
on-year to €10,655 million (2016: €9,665 million).
The income tax expense for the year amounted to
€1,949 million (2016: €2,755 million). The significantly
lower year-on-year tax expense was mainly due to the
reduction in the US federal corporate income tax rate
from 35% to 21% with effect from 1 January 2018,
which was taken into account in the measurement of
deferred taxes at 31 December 2017. The revaluation
of deferred taxes had an overall positive impact of
€977 million on net profit for the year. Further infor-
mation is provided in → note 12 of the Group Financial
Statements.
Results of operations by segment
BMW Group revenues by segment
→ 46
in € million
2017
2016
Change in %
Currency adjusted
change* in %
Automotive
Financial Services
5.1
*The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year's figures.
BMW Group profit/loss before tax by segment
2,207
2,166
1.9
80
170
-52.9
-528
-772
31.6
10,655
9,665
10.2
2017
2016
Change in %pts
18.4
17.9
0.5
8.9
8.9
20.8
10.8
185
205
9.8
→ 47
in € million
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
Group
BMW Group margins by segment
→ 48
39.7
in %
Gross profit margin
EBIT margin
Motorcycles
Gross profit margin
EBIT margin
2017
2016
Change in %
8,691
7,916
Automotive
Profit before tax in the Other Entities segment fell
significantly year-on-year, mainly due to the lower
21,267
Inter-segment eliminations reduced Group profit
before tax by €528 million. The amount of elimina-
tions was lower than in the previous financial year as
a result of the lower volume of new leasing business
in 2017 and the positive effect of reversals in the
portfolio of leased products (2016: negative impact
of €772 million).
The decrease in cash inflow from the Automotive seg-
ment's operating activities was mainly due to higher
net outflow for other operating assets and liabilities.
Cash outflow from investing activities was influenced
in particular by the overall €1,273 million increase in
-1,333
5,792
395
-1,112
-616
11,464
-5,432
-240
155
4,459
-6,544
10,848
Change
2016
2017
investments in intangible assets and property, plant
and equipment.
0
Net investment in marketable securities and investment funds
Free cash flow Automotive segment
Cash inflow/outflow from investing activities
Cash inflow/outflow from operating activities
in € million
Free cash flow for the Automotive segment was as
follows:
cash
equivalents
31.12.2017
Cash and
changes in
Currency
translation,
Group composition
activities
financing
Cash inflow
from
5,000
Cash outflow
from
investing
activities
Net financial assets of the Automotive segment com-
prise the following:
2017
Low
5.5
* Excluding derivative financial instruments.
267
19,520
19,787
Net financial assets Automotive segment
18
-1,498
-1,480
Less: external financial liabilities*
249
21,018
in € million
Financial assets
12,077
9,774
189
4,147
4,336
2,363
4,794
7,157
Intragroup net financial assets
Marketable securities and investment funds
Cash and cash equivalents
Change
2016
-2,303
activities
31.12.2016
from
operating
-300
-5,863
-6,163
2,736
3,173
5,909
Change
2016
2017
The cash outflow from investing activities exceeded
the cash inflow from operating activities by €254 mil-
lion in the financial year 2017. In the previous year,
the shortfall was higher at €2,690 million.
The Group's financing activities show a €1,913 million
reduction in cash inflows from the issue of bonds and
a €1,000 million decrease in cash outflows for bond
repayment. In addition, cash inflows from other finan-
cial liabilities decreased by €4,261 million. Changes
in commercial paper gave rise to net cash inflow of
€953 million (2016: net cash outflow of €1,632 million).
The increase in cash outflow from the Group's invest-
ing activities mainly reflects higher overall invest-
ments in intangible assets and property, plant and
equipment (€1,289 million), partially offset by higher
cash proceeds from the disposal of investments and
other business units (€1,096 million).
The increase in cash inflow from the Group's operat-
ing activities was mainly due to the higher net profit
for the year (€1,796 million) and lower additions to
leased products (€1,392 million), compared to the
previous year.
1,572
Change in cash and cash equivalents
Cash inflow/outflow from financing activities
Cash inflow/outflow from investing activities
Cash inflow/outflow from operating activities
in € million
77
Cash flows from operating activities are determined
indirectly, starting with Group and segment net profit.
By contrast, cash flows from investing and financing
activities are based on actual payments and receipts.
statements correspond to the amounts disclosed in
the balance sheet.
→ 49
BMW Group financial position
The cash flow statements for the Group and the
Automotive and Financial Services segments show
the sources and applications of cash flows for the
financial years 2017 and 2016. Cash flows are classi-
fied according to operating, investing and financing
activities. Cash and cash equivalents in the cash flow
Financial position
76
66
Effects of changes in exchange rate and composition of Group
4,393
-2,821
-159
Cash inflow
Cash and
cash
equivalents
-159
10,000
9,039
+1,572
15,000
0
5,000
-6,163
7,880
10,000
+5,909
15,000
in € million
→ 50
tion and Net Assets
→ Results of Opera-
tions, Financial Posi-
Economic Position
Report on
Management
Report
BMW Group change in cash and cash equivalents
Combined
78
-599
1,758
1,159
-214
55
net interest result.
6.2
Materiality matrix
4.6
Relevance for the stakeholders
←
relevance
Low
relevance
Fuel efficiency and CO2 emissions
of vehicles*
Energy efficiency and CO2 emissions
from value creation*
Pollutant emissions
of vehicles*
Occupational health and safety*
Alternative drivetrain technologies*
Product safety*
Connected and autonomous driving*
Environmental and social standards
in the supply chain/sustainable sourcing*
Human rights*
Prevention of corruption and
anticompetitive behaviour*
Mobility concepts
and services*
Data protection*
Attractive workplace, talent attraction and retention*
Medium
materiality
Air emissions from value creation*
Low
materiality
Diversity and equal opportunity*
Customer satisfaction*
Employee development and training*
Socio-economic impacts on society*
Design for Recycling*
High
materiality
High
relevance
→ 41
BMW Group condensed income statement
5.3
9,386
9,880
-177
-494
-4.4
-9,158
-9,560
6.5
18,721
19,934
-4.4
4.8
Water consumption Waste and water waste
94,163
-75,442
Change in %
2016
2017
Profit before tax
Financial result
Profit before financial result
Other operating income and expenses
Selling and administrative expenses
Gross profit
Cost of sales
Revenues
in € million
→ 42
98,678
-78,744
775
Use of urban space
Development of local companies
-59.0
-61.0
In 2017, at 2.17 MWh per vehicle produced, the
BMW Group slightly reduced energy consumed in
the production process compared with the previous
year (2016: 2.21 MWh; -1.8%). This was mainly due
to the implementation of new production structures
at Group plants in Shenyang and the installation of
LED lighting throughout the entire Group production
network.
Through measures to boost energy efficiency and the
purchase and in-house generation of electricity from
renewable sources at BMW Group production sites,
production-related CO2 emissions fell significantly
by 24.1% to 0.41 tonnes per vehicle produced in 2017
compared with the previous year (2016: 0.54 tonnes).
The substantial improvement in CO2 efficiency was
mainly due to improvement in energy efficiency and,
above all, sourcing of power supplies in Germany, the
UK and Austria exclusively from renewable sources.
In 2017, at 2.22 m³ per vehicle produced, water
consumption was slightly below the previous year's
level (2016: 2.25 m³; -1.3%). At 0.40 m³, the volume of
process wastewater per vehicle produced fell by 4.8%
(2016: 0.42 m³). The amount of non-recyclable waste
from production processes increased from a very low
level the previous year to 3.86 kg per vehicle produced
(2016: 3.51 kg; +10.0%) in the period under report.
Solvent emissions were cut by 9.6% to 1.03 kg per
vehicle produced during 2017 (2016: 1.14 kg).
Overall in 2017, the BMW Group reduced resource
usage and emissions per vehicle in the production
process by an average of 5.3%, equivalent to a total
cost reduction of €161 million, mainly due to a slight
improvement in the energy efficiency ratio.
Sustainability along the value chain
Sustainability criteria also play a key role in the
selection and evaluation of suppliers as well as in
the field of transport logistics. The BMW Group has
therefore integrated comprehensive sustainability
management in its purchasing processes. The Group's
positive business performance in recent years has also
caused a significant rise in transportation require-
ments worldwide. The BMW Group principle that
production follows the market is an effective method
of significantly reducing the need for transportation,
thus keeping CO2 emissions as low as possible.
Sustainability in human resources policies
In 2017, the BMW Group continued to consolidate
its position as one of the most attractive employers
worldwide. Its leading role in terms of sustainability
contributes significantly to the high degree of employ-
ee loyalty within the BMW Group and is one of the
reasons for the low staff attrition rate. This enables
the BMW Group to maintain a low level of personnel
recruitment expenditure. Further information on the
attrition rate is provided in the section "Workforce".
A key reason for the BMW Group's ongoing success
and an example of the high level of employee identi-
fication are the personal engagement and the ideas
brought forward by staff members. This is demonstrat-
ed by the €18.2 million saved in 2017 in conjunction
with the ideas management programme CREATE.
Social engagement
In 2017, the BMW Group contributed a total of €33.4 mil-
lion for social engagement (2016: €87.8 million), includ-
ing €16.2 million for donations (2016: €70.4 million).
The significant decrease compared to 2016 was due to
a one-time donation to the BMW Foundation in honour
of the Company's centenary year 2016.
71
22
72
Combined
Management
Report
Report on
Economic Position
Review of Operations
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
RESULTS OF OPERATIONS,
FINANCIAL POSITION AND
NET ASSETS
Results of operations
In the financial year 2017, the BMW Group again
achieved year-on-year growth in revenues, deliveries
and profit before tax. The number of BMW, MINI and
Rolls-Royce brand vehicles delivered to customers rose
slightly by 4.1% to 2,463,526* units.
-79.6
-51.2
-31.9
-36.5
Biodiversity
Corporate volunteering
Donations and philanthropy
Corporate citizenship
Responsible financial services
Employee-management relations
Efficient use of resources in value creation
Relevance for the BMW Group
Political involvement
*These areas were rated highly material, as they were among the three topics the respondent stakeholder groups considered most important.
High
relevance
69
69
Responsible marketing and product communication
70
Report on
Economic Position
Review of Operations
Sustainability
Top rankings in sustainability ratings
pres-
The BMW Group again achieved top rankings in
tigious sustainability ratings in 2017, thereby under-
lining its leading position as a sustainable company.
In the Dow Jones Sustainability Indices (DJSI) rating,
the BMW Group is the only German automobile maker
to have been included once again in the two indices
"World" and "Europe" and the only company in the
sector to have been continuously represented since
the indices were established.
In the CDP rating (formerly the Carbon Disclosure
Project), the Group achieved the best rating for its cli-
mate protection efforts. The BMW Group is therefore
one of only two companies worldwide to have been
listed in the highest category eight times in succes-
sion. The BMW Group also achieved the best rating
in the CDP water rating, which assesses companies'
responsible use of water resources. The Group was
again listed in the British FTSE4Good Index in 2017.
Fleet carbon dioxide emissions reduced
The development of sustainable products and services
is an integral part of the BMW Group's business mod-
el. The fleet-wide deployment of Efficient Dynamics
technologies is contributing to a continual reduction
in CO2 emissions. The electrification of the fleet con-
tinued to make significant progress in 2017. Due to the
expansion of the model range, annual sales of electri-
fied BMW Group vehicles increased significantly and,
with 103,080 units, surpassed the announced target of
100,000 units. Efficient Dynamics and electrification
form the basis for future compliance with legal CO2
and fuel consumption requirements. Between 1995
and 2017, average CO2 emissions of vehicles of the
Group's three brands sold in Europe fell by 42%.
In 2017, the BMW Group's fleet of new vehicles sold
in Europe (EU-28) consumed an average of 4.6 litres of
diesel and 5.6 litres of petrol per 100 km respectively.
CO2 emissions averaged 122 g/km.
Clean production
Integrated sustainability management in production
processes ensures that resources are used efficiently.
Since 2006, the consumption of resources and emis-
sions per vehicle produced have been reduced by
an average of 53.2%. The individual figures for the
development since 2006 are as follows:
in %
Energy consumption
Water consumption
Process wastewater
Non-recyclable waste
Solvent emissions
CO₂ emissions
2017
Combined
Management
Report
279
0.4
9,665
2,081
Service contracts, telematics and roadside assistance
1.1
1,222
1,236
thereof amortisation of capitalised development costs
14.6
4,294
4,920
Research and development expenses
10.0
1,638
1,801
thereof interest expense relating to financial services business
10.7
22,932
Cost of sales relating to financial services business
2,018
3.1
Warranty expenses
Other cost of sales
Management
Combined
Change in %pts
2016
2017
74
73
The Group's cost of sales was slightly higher than in
the previous year due to volume and mix effects. Costs
relating to the Group's Financial Services business,
which were significantly higher than the previous
year, also contributed. Revenue growth from the sale
of returned leasing vehicles had a corresponding effect
on cost of sales. Currency effects held down the scale
of the increase.
1.6
4.4
78,744
Cost of sales
-5.7
3,067
2,893
-5.7
2,165
2,041
75,442
Report
43,175
Manufacturing costs
Europe
Asia
in %
→ 43
BMW Group revenues by region
Group revenues by region were as follows:
Negative currency effects held down revenue growth.
Currency effects were mainly the result of develop-
ments in the average exchange rates of the British
pound and the Chinese renminbi.
BMW Group revenues increased slightly by 4.8% year-
on-year to reach €98,678 million (2016: €94,163 mil-
lion). This was mainly driven by higher sales volume
of BMW Group vehicles, growth in the leasing and
credit financing contract portfolio and increased sales
of returned leasing vehicles in the Financial Services
business.
*Includes the joint venture BMW Brilliance Automotive, Shenyang Ltd.
(2017: 384,124 units, 2016: 316,200 units).
-10.2
28.5
18.3
0.3
19.9
20.2
1.5
7.3
8.8
2017
2016
45.6
47.1
Change in %
2016
2017
in € million
→ 44
BMW Group cost of sales
100.0
100.0
43,877
Group
3.1
Other regions
7
20.7
21.2
Americas
28.8
30.1
3.4
Report on
20,723
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
10.3
10.8
Change in %pts
2016
2017
Profit before tax for the financial year 2017 was
significantly higher year-on-year.
Effective tax rate
Gross margin
Post-tax return on sales
Pre-tax return on sales
in %
25.5
10.47
0.5
13.14
25.6
10.45
13.12
Earnings per share of common stock in €
26.0
6,910
8,706
29.3
-2,755
Economic Position
Net profit
Income taxes
10.2
Earnings per share of preferred stock in €
10,655
-1,949
Research and development expenses as a percentage of revenues
Research and development expenditure ratio
Capitalisation rate
in %
→ 45
BMW Group performance indicators relating to research and development expenses
5.0
47
0.3
86
14.3
19.3
4,563
24.0
5,990
83.0
24,978
100.0
0.2
31.3
50,279
9.7
2,300
10.5
2,630
-33.0
13.7
3,213
8.6
2,154
5.1
8.3
1,965
23,623
100.0
5.7
* Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
BMW AG develops, manufactures and sells automobiles
and motorcycles as well as spare parts and accessories
manufactured in-house, by foreign subsidiaries and by
external suppliers, and performs services related to
these products. Sales activities are carried out primar-
ily through branches, subsidiaries, independent deal-
erships and importers. In 2017, BMW AG increased
deliveries by 138,389 units to 2,494,115 units. This
figure includes 396,749 units relating to series sets
supplied to the joint venture BMW Brilliance Automo-
tive Ltd., Shenyang, an increase of 91,023 units over
the previous year. At 31 December 2017, BMW AG
employed a workforce of 87,940 people, 2,186 more
than one year earlier.
Business environment and review of operations
The general and sector-specific environment of BMW AG
is essentially the same as that of the BMW Group and is
described in the Report on Economic Position section
of the Combined Management Report.
Differences between the accounting treatment of the
German Commercial Code and International Financial
Reporting Standards (IFRS), according to which the
BMW Group Financial Statements are prepared, are
mainly to be found in connection with the capitali-
sation of intangible assets, the creation of valuation
units, the recognition and measurement of financial
instruments and provisions, and the recognition
of deferred tax assets. Differences also arise in the
presentation of assets and liabilities and of items in
the income statement.
The key financial and non-financial performance
indicators for BMW AG are essentially identical and
concurrent with those of the Automotive segment
of the BMW Group. These are described in detail
in the Report on Economic Position section of the
Combined Management Report.
Bayerische Motoren Werke Aktiengesellschaft
(BMW AG), based in Munich, Germany, is the parent
company of the BMW Group. The comments on the
BMW Group and Automotive segment provided in
earlier sections apply to BMW AG, unless presented
differently in the following section. The Financial
Statements of BMW AG are drawn up in accordance
with the provisions of the German Commercial Code
(HGB) and the relevant supplementary provisions of
the German Stock Corporation Act (AktG).
COMMENTS ON FINANCIAL
STATEMENTS OF BMW AG
Financial Statements
of BMW AG
→ Comments on
Economic Position
Report on
Report
Management
Combined
86
98
85
95
BMW Group value added 2017
→ 58
in %
Depreciation and amortisation 8.4
16.0 Other expenses
Cost of materials 50.8
8.3
C
24.8 Net value added
8.3% Providers of finance
8.6% Government/public sector
10.5% Shareholders
24.0% Group
-0.3% Minority interest
48.3% Employees
2,066
11,535
48.8
67,088
Bought-in costs
14.1
13,502
16.0
Cost of materials*
Other expenses
98,678
98.2
94,163
98.4
1,123
1.1
66.8
875
720
0.7
16,045
670
0.7
100,521
Results of operations
100.0
95,708
100.0
5.0
51,043
50.8
0.9
63,781
66.6
5.2
52.5
48.3
12,052
Net value added
Minority interest
Group
Shareholders
Government/public sector
Providers of finance
Employees
ALLOCATION
5.7
24.7
24.8
24,978
Net value added
8.7
8,304
8.4
8,455
23,623
intangible and investment assets
Depreciation and amortisation of total tangible,
4.7
33.4
31,927
33.2
33,433
Gross value added
4.5
BMW AG Income Statement
88
in € million
Other receivables and other assets
Receivables from subsidiaries
667
766
4,260
4,643
Trade receivables
Inventories
14,711
15,419
Tangible, intangible and investment assets
3,238
3,676
Marketable securities
Investments
11,455
Net cash inflows and outflows for the Financial Ser-
vices segment were as follows:
Property, plant and equipment
310
288
Intangible assets
ASSETS
2016
2017
in € million
→ 60
BMW AG Balance Sheet at 31 December
Financial and net assets position
11,163
7,641
6,001
2,827
658
Provisions
Other provisions
Pension provisions
Registered profit-sharing certificates
Equity
Unappropriated profit available for distribution
Revenue reserves
Capital reserves
Subscribed capital
EQUITY AND LIABILITIES
36,299
41,472
Total assets
1,183
1,290
Surplus of pension and similar plan assets over liabilities
430
483
Prepayments
19,975
24,280
2,676
4,218
Current assets
Cash and cash equivalents
3,846
4,185
2,525
Financial Statements
of BMW AG
→ Comments on
Economic Position
Report on
-4,504
-5,168
-2,504
-2,733
-3,635
-3,958
14,404
16,398
-60,946
-62,817
75,350
79,215
2016
2017
Unappropriated profit available for distribution
Transfer to revenue reserves
Net profit
Other taxes
Profit after income tax
Income taxes
Financial result
Result on investments
Other operating income and expenses
Research and development expenses
Administrative expenses
Selling expenses
Gross profit
Cost of sales
Revenues
-303
→ 59
-137
1,015
Report
Management
Combined
Total output
88
87
848
After deducting the expense for taxes, the Company
reported a net profit of €3,197 million compared to
€3,277 million in the previous year.
The expense for income taxes relates primarily to
current tax for the financial year 2017.
Results on investments benefited from higher profit
transfers from Group companies. By contrast, the
financial result deteriorated by €506 million, mainly
due to higher interest expenses for pension liabilities
and lower income from the corresponding plan assets.
The reversal of impairment losses on the investment
in SGL Carbon SE, however, had a positive impact on
the financial result.
The net amount of other operating income and
expenses deteriorated by €166 million to € - 303 mil-
lion, with the year-on-year change mainly attributable
to higher net expenses for financial transactions as
well as legal disputes.
Research and development expenses related mainly to
new vehicle models in conjunction with the product
offensive (including new X models), expenses for the
development of drivetrain systems and innovations,
for example in connection with the electrification of
vehicles and the further development of autonomous
driving. Compared to the previous year, research and
development expenses increased by 14.7%.
Selling and administrative expenses increased over-
all year-on-year, reflecting an increase in workforce,
IT projects and increased marketing costs.
Cost of sales increased by 3.1% to €62,817 million,
mostly due to the higher cost of materials. Gross profit
improved by €1,994 million to €16,398 million.
Revenues rose by 5.1% year-on-year, mainly reflecting
increased deliveries of the BMW 5 Series. In geograph-
ical terms, the increase mainly related to Asia and
Europe. Revenues amounted to €79,215 million (2016:
€75,350 million), of which Group internal revenues
accounted for €59,736 million (2016: €56,412 million)
or 75.4% (2016: 74.9%).
2,300
2,630
-977
-567
3,277
3,197
-19
-16
3,296
3,213
-1,308
-1,563
-35
-541
1,081
Other income
BMW Group value added statement
Revenues
17,960
2.8
5.3
9.5
Leased products
36,257
37,789
-4.1
18,471
2.0
Investments accounted for using the equity method
2,767
2,546
8.7
8.7
1.4
Other investments
690
18.7
560
Property, plant and equipment
16.2
In 2017, the BMW Group issued four euro bench-
mark bonds on the European capital market with
a total issue volume of €3.75 billion, as well as
bonds on the US capital market with a total issue
volume of US$2.20 billion. Bonds were also issued in
British pounds, US dollars, Canadian dollars, Indian
rupees, South Korean won and Norwegian krone for
a total amount of €1.17 billion. Private placements
totalling €4.50 billion were also issued.
Net assets
BMW Group condensed balance sheet at 31 December
→ 53
in € million
ASSETS
Group
Currency adjusted
4.9
2017
Change in %
change* in %
Proportion of
balance sheet
total in %
2017
Intangible assets
9,464
8,157
16.0
2016
Further information with respect to financial liabilities
is provided in → notes 29, 33 and 37 of the Group
Financial Statements.
23.2
0.4
7.2
10.0
3.7
12,707
11,841
7.3
11.1
6.6
6,682
Trade receivables
2,825
-5.6
-1.8
1.4
Cash and cash equivalents
9,039
7,880
14.7
2,667
24.1
7,160
Other assets
Receivables from sales financing
80,434
78,260
2.8
9.1
41.6
Financial assets
10,334
Inventories
9,770
6.8
5.3
Deferred and current tax
3,493
4,265
-18.1
-6.4
1.8
5.8
18.2
The BMW Group also has access to a syndicated credit
line which was newly agreed in July 2017. The syn-
dicated credit line of €8 billion has a minimum term
to July 2022 and is made available by a consortium of
44 international banks. The credit line was not being
utilised at 31 December 2017.
33 and 37
1. Ability to act through permanent access to strate-
gically important capital markets
2. Autonomy through the diversification of refi-
nancing instruments and investors
3. Focus on value through optimisation of financing
costs
Financing measures undertaken centrally ensure
access to liquidity for the Group's operating subsid-
iaries at standard market conditions and consistent
credit terms. Funds are acquired in line with a target
liability structure, comprising a balanced mix of financ-
ing instruments. The use of longer-term financing
instruments to finance the Group's financial services
business and the maintenance of a sufficiently high
liquidity reserve serves to avoid liquidity risk in the
portfolio. This conservative financial approach also
supports the Group's rating. Further information
is provided in the section Liquidity risks within the
Report on Outlook, Risks and Opportunities.
Thanks to its good ratings and the high level of accept-
ance it enjoys on capital markets, the BMW Group
was again able to refinance operations at favourable
conditions on debt capital markets during the finan-
cial year 2017. In addition to the issue of bonds, loan
notes and private placements, commercial paper
was also issued. As in previous years, all issues were
in high demand, not only from private but also in
particular from institutional investors. In addition,
retail customer and dealership financing receivables
and rights and obligations from leasing contracts
are securitised in the form of asset-backed securi-
ties (ABS) financing arrangements. Specific banking
instruments, such as customer deposits used by the
Group's own banks in Germany and the USA, are
also used for financing. Loans are also taken out with
international banks.
60
80
The overall objective of Group financing is to ensure at
all times the solvency of the BMW Group. This leads
to three areas of focus:
Combined
Report on
Economic Position
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
BMW Group composition financial liabilities
→ 51
in € million
Derivate instruments 1,090
Commercial paper 4,461
Management
Report
Liabilities to banks
A broad range of instruments on international money
and capital markets is used to refinance worldwide
operations. Funds raised are used almost exclusively to
finance the BMW Group's Financial Services business.
Cash outflow from operating activities in the Finan-
cial Services segment is driven primarily by the cash
flows relating to leased products and receivables from
sales financing. Cash inflow from investing activities
results mainly from cash proceeds from the disposal
of investments and other business units (€970 million).
Cash inflow from financing activities is mainly driven
by the change in other financial liabilities.
in € million
Cash inflow/outflow from operating activities
Cash inflow/outflow from investing activities
Cash inflow/outflow from financing activities
Net
2017
2016
Change
-6,384
937
-9,844
3,460
Refinancing
-102
4,334
11,601
-7,267
-1,113
1,655
-2,768
19
79
1,039
At 31 December 2017, liquidity stood at a solid level
of €14.5 billion.
12,658
from customer
deposits (banking)
13,572
4.4
50,000
25,000
0
Maturity (years)
42,326 41,100
44,144 43,865
II
13.0
within
between
1-5
11,261
9,683
later
than 5
2016 2017
2016 2017
2016 2017
→ see
notes 29,
1
Liabilities
0.3
34.7
Other 1,132
Bonds
44,880
Asset-backed
financing
transactions
A total of twelve public ABS transactions were exe-
cuted in 2017, including three in China, two each
in Germany and the USA, and one each in Canada,
South Korea, South Africa, the UK and Switzerland,
with a total volume equivalent to €6.9 billion. Fur-
ther funds were also raised via new ABS conduit
transactions in Japan, the UK and the USA totalling
€2.4 billion. Other transactions remain in place in
Germany, Switzerland, South Korea, South Africa
and Australia, amongst others.
The following table provides an overview of amounts*
utilised at 31 December 2017 in connection with the
BMW Group's money and capital market programmes:
16,855
BMW Group financial liabilities by maturity
→ 52
1.6
in € million
Programme
framework
Amount
utilised*
in € billion
Euro Medium Term Notes
Australian Medium Term Notes
Commercial Paper
* Measured at exchange rates at the relevant transaction dates.
50.0
Programme
4.7
Total assets
193,483
2017
52%
18%
40%
5%
2016
2017
2016
thereof cash and cash equivalents 8%
19% Non-current provisions and liabilities
100
99
66
33
200
133
66
99
40% Current provisions and liabilities
Group equity rose by €7,185 million to €54,548 mil-
lion. Equity increased year-on-year mainly as a result
of the net profit attributable to shareholders of
BMW AG amounting to €8,620 million, fair value gains
on derivative financial instruments amounting to
€1,914 million and the positive impact of remeasure-
ments of the net defined benefit liability for pension
Current assets 54%
41% Equity
4%
2017
2016
2017
2016
Balance sheet structure - Automotive segment
→ 55
Balance sheet total in € billion
||||
100
94
89
89
Non-current assets 46%
48%
66
33
42%
657
thereof cash and cash equivalents 5%
BMW Group equity ratio
plans amounting to €693 million, due mainly to the
revaluation of plan assets. The dividend payment of
€2,300 million, negative currency translation effects
of foreign operations amounting to €1,171 million
and deferred taxes on fair value changes recognised
directly in equity amounting to €815 million had a
negative impact on equity.
Combined
Management
Report
Report on
Economic Position
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Value added statement
The value added statement shows the value of work
performed by the BMW Group during the financial
year, less the value of work bought in. Deprecia-
tion and amortisation, cost of materials, and other
expenses are treated as bought-in costs in the net
value added calculation. The allocation statement
shows the value added of each of the participants
involved in the value added process. The bulk of
→ 57
the net value added is related to employees. The
proportion remaining in the Group is retained to
finance future operations. The gross value added
amount treats depreciation as a component of value
added which, in the allocation statement, would be
treated as internal financing.
84
Net valued added by the BMW Group remained at a
high level in the financial
2017
in € million
2017
in %
2016
in € million
2016
in %
Change
in %
WORK PERFORMED
year 2017.
→ 56
883
8.0
in %
Group
Automotive segment
Financial Services segment
Pension provisions decreased significantly compared
to the end of the financial year 2016. The decrease
was mainly due to gains on plan assets as well as
gains from the closing of defined benefit plans in the
UK. A transfer from plan assets for pre-retirement
part-time working arrangements to plan assets for
pension plans brought about a further reduction in
pension provisions.
Financial liabilities fell slightly compared to 31 Decem-
ber 2016. Adjusted for currency effects, they increased
slightly. The increase was mainly due to the issue of
bonds and commercial paper. In addition, new ABS
transactions were concluded in various countries.
Changes in derivatives and lower liabilities to banks
kept down the increase in financial liabilities.
The significant increase in trade payables mainly
reflects higher production volumes and model start-
ups.
Overall, the results of operations, financial position
and net assets position of the BMW Group continued
to develop positively during the year under report.
2.7
31.12.2017
Change in %pts
28.2
25.1
3.1
42.0
41.3
0.7
10.7
31.12.2016
36% Current provisions and liabilities
36%
35%
6.1
Deferred and current tax
3,365
3,869
-13.0
10.3
1.7
Financial liabilities
13.0
94,648
-3.2
1.8
48.9
Trade payables
9,731
8,512
14.3
16.7
97,731
5.0
7.6
11,750
188,535
2.6
7.6
100.0
EQUITY AND LIABILITIES
Equity
54,548
47,363
10,918
15.2
28.2
Pension provisions
3,252
4,587
-29.1
-27.4
1.7
Other provisions
19.1
Other liabilities
16,189
15,555
Cash and cash equivalents grew significantly by
€1,159 million, compared to one year earlier.
Balance sheet structure - Group
→ 54
Balance sheet total in € billion
200
193
193
189
Financial assets increased solidly compared to
31 December 2016, mainly due to the positive devel-
opment of currency and commodity derivatives.
189
25% Equity
133
Non-current assets 63%
65%
36%
39% Non-current provisions and liabilities
66
Current assets 37%
28%
A solid increase in inventories was recorded compared
to the end of 2016. Adjusted for currency effects the
increase was significant. The increase was primarily due
to finished goods, mainly relating to stocking up effects
in connection with the introduction of new models,
amongst others, the 5 Series and the X3 and X1 models.
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Report on
Economic Position
4.1
10.0
8.4
Total equity and liabilities
193,483
188,535
2.6
7.6
100.0
*The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year's figures.
81
4
The balance sheet total of the BMW Group increased
slightly compared to 31 December 2016. Adjusted for
currency effects, the increase was solid. Currency
effects arose primarily from the period-end exchange
rates of the US dollar, Chinese renminbi and British
pound against the euro.
Intangible assets increased significantly compared
to the end of 2016. Within this item, the carrying
amount of capitalised development costs rose by
€1,188 million as a result of the continued product
offensive, vehicle electrification and development
work on autonomous driving.
Leased products decreased slightly compared to
31 December 2016. Adjusted for currency effects,
however, they increased slightly. The portfolio of
leasing contracts grew by 3.8% to 1,744,297 contracts,
with increases recorded in particular in France, Spain
and Germany.
Receivables from sales financing were slightly higher
compared to 31 December 2016. Adjusted for currency
effects, however, there was a solid increase, particu-
larly in the UK and China. A total of 1,224,546 new
credit financing contracts were signed in 2017 and the
contract portfolio grew by 5.3% to 3,181,931 contracts.
82
62
Combined
Management
Report
Financial income
2,153
94
9,605
965
995
5,619
5,030
8,187
5,951
333
Total equity and liabilities
406
12,382
2,685
2,066
41,472
Capital expenditure on intangible assets and prop-
erty, plant and equipment in the year under report
amounted to €2,628 million (2016: €2,346 million),
up by 12.0% compared to the previous year. Depre-
ciation and amortisation amounted to €2,350 million
(2016: €2,233 million).
The carrying amount of investments increased to
€3,676 million (2016: €3,238 million), mainly as a
result of a share capital increase at BMW Automotive
Finance (China) Co., Ltd., Beijing. A previously rec-
ognised impairment loss of €70 million on the invest-
ment in SGL Carbon SE, Wiesbaden, was reversed
in 2017, since the reasons for valuing the investment
at the lower market value no longer existed at the
balance sheet date.
2,127
15,104
Deferred income
36,299
Other liabilities
Liabilities
9,038
2,630
15,046
14,122
29
30
139
2,300
8,469
7,606
8,608
7,699
Liabilities to banks
Trade payables
93
Liabilities to subsidiaries
-21.6
Motorcycles¹
112
182
187
Financial Services
175
-15.5
1,756
1,981
6,182
2,184
207
7,888
9,593
7,836
7,244
Automotive¹
-7.9
9,121
9,899
9,386
9,118
Group profit before financial result (EBIT)1
-8.1
-18,710
-17,306
-20,017
2,194
7,695
2,190
9,815
Other Entities
205
185
179
107
Motorcycles¹
-20.0
6,977
8,717
7,916
7,523
6,886
Automotive1
-8.1
-19,097
-0.2
10,675
9,224
8,707
Group profit before tax (EBT)1
601
-404
-663
-575
-65
Eliminations¹
-27
14
-17
169
71
9,665
-17,057
1,990
-14.3
-39.2
2,713
4,459
5,792
5,404
3,481
Free cash flow Automotive segment
6.0
5,113
4,822
4,806
4,659
4,170
Depreciation and amortisation
Group revenues¹
12.7
7,112
5,823
5,890
6,100
Total capital expenditure²
Change in %
2018
2017
2016
2015
2014
in € million
→ 04
Further financial performance figures
8,013
Eliminations1
80,401
94,163
6
7
6
7
7
Other Entities
2.2
28,165
27,567
25,681
23,739
20,599
-4.4
2,173
92,175
2,272
169
1,679
Financial Services
Motorcycles¹
0.1
85,846
85,742
86,424
85,536
75,173
Automotive¹
-0.8
97,480
98,282
2,069
-17.6
553
1,723
80.4
94.2
92.2
100
97.5
98.3
in € billion
2 Prior year figures adjusted due to first-time application of IFRS 15,
see note 6 to the Group Financial Statements.
20172 2018
2016
2015
2014
5,500
9,121
9,386
50
9,118
9,593
11,000
in € million
BMW Group profit before financial result (EBIT)
→ 06
(2014: 275,891 units, 2015: 282,000 units, 2016: 316,200 units, 2017: 384,124 units,
2018: 459,581 units).
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
2018
2017
2016
2015
2014
0
1,250
2,118.0
9,899
2,247.5
2014
2016
Norbert Reithofer
Chairman of the Supervisory Board
Supervisory Board
→ Report of the
Shareholders
To Our
80
CAPITAL MARKETS IN 2018
BMW AG STOCK AND
BOARD OF MANAGEMENT
Report of the
Supervisory Board
Statement of
the Chairman of
the Board of
Management
BMW AG Stock and
Capital Markets
BMW Group in
Figures
To Our
Shareholders
STATEMENT OF THE
CHAIRMAN OF THE
REPORT OF THE
SUPERVISORY BOARD
2015
1
2016
2015
2014
5,500
8,707
9,224
9,815
9,665
11,000
10,675
in € million
→ 08
BMW Group profit before tax
20172 2018
20172 2018
Financial Services
2,463.5 2,490.7
2,500
7,240
8,675
6,910
6,396
5,817
Profit from continuing operations
-28.8
-2,575
-2,000
-2,755
-2,828
-2,890
Group income taxes¹
-3.3
-16.5
-534
-664
-163
Eliminations¹
-45
80
170
211
154
Other Entities
-2.1
2,161
2,207
2,166
1,975
-772
2,367.6
Loss from discontinued operations
Group net profit¹
in 1,000 units
→ 07
BMW Group revenues
→ 05
BMW Group deliveries of automobiles¹
→ BMW Group
in Figures
Shareholders
To Our
60
5
3 Group profit before tax as a percentage of Group revenues.
² Expenditure for capitalised development costs, other intangible assets and property, plant and equipment.
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
-0.8
-33
10.1
10.3
10.0
10.8
-17.2/-17.2
-16.9
7,207
10.82/10.84
13.07/13.09
10.45/10.47
9.70/9.72
8,675
6,910
6,396
5,817
8.83/8.85
Earnings per share¹ in €
10.9
14.8
Pre-tax return on sales ¹³ in % (change in %pts)
21.2
→Page 167
Other Disclosures
→Page 184 Segment Information
→Page 190 List of Investments at 31 December 2018
MILESTONES
IN FUTURE MOBILITY
Our Annual Report is also available
in digital form under:
www.annual-report2018.bmwgroup.com
The figures for fuel consumption, CO₂ emissions and power consumption are calculated
based on the measurement methods stipulated in the current version of Regulation
(EU) 715/2007. This information is based on a vehicle with basic equipment in Germany;
ranges take into account differences in wheel and tire size selected as well as optional
equipment and can change based on configuration. Fuel consumption and CO₂ emissions
information are available on page 108.
The figures have been calculated based on the new WLTP test cycle and adapted to NEDC
for comparison purposes. In these vehicles, different figures than those published here may
apply for the assessment of taxes and other vehicle-related duties which are (also) based
on CO2-emissions. These figures are provisional.
For further details of the official fuel consumption figures and official specific CO2 emissions
of new cars, please refer to the "Manual on fuel consumption, CO₂ emissions and power
consumption of new cars", available at www.dat.de/co2/.
TO OUR SHAREHOLDERS
1
To Our
Shareholders
Notes to the Balance Sheet
BMW Group in
Figures
→Page 4 BMW Group in Figures
→Page 8 Report of the Supervisory Board
→ Page 16 Statement of the Chairman of the Board of Management
→Page 20 BMW AG Stock and Capital Markets in 2018
1
To Our
Shareholders
→ BMW Group
in Figures
BMW GROUP IN FIGURES
Key non-financial performance indicators
→ 01
GROUP
2014
2015
2016
Report of the
Supervisory Board
Statement of
the Chairman of
the Board of
Management
BMW AG Stock and
Capital Markets
2017
→ Page 146
→ Page 145
Supervisory Board of BMW AG and its Committees
→ Page 215 Disclosures Pursuant to the Act on Equal
Gender Participation
→Page 216 Information on Corporate Governance Practices Applied
beyond Mandatory Requirements
Compliance in the BMW Group
→Page 218
→Page 223 Compensation Report
(Part of the Combined Management Report)
→ Page 239 Responsibility Statement by the
Company's Legal Representatives
→ Page 240 Independent Auditor's Report
5
OTHER INFORMATION
→Page 248 BMW Group Ten-year Comparison
→Page 250 Glossary - Explanation of Key Figures
→Page 252 Index
→Page 254 Index of Graphs
→Page 255 Financial Calendar
Notes to the Statement of Comprehensive Income
→Page 256 Contacts
GROUP FINANCIAL
STATEMENTS
→Page 110 Income Statement
→ Page 110 Statement of Comprehensive Income
→Page 112 Balance Sheet
→Page 114
Cash Flow Statement
Statement of Changes in Equity
→ Page 118
Notes to the Group Financial Statements
→Page 118
Accounting Principles and Policies
→ Page 139
Notes to the Income Statement
3
→Page 208 Composition and Work Procedures of the
2018
Workforce at year-end¹
2018
Change in %
Deliveries
BMW2
MINI
Rolls-Royce
1,811,719
302,183
4,063
Total²
2,117,965
1,905,234
338,466
3,785
2,247,485
2,003,359
360,233
4,011
2,367,603
2,088,283
371,881
3,362
2,463,526
2,125,026
1.8
2017
361,531
1,933,647
342,008
3,848
2,279,503
2,165,566
1,838,268
322,803
4,495
Total 5
Rolls-Royce
MINI
BMW5
Production volume
1.1
2,490,664
22.2
4,107
18.1
-2.8
2,002,997
352,580
4,179
2,359,756
Change in %
2016
2014
116,324
122,244
124,729
129,932
134,682
3.7
AUTOMOTIVE SEGMENT
Deliveries²
2,117,965
2,247,485
2,367,603
Fleet emissions in g CO2/km³
130
127
2015
124
2,490,664
1.1
128
MOTORCYCLES SEGMENT
Deliveries
123,495
136,963
145,032
164,153
165,566
0.9
Further non-financial performance figures
→ 02
AUTOMOTIVE SEGMENT
2,463,526
1284
Composition and Work Procedures of the Board of
Management of BMW AG and its Committees
→ Page 116
→Page 103 Internal Control System Relevant for Accounting and
Financial Reporting Processes
in Future Mobility
#Milestones
ANNUAL REPORT 2018
2,123,947
378,486
3,308
2,505,741
2,168,496
2.1
368,685
-2.6
4,353
2,541,534
31.6
1.4
MOTORCYCLES SEGMENT
BMW
GROUP
Production volume
FINANCIAL SERVICES SEGMENT
New contracts with retail customers
133,615
151,004
145,555
185,682
162,687
-12.4
1,509,113
1,655,961
1,811,157
1,828,604
BMW
THE NEXT
100 YEARS
B
M
→Page 206
Members of the Supervisory Board
→ Page 203
Members of the Board of Management
→ Page 202
→Page 20 BMW AG Stock and Capital Markets in 2018
→ Page 201
→ Page 200
→Page 200 Statement on Corporate Governance
(Part of the Combined Management Report)
Information on the Company's Governing Constitution
Declaration of the Board of Management and of the
Supervisory Board Pursuant to § 161 AktG
GOVERNANCE
CORPORATE
4
Board of Management
→Page 16 Statement of the Chairman of the
Report of the Supervisory Board
8
→ Page
4 BMW Group in Figures
TO OUR SHAREHOLDERS
1
→ Page
CONTENTS
We are inventing the mobility of the future,
in which we think and work in new ways.
We invite you to learn more about how we
see the future today.
Motor Cars Limited
Rolls-Royce
MINI
M
1,908,640
4.4
Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 275,891 units, 2015: 282,000 units, 2016: 316,200 units, 2017: 384,124 units, 2018: 459,581 units).
3 EU-28.
Adjusted value based on planned conversion to WLTP (Worldwide Harmonised Light Vehicles Test Procedure).
-2.0
ROCE¹ in % (change in %pts)
61.7
72.2
74.3
77.7
49.8
-27.9
MOTORCYCLES SEGMENT
EBIT margin in % (change in %pts)
ROCE¹ in % (change in %pts)
6.7
9.1
9.0
9.1
8.1
-1.0
21.8
31.6
33.0
34.0
28.4
-5.6
FINANCIAL SERVICES SEGMENT
RoE in % (change in %pts)
19.4
20.2
7.2
2
9.2
9.2
5 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 287,466 units, 2015: 287,755 units, 2016: 305,726 units, 2017: 396,749 units, 2018: 491,872 units).
Key financial performance indicators
→ 03
GROUP
Profit before tax¹ in € million
2014
2015
2016
2017
2018
Change in %
8,707
9,224
9,665
10,675
→ Page 104 Disclosures Relevant for Takeovers and
Explanatory Comments
-8.1
AUTOMOTIVE SEGMENT
Revenues¹ in € million
75,173
85,536
86,424
85,742
85,846
0.1
EBIT margin¹ in % (change in %pts)
9.6
8.9
COMBINED
9,815
→ Page 40 Report on Economic Position
→Page 90 Risks and Opportunities
→ Page 84 Report on Outlook, Risks and Opportunities
→Page 84 Outlook
→ Page 80 Comments on Financial Statements of BMW AG
→ Page 65 Results of Operations, Financial Position and Net Assets
→Page 45 Comparison of Forecasts for 2018 with Actual Results in 2018
→Page 48 Review of Operations
→Page 44 Overall Assessment by Management
→ Page 40 General and Sector-specific Environment
→Page 36 Management System
→Page 26 General Information and Group Profile
→Page 26 Organisation and Business Model
MANAGEMENT REPORT
The Group risk management system is organised
formally as a decentralised, company-wide network
and is steered by a centralised risk management
function. Every BMW Group division is represented
within the risk management organisation by Network
Representatives. This formal structure reinforces the
network's visibility and underlines the importance
of risk management within the BMW Group. Roles,
responsibilities and tasks of the centralised risk man-
agement function and the Network Representatives
are clearly described, documented and understood.
In view of the dynamic growth of business and the
increasingly volatile environment, the BMW Group
regularly reviews its risk management system for
effectiveness and appropriateness.
Group
Audit
Board of
Management
Opportunities
Risk management as a whole comprises the Risk
Management Steering Committee, the Compliance
Committee, the Internal Control System and the
Group Internal Audit.
Management
Steering
Committee
Supervisory
Board
During 2018, the risk management system focused
on two main areas. Firstly, generic risk models were
developed for all aspects of the business with a view
to ensuring that recurring individual risks are better
assessed. These risk models were validated by mea-
suring specific risks.
The risk management system is regularly examined
by Group Internal Audit. An ongoing exchange of
experience with other companies ensures that new
insights are incorporated in the risk management
system of the BMW Group, thus providing for con-
tinual improvement. Training sessions, development
programmes and information events are regularly
conducted across the BMW Group, particularly within
the risk management network. These measures are
essential ways of preparing those involved in the
process for new or additional demands.
Risk management process
The risk management process covers the entire Group
and comprises the early identification of risks, detailed
analysis and risk assessment, the coordinated use of
relevant management tools as well as monitoring and
evaluation of measures taken.
Significant risks reported from within the network are
firstly presented for review to the Risk Management
Steering Committee, chaired by Group Controlling.
After review, the risks are reported to the Board of
Management and the Supervisory Board. Risks are
classified according to their potential impact on
earnings and risk-bearing capacity. The expected risk
and worst-case amounts are assessed in each case net
of risk mitigation measures.
Overall risk assessment is performed in conjunction
with the calculation of risk-bearing capacity. For this
purpose, worst-case risks are aggregated using a
value-at-risk model, taking correlation effects into
account and compared with the asset cushion. The
segment's risk-bearing capacity is regularly controlled
through an integrated limit system for the various
risk categories.
Risk
In addition to comprehensive risk management,
sustainable business practice constitutes one of the
core strategic principles of the company. Risks or
opportunities relating to sustainability issues are
considered by the Sustainability Committee. Resulting
strategic options and measures are put forward to
the Sustainability Board, which comprises the entire
Board of Management. Where necessary, risk aspects
may be integrated within the Group-wide risk net-
work. The composition of the Risk Management
Steering Committee and the Sustainability Committee
ensures that risk and sustainability management are
closely coordinated.
Secondly, procedures to ensure that all risk scenarios
are considered were further tightened. Instead of
quantifying risks by means of a single-point estimate
based on the net loss and probability of occurrence,
risks are assessed using the loss distribution approach
based on expected and worst-case values, thereby
enabling better comparability of risk categories for
both internal and external reporting purposes.
Controlling
Completeness
Measures
→ 65
7
As part of the risk management process, all individual
and cumulative risks that represent a threat to the
success of the business are monitored and managed.
Any risks capable of posing a threat to the going-
concern status of the BMW Group are generally
avoided. Where no specific reference is made, oppor-
tunities and risks relate to the Automotive segment.
The scope of entities consolidated in the Report on
Risks and Opportunities corresponds to the scope
of consolidated entities included in the BMW Group
Financial Statements.
Risk management system
The objective of the risk management system, and
the main function of risk reporting, is to identify,
measure and, where possible, actively manage internal
or external risks that could threaten the attainment of
the Group's corporate targets. The risk management
system covers all significant and existential risks
to the Group. Group risk management focuses on
the criteria of effectiveness, practicability and com-
pleteness. Responsibility for risk reporting is not
allocated to a centralised function, but is part of the
task of each employee and manager, according to their
individual function. According to Group-wide rules,
every employee and manager has a duty to report risks
through the relevant reporting channels.
Effectiveness
Internal Control System
Identification
Compliance
Committee
Reporting/
Monitoring
In order to comply with the CSR Directive Imple-
mentation Act, a review of risks with impact on
non-financial aspects referred to in the law was
conducted as part of the reporting process for the
Group's Non-Financial Declaration. Significant risks
within the meaning of the law are those relating
to business activities, business relationships and
products and services of the BMW Group which are
highly likely to have a serious adverse impact. No
significant risks were identified during the review.
The Group's Non-Financial Declaration is provided in
the Sustainable Value Report 2018, which is available
on the Internet at www.bmwgroup.com/svr.
Group-wide
risk management
Analysis and
Measurement
Practicability
91
In addition to cyberattacks and direct physical inter-
vention, lack of knowledge or misconduct on the
part of employees may also represent a danger to the
confidentiality, integrity and availability of informa-
tion, data and systems. Direct consequences include
expenditure required to limit the immediate damage
and to restore systems promptly. Negative impacts on
revenue due to the non-availability of products and
services or disruptions in the production of compo-
nents or vehicles are also possible. A further indirect
result could be reputational damage.
92
Close cooperation between carmakers and suppli-
ers in the development and production of vehicles
and the provision of services generates economic
benefits, but also increased dependency. Potential
reasons for the failure of individual suppliers include
in particular increased IT-related risk, non-compliance
with sustainability or quality standards, insufficient
financial strength of a supplier, the occurrence of
natural hazards, fires and insufficient supply of raw
materials. In order to ensure a uniform level of security
for all parties concerned along the added value/supply
chain, the BMW Group focuses on obtaining evi-
dence of appropriate IT security certification from
its suppliers. As part of supplier pre-selection, the
Purchasing risks relate primarily to supply risks
caused by the failure of a supplier as well as risks
associated with the quality of bought-in parts. Pro-
duction problems incurred by suppliers could lead to
increased expenditure for the BMW Group through
to interruptions in production and a corresponding
reduction in sales. The increasing complexity of the
supplier network, especially at the level of lower tier
suppliers, whose operations can only be indirectly
influenced by the BMW Group, is a further poten-
tial cause of downtimes at supplier locations. The
increased threat of cyberattacks along the supplier
chain also give cause for a more critical assessment of
the risk situation, in this case in anticipation of future
potential risks relating to security of supply and the
protection of internal know-how. If purchasing risks
were to materialise, they could have a high earnings
impact over the two-year assessment period. The risk
amount attached to purchasing risks is classified as high.
Risks and opportunities relating to purchasing
The BMW Group sees opportunities in production
processes and technology fields primarily through
the competitive edge gained from mastering new
and complex technologies. Opportunities could
arise as a result of further technological innovations
related to products or processes, as well as from
organisational changes which improve efficiency or
increase competitiveness of the BMW Group. The
early integration of WLTP-related requirements into
production and sales planning systems, for instance,
enabled the BMW Group to offer its fleet customers
the usual product range without interruption. Given
the long lead times in developing new products and
processes, additional opportunities are not expected
to have a significant impact on earnings during the
outlook period.
notes 33
Further information on risks related to provisions for
statutory and non-statutory warranty obligations is pro-
→ see vided in → note 33 to the Group Financial Statements.
BMW Group checks for compliance with the sus-
tainability standards for the supplier network. This
includes compliance with internationally recognised
human rights and applicable labour and social stan-
dards. The principal means for ensuring compliance
with the Sustainability Standards is a three-stage risk
management system for sustainability. In addition,
the technical and financial capabilities of suppliers
are monitored, especially where modular-based
production is concerned. Supplier sites are assessed
for exposure to natural hazards, such as floods or
earthquakes, in order to identify supply risks at an
early stage and implement appropriate precautions.
Fire risks at series suppliers are evaluated by means
of questionnaires and selective site inspections. In
order to minimise supply risks of raw materials, the
BMW Group draws up measures to reduce the use of
raw materials or to substitute alternative raw materials.
In order to meet high standards in product quality
and achieve favourable external ratings (e.g. for
product safety), reduce statutory and non-statutory
warranty obligations and keep down follow-up costs
arising from other changes in planning assumptions,
it may be necessary to incur a higher level of expen-
diture than originally forecast. If warranty expenses,
including provisions for recalls, were to exceed the
amounts previously recognised and expected, higher
allocations to provisions in connection with goodwill
and warranty measures would have a negative impact
on the BMW Group. Such an allocation, for example,
to the warranty provision was made in 2018, among
other things in connection with the exhaust gas recir-
culation cooler. In addition, availability of products
may be limited, particularly at the start of production
for new vehicle projects. These risks are mitigated
through regular audits and the continual improve-
ment of quality management, which ensures the high
standard of quality. The BMW Group also recognises
appropriate accounting provisions for statutory and
non-statutory warranty obligations. These reduce the
risk to earnings, as they are already taken into account
in the outlook. It cannot be ruled out, however, that
damages could arise that are either not covered or not
fully covered by provisions.
pro-
Production structures and processes are designed
from the outset with measures to minimise potential
damage and the probability of occurrence. The inter-
changeability of production facilities, preventative
maintenance and management of spare parts across
sites play an important role within the production
network. Risk is also reduced through flexible working
hour models and working time accounts as well as the
ability to build individual split models or engine types
with a high degree of flexibility - either additionally or
alternatively - at plants of the BMW Group, depend-
ing on requirements. These various features enable
Production stoppages and downtimes due to fire,
machine and tooling breakdowns, IT disruptions,
damage to infrastructure, power failures, transporta-
tion and logistical disruptions represent risks which
the BMW Group addresses through appropriate
precautions.
Risks relating to production processes and technology
fields are particularly apparent in potential sources
of interruptions in production or additional costs to
comply with quality standards under changed market
conditions. If risks arising from production processes
and technologies were to materialise, they could have
a high earnings impact over the two-year assessment
period. The corresponding risk amounts are classified
as medium.
Risks and opportunities relating to operations
Risks and opportunities relating to production
and technologies
New opportunities are continuously being sought to
create even greater added value for customers than
currently expected, and thereby to realise signif-
icant opportunities with respect to sales growth and
pricing. Further development of the product and
mobility portfolio and expansion in growth regions
offer the most important medium- to long-term
growth opportunities for the BMW Group. Continued
growth depends above all on the ability to develop
innovative products and services and bring them to
market. In this context, the BMW Group will focus
on developing autonomous driving and on expanding
mobility services via the planned joint venture with
the Daimler Group. If the negative impact of the cur-
rent competitive situation is reduced more quickly
than expected, additional opportunities will arise
for the BMW Group. Compared to the assumptions
made in the outlook, the BMW Group expects these
opportunities to have no significant earnings impact
over the two-year assessment period.
customer wishes to be met appropriately and allow any
backlogs caused by temporary interruptions in
duction to be made up within a short to medium time
frame. Other measures worthy of mention include the
technical fire protection and anti-flooding measures
undertaken at the San Luis Potosí plant in Mexico.
Risks arising from business interruptions due to fire
in production facilities or at suppliers are also appro-
priately covered with insurance companies of good
credit standing. Measures taken in connection with
the current challenges posed by Brexit include build-
ing up adequate levels of safety stocks and increasing
flexibility along the supply chain.
42
The BMW Group pays particular attention to the quality
of the parts built into its vehicles. In order to attain a
very high level of quality, it may become necessary to
invest in new technological concepts or discontinue
planned innovations, with the result that the cost of
materials could exceed levels accounted for in the
outlook. By monitoring and developing global supplier
markets, the BMW Group continuously strives to
optimise its competitiveness by working together
with the world's best product and service providers.
46
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
Great importance is attached to the protection of the
confidentiality, integrity and availability of business
information as well as employee and customer data,
for instance as a result of unauthorised access or
misuse. Data security is an integral component of
all business processes and is aligned with the Inter-
national Standard ISO/IEC 27001. As part of risk
management, information security, data protection
and IT risks are systematically documented, allocated
appropriate measures by the departments concerned
and continuously monitored with regard to threat
level and risk mitigation. Regular analyses and controls
as well as rigorous security management ensure an
appropriate level of security. Despite continuous
testing and preventative security measures, it is impos-
sible to eliminate risks completely in this area. All
employees are required to treat with care information
such as confidential business, customer and employee
data, to use information systems securely and handle
risks with transparency. Group-wide requirements
are documented in a comprehensive set of principles,
guidelines and instructions, such as, for example, the
Privacy Corporate Rules for handling personal data.
Regular communication and awareness-raising mea-
sures create a high level of security and risk awareness
among those involved. Employees receive training to
ensure compliance with the applicable requirements
and internal rules. With regard to cooperations and
business partnerships, the BMW Group protects its
intellectual property as well as customer and employee
data through clear instructions on information secu-
rity and data protection and the use of information
technology. Information pertaining to key areas of
expertise as well as sensitive personal data are subject
to particularly stringent security measures. Technical
data protection incorporates industry-wide standards
and good practices. Responsibility for information
security and data protection lies for each Group
entity with the Board of Management or relevant
management team.
Risk management in the BMW Group
Increasing digitalisation across all areas of business
places considerable demands on the confidentiality,
integrity and availability of electronically processed
data and the associated use of information technology
(IT). In addition to the increased threat of cybercrime,
regulations covering the handling of personal data are
becoming more stringent, for example as a result of
the EU General Data Protection Regulation. If risks
relating to information security, data protection and
IT were to materialise, they could have a high earnings
impact over the two-year assessment period. Despite
extensive security measures, the risks in this area are
classified as high.
Information, data protection and IT
Within the Purchasing and Supplier Network, oppor-
tunities arise above all in the area of global sourcing
through increased efficiency and the use of innova-
tions developed by suppliers, which can lead to a
broader range of products. Making full use of location-
specific cost factors, in particular through local supplier
structures in close proximity to new and existing
BMW Group production plants and the introduction
of new, innovative production technologies, could lead
to lower cost of materials for the BMW Group. One
goal of the BMW Group is to manufacture battery cells
in Europe and to establish the relevant value chain for
cell production. In order to secure the BMW Group's
electrification strategy, a contract was signed with
CATL (Contemporary Amperex Technology) for the
supply of battery cells. The plant is currently under
construction in Thuringia. Integration of previously
unidentified innovations from the supplier market
in the Group's product range could provide a further
source of opportunities. The BMW Group offers inno-
vative suppliers numerous possibilities for creating
specific contractual arrangements which are attractive
Risks and opportunities relating to sales and marketing
In order to sell its products and services, the
BMW Group employs a global sales network, com-
prising primarily independent dealerships, branches,
subsidiaries and importers. Any threat to the contin-
ued activities of parts of the sales network would entail
risks for the BMW Group. The occurrence of sales
and marketing risks is associated with a low earnings
impact over the two-year assessment period. The risk
level is classified as low. New developments in the
field of digital communication and connectivity in par-
ticular offer new opportunities for the BMW Group's
brands. Since 2017 BMW CarData has made it possible
to provide customised service offers to BMW drivers
based on data from the vehicle. If customers wish
to use a specific service and actively consent to the
release of their telematics data, requesting companies
receive the data they need for the service in encrypted
form via BMW's secure backend database. This infor-
mation provides the basis for customised, data-based
and innovative service options. Additional opportu-
nities could arise if new sales channels contribute to
greater brand reach to customer groups than currently
envisaged in the outlook. Digital communication
and connectivity enable consumers to be reached
on a more targeted and individualised basis, thus
strengthening long-term relationships and brand
loyalty. This can lead to a more intense product and
brand experience for customers, which could result
in higher sales volume and have a positive impact on
revenues and earnings. The BMW Group invests in
advanced marketing concepts in order to intensify
customer relationships. The BMW Group estimates
the earnings impact as insignificant over the two-year
assessment period as compared to the assumptions
made in the outlook.
→ Risks and
Opportunities
Report on Outlook,
Risks and
Opportunities
Combined
Management
Report
98
96
97
for those developing innovative solutions. At regular
intervals, the BMW Group honours its most inventive
suppliers with the Supplier Innovation Award. The
BMW Group expects these opportunities to have no
significant earnings impact over the assessment period
as compared to the assumptions made in the outlook.
Management of opportunities and risks is essential for
the Group to react appropriately to changes in political,
economic, technical or legal conditions. Opportunities
and risks which are likely to materialise are taken into
account in the Outlook Report. The following sections
focus on potential future developments or events,
which could result in a positive (opportunity) or a
negative (risk) deviation from the BMW Group's out-
look. The earnings impact of risks and opportunities is
assessed separately without offsetting. Opportunities
and risks are assessed with respect to a medium-term
period of two years.
Report on Outlook,
RISKS AND
OPPORTUNITIES
Return on capital employed
FINANCIAL SERVICES SEGMENT
Return on equity
1 Adjusted with effect from the financial year 2018.
² Adjusted in accordance with IFRS 16.
3 Based on adjusted outlook.
EBIT margin
4 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 459,581 units).
2018
reported
20182
adjusted
2019
Outlook³
€ million
9,815
5 EU-28.
9,627
Deliveries to customers
Return on capital employed
→ Risks and
Overall assessment by Group management
Business is expected to be more volatile in the finan-
cial year 2019. While numerous new automobile and
motorcycle models as well as an expanded range of
individual mobility-related services will provide addi-
tional momentum, the various challenges described
above are likely to have an offsetting impact. Research
and development expenses will remain at a high level in
view of future-oriented projects. Accordingly, Group
profit before tax is forecast to decrease significantly.
Automobiles segment deliveries to customers should
increase slightly and reach a new record level. At the
same time, fleet carbon dioxide emissions are forecast
to drop slightly. The Group's targets are to be met
with a workforce size at the previous year's level.
The Automotive segment's EBIT margin in 2019 is
expected to lie within the range of between 6 and 8%.
A significant decrease is forecast for the RoCE of the
Automobiles segment. The RoE for the Financial
Services segment should remain at the previous
BMW Group key performance indicators
→ 64
year's level. However, both performance indicators
will be above their long-term targets of 26% (RoCE)
and 14% (ROE¹) respectively. Deliveries to customers
in the Motorcycles segment are forecast to show a solid
increase, with an EBIT margin within the target range
of between 8 and 10% and the RoCE also showing a
solid increase on the previous year.
MOTORCYCLES SEGMENT
Growing uncertainty, particularly with regard to
political developments - such as Brexit and inter-
national trade and customs policies may cause
economic developments in many regions to deviate
from expected trends and outcomes. This would also
have a significant impact on the business performance
of the BMW Group.
Profit before tax
Workforce at year-end
AUTOMOTIVE SEGMENT
Deliveries to customers4
Fleet emissions5
EBIT margin
GROUP
As a worldwide-leading provider of premium cars,
motorcycles and mobility services, as well as related
financial services, the BMW Group is exposed to
numerous uncertainties and change. Making full
use of the opportunities arising out of change is a
fundamental basis of the Group's corporate success.
In order to achieve growth, profitability, efficiency
and continued sustainable activities going forward,
the BMW Group must consciously assume risks.
significant decrease
in line with last
year's level
14.8
solid increase
between 8 and 10
solid increase
in line with last
year's level
89
%
90
Combined
Management
Report
→ Risks and
Opportunities
Risks and
Opportunities
→ Risks and
Opportunities
90
134,682
28.4
8.1
units
2,490,664
slight increase
g CO2/km
128
slight reduction
%
%
%
49.8
between 6 and 8
significant decrease
units
165,566
%
7.2
Report on Outlook,
Risks and
Opportunities
Depending on the political and economic situation
and the risks and opportunities described below,
actual business performance could differ from current
expectations.
Combined
Stable
Insignificant
Stable
High
Market developments
Stable
Insignificant
Stable
High
Changes in legislation and regulatory requirements
Strategic and sector risks and opportunities
Stable
Insignificant
Stable
High
Risks and opportunities relating to operations
Production and technology
Medium
Stable
Insignificant
Stable
High
Information, data protection and IT
Stable
Insignificant
Stable
Macroeconomic risks and opportunities
Low
Stable
Insignificant
Stable
High
Purchasing
Stable
Insignificant
Sales and marketing
Stable
93
Change compared
to prior year
Low
Medium
Class
Overall, the following criteria apply for the
of classifying the risk amount:
The risk amount is the basis for the classification
of risk levels at the BMW Group. These have been
revised as part of the further development of the risk
management system. The risk amount corresponds to
the average earnings impact, taking into account prob-
ability of occurrence and risk mitigation measures.
> €2,000 million
> €0-500 million
> €500-2,000 million
Potential earnings impact
Medium
High
Low
Class
The overall impact of a risk's occurrence on the results
of operations, financial position and net assets on
the basis of worst-case scenarios for the two-year
assessment period is classified as follows:
Risks are classified as high, medium or low, based on
their significance with respect to results of operations,
financial position and net assets and to performance
indicators of the BMW Group. The impact of risks is
measured and reported net of risk mitigation mea-
sures (net basis).
Management
Report
Risk measurement
In the Financial Services segment risk management
also addresses regulatory requirements, such as Basel
III. Internal methods to identify, measure, manage and
monitor risks within the Financial Services segment
comply with national and international standards.
Risk management in the Financial Services business is
based on the risk strategy, the Internal Capital Adequacy
Assessment Process Framework and a set of rules
comprising strategic principles and guidelines. The
risk management process is ensured organisationally
through a clear division between front- and back-office
activities and a comprehensive internal control system.
The main instrument of risk management within the
Financial Services segment is ensuring the Group's
risk-bearing capacity. At all times, risks in the sense of
unexpected losses must be covered. This is achieved by
means of an asset cushion in the form of equity capital
derived from the entity's risk appetite. Unexpected
losses are measured according to various value-at-risk
models, which are validated at regular intervals. Risks
are aggregated after taking account of correlation
effects. In addition to assessing the Group's ability to
bear risk under normal circumstances, stress scenarios
are also examined. The segment's risk-bearing capacity
is regularly controlled through an integrated limit
system for the various risk categories.
High
Opportunity management system and
opportunity identification
purposes
Risk amount
Classification
to prior year*
Classification of Change compared
risk amount
Opportunities
Risks
RISKS AND OPPORTUNITIES
Risks or opportunities which could, from today's
perspective, have a significant impact on the results
of operations, financial position and net assets of the
BMW Group are described below.
93
7
Risks and opportunities
The implementation of identified opportunities is
undertaken on a decentralised basis within the rele-
vant functions. The significance of opportunities for
the BMW Group is classified on a qualitative basis in
the categories "significant" and "insignificant".
Continuous monitoring of major business processes
and strict cost controls are essential for ensuring strong
profitability and return on capital employed. Probable
measures to increase profitability are incorporated in
the outlook. The implementation of modular-based
and common architectures, for instance, allows iden-
tical components to be deployed increasingly across
models and product lines. This reduces development
costs and investment on the series development of
new vehicles and contributes positively to profitability.
In addition, it also supports economies of scale in
production costs and increases production flexibility.
Moreover, a more competitive cost basis opens up
opportunities to enter new market segments.
A dynamic market environment also gives rise to
opportunities. The BMW Group continually monitors
macroeconomic trends as well as developments within
the sector and overall environment. This includes
external regulations, suppliers, customers and com-
petitors. Identifying opportunities is an integral part
of the strategic planning process of the BMW Group.
The Group's product and service portfolio is continually
reviewed on the basis of these analyses. This results,
for example, in new product projects being presented
to the Board of Management for consideration.
> € 400 million
> €50-400 million
> €0-50 million
The following table provides an overview of all risks
and opportunities and indicates their significance
for the BMW Group. Overall, no risks which could
threaten the continued existence of the BMW Group
were identified either at the balance sheet date or at
the date on which the Group Financial Statements
were drawn
up.
Financial risks and opportunities
In the following sections, earnings impact is used
consistently to cover the overall impact on results of
operations, financial position and net assets.
High
Opportunities
→ Risks and
Risks and
Opportunities
Report on Outlook,
Management
Report
Combined
94
44
A possible introduction of further trade barriers,
including anti-dumping customs duties and duties
aimed at protecting national security by the US
administration, could have a significantly adverse
impact on the BMW Group's operations through less
In view of the political events of recent years, global
economic developments continue to be subject to a
high degree of uncertainty, in particular with respect
to potential barriers to global trade. A reorientation
of US economic policy, changes within the EU and
possible economic agendas by parties in EU countries
that are critical of globalisation and could therefore
jeopardise stability could lead to more restrictive trade
practices in the coming years.
-
-
Economic conditions influence business performance
and hence the results of operations, financial position
and net assets of the BMW Group. Unforeseen dis-
ruptions in global economic relations can have highly
unpredictable effects. Macroeconomic risks can lead
to reduced purchasing power in the countries and
regions affected and lead to reduced demand for the
products and services offered by the BMW Group.
Macroeconomic risks could due to sales volume
fluctuations have a high earnings impact over the
two-year assessment period. Overall, the risk amounts
attached to macroeconomic risks are classified as high.
Macroeconomic risks are evaluated on the basis of
historical data and cash-flow-at-risk scenario analyses.
Macroeconomic risks and opportunities
* Prior year classifications have been amended in line with the revision of the risk modelling described in the "Risk management system" section and the revision of the measurement of risk amount described in
the "Risk measurement" section. In the case of risks for which prior year amounts have been reclassified, risk amounts have been classified to a higher level than reported in the Annual Report 2017.
favourable conditions for importing vehicles. Moreover,
countermeasures by the USA's trading partners
could slow down global economic growth and have
a greater-than-expected adverse impact on the export
of vehicles produced in the USA. The BMW Group's
"production follows the market" strategy involves local
production both in the USA and with other important
trade partners. Regional production reduces the exist-
ing risk of trade barriers. Nevertheless, any increase
in trade barriers would have an adverse impact on
the BMW Group.
The impending Brexit could have a long-term adverse
impact on the BMW Group, particularly as a result
of increased trade barriers in the form of customs
duties in relation to the European single market. Any
such trade barriers could have a negative impact on
volumes and costs both for vehicles and components
produced in the EU for the UK as well as those pro-
duced in the UK for the European market. In extreme
cases, this could also result in production losses due
to delays in customs clearance. In addition, Brexit
could lead to reduced customer spending in the wake
of weaker economic performance, particularly in
the UK. In the short and medium term, uncertainty
regarding the outcome of the negotiations with the
EU could exacerbate these factors and cause further
negative currency effects. A possible further economic
downturn of countries in the EU could also potentially
reduce growth prospects for the BMW Group. European
integration with a unified economic and currency area
is an important pillar of economic stability in Europe.
The transition in China from an investment-driven to
a consumer-driven economy is associated with slower
growth rates and, potentially, greater instability in
the short to medium term on financial markets. If the
Chinese economy were to grow at a significantly slower
pace than expected, the consequence would be not
only a decline in automobile sales, but also, potentially,
lower demand for raw materials, which would have a
negative impact above all on emerging economies such
as Brazil, Russia or South Africa. Any further drop in
raw material prices could result for the BMW Group
in lower demand from these countries. Turmoil on
the Chinese property, stock and banking markets
and an overly rapid increase in interest rates by the
US Federal Reserve could pose considerable risks for
global financial market stability. Such developments
could lead to greater currency fluctuations and have
a negative impact on emerging markets in particular.
Furthermore, increasing political unrest, military
conflicts, terrorist activities, natural disasters or
pandemics could have a lasting negative impact on
the global economy and international capital markets.
Local restrictions affecting product usage in specific
sectors may limit BMW Group sales in individual mar-
kets. In some urban areas, for instance, local measures
are being introduced, including entry restrictions,
congestion charges or, in some situations, highly
restrictive registration rules. These may impact local
demand for the BMW Group vehicles affected and
hence have a negative impact on sales, margins and,
possibly, the residual values of these vehicles. The
BMW Group addresses this risk by offering locally
emissions-free vehicles, such as the BMW i3*, which
benefit from state subsidies and exemptions.
Foreign currencies
Intense competition, particularly in Western Europe,
the USA and China, is a potential cause for lower
demand and for fluctuations in the regional distribu-
tion and composition of demand for BMW, MINI and
Rolls-Royce brand vehicles and for mobility services.
Greater competition could put pressure on selling
prices and margins. The BMW Group successfully
completed the conversion to the new WLTP test pro-
cedure in 2018. Markets in Europe were nevertheless
subject to a high degree of distortion on the supply
side and pressure on selling prices as a result of the
conversion. Changes in customer behaviour can also
be brought about by changes in attitudes, values,
environmental factors, and fuel or energy prices. In
order to determine price and margin risks, a scenario
approach is used. The BMW Group's flexible sales and
production processes enable risks to be reduced and
newly arising opportunities in market and product
segments to be taken.
96
In addition to economic factors and sector-specific
political conditions, increasingly fierce competition
among established manufacturers and the emergence
of new competitors could also have effects which are
difficult to predict. Unforeseen consumer preferences
and changes in brand perceptions can give rise to
opportunities and risks. If market risks were to mate-
rialise, they could have a high earnings impact over
the two-year assessment period. The risk amount is
classified as high.
Market development
The BMW Group's earnings could also be positively *Fuel consumption
affected in the short to medium term by changes in and CO2 emissions
trading policies. A possible reduction in tariff barriers,
import restrictions or direct excise duties could lower
the cost of materials for the BMW Group, and enable
products and services to be offered to customers at
lower prices. Further opportunities for the earnings
performance of the BMW Group from changes in
legislation and regulatory requirements compared
to the outlook are classified as insignificant.
Stable
96
Further risks can result from the tightening of existing
import and export regulations. These lead primarily
to additional expenses but can also restrict imports
and exports of vehicles or parts.
At present, the BMW Group sees increasingly
restrictive vehicle emissions regulations, particularly
for conventional drivetrain systems, not only in the
world's major markets (Europe, North America and
China), but also in other markets such as India and
Brazil. In particular, the combination of newly intro-
duced measurement procedures to reflect standard
driving cycles (WLTP) and Real Driving Emissions
(RDE) tests to reflect actual emissions on the road
on the one hand, and significantly lower emissions
thresholds on the other, pose major challenges to the
automotive sector. The BMW Group is addressing this
risk with its Efficient Dynamics concept and is playing
a pioneering role in reducing both fuel consumption
and emissions within the premium segment. One
area of focus of the BMW Group is the systematic
electrification of all brands and model series. The
product range has been increasingly expanded with
electric drivetrain systems in BMWi vehicles since
2013 and with plug-in-hybrid technologies since 2015.
These technologies have contributed to the fulfilment
of legal standards and requirements with regard to
vehicle emissions.
95
95
Strategic and sector risks and opportunities
Changes in legislation and regulatory requirements
The sudden introduction of more stringent legislation
and regulations, particularly with regard to emissions,
safety and consumer protection as well as regional
vehicle-related purchase and usage taxes, represents
a significant risk for the automobile industry. Country-
and sector-specific trade barriers can also change at
short notice. A sudden tightening of regulations in
any of these areas can necessitate significantly higher
investments and ongoing expenses or influence cus-
tomer behaviour. Risks from changes in legislation
and regulatory requirements could have a high impact
on earnings over the two-year assessment period.
Compared to the previous year, the potential impact
on earnings has increased. The risk amount attached
to these risks is classified as high. Compared with the
previous year, risks arising from the further tightening
of emissions laws are assessed as being stable.
Should the global economy develop significantly bet-
ter than presented in the outlook, macroeconomic
opportunities could arise for the BMW Group's
revenues and earnings. Significantly stronger GDP
growth in China, demand-oriented reforms within the
eurozone, a cancellation of Brexit and intensified trade
relations between the EU and the UK, further growth
stimulus through the tax reform in the USA or more
robust consumer spending in emerging markets due to
rising raw material prices could result in significantly
stronger sales volume growth, reduced competitive
pressures and corresponding improvement in pricing.
The planned expansion of production capacities will
enable emerging opportunities to be exploited to a
greater degree. Macroeconomic opportunities that
could generate a sustainable impact on earnings are
currently classified by the BMW Group as insignificant.
The BMW Group addresses macroeconomic risks pri-
marily by internationalising its sales and production
structures, in order to minimise the extent to which
earnings depend on risks in individual countries
and regions. Flexible sales and production processes
within the BMW Group increase the limited ability
to react quickly to regional economic developments.
An established regulatory framework for innovative
mobility solutions as well as government incentives
are important prerequisites for introducing product
innovations, such as autonomous driving, and for
scaling up the range of electric mobility offerings. For
the electrified vehicles of the BMW Group a faster
expansion of charging infrastructure could increase
acceptance and help boost sales of planned or recently
introduced product innovations compared to forecast.
This includes implementation of the 360° ELECTRIC
portfolio in the field of electric mobility and collabo-
ration with Toyota on hydrogen fuel cell technology.
Medium
information are
available on
page 108.
Stable*
Significant
Stable*
High
Pension obligations
Stable*
Stable
Low
Liquidity
Stable
Significant
Significant
Medium
Raw materials
Legal risks
Stable
Stable
Risks and opportunities relating to the provision of financial services
Stable*
Medium
Credit risk
Operational risks
Significant
Stable*
Medium
Interest rate changes
Medium
Significant
Stable
High
Residual value
Stable
Significant
Stable
Stable
Stable*
Contractual holding period arrangements also apply to
shares of common stock acquired by Board of Manage-
ment members and certain senior department heads
in conjunction with the share-based remuneration
programmes (Compensation Report of the Corporate
Governance section; → note 41 of the Group Financial
Statements).
Direct or indirect investments in capital exceeding
10% of voting rights
Based on the information available to the Company, 1
the following direct or indirect holdings exceeding
10% of the voting rights at the end of the reporting
period were held at the stated reporting date:¹
Susanne Klatten Beteiligungs GmbH, Bad Homburg v. d. Höhe, Germany
Stefan Quandt, Germany
AQTON SE, Bad Homburg v. d. Höhe, Germany
AQTON Verwaltung GmbH, Bad Homburg v. d. Höhe, Germany
AQTON GmbH & Co. KG für Automobilwerte, Bad Homburg v. d. Höhe, Germany
Susanne Klatten, Germany
1 Based on voluntary notifications provided by the listed shareholders as at 31 December 2018.
2 Controlled entities, of which 3% or more are attributed: AQTON SE, AQTON Verwaltung GmbH, AQTON GmbH & Co. KG für Automobilwerte.
in %
When the Company issues non-voting shares of
preferred stock to employees in conjunction with its
Employee Share Programme, these shares are gener-
ally subject to a company-imposed blocking period
of four years, calculated from the beginning of the
calendar year in which the shares are issued.
(b) payment of an additional dividend of €0.02 per
€1 par value on non-voting preferred shares
Restrictions on voting rights or the transfer
of shares
DISCLOSURES RELEVANT
FOR TAKEOVERS* AND
EXPLANATORY COMMENTS
and Explanatory
Comments
Composition of subscribed capital
The subscribed capital (share capital) of BMW AG
amounted to €658,122,100 at 31 December 2018
(2017: €657,600,600) and, in accordance with Article 4
no. 1 of the Articles of Incorporation, is subdivided
into 601,995,196 shares of common stock (91.47%)
(2017: 601,995,196; 91.54%) and 56,126,904 shares of
non-voting preferred stock (8.53%) (2017: 55,605,404;
8.46%), each with a par value of €1. The Company's
shares are issued to bearer.
The rights and duties of shareholders derive from the
German Stock Corporation Act (AktG) in conjunction
with the Company's Articles of Incorporation, the
full text of which is available at www.bmwgroup.com. The
right of shareholders to have their shares evidenced
is excluded in accordance with the Articles of Incor-
poration. The voting power attached to each share
corresponds to its par value. Each €1 of par value
of share capital represented in a vote entitles the
holder to one vote (Article 18 no. 1 of the Articles of
Incorporation).
As well as shares of common stock, the Company
has also issued non-voting shares of preferred stock.
Further information can be found in the section
"Composition of subscribed capital".
*Disclosures
pursuant to
The Company's shares of preferred stock are shares
within the meaning of § 139 ff. AktG, which carry a
cumulative preferential right in terms of the allocation
of profit and for which voting rights are excluded.
These shares confer voting rights only in exceptional
cases stipulated by law, in particular when the prefer-
ence amount has not been paid or has not been fully
paid in one year and the arrears are not paid in the
subsequent year alongside the full preference amount
due for that year. With the exception of voting rights,
holders of shares of preferred stock are entitled to
the same rights as holders of shares of common stock.
Article 24 of the Articles of Incorporation confers
preferential treatment to the non-voting shares of
preferred stock with regard to the appropriation of the
Company's unappropriated profit. Accordingly, the
unappropriated profit is required to be appropriated
in the following order:
(a) subsequent payment of any arrears on dividends
on non-voting preferred shares in the order of
accruement
(c) uniform payment of any other dividends on
shares of common and preferred stock, provided
the shareholders do not resolve otherwise at
the Annual General Meeting
→ see
note 41
§ 289 (5) and
§ 315 (2) No. 5
HGB.
3 Controlled entities, of which 3% or more are attributed: AQTON Verwaltung GmbH, AQTON GmbH & Co. KG für Automobilwerte.
The voting percentages disclosed above may have
changed subsequent to the stated date if these changes
were not required to be reported to the Company.
As the Company's shares are issued to bearer, the
Company is generally aware of changes in sharehold-
ings only if such changes are subject to mandatory
notification rules.
5 Controlled entities, of which 3% or more are attributed: Susanne Klatten Beteiligungs GmbH.
BMW AG is party to the following major agreements,
which contain provisions that would apply in the event
of a change in control or the acquisition of control as a
result of a takeover bid:
Significant agreements of the Company taking
effect in the event of change in control following a
takeover bid
An agreement concluded with an international
consortium of banks relating to a syndicated
credit line, which was not being utilised at the
balance sheet date, entitles the lending banks
to give extraordinary notice to terminate the credit
line, such that all outstanding amounts, including
interest, would fall due immediately if one or more
parties jointly acquire direct or indirect control
of BMW AG. The term control is defined as the
acquisition of more than 50% of the share capital
of BMW AG, or the right to receive more than 50%
of the dividend or the right to direct the affairs
of the Company or appoint the majority of the
members of the Supervisory Board.
In accordance with Article 4 no. 5 of the Articles of
Incorporation, the Board of Management is authorised,
with the approval of the Supervisory Board, to increase
for cash contributions BMW AG's share capital during
the period until 14 May 2019 by up to €3,132,883 for
the purposes of an Employee Share Programme by
issuing new non-voting shares of preferred stock,
which carry the same rights as existing non-voting
preferred stock (Authorised Capital 2014). Subscrip-
tion rights of existing shareholders are excluded. No
conditional capital is in place at the reporting date.
In accordance with the resolution passed at the
Annual General Meeting on 15 May 2014, the Board of
Management is also authorised up until 14 May 2019
to acquire shares of non-voting preferred stock of the
Company via the stock exchange, up to a maximum
of 1% of the share capital existing at the date of the
resolution. The consideration paid by the Company
per share of non-voting preferred stock (excluding
transaction costs) may not be more than 10% above
or below the market price of the stock determined
by the opening auction on the date of trading in the
Xetra trading system (or a successor system having a
comparable function). Moreover, the Board of Man-
agement is authorised to use the acquired own shares
of non-voting preferred stock for all legally admissible
purposes, specifically including the right to offer for
sale and transfer shares to persons employed by the
Company or one of its affiliated companies up to a
proportionate amount of €5 million of share capital.
The subscription rights of existing shareholders to the
new shares of preferred stock used for the purpose
stated above are excluded. The authorisations may
also be exercised in parts over several transactions.
The Board of Management is authorised to buy back
shares and sell repurchased shares in situations speci-
fied in §71 AktG, for example to avert serious and
imminent damage to the Company and/or to offer
shares to persons employed or previously employed
by BMW AG or one of its affiliated companies.
Authorisations of the Board of Management in
particular with respect to the issuing or buying
back of shares
and Explanatory
Comments
for Takeovers
→ Disclosures Relevant
Combined
Management
Report
106
105
Amendments to the Articles of Incorporation must
comply with § 179 ff. AktG. Amendments must be
decided upon by the shareholders at the Annual
General Meeting (§ 119 (1) no.5, § 179 (1) AktG). The
Supervisory Board is authorised to approve amend-
ments to the Articles of Incorporation which only affect
its wording (Article 14 no. 3 of the Articles of Incorpo-
ration). Resolutions are passed at the Annual General
Meeting by simple majority of shares exercised unless
otherwise explicitly required by binding provisions of
law or, when a majority of share capital is required,
by simple majority of shares represented in the vote
(Article 20 no. 1 of the Articles of Incorporation).
Statutory regulations and Articles of Incorporation
provisions with regard to the appointment and
removal of members of the Board of Management
and changes to the Articles of Incorporation
The appointment or removal of members of the Board
of Management is based on the rules contained in
§ 84 f. AktG in conjunction with § 31 of the German
Co-Determination Act (MitbestG).
Like all other shareholders, employees exercise their
control rights pertaining to shares they have acquired
in conjunction with the Employee Share Programme
and/or the share-based remuneration programme
directly on the basis of relevant legal provisions and
the Company's Articles of Incorporation.
Control of voting rights when employees
participate in capital and do not exercise their
control rights directly
Direct share of
voting rights
Indirect share of
voting rights
0.2
25.62
9.0
4 Controlled entities, of which 3% or more are attributed: AQTON GmbH & Co. KG für Automobilwerte.
16.63
16.6
0.2
20.75
20.7
Shares with special rights which confer control
rights
There are no shares with special rights which confer
control rights.
16.64
for Takeovers
Opportunities
Combined
Management
Report
Combined
Management
Report
102
101
Operational risks are defined in the Financial Services
segment as the risk of losses arising as a consequence
of unsuitability or failure of internal procedures
(process risks), people (personnel-related risks), sys-
tems (infrastructure and IT risks) and external events
(external risks). The recording and measurement of
risk scenarios, loss events and countermeasures in
the operational risk management system provide the
basis for a systematic analysis and management of
potential or materialised operational risks. Annual
self-assessments are also carried out. If operational
risks were to materialise, they would be likely to have
a low earnings impact over the two-year assessment
period. The risk amount is classified as medium.
Operational risks in the Financial
Services segment
notes 39
Interest rate risks in the Financial Services segment
relate to potential losses caused by changes in market
interest rates. These can arise when fixed interest rate
periods do not match for assets and liabilities recog-
nised in the balance sheet. If interest rate risks were
to materialise, they could have a medium earnings
impact over the two-year assessment period. The risk
amount is classified as medium. The BMW Group
classifies potential interest rate opportunities com-
pared to the outlook as significant. Interest rate risks
in the Financial Services business are managed by
matching maturities for refinancing and by employing
interest-rate derivatives. If the relevant recognition cri-
teria are fulfilled, derivatives used by the BMW Group
are accounted for as hedging instruments. Further
information on risks in conjunction with financial
→ see instruments is provided in → note 39 to the Group
Financial Statements.
to the Financial Services segment
Interest rate risks and opportunities relating
premium segment responded here with price declines
for diesel vehicles. As part of the management of resid-
ual value risks, the net present value of risk costs is
calculated at contract inception. Market developments
are observed throughout the contractual period and
the risk assessment updated.
Residual value risks and opportunities relating
to the Financial Services segment
Risks and opportunities arise in conjunction with
leasing contracts if the market value of a leased vehicle
at the end of the contractual term of a lease differs
from the residual value estimated at the inception
of the lease and factored into the lease payments. A
residual value risk exists if the expected market value
of the vehicle at the end of the contractual term is
lower than its estimated residual value at the date
the contract is entered into. If residual value risks
were to materialise, they could have a high earnings
impact from the Group's perspective over the two-year
assessment period. A high earnings impact would
then arise for the affected Financial Services and
Automotive segments. The risk amount is classified
as high for the Group as a whole. Opportunities can
arise out of a positive deviation from the original
residual value forecast. The BMW Group classifies
potential residual value opportunities as significant.
Each vehicle's estimated residual value is calculated
on the basis of historical external and internal data.
This estimation provides the expected market value
of the vehicle at the end of the contractual period.
Developments on pre-owned car markets represent
an important factor. In 2018, diesel engines were
again the subject matter of political discussions in
the European region. Pre-owned car markets in the
Initial and continuous creditworthiness testing is
an important aspect of the BMW Group's credit
risk management. For this reason, every borrower's
creditworthiness is tested for all credit financing
and lease contracts entered into by the BMW Group.
Opportunities can arise when the managed portfolio
presents itself over time better than as was estimated
at the provision of the credit. An intense management
of the purchase process and the securities evaluation
as well as the development of macroeconomic factors
can strengthen the opportunities. In the case of retail
customer financing, creditworthiness is assessed
using validated scoring systems integrated into the
purchasing process. In the area of dealership financing,
creditworthiness is assessed by means of ongoing
credit monitoring and an internal rating system that
takes account not only of the material credit standing
of the borrower, but also of qualitative factors such
as past reliability in business relations. Changes in
the creditworthiness of customers arising during the
credit term are covered by risk provisioning proce-
dures. The credit risk of the individual customers is
quantified on a monthly basis and, depending on
the outcome, taken into account within the risk
pro-
visioning system. Macroeconomic developments are
currently subject to a higher degree of volatility. If
developments are more favourable than assumed in
the outlook, credit losses may be reduced, leading to
a positive earnings impact.
Credit and counterparty risks and opportunities
relating to the Financial Services segment
Credit and counterparty default risk arises within the
Financial Services segment if a contractual partner
(e.g. a customer or dealer) either becomes unable or
only partially able to fulfil its contractual obligations,
so that lower income is generated or losses incurred.
If credit and counterparty risks were to materialise,
they could have a medium earnings impact over the
two-year assessment period. The risk amount is clas-
sified as medium. The BMW Group classifies potential
opportunities in this area as significant.
The categories of risk relating to financial services
comprise credit and counterparty risk, residual value
risk, interest rate risk, operational risks and liquidity
risk. Evaluation of liquidity risk for the Financial Services
segment is included in the liquidity risk category for
the Group as a whole. The segment's total risk expo-
sure was covered at all times during the 2018 financial
year by the available risk-covering assets. As a result,
the Financial Services segment's risk-bearing capacity
was assured at all times.
Risks and opportunities relating to the Financial
Services segment
notes 32
the Group. The amount of funds required to finance
pension payments out of operations in the future is
substantially reduced by the fact that the Group's
pension obligations are mainly settled out of pension
fund assets. The pension assets of the BMW Group
comprise interest-bearing securities, equities, real
estate and other investment classes. Assets held by
pension funds and trust arrangements are monitored
continuously and managed on a risk-and-return basis.
Diversification of investments also helps to mitigate
risk. In order to reduce fluctuations in pension fund-
ing shortfalls, investments are structured to match
the timing of pension payments and the expected
development of pension obligations. Remeasurements
on the liability and fund asset sides are recognised
net of deferred taxes in other comprehensive income
and hence directly in equity (within revenue reserves).
Further information on risks in conjunction with pen-
→ see sion provisions is provided in → note 32 to the Group
Financial Statements.
The major part of the Financial Services segment's
credit financing and leasing business is refinanced on
capital markets. Liquidity risks can arise in the form
of rising refinancing costs or from restricted access to
funds as a consequence of the general market situation.
If liquidity risks were to materialise, they would be
likely to have a low earnings impact over the two-year
assessment period. The risk amount associated with
liquidity risk, including the risk of the BMW Group's
rating being downgraded, which would lead to an
increase in financing costs, is classified as low.
Liquidity risks
99
― A cooperation agreement concluded with
Peugeot SA relating to small (1- to 1.6-litre)
petrol engines entitles each of the cooperation
partners to give extraordinary notification of
termination in the event of a competitor acquiring
control over the other contractual party and if
any concerns of the other contractual party re-
garding the impact of the change of control on
the cooperation arrangements are not resolved
during the subsequent discussion process.
100
Combined
Report on Outlook,
Risks and
Management
Report
→ Risks and
Opportunities
Based on the experience of the financial crisis, a min-
imum liquidity concept has been drawn up, which is
rigorously adhered to and continuously developed.
Use of the "matched funding principle" to finance the
Financial Services segment's operations eliminates
liquidity risks to a large extent. Solvency is assured at
all times throughout the BMW Group by maintaining
a liquidity reserve and by the broad diversification
of refinancing sources. Regular measurement and
monitoring ensure that cash inflows and outflows for
the various maturities and currencies offset each other.
This approach is incorporated in the BMW Group's
target liquidity concept. The liquidity position is moni-
tored continuously and managed through Group-wide
planning of financial requirements and funding. A
diversified refinancing strategy reduces dependency
on any specific type of instrument. Moreover, the
BMW Group's solid financial and earnings position
results in high credit ratings from internationally
recognised rating agencies.
Further information on risks in conjunction with
financial instruments is provided in → note 39 to the → see
Group Financial Statements.
Risks and opportunities relating to pension obligations
Pension obligations are influenced in particular by
fluctuations of market yields on corporate bonds, as
well as by other economic and demographic para-
meters. Opportunities and risks arise depending
on changes in these parameters. If risks relating to
pension obligations materialised, they could have a
high earnings impact over the two-year assessment
period. Despite the high level of external funding,
the risk amounts relating to pension obligations are
classified as high. Within a favourable capital market
environment, the return generated by growth-oriented
pension assets may exceed expectations and reduce
the deficit of the relevant pension plans. This could
have a significantly favourable impact on the net asset
position of the BMW Group.
Future pension payments are discounted on the basis
of market yields on high-quality corporate bonds.
These yields are subject to market fluctuation and
therefore influence the level of pension obligations.
Changes in other parameters, such as rises in infla-
tion and longer life expectancy, also impact pension
obligations and payments. Regulatory requirements
can influence the amount of pension obligations.
The BMW Group's pension obligations are mainly
held in external pension funds or trust arrangements
and the related assets legally separated from those of
note 39
Report on Outlook,
Risks and
Opportunities
→ Disclosures Relevant
Opportunities
→ Internal Control
System Relevant for
Accounting and
104
103
Responsibilities for ensuring the effectiveness of
the internal control system in relation to individual
entity and Group accounting and financial reporting
processes are clearly defined and allocated to the
relevant line and process managers. These report
annually on their assessment of the effectiveness of the
internal control system for accounting and financial
reporting to the Board of Management. The assessment
also includes the results of internal and external audits
as well as of ongoing data analysis. In this context,
the Group's units confirm the effectiveness of the
internal control system for accounting and financial
reporting. The results of the assessment are gathered
and documented with the aid of tools. Weaknesses in
the control system are eliminated, taking into account
their potential impact on accounting processes. The
Board of Management and Audit Committee are
briefed annually on the assessment of the effective-
ness of the internal control system for accounting and
financial reporting. The Board of Management and,
where applicable, the Supervisory Board are informed
immediately in the event of any significant changes
in the effectiveness of the internal control system.
As part of the ongoing development of accounting and
financial reporting processes at individual entity or
Group level, such controls are adapted to take account
of new requirements and opportunities arising with
advances in information technology. In addition, the
BMW Group uses data analysis tools to ensure that
any control weaknesses are quickly identified and
eliminated.
Controls are integrated into the accounting and finan-
cial reporting processes, at both individual entity and
Group level. These are both preventive and detective
in nature and take account, where appropriate, of
the principle of the separation of duties. Important
accounting-related IT systems incorporate controls
which, amongst others, prevent business transactions
from being recorded incorrectly and ensure that
business transactions are recorded completely and in
good time and measured properly in accordance with
applicable requirements. Controls are also in place to
test the appropriateness of consolidation procedures.
The recording of items requiring disclosure is also
performed largely through IT systems.
pursuant to
§ 289 (5)
and § 315 (2)
no. 5 HGB.
Disclosures
Guidelines for recognising, measuring and allocating
items to accounts are available to all employees via
the intranet. New accounting standards are assessed
for their impact on the BMW Group's accounting
and financial reporting. Accounting guidelines and
processes are reviewed continuously and revised at
least once a year or more frequently, if necessary.
The internal control system is subject to continuous
improvement, with system effectiveness assessed
regularly on the basis of centralised and decentralised
process analyses, analyses of data within the various
financial systems and audit procedures. The principal
features of the internal control system, as far as they
relate to individual entity and Group accounting and
financial reporting processes, are described below.
process-independent monitoring measures.
organisational measures incorporating the
principle of separation of duties, and
IT systems,
controls integrated into processes and
Group-wide mandatory accounting guidelines,
-
The internal control system relevant for accounting
and financial reporting processes has the task of
ensuring that accounting and financial reporting by
the BMW Group is both correct and reliable. Inter-
nationally recognised standards for internal control
systems have been taken into account in the design of
the components of the BMW Group's internal control
system. The system comprises:
SYSTEM* RELEVANT FOR
ACCOUNTING AND
FINANCIAL REPORTING
PROCESSES
Financial Reporting
Process
Legal risks
The BMW Group is exposed to various legal risks, not
least as a result of its global operations. Legal risks may
result from non-compliance with laws or other legal
requirements or from legal disputes with business
partners or other market participants. If legal risks
were to materialise, they could have a high earnings
impact over the two-year assessment period. The risk
amount attached to significant identified legal risks
is classified as medium. However, it cannot be ruled
out that new legal risks, as yet unforeseen, could
materialise that could have a high earnings impact
for the BMW Group.
The increasing globalisation of the BMW Group's
operations and of business interdependencies in
general, combined with the variety and complexity
of legal provisions, including, increasingly, import
and export regulations, give rise to an increased risk
of non-compliance with applicable law. A Compliance
Management System is in place at BMW Group to
ensure that the representative bodies, managers
and staff across the globe consistently act in a lawful
manner. Further information on the BMW Group's
Compliance Management System can be found in the
section Corporate Governance.
Like all entities with international operations, the
BMW Group is confronted with legal disputes, claims
particularly relating to warranties and product liability
or rights infringements and proceedings initiated by
government agencies. Any of these could, amongst
other consequences, have an adverse impact on the
Group's reputation. Such proceedings are typical
for the sector and may result as a consequence of
realigning product or purchasing strategies to changed
market conditions. Particularly in the US market,
class action lawsuits and product liability risks can
have substantial financial consequences and cause
damage to the Group's public image. More rigorous
application or interpretation of existing consumer
protection regulations could result in a greater number
of recalls. The high quality of the Group's products,
which is ensured by regular quality audits and ongoing
improvement measures, helps reduce this risk.
Possible risks for the BMW Group related to competi-
tion and antitrust law cannot in detail be predicted or
quantified at present. Further information on current
developments with regard to identified antitrust risks
and contingent liabilities can be found in → note 38
to the Group Financial Statements.
→ Risks and
→ see
note 38
The BMW Group recognises appropriate levels of
provision for lawsuits. In addition, a part of these
risks is insured where this makes business sense.
Such items are reported as contingent liabilities. It
cannot be ruled out, however, that damages could
arise that are either not covered or not fully covered
by insurance policies or provisions or reported as
contingent liabilities. In accordance with IAS 37
(Provisions, Contingent Liabilities and Contingent
Assets), the required information is not provided
if the BMW Group concludes that disclosure of the
information could seriously prejudice the outcome of
the relevant legal proceedings. Further information
on contingent liabilities is provided in → note 38 to
the Group Financial Statements.
Overall assessment of the risk and opportunities
situation
The overall risk assessment is based on a consolidated
view of all significant individual risks and opportu-
nities. The overall risk level for the BMW Group as a
whole has increased slightly compared to the previous
year, while there has been no significant change in
the opportunity situation. Exposure to risks in the
individual risk categories remains essentially stable.
In addition to the risk categories described above,
unforeseen events could have a negative impact on
business operations and hence on the BMW Group's
results of operations, financial position and net assets
as well as on its reputation. A comprehensive risk
management system is in place to ensure that the
BMW Group successfully manages these risks.
From today's perspective, management does not see
any threat to the BMW Group's status as a going
concern. As in the previous year, identified risks are
considered to be manageable, but could - like the
opportunities - have an impact on the underlying key
performance indicators, which could then, as a result,
deviate from the outlook if they were to materialise.
The BMW Group's financial position is stable and cash
needs are currently covered by available liquidity and
credit lines.
INTERNAL CONTROL
→ see
notes 38
BMW AG acts as guarantor for all obligations aris-
ing from the joint venture agreement relating
to BMW Brilliance Automotive Ltd. in China. This
agreement grants an extraordinary right of termi-
nation to either joint venture partner in the event
that - either directly or indirectly - more than 25%
of the shares of the other party are acquired by a
third party, or if the other party is merged with
another legal entity. The termination of the joint
venture agreement may result in the sale of the
shares to the other joint venture partner or in the
liquidation of the joint venture entity.
Risks and opportunities relating to raw materials
As a large-scale manufacturing company, the BMW Group
is exposed to purchase price risks, particularly in rela-
tion to raw materials used in vehicle production.
The analysis of raw material price risk is based on
planned purchases of raw materials and components
containing those raw materials. If risks relating to raw
materials prices were to materialise, they could have
a medium earnings impact over the two-year assess-
ment period. A medium risk level is attached to risks.
Significant opportunities could arise if raw materials
prices developed favourably for the BMW Group.
enables the acquirer to exercise control over a
contractual party, or which constitutes a merger
or a transfer of net assets.
13.7-13.2
56-55
2.5-2.4
207-206
9.1
246-243
10.8-10.7
198
209
9.1
8.5
227-224
10.0-9.8
(combined)
in kWh/100 km
Electric power
consumption
15
in g/km
(combined)
341
330-328
Changes in commodity prices are monitored on the
basis of a well-defined management process. The
principal objective is to increase planning reliability
for the BMW Group. Price fluctuations for precious
metals (platinum, palladium, rhodium), non-ferrous
metals (aluminium, copper, lead, nickel) and, to some
extent, for steel and steel ingredients (iron ore, coking
coal) and energy (gas, electricity) are hedged using
financial derivatives and supply contracts with fixed
pricing arrangements.
With the advance of digitalisation, the BMW Group
is improving the customer experience and its existing
lines of business. At the same time, new digital busi-
ness segments are emerging, which are mainly focused
on information technology. The development and
provision of digital services for customers, increased
vehicle connectivity and autonomous driving solutions
are opening up new opportunities. Through BMW
ConnectedDrive and BMW CarData the range of
services and apps on offer to customers is constantly
being expanded and updated. Starting in March 2019,
the BMW Intelligent Personal Assistant will provide
customers with an intelligent, digital character that
enables voice access to functions and information. The
BMW Group expects these opportunities to have no
significant earnings impact over the assessment period
as compared to the assumptions made in the outlook.
Financial risks and risks relating to the use of
financial instruments
Currency risks and opportunities
Framework agreements are in place with financial
institutions and banks (ISDA Master Agreements)
relating to trading activities with derivative finan-
cial instruments. These agreements include an
extraordinary right of termination which triggers
actions in the event that the creditworthiness of
the party involved is significantly weaker following
a direct or indirect acquisition of beneficially
owned equity capital that confers the power to elect
a majority of the Supervisory Board of a contrac-
tual party or any other ownership interest that
Operational currency management is based on the
results of currency risk analyses. The BMW Group
manages currency risks at both strategic (medium
and long term) and operational level (short and
medium term). Medium- and long-term measures
include increasing production volumes and purchase
volumes in foreign currency regions (natural hedging).
Currency risks are managed in the short to medium
term and for operational purposes by means of hedg-
ing on financial markets. The principal objective of
this currency management process is to increase
planning reliability for the BMW Group. Hedging
transactions are entered into only with financial
partners of good credit standing. Opportunities are
also secured through the use of options during specific
market phases.
14.5
46
2.0
14.0
42
1.8
13.1
14.6-14.0
0
0
14.5-14.4
in l/100 km
(combined)
As an internationally operating enterprise, the
BMW Group conducts business in a variety of cur-
rencies, thus giving rise to currency risks and oppor-
tunities. A substantial portion of Group revenues,
purchasing and funding occur outside the eurozone
(particularly in China and the USA). Cash-flow-at-
risk models and scenario analyses are used and
continuously developed to measure currency risks
and opportunities. If currency risks were to materi-
alise, they could be associated with a high earnings
impact over the two-year assessment period. The risk
level attached to currency risks is high. Significant
opportunities can arise if currency developments are
favourable for the BMW Group.
Fuel consumption
Compensation agreements with members of the
Board of Management or with employees in the
event of a takeover bid
other joint venture partner or in the liquidation
of the joint venture entity.
7
BMW AG has agreed with Great Wall Motor
Company Limited to establish the joint venture
Spotlight Automotive Ltd. in China. The
agreement grants an extraordinary right of
termination to either joint venture partner
in the event that - either directly or indirectly -
more than 25% of the shares of the other
party are acquired by a third party or the other
party is merged with another legal entity.
The termination of the joint venture agreement
may result in the sale of the shares to the
and Explanatory
Comments
→ Disclosures Relevant
for Takeovers
Combined
Management
Report
108
107
The development collaboration agreement between
BMW AG, FCA US LLC and FCA Italy S.p.A.,
relating to the development of technologies used
in automated vehicles, may be terminated by
any of the contractual parties if certain competi-
tors in the technology sector acquire and sub-
sequently hold at least 30% of the voting shares
of the other contractual party.
The development collaboration agreement between
BMW AG, Intel Corporation and Mobileye Vision
Technologies Ltd., relating to the development of
technologies used in highly and fully automated
vehicles, may be terminated by any of the con-
tractual parties if a competitor of one of the
parties acquires and subsequently holds at least
30% of the voting shares of one of the contrac-
tual parties.
BMW AG is party to the shareholder agreement
relating to There Holding B.V., which is the
majority shareholder of the HERE Group. In
accordance with the shareholder agreement,
each contractual party is required to offer its
directly or indirectly held shares in There
Holding B. V. for sale to the other shareholders
in the event of a change in control. A change
in control of BMW AG arises if a person takes
over or loses control of BMW AG, with control
defined as (i) holding or having control over
more than 50% of the voting rights, (ii) the
possibility to control more than 50% of voting
rights exercisable at Annual General Meetings
on all or nearly all matters, or (iii) the right to
determine the majority of members of the
Board of Management or the Supervisory Board.
Furthermore, a change in control occurs if
competitors of the HERE Group or certain potential
competitors of the HERE Group from the tech-
nology sector acquire at least 25% of BMW AG.
If none of the other shareholders acquire these
shares, the other shareholders are entitled to
resolve that There Holding B. V. be dissolved.
On the basis of a Business Combination Agree-
ment concluded on 28 March 2018, BMW AG
and Daimler AG have established five operating
joint ventures in the areas of car sharing, ride
hailing, parking, charging and multimodality, into
which BMW has contributed a number of busi-
nesses, including DriveNow, Parkmobile, Digital
Charging Solutions and ReachNow. The Frame-
work Joint Venture Agreement entitles Daimler AG
and BMW AG (principals) each to initiate a bid-
ding process in the event that (i) a shareholder
or third party notifies the other principal
pursuant to § 33 WPHG that voting rights, includ-
ing those attributed pursuant to § 34 WPHG,
have reached the threshold of 50% or pursuant
to § 20 AktG that a shareholding of more than
50% exists, or (ii) a shareholder or a third party
holds more than 50% of the voting rights or
shares in the other principal, including those at-
tributed pursuant to § 30 WPHG (iii) a share-
holder or third party entered into a domination
agreement with the other principal, who is the
dominated entity. Such a bidding process is re-
quired to be carried out for each of the above-
mentioned business divisions as well as for the
special-purpose entity holding the relevant
trademark rights, whereby the highest bidding
principal for the respective business division
or special-purpose entity wins the relevant bid.
Financing agreements in place with the European
Investment Bank (EIB) entitle the EIB to request
early repayment of the loan in the event of an
imminent or actual change in control of BMW AG,
if the EIB has reason to assume - after the change
in control or 30 days after it has made a request
to discuss the situation - that the change in control
could have a significantly adverse impact, or if
the borrower refuses to hold any such discussions.
A change in control of BMW AG arises if one
or more individuals take over or lose control of
BMW AG, with control being defined in the
above-mentioned financing agreements as
(i) holding or having control over more than 50%
of the voting rights, (ii) the right to appoint the
majority of the members of the Board of Man-
agement or Supervisory Board, (iii) the right to
receive more than 50% of dividends payable
or (iv) any other comparable controlling influence
over BMW AG.
CO2 emissions
The BMW Group has not concluded any compensation
agreements with members of the Board of Manage-
ment or with employees for situations involving a
takeover offer.
Fuel consumption and CO2 emissions information
Several supply and development contracts between
BMW AG and various industrial customers, all
relating to the sale of components for drivetrain
systems, grant an extraordinary right of ter-
mination to the relevant industrial customer in
specified cases of a change in control at BMW AG
(for example BMW AG merges with a third party
or is taken over by a third party; an automobile
manufacturer acquires more than 50% of the voting
rights or share capital of BMW AG).
Model
→ 66
BMW i8 Coupé
BMW i3 (120 Ah) with pure electric drive BMW eDrive
BMW ELECTRIFIED MODELS
Phantom
Cullinan
ROLLS-ROYCE
BMW i3s (120 Ah) with pure electric drive BMW eDrive
MINI
BMW
MINI Cooper SE Countryman ALL4
BMW M2 Competition
BMW i8 Roadster
BMW M3 CS
BMW M5/Competition
BMW M3
BMW X3 M40i
Property, plant and equipment
-307
-66,289 -66,926
71,383
71,704
24,971
146,808
137,828
82,950 -127,818 -120,147
ASSETS
Intangible assets
-98
28,811 -66,387 -67,233
91,596
17
12,339
11
12,595
849
45,220
43,988
950
24,853
25,705
17
233
208
9
9
549
Leased products
15,607
11
13,167
Investments accounted for using the equity method
Accumulated other equity
Receivables from sales financing
Total equity and liabilities
Current provisions and liabilities
Liabilities in conjunction with assets held for sale
Trade payables
Other liabilities
Current tax
Financial liabilities
Other provisions
Non-current provisions and liabilities
Other liabilities
Financial liabilities
Deferred tax
Other provisions
Pension provisions
Equity
Minority interest
Other investments
Equity attributable to shareholders of BMW AG
Capital reserves
Subscribed capital
EQUITY AND LIABILITIES
Total assets
Current assets
Cash and cash equivalents
Assets held for sale
Financial assets
Current tax
Other assets
Receivables from sales financing
Trade receivables
Inventories
Non-current assets
Other assets
Deferred tax
Financial assets
Revenue reserves
113
-5,670
Group
Financial
-34
-43
Change in deferred taxes
355
-559
Change in leased products
-1,693
-1,134
Change in receivables from sales financing
-7,440
Changes in working capital
-573
166
Change in inventories
Change in trade receivables
Change in trade payables
Change in provisions
532
5,051
1,211
697
752
-82
Gain/loss on disposal of tangible and intangible assets and marketable securities
1,414
45
112
-1,293
-357
Cash inflow/outflow from operating activities
Change in other operating assets and liabilities
-328
-739
-632
Result from equity accounted investments
8,675
7,207
Current tax
Loss from discontinued operations
Net profit
20171
33
2018
in € million
CASH FLOW STATEMENT
BMW GROUP
Cash Flow Statement
→ BMW Group
Statements
Group
114
2,220
Income taxes paid
-249
111
Other non-cash income and expense items
4,822
5,113
Depreciation and amortisation of tangible, intangible and investment assets
2,558
65
Other interest and similar income/expenses²
125
170
Interest received²
-2,301
-1,972
-199
-30,981
-34,818
8,631
-3,639
31
57,559
53,772
50,815
114
53,671
Minority interest
529
436
436
Equity
58,088
54,208
54,107
39,778
39,361
Pension provisions
32
2,330
Equity attributable to shareholders of BMWAG
37
-1,338
31
1,276
1,230
EQUITY AND LIABILITIES
Subscribed capital
31
658
658
658
3,252
Capital reserves
2,118
2,084
2,084
Revenue reserves
31
56,121
50,993
Accumulated other equity
31
3,252
2,089
2,405
53,521
53,548
1,017
832
Other liabilities
36
5,299
5,045
64,772
5,045
6,506
506
487
Non-current provisions and liabilities
79,983
69,616
69,634
17,034
7,549
93,645
35
1,456
64
69
Other provisions
33
5,776
5,632
5,632
5,363
Financial liabilities
5,175
101
Deferred tax
14
1,806
2,166
28
2,157
1,016
70
97,118
195,506
195,586
12,707
12,462
12,103
568
580
30
2,546
2,663
12,707
2,667
2,354
167
160
Receivables from sales financing
25
38,674
32,087
32,113
2,287
Financial assets
13,047
Trade receivables
5,909
2,026
1,630
1,630
5,085
3,671
33
32
20
Non-current assets
122,090
121,964
45,655
42,615
527
477
Inventories
29
125,442
16,374
26
7,949
9,039
7,157
12
8
Assets held for sale
2
461
461
9,039
Current assets
73,496
73,542
51,463
51,030
749
753
Total assets
208,980
83,538
6,675
10,979
5
7,965
4,988
5,578
Current tax
27
1,366
1,566
1,566
Cash and cash equivalents
618
Other assets
28
9,790
7,485
7,485
22,016
23,124
2
714
640
657
Other provisions
96,766
41,340
35,008
-61,233
-52,902
17
24
91
99,153
152
32,113
1,325
1,531
79
55
460
669
5,484
5,331
38,674
48,775
-198
-1,436
-31,783
26,628
7,160
-10,765
-11,457
48,109
48,321
138
176
695
-40,610
1,089
483
442
28
130
-1,964
3,562
3,082
33,956
-39
6,660
1,163
797
45,963
-307
706
343
356
4,611
4,302
22
38
19,170
128
17,819
36,333
28,835
1,168
60,506
51,384
45,942
35,095
198
36,037
-3,843
-39
-40,257
-44,139
44,624
-98
72
-18,096
-66,487 -66,938
1,985
1,856
351
18
47,655
41,062
50,256
49
47,942 -66,585 -67,245
137,828
91,596
82,950 -127,818 -120,147
14,919
14,740
20,683
18,102
-17,292
146,808
-198
2
-8,028
Trade payables
37
9,669
9,731
9,731
8,360
8,516
348
947
355
36
15,117
13,443
13,443
24,636
21,863
187
119
Other liabilities
Liabilities in conjunction with assets held for sale
879
41,097
33
6,078
6,367
6,367
5,436
5,710
101
99
41,100
Current tax
1,158
1,124
1,124
933
874
Financial liabilities
35
38,825
34
1
2
62
information)
2017
2018
Eliminations
(unaudited supplementary
information)
2017
2018
(unaudited supplementary
403
1
1
30
33
46,427
44,285
20172
-7,855
425
62
Other Entities
information)
Current provisions and liabilities
70,909
71,762
71,765
40,306
37,910
636
573
2018
Total equity and liabilities
195,586
195,506
97,118
93,645
1,276
1,230
1 The opening balance sheet figures have been adjusted, based on the first-time application of IFRS 15 and IFRS 9, see notes 6 and 7.
² Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
Financial Services
(unaudited supplementary
208,980
Total investment in intangible assets and property, plant and equipment
2,084
-7,112
Accumulated other equity
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
50,815
658
31
31 December 2017*
15
Other changes*
37
relating to preferred stock
-2,300
9,064
Equity
475
44,036
2,047
657
44,445
-409
2,047
657
31
Revenue
reserves
reserves
Capital
Subscribed
capital
Note
8,589
Derivative
attributable to
Translation
differences
-1,494
31 December 2017 (adjusted according to IFRS 15)
Effects from the first-time application of IFRS 9
54,107
101
101
5
-82
436
53,671
1,515
93
-1,494
31 December 2017 (as originally reported)
Effect from the first-time application of IFRS 15
54,548
-441
-441
436
54,112
1,515
93
-1,494
Total
interest
of BMW AG
Minority
shareholders
Costs of
hedging
financial
instruments
Securities
56,121
11
2,118
31
1 January 2017 (as originally reported)
in € million
31 December 2018
Other changes
relating to preferred stock
Premium arising on capital increase
out of Authorised Capital
Subscribed share capital increase
Dividend payments
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2018
Net profit
1 January 2018 (adjusted according to IFRS 9)
Effects from the first-time application of IFRS 15
31 December 2017 (adjusted according to IFRS 15)
Effects from the first-time application of IFRS 9
31 December 2017 (as originally reported)
in € million
STATEMENT OF CHANGES IN EQUITY
BMW GROUP
Changes in Equity
→ BMW Group
Statement of
Statements
Group
Financial
116
115
The reconciliation of liabilities from financing activities is presented in note 35.
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
Effect from the first-time application of IFRS 15
1 January 2017 (adjusted according to IFRS 15)
Net profit*
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2017
(adjusted according to IFRS 15)*
-77
34
-2,630
7,835
718
7,117
50,993
2,084
658
178
50,815
2,084
658
-441
51,256
2,084
658
31
Revenue
reserves
reserves
Capital
Subscribed
capital
Note
Premium arising on capital increase
out of Authorised Capital
Subscribed share capital increase
Dividend payments
658
Change in cash and cash equivalents
1,515
53,772
1,515
93
-1,494
110
95
15
37
37
1
1
-2,300
-2,300
53,671
9,305
9,219
1,437
41
-1,323
8,675
630
630
1,437
41
-1,323
86
8,589
1 January 2017 (adjusted according to IFRS 15)
86
436
54,107
Net profit*
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2017
(adjusted according to IFRS 15)*
cial Statements.
On 19 February 2019, the Board of Management
granted approval for publication of the Group Finan-
note 45
In order to provide a better insight into the results of
operations, financial position and net assets of the
BMW Group, and going beyond the requirements of
IFRS 8 (Operating Segments), the Group Financial
Statements also include income statements and bal-
ance sheets for the Automotive, Motorcycles, Financial
Services and Other Entities segments. The Group
Cash Flow Statement is supplemented by the state-
ments of cash flows for the Automotive and Financial
Services segments. This supplementary information is
unaudited. Inter-segment transactions relate primarily
to internal sales of products, the provision of funds
for Group companies and the related interest. These
items are eliminated in the relevant "Eliminations"
columns. A description of the nature of the business
and the major operating activities of the BMW Group's
→ see segments is provided in → note 45 ("Explanatory notes
to segment information").
The BMW Group and segment income statements are
presented using the cost of sales method.
The Group currency is the euro. All amounts are
disclosed in millions of euros (€ million) unless stated
otherwise.
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (BMW Group
Financial Statements or Group Financial Statements)
at 31 December 2018 have been drawn up in accord-
ance with International Financial Reporting Standards
(IFRS), as endorsed by the European Union (EU), and
the supplementary requirements of § 315 a (1) of the
German Commercial Code (HGB). The Group Finan-
cial Statements and Combined Management Report
will be submitted to the operator of the electronic
version of the German Federal Gazette and can be
obtained via the Company Register website. Bayerische
Motoren Werke Aktiengesellschaft, which has its
seat at Petuelring 130, Munich, is registered in the
Commercial Register of the District Court of Munich
under the number HRB 42243.
Basis of preparation
01
AND POLICIES
ACCOUNTING PRINCIPLES
NOTES TO
THE GROUP
FINANCIAL
STATEMENTS
Policies
Principles and
→ Accounting
Financial Statements
Notes to the Group
Statements
Group
Financial
118
117
31 December 2017*
Other changes*
Premium arising on capital increase
relating to preferred stock
out of Authorised Capital
Subscribed share capital increase
Dividend payments
46,954
5
255
78
-130
-2
-51
34
34
-1,326
-2,630
-2,630
Net profit
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2018
7,207
-604
6,603
90
6,513
3
-572
-12
168
-604
-572
-906
-12
168
90
7,117
1 January 2018 (adjusted according to IFRS 9)
54,208
436
-906
-127
558
-569
52
-171
1 January 2017 (as originally reported)
Effects from the first-time application of IFRS 15
47,363
-409
-409
255
47,108
78
52
-171
31 December 2018
Other changes
Premium arising on capital increase
relating to preferred stock
Subscribed share capital increase
out of Authorised Capital
Dividend payments
Total
Minority
interest
Equity
attributable to
shareholders
of BMW AG
Costs of
hedging
financial
instruments
Securities
Translation
differences
Derivative
Accumulated other equity
58,088
529
57,559
46,699
-7,777
Effect of changes in composition of Group on cash and cash equivalents
Cash inflow/outflow from financing activities
125
170
-315
-299
-1,896
-1,751
-114
308
2,699
1,886
33
4,047
-
1,653
5,091
2017
2018
20171
2018
information)
(unaudited supplementary
Financial Services
information)
(unaudited supplementary
Automotive
9,039
5,299
-
-165
89
176
78
-758
-7,440
-5,670
-1,855
-1,783
-1,872
28
909
-71
-2
1
-41
-35
-739
-632
46
33
25
83
35
34
4,699
4,982
-5
1
10,979
161
7,880
5 Includes dividends received from investment assets amounting to €384 million (2017: €258 million).
Proceeds from non-current financial liabilities³
Intragroup financing and equity transactions
Interest paid²
Payment of dividend for the previous year
Payments into equity
Cash inflow/outflow from investing activities
3,866
3,761
Proceeds from the sale of marketable securities and investment funds
-4,041
-3,725
Investments in marketable securities and investment funds
969
Repayment of non-current financial liabilities³
Proceeds from the sale of subsidiaries and other business units
6235
Proceeds from the disposal of investment assets and other business units
-209
Acquisitions of subsidiaries and other business units
-142
-164
Expenditure for investment assets
30
107
Proceeds from the disposal of intangible assets and property, plant and equipment
21
Proceeds from subsidies for intangible assets and property, plant and equipment
267
Change in other financial liabilities4
Cash inflow/outflow from financing activities
Effect of exchange rate on cash and cash equivalents
4 The change in commercial paper is recognised under change in other financial liabilities. Prior year figures adjusted accordingly.
³ Proceeds/Repayment of bonds are recognised under Proceeds/Repayment of non-current financial liabilities. Prior year figures adjusted accordingly.
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
Interest relating to financial services business is classified as revenues/cost of sales.
Cash and cash equivalents as at 31 December
Cash and cash equivalents as at 1 January
1,159
1,940
64
-25
-223
-19
1,572
4,296
-3,131
-1,161
-16,801
-22,564
23,955
30,762
-165
-136
38
-2,324
25
-2,630
-6,163
-7,363
Change in cash and cash equivalents
Effect of changes in composition of Group on cash and cash equivalents
9,039
Effect of exchange rate on cash and cash equivalents
-390
7
3,046
1,856
4,794
7,157
-1,190
129
2,363
1,474
64
-25
-141
-82
8,631
-31
6,793
-1,859
-4,310
827
73
-2
-1,053
-7,608
-12,071
-48
-410
11,937
12,940
4,334
7,157
1,985
1,856
Proceeds from non-current financial liabilities³
Repayment of non-current financial liabilities³
Change in other financial liabilities4
Interest paid²
Intragroup financing and equity transactions
Payment of dividend for the previous year
Payments into equity
Acquisitions of subsidiaries and other business units
Proceeds from the disposal of investment assets and other business units
Proceeds from the sale of subsidiaries and other business units
Investments in marketable securities and investment funds
Proceeds from the sale of marketable securities and investment funds
Cash inflow/outflow from investing activities
Expenditure for investment assets
Total investment in intangible assets and property, plant and equipment
Proceeds from subsidies for intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment
Cash inflow/outflow from operating activities
Change in other operating assets and liabilities
Change in provisions
Change in trade payables
Change in trade receivables
Change in inventories
Changes in working capital
Change in receivables from sales financing
Change in leased products
Change in deferred taxes
Gain/loss on disposal of tangible and intangible assets and marketable securities
Other non-cash income and expense items
Result from equity accounted investments
Depreciation and amortisation of tangible, intangible and investment assets
Other interest and similar income/expenses²
Interest received²
Income taxes paid
Current tax
Loss from discontinued operations
Net profit
1
-1,179
-165
4,315
18
-15
-13
-6,972
-7,618
-6,384
-6,790
10,848
9,352
705
-1,259
-1,468
3
175
-13
1,069
344
162
109
1,214
-427
19
60
43
59
-20
225
105
28
2
5,097
567
2,099
-2,324
38
25
-2,630
937
130
-6,544
-6,769
211
199
3,655
3,562
-231
-63
-3,810
-3,692
969
1
2
1,037
1,210
-209
-482
-145
2
-136
Other assets
14
3,043
14
-2,575
-2,000
-1,853
-3,418
-45
-63
Profit/loss from continuing operations
7,240
8,675
5,124
Income taxes
5,299
142
Loss from discontinued operations
-33
-33
Net profit/loss
7,207
8,675
5,091
5,299
124
142
124
Attributable to minority interest
205
8,717
Interest and similar expenses
12
-386
-412
-533
-530
-6
Other financial result
13
51
248
169
129
Financial result
694
776
795
829
-6
-2
Profit/loss before tax
9,815
10,675
6,977
295
325
90
30
in € million
Note
2018
2017*
Net profit
Remeasurement of the net defined benefit liability for pension plans
Deferred taxes
Items not expected to be reclassified to the income statement in the future
Marketable securities (at fair value through other comprehensive income)
Financial instruments used for hedging purposes
Costs of hedging
→ 68
Other comprehensive income from equity accounted investments
Deferred taxes
8,675
32
935
693
-217
-218
718
475
-30
39
-1,381
7,207
86
Statement of Comprehensive Income for Group
10.84
22
Attributable to shareholders of BMW AG
31
7,117
8,589
5,061
5,277
124
142
Basic earnings per share of common stock in €
15
13.09
10.82
Basic earnings per share of preferred stock in €
15
10.84
13.09
Dilutive effects
Diluted earnings per share of common stock in €
15
10.82
13.07
Diluted earnings per share of preferred stock in €
15
13.07
1,914
567
397
→ BMW Group
Income Statement
→ Statement of Com-
prehensive Income
BMW GROUP
INCOME STATEMENT
STATEMENT OF COMPREHENSIVE INCOME
Income Statements for Group and Segments
→ 67
in € million
Automotive
Statements
(unaudited supplementary
information)
Note
2018
2017*
2018
Motorcycles
(unaudited supplementary
information)
2017*
2018
2017*
Group
Revenues
Group
Financial
Notes
GROUP FINANCIAL
STATEMENTS
→Page 110 Income Statement
→Page 110 Statement of Comprehensive Income
→Page 112 Balance Sheet
→Page 114 Cash Flow Statement
→ Page 116 Statement of Changes in Equity
Notes to the Group Financial Statements
Accounting Principles and Policies
Notes to the Income Statement
→ Page 118
→ Page 118
→Page 139
110
→ Page 145
→Page 167
Other Disclosures
Notes to the Statement of Comprehensive Income
Notes to the Balance Sheet
→Page 184 Segment Information
→ Page 190 List of Investments at 31 December 2018
3
3
Group Financial
Statements
Income Statement
Statement of
Comprehensive
Income
Balance Sheet
Cash Flow
Statement
→ Page 146
201
8
Gross profit
4
Other operating expenses
11
-651
-1,214
-676
-1,200
-1
-15
Profit/loss before financial result
9,121
4
9,899
7,888
175
207
Result from equity accounted investments
24
632
739
632
739
Interest and similar income
12
6,182
Cost of sales
675
720
97,480
9 -78,924
18,556
98,282 85,846
-78,329 -71,918
85,742
2,173
2,272
-69,402
-1,738
-1,798
19,953
13,928
16,340
810
435
Selling and administrative expenses
10
-9,558
-9,560
-7,880
-7,927
-263
-256
Other operating income
11
774
474
-620
2,857
-30
Attributable to minority interest
Attributable to shareholders of BMW AG
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
111
112
Group
Financial
Statements
→ BMW Group
Balance Sheet
at 31 December 2018
BMW GROUP
BALANCE SHEET AT 31 DECEMBER 2018
Profit/loss from continuing operations
Loss from discontinued operations
Net profit/loss
in € million
Group
Note
2018
1.1.20181 31.12.2017²
Automotive
(unaudited supplementary
information)
2018
Motorcycles
(unaudited supplementary
information)
20172
ASSETS
2018
Financial result
Profit/loss before tax
Income taxes
Result from equity accounted investments
Interest and similar income
Interest and similar expenses
-81
61
420
-874
1,653
4,047
-81
61
420
-874
60
Other financial result
64
3,983
-81
61
420
-874
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
Other operating income
Other operating expenses
Profit/loss before financial result
1,593
4,047
20172
21
Other investments
739
690
690
4,843
4,985
Receivables from sales financing
25
48,109
48,475
48,321
2,769
Financial assets
1,010
2,369
2,369
216
1,302
Deferred tax
14
1,590
1,965
1,993
-157
26
Intangible assets
2,624
2,769
10,971
9,464
10,472
8,981
95
57
Property, plant and equipment
Leased products
Investments accounted for using the equity method
24
222
2,769
22
18,471
18,471
19,372
18,050
399
388
23
38,572
36,257
36,257
2,624
19,801
1,653
9,464
-133
2017
2018
Eliminations
(unaudited supplementary
information)
2017
2018
2017*
28,165
27,567
6
information)
7
-17,306
-24,541
-23,986
-
19,273
16,857
3,624
3,581
6
7
563
-18,710
-449
Other Entities
information)
-340
674
-597
Currency translation foreign operations
Items that can be reclassified to the income statement in the future
Other comprehensive income for the period after tax
192
-1,171
-1,322
155
19
2018
-604
Total comprehensive income
Total comprehensive income attributable to minority interests
6,603
90
9,305
Total comprehensive income attributable to shareholders of BMW AG
31
6,513
86
9,219
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
Financial Services
(unaudited supplementary
630
-1,352
(unaudited supplementary
-79
-10
-1,145
-986
1,312
1,116
-27
11
-51
-58
-29
-18
66
-48
-130
2,161
2,207
-45
80
553
-534
-508
1,840
-36
-1,370
-19
-14
-1,246
13
-1,360
-27
16
20
42
96
126
130
-185
-124
-113
-80
-96
-208
12
210
2,190
2,194
-27
601
-404
1,110
12
1,178
230
97
Total identified net assets
In December 2017, BMW AG, Audi AG, Ingolstadt,
and Daimler AG, Stuttgart, signed agreements to sell
shares in THERE Holding B.V. (THERE) to Robert
Bosch Investment Nederland B.V., Boxtel, and to
Continental Automotive Holding Netherlands B.V.,
Maastricht. Each of these two parties acquired 5.9% of
the shares, which were sold in equal parts by BMW AG,
Audi AG and Daimler AG. The transactions were
completed during the first quarter of 2018. The sale
does not have a significant impact on the results of
operations, financial position and net assets of the
BMW Group.
Consideration transferred (purchase price)
418
Goodwill
As a result of the merger, the investments in the
companies previously held by BMW will be remea-
sured to their fair value. This will give rise to a one-off
positive effect on Group earnings in the region of
between €100 million and €300 million. Due to the
fact that the transaction was completed shortly after
the BMW Group's year-end, the work on opening
balance sheets at the merger date and the calculation
of the final purchase prices have not yet been finalised.
For this reason, the final purchase prices cannot yet
be determined definitively. Similarly, purchase price
allocations have not yet been finalised. The disclosures
made should be regarded as provisional since no fur-
ther information is available at present.
On 28 March 2018, the BMW Group signed an agree-
ment with Daimler - subject to anti-trust approval.
regarding the merger of certain business units that
provide mobility services. DriveNow is part of this
agreement and is therefore accounted for as a dis-
continued operation.
Assets and liabilities totalling €461 million and
€62 million respectively are reported as discontin-
ued operations at 31 December 2018. These items are
disclosed separately in the Group Balance Sheet and
allocated to the Automotive segment. The loss after
tax from discontinued operations for the financial
year 2018 amounted to €33 million. This amount is
also disclosed separately in the Income Statements
for the Group and Segments.
Following approval by the antitrust authorities and
with effect from 31 January 2019, the BMW Group
has now completed the agreement with the Daimler
Group regarding the merger of certain business units
that provide mobility services. Existing on-demand
mobility offerings in the areas of car sharing, ride-
hailing, parking, charging and multi-modality will
be combined and strategically expanded. The
BMW Group and the Daimler Group each hold equal
shares in the joint ventures that comprise the mobility
services referred to above.
GOODWILL CALCULATION
321
40
Other receivables
Total identified net assets
3
34
Deferred tax liabilities
5
Trade payables
16
Provisions
IDENTIFIED LIABILITIES
Inventories
Cash and cash equivalents
The other changes to the Group reporting entity do
not have a material impact on the results of operations,
financial position and net assets of the Group.
97
03
7.81
The financial statements of consolidated compa-
nies which are presented in a foreign currency are 7
125.77
Trade receivables
7.63
7.80
7.87
0.88
0.88
0.89
0.89
2017
2018
31.12.2017
Foreign currency translation and measurement
31.12.2018
Closing rate
Argentina has fulfilled the definition of a hyperinfla-
tionary economy since 1 July 2018. For this reason,
IAS 29 (Financial Reporting in Hyperinflationary
Economies) is being applied for the BMW subsidiary in
Argentina with effect from the financial year 2018. The
price indices published by the Federación Argentina
de Consejos Profesionales de Ciencias Económicas
(FACPCE) are used to adjust non-monetary assets and
liabilities and items in the income statement. The
resulting effects are not significant for the BMW Group
and for this reason prior year figures have not been
adjusted.
South African Rand
US-Dollar
Russian Rubel
Korean Won
Japanese Yen
Chinese Renminbi
British Pound
1 Euro =
The exchange rates of currencies which have a mate-
rial impact on the Group Financial Statements were
as follows:
In the single entity accounts of BMW AG and its sub-
sidiaries, foreign currency receivables and payables
are measured on initial recognition using the exchange
rate prevailing at the date of first-time recognition.
At the end of the reporting period, foreign currency
receivables and payables are measured using the clos-
ing exchange rate. The resulting unrealised gains and
losses, as well as realised gains and losses arising on
settlement, are recognised in the income statement.
Non-monetary balance sheet items denominated in
foreign currencies are rolled forward on the basis of
historical exchange rates.
translated using the modified closing rate method.
Under this method, assets and liabilities are translat-
ed at the closing exchange rate, whilst income and
expenses are translated at the average exchange rate.
Differences arising on foreign currency translation are
presented in "Accumulated other equity".
Average rate
Trademarks
All consolidated subsidiaries have the same year-end as
BMW AG with the exception of BMW India Private Ltd.
and BMW India Financial Services Private Ltd., whose
year-ends are 31 March in accordance with local legal
requirements.
1
first time in 2018
24
22
208
187
21
Total
Foreign
Germany
31 December 2017
Included for the
Included at
The following changes took place in the Group report-
ing entity in the financial year 2018:
2
Associated companies and joint ventures are accounted
for using the equity method, with measurement on
initial recognition based on acquisition cost.
The BMW Group is also party to a cooperation with
Toyota Motor Corporation, Toyota City, for the devel-
opment of a sports car. This cooperation is accounted
for as a joint operation.
with SGL Carbon SE concerning that entity's gradual
acquisition of the BMW Group's 49% shareholding.
Accordingly, between the beginning of 2018 and the
end of 2020 at the latest, SGL Carbon SE will become
the sole owner of the hitherto joint operations. As a
consequence of the transaction, the joint operations
are no longer consolidated proportionately in the
BMW Group Financial Statements and are no longer
consolidated entities with effect from the financial
year 2018. SGL Composites LLC continues to be held
as an investment.
In the case of a joint operation, the parties that have
joint control of the arrangement have rights to the
assets, and obligations for the liabilities, relating to the
arrangement. Assets, liabilities, revenues and expenses
of a joint operation are recognised proportionately in
the Group Financial Statements on the basis of the
BMW Group entity's rights and obligations (propor-
tionate consolidation). Together with SGL Carbon SE,
companies of the BMW Group were previously party
to joint operations for the manufacture of carbon
fibres and carbon fibre fabrics used in vehicle pro-
duction. In November 2017, an agreement was signed
Joint operations and joint ventures are forms of joint
arrangements. Such an arrangement exists when a
BMW Group entity jointly carries out activities with
a third party on the basis of a contractual agreement.
An entity is classified as an associated company if
BMW AG - either directly or indirectly – has the abil-
ity to exercise significant influence over the entity's
operating and financial policies. As a general rule,
the Group is assumed to have significant influence
if it holds 20% or more of the entity's voting power.
An entity is deemed to be controlled if BMW AG -
either directly or indirectly - has power over it, is
exposed or has rights to variable returns from it and
has the ability to influence those returns.
When assessing whether an investment gives rise to a
controlled entity, an associated company, a joint oper-
ation or a joint venture, the BMW Group considers
contractual arrangements and other circumstances, as
well as the structure and legal form of the entity. Discre-
tionary decisions may also be required. If indications
exist of a change in the judgement of (joint) control, the
BMW Group undertakes a new assessment.
The BMW Group Financial Statements include BMW AG
and all material subsidiaries over which BMW AG -
either directly or indirectly - exercises control. This
also includes 58 structured entities, consisting of asset-
backed securities entities and special-purpose funds.
and consolidation principles
Group reporting entity
02
134.93
In the case of a joint venture, the parties which have
joint control only have rights to the net assets of the
arrangement.
No longer included
in 2018
Included at
31 December 2018
7
9
22
111
Fair values at
acquisition date
Intangible assets
IDENTIFIED ASSETS
in € million
The following table shows the purchase price allocation:
DriveNow's equity prior to the acquisition stood at
a negative amount of €2 million. As a result of the
step acquisition, the shares already held by BMW
were remeasured to their fair value, giving rise to a
gain of €209 million, which is included in the result
on investments. The fair value of shares already held
amounts to €209 million.
DriveNow GmbH & Co. KG and DriveNow Verwal-
tungs GmbH and their foreign subsidiaries DriveNow
Austria GmbH, DriveNow UK Limited, DriveNow
Sverige AB, DriveNow Belgium S.p.r.l. and DriveNow
Italy S.r.l. have been fully consolidated since the first
quarter of 2018.
services.
Following approval by the antitrust authorities and
with effect from 9 March 2018, the BMW Group
acquired the remaining 50% of the shares of the
DriveNow companies together with their subsidiaries
for a purchase price of €209 million. The purchase
price was settled by the transfer of cash funds. The
acquisition expands the BMW Group's strategic
options for the further development of mobility
Principles and
Policies
→ Accounting
Notes to the Group
Financial Statements
Statements
Group
Financial
120
119
The BMW Group previously operated the joint ven-
tures DriveNow GmbH & Co. KG and DriveNow
Verwaltungs GmbH (DriveNow) together with Sixt SE,
Pullach. DriveNow offers car-sharing services in major
German cities and abroad. In January 2018, the
BMW Group signed an agreement with Sixt SE for
the complete acquisition of the shares in DriveNow.
217
194
23
15
15
22
5
130.36
Other liabilities
1,271.07
Where hedge accounting is applied, changes in fair value
are recognised in the income statement in sundry other
financial result or in other comprehensive income as
a component of accumulated other equity, depending
on whether the hedging relationship is classified as a
fair value hedge or a cash flow hedge. Fair value hedges
are mainly used to hedge interest rate risks relating to
bonds, other financial liabilities and receivables from
sales financing. Cross currency basis spreads are not
designated as part of the hedging relationship in the
case of interest rate hedges accounted for as fair value
hedges. Accordingly, changes in the market value of
such instruments are recorded as costs of hedging
within accumulated other equity. Amounts recorded
in equity are reclassified to the income statement over
the term of the hedging relationship.
The BMW Group applies the option to recognise the
credit risks arising from the fair values of a group of
derivative financial assets and liabilities on the basis
of their total net amount. Portfolio-based valuation
adjustments (credit valuation adjustments and debit
valuation adjustments) to the individual derivative
financial assets and financial liabilities are allocated
using the relative fair value approach (net method).
Derivative financial instruments are used within the
BMW Group for hedging purposes in order to reduce
currency, interest rate, fair value and market price
risks. All derivative financial instruments are mea-
sured at their fair value. Fair values are determined
on the basis of valuation models. Observable market
price, tenor and currency basis spreads are taken into
account in the measurement of derivative financial
instruments. Furthermore, the Group's own credit
risk and that of counterparties is taken into account
on the basis of credit default swap values for market
contracts with matching terms.
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
Group
Financial
Statements
126
125
The BMW Group writes off financial assets when it has
no reasonable expectation of recovering the amounts
concerned. This may be the case, for instance, if the
debtor is deemed not to have sufficient assets or other
sources of income to service the debt.
The measurement of the change in default risk is based
on a comparison of the default risk at the date of initial
recognition and at the end of the reporting period.
The default risk at the end of each reporting period
is determined on the basis of credit checks, current
key economic indicators and any overdue payments.
Loss allowances on trade receivables are determined
primarily on the basis of information relating to over-
due amounts. In the case of marketable securities and
investment funds, the BMW Group usually applies
the option not to allocate financial assets with a low
default risk to different stages. Accordingly, assets
with an investment grade rating are always allocated to
stage 1. The loss allowance on these assets is calculated
using the input factors available on the market, such
as ratings and default probabilities.
which had not been credit-impaired at the time they
were acquired or originated, an impairment allowance
is recognised at an amount equal to lifetime expected
credit losses (stage 3). This is the case regardless of
whether the general or simplified approach is applied.
As a general rule, the BMW Group assumes that a
receivable is in default if it is more than 90 days
overdue or if there are objective indications of insol-
vency. Credit-impaired assets are identified as such
on the basis of this definition of default. In the case
of stage 3 assets, interest income is calculated on the
asset's carrying amount less any impairment loss.
Loss allowances on receivables from sales financing
are determined primarily on the basis of past expe-
rience with credit losses, current data on overdue
receivables, rating classes and scoring information.
Forward-looking information (for instance forecasts of
key performance indicators) is also taken into account
if, based on past experience, such indicators show a
substantive correlation to actual credit losses.
With the exception of operating lease and trade
receivables, the BMW Group applies the general
approach described in IFRS 9 to determine impairment
of financial assets. Under the general approach, loss
allowances are measured on initial recognition on the
basis of the expected 12-month credit loss (stage 1). If
the credit loss risk at the end of the reporting period
has increased significantly since initial recognition,
the impairment allowance is measured on the basis
of lifetime expected credit losses (stage 2 – general
approach). The BMW Group applies the simplified
approach described in IFRS 9 to operating lease
and trade receivables, whereby the amount of the
loss allowance is measured subsequent to the initial
recognition of the receivable on the basis of lifetime
expected credit losses (stage 2 – simplified approach).
For the purposes of allocating an item to stage 2, it
is irrelevant whether the credit risk of the asset
concerned has increased significantly since initial
recognition. In the case of credit-impaired assets
Receivables from sales financing are measured at amor-
tised cost using the effective interest rate method. This
also includes receivables arising on vehicle finance
leases.
The time values of option transactions and the interest
component of forward currency contracts are not des-
ignated as part of the hedging relationship in the case
of currency hedges accounted for as cash flow hedges.
Changes in the market value of such components are
recorded as costs of hedging on a separate line within
accumulated other equity. Amounts accumulated in
other equity from currency hedges are reclassified to
cost of sales when the related hedged item is recog-
nised in profit or loss.
Items reported under other investments within the
scope of IFRS 9 are measured at fair value through
profit or loss. Investments in subsidiaries, joint
arrangements and associated companies that are not
material to the BMW Group and which do not fall
within the scope of IFRS 9 are also included in other
investments.
liquidity management purposes. Selected marketable
securities and investment fund, money market funds
within cash and cash equivalents as well as convertible
bonds are recognised at fair value through profit or
loss, as their contractual cash flows do not solely
represent payments of principal and interest.
Depending on the business model and the structure of
contractual cash flows, financial assets are classified
as measured at amortised cost, at fair value through
comprehensive income or at fair value through profit
or loss. The category "at fair value through compre-
hensive income" at the BMW Group comprises mainly
marketable securities and investment funds used for
The Group's financial assets include in particular other
investments, receivables from sales financing, mar-
ketable securities and investment funds, derivative
financial assets, trade receivables and cash and
cash equivalents. Non-derivative financial assets are
accounted for on the basis of the settlement date.
Investments accounted for using the equity method are
measured provided no impairment has been recog-
nised at cost of investment adjusted for the Group's
share of earnings and changes in equity capital.
-
Assumptions and estimations are required regarding
future residual values, since these represent a signif-
icant part of future cash inflows. Relevant factors
to be considered include the trend in market prices
and demand on the pre-owned vehicle market. The
assumptions are based on internally available historical
data and current market data as well as on forecasts of
external institutions. Furthermore, assumptions are
regularly validated by comparison with external data.
Group products recognised by BMW Group entities as
leased products under operating leases are measured at
manufacturing cost, including any initial direct costs.
All other leased products are measured at acquisition
cost. All leased products are depreciated over the period
of the lease using the straight-line method down to
their expected residual value. Where the recoverable
amount of a lease exceeds the asset's carrying amount,
changes in residual value expectations are recognised
by adjusting scheduled depreciation prospectively
over the remaining term of the lease. If the recoverable
amount is lower than the asset's carrying amount,
an impairment loss is recognised for the shortfall. A
test is carried out at each balance sheet date to deter-
mine whether an impairment loss recognised in prior
periods no longer exists or has decreased. In such
cases, the carrying amount of the asset is increased
to the recoverable amount, at a maximum up to the
amount of the asset's amortised cost.
Leased items of property, plant and equipment whose
economic ownership is attributed to the BMW Group
(finance leases) are measured on initial recognition at
their fair value or, if lower, at the net present value of
minimum lease payments. The assets are depreciated
using the straight-line method over their estimated
useful lives or, if shorter, over the contractual lease
period. Obligations for future lease payments are
recognised at their net present value in other financial
liabilities.
With respect to lease arrangements of the BMW Group,
use of judgement is required, in particular with regard
to the transfer of economic ownership of a leased item.
For machinery used in multiple-shift operations,
depreciation rates are increased to account for the
additional utilisation. If there is any indication of
impairment of property, plant and equipment, an
impairment test is performed as described above for
intangible assets.
2 to 25
Other equipment, factory and office equipment
The market values of financial instruments measured
at fair value are determined on the basis of market
information available at the balance sheet date, such
as quoted prices or using appropriate measurement
methods, in particular the discounted cash flow method.
In the case of raw materials hedges that are accounted
for as cash flow hedges, the hedging instruments are
designated in full as part of the hedging relationship.
As an exception to this general rule, the interest
component of raw materials derivative instruments
redesignated in conjunction with the first-time
application of IFRS 9 was not designated as part of the
hedging relationship. Changes in the fair value of
this component are recorded as costs of hedging
on a separate line within accumulated other equity.
Amounts recorded in accumulated other equity are
included in the carrying amount of inventories on
initial recognition.
Deferred taxes are recognised on all temporary differ-
ences between the tax and accounting bases of assets
and liabilities and on consolidation procedures. The
recoverability of deferred tax assets is assessed at each
balance sheet date on the basis of planned taxable
income in future financial years. If with a probabil-
ity of more than 50 percent future tax benefits will
not be realised, either in part or in total, a valuation
allowance is recognised on the deferred tax assets. The
calculation of deferred tax assets requires assumptions
to be made with regard to the level of future taxable
income and the timing of recovery of deferred tax
assets. These assumptions take account of forecast
operating results and the impact on earnings of the
reversal of taxable temporary differences. Since future
business developments cannot be predicted with cer-
tainty and to some extent cannot be influenced by the
BMW Group, the measurement of deferred tax assets
is subject to uncertainty. Deferred taxes are calculated on
the basis of tax rates which are applicable or expected
to apply in the relevant national jurisdictions when
the amounts are recovered.
Current income taxes are calculated within the
BMW Group on the basis of tax legislation applicable
in the relevant countries. To the extent that judgement
was necessary to determine the treatment and amount
of tax items presented in the financial statements,
there is in principle a possibility that local tax author-
ities may take a different position.
126.68
in note 41.
The share-based remuneration programme for Board
of Management members and senior heads of depart-
ment entitles BMW AG to elect whether to settle its
commitments in cash or with shares of BMW AG
common stock. Based on the decision to settle in cash,
the share-based remuneration programmes for Board
of Management members and senior heads of depart-
ment are accounted for as cash-settled, share-based
remuneration programmes. Further information on
share-based remuneration programmes is provided
to be settled in shares are measured at their fair value
at grant date. The related expense is recognised as
personnel expense in the income statement over the
vesting period and offset against capital reserves.
Share-based remuneration programmes expected to
be settled in cash are revalued to their fair value at
each balance sheet date between the grant date and
the settlement date and on the settlement date itself.
The expense is recognised as personnel expense in
the income statement over the vesting period and
presented in the balance sheet as a provision.
Share-based remuneration programmes which are expected
→ see
note 40 and 46
→ see
not 41
note 33
Related party disclosures comprise information on
associated companies, joint ventures and non-con-
solidated subsidiaries as well as individuals which
have the ability to exercise a controlling or significant
influence over the financial and operating policies
of the BMW Group. This includes all persons in key
positions of the Company, as well as close members
of their families or intermediary entities. In the case
of the BMW Group, this also applies to members of
the Board of Management and the Supervisory Board.
Details relating to these individuals and entities are
provided in → note 40 and in the list of investments
disclosed in → note 46.
If the recognition and measurement criteria relevant
for provisions are not fulfilled and the outflow of
resources on fulfilment is not unlikely, the potential
obligation is disclosed as a contingent liability.
The recognition and measurement of provisions
for litigation and liability risks necessitates making
assumptions in order to determine the probability of
liability, the amount of claim and the duration of the
legal dispute. The assumptions made, especially the
assumption about the outcome of legal proceedings,
are subject to a high degree of uncertainty. The appro-
priateness of assumptions is regularly reviewed, based
on assessments undertaken both by management and
external experts, such as lawyers. If new developments
arise in the future that result in a different assessment,
provisions are adjusted accordingly.
Provisions for statutory and non-statutory warranties
are recognised at the point in time when control over
the goods is transferred to the dealership or retail
customer or when a new category of warranty is
introduced. With respect to the level of the provi-
sion, estimations are made in particular based on past
experience of damage claims and processes. Future
potential repair costs and price increases per product
and market are also taken into account. Provisions
for warranties for all companies of the BMW Group
are adjusted regularly to take account of new infor-
mation, with the impact of any changes recognised
in the income statement. Further information is
pro-
vided in note 33. Similar estimates are also made → see
in conjunction with the measurement of expected
reimbursement claims.
Principles and
Policies
Notes to the Group
Financial Statements
→ Accounting
Group
Financial
Statements
128
127
The measurement of provisions for statutory and
non-statutory warranty obligations (statutory, contractual
and voluntary) involves estimations. In addition to manu-
facturer warranties prescribed by law, the BMW Group
offers various further standard (assurance-type) war-
ranties depending on the product and sales market.
No provisions are recognised for additionally pur-
chased service packages that are treated as separate
performance obligations.
Other provisions are recognised when the BMW Group
has a present legal or factual obligation towards a third
party arising from past events, the settlement of which
is probable, and when the amount of the obligation
can be reliably estimated. Provisions with a remaining
period of more than one year are measured at their
net present value.
Remeasurement of the net liability can result from
changes in the present value of the defined benefit
obligation, the fair value of the plan assets or the
asset ceiling. Remeasurement can result, amongst
others, from changes in financial and demographic
parameters, as well as changes following the portfolio
development. Remeasurements are recognised imme-
diately in other comprehensive income and hence
directly in equity (within revenue reserves).
Past service cost arises where a BMW Group com-
pany introduces a defined benefit plan or changes
the benefits payable under an existing plan. This cost
is recognised immediately in the income statement.
Similarly, gains and losses arising on the settlement
of a defined benefit plan are recognised immediately
in the income statement.
Net interest expense on the net defined benefit lia-
bility and net interest income on net defined benefit
assets are presented separately within the financial
result. All other costs relating to allocations to pension
provisions are allocated to costs by function in the
income statement.
In the case of funded plans, the pension obligation is
offset against plan assets measured at their fair value.
If the plan assets exceed the pension obligation, the
surplus is tested for recoverability. In the event that
the BMW Group has a right of reimbursement or a
right to reduce future contributions, it reports an asset
(within Other financial assets), measured on the basis
of the present value of the future economic benefits
attached to the plan assets. For funded plans, in cases
where the obligation exceeds plan assets, a liability is
recognised under pension provisions.
Provisions for pensions are measured using the projected
unit credit method. Under this method, not only
obligations relating to known vested benefits at the
reporting date are recognised, but also the effect of
future expected increases in pensions and salaries. The
calculation is based on independent actuarial valua-
tions which take into account relevant biometric factors.
Cash and cash equivalents comprise mainly cash on hand
and cash at bank with an original term of up to three
months. With the exception of money market funds,
cash and cash equivalents are measured at amortised
cost.
Work in progress and finished goods are stated at
the lower of manufacturing cost and net realisable
value. Manufacturing cost comprises all costs which
are directly attributable to the manufacturing process
as well as an appropriate proportion of production-
related overheads. This includes production-related
depreciation and amortisation and an appropriate
proportion of administrative and social costs. Financ-
ing costs are not included in the acquisition or man-
ufacturing cost of inventories.
Inventories of raw materials, supplies and goods for
resale are stated at the lower of average acquisition
cost and net realisable value.
8 to 50
3 to 21
Plant and machinery
The calculation of the amount of the provision
requires assumptions to be made with regard to
discount rates, salary trends, employee fluctuation
and the life expectancy of employees. Discount rates
are determined by reference to market yields at the
end of the reporting period on high quality fixed-in-
terest corporate bonds. The salary trend relates to
the expected future rate of salary increase which is
estimated annually based on inflation and the career
development of employees within the Group.
in years
Revenues also include lease rentals and interest
income from financial services. Income from lease
instalments arising on operating leases is recognised
on a straight-line over the lease term. Interest income
arising on finance leases as well as on retail customer
and dealership financing is recognised using the effec-
tive interest method and reported as interest income
on loan financing within revenues.
Revenues from the sale of vehicles, for which repur-
chase arrangements are in place, are not recognised
immediately in full. Instead, revenues are either recog-
nised proportionately or the difference between the
sales and repurchase price recognised in instalments
over the term of the contract depending on the nature
of the agreement. This includes in particular revenues
from vehicle sales, where it is expected that vehicles
will return to the Group as leased vehicles in the
subsequent period. In this case, assets and liabilities
relating to rights of return are recognised.
Consideration for the rendering of services to customers
usually falls due for payment at the beginning of a
contract and is deferred as a contract liability under
deferred income. The deferred amount is released over
the service period and recognised as revenue in the
income statement. Reflecting the fact that expenses
are incurred over the period in which services are ren-
dered, deferred income is released on the basis of the
expected cost trend. If the sale of products includes a
determinable amount for services (multiple-component
contracts), the related revenues are deferred and
recognised as income in the same way.
Revenues from contracts with customers include in
particular revenues from the sale of products and
leased assets as well as from services. Revenue is
recognised when control is transferred to the deal-
ership or retail customer. This is usually the case
at the point in time when the risks and rewards of
ownership are transferred. In the case of services,
control is transferred over time. Revenues are stated
net of settlement discount, bonuses and rebates as well
as interest and residual value subsidies. Variable con-
sideration components, such as bonuses and interest
subsidies, are measured at the expected value and, in
the case of multi-component contracts, allocated to all
performance obligations unless directly attributable
to the sale of a vehicle. The consideration arising from
these sales usually falls due for payment immediately
or within 30 days. In exceptional cases, a longer pay-
ment may also be agreed.
Accounting policies, assumptions, judgements
and estimations
04
→ Accounting
Principles and
Policies
Notes to the Group
Financial Statements
Statements
Group
Financial
122
121
1.13
1.18
1.14
15.04
15.62
14.81
16.45
65.91
74.07
69.04
79.72
1,276.47
1,298.78
Factory and office buildings, residential buildings, fixed
installations in buildings and outside facilities
1,281.41
Public sector grants are not recognised until there is
reasonable assurance that the conditions attaching to
them have been complied with and the grants will be
received. The resulting income is recognised in cost
of sales over the periods in which the costs occur that
they are intended to compensate.
Earnings per share are calculated as follows: Basic
earnings per share are calculated for common and
preferred stock by dividing the net profit for the year
after minority interests and attributable to each cate-
gory of stock, by the average number of outstanding
shares. Net profit for the year is accordingly allocated
to the different categories of stock. The portion of
net profit that is not being distributed is allocated
to each category of stock based on the number of
outstanding shares. Profits available for distribution
are determined directly on the basis of the dividend
resolutions passed for common and preferred stock.
Diluted earnings per share are calculated and sepa-
rately disclosed in accordance with IAS 33.
1.20
Development costs for vehicle, module and architecture
projects are capitalised at manufacturing cost, to the
extent that attributable costs (including development-
related overhead costs) can be measured reliably and
both technical feasibility and successful marketing
are assured. It must also be sufficiently probable that
the development expenditure will generate future
economic benefits. Capitalised development costs are
amortised on a straight-line basis following the start
of production over the estimated product life cycle
(usually five to 12 years).
All items of property, plant and equipment are measured
at acquisition or manufacturing cost less accumulated
depreciation and accumulated impairment losses. The
cost of internally constructed plant and equipment
comprises all costs which are directly attributable
to the manufacturing process as well as an appro-
priate proportion of production-related overheads.
This includes production-related depreciation and
amortisation as well as an appropriate proportion
of administrative and social costs. Financing costs
are not included in acquisition or manufacturing cost
unless they are directly attributable to the asset. The
carrying amount of items of depreciable property,
plant and equipment is written down according to
scheduled usage-based depreciation - as a general
rule on a straight-line basis - over the useful lives of
the assets. Depreciation is recorded as an expense in
the income statement.
Purchased and internally-generated intangible assets
are recognised as assets where it is probable that the
use of the asset will generate future economic benefits
and where the costs of the asset can be determined
reliably. Such assets are measured at acquisition
or manufacturing cost, as a general rule without
financing costs, and, to the extent that they have a
finite useful life, amortised on a straight-line basis
over their estimated useful lives. With the exception
of capitalised development costs, intangible assets
are amortised as a general rule over their estimated
useful lives of between three and 20 years.
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
Group
Financial
Statements
124
123
The risk-adjusted discount rate, calculated using a
CAPM model, also takes into account specific peer-
group information relating to beta-factors, capital
structure data and borrowing costs. In conjunction
with the impairment tests for cash-generating units,
sensitivity analyses are performed for the main
assumptions in order to rule out that possible changes
to the assumptions used to determine the recoverable
amount would result in the requirement to recognise
an impairment loss.
The following useful lives are applied throughout the
BMW Group:
13.4
12.0
12.0
12.0
12.0
13.4
2018
If there is any indication of impairment of intangible
assets, or if an annual impairment test is required
(i.e. intangible assets with an indefinite useful life,
intangible assets during the development phase and
goodwill), an impairment test is performed. Each
individual asset is tested separately unless the cash
flows generated by the asset are not sufficiently inde-
pendent from the cash flows generated by other assets
or other groups of assets. In this case, impairment is
tested at the level of a cash-generating unit.
Financial Services
Automotive
Motorcycles
in %
Amounts are discounted on the basis of a market-
related cost of capital rate. Impairment tests for the
Automotive and Motorcycles cash-generating units
are performed using a risk-adjusted pre-tax cost of
capital (WACC). In the case of the Financial Services
cash-generating unit, a pre-tax cost of equity capital
is used, as is customary in the sector. The following
discount factors were applied:
into account. Forecasting assumptions are continually
adjusted to current information and regularly com-
pared with external sources. The assumptions used
take account in particular of expectations of the prof-
itability of the product portfolio, future market share
development, macroeconomic developments (such
as currency, interest rate and raw materials prices)
as well as the legal environment and past experience.
The BMW Group determines the value in use on the
basis of a present value computation. Cash flows
used for this calculation are derived from long-term
forecasts approved by management. These long-term
forecasts are based on detailed forecasts drawn up
at an operational level and, with a planning period
of six years, correspond roughly to a typical product
life cycle of vehicle projects. For the purposes of cal-
culating cash flows beyond the planning period, a
residual value is assumed which does not take growth
Goodwill arises on first-time consolidation of an
acquired business when the cost of acquisition
exceeds the Group's share of the net fair value of the
assets, liabilities and contingent liabilities identified
during the acquisition.
As part of the process of assessing recoverability, it is
generally necessary to apply estimations and assump-
tions - in particular regarding future cash inflows and
outflows and the length of the forecast period - which
could differ from actual amounts. Actual amounts
may differ from the assumptions and estimations
used if business conditions develop differently to
expectations.
If the reason for a previously recognised impairment
loss no longer exists, the impairment loss is reversed
up to the level of the recoverable amount, but no higher
than the amortised acquisition or manufacturing cost.
Impairment losses on goodwill are not reversed.
For the purpose of the impairment test, the carrying
amount of an asset (or a cash-generating unit) is com-
pared with the recoverable amount. The first step of
the impairment test is to determine the value in use.
If the value in use is lower than the carrying amount,
the next step is to determine the fair value less costs to
sell and compare the amount so determined with the
asset's carrying amount. If the fair value is lower than
the carrying amount, an impairment loss is recognised,
reducing the carrying amount to the higher of the
asset's value in use or fair value less costs to sell.
2017
Hedge accounting
Hedge accounting
2,187
Hedge accounting
Hedge accounting
2,187
814
1,340
Held for trading
Fair value through profit or loss
1,340
Available-for-sale
Fair value directly through equity
Fair value through profit or loss
790
814
80,562
Other
At amortised cost
Fair value hedges
5,447
Cash flow hedges
Other derivative instruments
Marketable securities and investment funds
Loans to third parties
Credit card receivables
80,434
Cash and cash equivalents
Carrying amount
IAS 39
IFRS 9
Fair value through profit or loss
366
395
29
Trade receivables
3,919
Other assets
730
Fair value through profit or loss
632
Loans and receivables
At amortised cost
2,667
2,663
Receivables from subsidiaries
9,039
Receivables from companies
At amortised cost
276
276
Loans and receivables
At amortised cost
Available-for-sale
Fair value option
Loans and receivables
in which an investment is held
Loans and receivables
At amortised cost
8,407
Cash
Loans and receivables
At amortised cost
112
112
Fair value option
Fair value through profit or loss
2
At amortised cost
2
At amortised cost
248
240
Loans and receivables
At amortised cost
184
184
Loans and receivables
Derivative instruments
13.09
Receivables from sales financing
As originally
reported
Adjustment
IFRS 15
Adjusted
according to
IFRS 15
8,706
-31
8,675
1,334
9,336
9,305
9,250
-31
9,219
As originally
reported
Adjustment
IFRS 15
Adjusted
according to
-31
IFRS 15
-0.05
13.07
-51
-2,000
8,706
-31
8,675
8,620
-31
13.14
8,589
-0.05
13.07
13.14
-0.05
13.09
13.12
-0.05
13.12
Financial assets
8,706
8,675
136
Group
Financial
Statements
BMW Group reclassification of financial instruments at 1 January 2018
→ 74
Notes to the Group
Financial Statements
135
→ Accounting
Policies
in € million
FINANCIAL ASSETS
Category
IAS 39
IFRS 9
Other investments
Principles and
-31
The following table shows the reconciliation of the
categories and carrying amounts of financial instru-
ments as well as the impact on Group equity of the
first-time application of IFRS 9.
→ see
note 4
696
56
752
-609
50
-559
-2,884
The rules for hedge accounting contained in IAS 39
required an effectiveness test to be performed for
corresponding hedging relationships, based on fixed
ranges, in order to demonstrate the retrospective
effectiveness of the hedge. It was not permitted under
IAS 39 to designate all risk components separately.
-75
5,909
5,909
07
First-time application of IFRS 9
The new requirements contained in IFRS 9 (Finan-
cial Instruments) relating to the classification and
measurement of financial instruments were applied
retrospectively by the BMW Group in the financial
year 2018. The available exemption not to adjust
comparative information for previous periods was
applied. Accordingly, only the opening balance sheet
at 1 January 2018 was adjusted. Apart from a small
number of exceptions, the requirements for hedge
accounting were applied prospectively in the financial
year 2018. The one exception to this is hedge accounting
for the fair value of a portfolio against interest rate
risk, for which the requirements of IAS 39 continue to
be applied. Information on accounting in accordance
with IFRS 9 is provided in the Accounting Policies
section in note 4.
Prior to the adoption of IFRS 9, financial instruments
were accounted for in accordance with IAS 39. In
accordance with those requirements, the Group's
financial assets were allocated to either cash funds
or to the categories "loans and receivables", "available-
for-sale”, “held for trading” or “fair value option”.
Financial liabilities were allocated to the categories
"financial liabilities at fair value through profit or loss"
or "other financial liabilities". On initial recognition,
financial instruments accounted for in accordance
with IAS 39 were measured at fair value, whereby
transaction costs were taken into account except in the
case of financial instruments allocated to the category
"at fair value through profit or loss". Subsequent to
initial recognition, available-for-sale financial assets,
held-for-trading financial instruments and financial
assets for which the fair value option was applied
were measured at their fair value. Financial assets
that were classified as loans and receivables and
financial liabilities (with the exception of derivative
financial instruments) were subsequently measured
at amortised cost using the effective interest method.
The IAS 39 impairment model was based on a regular
determination of whether objective evidence indicated
that impairment had already occurred. For the pur-
poses of assessing possible impairment, all available
information, such as market conditions and prices as
well as the length of time and the scale of the decline
in value were taken into account.
-2,959
1,334
c)
Cash
Financial liabilities
Trade payables
Other liabilities
23
-77
178
137
Total financial liabilities
FINANCIAL LIABILITIES
Total impact on equity
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
→ Notes to the
Income Statement
138
The impact of the various changes arising in con-
junction with the first-time application of IFRS 9 is
explained below:
Total financial assets
23
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Marketable securities and investment funds
b)
Other assets
이
Credit card receivables
Other
Cash and cash equivalents
Trade receivables
Other assets
Receivables from subsidiaries
Receivables from companies
in which an investment is held
Collateral assets
Loans to third parties
Receivables from sales financing
(a) Financial investments in equity instruments were
reclassified to the category "at fair value through
profit or loss". There was no difference between
carrying amounts pursuant to IAS 39 and fair
values at 1 January 2018.
(c) Adjustment of impairment allowances in accor-
dance with the new requirements of IFRS 9.
-1,019
Credit card receivables
-10
-8
-18
Trade receivables
-56
128
-4
Marketable securities and investment funds
-2
-2
Total
-1,213
114
-1,949
-60
(b) Selected non-current marketable securities and
loans to third parties, for which the fair value
option available under IAS 39 was previously used,
were reclassified to the category "at fair value
through profit or loss" because their contractual
cash flows do not solely represent payments of
principal and interest on the principal amount
outstanding. There was no difference between
carrying amounts pursuant to IAS 39 and fair
values at 1 January 2018.
-1,147
1.1.2018
IFRS 9
(d) The new accounting requirements for interest rate
hedges reduce the carrying amount of financial
liabilities designated as hedged items within a
hedge relationship by €30 million and increase
accumulated other equity by €5 million. At the
date of adoption of the new requirements, rev-
enue reserves increased by €18 million, after offset
of deferred tax.
(e) Specific investments in debt instruments were
reclassified to the category "at fair value
through profit or loss" because their contractual
cash flows do not solely represent payments
of principal and interest on the principal amount
outstanding.
7
(f) Adjustment of the amount and presentation of
impairment allowances in accordance with the
new requirements of IFRS 9.
(g) Specific listed bonds were reclassified to the cat-
egory "at amortised cost". At the date of first-
time application of IFRS 9, the BMW Group uses
a business model for these bonds, the objective
of which is to collect contractual cash flows that
solely represent payments of principal and interest
on the principal amount outstanding. The market
value of these instruments at 31 December 2018
amounted to €680 million (31 December 2017:
€738 million). If the reclassification to other
comprehensive income had not taken place in
the period under report, a fair value loss of
€2 million would have been recognised through
other comprehensive income.
(h) Some of the money market funds with a fixed
net asset value were reclassified from cash to
the category "at fair value through profit or loss".
They do not meet the criteria for measurement
at amortised cost in accordance with IFRS 9 be-
cause their contractual cash flows do not solely
represent payments of principal and interest on
the principal amount outstanding. There was
no difference between carrying amounts pursuant
to IAS 39 and fair values at 1 January 2018.
The following table shows the adjustments made to
impairment allowances in the Group Balance Sheet as
a result of the first-time application of IFRS 9.
Receivables from sales financing
BMW Group reconciliation of impairment allowances
in € million
Impairment
allowances
31.12.2017
Adjustment to
impairment
Impairment
allowances
allowance due to
IAS 39
IFRS 9
→ 75
Collateral assets
f)
a
Total impact on equity
Other liabilities
At amortised cost
94,648
94,618
Other liabilities
At amortised cost
Total financial liabilities
9,731
Other liabilities
At amortised cost
6,822
6,822
111,201
111,171
Differences through
9,731
new
Other liabilities
Financial liabilities
At amortised cost
219
219
Available-for-sale
Fair value directly through equity
97
97
Trade payables
Other assets
Loans and receivables
At amortised cost
1,108
1,108
105,903
106,011
FINANCIAL LIABILITIES
Total financial assets
e)
measurement
evaluation
2
.6
22
-2
-6
3
-8
-2
116
-77
155
-30
7
-30
7
FINANCIAL ASSETS
Other investments
-30
change of
5
93
category
measurement
-8
Equity effects
Accumulated
Deferred taxes
other equity
5
Revenue
reserves
128
-35
-8
-76
76
a)
b)
Note
10,675
In accordance with IFRS 15, costs incurred for sales
promotion measures in the Automotive segment,
such as sales support or residual value subsidies,
are required to be treated as variable components of
consideration and therefore have the effect of reducing
revenue. Variable consideration is measured on the
basis of the amount of consideration to which the
BMW Group expects to be entitled. Some of these
costs were previously reported as cost of sales. The
change in classification in the income statement
results in a decrease in both revenues and cost of
sales. For the financial year 2017, the retrospective
reclassification recorded by the Automotive segment
amounted to €2.9 billion, which did not, however,
have a significant impact at Group level.
10,655
The following tables show the impact on the balance
sheets at 1 January 2017 and 31 December 2017,
as well as on the income statement, statement of 7
comprehensive income and cash flow statement for
the financial year 2017:
BMW Group change in presentation of balance sheet at 1 January 2017
→ 69
in € million
ASSETS
Policies
Total non-current assets
thereof deferred tax
thereof other assets
Total current assets
thereof other assets
As originally
reported
Adjustment
IFRS 15
Adjusted
according to
IFRS 15
thereof investments accounted for using the equity method
121,671
Principles and
Notes to the Group
Financial Statements
Other financial reporting standards issued by the IASB
and not yet applied are not expected to have any
significant impact on the BMW Group Financial
Statements.
06
First-time application of IFRS 15
The new Standard IFRS 15 (Revenue from Contracts with
Customers) assimilates the numerous requirements
and interpretations relating to revenue recognition
into a single Standard. The new Standard also stip-
ulates uniform revenue recognition principles for all
sectors and all categories.
In accordance with the transitional provisions con-
tained in IFRS 15, the BMW Group has applied the
new requirements for revenue from contracts with
customers in the 2018 financial year using the full
retrospective option. For this reason, the opening bal-
ance sheet at 1 January 2017, the figures reported for
the previous year and the balance sheet at 31 Decem-
ber 2017 have been adjusted and made comparable.
The exemption provision, allowing contracts fulfilled
prior to 1 January 2017 not to be newly assessed in
accordance with IFRS 15, has been applied. The impact
of applying the exemption is classified as insignificant
due to the fact that it only affects the BMW Group in
a few individual cases.
Revenue recognition from contracts with customers
is based on a five-stage model. Revenues are required
to be recognised either over time or at a specific point
in time. A major difference to the previous Standard
is the increased scope of discretion for estimates and
the introduction of thresholds, thus influencing the
amount and timing of revenue recognition.
Accounting for buyback arrangements and rights
of return for vehicles sold, but which the Financial
Services segment will subsequently lease to customers,
results in the earlier recognition of intragroup elimina-
tions. The adoption of IFRS 15 results in a retrospective
decrease in Group equity at 1 January 2017 amounting
to €498 million, after offset of deferred tax amount-
ing to €239 million (31 December 2017: reduction
of revenue reserves by €553 million, after offset of
deferred tax amounting to €192 million). The lower
amount of deferred tax at 31 December 2017 results
from the reduction of the US federal corporate tax
rate with effect from 1 January 2018. The earlier date
for consolidating intragroup transactions also results
in the recognition of assets and liabilities relating to
rights of return, causing other current assets and other
current liabilities to increase. The impact on earnings
in the financial year 2018 was not significant.
→ Accounting
-1,099
As a result of the retrospective adjustments described
above, the Automotive segment's EBIT margin for
the financial year 2017 improved by 0.3 percentage
points to 9.2%.
A different accounting treatment may be required if
buyback arrangements are in place with customers,
resulting in a shift in the timing of revenue recogni-
tion. The resulting impact was not significant.
Buyback arrangements between the Automotive and
Financial Services segments are not reflected in the
internal management system or reporting and there-
fore, in accordance with IFRS 8, do not result in any
changes in the presentation of segment information.
131
132
Group
Financial
Statements
If the sale of products includes a determinable amount
for services (multiple-component contracts), the related
revenues are deferred and recognised as income
over time. Variable consideration to be received for
multi-component contracts is allocated across all
service obligations unless it is directly attributable
to the sale of the vehicle. As a result of the change
in accounting policy for multi-component contracts
with variable consideration components, changes
in the allocation of transaction prices result for the
Automotive segment in higher amounts being recog-
nised for vehicle sales and a lower level of amounts
deferred for service contracts. The shift in the timing
of revenue recognition resulted in a retrospective
increase in Group revenue reserves at 1 January 2017
of €89 million, after offset of deferred tax amounting to
€38 million (31 December 2017: increase in Group rev-
enue reserves of €112 million, after offset of deferred
tax amounting to €42 million). The impact on earnings
in the financial year 2018 was not significant.
-291
222
2,546
47,363
-409
46,954
thereof equity attributable to shareholders of BMW AG
47,108
-409
46,699
Total equity
thereof revenue reserves
-409
44,036
Total non-current provisions and liabilities
73,183
-100
73,083
thereof other provisions
44,445
121,893
EQUITY AND LIABILITIES
190,266
2
2,548
2,327
226
2,553
1,595
-6
Total assets
1,589
1,509
68,373
5,087
1,509
6,596
188,535
1,731
66,864
5,039
-143
Total impact
1.1.2018
1.1.2018
Changes due to the new accounting standards IFRS 15
and IFRS 9 are described in → notes 6 and 7.
The Interpretation IFRIC 22 clarifies that when
a non-monetary asset or liability denominated in
(b) Financial reporting pronouncements issued by
the IASB that are significant for the BMW Group,
but have not yet been applied:
→ see
note 6 and 7
7
a foreign currency is recognised, any payments or
receipt of advance consideration should be based on
the exchange rate prevailing at the date of payment.
This situation is relevant in individual cases within
the BMW Group.
1.1.2018
1.1.2018
Standard/Interpretation
Leases
Date of
issue by
IASB
Date of
mandatory
application
IASB
Date of
mandatory
application
EU
13.1.2016
1.1.2019
IFRS 16
1.1.2019
24.7.2014
8.12.2016
1.1.2018
(a) Standards and Revised Standards significant for
the BMW Group applied for the first time in the
financial year
2018:
Standard/Interpretation
IFRS 15
Revenue from Contracts with Customers
IFRS 9
IFRIC 22
12.4.2016
Financial Instruments
Date of
issue by
IASB
Date of
mandatory
application
IASB
Date of
mandatory
application
EU
28.5.2014
11.9.2015
1.1.2018
Foreign Currency Transactions and Advance Consideration
-116
The new Standard IFRS 16 (Leases) sets out a new
approach to accounting for leases by lessees. While
under IAS 17, the accounting treatment of a lease
was determined on the basis of the transfer of risks
and rewards incidental to ownership of the asset, in
the future, each lease arrangement will, as a general
rule, be accounted for by the lessee in a similar way
to finance leases.
The impact on the BMW Group's results of operations,
financial position and net assets is currently being
analysed as part of a Group-wide implementation
project. A new IT system has been introduced to
account for right-of-use assets and lease liabilities in
the future. At the date of initial adoption, the balance
sheet total is expected to increase by approximately
€2.3 billion as a result of leases previously classified
as operating leases. The reclassification results in a
slight decline in the equity ratio. For a small number of
contracts, the carrying amount of a right-of-use asset
will be determined as if IFRS 16 had been applied from
the inception of the lease. After offsetting deferred
tax effects amounting to €13 million, this results in
a reduction of approximately €32 million in Group
revenue reserves at 1 January 2019. In subsequent
periods, the BMW Group expects a slightly positive
impact on profit before financial result and on cash
inflows/outflows from operating activities and a
slightly negative impact on cash inflows/outflows
from financing activities.
Segment
Lessee
Lessor
Measurement of right-of-use assets as if IFRS 16 had
been applied from the inception of the contract
First-time application of requirements applicable to
finance leases of manufacturers or dealers
Automotive
-32
Eliminations
1.1.2019
-15
-146
Lessor
Changes in timing of income statement recognition of
volume-dependent bonuses
Financial Services
-101
-12
-113
-131
The BMW Group will use the grandfather clause
available for existing leases and apply the available
exemptions regarding the recognition of short-term
leases and low-value leasing assets. The new Standard
will be applied for the first time using the modified
retrospective method. Intragroup leasing arrange-
ments are not reflected in the internal management
system or in internal reporting pursuant to IFRS 16
and therefore, in accordance with IFRS 8, do not
result in any changes in the presentation of segment
information. IFRS 16 has not been adopted prior to
the mandatory application date.
2018
revenue reserves
129
130
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
In conjunction with the adoption of IFRS 16, the methods
used to account for leases as a lessor have also been
reviewed, resulting in a change of accounting policy
as described below with effect from the financial year
2019. The change in accounting policy will be applied
retrospectively, with comparative figures restated. In
this context, it will be necessary to restate the opening
balance sheet as at 1 January 2018 and figures for the
financial year 2018.
As a result of the revised definition of initial direct costs
contained in IFRS 16, the BMW Group will change the
timing of income statement recognition for volume-
dependent bonuses relating to Financial Services
segment sales promotions. Rather than being spread
over the term of the underlying lease, in future these
costs will be recognised as an expense in full in the
period in which the entitlement to the bonus arises.
This results in a retrospective decrease in Group
revenue reserves at 1 January 2018 of €101 million,
after offset of deferred tax amounting to €44 million
(31 December 2018: reduction of revenue reserves of
€113 million, after offset of deferred tax amounting
to €49 million).
1.1.2018
The first-time application of IFRS 16 with effect from
1 January 2019, in conjunction with IFRS 15, will also
require the BMW Group to account for finance leases
concluded with retail customers via the Financial
The following table provides an overview of the
expected effects on revenue reserves from the first-
time application of IFRS 16 and the related change
in the methods used to account for leases as a lessor:
in € million
Change
Impact on
revenue reserves
After-tax
earnings impact
Impact on
Services segment in accordance with the requirements
applicable to manufacturers or dealers. For this reason,
in future, revenues and cost of sales arising on the
sale of vehicles which will subsequently be leased to
customers under finance lease arrangements will be
recognised at a later date. Revenues and cost of sales
relating to vehicle sales will no longer be recognised at
the time of sale, but rather at the commencement date
of the lease. Revenues will be recognised on the basis
of the leased asset's fair value, reduced by any unguar-
anteed residual value of vehicles that are expected
to be returned to the Group. Cost of sales will also be
reduced for unguaranteed residual values. In addition,
initial direct costs incurred by the Financial Services
segment will be recognised at Group level as cost of
sales. Overall, this results in a retrospective decrease
in Group revenue reserves as at 1 January 2018 of
€15 million, after offset of deferred tax amounting to
€4 million (31 December 2018: decrease of revenue
reserves of €146 million, after offset of deferred tax
amounting to €44 million). The adoption of these
requirements will not have a material impact on the
accounting in the Automotive and Financial Services
segments.
20
155
thereof deferred tax
193,483
2,023
195,506
133
BMW Group change in presentation of income statement
for the period 1 January to 31 December 2017
134
Group
Financial
13,443
Statements
Financial Statements
→ Accounting
Principles and
Policies
→ 71
in € million
Revenues
Notes to the Group
Cost of sales
2,664
6,367
thereof other liabilities
Total current provisions and liabilities
thereof other provisions
thereof other liabilities
Total equity and liabilities
2,241
-84
10,779
2,157
-365
5,045
69,047
2,718
71,765
6,313
54
5,410
thereof deferred tax
Gross profit
Profit/loss before tax
As originally
reported
Adjustment
IFRS 15
Adjusted
according to
IFRS 15
98,678
-396
98,282
The effects of the first-time application of IFRS 15
on equity are shown in the Statement of Changes
in Equity.
-78,744
-78,329
19,934
19
19,953
9,880
19
9,899
415
Profit/loss before financial result
Cash inflow/outflow from operating activities
Change in deferred taxes
Income taxes
Net profit/loss
Attributable to shareholders of BMW AG
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
BMW Group change in presentation of statement of comprehensive income
for the period 1 January to 31 December 2017
→ 72
Other
in € million
Total comprehensive income
Total comprehensive income attributable to shareholders of BMW AG
BMW Group change in presentation of cash flow statement
for the period 1 January to 31 December 2017
→ 73
in € million
Net profit
Change in provisions
Net profit
5,194
5,632
5,437
188,535
1,731
190,266
BMW Group change in presentation of balance sheet at 31 December 2017
→ 70
in € million
ASSETS
12,401
Total non-current assets
thereof deferred tax
thereof other assets
Total current assets
thereof other assets
Total assets
As originally
reported
Adjustment
IFRS 15
thereof investments accounted for using the equity method
Adjusted
according to
IFRS 15
2,203
5,916
thereof other liabilities
Total current provisions and liabilities
thereof other provisions
thereof other liabilities
Total equity and liabilities
2,795
26
10,198
2,821
-281
5,076
67,989
2,240
70,229
5,879
37
5,357
195
121,901
121,964
54,548
-441
54,107
thereof equity attributable to shareholders of BMW AG
54,112
-441
53,671
Total equity
thereof revenue reserves
-441
50,815
Total non-current provisions and liabilities
69,888
-254
69,634
thereof other provisions
51,256
63
EQUITY AND LIABILITIES
2,023
2,767
2
2,769
1,927
66
1,993
1,635
195,506
-5
71,582
1,960
73,542
5,525
1,960
7,485
193,483
1,630
Financial reporting rules
05
127,524
Analysis of changes in Group tangible, intangible and investment assets 2017
in € million
Development costs
Goodwill
Other intangible assets
Intangible assets
Acquisition and manufacturing cost
Translation
1.1.20171 differences
Additions
Reclassi-
fications
Disposals 31.12.2017
11,484
2,424
943
12,965
386
buildings on third party land
Land, titles to land, buildings, including
15,100
972
2,710
-38
2 Including €74 million recognised through the income statement
13,400
29
286
-37
1,530
385
-1
1,750
10,940
1 Including assets under construction of €2,017 million.
1,410
Leased products
44,143
735
18,421
16,956
46,343
Investments accounted for using
the equity method
2,769
547
692
2,624
Investments in non-consolidated subsidiaries
438
3
8
Participations
11
123
12
1,286
28
28
Other investments
Non-current marketable securities
444
|
56
115
9
820
938
-299
271
228
the equity method
Investments in non-consolidated subsidiaries
Participations
Non-current marketable securities
Other investments
1 Including first-time consolidation and changes in accordance with IFRS 15.
2 Including assets under construction of €2,010 million.
3 Including €3 million recognised through the income statement and €76 million directly in equity.
2,548
639
418
2,769
501
-8
74
129
438
Carrying amount
Depreciation and amortisation
1,286
130
192
-15
Investments accounted for using
1,239
28
820
|
118
-7
710
28
44,143
16,686
18,281
70
314
-91
2,674
Other facilities, factory and office equipment
36,833
168
1,560
2,123
-681
35,924
Plant and machinery
11,088
52
1,027
55,304
2,799
2,255
-3,047
45,595
Leased products
53,245
1,782
4,402
Advance payments made and construction in progress
-1,168
Property, plant and equipment
2,525
2
-1,325
1,694
-97
51,793
Translation
3,123
314
475
Marketable securities (at fair value through other comprehensive income)
-30
18
-12
39
2
41
Financial instruments used for hedging purposes
-1,381
436
-945
1,914
-568
1,346
Costs of hedging
-620
-61
-31
-30
-1,171
1,445
192
-604
457
-1,061
-218
Other comprehensive income
-124
33
-157
Other comprehensive income from equity accounted investments
Currency translation foreign operations
-433
187
192
-815
693
-217
-1,048
-103
-620
-973
353
-157
-30
674
-597
192
-1,171
-1,322
155
Other comprehensive income for the period after tax
Deferred taxes on components of other comprehen-
sive income are as follows:
in € million
-604
935
Remeasurement of the net defined benefit liability for pension plans
After
tax
Deferred
taxes
tax
tax
718
taxes
After
Deferred
Before
tax
2017
2018
630
Before
-1,171
630
Other comprehensive income arising from equity
accounted investments is reported in the State-
ment of Changes in Equity within currency trans-
lation differences with an amount of € - 24 million
(2017: € -152 million), within financial instruments
used for hedging purposes with an amount of €39 mil-
lion (2017: €91 million) and within costs of hedging
with an amount of € -139 million (2017: € - million).
Intangible assets
Land, titles to land, buildings, including
buildings on third party land
11,088
75
277
372
82
11,730
Plant and machinery
36,833
201
2,888
1,119
2,852
Other facilities, factory and office equipment
2,799
53,245
Property, plant and equipment
2,395
6
-1,551
1,409
17,173
18
Advance payments made and construction in progress
2,990
183
60
294
20
2,525
1,084
1,798
125
Translation
differences
1.1.2018
in € million
Acquisition and manufacturing cost
Analysis of changes in Group tangible, intangible and investment assets 2018
20
Additions
NOTES TO THE BALANCE SHEET
→ Notes to the
Notes to the Group
Financial Statements
Statements
Group
Financial
146
145
Balance Sheet
4,868
Reclassi-
fications
Development costs
385
14,990
959
2,984
3,145
12
Disposals 31.12.2018
15,100
12
1,750
385
12,965
Other intangible assets
Goodwill
161
2,017
1.1.2018
Reclassi-
fications
2,769
2,546
Investments accounted for using
the equity method
Investments in non-consolidated
192
189
249
308
subsidiaries
484
-76
408
412
226
Participations
2
-3
Notes to the Group
Financial Statements
Group
Financial
Statements
148
147
Other investments
560
Leased products
690
-79
678
Non-current marketable securities
26
29
-1
596
→ Notes to the
37,789
7,886
6,154
27,092
-531
2,820
5
1,548
27,838
8,995
8,832
1,952
-62
238
158
1,970
829
2,5252
33,830
3,169
3,633
-379
7,801
Advance payments made and
construction in progress
Property, plant and equipment
721 Other facilities, factory and office equipment
36,257
Plant and machinery
2,253
17,960
18,471
34,774
1,743
3,395
-708
Land, titles to land, buildings, including
buildings on third party land
Balance Sheet
21
Intangible assets
49
41
47
60
105
110
23
22
Property, plant and equipment
No impairment losses were recognised in 2018, as in
the previous year.
As in the previous year, no financing costs were
recognised as a cost component of property, plant
and equipment in 2018.
Property, plant and equipment include a total of
€89 million (2017: €94 million) relating to land and
buildings, for which economic ownership is attribut-
able to the BMW Group (finance leases). The principal
leases are held by BMW AG, have a carrying amount
of €70 million (2017: €78 million) and run for peri-
ods up to 2030 at the latest. The leases contain price
adjustment clauses in the form of index-linked rentals
as well as extension and purchase options.
Leased products
Minimum lease payments of non-cancellable oper-
ating leases amounting to €18,880 million (2017:
€17,982 million) fall due as follows:
in € million
31.12.2018
31.12.2017
Impairment losses amounting to €235 million (2017:
€148 million) were recognised on leased products in
2018 as a consequence of changes in residual value
expectations. Income from the reversal of impairment
losses amounted to €92 million (2017: € - :
- 
million).
Contingent rents of €92 million (2017: €52 million),
based principally on the distance driven, were
recognised in income. The agreements have, in part,
extension and purchase options.
17,982
18,880
Minimum lease payments
13
due between one and five years
due later than five years
37
9,383
9,863
between one and five years
8,586
8,980
within one year
later than five years
9
9
due within one year
75
due between one and five years
due later than five years
19
18
Total of future minimum lease payments
due within one year
31.12.2017
73
31.12.2018
Minimum lease payments are as follows:
As in the previous year, no financing costs were recog-
nised as a cost component of intangible assets in 2018.
As in the previous year, there was no requirement to
recognise impairment losses or reversals of impair-
ment losses on intangible assets in 2018.
Intangible assets amounting to €41 million (2017:
€41 million) are subject to restrictions on title.
Other intangible assets include a brand-name right
amounting to €41 million (2017: €41 million) which
is allocated to the Automotive segment and is not
subject to scheduled amortisation since its useful life is
deemed to be indefinite. Intangible assets also include
goodwill of €33 million (2017: €33 million) allocated
to the Automotive cash-generating unit (CGU) and
goodwill of €347 million (2017: €347 million) allocated
to the Financial Services CGU.
Intangible assets mainly comprise capitalised devel-
opment costs on vehicle, module and architecture
projects as well as subsidies for tool costs, licences,
purchased development projects, software and pur-
chased customer lists.
in € million
6,122
85
178
Present value of future minimum lease
payments
82
73
40
38
32
100
26
10
9
due within one year
lease payments
Interest portion of the future minimum
192
due between one and five years
due later than five years
differences Current year
4,966
-5
5,310
6,420
6,122
27,838
154
2,886
2,767
28,111
10,078
8,995
1,970
17
270
175
2,082
908
2,3951
113
7,886
829 Other facilities, factory and office equipment
Advance payments made and
construction in progress
Property, plant and equipment
Plant and machinery
buildings on third party land
Land, titles to land, buildings, including
33
18,471
35,503
2,975
3,504
200
34,774
2,525
19,801
3,328
348
4,966
Value
adjustments²
Disposals
31.12.2018
31.12.2018 31.12.2017
4,556
1,414
956
5,014
9,976
8,409
5
5
380
380
1,075
5
195
Intangible assets
Other intangible assets
Development costs
Goodwill
9,464
10,971
6,202
29
1,048
5
5,636
675
615
1,183
92
1,609
3,556
7,771
38,572
31.12.2017 31.12.2016
4,263
5
928
-16
191
5,196
-16
1,427
1,236
943
4,556
8,409
7,221
5
380
364
Development costs
337
-115
4,786
Intangible assets
8,157
9,464
31.12.2017
5,636
Other intangible assets
572
675
1,075
28
Goodwill
971
Disposals
Value
adjustments³
Reclassi-
fications
73
-1
408
subsidiaries
249
253
480
191
Investments in non-consolidated
Investments accounted for using
the equity method
2,769
2,624
Leased products
36,257
189
37
1
74
Current year
Translation
differences
1.1.20171
Carrying amount
Depreciation and amortisation
Other investments
596
690
29
Participations
412
|སྒྱུ| |
739
671
Non-current marketable securities
-333
1,914
-1,381
2,593
3,077
18
22
2017*
2018
2017*
2018
Deferred tax liabilities
Deferred tax assets
Eliminations
Liabilities
Provisions
Tax loss carryforwards and capital losses
Sundry other assets
Other investments
Leased products
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
In the previous year, variances due to different tax
rates were influenced in particular by the reduction
in the US federal corporate income tax rate, which
was required to be taken into account in the mea-
surement of deferred taxes as of 31 December 2017.
This resulted in a reduction in the tax expense of
€977 million.
Tax increases as a result of non-deductible expenses
and tax reductions due to tax-exempt income
increased compared to one year earlier. As in the
previous year, tax increases as a result of non-tax-
deductible expenses were attributable primarily to
the impact of non-recoverable withholding taxes and
transfer price issues.
Tax income relating to prior years resulted primarily
from adjustments to income tax receivables and pro-
visions for prior years.
Other variances comprise various reconciling items,
including the Group's share of earnings of companies
accounted for using the equity method.
142
171
Group
Financial
Statements
→ Notes to the
Income Statement
The allocation of deferred tax assets and liabilities to
balance sheet line items at 31 December is shown in
the following table:
in € million
Intangible assets
Property, plant and equipment
Notes to the Group
Financial Statements
Actual tax expense
Effective tax rate
88
195
Valuation allowances on tax loss carryforwards and capital losses
12,294
13,550
12,632
13,832
706
981
3,222
3,180
428
620
2,415
2,570
78
29
5,192
5,323
487
473
5,210
4,655
3
3
359
20
1,185
613
3,254
3,629
891
608
10
Deferred taxes for non-German entities are calcu-
lated on the basis of the relevant country-specific tax
rates. These range in the financial year 2018 between
9.0% and 45.0% (2017: between 9.0% and 45.0%).
30.7
30.8
3,277
3,023
30.7%
30.8%
Tax rate applicable in Germany
Expected tax expense
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
10,675
9,815
Profit before tax
2,000
2,575
Income taxes
-56
-286
2017*
2018
in € million
The difference between the expected tax expense
based on the underlying tax rate for Germany and
actual tax expense is explained in the following
reconciliation:
141
2,220
2,558
Deferred tax expense (+)/
deferred tax income (-)
Variances due to different tax rates
Tax increases (+)/tax reductions (-) as a
result of non-deductible expenses and
tax-exempt income
355
thereof relating to temporary
differences
641
-502
thereof relating to tax loss
carryforwards and tax credits
-558
-359
-1,026
141
Corporate tax rate
15.0
15.0
Solidarity surcharge
5.5
5.5
2017
Corporate tax rate including solidarity
15.8
15.8
Municipal trade tax rate
15.0
14.9
German income tax rate
surcharge
-498
2018
Deferred taxes are determined on the basis of tax
rates which are currently applicable or expected to
apply in the relevant national jurisdictions when the
amounts are recovered. After taking account of an
average municipal trade tax multiplier rate (Hebesatz)
of 428.0% (2017: 425.0%), the underlying income tax
rate for Germany was as follows:
58
Tax expense (+)/benefits (-) for prior
years
-16
-104
Other variances
-214
in %
-205
2,000
26.2%
18.7%
Current tax expense includes tax income of €16 mil-
lion (2017: €104 million) relating to prior periods.
The tax expense was reduced by €41 million (2017:
€91 million) as a result of utilising tax loss carryfor-
wards, for which deferred assets had not previously
been recognised and in conjunction with previously
unrecognised tax credits and temporary differences.
The tax expense resulting from the change in the
valuation allowance on deferred tax assets relating to
tax losses available for carryforward and temporary dif-
ferences amounted to €24 million (2017: €67 million).
2,575
Changes in tax rates resulted in a deferred tax
expense of €90 million (2017: deferred tax income
of €796 million). The principal reason for this devel-
opment in the previous year was the reduction in
the US federal corporate income tax rate from 35.0%
to 21.0% with effect from 1 January 2018.
-502
-11,744
819
843
Social insurance expenses
1,295
1,387
Pension and welfare expenses
9,938
10,249
2017*
2018
Wages and salaries
in € million
The income statement includes personnel expenses
as follows:
Personnel expenses
16
Basic/diluted earnings per share from continuing
operations amounted to €10.87 per share of common
stock and €10.89 per share of preferred stock.
Earnings per share of preferred stock are computed
on the basis of the number of preferred stock shares
entitled to receive a dividend in each of the relevant
financial years. As in the previous year, diluted earn-
ings per share correspond to basic earnings per share.
601,995,196
55,605,380
601,995,196
55,114,290
10.82
13.07
€
Personnel expenses
10.84
€
3.502
4.00
€
3.522
4.02
13.09
number
number
12,479
* Distribution to wages and salaries and pension and welfare expenses adjusted in previous
year figures.
131,565
1
proportionately-consolidated entities
Average number of employees
thereof at
7,913
8,228
experience
Apprentices and students gaining work
thereof at
Employees
182
and, in accordance with current requirements, all
work related thereto, including the review of the
Group Interim Financial Statements.
123,337
2017
2018
proportionately-consolidated entities
Personnel expenses include €45 million (2017:
€54 million) of costs relating to workforce measures.
The total pension expense for defined contribution
plans of the BMW Group amounted to €122 million
(2017: €105 million). Employer contributions paid to
state pension insurance schemes totalled €645 million
(2017: €630 million).
144
Group
Financial
Statements
Notes to the Group
↑ ↑
12,052
Financial Statements
Notes to the
→ Notes to the
Statement of
Comprehensive
Income
The average number of employees during the
year was:
Income Statement
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
2 Proposal by management.
Dividend per share of preferred stock
Dividend per share of common stock
-677
thereof relating to fair value gains and losses on financial instruments and marketable securities recognised directly in equity
thereof relating to the remeasurements of net liabilities for defined benefit pension plans
815
-457
Change in deferred taxes recognised directly in equity
-558
355
Deferred tax expense (+)/income (-) recognised through income statement
268
201
Deferred taxes at 1 January (assets (-)/ liabilities (+))
20172
2018¹
in € million
as follows:
Changes in deferred tax assets and liabilities
during the reporting period can be summarised
Deferred taxes recognised directly in equity amounted
to €1,457 million (2017: €1,000 million).
Deferred taxes
1,590
-10,137
1,993
-11,744
-10,137
Net
591
1,806
216
164
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
Tax loss carryforwards - for the most part usable
without restriction – amounted to €2,045 million
(2017: €928 million). This includes an amount of
€542 million (2017: €548 million), for which a valu-
ation allowance of €185 million (2017: €186 million)
was recognised on the related deferred tax asset. For
entities with tax losses available for carryforward,
a net surplus of deferred tax assets over deferred
tax liabilities is reported at 31 December 2018
amounting to €234 million (2017: €131 million).
Deferred tax assets are recognised on the basis of
management's assessment that there is material
evidence that the entities will generate future tax-
able profits, against which deductible temporary
differences can be offset.
Capital losses available for carryforward in the United
Kingdom which do not relate to ongoing operations
decreased to €1,841 million (2017: €1,854 million) due
to currency factors. As in previous years, deferred tax
assets recognised on these tax losses - amounting to
€313 million at the end of the reporting period (2017:
€315 million) - were fully written down since they can
only be utilised against future capital gains.
Netting relates to the offset of deferred tax assets
and liabilities within individual entities or tax
groups to the extent that they relate to the same
tax authorities.
2,157
222
181
thereof from currency translation
Net profit attributable to the shareholders of BMW AG
€ million
7,117.4
8,589.0
Profit attributable to common stock
Profit attributable to preferred stock
€ million
20171
€ million
7,867.6
721.4
Average number of common stock shares in circulation
Average number of preferred stock shares in circulation
Basic/diluted earnings per share of common stock
Basic/diluted earnings per share of preferred stock
6,514.5
602.9
Netting
2018
15
-2
43
Exchange rate impact and other changes
Deferred taxes at 31 December (assets (-)/liabilities (+))
1 The figures at 1.1.2018 adjusted due to first-time application of IFRS 9, see note 7.
² Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
Earnings per share
117
216
164
Deferred taxes are not recognised on retained profits
of €48.2 billion (2017: €42.8 billion) of foreign sub-
sidiaries, as it is intended to invest these profits to
maintain and expand the business volume of the
relevant companies. No computation was made of
the potential impact of income taxes on the grounds
of proportionality.
7
The tax returns of BMW Group entities are checked
regularly by German and foreign tax authorities. Taking
account of numerous factors - including interpretations,
commentaries and legal decisions relating to the various
tax jurisdictions as well as past experience - adequate
provision has been made, to the extent identifiable and
probable, for potential future tax obligations.
143
-361
2017*
2018
Current tax expense
9,816
9,691
Income from lease instalments
22,932
23,383
Cost of sales relating to financial services
business
10,208
10,467
leased to customers
Sales of products previously
43,442
43,262
Manufacturing costs
69,417
68,194
Sales of products and related goods
2017*
Other attestation services include mainly project-
related audits, comfort letters as well as legally
prescribed, contractually agreed or voluntarily
commissioned attestation work.
NOTES TO THE INCOME
STATEMENT
Interest income on loan financing includes interest
calculated on the basis of the effective interest method
totalling €3,623 million. This interest income is not
reported separately in the income statement as it is
not significant compared to total Group revenues.
08
Revenues
Revenues by activity comprise the following:
thereof: Interest expense relating
in € million
Cost of sales
Cost of sales comprises:
2018
2017*
in € million
2018
09
Tax advisory services were performed particularly in
conjunction with tax compliance.
to financial services business
1,801
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
78,329
78,924
Cost of sales
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
2,857
2,996
Other cost of sales
98,282
97,480
Revenues
2,097
1,729
Warranty expenditure
3,384
3,744
2,081
Interest income on loan financing
3,744
3,720
Revenues from service contracts,
Research and development expenses
5,320
2,051
4,920
1,640
1,737
Expenses for service contracts, telematics
and roadside assistance
Other income
2,234
telematics and roadside assistance
Other services include mainly IT consulting, bench-
mark analyses as well as advisory work relating to
production processes.
17
Fee expense for the Group auditor
NOTES TO THE STATEMENT
OF COMPREHENSIVE
INCOME
19
Disclosures relating to the statement of
comprehensive income
Other comprehensive income for the period after tax
comprises the following:
in € million
2018
2017
Remeasurement of the net defined benefit liability for pension plans
935
693
Deferred taxes
-217
-218
Items not expected to be reclassified to the income statement in the future
718
475
Marketable securities (at fair value through other comprehensive income)
-44
-29
83
-1
Items that can be reclassified to the income statement in the future
Currency translation foreign operations
The audit of financial statements comprises mainly the
audit of the Group financial statements and Company
financial statements of BMW AG and its subsidiaries,
Other comprehensive income from equity accounted investments
Deferred taxes
thereof gains/losses arising in the period under report
Costs of hedging
thereof gains/losses arising in the period under report
thereof reclassifications to the income statement
thereof gains/losses arising in the period under report
thereof reclassifications to the income statement
Financial instruments used for hedging purposes
39
-30
thereof reclassifications to the income statement
Services provided by KPMG AG Wirtschaftsprüfungs-
gesellschaft, Berlin, during the financial year 2018 on
behalf of BMW AG and subsidiaries under its control
relate to the audit of the financial statements, other
attestation services, tax advisory services and other
services.
9
7
Fee expense
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Other services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Tax advisory services
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
2018
Other attestation services
Audit of financial statements
in € million
These amounts relate mainly to public sector grants
aimed at the promotion of regional structures as well
as to subsidies received for plant expansions.
Government grants and government assistance
Income from asset-related and performance-related
grants, amounting to €29 million (2017: €30 million)
and €83 million (2017: €112 million) respectively, was
recognised in the income statement in 2018.
18
The fee expense pursuant to § 314 (1) no. 9 HGB
recognised in the financial year 2018 for the Group
auditor and its network of audit firms amounted to
€24 million (2017: €25 million) and consists of the
following:
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
Revenues recognised from contracts with customers
in accordance with IFRS 15 totalled €82,024 million
(2017: €82,894 million).
2017
17
thereof KPMG AG Wirtschafts-
prüfungsgesellschaft, Berlin
25
24
1
2
2
17
2
22
4
3
5
5
17
3
note 45
An analysis of revenues by segment is shown in the
segment information provided in → note 45. Revenues → see
from the sale of products and related goods are gene-
rated primarily in the Automotive segment and, to a
lesser extent, in the Motorcycles segment. Revenues
from sales of products previously leased to customers,
income from lease instalments and interest income on
loan financing are allocated to the Financial Services
segment. Other income relates mainly to the Auto-
motive segment and the Financial Services segment.
The major part of revenues expected to arise from the
Group's order book at the end of the reporting period
relates to the sale of vehicles. Revenues resulting from
those sales will be recognised in the short term. The
services included in vehicle sale contracts that will be
recognised as revenues in subsequent years represent
only an insignificant portion of expected revenues.
Accordingly, use has been made of the practical
expedient contained in IFRS 15.121, permitting an
entity not to disclose information on a quantitative
basis due to the short-term nature of items and the
lack of informational value of such disclosures.
Sundry operating expenses
2017
2018
in € million
-29
-48
write-downs
Expense for impairment losses and
-580
-193
Expense for additions to provisions
Other financial result
-246
-135
Exchange losses
13
720
losses and write-downs
15
8
Net interest result
11
-211
-275
Gains on the disposal of assets
80
Sundry operating income
262
212
Other operating income
774
96
-359
Other operating expenses
-651
Impairment losses recognised on receivables from
contracts with customers amounted to €47 million
(2017: €29 million).
The expense for additions to provisions includes
litigation and other legal risks. Income from the
reversal of provisions includes legal disputes that
have been concluded.
Income (+) and expenses (-) from
financial instruments
Sundry other financial result
-105
234
-105
Income from the reversal of and expenses for the
recognition of impairment allowances and write-
downs relate mainly to impairment allowances on
receivables.
234
51
248
14
Income taxes
Taxes on income of the BMW Group comprise the
following:
in € million
Other financial result
Income from the reversal of impairment
14
156
-1,214
Income from investments in subsidiaries
and participations
278
Other operating income and expenses
123
-494
14
thereof from subsidiaries:
13
14
13
Expenses from investments in subsidiaries
and participations
-122
Result on investments
9
The number of employees at the end of the reporting
period is disclosed in the Combined Management
Report.
-412
Interest and similar expenses
Net interest result
12
Selling and administrative expenses relate mainly to
expenses for marketing, personnel and IT.
Selling and administrative expenses
10
Income Statement
→ Notes to the
Financial Statements
Notes to the Group
Group
Financial
Statements
140
139
6,108
6,890
expenditure
Total research and development
2,424
Cost of sales is reduced by public-sector subsidies
in the form of reduced taxes on assets and reduced
consumption-based taxes amounting to €88 million
(2017: €61 million).
Expenses for impairment losses for receivables from
sales financing recognised in the income statement
for the financial year 2018 amounted to €142 million.
Because the impairments are of minor importance
compared to the total Group cost of sales, a separate
disclosure has not been provided in the income
statement.
Research and development expenditure was as follows:
in € million
2018
in € million
2017
5,320
4,920
-1,414
-1,236
New expenditure for capitalised
development costs
2,984
Research and development expenses
Amortisation
2018
2017
Other interest and similar income
Net interest expense on the net defined
benefit liability for pension plans
Other interest and similar expenses
-62
-81
-233
-265
thereof subsidiaries:
2017
-2
Exchange gains
185
282
Income from the reversal of provisions
216
138
-2
-386
2018
-66
397
201
thereof from subsidiaries:
8
9
11
in € million
Other operating income and expenses
397
201
Other operating income and expenses comprise the
following items:
Expense relating to interest impact
on other long-term provisions
-91
Interest and similar income
119,611
38,189
Present value of future minimum
lease payments
Receivables from subsidiaries
295
276
Collateral assets
293
316
Expected reimbursement claims
1,537
933
Sundry other assets
1,204
825
Other assets
11,816
9,115
in € million
847
1,747
Other taxes
1,334
5,316
5,447
in € million
31.12.2018
31.12.2017*
In 2017, stocks and other equity capital instruments
related entirely to investment funds. In accordance
with IFRS 9, these assets are required to be classified
as debt capital instruments and are therefore reported
as other debt securities with effect from the financial
year 2018.
The contracted maturities of debt securities are as
follows:
Return right assets for future
leased products
3,261
1,962
Prepayments
2,167
2,018
Receivables from companies in which
an investment is held
1,916
31.12.2018
31.12.2017
thereof non-current
2,026
to IFRS 9 developed during the financial
as follows:
year 2018
29
Inventories
Inventories comprise the following:
in € million
Balance at 1 January*
Allocated (+)
Reversed (-)
2018
60
21
-26
-1
in € million
31.12.2018
31.12.2017
Impairment allowances on trade receivables according
Other assets comprise:
Collateral assets comprise mainly customary collateral
(banking deposits) arising on the sale of receivables.
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
1,630
thereof current
9,790
7,485
Fixed income securities
due within three months
due later than three months
787
3,572
628
4,034
Other debt securities
due within three months
957
251
due later than three months
Debt securities
5,316
4,913
Prepayments relate mainly to prepaid interest, com-
mission paid to dealerships and amounts paid in
advance to contract manufacturers. Prepayments of
€1,227 million (2017: €1,136 million) have a maturity
of less than one year.
Utilised
Other assets
957
Receivables relating to credit card business comprise
the following:
31.12.2018
31.12.2017
in € million
31.12.2018
31.12.2017
Allowances for impairment and credit risk
Marketable securities and
262
258
investment funds
5,316
5,447
Allowance for impairment
-18
Gross carrying amount
→ Notes to the
in € million
Balance Sheet
20
20,262
18,033
Unrealised interest income
2,053
1,882
Impairment allowances include €113 million (2017:
€105 million) on credit-impaired receivables relating
to finance leases.
The estimated fair value of vehicles held as collateral
for credit-impaired receivables at the end of the
reporting period totalled €506 million. The carrying
amount of assets held as collateral and taken back as
a result of payment default amounted to €42 million
(2017: €45 million).
151
152
Group
Financial
Statements
Notes to the Group
26
Financial assets
Financial assets comprise:
Financial Statements
-10
Derivative instruments
1,977
4,341
7,965
Marketable securities and investment funds relate to
available-for-sale financial assets and comprise:
Income tax assets
Income tax assets totalling €1,366 million (2017:
€1,566 million) include claims amounting to €222 mil-
lion (2017: €364 million), which are expected to
be settled after more than one year. Claims may be
settled earlier than this depending on the timing of
proceedings.
in € million
Fixed income securities
Stocks and other equity
capital instruments
Other debt securities
Marketable securities and
investment funds
31.12.2018
31.12.2017
4,359
4,662
28
534
6,675
251
2,369
thereof current
Net carrying amount
244
248
Credit card receivables
244
248
Loans to third parties
20
114
Other
128
184
Financial assets
7,685
10,334
27
thereof non-current
1,010
23
Exchange rate impact and other changes
10,592
Revenue reserves comprise the non-distributed earn-
ings of companies consolidated in the Group Financial
Statements. In addition, remeasurements of the net
defined benefit obligation for pension plans are also
presented in revenue reserves.
It is proposed that the unappropriated profit of BMW AG
for the financial year 2018 amounting to €2,303 mil-
lion according to HGB be utilised as follows:
Distribution of a dividend of 3.52 per
preferred stock (€196 million)
share of
Distribution of a dividend of 3.50 per share of
common stock (€2,107 million)
The proposed distribution was not recognised as a
liability in the Group Financial Statements.
Accumulated other equity
Revenue reserves
Accumulated other equity comprises amounts recog-
nised directly in equity resulting from the translation
of the financial statements of foreign subsidiaries,
changes in the fair value of derivative financial instru-
ments and marketable securities, costs of hedging
recognised directly in equity as well the related
deferred taxes.
Capital management disclosures
The BMW Group's objectives with regard to capital
management are to safeguard over the long-term the
Group's ability to continue as a going concern and to
provide an adequate return to shareholders.
The capital structure is managed in order to meet
needs arising from changes in economic conditions
and the risks of the underlying assets.
The BMW Group is not subject to any unified external
minimum equity capital requirements. Within the
Financial Services segment, however, there are a
number of individual entities which are subject to
equity capital requirements of relevant regulatory
banking authorities.
In order to manage its capital structure, the BMW Group
uses various instruments, including the amount of
dividends paid to shareholders and share buybacks.
Moreover, the BMW Group actively manages debt
capital, carrying out funding activities with a target
debt structure in mind. A key aspect in the selection
of financial instruments is the objective to achieve
matching maturities for the Group's financing require-
ments. In order to reduce non-systematic risk, the
BMW Group uses a variety of financial instruments
available on the world's capital markets to achieve
diversification.
→ see
notes 6 and 7
Further information regarding the transition effects
recognised directly in equity on the first-time application
of IFRS 15 and IFRS 9 is provided in → notes 6 and 7.
Capital reserves include premiums arising from the
issue of shares and totalled €2,118 million (2017:
€2,084 million). The change related to the share cap-
ital increase arising in conjunction with the issue of
shares of preferred stock to employees amounting
to €34 million.
Capital reserves
In addition, 24 previously issued shares of preferred
stock were acquired and re-issued to employees.
Shares issued/in circulation at 31 December
Common stock
2017
2018
2017
521,524
24
55,114,404
491,114
114
601,995,196
601,995,196
56,126,904
55,605,404
601,995,196
601,995,196
All Company stock is issued to bearer and each share
has a par value of €1.00. Preferred stock, to which no
voting rights are attached, bear an additional dividend
of €0.02 per share.
In 2018, a total of 521,524 shares of preferred stock
was sold to employees at a reduced price of €46.26 per
share in conjunction with the Company's Employee
Share Programme. These shares are entitled to
receive dividends for the first time with effect from
the financial
year 2019.
Issued share capital increased by €0.5 million as a
result of the issue to employees of 521,500 new shares
of non-voting preferred stock. BMW AG is authorised
up to 14 May 2019 to issue 5 million shares of non-
voting preferred stock amounting to nominal €5.0 mil-
lion. At the end of the reporting period, 3.1 million
of these amounting to nominal €3.1 million remained
available for issue.
The capital structure at the end of the reporting period
was as follows:
31.12.2018 31.12.2017*
Equity attributable to shareholders
of BMW AG
57,559
reserves.
155
156
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
32
Pension provisions
In the case of defined benefit plans, the BMW Group
is required to pay the benefits it has granted to
present and past employees. Defined benefit plans
may be covered by provisions or pension assets. In
Germany, pension entitlements are mostly covered
by assets transferred to BMW Trust e. V., Munich, in
conjunction with a Contractual Trust Arrangement
(CTA). Funded plans also exist in the UK, the USA,
Switzerland, Belgium and Japan. In the meantime,
most of the defined benefit plans have been closed
to new entrants.
The assumptions stated below, which depend on
the economic situation in the relevant country, are
used to measure the defined benefit obligation
of each pension plan. In Germany, the so-called
“pension entitlement trend” (Festbetragstrend)
remained at 2.0%. The following weighted average
values have been used for Germany, the UK and
other countries:
in %
Discount rate
Pension level trend
Weighted duration of all pension obligations in years
The following mortality tables are applied in countries,
in which the BMW Group has significant defined
benefit plans:
Germany
The equity ratio attributable to shareholders of
BMW AG increased during the financial year by
7.2%, primarily reflecting the increase in revenue
Less: shares repurchased and re-issued
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
161,156
53,671
Proportion of total capital
35.7%
36.2%
Non-current financial liabilities
64,772
53,548
Current financial liabilities
38,825
41,100
Total financial liabilities
103,597
94,648
Proportion of total capital
64.3%
63.8%
Total capital
148,319
Finished goods and goods for resale
55,605,404
Shares issued/in circulation at 1 January
31.12.2017
Gross carrying amount
Allowance for impairment
2,600
2,723
-56
Allowances for impairment of stage 2 -
simplified procedure
31.12.2018
-20
-34
Net carrying amount
2,546
2,667
The impairment allowances according to IAS 39 in the
financial year 2017 developed as follows:
in € million
2017
Allowances for impairment of stage 3
in € million
Trade receivables comprise the following:
Trade receivables
10,436
Balance at 31 December
54
Work in progress, unbilled contracts
1,208
1,125
Raw materials and supplies
1,247
1,146
* The difference between the closing balance at 31 December 2017 and the opening balance
at 1 January 2018 corresponds to the adjustment recorded in accordance with IFRS 9.
Inventories
13,047
12,707
Out of the total amount recognised for inventories
at 31 December 2018, inventories measured at net
realisable value amounted to €680 million (2017:
€673 million¹). Write-downs to net realisable value * Prior year figure
amounting to €54 million (2017: €36 million¹) were
recognised in 2018, reversal of impairment losses
amounted to €22 million (2017: €6 million).
The expense recorded in conjunction with inven-
tories during the financial year 2018 amounted to
€58,079 million (2017: €55,969 million).
has been adjusted.
30
Allowance for impairment
recognised on a
specific
item basis
56
* The difference between the closing balance at 31 December 2017 and the opening balance
at 1 January 2018 corresponds to the adjustment recorded in accordance with IFRS 9.
In the case of trade receivables, collateral is generally
held in the form of vehicle documents and bank guar-
antees so that the risk of bad debt loss is very limited.
Expenses for impairment losses and income from
the reversal of impairment losses is not significant in
relation to total Group expenses and is therefore not
reported separately in the income statement.
153
154
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Notes to the
31
Equity
Number of shares issued
Balance Sheet
Preferred stock
2018
7
Shares issued in conjunction with Employee Share Programme
49
-2
group basis
Total
Balance at 1 January
46
11
57
Allocated (+)/reversed (-)
Utilised
8
-2
6
-4
-1
-5
Exchange rate impact and
other changes
−1
−1
Balance at 31 December*
United Kingdom
12,358
due between one and five years
due later than five years
2017
2018
2017
2018
2017
DISCLOSURES RELATING TO
THE BALANCE SHEET
2018
Non-current assets
5,910
1,763
1,906
48
4
Current assets
6,570
6,714
20171
2018
IONITY
1,311
1,217
-344
364
-6
-17
-15
-10
Dividends received by the Group
384
258
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
2 Revenues relate only to the month of January up to the time of loss of control of HERE.
in € million
BMW Brilliance
THERE
DriveNow
5,211
2
289
26
1,193
960
Current provisions and liabilities
6,094
4,779
3
22
6
10
thereof current financial liabilities
81
6
RECONCILIATION OF
AGGREGATED FINANCIAL
INFORMATION
Assets
13,284
Non-current provisions and liabilities
Total comprehensive income
71
40
110
46
thereof cash and cash equivalents
2,937
2,617
2
289
9
102
45
Equity
5,926
5,382
1,764
2,195
42
149
Non-current financial liabilities
11,121
2
-121
DISCLOSURES RELATING TO
THE INCOME STATEMENT
BMW Brilliance
THERE
DriveNow
2018
20171
in € million
2018
2018
IONITY
2017
2018
2017
Revenues
17,766
2017
Balance Sheet
Financial information relating to equity accounted
investments is summarised in the following tables:
→ Notes to the
24
Investments accounted for using the equity method
Investments accounted for using the equity method com-
prise the joint venture BMW Brilliance Automotive Ltd.
(BMW Brilliance), until 9 March 2018 the joint ven-
tures DriveNow GmbH & Co. KG and DriveNow
Verwaltungs GmbH (DriveNow), the joint venture
IONITY Holding GmbH & Co. KG (IONITY) and the
interest in the associated company THERE Holding
B.V. (THERE).
BMW Brilliance produces mainly BMW brand models
for the Chinese market and also has engine manu-
facturing facilities, which supply the joint venture's
two plants with petrol engines.
The BMW Group intends to increase its stake in
the BMW Brilliance joint venture from 50% to 75%.
On 11 October 2018, the BMW Group signed an
agreement with its joint venture partner, a wholly
owned subsidiary of Brilliance China Automotive
Holdings Ltd. (CBA), to acquire an additional 25%
shareholding in BMW Brilliance. The two partners
agreed on a purchase price of an equivalent of €3.6 bil-
lion. The contractual term of the joint venture, which
would currently expire in 2028, is to be extended
to 2040 as part of the agreement. The prerequisite
for the extension is the acquisition of the additional
shares as agreed. The agreement was approved at
the CBA shareholders' meeting on 18 January 2019
and remains subject to the approval of the relevant
authorities. The transaction is scheduled to close
in 2022. The closing will result in BMW Brilliance
being fully consolidated in the BMW Group Financial
Statements and is expected to result in the recognition
of a significant valuation gain in the financial year in
which the transaction closes.
The BMW Group previously maintained the joint
ventures DriveNow GmbH & Co. KG and DriveNow
Vewaltungs GmbH together with Sixt SE, Pullach.
DriveNow offers car-sharing services in major German
cities and abroad. Following approval by the antitrust
authorities and with effect from 9 March 2018, the
agreement with SIXT regarding the full acquisition
of shares in DriveNow by the BMW Group was com-
pleted. The total valuation for DriveNow amounts
to €418 million. Further information relating to this
transaction is provided in → note 2 to the Group → see
Financial Statements.
In the financial year 2017, the BMW Group,
Daimler AG, Stuttgart (Daimler AG), the Ford
Motor Company and the Volkswagen Group, each
with equal shareholdings, founded the joint venture
IONITY Holding GmbH & Co. KG. IONITY's business
model envisages the construction and operation of
high-performance charging stations for battery
note 2
electric vehicles in Europe. The plan is to build some
400 fast-charging stations by 2020 in order to support
electric mobility on long-haul routes and thereby
establish the market.
In the financial year 2015, BMW AG, Daimler AG and
AUDI AG, Ingolstadt (Audi AG) jointly acquired the
mapping and location-based services business (HERE
Group) of Nokia Corporation, Helsinki. HERE'S
digital maps are laying the foundations for the next
generation of mobility and location-based services,
providing the basis for new assistance systems and,
ultimately, fully automated driving.
In December 2016, THERE signed contracts relating
to the sale of shares in HERE International B.V.,
Amsterdam (HERE). The sale of 15% of the shares to
Intel Holdings B.V., Schiphol-Rijk, was completed in
January 2017. The sale of the shares resulted in a loss
of control, as defined by IFRS 10, at the level of THERE.
Since THERE continues to have a significant influence
over HERE, the latter has been included since then
in THERE's consolidated financial statements as an
associated company using the equity method. The
loss of control and the subsequent deconsolidation of
HERE and its subsidiaries led to a positive earnings
effect at the level of THERE. The BMW Group portion
amounted to €183 million, which was recognised in
the result from equity accounted investments in the
financial
year 2017.
In December 2017, BMW AG, Audi AG and Daimler AG
signed contracts for the sale of shares in THERE. Stakes
of 5.9% each were sold to Robert Bosch Investment
Nederland B.V., Boxtel, and Continental Automotive
Holding Netherlands B.V., Maastricht, whereby the
sale was executed in equal parts by BMW AG, Audi AG
and Daimler AG. Closure of these transactions did
not have a significant effect on earnings in the finan-
cial year 2018.
Capital increases were made at the level of THERE in
June and November 2018, with BMW AG participating
with an amount of €31 million on each occasion. As a
result, BMW AG's stake in THERE increased in steps
by 0.2% to 29.6%.
149
150
Group
Financial
Statements
Notes to the Group
Financial Statements
14,627
712
14
71
1,561
1,338
-337
362
-6
-17
-15
-10
thereof from continuing operations
1,561
1,338
-337
-151
thereof from discontinued operations
513
Other comprehensive income
-250
Profit/loss after tax
-7
2
454
Scheduled depreciation
636
637
1
Profit/loss before financial result
1,922
1,620
-6
-17
-18
-12
Interest income
62
46
Interest expenses
Income taxes
535
3
14,001
1,765
26
-1
26
30
Other changes
-54
-24
2
1
15
Impairment allowances at 31 December 2018
363
175
12
482
1,032
The impairment allowances according to IAS 39 in the
financial year 2017 developed as follows:
-61
4
Changes in risk parameters
-129
-21
51
Reclassification to Stage 3
-4
-23
138
110
Derecognition and origination of receivables
59
-10
-17
33
Write off of receivables
-3
-20
-1
-105
Finance leases are analysed as follows:
in € million
31.12.2018
31.12.2017
-337
-8
-345
22,315
19,915
Exchange rate impact
and other changes
-48
-17
-65
Impairment allowances
at 31 December 2017
701
446
1,147
due within one year
6,238
5,655
Utilised
79
21
due later than five years
in € million
specific
item basis
group basis
Total
Gross investment in finance leases
due within one year
Impairment allowances
at 1 January 2017
943
469
1,412
due between one and five years
6,811
15,480
6,122
13,772
Allocated (+)/reversed (-)
143
2
145
24
2,195
-7
-21
732
23
37
10
Eliminations
-898
-666
522
-
2,065
2,025
522
732
2
37
10
Carrying amount
2,691
2,963
Group's interest in net assets
158
50
Provisions and liabilities
7,358
5,739
1
22
9
10
Net assets
5,926
5,382
1,764
2,195
4
149
40
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
2 Corresponds to the consolidated equity capital provided by the shareholders of Drive Now GmbH & Co. KG and its subsidiaries.
3 The share of the BMW Group on net assets at 31 December 2017 amounted to 52.8%. Due to the allocation of voting power within decision-making bodies of the two entities,
operations remain subject to joint control.
25
7
Stage 1
Stage 2
Stage 3
General
Simplified
Total
Impairment allowances at 1 January 2018
365
192
12
450
1,019
Reclassification to Stage 1
3
-20
-4
80,434
Reclassification to Stage 2
86,783
20,262
Receivables from sales financing
Receivables from sales financing comprise the fol-
lowing:
in € million
Credit financing for retail customers
31.12.2018
31.12.2017
Unguaranteed residual values amount to €1,392 mil-
* Prior year figure lion (2017: €1,240 million *).
has been adjusted.
Impairment allowances on receivables from sales
financing in accordance with IFRS 9, which only arise
within the Financial Services segment, developed in
the financial year 2018 as follows:
and dealerships
Finance lease receivables
Receivables from
sales financing
in Mio. €
66,521
62,401
18,033
Based on the measurement principles contained in
IAS 19, the following balance sheet carrying amounts
apply to the Group's pension plans:
in € million
Germany
-73
-632
689
57
57
8
14
14
21,247
-18,937
2,310
3
2,313
2,330
-658
-17
in € million
1 January 2017
EXPENSE/INCOME
Current service cost
Interest expense (+)/income (−)
Past service cost
Gains (-) or losses (+) arising from settlements
Defined
benefit
obligation
Plan assets
Total
73
-658
-658
thereof assets
62
62
59
59
59
-10
-10
-10
999
999
999
Gains (-) or losses (+) arising from changes in financial assumptions
Gains (-) or losses (+) arising from changes in demographic assumptions
-1,274
22,899
-1,274
-416
-416
-416
Gains (-) or losses (+) arising from experience adjustments
Changes in the limitation of the net defined benefit asset to the
asset ceiling
-264
-264
-264
Transfers to fund
Employee contributions
Pensions and other benefits paid
Translation differences and other changes
31 December 2018
thereof pension provision
-1,274
-413
-18,315
Effect of limitation
-134
Changes in the limitation of the net defined benefit asset to the
asset ceiling
Transfers to fund
Employee contributions
Pensions and other benefits paid
Translation differences and other changes
31 December 2017
thereof pension provision
thereof assets
86
-1,165
-86
-1,165
-619
637
18
18
-548
450
-98
-98
22,710
-19,477
3,233
3,236
3,252
-16
in € million
-134
-134
Gains (-) or losses (+) arising from experience adjustments
-152
of the net defined
benefit asset to the
asset ceiling
Net defined
benefit liability
3
4,587
581
581
581
489
-408
81
81
-2
-2
4,584
-2
-212
-212
REMEASUREMENTS
Gains (-) or losses (+) on plan assets, excluding amounts included
in interest income
-590
-590
-590
Gains (-) or losses (+) arising from changes in financial assumptions
Gains (-) or losses (+) arising from changes in demographic assumptions
322
322
322
-152
-152
-212
475
-1,165
508
508
31.12.2017
31.12.2018
31.12.2017
31.12.2018 31.12.2017
Present value of defined benefit
obligations
11,542
11,641
8,277
9,594
1,428
Fair value of plan assets
9,721
9,604
8,167
8,908
1,049
1,475
965
21,247
22,710
18,937
19,477
Effect of limiting net defined benefit
asset to asset ceiling
3
3
3
31.12.2017
31.12.2018
Total
Other
Other
United Kingdom
31.12.2018
31.12.2017
31.12.2018
31.12.2017
31.12.2018
31.12.2017
1.91
1.79
2.69
2.34
3.66
3
3.13
1.82
2.25
2.44
20.2
20.8
19.0
21.3
17.2
18.3
Mortality Table 2018 G issued by Prof. K. Heubeck (with invalidity rates reduced by 70%)
S2PA tables and S2PA light tables with weightings
Germany
United Kingdom
1.62
Carrying amounts at 31 December
31.12.2018
2,037
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
The change in the net defined benefit obligation for pension
plans can be derived as follows:
in € million
1 January 2018
EXPENSE/INCOME
Current service cost
Interest expense (+)/income (−)
Past service cost
Gains (-) or losses (+) arising from settlements
158
REMEASUREMENTS
Defined
benefit
obligation
Plan assets
Total
22,710
-19,477
3,233
Effect of limitation
of the net defined
benefit asset to the
asset ceiling
Net defined
benefit liability
3
1,821
508
Gains (-) or losses (+) on plan assets, excluding amounts included
in interest income
157
3,236
United Kingdom
Defined benefit plans exist in the United Kingdom
which are closed for all plan participants. Vested
benefits remain in place. New benefits are covered
by contributions made to a defined contribution plan.
The pension plans are administered by BMW Pension
Trustees Limited, Farnborough, and BMW (UK) Trustees
Limited, Farnborough, both trustee companies which
act independently of the BMW Group. BMW (UK)
Trustees Limited, Farnborough, is represented by
ten trustees and BMW Pension Trustees Limited,
Farnborough, by five trustees. A minimum of one
third of the trustees must be elected by plan partic-
ipants. The trustees represent the interests of plan
participants and decide on investment strategies.
Funding contributions to the funds are determined
in agreement with the BMW Group.
686
382
513
2,313
3,236
thereof pension provision
1,823
2,037
125
702
382
513
2,330
110
thereof assets
3,252
The assets of the German pension plans are invested
by BMW Trust e. V., Munich, in accordance with a
CTA. The representative bodies of this entity are
the Board of Directors and the Members' General
Meeting. BMW Trust e. V., Munich, currently has
seven members and three members of the Board of
Directors elected by the Members' General Meeting.
The Board of Directors is responsible for investments,
drawing up and deciding on investment guidelines as
well as monitoring compliance with those guidelines.
The members of the association can be BMW Group
employees, senior executives and members of the
Board of Management. An ordinary Members' General
Meeting takes place once every calendar year, and
deals with a range of matters, including receiving and
approving the association's annual report, ratifying
the activities of the Board of Directors and adopting
changes to the association's statutes.
The defined benefit plans have been closed to new
entrants. Defined contribution plans with a minimum
rate of return, comprising employer- and employee-
funded components, continue to exist. The fact that
the plan involves a minimum rate of return means that
the defined contribution entitlements are classified
in accordance with IAS 19 as defined benefit plans.
In the case of defined benefit plans involving the
payment of a pension, the amount of benefits to be
paid is determined by multiplying a fixed amount by
the number of years of service.
Both employer- and employee-funded benefit plans
exist in Germany. Benefits paid in conjunction with
these plans comprise old-age retirement pensions as
well as invalidity and surviving dependents' benefits.
Germany
Numerous defined benefit plans exist within the
BMW Group.
The most significant of the BMW Group's pension
plans are described below.
-17
-16
-15
-2
-16
2,202
550
2,437
thereof non-investment grade
518
thereof mixed funds
9,399
9,144
434
5,734
(funds without a rating)
620
93
35
2,786
3,092
Real estate funds
93
93
93
Money market funds
|י
221
191
5,224
Absolute return funds
34
3,231
172
thereof investment grade
Total
2018
2017
2018
2017
2018
2017
2018
2017
COMPONENTS OF PLAN ASSETS
Equity instruments
1,565
1,682
407
478
222
2,144
2,382
Debt instruments
5,604
5,668
5,774
6,354
552
469
11,930
12,491
3,402
195
27
42
702
737
216
404
918
1,141
thereof non-investment grade
54
1
55
1
Real estate
325
240
678
662
36
1,039
902
Cash and cash equivalents
12
16
10
1
1
13
Absolute return funds
(funds without a rating)
thereof mixed funds
198
307
268
233
51
Other
15
5
15
5
Total with quoted market price
7,169
7,350
6,402
7,074
47
879
14,450
15,255
Debt instruments
1,009
935
270
404
1
1,280
1,340
thereof investment grade
307
198
831
Other
3,296
Germany
Changes due to
the acquisition
or disposal of
companies
outflows
Cash inflows/
1.1.2018
in € million
Liabilities related to financing activities can be rec-
onciled as follows:
94,648
9,683
43,865
41,100
1,132
469
150
513
1,090
173
544
373
Financial liabilities
Other
Derivative instruments
4,461
4,461
Commercial paper
12,658
1,048
3,170
Changes due to
exchange rate
factors
Changes in
fair values
Other changes
14,359
669
3
17,335
53,346
8
40
-2,021
4,461
Commercial paper
-141
679
12,658
8,440
Liabilities to banks
557
13,572
Liabilities from customer deposits (banking)
192
288
16,855
Asset-backed financing transactions
-33
707
7,784
44,880
Bonds
31.12.2018
227
United Kingdom
Liabilities to banks
132
697
556
Payables to other companies in which
Payables to subsidiaries
Other liabilities
Trade payables
Other
Other derivative instruments
Fair value hedges
Cash flow hedges
Derivative instruments
17,335
Asset-backed financing transactions
2,480
Commercial paper
14,359
Liabilities from customer deposits (banking)
13,196
Liabilities to banks
53,346
Bonds
Financial liabilities
Past service cost in the financial year 2018 results
mainly from the estimated effects of a court order
made in October 2018 in the UK. The court ruling
related to gender equality in state-guaranteed min-
imum pension (GMP) plans and requires existing
pension entitlements to be adjusted.
The gains arising from changes in demographic
assumptions relate mainly to revised mortality tables
in the United Kingdom. The revision of German mor-
tality tables had an offsetting effect.
Depending on the cash flow profile and risk structure
of the pension obligations involved, pension plan
assets are invested in a diversified portfolio.
Plan assets in Germany, the UK and other countries
comprised the following:
in € million
1,206
9,669
422
92
an investment is held
10,144
Liabilities from customer deposits (banking)
16,855
10,818
6,037
Asset-backed financing transactions
44,880
7,861
25,887
11,132
Bonds
Total
Maturity later
than five years
13,572
Maturity between
one and five years
in € million
Maturity within
31.12.2017
103,597
12,921
51,851
*The carrying amounts of cash flow hedges and fair value hedges are categorised as at fair value through profit or loss for the sake of clarity. Receivables from sales financing are shown including finance leases.
1,675
118,129
Total
5,665
781
Other
one year
708
156
617
-1,761
-30
2,819
1,861
Other obligations
2,523
-10
653
-454
-625
2,087
1,310
Other obligations for ongoing
operational expenses
1,620
34
694
-481
-77
1,790
1,540
Other provisions
11,999
110
5,133
59
-4,715
1,827
-732
1
2,782
-147
-0.7
-155
-0.7
In the UK, the sensitivity analysis for the pension
level trend also takes account of restrictions due to
caps and floors.
33
Other provisions
Other provisions changed during the year as follows:
in € million
1.1.2017*
Translation
differences
Additions
Reversal of
discounting
Utilised
Reversed
thereof due
31.12.2018 within one year
Statutory and non-statutory warranty
obligations, product guarantees
5,074
85
1,959
59
-2,019
5,158
1,367
Obligations for personnel and
social expenses
38,825
11,854
6,078
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
11,603
17,335
Liabilities from customer deposits (banking)
10,961
3,289
109
14,359
Liabilities to banks
8,678
3,293
1,225
13,196
Commercial paper
Derivative instruments
Other
Financial liabilities
2,480
2,480
646
915
114
1,675
566
159
481
1,206
13,196
5,732
Asset-backed financing transactions
53,346
10,992
Depending on when claims occur, it is possible that the
BMW Group may be called upon to fulfil the warranty
or guarantee obligations over the whole period of
the warranty or guarantee. Expected reimbursement
claims at 31 December 2018 amounted to €933 million
(2017: €847 million).
Provisions for obligations for personnel and social
expenses comprise mainly performance-related
remuneration components, early retirement part-time
working arrangements and employee long-service
awards.
4,264
Provisions for other obligations cover numerous
specific risks and uncertain obligations, in particular
for litigation and liability risks.
Other obligations for ongoing operational expenses
include in particular expected payments for bonuses
and other price deductions.
Income from the reversal of other provisions amoun-
ting to €516 million (2017: €322 million) is recorded
in cost of sales and in selling and administrative
expenses.
34
Income tax liabilities
Current income tax liabilities totalling €1,158 million
(2017: €1,124 million) include €96 million (2017:
€68 million) which are expected to be settled after
more than twelve months. Liabilities may be settled
earlier than this depending on the timing of pro-
ceedings.
161
162
Group
Financial
Statements
Notes to the Group
Financial Statements
decrease of 0.25%
→ Notes to the
35
Financial liabilities
Financial liabilities of the BMW Group comprise the
following:
31.12.2018
in € million
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
Total
Bonds
9,762
32,592
Balance Sheet
0.7
162
0.7
Employer contributions to plan assets are expected to
amount to €526 million in the coming year.
The BMW Group is exposed to risks arising both from
defined benefit plans and defined contribution plans
with a minimum return guarantee. The discount rates
used to calculate pension obligations are subject to
market fluctuation and therefore influence the level of
the obligations. Furthermore, changes in other actu-
arial parameters, such as expected rates of inflation,
also have an impact on pension obligations. In order
to reduce currency exposures, a substantial portion
of plan assets is either invested in the same cur-
rency as the underlying plan or hedged by means of
currency derivatives. As part of the internal reporting
procedures and for internal management purposes,
financial risks relating to the pension plans are reported
using a value-at-risk approach by reference to the
pension deficit. The investment strategy is also subject
to regular review together with external consultants,
with the aim of ensuring that investments are struc-
tured to match the timing of pension payments and
the expected development of pension obligations. In
this way, fluctuations in pension funding shortfalls
are reduced.
159
160
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
The defined benefit obligation relates to current
employees, pensioners and former employees with
vested benefits as follows:
in %
Current employees
Pensioners
Former employees with vested benefits
Defined benefit obligation
Germany
United Kingdom
Other
31.12.2018
31.12.2017
31.12.2018
31.12.2017
31.12.2018
31.12.2017
65.9
66.6
23.9
19,477
18,937
966
1,049
65
47
1,339
1,372
Other
537
354
212
141
Total without quoted market price
2,552
2,253
1,765
77.3
1,834
67
67
86
816
581
135
4,487
4,222
31 December
9,721
9,603
8,167
8,908
170
605
78.5
28.3
-12.5
-3,055
-13.5
3,334
15.7
3,878
17.1
increase of 0.25%
decrease of 0.25%
597
2.8
712
3.1
-567
-2.7
-672
-3.0
increase of 1 year
770
3.6
856
3.8
decrease of 1 year
-779
-3.7
-855
-3.8
increase of 0.25%
-2,652
increase of 0.75%
decrease of 0.75%
in %
in € million
48.5
45.0
18.8
17.8
4.8
5.1
51.5
31.1
3.9
3.7
100.0
100.0
100.0
29.3
100.0
100.0
The sensitivity analysis provided below shows the
extent to which changes in individual factors at the
end of the reporting period influence the defined
benefit obligation.
It is only possible to aggregate sensitivities to a lim-
ited extent. Since the change in obligation follows
a non-linear pattern, estimates made on the basis
of the specified sensitivities are only possible with
this restriction. The calculation of sensitivities using
ranges other than those specified could result in
a disproportional change in the defined benefit
obligation.
Discount rate
Pension level trend
Average life expectancy
Pension entitlement trend
Change in defined benefit obligation
31.12.2018
in € million
31.12.2017
in %
100.0
2,480
LIABILITIES
investment is held
Deferred income comprises the following items:
165
An amount of €2,134 million (2017: €2,294 million)
was released from contract liabilities in the financial
year and recognised as revenues from contracts with
customers.
Other liabilities include contract liabilities relating to
contracts with customers amounting to €4,985 million
(31 December 2017: €4,820 million).
Sundry other liabilities include mainly commission
payable and credit balances on customers' accounts.
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
18,488
440
4,605
13,443
Other liabilities
2,101
7
160
1,934
Sundry
129
129
Payables to subsidiaries
98
23
75
Social security
744
744
Payables to other companies in which an investment is held
856
166
5
Group
Financial
Statements
Financial Statements
Notes to the
557
Other deferred income
28
332
27
337
973
2,361
1,092
2,764
1,228
3,659
1,534
3,826
Grants
Deferred income from lease financing
Deferred income relating to service contracts
within one year
Total
thereof due
thereof due
within one year
Total
31.12.2017*
31.12.2018
in € million
→ Other Disclosures
Balance Sheet
Notes to the Group
346
505
Deposits received
87
1,905
Sundry
92
92
Payables to subsidiaries
102
26
76
Social security
781
781
Payables to other companies in which an investment is held
850
10
280
560
Deposits received
911
175
736
Advance payments from customers
945
945
2,940
2,940
4,311
8
2,000
Other liabilities
15,117
1,056
122
934
Advance payments from customers
934
934
Other taxes
3,097
3,097
2,807
2,807
6,666
Financial liabilities towards companies in which an
118
3,954
Bonuses and sales aides
Refund liabilities for future leased products
Deferred income
Total
Maturity later
than five years
Maturity between
one and five years
one year
Maturity within
31.12.2017*
in € million
20,416
471
4,828
2,284
4,311
314
Deferred income
Other assets
Trade receivables
Cash and cash equivalents
Other
Credit card receivables
Loans to third parties
Marketable securities and investment funds
Other derivative instruments
Fair value hedges
Cash flow hedges
Derivative instruments
Financial assets
Receivables from sales financing
Other investments
ASSETS
in € million
The carrying amounts of financial instruments are
assigned to IFRS 9 categories* in the following table.
Financial instruments
39
Notes to the Group
Financial Statements
→ Other Disclosures
Statements
Group
Financial
168
167
1,804
1,554
Purchase commitments for
intangible assets
Receivables from subsidiaries
4,137
Receivables from companies in which
Collateral assets
3,671
104,435
1,444
293
1,916
295
2,546
885
10,094
128
244
3
17
970
3,671
675
483
654
840
429
86,783
At fair value
through profit
or loss
At amortised cost prehensive income
At fair value
through other com-
31.12.2018
Total
Other
an investment is held
3,486
Purchase commitments for
property, plant and equipment
31.12.2017
125
275
31.12.2017
31.12.2018
Contingent liabilities
Other
Guarantees
Litigation
Investment subsidies
in € million
balance sheet date:
The following contingent liabilities existed at the
Contingent liabilities
commitments
Contingent liabilities and other financial
38
OTHER DISCLOSURES
As in the previous year, trade payables are due within
one year.
Trade payables
37
Grants comprise mainly public sector funds to
promote regional structures and which have been
invested in the production plants in Brazil, Mexico,
Leipzig and Berlin. The grants are partly subject to
holding periods for the assets concerned of up to five
years and/or minimum employment figures. Grant
income is recognised in the income statement over
the useful lives of the assets to which it relates.
Deferred income relating to service contracts com-
prises service and repair work as well as telematics
services and roadside assistance agreed to be part of
the sale of a vehicle (in some cases multi-component
arrangements). Deferred income from lease financing
relates primarily to down payments on leases.
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
2,284
6,666
2,771
7,484
399
204
14
10
351
31.12.2018
in € million
In addition, the following commitments exist for the
BMW Group at the end of the reporting period:
2,474
2,694
849
916
1,179
1,310
due between one and five years
due later than five years
Other financial obligations
446
468
due within one year
55
31.12.2017
in € million
Total minimum future lease payments from non-can-
cellable rental contracts by maturity is as follows:
In the financial year 2018, an expense of €483 million
(2017: €430 million) was recognised for payments on
operating leases.
In addition to liabilities, provisions and contingent
liabilities, other financial commitments consist in
particular of rental and leasing contracts for build-
ings, property, machinery, tools, offices and other
facilities. Contracts have terms of up to 121 years and
include in part renewal and purchase options or price
adjustments in the form of index-linked or graduated
rent, for example to compensate inflation.
Other financial commitments
Regulatory authorities have ordered the BMW Group
to recall various vehicle models in conjunction with
airbags supplied by the Takata group of companies.
Provision for the costs involved has been recognised
within warranty provisions. In addition to the risks
already covered by warranty provisions, it cannot be
ruled out that further BMW Group vehicles will be
affected by future recall actions. Further disclosures
pursuant to IAS 37.86 cannot be provided at present.
In July 2017, cartel allegations against five German
car manufacturers appeared in the press. Internal
investigations were initiated by the BMW Group
and have not yet been completed. In October 2017,
the European Commission began an inspection at
the BMW Group, and in September of the current
financial 1 year opened formal proceedings pertaining
to specific matters. A number of class actions were
brought in the USA and Canada. Possible risks for
the BMW Group can neither be foreseen in detail nor
quantified at present. Further disclosures pursuant to
IAS 37.86 cannot be provided at present.
In June 2016, Germany's Federal Cartel Agency con-
ducted searches at various carmakers and suppliers,
including BMW AG, in relation to the purchase of
steel. The respective investigations have not yet been
completed. More extensive disclosures pursuant to
IAS 37.86 cannot be provided at present.
The BMW Group determines its best estimate of
contingent liabilities on the basis of the information
available at the reporting date. This assessment may
change over time and is adjusted regularly on the basis
of new information and circumstances. A part of the
risks is covered by insurance.
Other contingent liabilities comprise mainly risks
relating to taxes and customs duties.
816
765
203
31.12.2018
7,484
428
4,260
Weighted average
nominal interest rate
maturity period
(in years)
Weighted average
Issue volume
in relevant currency
(ISO-Code)
Interest
Issuer
Bonds comprise:
→ Notes to the
Notes to the Group
Financial Statements
Statements
Group
Financial
164
163
93,883
-328
453
151
4,023
94,577
Liabilities relating to financing activities
604
88
151
-143
684
Other (excluding interest payable)
114
(in %)
-13
Balance Sheet
variable
4.3
3.0
CNY 2,300 million
fixed
1.8
3.8
NOK 2,400 million
fixed
0.4
5.8
JPY 19,100 million
fixed
1.0
6.3
EUR 21,150 million
fixed
1.2
2.0
GBP 20 million
variable
2.8
1.3
USD 130 million
variable
0.0
2.1
EUR 6,100 million
BMW Finance N.V.
127
Liabilities from finance lease contracts
739
Other changes
Changes in
fair values
Changes due to
exchange rate
factors
Changes due to
the acquisition
or disposal of
companies
Cash inflows/
outflows
1.1.2017
in € million
101,976
26
-33
626
15
38
105
529
1,063
7,037
93,883
Liabilities relating to financing activities
-31
604
Other (excluding interest payable)
-9
114
Liabilities from finance lease contracts
-210
739
31.12.2017
Bonds
44,421
2,687
124
615
investment is held
Financial liabilities towards companies in which an
4,461
12,658
13,572
16,855
44,880
1
-344
953
3,852
fixed
Commercial paper
-1,579
14,892
Liabilities to banks
-596
656
13,512
Liabilities from customer deposits (banking)
-957
1,338
16,474
Asset-backed financing transactions
-328
-1,901
-655
SEK 1,750 million
-4,541
1.8
Issuer
The following details apply to commercial
1.6
4.6
GBP 850 million
fixed
3.3
10.0
NOK 1,000 million
fixed
8.0
2.5
INR 8,000 million
fixed
4.4
3.0
CNY 8,000 million
fixed
2.6
3.0
KRW 120,000 million
fixed
0.3
3.0
SEK 500 million
variable
1.1
paper:
Issue volume
in relevant currency
(ISO-Code)
Weighted average
maturity period
(in days)
2,771
Other taxes
Bonuses and sales aides
Refund liabilities for future leased products
Deferred income
Total
Maturity later
than five years
Maturity between
one and five years
Maturity within
one year
31.12.2018
in € million
5.0
Other liabilities
2.2
36
44
INR 4,500 million
BMW India Financial Services Private Ltd.
0.9
59
GBP 350 million
BMW International Investment B.V.
-0.3
140
EUR 2,030 million
BMW Finance N.V.
(in %)
Weighted average
nominal interest rate
7.9
GBP 1,175 million
Other liabilities comprise the following items:
Other
NZD 30 million
variable
0.0
3.0
EUR 500 million
variable
2.5
2.8
USD 3,608 million
variable
BMW US Capital, LLC
3.3
6.9
AUD 290 million
fixed
2.5
4.0
USD 300 million
fixed
1.5
5.8
fixed
2.1
4.7
HKD 1,342 million
fixed
variable
3.0
2.0
GBP 1,150 million
USD 13,450 million
2.0
fixed
3.9
CAD 1,400 million
fixed
2.6
CAD 500 million
variable
BMW Canada Inc.
2.8
3.5
AUD 130 million
fixed
2.0
2.7
GBP 300 million
5.0
fixed
7.6
1.0
5.7
EUR 2,500 million
fixed
HKD 334 million
3.0
2.0
fixed
2.7
173
-44
Notwithstanding the existence of collateral accepted,
the carrying amount of financial assets (with the
exception of derivative financial instruments) generally
represents the maximum credit risk. In addition, the
credit risk is increased by additional unutilised loan
commitments for credit card business and dealership
financing. Total credit risk in these two lines of business
amounts to €1,148 million (2017: €1,217 million) and
€29,403 million (2017: €27,953 million) respectively.
The BMW Group is exposed to counterparty credit
risks if contractual partners, for example a retail
customer or a dealership, are unable or only partially
able to meet their contractual obligations. Information
on the management of credit risk for receivables
from financial services is provided in the Combined
Management Report (see section Report on Outlook,
Risks and Opportunities).
Credit risk
162
-94
-162
93
174
3
52
14
48
961
2017
Income/expenses
Other liabilities
Group
Financial
Statements
Other income/expenses
Impairment losses/reversals of impairment losses
41
Notes to the Group
Financial Statements
→ Other Disclosures
375
In the case of trade receivables, customers are regularly
assessed with regard to their credit risk. Depending
on contractual status, necessary measures, such as
dunning procedures, are initiated in good time.
43
Loans and receivables
187
31.12.2017
1-30 days overdue
31-60 days overdue
61-90 days overdue
91-120 days overdue
More than 120 days overdue
Balance at 31 December
in € million
At 31 December 2017 trade receivables existed that
were overdue but for which no impairment allowance
was recognised in accordance with IAS 39. The over-
due amounts can be grouped in the following ranges:
2,600
96
29
In the case of all relationships underlying non-deriva-
tive financial instruments, in order to minimise the
credit risk and depending on the nature and amount
of exposure, collateral is required, credit information
and references obtained or historical data based on the
existing business relationship, in particular payment
behaviour, reviewed.
34
31.12.2018
61-90 days overdue
More than 90 days overdue
Total
31-60 days overdue
1-30 days overdue
Not overdue
in € million
The credit risk on trade receivables is assessed main-
ly on the basis of information relating to overdue
amounts. The gross carrying amounts of these receiv-
ables are allocated at 31 December 2018 in accordance
with IFRS 9 to overdue ranges used for management
purposes as follows:
구
Within the financial services business, items financed
for retail customers and dealerships (such as vehicles,
facilities and property) serve as first-ranking collateral
with a recoverable value. Security is also put up by
customers in the form of collateral asset pledges, asset
assignment and first-ranking mortgages, supplemented
where appropriate by warranties and guarantees.
Items previously held as collateral that are subsequently
acquired relate mainly to vehicles. These assets can
usually be converted into cash at short notice through
the dealership organisation. Creditworthiness testing
is an important aspect of the BMW Group's credit
risk management. Every borrower's creditworthiness
is tested for all credit financing and lease contracts
entered into by the BMW Group. In the case of retail
customer financing, creditworthiness is assessed
using validated scoring systems integrated into the
acquisition process. In the area of dealership financing,
creditworthiness is assessed by means of ongoing
credit monitoring and an internal rating system that
takes account not only of the material credit standing
of the borrower, but also of qualitative factors such as
past reliability in business relations.
The credit risk relating to cash deposits and derivative
financial instruments is minimised by the fact that the
Group only enters into such contracts with parties of
first-class credit standing.
2,066
Balance at 31 December
1,064
Total change during the year
762
-835
-835
-913
-913
1,090
4,341
1,675
1,977
Reported on equity
and liabilities side
Reported on
assets side
and liabilities side
Reported on Reported on equity
assets side
31.12.2017
31.12.2018
Gross amount of derivatives which can be offset in case of insolvency
Net amount after offsetting
Balance sheet amounts as reported
in € million
payables relating to derivative financial instruments
are not netted due to non-fulfilment of the stipulated
criteria. Offsetting would have the following impact
on the carrying amounts of derivatives:
Offsetting of financial instruments
19
3,506
255
Gains and losses on financial instruments
The following table shows the net gains and losses
arising on financial instruments in the financial year
2018 pursuant to IFRS 9:
Balance at 1 January
Accumulated other equity
Net income from participations and investments in subsidiaries
(including investments in subsidiaries and participations measured at cost)
Gains and losses on sale and fair value measurement of marketable securities held for sale
Available-for-sale
Gains/losses on investments measured at fair value through profit and loss
Fair value option
Gains/losses from the use of derivative instruments
Held for trading
thereof recognised in the income statement during the period under report
in € million
Interest expenses from financial liabilities measured
at amortised cost amounted to €1.8 billion.
Interest income from financial assets measured at
amortised cost relates mainly to interest income from
loan financing which is reported as revenues. Interest
income and interest expense from financial assets
at fair value through other comprehensive income
amounted to €58 million and €47 million respectively.
155
203
-150
2018
Financial liabilities measured at amortised cost
Financial assets measured at amortised cost
Financial instruments measured at fair value through profit or loss
in € million
The following table shows the net gains and losses
arising on financial instruments in the financial year
2017 pursuant to IAS 39:
25
Derivative financial instruments of the BMW Group
are subject to legally enforceable master netting agree-
ments or similar contracts. However, receivables and 7
349
1,132
329
571
190
4,341
814
1,340
9,731
2,187
4,461
13,572
12,658
44,880
31
5,910
16,855
Trade payables
Other liabilities
Payables to subsidiaries
→ Other Disclosures
Notes to the Group
Financial Statements
Group
Financial
Statements
170
169
*The carrying amounts of cash flow hedges and fair value hedges are categorised as held for trading for the sake of clarity. Receivables from sales financing are shown including finance leases.
1,090
110,111
Total
5,949
744
129
Other
an investment is held
Payables to other companies in which
86,363
9,258
1,108
97
31.12.2017
Other
Other derivative instruments
Fair value hedges
Cash flow hedges
Derivative instruments
Asset-backed financing transactions
Commercial paper
Liabilities from customer deposits (banking)
Liabilities to banks
Bonds
Financial liabilities
LIABILITIES
Total
Other
Cash funds
The following table shows the fair values and carrying
amounts of financial assets and liabilities that are
measured at cost or amortised cost and whose carrying
Loans and
receivables
Fair value option
219
1,334
276
2,667
9,039
184
248
2
112
5,447
80,434
29
366
Held for trading
Other liabilities
Available for sale
Collateral assets
in € million
31.12.2017
Level 3
Level 2
Level 1
Level hierarchy in accordance with IFRS 13
31.12.2018
Raw materials market price risks
4,641
Currency risks
Derivative instruments (liabilities)
Other risks
Raw material market price risks
Currency risks
Interest rate risks
Derivative instruments (assets)
Interest rate risks
265
885
3
Marketable securities, investment funds and collateral assets - available-for-sale
Other investments - available-for-sale/fair value option
Level 2
Level hierarchy in accordance with IFRS 13
Level 1
31.12.2017
in € million
31 December 2017 was as follows:
measurement levels in accordance with IFRS 13 at
The classification of financial assets and liabili-
ties measured at fair value according to IAS 39 to
343
409
923
4
191
713
1,069
Loans to third parties
Cash equivalents
Other investments
Marketable securities, investment funds and collateral assets
53,831
80,434
83,853
86,783
90,445
Liabilities to banks
Liabilities from customer deposits (banking)
Asset-backed financing transactions
Bonds
Receivables from sales financing
Carrying amount
Fair value
Carrying amount
Fair value
31.12.2018
53,346
amounts differ from their fair value. For some balance
sheet items, fair value corresponds to the carrying
amount due to their short maturity.
45,566
17,443
in € million
accordance with IFRS 13.
classified as follows in the measurement levels in
At 31 December 2018 the financial assets and liabil-
ities measured at fair value according to IFRS 9 are 7
12,658
12,724
13,196
13,277
13,572
13,588
14,359
14,374
16,855
17,005
17,335
44,880
an investment is held
Receivables from companies in which
Receivables from subsidiaries
75
Average
Maturity later
than five years
Maturity
between one
and five years
one year
Maturity within
Raw material price risks
in € million
1,288.91
0.79
1.17
8.26
EUR/JPY
EUR/KRW
125.29
hedging rates
Currency risks
17,159
23,304
Palladium (EUR/oz)
Nominal amounts of
hedging intruments
Copper (EUR/t)
Lead (EUR/t)
Aluminium (EUR/t)
32
2,109
1,526
Raw material price risks
12,027
24,295
4,619
Interest rate risks
9,097
The nominal amounts of hedging instruments at
31 December 2018 were as follows:
EUR/GBP
→ Other Disclosures
EUR/USD
3,969
4,174
31.12.2017
31.12.2018
for
This
Raw material price exposures
in € million
The starting point for analysing raw materials price
risk is to identify planned purchases of raw materials
or components containing raw materials, the so-called
"exposure". At each reporting date, the exposure
the following financial year amounted to:
The economic relationship between the hedged item
and the hedging instrument is based essentially on
the fact that they have the same basis and term. The
BMW Group designates only the commodity price
index-linked raw material surcharge as a hedged item.
Other price components contained in the contract are
not designated as being part of the hedge relationship
as no effective hedging instruments exist for these
components.
The BMW Group is exposed to market price risks on
raw materials. In order to hedge these risks, the Group
mainly used forward commodity contracts. As part of
the implementation of the risk management strategy,
the extent to which risk exposures should be hedged
is decided at regular intervals and the corresponding
hedging ratio defined.
Raw materials price risk
* Prior year figure adjusted due to the fact that the entire interest rate risk is considered, not just
the significant interest rate portfolios.
1,180
31.12.2017*
exposure is compared to all hedges that are in
place. The net cash flow surplus represents an uncovered
risk position. The cash-flow-at-risk approach involves
showing the impact of potential raw materials market
price fluctuations on operating cash flows on the basis
of probability distributions. Volatilities and corre-
lations serve as input factors to assess the relevant
probability distributions.
35,501
The potential negative impact on earnings is calculated
at the reporting date for each raw materials category
for the following financial year on the basis of current
market prices and exposure with a confidence level of
95%. The risk mitigating effect of correlations between
the various categories of raw materials is taken into
account when the risks are aggregated.
in € million
EUR/CNY
The following disclosures on hedging measures include
derivatives of fully consolidated companies before
offset of deferred tax.
Notes to the Group
Financial Statements
Average
hedging rates
Currency risks
Disclosures on hedging measures
Statements
Group
Financial
178
177
409
327
31.12.2017
31.12.2018
Cash flow at risk
The following table shows the potential negative impact
for the BMW Group resulting from fluctuations in
prices across all categories of raw materials, measured
on the basis of the cash-flow-at-risk approach. The
risk at each reporting date for the following financial
year was as follows:
12,059
Platinum (EUR/oz)
The average hedging rates of hedging instruments
used by the BMW Group at 31 December 2018 were
as follows:
24
27
-33
49,846
8,930
-262
453
941
-119
relationships
Continuing hedge
Change in value
of hedged items
Liabilities
Balances in accumulated other equity
556
Terminated hedge
654
relationships
in € million
Other assets
Trade receivables
Cash and cash equivalents
Other
Credit card receivables
Loans to third parties
Marketable securities and investment funds
Other derivative instruments
Fair value hedges
Cash flow hedges
Derivative instruments
Financial assets
Receivables from sales financing
Other investments
ASSETS
For the financial year 2017, items are allocated by
category in accordance with the requirements of
IAS 39* as applied in that year:
5,544
52,580
334
7
The accumulated amount of hedge-related fair value
adjustments is €15 million for assets and €243 million
for liabilities.
Interest rate risks
Fair Value Hedges
Raw material price risks
Currency risks
Cash Flow Hedges
in € million
The following table summarises key information on
hedged items for each risk category and shows the
balances of designated components within accumu-
lated other equity:
Interest rate risks
Fair Value Hedges
Raw material price risks
Currency risks
Cash Flow Hedges
in € million
1,797
-453
1,784
745
189
3,667
121
363
651
26,256
Change in fair value
of designated
components
Liabilities
Assets
Nominal amounts
Fair Values
Assets
Fair Values
The following table provides information on the nominal
amounts, carrying amounts and fair value changes of
contracts designated as hedging instruments:
945
5,279
284
164
Loans to third parties
Total
Bonds
11,735
27,201
8,285
47,221
Maturity later
than five years
Asset-backed financing transactions
10,901
17,988
Liabilities to banks
9,546
3,656
771
7,087
Maturity between
one and five years
one year
in € million
Total
976
1,180
81
2,237
20
318
454
792
51,732
54,576
13,088
119,396
31.12.2017
Maturity within
13,973
Liabilities from customer deposits (banking)
10,225
3,418
9,748
109,115
The cash flows from non-derivative liabilities comprise
principal repayments and the related interest. The
amounts disclosed for derivative instruments com-
prise only cash flows relating to derivatives that have
a negative fair value at the balance sheet date. At
31 December 2018 credit commitments to dealerships
which had not been called upon at the end of the
reporting period amounted to €9,010 million (2017:
€8,812 million).
Solvency is assured at all times by managing and
monitoring the liquidity situation on the basis of
a rolling cash flow forecast. The resulting funding
requirements are covered by a variety of instruments
placed on the world's financial markets, with the aim
to minimise risk by matching maturities with financ-
ing requirements and in alignment with a dynamic
target debt structure.
As a further reduction of risk, a syndicated credit line
totalling €8 billion (2017: €8 billion) from a consortium
of international banks is available to the BMW Group.
Intragroup cash flow fluctuations are balanced out by
the use of daily cash pooling arrangements.
Further information is provided in the "Results of
Operations, Financial Position and Net Assets" section
and in the “Risks and Opportunities” section of the
Combined Management Report.
175
176
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Other Disclosures
Market risks
The principal market risks to which the BMW Group
is exposed are currency risk, interest rate risk and raw
materials price risk.
Protection against such risks is provided in the first
instance though natural hedging which arises when
the values or cash flows of non-derivative financial
instruments have matching maturities and amounts
(netting). Derivative financial instruments are used
to reduce the risk remaining after netting.
Currency, interest rate and raw materials price risks
of the BMW Group are managed at a corporate level.
Further information is provided in the "Report on
outlook, risks and opportunities" section of the Com-
bined Management Report.
46,004
Other financial liabilities
752
Cash equivalents
130
13,773
Trade payables
9,731
9,731
Commercial paper
4,463
4,463
Derivative instruments
Other financial liabilities
Total
466
637
111
1,214
110
53,363
451
Derivative instruments
2,478
2,478
52
5,493
189
Gross carrying amount of financial assets
with poor credit ratings
187
605
37
987
1,816
592
Total
84,166
2,415
509
987
52
88,077
1,059
Gross carrying amount of financial assets
with medium credit ratings
Receivables from financial services (including credit
card business receivables) are allocated to internally
defined rating categories based on credit risk. The
related gross carrying amounts in accordance with
IFRS 9 were allocated at 31 December 2018 as follows:
in € million
Stage 1
Stage 2
General
Simplified
Stage 3
Total
Expected
credit loss
Gross carrying amount of financial assets
with good credit ratings
79,597
751
420
80,768
269
4,382
Currency risks
1,050
lar with regard to the amounts of impairment losses
recognised - are provided in the explanatory notes
18,652
Liabilities to banks
9,848
3,804
900
14,552
Liabilities from customer deposits (banking)
11,010
3,368
107
14,485
Trade payables
9,669
9,669
Commercial paper
11,710
Further disclosures relating to credit risk – in particu-
6,942
56,531
to the relevant categories of receivables in → notes 25, → see
26 and 30.
notes 25,
26 and 30
Liquidity risk
The following table shows the maturity structure of
expected contractual cash flows (undiscounted) for
financial liabilities:
31.12.2018
in € million
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
Total
Bonds
10,789
34,196
11,546
Asset-backed financing transactions
As an enterprise with worldwide operations, the
BMW Group conducts business in a variety of cur-
rencies, from which currency risks arise. In order to
hedge currency risks, the BMW Group holds, as at
31 December 2018, derivative financial instruments
mostly in the form of forward currency contracts and
currency swaps.
191
The BMW Group measures currency risk using a
cash-flow-at-risk model. The analysis of currency
risk in this model is based on the planned foreign
currency transactions or "exposures". At the end of
the reporting period, the currency exposure - in each
case for the following year – was as follows:
Notes to the Group
Financial Statements
→ Other Disclosures
Statements
Group
Financial
The balance sheet carrying amount of Level 3 financial
instruments developed as follows:
172
171
As part of the implementation of the risk management
strategy, the extent to which risk exposures should
be hedged is decided at regular intervals and the
corresponding hedging ratio defined. The economic
relationship between the hedged item and the hedging
instrument is based essentially on the fact that they
are denominated in the same currency and have the
same maturities.
Company performance
Contractual rights by share class
Exercise price
Last financing round
Milestone analysis (quantitative and
qualitative factors)
Consideration of exercise price
interest rate
Level 3 financial assets relate mainly to investments in
a venture capital fund. The private equity companies
are valued on the basis of their net asset value which
is determined using relevant information that is not
available in the public domain. The fund manager
assesses the underlying individual companies in
accordance with the guidelines for international
private equity and venture capital valuations (IPEV).
An increase in input parameters would normally also
lead to a similar increase in valuation.
4
Options on unquoted equity instruments
Expected Company performance
Risk adequate discounted
Price per share
1 January 2018*
Additions
Disposals
Unquoted equity
instruments
Options on
31 December 2017
Currency translation differences
Gains (+)/losses (-) recognised in the income statement
Gains (+)/losses (-) recognised in accumulated other equity
Disposals
Additions
1 January 2017
in € million
*Opening balance adjusted due to first-time application of IFRS 9.
31 December 2018
Currency translation differences
Gains (+)/losses (-) recognised in the income statement
Gains (+)/losses (-) recognised in accumulated other equity
Income-based approach
3
Company performance
Contractual rights by share class
qualitative factors)
2,008
1,797
2
-
105
Level 3
Raw materials market price risks
Currency risks
Interest rate risks
Derivative instruments (liabilities)
Other risks
Raw material market price risks
Currency risks
Interest rate risks
Derivative instruments (assets)
534
Convertible bonds
2
221
Price per share
Last financing round
Milestone analysis (quantitative and
265
Input Parameter
Valuation method
Fair value
31.12.2018
Convertible bonds
Unquoted equity instruments
in € million
cash flow method was used, taking account of the
BMW Group's own credit risk; for this reason, the fair
values calculated can be allocated to Level 2. Finan-
cial instruments recognised at fair value for which
no market price is available are allocated to Level 3.
Fair values are determined in accordance with the
following table:
Where the fair value was required for a financial
instrument for disclosure purposes, the discounted ¬
note 7
→ see
The allocation to measurement levels at 31 Decem-
ber 2018 takes account of the reclassifications of
financial instruments made in conjunction with the
first-time application of IFRS 9 see → note 7. There
were no reclassifications within the level hierarchy
either in the financial year 2017 or in the financial
year 2018.
91
778
unquoted equity
instruments
in € million
ments Level 3
in € million
Currency exposure
31.12.2018
31.12.2017*
28,407
29,203
* Prior year figure adjusted, due to the fact that entire interest rate risk is shown, not just of
the significant interest rate portfolios.
* Prior year figure adjusted, due to the fact that entire currency risk is shown, not just of the
significant currencies.
Interest rate risk is managed through the use of inter-
est rate derivatives. As part of the implementation
of the risk management strategy, interest rate risks
are monitored and managed at regular intervals. The
interest rate contracts used for hedging purposes
comprise mainly swaps, which, if hedge accounting
is applied, are accounted for as fair value hedges. The
economic relationship between the hedged item and
the hedging instrument is based on the fact that the
main parameters of the hedged item and the related
hedging instrument, such as start date, term and
currency, are the same.
For selected fixed-interest assets, part of the interest
rate risk is hedged on a portfolio basis. In this case,
swaps are used as the hedging instrument. Hedge
relationships are terminated and redesignated on a
monthly basis at the end of each reporting period,
thereby taking account of the constantly changing
content of each portfolio.
The BMW Group applies a value-at-risk approach
throughout the Group for internal reporting purposes
and to manage interest rate risk. This approach is
based on a historical simulation in which the potential
future fair value losses of the interest rate portfolios are
compared across the Group with expected amounts
on the basis of a holding period of 250 days and a
confidence level of 99.98%. The risk mitigating effect
of correlations between the various portfolios is taken
into account when the risks are aggregated.
The following table shows for interest-rate-sensitive
exposures of the BMW Group the potential fair value
fluctuation compared with the expected value, mea-
sured on the basis of the value-at-risk approach:
in € million
Value at risk
This exposure is compared to all hedges that are in
place. The net cash flow surplus represents an uncov-
ered risk position. The cash-flow-at-risk approach
involves showing the impact of potential exchange
rate fluctuations on operating cash flows on the basis
60,790
60,356
Financial Instru-
of probability distributions. Volatilities and correla-
tions serve as the main input factors to determine the
relevant probability distributions.
The potential negative impact on earnings is calcu-
lated at the reporting date for each currency for the
following financial year on the basis of current market
prices and exposures with a confidence level of 95%.
The risk mitigating effect of correlations between the
various currencies is taken into account when the
risks are aggregated.
The following table shows the potential negative
impact for the BMW Group for the following year
resulting from unfavourable changes in exchange
rates, measured on the basis of the cash-flow-at-risk
approach.
in € million
Cash flow at risk
31.12.2018 31.12.2017*
431
581
* Prior year figure adjusted, due to the fact that entire currency risk is considered, not just of
the significant currencies.
Interest rate risk
Interest rate risks arise when funds are borrowed and
invested with differing fixed-rate periods or differing
terms. At the BMW Group, all items subject to, or
bearing, interest are exposed to interest rate risk and
can therefore affect both the assets and liabilities side
of the balance sheet.
The fair values of the Group's interest rate portfolios
were as follows at the end of the reporting period:
in € million
Fair values of interest rate portfolios
31.12.2018
31.12.2018
1,123
31.12.2017*
2
265
10
10
47
2
45
106
115
2
-2
3
103
2
111
109
3
4
-6
105
-1
3
3
8
-6
105
8
272
2
103
ments Level 3
Financial Instru-
unquoted equity
instruments
Convertible bonds
Unquoted equity
instruments
Options on
-7
Non-operating assets - Automotive
Liabilities of Automotive segment
not subject to interest
48,639
101,702
Total for reportable segments
Elimination of inter-segment items
Total Group depreciation and
amortisation on non-current assets
34,643
113,885
34,489
47,933
Reconciliation of segment assets
Total for reportable segments
14,779
31.12.2018
in € million
8,455
8,441
-6,324
-6,600
15,041
Non-operating assets - Motorcycles
31.12.2017*
45
208,980
Liabilities of Motorcycles segment
Reconciliation of depreciation and
amortisation on non-current assets
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
195,506
Total Group assets
-120,147
-127,818
Elimination of inter-segment items
7,829
40
7,084
Non-operating assets -
123,088
131,889
Financial Services segment
Total liabilities -
572
613
not subject to interest
Other Entities segment
25,393
Group
on non-current assets
23,386
29,816
34
94
4,464
2,235
SOLARWATT GmbH
22
36
1
1
3,393
5
2,322
2,421
341
296
401
360
UnternehmerTUM GmbH
58
27
1,527
1,435
ALTANA AG
3,536
DELTON Health AG (formerly DELTON AG)
DELTON Logistics S.à r.l.
2017
739
Business relationships of the BMW Group with other
associated companies and joint ventures as well as
with non-consolidated subsidiaries are small in scale.
Stefan Quandt, Germany, is a shareholder and Deputy
Chairman of the Supervisory Board of BMW AG.
He is also the sole shareholder and Chairman of
the Supervisory Board of DELTON Health AG,
Bad Homburg v.d.H., as well as sole shareholder of
DELTON Logistics S.à r.l., Grevenmacher, which, via
its subsidiaries, performed logistic-related services for
the BMW Group during the financial year 2018. In
addition, the companies acquired vehicles from the
BMW Group, mainly by way of leasing.
Stefan Quandt, Germany, is also the indirect major-
ity shareholder of SOLARWATT GmbH, Dresden.
Cooperation arrangements are in place between
BMW Group and SOLARWATT GmbH, Dresden,
within the field of electric mobility. The focus of this
cooperation is on the provision of complete photo-
voltaic solutions for rooftop systems and carports
to BMWi customers. In 2018, SOLARWATT GmbH,
Dresden, acquired vehicles from the BMW Group by
way of leasing.
Susanne Klatten, Germany, is a shareholder and
member of the Supervisory Board of BMW AG and
also a shareholder and Deputy Chairwoman of the
Supervisory Board of ALTANA AG, Wesel. In 2018,
ALTANA AG, Wesel, acquired vehicles from the
BMW Group, mainly by way of leasing.
Susanne Klatten, Germany, is also the sole share-
holder and Chairwoman of the Supervisory Board
of UnternehmerTUM GmbH, Garching. In 2018,
the BMW Group bought in services from Unter-
nehmerTUM GmbH, Garching, mainly in the form
of consultancy and workshop services.
In addition, Susanne Klatten, Germany, and Stefan
Quandt, Germany, are indirectly sole shareholders of
Entrust Datacard Corp., Shakopee, Minnesota. Stefan
Quandt is also a member of the supervisory board of
this entity. In 2018, Entrust Datacard Corp., Shakopee,
Minnesota, acquired vehicles from the BMW Group
by way of leasing.
Seen from the perspective of BMW Group entities,
the volume of transactions with the above-mentioned
entities was as follows:
181
in € thousand
Supplies and services
performed
2018
Supplies and services
received
2017
2018
Receivables
at 31 December
Payables
at 31 December
2017
2018
2017
2018
367
772
56
255
Compensation of members of the Board of
Management and Supervisory Board
The total compensation of the current members of
the Board of Management and the Supervisory Board
of BMW AG expensed for the financial year 2018 in
accordance with IFRS comprised the following:
in € million
2018
2017
the Supervisory Board of BMW AG or its subsidiaries,
nor were any contingent liabilities entered into on
their behalf.
Further details about the remuneration of current
members of the Board of Management and the
Supervisory Board can be found in the Compensation
Report, which is part of the Combined Management
Report.
Compensation to members of the
Board of Management
28.8
40.2
43
Fixed remuneration
7.7
Variable remuneration
20.3
31.7
thereof Performance Cash Plan
5.3
Share-based remuneration component
0.3
0.8
Allocation to pension provisions
3.4
8.2
The Board of Management and the Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft have
issued the prescribed Declaration of Compliance pur-
suant to § 161 of the German Stock Corporation Act.
It is reproduced in the Annual Report 2018 of the
BMW Group and is also available to shareholders on
the BMW Group website at www.bmwgroup.com.
Declaration with respect to the Corporate
Governance Code
42
Entrust Datacard Corp.
103
106
2
15
Apart from vehicle leasing and financing contracts
at usual conditions, companies of the BMW Group
concluded no further transactions with members of
the Board of Management or Supervisory Board of
BMW AG. This also applies to close members of the
families of those persons.
BMW Trust e. V., Munich, administers assets on a
trustee basis to secure obligations relating to pen-
sions in Germany and is therefore a related party
of the BMW Group in accordance with IAS 24. This
entity has no assets of its own. It had no income or
expenses during the period under report. BMW AG
bears expenses on an immaterial scale and performs
services for BMW Trust e. V., Munich.
For disclosures relating to key management personnel,
please see → note 43 and the Compensation Report. → see
note 43
182
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Other Disclosures
41
Share-based remuneration
The BMW Group provides three share-based pro-
grammes: the Employee Share Programme for enti-
tled employees of the BMW Group, a share-based
remuneration programme for members of the Board
of Management and a share-based remuneration pro-
gramme for senior heads of department of BMW AG.
As part of the Employee Share Programme, non-voting
shares of preferred stock in BMW AG were granted in
2018 to qualifying employees at favourable conditions
(see note 31 for the number and price of issued
shares). The holding period for these shares is up
to 31 December 2021. In the financial year 2018,
the BMW Group recorded a personnel expense of
€10 million (2017: €10 million) for the Employee Share
Programme, corresponding to the difference between
the market price and the reduced price of the shares
of preferred stock purchased by employees. The Board
of Management reserves the right to decide anew each
year
with respect to an Employee Share Programme.
For financial years beginning after 1 January 2011,
BMW AG has added a share-based remuneration
component to the existing compensation system for
Board of Management members. This compensation
component was revised for financial years from 2018
onwards.
Members of the Board of Management continue to
receive a cash compensation for the specific purpose
of investment after tax and contributions in BMW AG
common stock. For financial years from 2018 onwards,
the investment component corresponds to 45% of the
gross bonus. Shares of common stock purchased in
this way by Board members are required to be held for
a period of four years. At the end of the holding period,
Board members receive from BMW AG, for every three
shares of common stock held, either one additional
share of common stock or the cash equivalent, to be
decided at BMW AG's discretion. In the event of death
or invalidity, special rules apply for early payment
of share-based remuneration components based on
the target amounts. Insofar the service contract is
prematurely terminated and the Company has an
extraordinary right of termination, or if the Board
member resigns without the Company's agreement,
entitlements to amounts as yet unpaid relating to
share-based remuneration are forfeited. With effect
from the financial year 2012, qualifying senior heads
of department are also entitled to select a share-based
remuneration component, which is largely comparable
to the share-based remuneration arrangements for
Board of Management members.
→ see
note 31
The share-based remuneration component is measured
at its fair value at each balance sheet date between
grant and settlement date, and on the settlement date.
The amounts are recognised as personnel expense
on a straight-line basis over the vesting period and
reported in the balance sheet as a provision.
The cash-settlement obligation for the share-based
remuneration component is measured at its fair value at
the balance sheet date (based on the closing price of
BMW AG common stock in Xetra trading at 31 Decem-
ber 2018).
The total carrying amount of the provision for the
share-based remuneration component of current
and former Board of Management members and
senior heads of department at 31 December 2018 was
€4,745,518 (2017: €6,301,785).
The total expense recognised in 2018 for the share-
based remuneration component of current and former
Board of Management members and senior heads of
department was €609,890 (2017: €1,642,936).
The fair value of the programmes for Board of Man-
agement members and senior heads of department
at the date of grant of the share-based remuneration
components was €1,919,680 (2017: €2,311,946), based
on a total of 22,245 shares (2017: 25,694 shares) of
BMW AG common stock or a corresponding cash-
based settlement measured at the relevant market
share price prevailing on the grant date.
Further details on the remuneration of the Board
of Management are provided in the Compensation
Report for the financial
year 2018.
36
3.1
1,333
63
Opening balance at 1 January 2018
1,875
6
Change in fair value during the reporting period
120
-966
-20
235
-453
14
Reclassification to profit or loss
for continuing hedge relationships
of hedging
-987
for terminated hedge relationships
-68
33
Reclassification to acquisition costs for inventories
Closing balance at 31 December 2018
7
-51
-2
940
-614
-13
319
Costs
Designated
component
Costs
of hedging
Hedge relationships give rise to following effects:
in € million
Cash Flow Hedges
Currency risks
Raw material price risks
Fair Value Hedges
Interest rate risks
Designated components and costs of hedging within
accumulated other equity changed as follows:
Change of
designated com-
ponents in other
comprehensive
income
Costs of
hedging in other
comprehensive
income
Hedge
ineffectiveness
recognised in
income statement
-931
-497
-614
12
-19
-6
Currency risks
Interest rate risk
Raw materials price risk
in € million
Designated
component
Costs
of hedging
-262
1,829
12
The following section shows disclosures relevant for
hedging instruments used in the financial year 2017
in accordance with IAS 39.
Related party relationships
Transactions of Group entities with related parties
were carried out without exception in the normal
course of business of each of the parties concerned
and at market conditions.
in € million
Supplies and services
performed
2018
7
A significant proportion of the BMW Group's transac-
tions with related parties relates to the joint venture
BMW Brilliance Automotive Ltd.
Supplies and services
received
2017
2018
40
Receivables
at 31 December
at 31 December
2017
2018
2017
2018
2017
BMW Brilliance Automotive Ltd.
7,691
5,946
99
Payables
-7
328
-335
179
180
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Other Disclosures
Cash flow hedges
The impact of cash flow hedges on accumulated other
equity was as follows:
in € million
2017
78
Balance at 1 January
Total changes during the year
1,437
thereof reclassified to the income statement
Balance at 31 December
-103
1,515
No effects were recognised in financial result in the
financial year 2017 in connection with forecasting
errors and resulting overhedging. Gains due to the
ineffective portion of cash flow hedges amounting
to €17 million were recognised in financial result.
No effects were recognised in financial result in the
financial year 2017 in connection with forecasting
errors relating to cash flow hedges for commodities.
Losses attributable to the ineffective portion of cash
flow hedges amounting to €1 million were recognised
in financial result.
At 31 December 2017, the BMW Group held deriva-
tive financial instruments (mainly forward currency
contracts) in order to hedge currency risks attached
to future or existing transactions. These derivative
instruments were intended to hedge forecast sales
denominated in a foreign currency over the coming
32 months. It was expected that €336 million of net
gains, recognised in equity at 31 December 2017,
would be reclassified to profit and loss in the financial
year 2018.
Furthermore, the BMW Group held no derivative
financial instruments at 31 December 2017 which
were designated as cash flow hedges to hedge against
interest rate risks.
At 31 December 2017, the BMW Group held derivative
financial instruments, mainly commodity swaps, with
terms of up to 46 months to hedge raw materials price
risks. It was expected that €55 million of net gains,
recognised in equity at 31 December 2017 would be
reclassified to profit and loss in the financial year 2018.
Fair value hedges
The following table shows gains and losses from fair
value hedge relationships on hedging instruments and
hedged items in the financial year 2017:
in € million
Gains/losses on hedging instruments designated as
part of a fair value hedge relationship
Gains/losses from hedged items
Ineffectiveness of fair value hedges
31.12.2017
Changes in fair value include additional effects from
the application of the modified closing rate method.
26,434
Benefits in conjunction with the
3.9
-17,306
6
7
-18,710
-17,306
97,480
98,282
-45
80
1,342
293
-18,710
9,815
632
-6,728
26,434
739
25,393
-6,600
-6,324
8,441
8,455
Other Entities
Reconciliation to Group figures
31.12.2018
10,675
4
4
98,282
Motorcycles
Financial Services
31.12.2018
31.12.2017*
31.12.2018
31.12.2017
31.12.2018
31.12.2017
13,836
2,624
11,223
2,769
618
618
14,919
14,740
Other Entities
2018
2017
Reconciliation to Group figures
2018
2017*
2017*
2018
2
3
97,480
31.12.2017
Automotive
31.12.2018
31.12.2017*
2018
2017*
Total for reportable segments
Financial result of Automotive segment
Financial result of Motorcycles segment
8,473
10,382
795
829
-6
-2
Elimination of inter-segment items
553
Reconciliation of segment result
-534
9,815
10,675
Reconciliation of capital expenditure
on non-current assets
Total for reportable segments
32,608
32,121
Elimination of inter-segment items
-6,174
-6,728
Total Group capital expenditure
Group profit before tax
in € million
The total of the segment figures can be reconciled to
the corresponding Group figures as follows:
1 Prior year figure
has been adjusted.
31.12.2018
31.12.2017*
SEGMENT INFORMATION
BY OPERATING SEGMENT
External revenues
Inter-segment revenues
Total revenues
Segment result
Result from equity accounted investments
Capital expenditure on non-current assets
Depreciation and amortisation on non-current assets
84,512
75,121
95,095
93,804
208,980
2,624
195,506
Segment assets
2,769
Investments accounted for using the equity method
187
188
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Segment Information
Write-downs on inventories to their net realisable value
amounting to €54 million (2017: €36 million¹) were
recognised by the Automotive segment in the financial
year 2018. The reversal of impairment losses increased
the segment result of the Automotive segment by an
amount of €22 million (2017: €6 million).
The result of the Financial Services segment was
negatively impacted by impairment losses totalling
€302 million (2017: €215 million) recognised on leased
products. Income from the reversal of impairment
losses on leased products amounted to €118 million
(2017: €11 million).
The Other Entities' segment result includes interest
and similar income amounting to €1,178 million (2017:
€1,110 million) and interest and similar expenses
amounting to €1,145 million (2017: €986 million).
The information disclosed for capital expenditure and
depreciation and amortisation relates to non-current
property, plant and equipment, intangible assets and
leased products.
Group
termination of board activity
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
Segment assets
→ Segment Information
SEGMENT INFORMATION
45
Explanatory notes to segment information
Information on reportable segments
For the purposes of presenting segment information,
the activities of the BMW Group are divided into oper-
ating segments in accordance with IFRS 8 (Operating
Segments). The segmentation follows the internal
management and reporting system and takes account
of the organisational structure of the BMW Group
based on the various products and services of the
reportable segments.
The activities of the BMW Group are broken down
into the operating segments Automotive, Motorcycles,
Financial Services and Other Entities.
Within the Automotive segment the BMW Group devel-
ops, manufactures, assembles and sells automobiles
and off-road vehicles, under the brands BMW, MINI
and Rolls-Royce as well as spare parts, accessories
and mobility services. BMW and MINI brand products
are sold in Germany through branches of BMW AG
and by independent, authorised dealerships. Sales
outside Germany are handled mainly by subsidiary
companies and by independent import companies in
some markets. Rolls-Royce brand vehicles are sold in
the USA as well as in China, Korea, Italy and Russia via
subsidiary companies and elsewhere by independent,
authorised dealerships.
Activities relating to the development, manufacture,
assembly and sale of motorcycles as well as spare
parts and accessories are reported in the Motorcycles
segment.
Automobile leasing, fleet business, multi-brand
business, retail and dealership financing, customer
deposit business and insurance activities are the main
activities allocated to the Financial Services segment.
Holding and Group financing companies are reported in
the Other Entities segment. This segment also includes
the operating companies BMW (UK) Investments Ltd.
and Bavaria Lloyd Reisebüro GmbH, which are not
allocated to one of the other segments.
Internal management and reporting
Notes to the Group
Financial Statements
Segment information is prepared as a general rule
in conformity with the accounting policies adopted
for preparing and presenting the Group Financial
Statements. Exceptions to this general principle are
the treatment of inter-segment guarantees, the earn-
ings impact of which is allocated to the Automotive
and Financial Services segments on the basis used
internally to manage the business, and cross-segment
receivables and investments in subsidiaries for which
no impairment losses have been recognised. A further
exception is the treatment of intragroup buyback
arrangements between the Automotive and Financial
Services segments. Inter-segment receivables and
payables, provisions, income, expenses and profits
are eliminated upon consolidation. Inter-segment
revenues are based on market prices. Centralised
functions are included in the segments concerned.
Expenses for centralised administrative functions
allocated to the Financial Services segment are not
settled in cash.
The success of the Financial Services segment is mea-
sured on the basis of return on equity (RoE). Profit
before tax therefore represents the relevant measure
of segment earnings. The measure of segment assets
in the Financial Services segment corresponds to net
assets, defined as total assets less total liabilities.
The success of the Other Entities segment is assessed
on the basis of profit or loss before tax. The corre-
sponding measure of segment assets used to manage
the Other Entities segment is total assets less asset-
side income tax items and intragroup investments.
185
186
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Segment Information
Segment information by operating segment is as
follows:
in € million
The Automotive and Motorcycles segments are
managed on the basis of return on capital employed
(ROCE). The relevant measure of segment results used
is therefore profit before financial result. Capital
employed is the corresponding measure of segment
assets used to determine how to allocate resources
and comprises all current and non-current operational
assets after deduction of liabilities used operationally
which are not subject to interest (e.g. trade payables).
Statements
Group
Financial
184
0.9
Compensation to members of the
Supervisory Board
5.6
5.6
Fixed compensation and attendance fees
2.0
2.0
Variable compensation
3.6
3.6
Total expense
41.7
49.8
thereof due within one year
30.7
45.9
With effect from the financial year 2018, variable cash
compensation includes a multi-year and future-oriented
Performance Cash Plan.
The total remuneration of former members of the
Board of Management and their dependants amounted
to €9.2 million (2017: €6.7 million).
Pension obligations to current members of the Board
of Management are covered by provisions amounting
to €19.7 million (2017: €22.0 million), determined
in accordance with IAS 19. Pension obligations to
former members of the Board of Management and
their surviving dependants, also determined in
accordance with IAS 19, amounted to €91.0 million
(2017: €90.1 million).
The compensation arrangements applicable for
members of the Supervisory Board for the financial
year 2018 do not include any stock options, value
appreciation rights comparable to stock options or
any other stock-based compensation components.
Apart from vehicle lease and financing contracts at
customary conditions, no advances or loans were
granted to members of the Board of Management and
44
Events after the end of the reporting period
No events have occurred since the end of the financial
year which could have a major impact on the results
of operations, financial position and net assets of
BMW AG and the BMW Group.
183
Automotive
Investments accounted for using the equity method
Motorcycles
2017*
6,182
7,888
175
207
2,161
2,207
Result from equity accounted investments
632
739
Capital expenditure on non-current assets
7,853
27,567
6,972
125
24,608
25,024
Depreciation and amortisation on non-current assets
4,982
4,699
97
88
9,962
9,992
in € million
147
28,165
2,272
2,173
2018
Financial Services
2017*
2018
2017
SEGMENT INFORMATION
BY OPERATING SEGMENT
External revenues
68,947
70,152
2,176
2,270
26,355
25,857
Inter-segment revenues
16,899
15,590
-3
2
1,810
1,710
Total revenues
Segment result
85,846
85,742
2018
The role of "chief operating decision maker" with
respect to resource allocation and performance
assessment of the reportable segment is embodied
in the full Board of Management. For this purpose,
different measures of segment performance as well as
segment assets are taken into account in the operating
segments.
-6,174
The Board of Management reported to the Audit Committee on engine control software for certain
earlier model versions of two vehicle types, which, in the BMW Group's opinion, was originally
developed correctly, but later fitted with a software module not intended for this type of vehicle.
The BMW Group attributes the software error to a manual, human error in an update and not
to a deliberate manipulation of the engine control and exhaust gas cleaning systems. The Board
of Management also explained this process at the Annual General Meeting in 2018. The Public
Prosecution Office Munich delivered a decision on 25 February 2019 regarding notice of a fine
of €8.5 million due to a minor offence. The investigation of the Public Prosecution Office found
no evidence of use of a deactivation device in emissions testing, fraud, or deliberate statutory
violations. The Company has accepted the penalty.
13
The composition of the Presiding Board and the committees of the Supervisory Board remained
unchanged during the financial year. The Corporate Governance Report contains a summary
of the composition of the Supervisory Board and its committees.
Dr Robert Lane resigned from the Supervisory Board with effect from the end of the Annual
General Meeting 2018. He resigned his mandate in mutual agreement with the Company. We
wish to thank Dr Lane for his valuable contributions and steadfast cooperation during his nine
years on the Supervisory Board. The Annual General Meeting elected the former Chairman of
the Board of Management of BASF SE, Dr Kurt Bock, as new member of the Supervisory Board.
The Supervisory Board members Professor Reinhard Hüttl, Dr Karl-Ludwig Kley and Professor
Dr Renate Köcher were re-elected as members of the Supervisory Board.
the Presiding Board and the Supervisory Board's committees
Composition of the Supervisory Board,
On 24 July 2018, the Supervisory Board resolved to revoke the appointment of Markus Duesmann
as a member of the Board of Management and release him from his duties for the remaining
term of his contract. Mr Duesmann had previously informed the Chairman of the Supervisory
Board of his intention to move to the management board of a competitor. The Purchasing and
Supplier Network headed by Mr Duesmann was temporarily taken over by Oliver Zipse, member
of the Board of Management responsible for Production. With effect from 1 October 2018, the
Supervisory Board appointed Dr Andreas Wendt to the Board of Management as member with
responsibility for Purchasing and Supplier Network. Previously, he was head of the largest
German BMW Group plant in Dingolfing.
14
Pieter Nota was appointed to the Board of Management with effect from 1 January 2018. He
succeeded Dr Ian Robertson as member of the Board of Management responsible for Sales and
Brand BMW, Aftersales BMW Group.
The Mediation Committee, which is prescribed by law, did not need to convene during the
financial year 2018.
The Nomination Committee convened twice during the financial year 2018. At those meetings, we
deliberated on succession planning for shareholder representatives and made recommendations
for proposed nominations of candidates for election to the Supervisory Board at the Annual
General Meetings 2018 and 2019, taking into account the composition targets previously decided
upon by the Supervisory Board.
The Personnel Committee convened four times during the financial year 2018 and held two
telephone conferences. In particular, it dealt with the change in the Board of Management for
the Purchasing and Supplier Network and prepared the relevant decisions of the Supervisory
Board. The Personnel Committee also discussed issues relating to the compensation of the
Board of Management and gave members of the Board of Management their approval to accept
mandates outside the Group in a number of cases.
The Audit Committee concurred with the decision of the Board of Management to raise the Com-
pany's share capital in accordance with Article 4 (5) of the Articles of Incorporation (Authorised
Capital 2014) by €521,500 and, in conjunction with the Employee Share Programme, to issue a
corresponding number of new non-voting bearer shares of preferred stock.
The Audit Committee continued to make preparations for the change in external auditor for the
financial year 2019 in line with plan. It also regularly examined the non-audit services provided
by the current auditor. An independent auditor engaged to conduct the mandatory audit of
over-the-counter derivative transactions confirmed the effectiveness of the system that BMW AG
currently employs to ensure compliance with regulatory requirements.
Furthermore, the Audit Committee dealt with the main results of the audits conducted by
Group Internal Audit and with further audit planning. The Audit Committee also discussed risk
management and the assessment of current risks. Other topics included the internal control
system, export control and the report on major legal disputes.
Composition of the Board of Management
To Our
Shareholders
→ Report of the
Supervisory Board
To Our
16
15
Norbert Reithofer
Chairman of the Supervisory Board
Yours
On behalf of the Supervisory Board
We wish to express our appreciation to the members of the Board of Management and the entire
workforce of the BMW Group worldwide for their dedication, their ideas and their achievements
during the financial year 2018, which form the bedrock of the enduring success and sustainability
of our Company - both now and in the future.
Expression of appreciation by the Supervisory Board
Furthermore, in conjunction with the presentation of the Sustainable Value Report, the
Audit Committee and the Supervisory Board reviewed the separate non-financial report of
BMW AG (Company and Group) at 31 December 2018, which has been drawn up by the Board
of Management. The audit firm PricewaterhouseCoopers GmbH has performed a “limited
assurance" review of these reports and issued an unqualified statement thereon. The documents
were carefully examined by the Audit Committee at its meeting on 27 February 2019 and by the
Supervisory Board at its meeting on 15 March 2019. The Board of Management provided an
in-depth explanation of the reports at both meetings. Representatives of the auditors attended
both meetings, reported on significant findings and answered additional questions raised by
members of the Supervisory Board. The Supervisory Board acknowledged and approved the
separate non-financial report (Company and Group) drawn up by the Management Board.
The Supervisory Board also examined the proposal of the Board of Management to use the
unappropriated profit to pay a dividend of €3.50 per share of common stock and €3.52 per
share of non-voting preferred stock. We consider the proposal appropriate and have therefore
approved it.
Based on a thorough examination conducted by the Audit Committee and the full Supervisory
Board, we concurred with the results of the external audit. In accordance with the conclusion
reached after the examination by the Audit Committee and the Supervisory Board, no objections
were raised. The Group and Company Financial Statements of BMW AG for the financial year
2018 prepared by the Board of Management were approved at the Supervisory Board meeting
held on 15 March 2019. The financial statements have therefore been adopted.
The representatives of the external auditor confirmed that the risk management system estab-
lished by the Board of Management is capable of identifying at an early stage any developments
that might threaten the Company's going-concern status. They confirmed that no material
weaknesses in the internal control system and risk management system with regard to the
financial reporting process were identified. Similarly, they did not identify in the course of their
audit work any facts that were inconsistent with the contents of the Declaration of Compliance
pursuant to Section 161 of the German Stock Corporation Act (AktG) issued by the Board of
Management and the Supervisory Board.
At its meeting held on 15 March 2019, the full Supervisory Board discussed in depth the draft
of the Company and Group Financial Statements submitted by the Board of Management. In
both meetings, the Board of Management gave a detailed explanation of the financial reports it
had prepared. Representatives of the external auditor were also present at both meetings. They
reported on the main findings of their audit, explained the key audit matters in the audits of
the Company and Group Financial Statements and answered additional questions of members
of the Supervisory Board.
The Audit Committee carefully examined and discussed these documents at its meeting held
on 27 February 2019. The Audit Committee reviewed in detail the key audit matters raised in
the auditor's report of the Company and Group Financial Statements and the related audit
procedures performed by the independent auditor.
Examination of financial statements and the profit distribution proposal
The Company and Group Financial Statements of the Company for the financial year 2018 were
audited by KPMG AG Wirtschaftsprüfungsgesellschaft. KPMG also conducted a review of the
abridged Interim Group Financial Statements and Interim Group Management Report for the
six-month period ended 30 June 2018. The results of the review were presented to the Audit
Committee by representatives of KPMG AG. No issues were identified that might indicate that
the abridged Interim Group Financial Statements and Interim Group Management Report had
not been prepared in all material respects in accordance with the applicable provisions.
The Group and Company Financial Statements for the year ended 31 December 2018 and the
Combined Management Report - as authorised for issue by the Board of Management on
19 February 2019 – were audited by KPMG AG and given an unqualified audit opinion.
The Auditor's Report has been signed since the financial year 2016 by Christian Sailer, as
independent auditor (Wirtschaftsprüfer), and since the financial year 2014 by Andreas Feege,
as independent auditor (Wirtschaftsprüfer) responsible for the performance of the engagement.
The financial statements for the financial year 2018, the Combined Management Report, the
reports of the external auditors and the Board of Management's profit distribution proposal
were made available to all members of the Supervisory Board in a timely manner.
The Committee received continuous and detailed information on the status of the internal
investigations and the EU Commission's investigation into the antitrust allegations in connection
with the former working groups of several German automobile manufacturers. A representative
of the law firm engaged by the company also regularly took part in the discussions.
During the year under report, the Audit Committee again dealt intensively with the topic
of compliance in the BMW Group. In his regular report, the Chairman of the Compliance
Committee provided us with a summary of ongoing compliance-related proceedings. He also
explained the results of a voluntary external audit of the BMW Group's compliance management
system in the context of antitrust law with the aim of verifying its appropriateness. On this
basis, the Compliance Committee submitted a concept to develop the Compliance Management
System, which was confirmed by the Board of Management. The Audit Committee discussed
the concept at length and supports the corresponding further development of the Compliance
Management System.
The fees proposed by KPMG for the audits of the year-end Company and Group Financial
Statements 2018 and for the review of the Half-Year Financial Report were deemed appropriate.
Subsequent to the Annual General Meeting held in May 2018, the Audit Committee therefore
appointed KPMG for the relevant engagements and specified audit focus areas.
The meeting of the Audit Committee held in February 2018 focused primarily on preparing for
the Supervisory Board meeting at which the financial statements were to be examined. Before
recommending to the full Supervisory Board that KPMG AG Wirtschaftsprüfungsgesellschaft
(KPMG) be re-elected as Company and Group auditor at the Annual General Meeting 2018,
the Audit Committee obtained a Declaration of Independence from KPMG and, in this context,
also considered the scope of non-audit services provided by KPMG entities to the BMW Group.
There were no indications of conflicts of interest, grounds for exclusion or lack of independence
on the part of the auditor.
The Supervisory Board discussed the current situation and strategy regarding the Group's
direct operations and joint ventures in China. In particular, the Board of Management
described its plans to expand local production through the BMW Brilliance Automotive Ltd.
joint venture (BBA) and its intention to increase its stake in BBA. The Supervisory Board
supports the Board of Management's strategically significant plan to increase the BMW Group's
stake in BBA's share capital by 25 percentage points to 75% by 2022 and gave its approval
for the transaction.
In addition to the status reports, the Supervisory Board focused on a number of specific areas
in greater detail. For example, the Board of Management reported on the current status and
strategy of Group financing. Further topics focused on were market developments and business
performance in North America, in the course of which trade risks and financial challenges in
the region were also addressed. Moreover, the Board of Management reported in detail on the
current status of and the overall strategy regarding the BMW brand.
Supervisory Board
→ Report of the
To Our
Shareholders
10
9
The status reports also included information on other current transactions and projects of key
importance, which the Supervisory Board considered in detail. These topics included important
cooperation projects such as the joint venture with Great Wall Motor, in particular regarding the
production of all-electric MINI vehicles in China, the joint venture with Daimler in the field of
mobility services and collaboration in the field of autonomous driving. The Supervisory Board also
discussed the possible introduction of driving bans for certain diesel-powered vehicles in individual
cities in Europe and the future prospects of diesel engines in general. Furthermore, the Board of
Management reported on the temporary market disruptions caused by discount campaigns initiated
by competitors in the run-up to the introduction of the new WLTP measurement procedures.
It informed the Supervisory Board about the increased extent of statutory and non-statutory warranty
measures as well as major vehicle recalls. International trade conflicts, trade risks and their impact
on the BMW Group were repeatedly the subject of the status reports provided.
In its regular reports on the BMW Group's current situation, the Board of Management provided us
with information about new vehicle models, delivery volume trends and market developments in the
Automotive and Motorcycles segments as well as new and total business volumes in the Financial
Services segment, in each case highlighting any planning variances. The Board of Management
also presented us with the latest workforce figures and reported on economic developments in
key markets.
The work of the Supervisory Board focused in particular on the strategic development of the
BMW Group's business models against the backdrop of digitalisation, drivetrain electrification
and other key trends. We also debated exhaustively on the challenges posed by trade conflicts,
the imminent Brexit crisis and supply distortions resulting from the difficulties encountered by
some of our competitors in converting to the new European WLTP testing cycle.
The Chairman of the Supervisory Board also held individual discussions with representatives of
various investors as well as with a shareholders' association. Topics of these consultations included
the treatment of strategy by the Supervisory Board, the involvement of the Supervisory Board in
sustainability issues and the new compensation system for the Board of Management.
In our capacity as Supervisory Board, we provided the Board of Management with in-depth advice
on matters relating to the management and further development of the BMW Group and monitored
the Board of Management's running of the business, both continuously and thoroughly. The full
Supervisory Board met five times in the course of the year, including one two-day meeting, and on
each occasion deliberated in detail with the Board of Management on the Group's performance. In
addition to these meetings, the Board of Management provided us with information on matters of
particular significance. Furthermore, the Chairman of the Supervisory Board was in frequent contact
with the Chairman of the Board of Management, as was the Chairman of the Audit Committee with
the Chief Financial Officer, in order to deal with current topics as they arose.
Monitoring and advisory activities of the Supervisory Board
In the course of 2018, our company had to tackle a variety of challenges within its business
environment. However, we were able to master them and achieve a good result, despite the adversities.
At the same time, the Group is systematically laying the foundations for long-term success going
forward. The continuous expansion of our range of electrified vehicles is one good example of this
strategy. Particularly in these times of fundamental change, the BMW Group maintains a leading
position in the automotive industry, shaping technological transformation with determination,
passion and professional excellence.
Dear Shareholders,
The Board of Management explained the current status of the customer ecosystem to the
Supervisory Board and provided an outlook on the further development of the Digital Services
and Mobility Services business fields. In the process, questions of data sovereignty and data
security regarding data collected within the Group's vehicles were also a topic of debate.
Furthermore, the Supervisory Board discussed the Group's global added value strategy across
the production network and the criteria influencing the decision to locate the planned new
production site in Eastern Europe.
Shareholders
The Supervisory Board held lengthy discussions with the Board of Management regarding
the current status of the Strategy NUMBER ONE > NEXT and the decisions taken in previous
months to implement it. In particular, the Board of Management discussed recent changes in
the market environment (such as customs duty increases, restrictive trade policies and Brexit
scenarios) and explained how the current strategy enables the BMW Group to respond to the
respective challenges. Among other matters, strategies regarding the electrification of the product
range, drivetrain technology and digitalisation as well as autonomous driving were presented
in detail. The Supervisory Board emphatically supports the continued implementation of the
Strategy NUMBER ONE > NEXT.
We also gave lengthy consideration to the business performance, risk situation and strategy of
the Financial Services segment. The strategy for the further development of the MINI brand and
cooperation with the Chinese company Great Wall Motor in this respect were also the subject
of our deliberations. In addition, the Board of Management reported on the current status of
diversity concepts for the Company.
Supervisory Board
→ Report of the
To Our
Shareholders
12
11
The Audit Committee held five meetings and three telephone conference calls during the financial
year 2018. In the course of those conference calls, together with the Board of Management we
examined and discussed the Quarterly Financial Reports prior to their publication. Representatives
of the external auditors were present when discussing the Half-Year Financial Report.
The Presiding Board convened four times during the year under report. Assuming no committee
was responsible, the focus of our activities was on preparing the detailed agenda for the meetings
of the full Supervisory Board. Together with the Board of Management and senior heads of
department, we prepared the various items on the agenda for Supervisory Board meetings in a
thorough manner and made suggestions for reports to be submitted to the full Supervisory Board.
The Supervisory Board has established a Presiding Board and four committees. Committee
chairpersons reported in detail on Presiding Board and committee work at the subsequent
meetings of the full Supervisory Board. A detailed description of the duties, composition and
working procedures of the Presiding Board and the committees is provided in the Corporate
Governance Report.
Description of Presiding Board activities and committee work
We reviewed the efficiency of our work in the Supervisory Board, having prepared the related
discussion at the full Supervisory Board meeting on the basis of a questionnaire. Overall, the work
of the Supervisory Board was deemed efficient. No significant need for change was identified.
Average attendance at the five Supervisory Board meetings was 94%. An individualised overview
of attendance at meetings of the Supervisory Board and its committees for the financial year
2018 has been published on the BMW Group's website. All members of the Supervisory Board
attended more than half of the meetings of the Supervisory Board and those committees to
which they belonged during their term of office in the financial year 2018.
No conflicts of interest arose on the part of members of the Supervisory Board during the year
under report. Significant transactions with Supervisory Board members and other related
parties as defined by IAS 24, including close relatives and intermediary entities, are examined
on a quarterly basis.
We also reviewed existing targets for the composition of the Supervisory Board and the competence
profile set out for its members. We concluded that the composition of the Supervisory Board at
31 December 2018 was in line with the targets stipulated in the diversity concept, the competency
profile and other composition targets. We have decided to continue using the competency profile
and the targets for the composition of the Supervisory Board for the financial
year 2019.
We also discussed corporate governance within the BMW Group and the application of the
recommendations contained in the German Corporate Governance Code. In December, the
Board of Management and the Supervisory Board issued their Declaration of Compliance with
the German Corporate Governance Code. We comply with all of the recommendations of
the current version of the Code with only one exception (the use of model tables for Board of
Management compensation). The wording of the Declaration of Compliance is shown in the
Corporate Governance Report.
The new compensation system in place since the beginning of 2018 was approved by the
Annual General Meeting in May 2018. The structure of compensation systems for members of
the Board of Management and reporting thereon is currently the subject of draft amendments
to the German Stock Corporation Act and the German Corporate Governance Code. For
this reason, we have decided not to make any changes to the compensation system for the
BMW Group's Board of Management decided on as recently as 2017, but to await the results of
the above-mentioned reforms.
The Supervisory Board examined the structure and the level of compensation paid to the
members of the Board of Management. In this context, we took into account trends in business
performance, executive manager compensation and the remuneration of the workforce in
Germany over time. Based on comparative studies conducted by an external compensation
consultant, we concluded that the compensation of the members of the Board of Management
is commensurate. Detailed information on the compensation of Board of Management members
is provided in the Compensation Report.
We also deliberated intensively on the BMW Group's forecasts for the period from 2019 to 2024.
In this context, the Board of Management addressed the volatile nature of global economic
and political conditions and their influence on planning. Risk scenarios and their possible
effects on long-term planning were also presented. After thorough review, the Supervisory
Board approved the BMW Group's long-term corporate plan. Based on this plan, the Board of
Management presented the annual budget for the financial year 2019, which we also discussed
at great length.
→ Statement of the
Chairman
Munich, 15 March 2019
Management
→ Statement of the
Chairman
of the Board of
Management
Eighth consecutive sales record
Because customers around the world value our cars and motorcycles so much, the BMW Group
was able to post record sales for the eighth consecutive year. The BMW Group has been number
one in the global premium segment for the past 15 years. Our brands BMW, Rolls-Royce and
BMW Motorrad achieved new all-time highs, while MINI reported its second-highest sales
result ever.
For the first time, BMW M GmbH broke through the 100,000 unit sales mark with its M and
M Performance models.
Despite tough headwinds, second-best result in our history
Group earnings before tax and annual net profit were both the second-highest in our history. As
previously announced, earnings before tax were moderately lower than last year's record figure.
To Our
Shareholders
With an EBIT margin of 7.2 percent in the Automotive segment, we exceeded our adjusted target.
This figure only partially includes our China business, as is usual. The Group EBT margin of
10.1 percent was above our 10 percent target for the eighth consecutive year. Once again, our
financial services business made a significant contribution to the Group result.
Systematic electrification for emissions-free driving
The trend is clear: in Europe, no other manufacturer sells more electrified vehicles than the
BMW Group. Between 2015 and 2018, sales of our electric models and plug-in hybrids increased
more than fourfold.
We are also number one worldwide in registrations of plug-in hybrid vehicles. This technology
not only gives our customers access to electric driving, it is also a quick and pragmatic way to
improve air quality in cities. Studies show that plug-in hybrids with an electric range of at least
60 km are driven in electric mode just as often as pure-electric models.
And there's more coming on the electric side: 2019 will bring plug-in hybrid variants of the
new BMW 3 Series, X5 and 7 Series. The X3 will also be available for the first time with a hybrid
drive train. These will be joined by the first fully electric MINI and, in 2020, by the first fully
electric BMW - the iX3.
By the end of 2020, we will have more than ten new and revised models with an electrified
drive train. Thanks to flexible vehicle architectures, our plants will be able to build different
drive types.
The heart of an electric vehicle is the electric motor and the battery. We produce both the
electric drive and the high-voltage battery in-house. In the summer, we will open the new
BMW Group Battery Cell Competence Centre in Munich, where we will develop so-called
build-to-print prototypes. For production of base cells, we will be working with the world's
largest manufacturer of automotive battery cells, CATL, from China, and with Northvolt in
a European consortium.
of the Board of
Dear Shareholders, your company is on a very solid footing and possesses considerable financial
strength. This means we can continue to invest in new technologies, services and our locations
as our springboard to the future.
18
The future belongs to electric mobility - there is no doubt in my mind about that. But it's certainly
not a sprint, it's a marathon. By late 2019, we aim to have half a million electrified BMW Group
vehicles on the roads.
A current example of this is the switch to the new WLTP test procedure in Germany and Europe.
We implemented the new requirements in our vehicles systematically and early. That is how we
operate as a company. We will also continue to meet ambitious targets to reduce CO2 emissions
in Europe and the rest of the world.
Harald Krüger
Chairman of the Board of Management
17
Dear Shareholders,
On behalf of the Board of Management and our nearly 135,000 associates worldwide, I would
like to thank you for joining the BMW Group on its journey into the future.
Individual mobility, in all its facets, remains our core competence. We are reminded, time and
again, that long-term success demands fresh thinking and bold action.
Digitalisation is changing every industry and every aspect of our lives. We have set ourselves a
clear goal: to be a leading tech company for premium mobility by 2025 - and we are developing
our business model in this direction. Our Strategy NUMBER ONE > NEXT has three main
approaches: profitability, growth and future all of them geared towards our customers'
ever-evolving needs and desires.
-
Tech company in the premium mobility sector
We are moving autonomous driving forward with a combination of enthusiasm and sound
judgement. Safety is for us an absolute priority in this area. In 2021, we will release the
BMW iNEXT, a vehicle that brings together several future technologies: a futuristic interior, full
connectivity and an electric range of up to 700 km. This marks the beginning of highly automated
driving. At the same time, we are also testing autonomous driving with a fleet of 500 iNEXT
vehicles in urban settings.
WLTP systematically implemented
Mobility services from a single source
We are creating new mobility offerings and digital services that will enable customers to bring
their digital world into the car. Combining our mobility services in a joint venture with the
Daimler Group will allow us to offer customers a single source for all their mobility needs with
a single touch.
Uncertainty is part of our business
2018 was a challenging year for our industry, due to trade conflicts and the uncertainty
surrounding Brexit: vehicle sales declined across the globe for the first time since the global
economic and financial crisis.
iNEXT ' – a building block for the future
Volatile markets, tough competition and various operating conditions in different countries
are all part of our business. The BMW Group has had to overcome difficult hurdles many
times in its history. In such moments, we have always stayed the course with a steady hand
at the wheel.
149
100
BMW Holding Malaysia Sdn Bhd, Kuala Lumpur
BMW India Private Ltd., Gurgaon
PT BMW Indonesia, Jakarta
BMW Asia Pte. Ltd., Singapore
BMW Asia Pacific Capital Pte Ltd., Singapore
-15
BMW Credit (Malaysia) Sdn Bhd, Kuala Lumpur
BMW Lease (Malaysia) Sdn Bhd, Kuala Lumpur
BMW Asia Technology Centre Sdn Bhd, Kuala Lumpur
25
50
1,561
50
1,764
-337
29.6
50
50
20
20
100
40
5,926
100
2018-1 ABL, Tokyo 13
100
40
ment in %
Capital invest-
100
51
Bavarian Sky China 2017-2, Beijing 13
Bavarian Sky Korea 2nd Asset Securitization Speciality Company, Seoul 13
Bavarian Sky Korea 3rd Asset Securitization Speciality Company, Seoul 13
2018-3 ABL, Tokyo 13
2018-2 ABL, Tokyo 13
2017-3 ABL, Tokyo 13
2017-1 ABL, Tokyo 13
2017-2 ABL, Tokyo 13
100
2016-2 ABL, Tokyo 13
2015-2 ABL, Tokyo 13
2015-1 ABL, Tokyo 13
BMW Tokyo Corp., Tokyo
at 31 December 2018
Notes to the Group
Financial Statements
→ List of Investments
Group
Financial
Statements
194
100
100
100
100
2016-1 ABL, Tokyo 13
50
Associated companies - equity accounted
252223
6.2
9.1
18.3
FOREIGN7
Gios Holding B.V., Oss
SGL Composites LLC, Dover, Delaware
1 The amounts shown for the German subsidiaries correspond to the annual financial statements drawn up in accordance with German accounting requirements (HGB).
12.0
49.0
2 The amounts shown for the foreign subsidiaries correspond to the annual financial statements drawn up in accordance with uniform IFRS rules. Equity and earnings not denominated in euro are translated into
euro using the closing exchange rate at the balance sheet date.
3 Profit and Loss Transfer Agreement with BMW AG.
4 Profit and Loss Transfer Agreement with a subsidiary of BMW AG.
16.7
5 Exemption from drawing up a management report applied in accordance with § 264 (3) and § 264 b HGB.
7 These entities are neither consolidated nor accounted for using the equity method due to their overall immateriality for the Group Financial Statements.
8 The amounts shown for entities accounted for using the equity method and for proportionately consolidated entities correspond to the annual financial statements drawn up in accordance with uniform
IFRS rules. Equity not denominated in euro is translated into euro using the closing exchange rate at the balance sheet date, earnings are translated using the average rate.
⁹ Including power to appoint representative bodies.
1º Exemption pursuant to Article 2:403 of the Civil Code of the Netherlands (Burgerlijk Wetboek).
11 First-time consolidation.
12 Deconsolidation in the financial year 2018: BMW Malta Finance Ltd., St. Julians.
13 Control on basis of economic dependence.
197
198
Group
Financial
Statements
6 Exemption from publication of financial statements applied in accordance with § 264 (3) and § 264b HGB.
51
9.8
17.8
20
20
30
BMW AG's participations at 31 December 2018
→ 79
Companies
DOMESTIC
Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern
GSB Sonderabfall-Entsorgung Bayern GmbH, Baar-Ebenhausen
Hubject GmbH, Berlin
IVM Industrie-Verband Motorrad GmbH & Co. Dienstleistungs KG, Essen
18.9
Joblinge gemeinnützige AG Berlin, Berlin
Joblinge gemeinnützige AG München, Munich
Racer Benchmark Group GmbH, Landsberg am Lech
BMW China Services Ltd., Beijing
SGL Carbon SE, Wiesbaden
Equity
Profit/loss
in € million
in € million
Capital invest-
ment in %
4.6
3.1
Joblinge gemeinnützige AG Leipzig, Leipzig
74
0
51
193
100
100
100
100
100
100
100
100
100
100
100
100
100
100
0
0
0
0
0
0
0
0
BMW Canada Auto Trust 2017-1, Richmond Hill, Ontario 13
BMW Canada Auto Trust 2018-1, Richmond Hill, Ontario 13
BMW Canada Auto Trust 2016, Richmond Hill, Ontario 13
BMW Canada 2018-A, Richmond Hill, Ontario 13
BMW Canada 2015-A, Richmond Hill, Ontario 13
100
BMW of Manhattan, Inc., Wilmington, Delaware
100
BMW SLP, S.A. de C.V., Villa de Reyes
100
BMW de Argentina S.A., Buenos Aires
BMW Insurance Agency Inc., Wilmington, Delaware
BMW Leasing de Mexico S.A. de C.V., Mexico City
BMW Leasing do Brasil S.A., São Paulo
Rolls-Royce Motor Cars NA LLC, Wilmington, Delaware
100
100
0
100
100
BMW Consolidation Services Co. LLC, Wilmington, Delaware
BMW Acquisitions Ltda., São Paulo
BMW Manufacturing Indústria de Motos da Amazônia Ltda., Manaus
SB Acquisitions LLC, Wilmington, Delaware
BMW Auto Leasing LLC, Wilmington, Delaware
BMW Facility Partners LLC, Wilmington, Delaware
BMW FS Securities LLC, Wilmington, Delaware
BMW FS Funding Corp., Wilmington, Delaware
BMW Manufacturing LP, Woodcliff Lake, New Jersey
BMW FS Receivables Corp., Wilmington, Delaware
BMW Receivables 1 Inc., Richmond Hill, Ontario
BMW Receivables Ltd. Partnership, Richmond Hill, Ontario
BMW Receivables 2 Inc., Richmond Hill, Ontario
BMW Extended Service Corp., Wilmington, Delaware
BMW Vehicle Lease Trust 2016-2, Wilmington, Delaware 13
BMW Vehicle Lease Trust 2017-1, Wilmington, Delaware 13
BMW Vehicle Lease Trust 2017-2, Wilmington, Delaware 13
BMW Vehicle Lease Trust 2018-1, Wilmington, Delaware 13
BMW Vehicle Lease Trust 2017-A, Wilmington, Delaware 13
BMW Vehicle Owner Trust 2016-A, Wilmington, Delaware13
BMW Vehicle Owner Trust 2018-A, Wilmington, Delaware 13
BMW Floorplan Master Owner Trust Series 2018-1, Wilmington, Delaware 13
100
0
Notes to the Group
Financial Statements
ooo
62
100
337
93
100
Herald International Financial Leasing Co., Ltd., Tianjin
197
13
58
BMW Korea Co. Ltd., Seoul
173
482
27
BMW India Financial Services Private Ltd., Gurgaon, Haryana
123
7
100
BMW (Thailand) Co. Ltd., Bangkok
108
87
100
BMW Manufacturing (Thailand) Co. Ltd., Rayong
100
BMW Malaysia Sdn Bhd, Kuala Lumpur
100
BMW Leasing (Thailand) Co. Ltd., Bangkok
BMW Japan Finance Corp., Tokyo
47
0
0
Africa
BMW (South Africa) (Pty) Ltd., Pretoria
719
63
100
BMW Financial Services (South Africa) (Pty) Ltd., Midrand
SuperDrive Investments (RF) Ltd., Cape Town 13
149
4
100
100
0
BMW Automotive Finance (China) Co. Ltd., Beijing
BMW China Automotive Trading Ltd., Beijing
2,107
248
58
557
480
100
100
BMW Financial Services Korea Co. Ltd., Seoul
530
Asia
→ List of Investments
100
Munich, 19 February 2019
100
100
100
100
100
100
100
100
100
100
100
Capital invest-
ment in %
Profit/loss
in € million
in € million
Equity
0
0
100
100
100
100
100
53
100
100
100
100
Parkmobile International B.V., Amsterdam
Parkmobile Hellas S.A., Athens
Parkmobile Group Holding B.V., Amsterdam
Parkmobile Group B.V., Amsterdam
Parkmobile Benelux B.V., Amsterdam
Parkmobile Belgium BvBa, Antwerp
Park-Mobile (UK) Ltd., Basingstoke
Park-line Holding B.V., The Hague
Park-line B.V., The Hague
Park-line Aqua B.V., The Hague
000 BMW Leasing, Moscow
100
John Cooper Works Ltd., Farnborough
Content4all B.V., Amsterdam
Cobalt Telephone Technologies Ltd., Basingstoke
Cobalt Holdings Ltd., Basingstoke
BMW Russland Automotive 000, Kaliningrad
BMW Motorsport Ltd., Farnborough
BMW Merger, distribucija motornih vozil, d.o.o., Ljubljana
BMW Merger S.R.L., Bukarest
BMW Manufacturing Hungary Kft., Vecsés
BMW i Ventures B.V., The Hague
100
The reconciliation of segment figures to the corre-
sponding total Group figures shows the elimination
of inter-segment items. Revenues with other segments
result mainly from the sale of vehicles, for which the
Financial Services segment has concluded a financing
or lease contract. Eliminations of inter-segment items
in the reconciliation to the Group profit before tax,
capital expenditure, depreciation and amortization
mainly result from the sale of vehicles in the Automo-
tive segment, which are subsequently accounted for
as leased vehicles in the Financial Services segment. 7
John Cooper Garages Ltd., Farnborough
27
28
179
Oceania
BMW Australia Finance Ltd., Mulgrave
BMW Australia Ltd., Melbourne
BMW Financial Services New Zealand Ltd., Auckland
BMW New Zealand Ltd., Auckland
BMW Sydney Pty. Ltd., Sydney
BMW Melbourne Pty. Ltd., Melbourne
BMW Australia Trust 2011-2, Mulgrave 13
Bavarian Sky Australia Trust A, Mulgrave 13
BMW AG's non-consolidated companies at 31 December 2018
→ 77
Bavarian Sky China 2018-2, Beijing 13
Companies
Alphabet Fleetservices GmbH, Munich
Automag GmbH, Munich
Blitz 18-353 GmbH, Munich
Blitz 18-354 GmbH, Munich
BMW Car IT GmbH, Munich4
BMW i Ventures GmbH, Munich
Digital Charging Solutions GmbH, Munich
ParkNow GmbH, Munich
PM Parking Ventures GmbH, Munich
FOREIGN7
Europe
DOMESTIC
Parkmobile International Holding B.V., Amsterdam
Bavarian Sky China 2018-1, Beijing 13
Alphabet Insurance Services Polska Sp. z o.o., Warsaw
403
0
0
0
0
0
0
0
0
0
0
Bavarian Sky China 2017-3, Beijing 13
0
0
0
0
0
100
BMW Group Benefit Trust Ltd., Farnborough
BMW Drivers Club Ltd., Farnborough
BMW Car Club Ltd., Farnborough
BMW Bulgaria EOOD, Sofia
BMW (UK) Pensions Services Ltd., Hams Hall
BMW (GB) Ltd., Farnborough
0
at 31 December 2018
Parkmobile Licenses B.V., Amsterdam
Parkmobile Software B.V., Amsterdam
Notes to the Group
Financial Statements
→ List of Investments
Group
Financial
Statements
196
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
at 31 December 2018
Asia
THEPSATRI Co. Ltd., Bangkok⁹
BMW Financial Services Singapore Pte Ltd., Singapore
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management
Harald Krüger
Milagros Caiña Carreiro-Andree Klaus Fröhlich
Pieter Nota
Dr. Nicolas Peter
Peter Schwarzenbauer
Dr.-Ing. Andreas Wendt
Oliver Zipse
Companies
→ 78
100
BMW AG's associated companies, joint ventures
and joint operations at 31 December 2018
Oceania
BMW Financial Services Hong Kong Ltd., Hongkong
Herald Hezhong (Beijing) Automotive Trading Co. Ltd., Beijing
BMW India Leasing Private Ltd., Gurgaon
BMW Middle East Retail Competency Centre DWC-LLC, Dubai
BMW Finance (United Arab Emirates) Ltd., Dubai
BMW Mobility Services Ltd., Sichuan Tianfu New Area (Chengdu Section)
BMW Insurance Services Korea Co. Ltd., Seoul
BMW Hong Kong Services Ltd., Hongkong
BMW India Foundation, Gurgaon
BMW Philippines Corp., Manila
Parkmobile International (Australia) Pty. Ltd., Sydney
90
BMW Financial Services de Mexico S.A. de C.V. SOFOM, Mexico City
100
100
195
BPF Midrand Property Holdings (Pty) Ltd., Midrand
Multisource Properties (Pty) Ltd., Midrand
BMW Automobile Distributors (Pty) Ltd., Midrand
Africa
Toluca Planta de Automoviles S.A. de C.V., Mexico City
ReachNow LLC, Wilmington, Delaware
ParkNow LLC, Wilmington, Delaware
Parkmobile LLC, Wilmington, Delaware
Parkmobile USA Inc., Atlanta, Georgia
Parkmobile Montgomery County LLC, Baltimore, Maryland
100
Parkmobile Electronic Parking Solutions Canada Inc., Vancouver
BMW Leasing de Argentina S.A., Buenos Aires
BMW i Ventures LLC, Wilmington, Delaware
BMW i Ventures Inc., Wilmington, Delaware
BMW Experience Centre Inc., Richmond Hill, Ontario
217-07 Northern Boulevard Corp., Wilmington, Delaware
The Americas
U.T.E. Alphabet España-Bujarkay, Sevilla
RingGo (GB) Ltd., Basingstoke
ParkNow Suisse S.A., Bulle
ParkNow France S.A.S., Versailles
ParkNow Austria GmbH, Vienna
BMW Operations Corp., Wilmington, Delaware
BMW Technology Corp., Wilmington, Delaware
Designworks/USA Inc., Newbury Park, California
Digital Charging Solution Corp., Atlanta, Georgia
MINI Business Innovation LLC, Wilmington, Delaware
Mini Urban X Accelerator SPV LLC, Wilmington, Delaware
Parkmobile Ltd., Basingstoke
100
100
100
100
100
100
100
100
100
60
100
100
100
100
100
100
100
DOMESTIC
100
100
100
100
100
100
100
100
100
100
BMW Japan Corp., Tokyo
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Europe 12
BMW Holding B.V., The Hague
BMW International Holding B.V., Rijswijk 10
17,761
2,106
100
7,971
58
100
100
100
153
BMW High Power Charging Beteiligungs GmbH, Munich 4,6
DriveNow GmbH & Co. KG, Munich¹¹
BMW Hams Hall Motoren GmbH, Munich 4, 5, 6
BMW Fahrzeugtechnik GmbH, Eisenach 3, 5, 6
BMW Anlagen Verwaltungs GmbH, Munich 3,6
Bürohaus Petuelring GmbH, Munich
Bavaria Wirtschaftsagentur GmbH, Munich 3, 5, 6
BAVARIA-LLOYD Reisebüro GmbH, Munich
Rolls-Royce Motor Cars GmbH, Munich 4, 5, 6
BMW Vermögensverwaltungs GmbH, Munich
BMW Vertriebszentren Verwaltungs GmbH, Munich
BMW M GmbH Gesellschaft für individuelle Automobile, Munich 3, 5, 6
DriveNow Verwaltungs GmbH, Munich 11
LARGUS Grundstücks-Verwaltungsgesellschaft mbH, Munich
FOREIGN²
100
Equity
Profit/loss
in € million
Capital invest-
ment in %
5,497
-13
100
3,558
100
1,988
100
326
100
in € million
BMW Österreich Holding GmbH, Steyr
BMW (UK) Holdings Ltd., Farnborough
3,064
100
191
BMW Finance S.N.C., Guyancourt
476
57
100
BMW Italia S.p.A., San Donato Milanese
388
61
100
BMW Belgium Luxembourg S.A./N.V., Bornem
105
316
100
BMW (UK) Ltd., Farnborough
304
84
100
ALPHABET (GB) Ltd., Farnborough
284
64
100
BMW France S.A.S., Montigny-le-Bretonneux
225
16
Alphabet International GmbH, Munich 4, 5, 6
561
100
838
100
1,889
385
100
BMW España Finance S. L., Madrid
1,020
22
100
BMW Financial Services (GB) Ltd., Farnborough
1,014
BMW (UK) Manufacturing Ltd., Farnborough
269
BMW Motoren GmbH, Steyr
963
176
100
BMW (Schweiz) AG, Dielsdorf
895
55
100
BMW International Investment B.V., The Hague
588
9
100
27
Alphabet Fuhrparkmanagement GmbH, Munich 4
BMW Verwaltungs GmbH, Munich³,6
70
100
100
100
100
100
100
100
In the reconciliation of segment assets to Group assets,
eliminations relate mainly to intragroup financing
balances.
In the information by region, external sales are based
on the location of the customer. Revenues with major
customers were not material overall. The information
disclosed for non-current assets relates to property,
plant and equipment, intangible assets and leased
products. Eliminations disclosed for non-current
assets relate to leased products.
Information by region
in € million
External revenues
2018
Non-current assets
2017*
2018
2017*
Germany
13,596
14,299
34,883
31,678
100
49
in € million
in € million
IONITY Holding GmbH & Co. KG, Munich
FOREIGN
BMW Brilliance Automotive Ltd., Shenyang
Joint operations - proportionately consolidated entities
FOREIGN
THERE Holding B.V., Amsterdam
Not equity accounted or proportionately consolidated entities
DOMESTIC
Encory GmbH, Unterschleißheim
Digital Energy Solutions GmbH & Co. KG, Munich
The Retail Performance Company GmbH, Munich
China
PDB - Partnership for Dummy Technology and Biomechanics GbR, Gaimersheim
Bavarian & Co. Ltd., Incheon
BMW Albatha Finance PSC, Dubai
BMW Albatha Leasing LLC, Dubai
BMW AVTOTOR Holding B.V., Amsterdam
Critical TW S.A., Porto
DSP Concepts Inc., Dover, Delaware
IP Mobile N.V., Brussels
Rever Moto Inc., Wilmington, Delaware
Stadspasparkeren B.V., Deurne
Equity
Profit/loss
FOREIGN7
19,008
18,268
90
-8,028
Group
97,480
98,282
69,344
64,192
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6.
189
190
Group
Financial
Statements
Notes to the Group
Financial Statements
-7,855
→ List of Investments
at 31 December 2018
46
List of investments at 31 December 2018
The List of Investments of BMW AG pursuant to § 285
and § 313 HGB is presented below. Disclosures for
equity and earnings and for investments are not made
if they are of "minor significance" for the results of
operations, financial position and net assets of
BMW AG pursuant to § 286 (3) sentence 1 no. 1 HGB
and § 313 (3) sentence 4 HGB. It is also shown in the list
which subsidiaries apply the exemptions available in
§ 264 (3) and § 264 b HGB with regard to the publication
of annual financial statements and the drawing up of
a management report and/or notes to the financial
statements (footnotes 5 and 6). The Group Financial
Statements of BMW AG serve as exempting consoli-
dated financial statements for these companies.
Affiliated companies (subsidiaries) of BMW AG at 31 December 2018
→ 76
Companies
DOMESTIC¹
BMW Beteiligungs GmbH & Co. KG, Munich6
BMW INTEC Beteiligungs GmbH, Munich 3, 6
BMW Bank GmbH, Munich³
BMW Finanz Verwaltungs GmbH, Munich
LIST OF INVESTMENTS AT
31 DECEMBER 2018
Parkhaus Oberwiesenfeld GmbH, Munich
355
2,975
85
USA
Rest of Europe
Rest of Asia
Rest of the Americas
Other regions
Eliminations
16,088
16,726
21,361
20,766
396
31,415
15,526
14,807
11,071
11,400
1,508
1,588
3,606
3,689
3,435
BMW de Mexico S.A. de C.V., Mexico City
2,696
30,925
100
2,941
222
Bavarian Sky S.A., Compartment German Auto Loans 4, Luxembourg 13
Bavarian Sky S.A., Compartment German Auto Loans 5, Luxembourg 13
Bavarian Sky S.A., Compartment German Auto Loans 6, Luxembourg 13
Bavarian Sky S.A., Compartment German Auto Loans 7, Luxembourg 13
Bavarian Sky S.A., Compartment German Auto Loans 8, Luxembourg 13
Bavarian Sky S.A., Compartment A, Luxembourg 13
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
0
0
0
DriveNow UK Ltd., London 11
DriveNow Italy S.r.I., Milan¹¹
DriveNow Belgium S.p.r.l., Brussels¹¹
BLMC Ltd., Farnborough
100
100
100
100
192
Group
Financial
Statements
Notes to the Group
Financial Statements
→ List of Investments
at 31 December 2018
BMW Madrid S.L., Madrid
Alphabet Polska Fleet Management Sp. z o.o., Warsaw
0
BMW Slovenská republika s.r.o., Bratislava11
BMW Milano S.r.I., Milan
Alphabet Luxembourg S.A., Leudelange
BMW (UK) Investments Ltd., Farnborough
DriveNow Sverige AB, Sollentuna¹¹
DriveNow Austria GmbH, Vienna¹¹
BMW Coordination Center V.o.F., Bornem
BiV Carry ISCS, Senningerberg
BMW (UK) Capital plc, Farnborough
Riley Motors Ltd., Farnborough
BMW Central Pension Trustees Ltd., Farnborough
Triumph Motor Company Ltd., Farnborough
Société Nouvelle WATT Automobiles S.A.R.L., Rueil-Malmaison
Bavarian Sky S.A., Compartment B, Luxembourg 13
Bavarian Sky Europe S.A. Compartment A, Luxembourg 13
Bavarian Sky Europe S.A., Compartment Swiss Auto Leases 2, Luxembourg 13
340
100
1,445
164
100
513
134
100
BMW Financial Services Scandinavia AB, Sollentuna
-35
100
1,530
BMW Financial Services NA LLC, Wilmington, Delaware
85
100
BMW do Brasil Ltda., Joinville
175
-24
100
BMW of North America LLC, Wilmington, Delaware
-116
2,670
100
BMW Financeira S.A. Credito, Financiamento e Investimento, São Paulo
190
100
100
1,817
Bavarian Sky FTC, Compartment French Auto Leases 2, Paris 13
Bavarian Sky FTC, Compartment French Auto Leases 3, Paris 13
Bavarian Sky UK 1 plc, London 13
Bavarian Sky UK 2 plc, London 13
Bavarian Sky UK A Ltd., London 13
Bavarian Sky UK B Ltd., London 13
0
0
0
0
0
270
0
0
0
0
0
The Americas
BMW (US) Holding Corp., Wilmington, Delaware
BMW Manufacturing Co. LLC, Wilmington, Delaware
Financial Services Vehicle Trust, Wilmington, Delaware
BMW Bank of North America Inc., Salt Lake City, Utah
BMW Canada Inc., Richmond Hill, Ontario
BMW US Capital LLC, Wilmington, Delaware
4,991
2,599
100
0
100
228
100
156
22
75
100
20
100
129
29
100
128
16
100
123
69
100
100
101
100
100
100
Alphabet UK Ltd., Glasgow
100
BMW Austria GmbH, Salzburg
Bavaria Reinsurance Malta Ltd., Floriana
19
BMW Finanzdienstleistungen (Schweiz) AG, Dielsdorf
BMW Bank 000, Moscow
100
218
157
BMW Malta Ltd., Floriana
APD Industries plc, Birmingham
Alphabet Belgium Long Term Rental NV, Aartselaar
BMW Vertriebs GmbH, Salzburg
BMW Austria Bank GmbH, Salzburg
11
Alphabet Nederland B.V., Breda 10
BMW Austria Leasing GmbH, Salzburg
BMW Russland Trading O00, Moscow
100
BMW i Ventures SCS SICAV-RAIF, Senningerberg
71
Rolls-Royce Motor Cars Ltd., Farnborough
100
19
205
BMW Finance N.V., The Hague
100
19
213
BMW Iberica S.A., Madrid
100
43
195
BMW Financial Services Belgium S.A./N.V., Bornem
2
Alphabet España Fleet Management S.A.U., Madrid
100
100
100
100
100
100
100
100
BMW Northern Europe AB, Stockholm
100
100
100
100
100
BMW Den Haag B.V., The Hague
100
100
100
100
100
100
100
100
100
100
100
BMW Roma S.r.I., Rome
BMW Norge AS, Fornebu
BMW Financial Services B.V., Rijswijk
Swindon Pressings Ltd., Farnborough
BMW Services Ltd., Farnborough
BMW Financial Services Polska Sp. z o.o., Warsaw
Alphabet Italia Fleet Management S.p.A., Rome
Alphabet Austria Fuhrparkmanagement GmbH, Salzburg
Alphabet France Fleet Management S.N.C., Rueil-Malmaison
BMW Retail Nederland B.V., The Hague
100
BMW Hellas Trade of Cars A.E., Kifissia
Alphabet Fuhrparkmanagement (Schweiz) AG, Dielsdorf
BMW Financial Services (Ireland) DAC, Dublin
BMW Portugal Lda., Porto Salvo
BMW Financial Services Denmark A/S, Copenhagen
BMW Nederland B.V., Rijswijk
BMW Amsterdam B.V., Amsterdam
BMW Automotive (Ireland) Ltd., Dublin
BMW Distribution S.A.S., Vélizy-Villacoublay
Park Lane Ltd., Farnborough
BMW Renting (Portugal) Lda., Porto Salvo
Alphabet France S.A.S., Rueil-Malmaison
Oy BMW Suomi AB, Helsinki
BMW Services Belgium N.V., Bornem
BMW Czech Republic s.r.o., Prague¹¹
BMW Danmark A/S, Copenhagen
100
Entrepreneur
Entrust Datacard Corp.
Franz Haniel (*1955)
Dr. rer. pol. Kurt Bock (*1958)
Member since 17 May 2018
Former Chairman of the Board of
Management of BASF SE
Mandates
Fresenius Management SE
Industrial Engineer
Münchener Rückversicherungs-Gesellschaft
Aktiengesellschaft (since 25 April 2018)
Member since 1997
Deputy Chairman
Mandates
DELTON Health AG (Chairman)
DELTON Technology SE
(Chairman, since 19 November 2018)
AQTON SE (Chairman)
Stefan Quandt (*1966)
Member since 2004
MAN Truck & Bus AG
Mandates
thyssenkrupp Elevator AG
(Chairman, until 6 July 2018)
thyssenkrupp Steel Europe AG
(Chairman, until 6 July 2018)
thyssenkrupp (China) Ltd.
(Chairman, until 6 July 2018)
Dr. h.c. Robert W. Lane (*1949)
Member since 2009 until 17 May 2018
Former Chairman and Chief Executive Officer of
Deere & Company
Horst Lischka² (*1963)
Member since 2009
Mandates
General Representative of IG Metall Munich
KraussMaffei Group GmbH
and General Works Council
Städtisches Klinikum München GmbH
Prof. Dr. rer. nat. Dr. h.c. Reinhard Hüttl (*1957)
Member since 2008
Chairman of the Executive Board
of Helmholtz-Zentrum Potsdam
Deutsches GeoForschungsZentrum - GFZ
University Professor
Willibald Löw¹ (*1956)
Mandates
Former Chairman of the Board of Management
of thyssenkrupp AG
Member since 2017
Dr.-Ing. Heinrich Hiesinger (*1960)
- DELTON Health AG
-
(Deputy Chairman, until 31 December 2018)
Franz Haniel & Cie. GmbH (Chairman)
Heraeus Holding GmbH
TBG AG
Stefan Schmid¹ (*1965)
Member since 2007
Deputy Chairman
Chairman of the Works Council, Dingolfing
Ralf Hattler³ (*1968)
Member since 2017
Head of Purchasing Indirect Goods and Services,
Raw Material, Production Partner
1 Employee representatives (company employees).
2 Employee representatives (union representatives).
3 Employee representatives (members of senior management).
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
203
204
Statement on
Corporate
Governance
→ Members of the
Supervisory Board
Entrepreneur
Chairman of the European
Membership of equivalent national or foreign boards of business enterprises.
Member since 1988
Deutsche Telekom AG (since 17 May 2018)
Peter Schwarzenbauer (*1959)
MINI, Rolls-Royce, BMW Motorrad,
Customer Engagement and Digital Business
Innovation BMW Group
Mandates
Scout24 AG
Mandates
Rolls-Royce Motor Cars Limited (Chairman)
Human Resources, Industrial Relations Director
Markus Duesmann (*1969)
Purchasing and Supplier Network
(until 24 July 2018)
Dr.-Ing. Andreas Wendt (*1958)
Purchasing and Supplier Network
(since 1 October 2018)
Mandates
Pöttinger Landtechnik GmbH
(Chairman, until 29 October 2018)
Milagros Caiña Carreiro-Andree (*1962)
Klaus Fröhlich (*1960)
Harald Krüger (*1965)
Chairman
BMW Brilliance Automotive Ltd.
Harald Krüger
Chairman
201
202
Statement on
Corporate
Governance
→Members of the
(Deputy Chairman)
Board of
Management
Supervisory Board
MEMBERS OF THE
BOARD OF MANAGEMENT
Dr. Nicolas Peter (*1962)
Finance
Mandates
→ Members of the
Development
Mandates
E.ON SE (since 9 May 2018)
Dr. jur. Karl-Ludwig Kley (*1951)
Member since 2008
Deputy Chairman
Chairman of the Supervisory Board of E.ON SE
and of the Deutsche Lufthansa Aktiengesellschaft
Mandates
― E.ON SE (Chairman)
Henkel AG & Co. KGaA (Shareholders' Committee)
Deutsche Lufthansa Aktiengesellschaft (Chairman)
Verizon Communications Inc. (until 3 May 2018)
Member since 2014
Second Chairman of IG Metall
Mandates
― Continental AG
(Deputy Chairman, since 1 March 2018)
Manfred Schoch¹ (*1955)
Christiane Benner² (*1968)
Siemens Aktiengesellschaft
Mandates
Management of BMW AG
HERE International B.V. (until 28 February 2018)
Oliver Zipse (*1964)
Production
Mandates
BMW (South Africa) (Pty) Ltd. (Chairman)
BMW Motoren GmbH (Chairman)
Pieter Nota (*1964)
Sales and Brand BMW, Aftersales BMW Group
Membership of other statutory supervisory boards.
Member since 1999
General Counsel:
Dr. Jürgen Reul
MEMBERS OF THE
SUPERVISORY BOARD
Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer (*1956)
Member since 2015
Chairman
Former Chairman of the Board of
Deputy Chairman
Chairman of the Works Council, Landshut
COMPOSITION AND WORK
PROCEDURES OF THE
BOARD OF MANAGEMENT
OF BMW AG AND ITS
COMMITTEES
Member since 1997
Supervisory Board
On behalf of the
Bayerische Motoren Werke
Aktiengesellschaft
Munich, December 2018
Furthermore, in its draft revision of the Code
dated 25 October 2018 (published on 6 Novem-
ber 2018), the Government Commission on the
German Corporate Governance Code has now
proposed to delete the aforementioned recom-
mendation, as the planned amendment to the
German Stock Corporation Act to implement the
second EU Shareholder Rights Directive con-
tains comprehensive and detailed requirements
for compensation reports, thus obviating the
need for recommendations in the Code. The cor-
responding amendments to the Code are due
to be made in the course of the financial year
2019. Continuity of reporting is therefore a fur-
ther argument for not using the model tables as
a one-off solution in the BMW Group's Compen-
sation Report for the financial year 2018 prior
to the new statutory reporting requirements
coming into force.
4. It is recommended in section 4.2.5 sentences 5
and 6 of the Code that specified information
pertaining to management board compensation
be disclosed in a Compensation Report. These
recommendations have not been and will not be
complied with, due to uncertainties as to whether
the additional disclosure of this information and
the use of model tables would add to the de-
sired transparency and understandability of the
BMW Group's Compensation Report in accord-
ance with generally applicable financial report-
ing requirements (see section 4.2.5 sentence 3
of the Code).
All members of the Supervisory Board of BMW AG take
care to ensure that they have sufficient time to perform
their mandate. If members of the Supervisory Board of
BMW AG are also members of the management board of
a listed company, they may not accept more than three
mandates on non-BMW Group supervisory boards of
listed companies or in other bodies with comparable
requirements.
3. It is recommended in section 4.2.3 sentence 9 of
the Code that subsequent amendments to per-
formance targets or comparison parameters for
variable remuneration components relating to
the Board of Management shall be excluded. As
previously reported, this recommendation was
deviated from on a one-time basis in order to im-
plement the new compensation system with
effect from the financial year 2018, rather than
with effect from the financial year 2020. Accor-
dingly, it was necessary to cancel the targets
previously set for the variable remuneration com-
ponents for the financial years 2018 and 2019
and replace them for the financial year 2018 on-
wards with targets based on the new compen-
sation system. The recommendation will, however,
be complied with again in the future.
1. Since the last Declaration was issued in De-
cember 2017, BMW AG has complied with all the
recommendations published officially in the
Federal Gazette on 24 April 2017 (Code version
dated 7 February 2017) with the exception - as
previously reported - of section 4.2.3 sentence 9
and section 4.2.5 sentences 5 and 6.
The Board of Management and the Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft
("BMW AG") declare the following regarding the
recommendations of the "Government Commission
on the German Corporate Governance Code":
Declaration of the Board of Management and the
Supervisory Board of Bayerische Motoren Werke
Aktiengesellschaft regarding the recommenda-
tions of the "Government Commission on the
German Corporate Governance Code" Pursuant
to § 161 German Stock Corporation Act
The close interaction between Board of Management
and Supervisory Board in the interests of the Company
as described above is also known as a "two-tier board
structure".
The designation BMW Group comprises Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) and
group entities. BMW AG is a stock corporation
(Aktiengesellschaft) within the meaning of the
German Stock Corporation Act (Aktiengesetz) and
has its registered office in Munich, Germany. It has
three representative bodies: the Annual General
Meeting, the Supervisory Board and the Board of
Management. The duties and powers of those bodies
derive from the Stock Corporation Act and the
Articles of Incorporation of BMW AG. Shareholders,
as the owners of the business, exercise their rights at
the Annual General Meeting. The Annual General
Meeting decides in particular on the utilisation of
unappropriated profit, the ratification of the acts of
the members of the Board of Management and the
Supervisory Board, the appointment of the external
auditor, changes to the Articles of Incorporation and
certain capital measures, and elects the shareholders'
representatives to the Supervisory Board. The Board of
Management is responsible for managing the Company
and is monitored and advised by the Supervisory
Board. The Supervisory Board appoints the members
of the Board of Management and can, for an important
reason, revoke an appointment at any time. The Board
of Management informs the Supervisory Board and
reports to it regularly, promptly and comprehensively,
in line with the principles of conscientious and faithful
accountability and in accordance with the law and the
reporting duties determined by the Supervisory Board.
The Board of Management requires the approval of
the Supervisory Board for certain major business
proceedings. The Supervisory Board is not, however,
authorised to undertake management measures itself.
its
2. In future, BMW AG will comply with all the recom-
mendations published officially in the Federal
Gazette on 24 April 2017 (Code version dated
7 February 2017), with the exception of section
4.2.5 sentences 5 and 6.
Governing Constitution
Following the election of a new Supervisory Board
member, the Corporate Governance Officer informs
the new member of the main framework for performing
duties, in particular the BMW Group Corporate Gov-
ernance Code and individual contributions required in
circumstances which trigger reporting obligations or are
subject to Supervisory Board approval.
In practice, resolutions are regularly passed by the
Supervisory Board and its committees at meetings.
Supervisory Board members who are not present can
submit their vote via another Supervisory Board member
in written, fax or electronic form. This rule also applies
for the second vote of the Chairman of the Supervisory
Board. The Chairman of the Supervisory Board can also
grant a period of time in which all members not present
at a meeting may retrospectively vote. In special cases,
resolutions may also be passed outside of meetings, in
particular in writing, by fax or by electronic means.
Resolutions and meetings are recorded in minutes,
which are signed by the relevant Chairman.
207
208
Statement on
Corporate
Governance
→ Composition and
Work Procedures of
the Supervisory
Board of BMWAG
Following its meetings, the Supervisory Board is generally
shown information on new vehicle models in the form
of a short presentation.
and its Committees
BMW AG's Supervisory Board is composed of ten share-
holder representatives (elected by the Annual General
Meeting) and ten employee representatives (elected in
accordance with the Co-Determination Act). The ten
Supervisory Board members representing employees
comprise seven Company employees, including one
executive staff representative, and three members elect-
ed following nomination by unions. The Supervisory
Board has the task of advising and supervising the Board
of Management in its management of the BMW Group.
It is involved in all decisions of fundamental importance
for the BMW Group. The Supervisory Board appoints
the members of the Board of Management and decides
upon the level of compensation they receive. The Super-
visory Board can revoke appointments for important
reasons.
The Supervisory Board holds a minimum of two meet-
ings per calendar half-year. Normally, five plenary
meetings are held per calendar year. One meeting each
year is planned to extend to several days and is used,
among other things, to enable an in-depth exchange on
strategic and technological matters. The main topics of
meetings in the period under report are summarised
in the Report of the Supervisory Board. Shareholder
representatives and employee representatives generally
prepare Supervisory Board meetings separately and
occasionally with members of the Board of Manage-
ment. Members of the Supervisory Board are specif-
ically legally bound to maintain secrecy with respect
to confidential reports they receive and confidential
discussions in which they partake.
The Chairman of the Supervisory Board coordinates
work within the Supervisory Board, convenes and
chairs its meetings, handles the external affairs of the
Supervisory Board and represents it before the Board
of Management.
The Supervisory Board is quorate if all members have
been invited to the meeting and at least half the mem-
bers of whom it is required to comprise participate
in the vote. A resolution relating to an agenda item
not included in the invitation is only valid if none
of the members of the Supervisory Board who were
present at the meeting object to the resolution and if
a minimum of two-thirds of the members are present.
Resolutions of the Supervisory Board are generally
passed by a simple majority. The German Co-determi-
nation Act contains specific legal requirements with
regard to majorities and technical procedures, particu-
larly with regard to the appointment and removal of
members of the Board of Management and the election
of Chairman or Deputy Chairman of the Supervisory
Board. In the event of a tied vote in the Supervisory
Board, the Chairman of the Supervisory Board has two
votes in a renewed vote if it also results in a tie.
COMPOSITION AND WORK
PROCEDURES OF THE
SUPERVISORY BOARD OF
BMW AG AND ITS
COMMITTEES
The Board of Management is represented by its Chair-
man in its dealings with the Supervisory Board. The
Chairman of the Board of Management maintains regu-
lar contact with the Chairman of the Supervisory Board
and keeps him informed of all important matters. The
Supervisory Board has passed a resolution specifying
the information and reporting duties of the Board of
Management. As a general rule, in the case of reports
required by law, the Board of Management submits
its reports to the Supervisory Board in writing. To the
greatest extent possible, documents required as a basis
for taking decisions are sent to the members of the
Supervisory Board in good time prior to the relevant
meeting. Regarding transactions of fundamental
importance, the Supervisory Board has resolved that
its specific approval is required. Whenever necessary,
the Chairman of the Board of Management obtains
the approval of the Supervisory Board and ensures
that reporting duties to the Supervisory Board are
complied with. The Chairman is supported by all
members of the Board of Management in the ful-
filment of these tasks. The fundamental principle
followed when reporting to the Supervisory Board
is that the information should be provided regularly,
comprehensively and without delay regarding all
significant matters relating to planning, business
performance, risk exposures, risk management and
compliance, as well as any major variances between
actual business development and plans and targets,
and the relevant reasons.
Information on the Company's
CORPORATE
GOVERNANCE
→Page 218 Compliance in the BMW Group
Practices Applied beyond Mandatory Requirements
→Page 215 Disclosures Pursuant to the Act on Equal Gender Participation
→Page 216 Information on Corporate Governance
of BMW AG and its Committees
→ Page 208 Composition and Work Procedures of the Supervisory Board
Composition and Work Procedures of the Board of Management
of BMW AG and its Committees
→Page 223 Compensation Report
→ Page 206
→ Page 203
→ Page 202
of the Supervisory Board Pursuant to § 161 AktG
Members of the Board of Management
→Page 200 Statement on Corporate Governance
(Part of the Combined Management Report)
→ Page 200 Information on the Company's Governing Constitution
→Page 201 Declaration of the Board of Management and
CORPORATE
GOVERNANCE
On behalf of the
Board of Management
Members of the Supervisory Board
Good corporate governance - acting in accordance
with the principles of responsible management aimed
at increasing the value of the business on a sustainable
basis - is an essential requirement for the BMW Group
embracing all areas of the business. Corporate culture
within the BMW Group is founded on transparent
reporting and communication, corporate governance
in the interest of all stakeholders, trustful cooperation
both of the Board of Management and the Supervisory
Board as well as among employees, and compliance
with applicable law. The Board of Management and
Supervisory Board report in this statement on impor-
tant aspects of corporate governance pursuant to
§§ 289 f, § 315 d HGB and section 3.10 of the German
Corporate Governance Code (GCGC).
(Part of the Combined Management Report)
→ Page 240 Independent Auditor's Report
STATEMENT ON
Constitution
Governing
→Information on the
Company's
Statement on
Corporate
Governance
200
→ Page 239 Responsibility Statement by the Company's
Legal Representatives
Report
Management
Board of
Company's Govern-
ing Constitution
Corporate
Governance
4
4
Supervisory Board
Compliance
Compensation
The Committee has two members who are entitled to
vote at meetings, namely the Chairman of the Board
of Management (who also chairs the meetings) and
the Board member for Human Resources. The Head
of Human Resources Management and Services as
well as the Head of Human Resources Executive
Management also participate in these meetings in
an advisory function. In addition, further participants
can be invited when needed for special topics. At
the request of the Chairman, resolutions may also
be passed outside of committee meetings by casting
votes in writing, by fax or by telephone if the other
member entitled to vote does not object immediately.
Normally, the Committee for Executive Management
Matters convenes between five and ten times a year.
The Board's Committee for Executive Management
Matters deals with corporate issues affecting executive
managers of the BMW Group, either in their entirety or
individually (such as potential candidates for executive
management or nominations for senior management
positions). This committee has, firstly, an advisory and
preparatory role (e.g. in connection with fundamen-
tal issues relating to human resources policies, such
as compensation systems and planning, personnel
development and tools for assessing performance)
and secondly the function of a decision-making body
(e.g. the appointment of senior executives).
The full Board usually convenes up to twice a year
in its function as Sustainability Board in order to
define strategy and use of resources with regard to
sustainability and decide upon measures to imple-
ment that strategy. The Head of Corporate Affairs
and the Representative for Sustainability and Envi-
ronmental Protection participate in these meetings
in an advisory capacity.
Johnson Controls International plc
(since 7 March 2018)
Russell Reynolds Associates Inc.
(since 19 January 2019)
Employee representatives (company employees).
2 Employee representatives (union representatives).
(since 23 April 2018)
³ Employee representatives (members of senior management).
Membership of equivalent national or foreign boards of business enterprises.
Dr. Dominique Mohabeer¹ (*1963)
Member since 2012
Member of the Works Council, Munich
Brigitte Rödig¹ (*1963)
Member since 2013
Member of the Works Council, Dingolfing
Membership of other statutory supervisory boards.
Jürgen Wechsler² (*1955)
Springer Nature AG & Co. KGaA
Mandates
Entrepreneur
Mandates
ALTANA AG (Deputy Chairman)
SGL Carbon SE (Chairman)
UnternehmerTUM GmbH (Chairman)
Prof. Dr. rer. pol. Renate Köcher (*1952)
Member since 2008
Director of Institut für Demoskopie
Deutsche Post AG
Allensbach Gesellschaft zum Studium der
öffentlichen Meinung mbH
Infineon Technologies AG
Nestlé Deutschland AG
Robert Bosch GmbH
Simone Menne (*1960)
Member since 2015
Member of supervisory boards
Mandates
Member since 2011
Former Regional Head of IG Metall Bavaria
Mandates
When a new member is appointed to the Board of Manage-
ment, the BMW Corporate Governance Officer is required
to inform that new member of the framework conditions
under which their duties are to be carried out in
par-
ticular those enshrined in the BMW Group's Corporate
Governance Code - as well as the duty to cooperate when
a transaction or event triggers reporting requirements or
requires the approval of the Supervisory Board.
The Board of Management consults and takes decisions as
a collegiate body in meetings of the Board of Management,
the Sustainability Board, the Operations Committee and
the Committee for Executive Management Matters.
At its meetings, the Board of Management defines the
overall framework for developing business strategies
and the use of resources, takes decisions regarding
the implementation of strategies and deals with issues
of particular importance to the BMW Group. The full
Board also takes decisions at basic policy level relating
to the Group's automobile product strategies and
product projects, inasmuch as these are relevant for
all of the Group's brands. The Board of Management
and its committees may, as required and depending on
the subject matters being discussed, invite non-voting
advisers to participate at meetings.
Terms of procedure approved by the Board of Manage-
ment contain a plan for the allocation of divisional
responsibilities among the individual Board members.
These terms of procedure also incorporate the prin-
ciple that the full Board of Management bears joint
responsibility for all matters of particular importance
and scope. In addition, members of the Board of
Management manage the relevant portfolio of duties
under their responsibility, whereby case-by-case
rules can be put in place for cross-divisional projects.
Board members continually provide the Chairman
of the Board of Management with all the required
information pertaining to major transactions and
developments within their sphere of responsibility.
The Chairman of the Board of Management coordi-
nates cross-divisional matters with the overall targets
and plans of the BMW Group, involving other Board
members to the extent that divisions within their area
of responsibility are affected.
The Board of Management makes its decisions at meet-
ings which are convened, coordinated and headed by
the Chairman of the Board of Management. Generally,
two to three Board meetings were held per month
during the financial year 2018.
At the request of the Chairman, decisions can also be
taken outside of Board meetings if none of the Board
members object to this procedure. A meeting is quorate
if all Board of Management members are invited to the
meeting in good time. Members unable to attend any
particular meeting are entitled to vote in writing, by fax
or by telephone. Votes cast by telephone must be sub-
sequently confirmed in writing. Except in urgent cases,
matters relating to a division for which the responsible
Board member is not present will only be discussed and
decided
with that member's consent.
upon
-
Unless stipulated otherwise by law or in BMW AG's
statutes, the Board of Management makes decisions
based on a simple majority of votes cast at meetings.
Outside of Board meetings, decisions are taken on
the basis of a simple majority of Board members. In
the event of a tied vote, the Chairman of the Board
of Management has the casting vote. Any changes
to the Board's terms of procedure must be passed
In the event that the Chairman of the Board of
Management is not present or is unable to attend
a meeting, the member of the Board responsible for
Finance will represent him.
Minutes are taken of all meetings and of the Board of
Management's resolutions and signed by the Chair-
man. Decisions taken by the Board of Management
are binding for all employees.
The rules relating to meetings and resolutions taken
by the full Board of Management are also applicable
for its committees.
Members of the Board of Management not represented
in a committee are provided with the agendas and
minutes of committee meetings. Committee matters
are dealt with in full Board meetings if the committee
considers it necessary or at the request of a member
of the Board of Management.
A secretariat for Board of Management matters has
been established to assist the Chairman and other
Board members with the preparation and follow-up
work connected with Board meetings.
The Operations Committee generally meets every
two weeks. At these meetings, decisions are reached
concerning automobile product projects, based on the
strategic orientation and decision-making framework
stipulated at Board of Management meetings. The
Operations Committee has three members who are
entitled to vote at meetings, namely the Board member
for Development (who also chairs the meetings), the
Board member for Production and the Board member
responsible for Purchasing and the Supplier Network.
Up to 28 February 2018, the Board member for Sales
and Brand BMW and Aftersales BMW Group as well
as the Board member for MINI, Rolls-Royce, BMW
Motorrad, Customer Engagement and Digital Business
Innovation BMW were also members of the Operations
Committee. If the committee chairman is not present
or unable to attend, meetings are chaired by the Board
member for Production. The Head of Corporate Qual-
ity as well as the Head of Maturity Management, Sign
Off and Product Validation participate in Operations
Committee meetings in an advisory capacity.
unanimously. A Board meeting may only be held if
more than half of the Board members are present.
During their period of employment for BMW AG, mem-
bers of the Board of Management are bound by a com-
prehensive non-competition clause. They are required to
act in the enterprise's best interests and may not pursue
personal interests in their decisions or take advantage
of business opportunities intended for the benefit of
the enterprise. They may undertake ancillary activi-
ties, particularly supervisory board mandates outside
the BMW Group, only with the prior approval of the
Supervisory Board's Personnel Committee. Individual
members of the Board of Management of BMW AG
are required to disclose any conflicts of interest to the
Supervisory Board without delay and inform the other
members of the Board of Management accordingly.
The Board of Management determines the strategic
orientation of the enterprise, agrees upon it with the
Supervisory Board and ensures its implementation.
The Board of Management is also responsible for
ensuring that all provisions of law and internal regula-
tions are complied with. Further details on compliance
within the BMW Group are available in the Corporate
Governance section of the Annual Report. The Board
of Management is also responsible for ensuring that
appropriate risk management and risk controlling
systems are in place throughout the Group.
The Board of Management manages the enterprise
under its own responsibility, acting in the best inter-
ests of the BMW Group with the aim of achieving
sustainable growth in value. The interests of share-
holders, employees and other stakeholders are also
taken into account in the pursuit of this aim.
Schaeffler AG (Deputy Chairman)
Siemens Healthcare GmbH (Deputy Chairman)
Werner Zierer¹ (*1959)
Member since 2001
Chairman of the Works Council, Regensburg
1 Employee representatives (company employees).
2 Employee representatives (union representatives).
3 Employee representatives (members of senior management).
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
205
206
Statement on
Corporate
Governance
→Composition and
Work Procedures
of the Board of
Management of
BMW AG and its
Committees
Susanne Klatten (*1962)
Dr.-Ing. Dr.-Ing. E. h.
Norbert Reithofer
Chairman
218
supervision of the financial reporting process, the effectiveness of the internal control
system, the risk management system, as well as the performance of Supervisory
Board duties in connection with audits pursuant to § 32 of the German Securities Trading
Act (WPHG)
-
-
-
The Supervisory Board, in collaboration with the
Personnel Committee and the Board of Management,
ensures long-term succession planning. In their
assessment of candidates for Board of Management
positions, the underlying suitability criteria applied
by the Supervisory Board are expertise in the relevant
function, outstanding leadership qualities, proven
track record and knowledge of the Company. The
Supervisory Board has adopted a diversity concept
for the composition of the Board of Management
which is also aligned with recommendations of the
German Corporate Governance Code. In considering
which individuals would best complement the Board
of Management, the Supervisory Board also takes
diversity into account. The criteria diversity is taken
by the Supervisory Board to encompass in particular
different, mutually complementary profiles, profes-
sional and life experiences also at the international
level and an appropriate gender representation. In
reaching its decisions, the Supervisory Board also
considers the following:
Board of Management succession planning,
diversity concept
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
→ Composition and
Statement on
Corporate
Governance
The members of the Board of Management should
have a long-standing track record of manage-
ment experience, ideally with experience in
different professional fields.
212
2 (Independent) financial expert within the meaning of §§ 100 (5) and 107 (4) AktG, no. 5.3.2 GCGC.
1 Chair.
(In accordance with statutory requirements, the Mediation Committee
comprises the Chairman and Deputy Chairman of the Supervisory Board
and one member each selected by shareholder representatives and
employee representatives.)
Norbert Reithofer
Manfred Schoch
Stefan Quandt
Stefan Schmid
- committee required by law
proposal to Supervisory Board if resolution for appointment of Board of Management
member has not been carried by the necessary two-thirds majority of Supervisory Board
members' votes
-
MEDIATION COMMITTEE
211
(In line with the recommendations of the German Corporate Governance
Code, the Nomination Committee comprises only shareholder
representatives.)
At least two members should have international
management experience.
The Board of Management should collectively
have extensive experience in the fields of devel-
opment, production, sales and marketing, fi-
nances and human resources.
An age limit for membership of the Supervisory
Board of 70 years is generally to be applied. In
exceptional cases, members may remain on the
Board until the end of the next Annual General
Meeting after reaching the age of 73, in order to
fulfil legal requirements or to facilitate smooth
succession in the case of key roles or specialist
qualifications.
No persons carrying out directorship functions
or advisory tasks for important competitors of
the BMW Group may belong to the Supervisory
Board. In compliance with applicable law, mem-
bers of the Supervisory Board are to take care
that no persons will be nominated for election
for whom a significant, non-temporary conflict
of interests could arise due to other activities
and functions carried out by them outside the
BMW Group, in particular advisory activities
or directorships with customers, suppliers, credi-
tors or other business partners.
Two independent members of the Supervisory
Board should have expert knowledge of account-
ing or auditing.
Of the 20 members of the Supervisory Board at
least 12 should be independent members within
the meaning of section 5.4.2 of the German
Corporate Governance Code, including at least
six as representatives of the Company's share-
holders.
When seeking qualified individuals for the Super-
visory Board whose specialist skills and leader-
ship qualities are most likely to strengthen the
Board as a whole, consideration is also to be
given to diversity. When preparing nominations,
the extent to which the work of the Supervisory
Board benefits from diversified professional and
personal backgrounds (including international
aspects) and from an appropriate gender repre-
sentation is also to be taken into account. It is
the joint responsibility of all those participating
in the nomination and election process to ensure
that qualified women are considered for Super-
visory Board membership.
Three members of the Supervisory Board should
if possible be persons from the fields of business,
science or research who have experience in areas
relevant to the BMW Group, for example chem-
istry, energy supply, information technology, or
who have specialist knowledge in fields relevant
for the future of the BMW Group, for example
customer requirements, mobility, resources or
sustainability.
Three of the shareholder representatives in the
Supervisory Board should if possible be entrepre-
neurs or persons who have previous experience in
the management or supervision of another
medium or large-sized company.
The Supervisory Board should include if possible
seven members who have acquired in-depth
knowledge and experience within the
BMW Group, though no more than two former
members of the Board of Management.
At least two members of the Board of Manage-
ment should have a technical background.
-
-
Four members of the Supervisory Board should
if possible have international experience or
specialist knowledge of one or more non-German
markets important to the BMW Group.
To this end, the Supervisory Board of BMW AG has
approved the following objectives for its composition,
including a competency profile. These objectives also
describe the concept for achieving diversity in the com-
position of the Supervisory Board (diversity concept):
The Supervisory Board is to be composed in such a way
that its members collectively possess the knowledge,
skills and experience required to properly perform
its tasks.
Composition objectives of the Supervisory Board,
competency profile, diversity concept
When selecting an individual for a particular Board of
Management position, the Supervisory Board decides
in the best interests of the Group and after due con-
sideration of all relevant circumstances. The Personnel
Committee takes into account the diversity concept
described above when selecting candidates, in order
to ensure that the Board of Management has a diverse
composition. In the Supervisory Board's opinion,
the composition of the Board of Management as at
31 December 2018 is in line with the defined diversity
concept. In particular, the Board of Management has
one female member and the various work, educational
and life experiences of the members of the Board of
Management complement each other. For ease of
comparison with the diversity concept, the curricula
vitae of members of the Board of Management are
available on the Internet.
In accordance with the recommendation of the
German Corporate Governance Code, the
Supervisory Board has set a standard age limit
for Board of Management membership. This
aims at a retirement age of 60. Consideration is
also given to achieving an appropriate age mix
within the Board of Management.
The Supervisory Board has stipulated a target
for the proportion of women on the Board of
Management. This is outlined in the section
"Disclosures pursuant to the Act on Equal
Gender Participation". The Board of Management
reports to the Personnel Committee and the
Supervisory Board at regular intervals on the
proportion and development of women in
senior management positions, in particular at
executive levels.
-
As a general rule, members of the Supervisory
Board should not hold office for longer than
until the end of the Annual General Meeting at
which the resolution is passed ratifying the
member's activities for the 14th financial year
after the beginning of the member's first period
of office. This excludes the financial year in which
the first period of office began. This rule does
not apply to natural persons who either directly
or indirectly hold significant investments in the
Company. In the Company's interest, deviation
from the general maximum period is possible,
for instance in order to work towards another
composition target, in particular diversity of
gender and technical, professional and personal
backgrounds.
Norbert Reithofer¹
Susanne Klatten
Karl-Ludwig Kley
Stefan Quandt
Karl-Ludwig Kley 1,2
PERSONNEL COMMITTEE
Norbert Reithofer¹
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
Members
― activities based on terms of procedure
preparation of Supervisory Board meetings to the extent that the subject matter to be
discussed does not fall within the remit of a committee
-
PRESIDING BOARD
Principal duties, basis for activities
-
and their composition
The establishment and composition of a mediation com-
mittee are prescribed by the German Co-determination
Act. The Mediation Committee has the task of making
proposals to the Supervisory Board if a resolution for the
appointment of a member of the Board of Management
has not been carried by the necessary two-thirds major-
ity of members' votes. In accordance with statutory
requirements, the Mediation Committee comprises the
Chairman and the Deputy Chairman of the Supervisory
Board, one member selected by shareholder represent-
atives and one by employee representatives.
The Nomination Committee is charged with the task of
finding suitable candidates for election to the Super-
visory Board as shareholder representatives and to
propose them to the Supervisory Board for election at
the Annual General Meeting. In line with the recom-
mendations of the German Corporate Governance Code,
the Nomination Committee is exclusively composed of
shareholder representatives.
In line with the recommendations of the German Cor-
porate Governance Code, the Chairman of the Audit
Committee is independent, and not a former Chairman
of the Board of Management, and has special knowledge
and experience in the application of financial reporting
standards and internal control procedures. He also
fulfils the requirement of being a financial expert as
defined by § 100 (5) and § 107 (4) AktG.
The Audit Committee deals in particular with the super-
vision of the financial reporting process, effectiveness
of the internal control system, the risk management
system, as well as the performance of Supervisory Board
duties in connection with audits pursuant to § 32 of the
German Securities Trading Act (WPHG). It also oversees
the audit of financial statements, auditor independence
and any additional work performed by the auditor. It
prepares the proposal for the election of the auditor at
the Annual General Meeting, makes a relevant recom-
mendation, issues the audit engagement and agrees on
additional areas of audit focus as well as the auditor's fee.
The Audit Committee prepares the Supervisory Board's
resolution relating to the Company and Group Financial
Statements and discusses interim reports with the Board
of Management prior to publication. Additionally, the
Audit Committee deals with the non-financial report-
ing, prepares the audit of the Supervisory Board and
the engagement of an external auditor and issues the
audit engagement. Furthermore, the Audit Committee
deals with the supervision of the internal audit system
and compliance as well as the audit and supervision
of any needs for action related to possible violations
of duties by members of the Board of Management in
preparation of a resolution in the Supervisory Board.
The Audit Committee also decides on the Supervisory
Board's agreement on the use of Authorised Capital
2014 (Article 4 no. 5 of the Articles of Incorporation)
and on amendments to the Articles of Incorporation
which only affect its wording.
The Personnel Committee prepares decisions of the
Supervisory Board with regard to the appointment and,
where applicable, removal of members of the Board of
Management and, together with the full Supervisory
Board and the Board of Management, ensures long-
term succession planning. The Personnel Committee
also
prepares s decisions of the Supervisory Board with
regard to Board of Management compensation and the
regular review of the compensation system for the Board
of Management. In conjunction with resolutions taken
by the Supervisory Board regarding the compensation
of the Board of Management, the Personnel Committee
is responsible for drawing up, amending and revoking
employment contracts or, when necessary, to prepare
and conclude other relevant contracts with members
of the Board of Management. In certain cases, the
Personnel Committee is also authorised to grant the
necessary approval of a business transaction on behalf of
the Supervisory Board. This includes cases of providing
loans to members of the Board of Management or Super-
visory Board, certain contractual arrangements with
members of the Supervisory Board, taking into account
related parties, as well as ancillary activities of members
of the Board of Management, in particular acceptance
of non-BMW Group supervisory board mandates.
→ Composition and
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
Statement on
Corporate
Governance
210
Overview of Supervisory Board committees
Norbert Reithofer
Manfred Schoch
Stefan Quandt
Stefan Schmid
preparation of decisions relating to the appointment and revocation of appointment of
members of the Board of Management, the compensation and the regular review of the
Board of Management's compensation system
members, including acceptance of non-BMW Group supervisory mandates as well as the
approval of transactions requiring Supervisory Board approval by dint of law (e.g. loans
to Board of Management or Supervisory Board members)
― establishment in accordance with the recommendation contained in the German Corpo-
rate Governance Code, activities based on terms of procedure
― identification of suitable candidates (male/female) as shareholder representatives on the
Supervisory Board to be put forward for inclusion in the Supervisory Board's proposals for
election at the Annual General Meeting
NOMINATION COMMITTEE
― establishment in accordance with the recommendation contained in the
German Corporate Governance Code, activities based on terms of procedure
- amendments to Articles of Incorporation only affecting wording
-
― supervision of internal audit system and compliance as well as the audit and supervision of
any needs for action related to possible violations of duties by members of the Board of
Management in preparation of a resolution in the Supervisory Board
decision on approval for utilisation of Authorised Capital 2014
- discussion of interim reports with Board of Management prior to publication
preparation of the Supervisory Board's audit of the non-financial reporting, preparation of
the selection of the auditor for non-financial reporting and engagement of the auditor
conclusion, amendment and revocation of employment contracts (in conjunction with
the resolutions taken by the Supervisory Board regarding the compensation of the Board
of Management) and other contracts with members of the Board of Management
― decisions relating to the approval of ancillary activities of Board of Management
Group Financial Statements
preparation of proposals for election of external auditor at Annual General Meeting,
engagement (recommendation) of external auditor and compliance of audit
engagement, determination of additional areas of audit emphasis and fee agreements
with external auditor
supervision of external audit, in particular auditor independence and additional work
performed by external auditor
-
-
-
AUDIT COMMITTEE
Norbert Reithofer¹
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
― set up in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of procedure
preparation of Supervisory Board's resolution on Company and
213
214
Statement on
Corporate
Governance
Compliance Processes
and IT Systems
Company-wide Compliance
Network
Compliance Instruments
of the BMW Group
Compliance Academy and Culture
Annual
Compliance
Reporting Run
Compliance Strategy
Legal Compliance
Monitoring and Trends
Compliance Case
Management
Compliance
Internal Rules
and Regulations
Compliance Communication
The Board of Management keeps track of and analyses
compliance-related developments and trends on
the basis of the Group's compliance reporting and
input from the BMW Group Compliance Committee.
Measures to improve the Compliance Management
System are initiated on the basis of identified
requirements.
The Chairman of the BMW Group Compliance
Committee keeps the Audit Committee (which is
part of the Supervisory Board) informed on the
current status of compliance activities within the
BMW Group as well as relevant proceedings both on
a regular and a case-by-case basis as the need arises.
217
We also work in close partnership with our suppliers
and promote their commitment to sustainability.
Sustainable business management can only be
effective, however, if it covers the entire value-added
chain. That is why the BMW Group not only sets high
standards for itself, but also expects its suppliers and
partners to meet the ecological and social standards it
sets and strives continually to improve the efficiency
of processes, measures and activities. For instance,
we consistently require our dealers and importers
to comply with ecological and social standards on a
contractual basis. Moreover, corresponding criteria
are embedded throughout the entire purchasing
system – including in enquiries to suppliers, in the
sector-wide OEM Sustainability Questionnaire, in our
purchasing terms and in our evaluation of suppli-
ers in order to promote sustainability aspects in
line with the BMW Group Sustainability Standard.
The BMW Group expects suppliers to ensure that
the BMW Group's sustainability criteria are also
adhered to by their sub-suppliers. A spot check of
supplier facilities is conducted with sustainability
audits and assessments. In 2017, the Human Rights
Contact Supply Chain was established for reporting of
sustainability infringements in the supply chain. Pur-
chasing terms and conditions and other information
relating to purchasing can be found in the publicly
available section of the BMW Group Partner Portal
at https://b2b.bmw.com.
Further information on social responsibility towards
employees can be found in the section "Workforce".
Risks and
Preventive Efforts
For the BMW Group, worldwide compliance of these
fundamental principles and rights is self-evident.
Since 2005 employees' awareness of this issue has
therefore been raised by means of regular internal
communications and training on recent developments
in this area. The "Compliance Contact" helpline
and the BMW Group SpeakUP Line are available to
employees wishing to raise queries or complaints
relating to human rights issues. With effect from 2016,
human rights have been incorporated as an integral
component of the BMW Group's worldwide Compli-
ance Management System, representing a further step
in the systematic implementation of the UN Guiding
Principles on Business and Human Rights.
Compliance Reporting
Compliance Controls
Statement on
Corporate
Governance
→ Compliance in the
BMW Group
COMPLIANCE IN THE
BMW GROUP
BMW Group Compliance Management System
→ 81
Responsible and lawful conduct is fundamental to the
success of the BMW Group. It is an integral part of
our corporate culture and the reason why customers,
shareholders, business partners and the general public
place their trust in us. The Board of Management and
the employees of the BMW Group are obliged to act
responsibly and in compliance with applicable laws and
regulations. The BMW Group also expects its business
partners to conduct themselves in the same manner.
BMW Group Compliance Committee ←
Office
In order to protect itself systematically against legal
and reputational risks, the Board of Management
created a Compliance Committee several years ago,
mandated to establish a Compliance Management
System throughout the BMW Group.
The BMW Group Compliance Committee comprises
the heads of the following departments: Legal Affairs,
Corporate and Governmental Affairs, Corporate
Audit, Group Reporting, Organisational Development
and Corporate Human Resources. It manages and
monitors activities necessary to avoid non-compliance
with the law, including, for example, legal monitoring,
internal compliance regulations, communications and
training activities, complaint and case management,
compliance reporting, compliance controls and follow-
ing through with sanctions in cases of non-compliance.
The BMW Group Compliance Committee reports
regularly to the Board of Management on all compli-
ance-related issues, including the progress made in
refining the BMW Group Compliance Management
System, details of investigations performed, known
infringements of the law, sanctions imposed and cor-
rective/preventative measures implemented. This also
ensures that the Board of Management is immediately
notified of any cases of particular significance.
Supervisory Board BMW AG
Annual
Report
Board of Management BMW AG
Annual
Report
BMW Group Compliance Committee
The BMW Group Compliance Management System
consists of a coordinated set of instruments and topics
designed to ensure that the BMW Group, its repre-
sentative bodies, its managers and staff act in a lawful
manner. Particular emphasis is placed on measures to
ensure compliance with antitrust legislation and avoid
the risk of corruption or money laundering.
The complete text of the UN Global Compact and
the recommendations of the ILO and other relevant
information can be found at www.unglobalcompact.org and
→ www.ilo.org. The Joint Declaration on Human Rights
and Working Conditions in the BMW Group can
be found at www.bmwgroup.com under the menu items
"Downloads" and "Responsibility".
The BMW Group stands by its social responsibilities.
Our corporate culture combines the drive for success
with openness, trust and transparency. We are well
aware of our responsibility towards society. Socially
sustainable human resource policies and compliance
with social standards are based on various interna-
tionally recognised guidelines. The BMW Group is
committed to the OECD's guidelines for multinational
companies and the contents of the ICC Business
Charter for Sustainable Development. Details of the
contents of these guidelines and other relevant infor-
mation can be found at www.oecd.org and → www.iccwbo.org
and → www.ohchr.org. The Board of Management signed
the United Nations Global Compact in 2001 and, in
2005, together with employee representatives, issued
a Joint Declaration on Human Rights and Working
Conditions in the BMW Group. This Joint Declaration
was reconfirmed in 2010. With the signature of these
documents, we have given our commitment to abide
worldwide by internationally recognised human rights
and the fundamental working standards of the Inter-
national Labour Organization (ILO). These include
in particular freedom of employment, the principle
of non-discrimination, freedom of association and
the right to collective bargaining, the prohibition of
child labour, appropriate remuneration, regulated
working times and compliance with work and safety
regulations. In 2018 we published the BMW Codex
on Human Rights and Working Conditions, which
supplements the Declaration on Human Rights and
Working Conditions from 2010. The Codex is based
on a diligence process, which allows the BMW Group
to identify relevant aspects and define measures. It
reinforces attention to the consideration of human
rights and clarifies how the BMW Group promotes
human rights and implements the ILO Core Labour
Conventions globally in its business activity.
Social responsibility towards employees and
along the supplier chain
Function levell
For the time frame from 1 January 2017 to 31 Decem-
ber 2020, the Board of Management has set a target
range of 10.2% to 12.0% for the first level of execu-
tive management and 8% to 10% for the second. At
31 December 2018, the proportion of women within
the first executive management level stood at 8.0%
and at 7.8% within the second.
In accordance with this legislation, the Supervisory
Board of BMW AG is required to set a target for the
proportion of women on its Board of Management
and a time frame for meeting this target. Likewise,
the Board of Management of BMW AG is required to
establish targets for the two executive management
levels below the Board of Management. As its target
for the Board of Management for the time frame from
1 January 2017 to 31 December 2020, the Supervisory
Board has stipulated that the Board of Management
should continue to have at least one female member.
Assuming that the Board of Management continues
to comprise eight members, this would correspond to
a proportion of at least 12.5%. At 31 December 2018,
the Board of Management had one female member
(12.5%). The Supervisory Board considers it desirable
to increase the proportion of women on the Board of
Management and fully supports the Board of Man-
agement's endeavours to increase the proportion of
women at the highest executive management levels
within the BMW Group.
The Act on Equal Participation of Women and Men
in Executive Positions in the Private and the Public
Sector ("Act on Equal Gender Participation") was
passed into German law in 2015.
7.8
8.0
10
.......................
Function level II
in %
Proportion of female executives within
management/function levels I and II
at BMW AG
Management level is defined in terms of functional
level and follows a comprehensive job evaluation
system based on Mercer.
DISCLOSURES PURSUANT
TO THE ACT ON EQUAL
GENDER PARTICIPATION -
TARGETS FOR THE PROPOR-
TION OF WOMEN ON THE
BOARD OF MANAGEMENT
AND AT EXECUTIVE MAN-
AGEMENT LEVELS I AND II
knowledge in subjects relevant for the future of the
BMW Group, such as customer requirements, mobility,
resources, sustainability and information technology.
For the purpose of assessing the independence of its
members, the Supervisory Board follows the recom-
mendations of the German Corporate Governance
Code. In the opinion of the Supervisory Board, nei-
ther ownership of a substantial shareholding in the
Company, or office as an employee representative, or
previous membership of the Board of Management,
rules out independence of a Supervisory Board mem-
ber. A substantial and not merely temporary conflict
of interests within the meaning of section 5.4.2 of
the German Corporate Governance Code does not
apply to any of the Supervisory Board members.
Employees holding office in the Supervisory Board
are protected by applicable law when performing their
duties. All other Supervisory Board members have a
sufficient degree of economic independence from the
Company. Business with entities in which the mem-
bers of the Supervisory Board carry out a significant
function is conducted on an arm's length basis. The
Supervisory Board has therefore concluded that all
of its members are independent. At the end of the
reporting period these are: Dr.-Ing. Norbert Reithofer,
Manfred Schoch, Stefan Quandt, Stefan Schmid,
Dr. Karl-Ludwig Kley, Christiane Benner, Dr. Kurt
Bock, Franz Haniel, Ralf Hattler, Dr.-Ing. Heinrich
Hiesinger, Prof. Dr. Reinhard Hüttl, Susanne Klatten,
Prof. Dr. Renate Köcher, Horst Lischka, Willibald Löw,
Simone Menne, Dr. Dominique Mohabeer, Brigitte
Rödig, Jürgen Wechsler and Werner Zierer. At least
three members meet the requirements of an inde-
pendent financial expert. These are Dr. Kurt Bock,
Dr. Karl-Ludwig Kley and Simone Menne. At the end
of the reporting period, the Supervisory Board had six
female members (30%), comprising three shareholder
representatives and three employee representatives.
The Supervisory Board has 14 male members (70%),
comprising seven shareholder representatives and
seven employee representatives. The Company there-
fore complies with the statutory gender quota of at
least 30% female members applicable in Germany
since 1 January 2016. At present, no member of the
Supervisory Board is older than 70 years.
In the Supervisory Board's opinion, its composition
as at 31 December 2018 fulfilled the composition
objectives detailed above. For ease of comparison
with composition targets, brief curricula vitae of
the current members of the Supervisory Board are
available on the Company's website at → www.bmwgroup.com.
Information relating to members' practised profes-
sions and mandates in other statutory supervisory
boards and equivalent national or foreign company
boards, including the length of periods of service on
the Supervisory Board, is provided in the section
Statement on Corporate Governance. Based on this
information, it is evident that the Supervisory Board of
BMW AG is highly diversified, with significantly more
than the targeted four members having international
experience or specialist knowledge with regard to one
or more of the non-German markets important to the
BMW Group. In-depth knowledge and experience
from within the Company are provided by seven
employee representatives, as well as the Chairman
of the Supervisory Board. Only one previous Board of
Management member holds office in the Supervisory
Board. At least four members of the Supervisory Board
have experience in managing another company. The
Supervisory Board also has three entrepreneurs as
members. Most of the members of the Supervisory
Board - including employee representatives - have
experience in supervising another medium-sized or
large company. Moreover, more than three members of
the Supervisory Board have experience and specialist
-
The time schedule set by the Supervisory Board for
achieving the above-mentioned composition targets is
the period up to 31 December 2019. The nomination
committee of the Supervisory Board already takes
into account the composition targets in its selection
of potential candidates as representatives of the share-
holders. This enables diversity in the composition of
the Supervisory Board and ensures that the Super-
visory Board collectively possesses the knowledge,
skills and experience required to properly perform
its duties. Proposals for nomination made by the
Supervisory Board to the Annual General Meeting -
insofar as they apply to shareholder Supervisory Board
members should take account of these objectives in
such a way that they can be achieved with the support
of the appropriate resolutions of the Annual General
Meeting. The Annual General Meeting is not bound
by proposed nominations for election. The voting
freedom of employees in the vote for the employee
members of the Supervisory Board is also protected.
Under the rules stipulated by the German Co-Determi-
nation Act, the Supervisory Board does not have
the right to nominate employee representatives for
election. The objectives which the Supervisory Board
has set itself with regard to its composition are there-
fore not intended to be instructions to those entitled
to vote or restrictions on their voting freedom.
Composition and
Work Procedures of
the Supervisory
Board of BMWAG
and its Committees
→ Disclosures Pursuant
to the Act on Equal
Gender Participation-
Targets for the
Proportion of Women
on the Board of
Management and at
Executive Manage-
ment Levels I and II
→ 80
Diversity contributes to greater competitiveness and
innovation at the BMW Group. Working together in
mixed, complementary teams raises performance
levels and increases customer focus. Promoting an
appropriate gender ratio is seen as an essential com-
ponent of the BMW Group's diversity concept. Further
increasing the proportion of women therefore remains
an objective of the Board of Management.
The proportion of women in the workforce as a whole
increased again during the financial year under report,
as a result of long-term measures, dialogue and infor-
mation events. Further information on the topic of
diversity within the BMW Group can be found in the
section "Workforce".
215
We are excited by change and open to new opportu-
nities. We learn from our mistakes.
Openness
We trust and rely on each other. This is essential if we
are to act swiftly and achieve our goals.
Trust
We acknowledge concerns and identify inconsisten-
cies in a constructive way. We act with integrity.
Transparency
We reflect on our actions, respect each other, offer
clear feedback and celebrate success.
Appreciation
We take consistent decisions and commit to them
personally. This allows us to work freely and more
effectively.
Responsibility
Core values and Principles of Action
Within the BMW Group, the Board of Management,
the Supervisory Board and the employees base their
actions on five core values which are the cornerstone
of the success of the BMW Group:
BEYOND MANDATORY
REQUIREMENTS
CORPORATE GOVERNANCE
PRACTICES APPLIED
INFORMATION ON
Beyond Mandatory
Requirements
Practices Applied
→Information on Cor-
porate Governance
Statement on
Corporate
Governance
216
209
In accordance with rules of procedure, the Presiding
Board comprises the Chairman of the Supervisory Board
and Deputies. The Presiding Board prepares Superviso-
ry Board meetings to the extent that the subject matter
does not fall within the remit of a committee. This
includes, for example, preparing the annual Declaration
of Compliance with the German Corporate Governance
Code and assessment of Supervisory Board efficiency.
Composition of the Presiding Board and the committees
is based on legal requirements, the Articles of Incor-
poration, rules of procedure and corporate governance
principles, while taking into particular account the
expertise of Board members.
BMW AG ensures that the Supervisory Board and its
committees are appropriately equipped to carry out
their duties. This includes providing a central Supervi-
sory Board office to support the chairpersons in their
coordination work.
The Supervisory Board regularly assesses the efficiency
of its activities. To this end, shared discussion is con-
ducted within the Supervisory Board and individual
meetings held with the Chairman, prepared on the basis
of a questionnaire sent in advance, which is drawn up
by the Supervisory Board.
Members of the Supervisory Board of BMW AG are
obliged to act in the best interest of the organisation as
a whole. They may not pursue personal interests in their
decisions or take advantage of business opportunities
intended to benefit the BMW Group.
In proposing candidates for election as members of the
Supervisory Board, care is taken that the Supervisory
Board collectively has the required knowledge, skills and
expertise to perform its tasks appropriately.
→ see Report of
the Supervisory
Board for the
number of
meetings during
the year 2018
→ The Supervisory Board has stated specific targets → see section
for its composition, agreed to a diversity concept and
determined a competency profile.
Members of the Supervisory Board are responsible for
undertaking any training required for the performance
of their duties. The Company provides them with appro-
priate assistance therein.
Members of the Supervisory Board are obliged to inform
the Supervisory Board of any conflicts of interest, in
particular those resulting from a consulting or executive
role with clients, suppliers, lenders or other business
partners, so that the Supervisory Board can report to
the shareholders at the Annual General Meeting on
its treatment of the issue. Material and non-temporary
conflicts of interest of a Supervisory Board member
result in a termination of mandate.
"Composition
targets for the
Supervisory
Board"
→ see "Overview
of Supervisory
Board commit-
tees and their
composition"
According to the rules of procedure, the Chairman of the
Supervisory Board is, by virtue of this function, member
and Chairman of the Presiding Board, the Personnel
Committee and the Nomination Committee.
→ The number of meetings held by the Presiding Board
and committees depends on requirements. The Pre-
siding Board, the Personnel Committee and the Audit
Committee generally hold several meetings in the course
of the year.
In line with the rules of procedure for the activities of
the plenum, the Supervisory Board has set out proce-
dural rules for the Presiding Board and committees.
Committees are quorate only when all members par-
ticipate. Committee resolutions are passed by a simple
majority, unless otherwise stipulated by law.
Members of the Supervisory Board may not delegate
their duties to others. However, the Supervisory Board,
the Presiding Board and the committees may call on
experts and informed persons to attend meetings and
advise on specific matters.
→ Taking into account the specific circumstances of
the BMW Group and the number of Board members,
the Supervisory Board has set up a Presiding Board
and four committees: the Personnel Committee, the
Audit Committee, the Nomination Committee and the
Mediation Committee. These serve to raise the efficiency
of the Supervisory Board's work and facilitate handling
of complex issues. Establishment and function of a
mediation committee is prescribed by law. Committee
chairpersons report in detail on committee work at each
plenary meeting of the Supervisory Board.
The Supervisory Board, the Presiding Board and com-
mittees also meet without the Board of Management
when necessary.
of 1.8.
구
In order to determine the multi-year earnings factor,
an earnings factor is calculated for each year of the
three-year evaluation period and an average is then
calculated for the evaluation period. As for the earn-
ings-related component of the bonus, the earnings
factor for each individual year within the evaluation
period is determined on the basis of Group net profit
and post-tax return on sales for the relevant year.
The maximum earnings factor is 1.8. The underlying
measurement values are determined in advance for
a period of three financial years and may not be
changed retrospectively.
In addition to the multi-year earnings factor, the
Supervisory Board also determines a multi-year
performance factor after the end of the evaluation
period. To this end, the Supervisory Board takes
account of in particular the business development
during the evaluation period, the forecast trend in the
business development for subsequent years, the Board
member's individual contribution to profitability and
the status of compliance within the Board member's
area of responsibility. The multi-year performance
factor can be between 0.9 and 1.1.
PCP factor overview
TARGET AMOUNT
→ 86
PCP FACTOR
In order to determine the PCP factor, a multi-year
earnings factor is multiplied by a multi-year perfor-
mance factor. The PCP factor is capped at a maximum
Performance Cash Plan overview
→ 85
The PCP evaluation period comprises three years, the
grant year and the two subsequent years. The PCP is
paid out after the end of the three-year evaluation period.
· Capped at 180%
Performance Cash Plan
Report
→ Compensation
Statement on
Corporate
Governance
226
of target amount
223
Cash payment
TOTAL
Qualitative, mainly non-financial parameters
Value between 0 and 1.8
at least three financial years
With effect from the financial year 2018, variable cash
compensation includes a multi-year and future-oriented
Performance Cash Plan (PCP). The PCP is calculated at
the end of a three-year evaluation period, by multi-
plying a predefined target amount by a factor that
is based on multi-year target achievement (the PCP
factor). PCP entitlements are paid in cash. The PCP
target amount (100%) amounts to €0.85 million p.a.
for a Board member in the first period of office,
€0.95 million p.a. from the second period of office
or the fourth year of mandate and €1.6 million p.a.
for the Chairman of the Board of Management. The
maximum amount that can be paid to a Board member
is capped at 180% of the PCP target amount p.a.
Revised Board of Management compensation
system for financial years from 2018 onwards
In December 2017, the Supervisory Board resolved
to revise the compensation system for financial years
from 2018 onwards. A focus was to align the remu-
neration structure even more strongly on sustainable
corporate development. The base salary, which had
remained at the same level since 1 January 2012, was
raised. The bonus was revised, both in terms of its
structure and the target setting. Target values for the
parameters Group net profit and post-tax return on
sales used to determine the earnings-related bonus
were adjusted in line with the Group's current business
plan and revised. A new multi-year and future-ori-
ented component was introduced in the form of a
performance cash plan, in order to further strengthen
the long-term orientation of the compensation system.
The overall upper limits are unchanged. The changes
apply to all members of the Board of Management
for financial years with effect from 1 January 2018.
COMPENSATION REPORT
(PART OF THE COMBINED
MANAGEMENT REPORT)
The compensation of members of the Board of Man-
agement is determined by the full Supervisory Board
on the basis of performance criteria and after taking
into account any remuneration received from Group
companies. The principal performance criteria are
the tasks and exercise of mandate of the member of
the Board of Management, the economic situation as
well as the performance and future prospects of the
BMW Group. The Supervisory Board sets ambitious
and relevant parameters as the basis for variable
To ensure that the BMW Group complies with regu-
lations relating to insider information, the Board
of Management appointed an Ad-hoc Committee
back in 1994, consisting of representatives of various
specialist departments, whose members determine
whether information displays the characteristics
of publishable insider information and handle the
publication and legal notices required by law. All
persons who perform duties on behalf of BMW AG
and have access to insider information are included
in an insider list and informed of the duties arising
from insider rules.
221
222
Statement on
Corporate
Governance
→ Compliance in the
BMW Group
→ Compensation
Report
Share-based compensation programmes for
employees and members of the Board of
Management
Three share-based remuneration schemes were
in place at BMW AG during the year under report,
namely the Employee Share Programme (under which
entitled employees of BMW AG have been able to
participate in the enterprise's success since 1989 in
the form of non-voting shares of preferred stock), a
share-based remuneration programme for Board of
Management members, and a share-based remuner-
ation programme for senior heads of department
(relating in both cases to shares of common stock).
The share-based remuneration programme for Board
of Management members is described in detail in
the Compensation Report (see also the "Share-based
remuneration" section in the Compensation Report
and → note 41 to the Group Financial Statements).
compensation. It also ensures that variable compo-
nents based on multi-year criteria take account of
both positive and negative developments and that
the overall incentive is on the long term. As a general
rule, targets and comparative parameters may not
be changed retrospectively. In connection with the
revised compensation system for the Board of Manage-
ment (see the section Revised Board of Management
compensation system for financial years from 2018
onwards), the targets originally set for the variable
compensation components for the financial years 2018
and 2019 were revoked exceptionally and replaced
by the more ambitious targets stipulated in the new
compensation system applicable from 2018 onwards.
The Supervisory Board reviews the appropriateness
of the compensation system annually. In preparation,
the Personnel Committee also consults remuneration
studies. In order to check that the compensation sys-
tem is in line with peers, the Supervisory Board com-
pares compensation paid by other DAX companies.
For a vertical view, it compares Board compensation
with the salaries of executive managers and with the
average salaries of employees of BMW AG based in
Germany, also with regard to the development over
time. Recommendations made by an independent
external remuneration expert and suggestions made
by investors and analysts are also considered in the
consultative process.
The share-based remuneration programme for qual-
ifying heads of department, introduced with effect
for financial years beginning after 1 January 2012, is
closely based on the programme for Board of Manage-
ment members and is aimed at rewarding a long-term,
entrepreneurial approach to running the business on
a sustainable basis.
→ see
note 41
→ see
notes
31 and 41
Under the terms of the Employee Share Programme,
in 2017 employees were entitled to acquire packages
of 7, 12 or 17 shares of non-voting preferred stock
with a discount of €20.00 (2017: €20.00) per share
compared to the market price (average closing price
in Xetra trading during the period from 5 to 8 Novem-
ber 2018: €66.26). All employees of BMW AG and
its (directly or indirectly) wholly owned German
subsidiaries (if agreed to by the directors of those
entities) were entitled to participate in the programme.
Employees were required to have been in an uninter-
rupted employment relationship with BMW AG or the
relevant subsidiary for at least one year at the date
on which the allocation for the year was announced.
Shares of preferred stock acquired in conjunction
with the Employee Share Programme are subject to
a blocking period of four years, starting from 1 Janu-
ary of the year in which the employees acquired the
shares. A total of 521,524 (2017: 491,114) shares of
preferred stock were acquired by employees under the
programme in 2018; 521,500 (2017: 491,000) of these
shares were drawn from Authorised Capital 2014, the
remainder were acquired via the stock exchange or as
a result of cancelled employee purchases relating to
the previous year. Every year the Board of Mana-
gement of BMW AG decides whether the scheme is
to be continued. Further information is provided in
→ notes 31 and 41 to the Group Financial Statements.
Contribution to sustainable and long-term
business development over a period of
The following section describes the principles governing
the compensation of the Board of Management for
financial years from 2018 onwards. A description of the
stipulations set out in the statutes relating to the com-
pensation of the Supervisory Board is also provided.
In addition to explaining the system of compensation,
details of components of compensation are also pro-
vided with figures. Furthermore, the compensation of
each individual member of the Board of Management
and the Supervisory Board for the financial year 2018
is disclosed with its component parts.
1. Board of Management compensation
Responsibilities
The full Supervisory Board is responsible for deter-
mining and regularly reviewing Board of Management
compensation. The preparation for these tasks is
undertaken by the Supervisory Board's Personnel
Committee.
Principles of compensation
The compensation system for the Board of Management
at BMW AG is designed to encourage a management
approach focused on the sustainable development of
the BMW Group. A further principle of the compen-
sation system at the BMW Group is that of consistency.
This means that compensation systems for the Board
of Management, senior management and employees
of BMW AG are composed of similar elements. The
Supervisory Board performs an annual review to
ensure that all Board of Management compensation
components are appropriate, individually and in total,
and do not encourage the Board of Management to take
inappropriate risks for the BMW Group. At the same
time, the compensation model used for the Board of
Management needs to be attractive for highly qualified
executives in a competitive environment.
Under the terms of the programme, participants give
a commitment to invest an amount equivalent to 20%
of their performance-based bonus in BMW common
stock and to hold the shares so acquired for a mini-
mum of four years. In return for this commitment,
BMW AG pays 100% of the investment amount as a net
subsidy. Once the four-year holding period require-
ment has been fulfilled, the participants receive - for
each three common stock shares held and at the
Company's option - one further share of common
stock or the equivalent amount in cash.
Basis for performance factor:
x 0.3 of target amount
Performance factor
1 Simplified depiction of target amounts for the variable cash remuneration of the Chairman
of the Board of Management. Excludes other remuneration. Based on the assumption that
the share price remains unchanged for the calculation of the matching component.
Performance component
of the bonus approx. 19
Payment of a discretionary additional bonus is not fore-
seen. An upper limit has been set for each component of
variable remuneration (see Overview of compensation
system and compensation components).
share-based remuneration
Performance Cash Plan and
bonus
The variable remuneration of the Board of Manage-
ment comprises three components:
Variable remuneration
Fixed remuneration consists of a base salary, which is
paid monthly, and fringe benefits (other remuneration
elements such as the use of Company cars, insurance
premiums and contributions towards security sys-
tems). With effect from the financial year 2018, the
base salary is €0.8 million p.a. for a Board member
during the first period of office, €0.95 million p.a. for
a Board member from the second period of office or
the fourth year of mandate and €1.8 million p.a. for
the Chairman of the Board of Management.
Fixed remuneration
Earn-
ings-based
component of
the bonus
approx. 8
Overview of compensation system: simplified
depiction of variable remuneration (target
compensation)²
approx. 24
Performance
Base salary
approx. 27
approx. 14
remuneration
Share-based
Pension contribution
approx. 8
in %
→ 82
Overview of compensation system for financial
year 2018: simplified depiction of allocation to
cash benefits (target compensation) and pension
contribution¹
Compensation system, compensation components
Board of Management compensation comprises fixed
and variable cash elements as well as a share-based
component. The compensation components are
described in more detail below. Retirement benefits
remained unchanged in the revised compensation
system applicable from 1 January 2018.
→ Compensation
Report
Cash Plan
x 0.7 of target amount
→ 83
Share-based remuneration
approx. 22
PERFORMANCE COMPONENT
Value between 0 and 1.8
Group post-tax return on sales
Group net profit
Basis for earnings factor:
Compliance is also an important factor in safeguard-
ing the future of the BMW Group workforce. With
this in mind, the Board of Management and the
national and international employee representative
bodies of the BMW Group have agreed on a binding
set of Joint Principles for Lawful Conduct. In doing
so, all parties involved made a commitment to the
principles contained in the BMW Group Legal Com-
pliance Code and to trustful cooperation in all matters
relating to compliance. Employee representatives are
therefore regularly involved in the process of refining
compliance measures within the BMW Group.
Earnings factor
EARNINGS COMPONENT BONUS
→ 84
Bonus overview
225
in %
The criteria include in particular innovation (economic
and ecological, for example in the reduction of carbon
dioxide emissions), the Group's market position
compared to its competitors, customer focus, ability
to adapt, leadership, corporate culture, promotion of
compliance and integrity, contribution to the Group's
attractiveness as an employer, progress in implement-
ing the diversity concept, and activities that foster
corporate social responsibility. The individual perfor-
mance factor lies between zero and a maximum of 1.8.
were below €3 billion or the post-tax return on sales
below 3%, the earnings factor would be zero. In this
case, an earnings-related component would not be paid.
The maximum value of the earnings factor is reached
in the event of a Group net profit of €11 billion and a
post-tax return on sales of 9%. In exceptional circum-
stances, for instance major acquisitions or disposals,
the Supervisory Board may adjust the earnings factor.
An earnings factor of 1.0 would give rise to a earnings-
related component of €0.255 million for a Board member
in the first period of office, €0.3 million from the
second period of office or the fourth year of mandate
and €0.54 million for the Chairman of the Board of
Management. The earnings factor is 1.0, for instance,
in the event of a Group net profit of €5.3 billion and a
post-tax return on sales of 5.6%. If the Group net profit
In order to calculate the earnings-related component,
an earnings factor is determined on the basis of the
target parameters and multiplied by 30% of the target
bonus amount. The level of the earnings-related com-
ponent depends on the degree to which the targets
set by the Supervisory Board for Group net profit and
post-tax return on sales are achieved. The degree of
achievement is expressed in an earnings factor. The
underlying measurement values are determined in
advance for a period of three financial years and may
not be changed retrospectively. The earnings factor is
capped at a maximum of 1.8.
In the case of 100% target achievement, the bonus
comprises an earnings-related component of 30% and
performance-related component of 70%. The target
bonus (100%) is €0.85 million p.a. for a Board member
during the first period of office, €1.0 million p.a.
from the second period of office or the fourth year
of mandate and €1.8 million p.a. for the Chairman
of the Board of Management. For all Board members,
the upper limit of the bonus is set at 180% of the
relevant target bonus.
Bonus
2 Simplified depiction of target amounts for the variable cash remuneration of the Chairman
of the Board of Management. Excludes basic salary, other remuneration and pension
contribution. Based on the assumption that the share price remains unchanged for the
calculation of the matching component.
approx. 29
Performance
component
of the bonus
Earnings-based
component
of the bonus
approx. 12
approx. 37
Performance
Cash Plan
The performance-related component is calculated
using a performance factor which the Supervisory
Board sets for each member of the Board of Manage-
ment and which is multiplied by 70% of the target
bonus amount. The Supervisory Board sets the perfor-
mance factor on the basis of a detailed evaluation of
the contribution made by Board members to sustainable
and long-term business development over a period of
at least three financial years. The evaluation by the
Supervisory Board is based on predefined criteria that
take into account the Group's long-term success, the
interests of shareholders, the interests of employees
and social responsibility.
was updated in 2010. This was followed by systematic
introduction and continuous upgrading of measures
to protect human rights. These measures, which were
already firmly established within the organisation,
were integrated into the BMW Group's group-wide
Compliance Management System in 2016. A group-
wide human rights compliance assessment was
conducted in 2017. In the year under review, the
BMW Group published its Code on Human Rights
and Working Conditions, which clarifies how the
Joint Declaration on Human Rights and Working
Conditions at the BMW Group from 2010 should be
implemented. The Code confirms the BMW Group's
commitment to human rights and outlines how the
Company promotes human rights and implements
the core labour standards of the ILO.
For example, since 2017, all exchange activities with
competitors must be documented and approved
in a special compliance IT system. All employees
have access to IT tools to help them verify the legal
admissibility of and document benefits, especially in
connection with corporate hospitality.
The BMW Group is committed to respecting interna-
tionally recognised human rights, as set out in the
ten principles of the UN Global Compact and the
ILO Core Labour Conventions. The Company's due
diligence process is geared towards the UN Guiding
Principles on Business and Human Rights, focusing
on topics and areas of activity where it can leverage
its influence as a commercial enterprise.
-
€1.8 million (Chairman of the Board of Management)
-
€1.0 million (from 2nd period of office or 4th year of mandate)
€0.85 million (1st period of office)
Target amount p.a. (at 100% target achievement):
(at 100% target achievement corresponds to 70% of target amount)
b) Performance-related bonus
(at 100% target achievement corresponds to 30% of target amount)
a) Earnings-related bonus
(sum of earnings-related bonus and performance-related bonus)
-
Bonus
€1.80 million
Chairman of the Board of Management:
€0.95 million (from 2nd period of office or 4th year of mandate)
€0.80 million (1st period of office)
Member of the Board of Management:
Parameter/measurement base
BASE SALARY P.A.
Component
→ Compensation
Report
components
Overview of compensation system and compensation
VARIABLE REMUNERATION
Statement on
Corporate
Governance
-
Capped at 180% of target amount, see section Remuneration caps
€2.268 million (Chairman of the Board of Management)
€1.26 million (from 2nd period of office or 4th year of mandate)
€1.071 million (1st period of office)
Maximum amount of performance-related bonus p.a.:
Performance factor may not exceed 1.8
Criteria for the performance factor include: innovation (economic and ecological, for
example in the reduction of carbon dioxide emissions), the Group's market position
compared to its competitors, customer focus, ability to adapt, leadership, corporate
culture, promotion of compliance and integrity, contribution to the Group's attractiveness
as an employer, progress in implementing the diversity concept, and activities that
foster corporate social responsibility
Primarily qualitative, non-financial criteria, expressed in terms of a performance factor
aimed at measuring the Board member's contribution to the sustainable and long-term
development and the future viability of the Company over a period of at least three finan-
cial years
€0.70 million (from 2nd period of office or 4th year of mandate)
€1.26 million (Chairman of the Board of Management)
€0.595 million (1st period of office)
Base amount p.a. (70% target amount per bonus):
Formula: 70% target amount x performance factor
-
- €0.972 million (Chairman of the Board of Management)
224
€0.459 million (1st period of office)
Maximum amount of earnings-related bonus p.a.:
Earnings factor may not exceed 1.8
The earnings factor is 1.0 in the event of a Group net profit of €5.3 billion and a post-tax
return on sales of 5.6%
Earnings factor is derived from Group net profit and Group post-tax return on sales
Quantitative criteria fixed in advance for a period of three financial years
€0.30 million (from 2nd period of office or 4th year of mandate)
€0.54 million (Chairman of the Board of Management)
€0.255 million (1st period of office)
Base amount p.a. (30% target amount per bonus):
Formula: 30% target amount x earnings factor
€0.54 million (from 2nd period of office or 4th year of mandate)
The BMW Group stated its position clearly back in
2005, with the Joint Declaration on Human Rights
and Working Conditions at the BMW Group, which
228
A one-year post-contractual non-competition clause
has been agreed with Board members under specified
circumstances. During that one-year period, the for-
mer Board member is entitled to receive monthly
compensation equivalent to 60% of his or her
vious monthly basic remuneration, reduced by any
amount of other income exceeding 40% of the basic
remuneration. The Company may unilaterally waive
the requirement to comply with the post-contractual
non-competition clause.
Compliance measures are determined and priori-
tised on the basis of a group-wide compliance risk
assessment that is updated annually. In 2018, this was
further refined to create a Compliance Risk and Per-
formance Management Concept, which supports the
recognition of compliance risks and the identification
of appropriate preventative IT measures. Through the
function Compliance Coordination in the Financial
Services segment the specific Compliance risks of
the segment are taken into consideration. Measures
are realised with the aid of a regionally structured
compliance management team covering all parts
of the BMW Group, which oversees a network of
around 240 compliance responsibles with 77 local
compliance functions.
Training plays an important role in reinforcing com-
pliance in the corporate culture. In 2018, training
management for online training in Compliance
Essentials and Antitrust Compliance, both available
in German and English, was switched to a central
training platform. These training modules must be
repeated by the required target groups every two
years and include a final test. Successful completion
of the test is confirmed by a certificate.
More than 44,000 managers and staff worldwide have
so far received training in the basic principles of
compliance and are in possession of a valid training
certificate. Successful completion of the training pro-
gramme is mandatory for all BMW Group managers.
Appropriate processes are in place to ensure that
all newly recruited managers and promoted staff
undergo compliance training and repeat it every two
years. In this way, the BMW Group ensures nearly
full training coverage for its managers in compliance
matters.
Online training in antitrust compliance was restruc-
tured in 2018. This training is also mandatory for
managers and staff whose functions or assignments
expose them to antitrust risks. A total of 22,000 man-
agers and associates worldwide have so far completed
antitrust compliance training and currently hold a
valid certificate.
Additional classroom training was also offered for key
compliance topics. The main emphasis here was on
providing training in antitrust law for employees who
participate in meetings with competitors or work with
suppliers or sales partners.
219
220
Statement on
Corporate
Governance
→ Compliance in the
BMW Group
Additional compliance coaching was also imple-
mented for international sales and financial ser-
vice companies in local markets. These multi-day
classroom seminars strengthen the understanding
of compliance in selected organisational units
and enhance cooperation between the central
BMW Group Compliance Committee Office and
decentralised compliance functions. In 2018, market
coaching was conducted in Australia, Austria, Brazil,
Canada, China, Denmark, France, Germany, Italy,
the Netherlands, New Zealand, Russia, Singapore,
Sweden, Switzerland, Thailand and the US.
The BMW Group Legal Compliance Code is supple-
mented by a whole range of internal policies,
guidelines and instructions, which in part reflect
applicable legislation. The BMW Group Policy "Cor-
ruption Prevention" and the BMW Group Instruc-
tion "Corporate Hospitality and Gifts" deserve
particular mention: these documents deal with
lawful handling of gifts and benefits and define
appropriate assessment criteria and approval pro-
cedures. The BMW Group Policy "Antitrust Com-
pliance" establishes binding rules of conduct for
all employees across the BMW Group to prevent
unlawful restriction of competition.
Any member of staff with questions or concerns
relating to compliance is expected to discuss these
matters with their managers and with the relevant
departments within the BMW Group: in particular
with Legal Affairs, Corporate Audit and Corporate
Security. The BMW Group Compliance Contact serves
as a further point of contact for both employees and
non-employees for any questions regarding compli-
ance. Non-employees may also use this reporting
system. This communication may remain anonymous,
if preferred.
in activities.
All compliance-related queries and concerns are
documented and followed up by the BMW Group
Compliance Committee Office using an electronic
Case Management System. If necessary, Corporate
Audit, Corporate Security, the legal departments or
the Works Council may be called upon to assist in
the investigation process.
Various internal channels and means of communi-
cation, including newsletters, employee newspapers
and intranet portals, are used to keep BMW Group
employees fully up-to-date with the instruments
and measures used by the Compliance Management
System. The central communications channel is
the compliance website within the BMW Group's
intranet, where employees can find compliance-
related information and training materials in both
German and English. The website contains a special
service area where various practical tools are made
available to employees to help them deal with typical
compliance-related situations. A group-wide com-
munications campaign was implemented in 2018
to boost employee awareness of the importance
of creating a culture of transparency and trust.
Managers were the main focus of additional training
on the topic of compliance culture, including how to
be a good role model, management style and dealing
with contradictions and crises.
In addition to these communication measures, appro-
priate IT systems also support BMW Group employees
with the assessment, approval and documentation of
compliance-relevant matters.
The BMW Group also uses an IT-based Business Rela-
tions Compliance programme aimed at ensuring the
reliability of its business relations. Relevant business
partners are checked and evaluated with a view to
identifying potential compliance risks. These proce-
dures are particularly relevant for relations with sales
partners and service providers, such as agencies and
consultants. Depending on the results of the evalua-
tion, appropriate measures - such as communication
measures, training and possible monitoring – are
implemented to manage compliance risks.
The IT system used to verify customer integrity has
been expanded and has so far been introduced in
56 organisational units under enhanced anti-money
laundering measures.
Through the group-wide reporting system, compli-
ance responsibles across all organisational units
of the BMW Group report on compliance-relevant
issues to the Compliance Committee on a regular
basis, and, if necessary, also on an ad hoc basis. This
includes reporting on the compliance status of the
relevant organisational units, on identified legal
risks and incidences of non-compliance, as well as
on sanctions and corrective/preventative measures
implemented.
Compliance with and implementation of the com-
pliance rules and processes are audited regularly
by Corporate Audit and subjected to control checks
by Corporate Security and the BMW Group Compli-
ance Committee Office. As part of its regular activi-
ties, Corporate Audit carries out on-site audits. The
BMW Group Compliance Committee also engages
Corporate Audit to perform compliance-specific
checks. In addition, a BMW Group Compliance Spot
Check, a sample test specifically designed to identify
potential corruption risks, was carried out in 2018.
Antitrust Compliance Validation was another new
measure introduced in 2018 to identify and audit
possible antitrust risks at the Company. Compliance
control activities are coordinated by the BMW Group
Panel Compliance Controls. Any necessary follow-up
measures are organised by the BMW Group Compli-
ance Committee Office.
Managers, in particular, bear a high degree of respon-
sibility and must set a good example with regard to
preventing infringements. Managers throughout the
BMW Group acknowledge this principle by signing
a written declaration, in which they also undertake
to inform staff working for them of the content and
significance of the Legal Compliance Code, to convey
the values it embodies and make employees aware
of legal risks. Managers must, at regular intervals
and on their own initiative, verify compliance with
the law and communicate with staff on this issue. It
is important to signal to employees that they take
compliance risks seriously and that relevant infor-
mation is extremely valuable. In their dealings with
staff members, managers remain open to discussion
and listen to differing opinions. Any indication of
non-compliance with the law must be rigorously
investigated.
It is essential for compliance in the BMW Group that
employees are aware of and comply with applicable
legal regulations. The BMW Group does not toler-
ate violations of the law by its employees. Culpable
violations of the law result in employment-contract
sanctions and may involve personal liability conse-
quences for the employee involved.
Employees also have the opportunity to submit infor-
mation about possible breaches of the law within the
Company anonymously and confidentially - via
the BMW Group SpeakUP Line. The BMW Group
SpeakUP Line is available in a total of 34 languages
and can be reached via local toll-free numbers in all
countries where BMW Group employees are engaged
227
The various elements of the BMW Group Compli-
ance Management System are shown in the dia-
gram on the previous page and are applicable to all
BMW Group organisational units worldwide. The
BMW Group Legal Compliance Code forms the core
of the Group's Compliance Management System,
spelling out the Board of Management's commitment
to compliance as a joint responsibility ("tone from
the top"). The Code also explains the significance
of legal compliance and provides an overview of
the various areas of relevance for the BMW Group.
It is available both as a printed brochure in German
and English and for download. In addition, trans-
lations into 11 other languages are available in the
BMW Group intranet.
The decisions taken by the BMW Group Compliance
Committee are drafted in concept and implemented
operationally by the BMW Group Compliance Com-
mittee Office. The BMW Group Compliance Commit-
tee Office comprises 19 employees and is allocated in
organisational terms to the Chairman of the Board of
Management.
pre-
In the event of death or invalidity, special rules apply for
early payment of performance cash plans and share-
based remuneration components based on the target
amounts. Insofar the service contract is prematurely
terminated and the Company has an extraordinary
right of termination, or if the Board member resigns
without the Company's agreement, entitlements to
amounts as yet unpaid relating to performance cash
plans and share-based remuneration are forfeited.
Other
At the end of the holding period, Board members receive
from the Company, as previously, for every three shares
of common stock held, either one additional share of
common stock or the cash equivalent, to be decided
at the Company's discretion (matching component).
Upper limits have been defined for both the invest-
ment component and the matching component (see
Overview of compensation system and compensation
components).
Members of the Board of Management receive a cash
compensation (investment component) for the specific
purpose of investment after tax and contributions in
BMW AG common stock. For financial years from 2018
onwards, the investment component corresponds to
45% of the gross bonus. Shares of common stock pur-
chased in this way by Board members are required to
be held for a period of four years.
Share-based remuneration
Members of the Board of Management receive advance
payments out of the Performance Cash Plan 2018 and
the Performance Cash Plan 2019 in the years 2019
and 2020. At the end of evaluation period, the advance
payment will be set off or refunded, depending on the
amount then determined. The advance payment for
each year is €0.5 million for a Board member in the
first period of office and €0.6 million from the second
period of office or the fourth year of mandate. For the
Chairman of the Board of Management the amount
is €0.9 million p.a.
PCP FACTOR
- Capped at 180% of target amount
Cash payment at end of evaluation period
CASH PAYMENT
The BMW Group Compliance Committee Office is
supported by local compliance functions, especially
in connection with operational implementation of
compliance topics. Installation of 77 local compliance
functions was completed in 2018. Their activities
follow a standardised management process with
clearly defined tasks and responsibilities. The heads
of these functions serve as the Compliance Officer
for the respective organisational unit.
Value between 0.9 and 1.1
area of responsibility
-
-
- Status of compliance in each Board member's
Trend in business development
MULTI-YEAR PERFORMANCE FACTOR
Measurement based on
multi-year performance factor:
- Value between 0 and 1.8
Group post-tax return on sales
Based on Group net profit and
Average earnings factor
MULTI-YEAR EARNINGS FACTOR
Individual contribution to profitability
Forecast trend in business development
Statement on
Corporate
Governance
3.3
Parameter/measurement base
(273,688)
23,661
23,661
(-)
(-)
51,812
80,987
(29,175)
(29,175)
32,264
354,125
(186,278)
(382,640)
1,632
1,632
(-)
29,002
222,771
(122,484)
(193,769)
274,927
1,786,110
(800,435)
(2,215,688)
1 The share-based remuneration component (matching component) for the financial year 2017 was calculated in accordance with the compensation system applicable for that year.
Provisional number or provisional monetary value calculated on the basis of the closing price of BMW common stock in the Xetra trading system on 28 December 2018 (€70.70) (fair value at reporting date).
3 Member of the Board of Management until 24 July 2018.
4 Amount based on the revaluation of share price at balance sheet date.
5 Member of the Board of Management since 1 October 2018.
* Disclosures for the previous year include amounts relating to a member of the Board of Management who left office with effect from the end of the financial year 2017.
(162,436)
254,591
-19,0974
(43,131)
Report
Share-based component of the individual members
of the Board of Management for the
financial year 2018 (2017)¹
in €
Harald Krüger
Milagros Caiña Carreiro-Andree
Markus Duesmann³
Klaus Fröhlich
Pieter Nota
Nicolas Peter
Peter Schwarzenbauer
Andreas Wendt5
Oliver Zipse
Pension entitlements
Total6
in accordance with
HGB and IFRS
Provision at
31.12.2018 in
accordance with
HGB and IFRS2
30,821
458,341
(54,038)
(515,677)
46,218
268,257
(63,120)
(303,169)
78,614
121,745
(41,001)
Expense in 2018
in €
Service cost in
accordance with
IFRS for the
(350,000)
(350,000)
(1,757,459)
(1,757,454)
Peter Schwarzenbauer
353,119
356,382
2,188,161
2,188,159
(354,117)
(357,918)
(1,893,252)
(1,893,216)
Andreas Wendt²
2,004,567
132,500
1,886,766
1,886,766
Oliver Zipse
353,289
(-)
356,550
(-)
(353,536)
Total³
2,754,201
(3,136,302)
2,298,444
(357,339) (2,071,748) (2,071,560)
2,775,150 19,703,788 19,703,287
(3,059,645) (21,987,289) (21,072,823)
2,298,405
Markus Duesmann4
617,548
(355,840)
620,741
(359,521)
132,500
→ Compensation
2,004,567
353,119
Service cost in
accordance with
HGB for the
financial year 2018' financial year 2018¹
Defined Benefit
Obligation IFRS
Defined Benefit
Obligation HGB
Harald Krüger
Milagros Caiña Carreiro-Andree
504,831
(505,281)
354,224
(355,527)
509,486 5,753,913
(510,702) (5,558,607)
357,468
(359,275) (2,347,166)
5,753,776
(5,558,200)
2,561,031
2,560,943
(2,346,906)
356,382
Klaus Fröhlich
356,382
2,660,630
2,660,630
(353,136)
(356,949)
(2,373,842)
(2,373,842)
Pieter Nota
350,000
350,000
350,276
350,041
(-)
Nicolas Peter
353,119
1,521,226
(1,020,053)
Statement on
Corporate
Governance
233
8,222,822
(7,641,704)
10,350,938
4,657,922
(26,440,875)
(5,288,173)
1,785,240
(3,339,888)
15,008,860
(31,729,048)
1 Remuneration for the financial year 2017 was paid in accordance with the compensation system applicable for that year, at which stage arrangements for base remuneration, variable remuneration and target
amounts were structured differently.
2 New variable remuneration components from the financial year 2018. Payment to be made for the first time after the end of the first three-year evaluation period 2018 to 2020.
3 Provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is determined in each case when the
requirement to invest in BMW AG common stock has been fulfilled. See note 41 to the Group Financial Statements for a description of the accounting treatment of the share-based remuneration component.
4 Value of benefits granted for work performed on the Board of Management during the financial year 2018 plus the amount falling due for payment in conjunction with a share-based remuneration component
granted in a previous year and for which the holding period requirements were met.
5 Member of the Board of Management until 24 July 2018.
6 Member of the Board of Management since 1 October 2018.
7 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office with effect from the end of the financial year 2017.
For financial years from 2018 onwards, a new variable
compensation component was introduced in the form
of the Performance Cash Plan. The PCP is paid out
after the end of the relevant three-year evaluation
period. In the case of PCP for the financial year 2018,
this covers the financial years 2018 to 2020. Due to
the fact that the criteria for the evaluation period 2018
to 2020 have not yet been fully met, it is not included
in variable compensation for the financial year 2018.
The expense of the PCP for the financial year 2018
recognised in accordance with IAS 19 amounted to
€5.3 million.
An expense of €3.4 million (2017: €3.1 million) was
recognised in the financial year 2018 for current mem-
bers of the Board of Management for the period after
the end of their service relationship. This relates to
the expense for allocations to pension provisions in
accordance with IAS 19.
Total benefits paid to former members of the Board of
Management and their surviving dependants for the
financial year 2018 amounted to €9.2 million (2017:
€6.7 million). This includes the above-mentioned
payments to Mr Duesmann.
Pension obligations to former members of the Board
of Management and their surviving dependants
are covered by pension provisions amounting to
€91.0 million (2017: €90.1 million), recognised in
accordance with IAS 19.
Share-based
compensation component
(matching component)³
Compensation
Total
Total value of
benefits allocated
in financial year¹
Number
Monetary value
1,981
(2,017)
171,158
(441,704)
(7,200,000)
421,209
7,801,613
583,200
1,879,200
(900,000)
(40,954)
(940,954)
(3,247,125)
(649,440)
(-)
(3,896,565)
Andreas Wendt6
200,000
13,029
213,029
275,400
5,376,110
123,930
(-)
(-)
Oliver Zipse
900,000
24,994
924,994
1,231,200
554,040
(750,000)
(25,752)
(775,752)
(2,783,250)
(556,638)
Total'
399,330
5,293,109
(181,490)
(8,382,730)
2,516,716
2,435,932
(1,008)
(90,700)
(4,272,838) (4,182,138)
1,181
102,038
(1,263)
277
(113,645)
21,645
2,983,015
(4,951,164)
2,941,756
(4,837,519)
634,004
80,784
612,359
1,045
(1,008)
9,087
(9,913)
90,288 2,800,522
(90,700) (4,206,340)
782,828 24,014,510 23,461,748
(891,973) (40,262,725) (39,608,356)
2,710,234
(4,115,640)
Harald Krüger
Milagros Caiña Carreiro-Andree
Markus Duesmann5
Klaus Fröhlich
Pieter Nota
Nicolas Peter
Peter Schwarzenbauer
Andreas Wendt6
Oliver Zipse
Total7
(-)
234
935
(-)
(8,295,070)
1,181
102,038
3,006,202
2,985,294
(1,263)
(113,645)
(4,985,985)
(4,915,446)
383
33,091
1,135,233
1,102,142
(1,083)
(-)
(97,448)
(4,192,381)
1,100
95,040
2,988,273
2,893,233
(1,008)
(90,700) (4,246,471)
(4,155,771)
1,004
86,746
2,574,435
2,487,689
(-)
(-)
(4,289,829)
1,296,000
1,521,192
'Service cost differs due to the different valuation bases used to measure pension obligations for HGB purposes (expected settlement amount) and for IFRS purposes
(present value of the performance-based pension obligation).
70,000
10,000
140,000
220,000
(70,000)
(10,000)
(140,000)
(220,000)
Robert W. Lane³
26,532
2,000
53,065
81,597
(70,000)
(8,000)
(140,000)
(218,000)
Horst Lischka¹
70,000
10,000
140,000
220,000
(70,000)
(10,000)
(140,000)
(220,000)
Willibald Löw¹
70,000
10,000
Renate Köcher
(220,000)
(140,000)
(10,000)
140,000
220,000
(70,000)
(10,000)
(140,000)
(220,000)
Heinrich Hiesinger
70,000
10,000
140,000
220,000
(44,785)
(6,000)
(89,570)
140,000
(140,355)
70,000
10,000
120,0004
200,000
(70,000)
(10,000)
(109,780)
(189,780)
Susanne Klatten
70,000
8,000
140,000
218,000
(70,000)
Reinhard Hüttl
220,000
(70,000)
(10,000)
(70,000)
(8,000)
(140,000)
(218,000)
Werner Zierer¹
70,000
10,000
140,000
220,000
(70,000)
(10,000)
(140,000)
(220,000)
Total5
218,000
1,820,188
3,620,377
5,628,565
(1,820,188)
(188,000)
(3,610,156)
(5,618,344)
1 These employee representatives have - in line with the guidelines of the Deutscher Gewerkschaftsbund - requested that their remuneration be paid into the Hans Böckler-Stiftung.
2 Member of the Supervisory Board since 17 May 2018.
3 Member of the Supervisory Board until 17 May 2018.
* Due to the requirements of his employer, Prof. Dr. Hüttl has waived his Supervisory Board compensation until further notice, to the extent that such compensation exceeds the amount of €200,000
(excluding value added tax) p.a.
5 Disclosures for the previous year include amounts relating to a member of the Supervisory Board who left office during the financial year 2017.
3. Other
Apart from vehicle lease and financing contracts
entered into on customary market conditions, no
advances or loans were granted to members of the
Board of Management and the Supervisory Board by
BMW AG or its subsidiaries, nor were any contingent
liabilities entered into on their behalf.
188,000
10,000
140,000
70,000
(140,000)
(220,000)
Simone Menne
70,000
8,000
140,000
218,000
(70,000)
(8,000)
(140,000)
(218,000)
Dominique Mohabeer¹
70,000
10,000
8,000
140,000
(70,000)
(10,000)
(140,000)
(220,000)
Brigitte Rödig¹
70,000
10,000
140,000
220,000
(70,000)
(10,000)
(140,000)
(220,000)
Jürgen Wechsler¹
220,000
(1,018,857)
70,000
(220,000)
Amount
Proportion in %
Amount
Proportion in %
2.0
35.7
2.0
35.7
3.6
64.3
3.6
64.3
5.6
100.0
5.6
100.0
238
Statement on
Corporate
Governance
→Compensation
Report
→ Responsibility
Statement by the
Company's Legal
Representatives
Compensation of the individual members of the Supervisory Board for the financial year 2018 (2017)
Fixed
Variable
in €
compensation
Attendance fee
compensation
Total
2017
2018
compensation or benefits from the BMW Group for
advisory or agency services personally rendered.
any further
² Member of the Board of Management since 1 October 2018.
3 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office with effect from the end of the financial year 2017.
* Member of the Board of Management until 24 July 2018.
235
236
Statement on
Corporate
Governance
→ Compensation
Report
2. Supervisory Board compensation
Responsibilities, provisions of Articles of
Incorporation
The compensation of the Supervisory Board is specified
either by a resolution of the shareholders at the Annual
General Meeting or in the Articles of Incorporation.
The compensation provisions valid for the financial
year under report were resolved by shareholders at
the Annual General Meeting on 14 May 2013 and are
set out in Article 15 of BMW AG's Articles of Incor-
poration, which are available at → www.bmwgroup.com within
the section "Company" (menu items "Company
Portrait" and "Corporate Governance") as well as in
"BMW Group Download Centre”.
Compensation principles,
compensation components
The Supervisory Board of BMW AG receives a fixed
compensation component as well as an earnings-related
compensation component, which is oriented toward
sustainable growth. The earnings-related component
is based on average earnings per share of common
stock for the remuneration year and the two preceding
financial years.
The fixed and earnings-related components in combi-
nation are intended to ensure that the compensation of
Supervisory Board members is appropriate in relation
to the tasks of Supervisory Board members and the
Company's financial condition and also takes account
of the Company's performance over several years.
Norbert Reithofer (Chairman)
In accordance with the Articles of Incorporation, each
member of BMW AG's Supervisory Board receives, in
addition to the reimbursement of reasonable expenses,
a fixed amount of €70,000, payable at the end of the
year, as well as earnings-related compensation of €170
for each full €0.01 by which the average amount of
(undiluted) earnings per share (EPS) of common stock
reported in the Group Financial Statements for the
remuneration year and the two preceding financial
years exceed a minimum amount of €2.00, pay-
able after the Annual General Meeting held in the
following year. An upper limit corresponding to
twice the amount of the fixed compensation is in
place for the earnings-related compensation. The
limit for a member of the Supervisory Board with
no additional compensation-relevant function is
therefore set at €140,000.
The German Corporate Governance Code also recom-
mends in section 5.4.6 paragraph 1 sentence 2 that
the exercising of chair and deputy chair positions in
the Supervisory Board as well the chair and member-
ship of committees should also be considered in the
compensation.
Accordingly, the Articles of Incorporation of BMW AG
stipulate that the Chairman of the Supervisory Board
shall receive three times the amount and each Deputy
Chairman shall receive twice the amount of the remu-
neration of a Supervisory Board member. Each chairman
of the Supervisory Board's committees receives twice
the amount and each member of a committee receives
one-and-a-half times the amount of the remuneration of
a Supervisory Board member, provided the relevant
committee convened for meetings on at least three
days during the financial year. If a member of the
Supervisory Board exercises more than one of the
functions referred to above, the compensation is
measured only on the basis of the function that is
remunerated with the highest amount.
In addition, each member of the Supervisory Board
receives an attendance fee of €2,000 for each full
meeting of the Supervisory Board (Plenum) which
the member has attended, payable at the end of the
financial year. Attendance at more than one meeting
on the same day is not remunerated separately.
The Company also reimburses to each member of the
Supervisory Board reasonable expenses and any value-
added tax arising on the member's remuneration. The
amounts disclosed below are net amounts.
In order to perform his duties, the Chairman of the
Supervisory Board has the use of an office, with
administrative support, as well as access to the BMW
car service.
Total compensation of the Supervisory Board for the
financial year 2018
In accordance with Article 15 of the Articles of Incor-
poration, the compensation of the Supervisory Board
for activities during the financial year 2018 totalled
€5.6 million (2017: €5.6 million). This includes fixed
compensation of €2.0 million (2017: €2.0 million)
and variable compensation of €3.6 million (2017:
€3.6 million). The earnings-related compensation for
the financial year 2018 was capped at the maximum
amount stipulated in the Articles of Incorporation.
237
in € million
Fixed compensation
Variable compensation
Total compensation
Supervisory Board members did not receive
With fixed compensation elements and an earnings-
related compensation component oriented toward
sustainable growth, the compensation structure in
place for BMW AG's Supervisory Board complies with
the recommendation on supervisory board compensa-
tion contained in section 5.4.6 paragraph 2 sentence 2
of the German Corporate Governance Code, in the
version dated 7 February 2017.
210,000
10,000
420,000
10,000
280,000
430,000
(140,000)
(10,000)
(280,000)
(430,000)
Christiane Benner¹
70,000
8,000
140,000
218,000
(70,000)
(6,000)
140,000
(140,000)
Kurt Bock2
43,656
8,000
87,312
138,968
(-)
Franz Haniel
70,000
8,000
140,000
218,000
(70,000)
(10,000)
(140,000)
(216,000)
Ralf Hattler
Karl-Ludwig Kley (Deputy Chairman)
(280,000)
640,000
(210,000)
(10,000)
(420,000)
(640,000)
Manfred Schoch (Deputy Chairman)¹
140,000
10,000
280,000
430,000
(140,000)
(10,000)
(280,000)
(430,000)
(430,000)
Stefan Quandt (Deputy Chairman)
10,000
280,000
430,000
(140,000)
(10,000)
(280,000)
(430,000)
Stefan Schmid (Deputy Chairman)¹
140,000
8,000
280,000
428,000
(140,000)
(10,000)
140,000
Component
1,001,777
950,000
The Supervisory Board has stipulated upper limits
for all variable remuneration components and for the
remuneration of Board of Management members in
total. The upper limits are shown in the table Over-
view of compensation system and compensation
components. The overall upper limits (caps) have not
changed in conjunction with the revised compensa-
tion system for financial years from 2018 onwards.
Total compensation of the Board of Management for
the financial year 2018 (2017)
The total compensation of the current members of the
Board of Management of BMW AG for the financial
year 2018 amounted to €24.0 million (2017: €40.3 mil-
lion), of which €8.2 million (2017: €7.7 million) relates
to fixed components including other remuneration.
Variable components amounted to €15.0 million (2017:
€31.7 million) and the share-based remuneration com-
ponent amounted to €0.8 million (2017: €0.9 million).
231
2018
2017
in € million
Amount
Proportion in %
Amount
Proportion in %
No commitments or agreements exist for payment of
compensation in the event of early termination of a
Board member's mandate due to a change of control or
a takeover offer. No members of the Board of Manage-
ment received any payments or relevant commitment
from third parties in 2018 on account of their activities
as members of the Board of Management.
Fixed compensation
8.2
34.2
7.7
19.1
15.0
62.5
31.7
78.7
Share-based compensation component*
0.8
0.9
Variable cash compensation
In accordance with the recommendation of the German
Corporate Governance Code, Board of Management
service contracts provide for severance pay to be paid
to the Board member in the event of premature ter-
mination by the Company without important reason,
the amount of which is limited to a maximum of two
years' compensation (severance payment cap). If the
remaining term of the contract is less than two years,
the severance payment is reduced proportionately.
For these purposes, annual compensation comprises
the basic remuneration, the target bonus amount and
the target PCP amount for the last full financial year
before termination.
contract for the financial years 2019 and 2020 amounts
to €3.0 million.
Termination benefits on premature termination of
Board activities, benefits paid by third parties
Mr Duesmann left the Board of Management Board
at the end of 24 July 2018 and was released from his
duties for the remaining term of his service contract
(until the end of 30 September 2019), with remunera-
tion continuing to be paid until that date. For the
period from 25 July 2018 to 31 December 2018, he
received a base remuneration of €0.348 million and
other remuneration of €0.015 million. The bonus for
this period amounts to €0.324 million, the proportion-
ate cash remuneration component of the share-based
remuneration programme (investment component)
amounts to €0.146 million. The proportionate share-
based remuneration component of the share-based
remuneration programme (matching component)
has a provisional monetary value of €0.025 million;
the provisional number of matching shares is 295
(calculated in each case at the grant date). The final
number of matching shares is determined when the
requirement to invest in BMW AG common stock has
been fulfilled. The Company paid a proportionate pen-
sion contribution of €0.152 million. The base remu-
neration from 1 January 2019 to 30 September 2019
amounts to €0.6 million. The pension contribution for
this period amounts to €0.263 million. The expense
for these and other entitlements relating to the service 7
344,500
4,925,000
1,800,000
1,710,000
810,000
405,000
5,500,000
3,240,000
2,880,000
1,458,000
729,000
9,850,000
*Including base salary, other fixed remuneration elements and pension contribution. The overall cap is lower than the sum of the maximum amounts for each of the individual components.
Retirement benefits
With effect from 1 January 2010, the provision of retire-
ment benefits for members of the Board of Management
was changed to a defined contribution system with
a guaranteed minimum return. Retirement benefits
remain unchanged as part of the new compensation
system applicable for financial years from 2018 onwards,
as they are appropriate and in line with customary
market practice.
If a mandate is terminated, the defined contribution
system provides, in the case of death or invalidity, for
amounts accumulated on individual pension accounts
to be paid out as a one-off amount or in instalments.
Former members of the Board of Management are
entitled to receive the retirement benefit at the earliest
upon reaching the age of 60, or in the case of entitle-
ments awarded after 1 January 2012, upon reaching
the age of 62.
The amount of the benefits to be paid is determined
on the basis of the amount accrued in each Board
member's individual pension savings account. The
amount on this account results from annual contri-
butions paid in, plus interest earned depending on
the type of investment.
If a member of the Board of Management with a vested
entitlement dies prior to the commencement of benefit
payments, a surviving spouse or registered partner,
or otherwise surviving children - in the latter case
depending on their age and education - are entitled
to receive benefits as surviving dependants.
In the case of death or invalidity, a minimum benefit
is payable based on the number of contributions
possible up to the age of 60 (subject to maximum of
ten contributions).
The annual contribution paid by the Company is
€350,000 for a Board member and €500,000 for the
Chairman of the Board of Management. The guaran-
teed minimum rate of return p.a. corresponds to the
maximum interest rate used to calculate insurance
reserves for life insurance policies (guaranteed interest
on life insurance policies). When granting pension
entitlements, the Supervisory Board considers the
targeted level of pension provision in each case as well
as the resulting expense for the BMW Group.
Contributions falling due under the defined con-
tribution model are paid into an external fund in
conjunction with a trust model that is also used to
fund pension obligations to employees.
Income earned on an employed or a self-employed
basis
up to the age of 63 may be offset against instal-
ment payments. In addition, certain circumstances
have been specified, in the event of which the Com-
pany no longer has any obligation to pay benefits.
Transitional payments are not provided.
In the event of the death of a member of the Board
of Management during the service contract term,
the base remuneration for the month of death and a
maximum of three further calendar months are paid
to entitled surviving dependants.
Board of Management members who retire imme-
diately after their service on the Board are entitled
to acquire vehicles and other BMW Group products
and services at conditions that also apply to BMW
pensioners and to lease BMW Group vehicles in
accordance with the guidelines applicable to senior
heads of departments. Retired Chairmen of the Board
of Management are entitled to use a BMW Group
vehicle as a company car on a similar basis to senior
heads of departments, and depending on availability
and against payment, use BMW chauffeur services.
2.2
688,500
Total compensation
100.0
(21,464)
(1,521,464)
(5,566,500)
(1,113,276)
(6,679,776)
Milagros Caiña Carreiro-Andree
950,000
74,964
1,024,964
1,296,000
583,200
(1,500,000)
1,879,200
(75,775)
(975,775)
(3,247,125)
(649,440)
(3,896,565)
Markus Duesmann5
451,613
41,039
492,652
420,338
51,777
(900,000)
3,382,560
1,049,760
2,332,800
40.3
100.0
*Matching component; provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is determined in
each case when the requirement to invest in BMW AG common stock has been fulfilled.
232
Statement on
Corporate
Governance
→ Compensation
Report
Compensation of the individual members
of the Board of Management for the
financial year 2018 (2017)¹
Fixed compensation
in € or
number of matching shares
Base salary
Other
compensation
Total
Bonus
Variable cash compensation
Share-based
compensation
component (invest-
ment component)
Performance
Cash Plan
2018-2020²
Total
Harald Krüger
1,800,000
22,392
1,822,392
24.0
1,530,000
Remuneration caps
Total*
(65,883)
(750,000)
1,879,200
583,200
1,296,000
1,014,033
64,033
950,000
Klaus Fröhlich
(3,339,913)
(556,663)
(2,783,250)
(852,468)
(102,468)
(750,000)
609,490
189,152
VARIABLE REMUNERATION
Performance Cash Plan
a) Multi-year earnings factor
b) Multi-year performance factor
Share-based remuneration programme
a) Cash remuneration component
(investment component)
b) Share-based remuneration component
(matching component)
Target amount p.a. (at 100% target achievement):
-
(815,883)
| | | |
(2,783,250)
(3,339,888)
Peter Schwarzenbauer
1,597,320
(3,339,888)
(556,638)
(2,783,250)
(842,250)
(92,250)
(750,000)
495,720
1,101,600
838,612
38,612
800,000
Nicolas Peter
(-)
(-)
(-)
(-)
(-)
1,597,320
495,720
1,101,600
890,369
90,369
800,000
1,530,000
(556,638)
-
Pieter Nota
-
230
Statement on
Corporate
Governance
→ Compensation
Report
Overview of compensation system and compensation
components onwards
RETIREMENT AND SURVIVING DEPENDANTS' BENEFITS
Model
Defined contribution system with guaranteed minimum rate of return
Principal features
Pension based on amounts credited to individual savings accounts for contributions paid
and interest earned, various forms of disbursement
Pension contributions p. a.:
Member of the Board of Management: €350,000
Chairman of the Board of Management: €500,000
in € p.a.
Member of the Board of Management
in the first period of office
Member of the Board of Management
in the second period of office or from fourth year of mandate
Chairman of the Board of Management
Bonus
Performance
Cash Plan
Cash compen-
sation for share
acquisition
Share-based compensation programme
Monetary value
| ||
of matching
component
229
Contractual agreement, main points: non-cash benefits from use of Company car, insurance
premiums, contributions towards security systems
REMUNERATION CAPS (MAXIMUM REMUNERATION)
Maximum remuneration, see section Remuneration caps
€0.85 million (1st period of office)
€0.95 million (from 2nd period of office or 4th year of mandate)
€1.6 million (Chairman of the Board of Management)
OTHER REMUNERATION
3-year evaluation period
Capped at 180% of target amount, see section Remuneration caps
Formula: PCP factor xtarget amount
PCP factor: multi-year earnings factor x multi-year performance factor
PCP factor may not exceed 1.8
and Group post-tax return on sale
Earnings factor for each year may not exceed 1.8
Average for evaluation period calculated
Determined by Supervisory Board at end of evaluation period
Criteria include in particular the trend in business development during the evaluation
Earnings factor for each year of three-year evaluation period derived from Group net profit
period, the forecast trend in business development, individual contribution to profitability
and the status of compliance within the Board member's area of responsibility
Multi-year performance factor can be between 0.9 and 1.1
Requirement for Board of Management members to invest an amount of 45% of the
gross bonus after tax and contributions in BMW AG common stock
Requirement for Board of Management members to hold the acquired shares of common
stock for four years
Earmarked cash remuneration amounting to 45% of the gross bonus
Cash remuneration p.a. at 100% target achievement of the bonus:
€0.3825 million (1st period of office)
€0.45 million (from 2nd period of office or 4th year of mandate)
€0.81 million (Chairman of the Board of Management)
Once the four-year holding period requirement is fulfilled, Board of Management mem-
bers receive for each three common stock shares held either - at the Company's option -
one further share of common stock or the equivalent amount in cash
Maximum remuneration, see section Remuneration caps
note 25.
Valuation of receivables from sales financing
Please refer to note 4 "accounting policies as well
as assumptions, judgements and estimates" in the
notes to the consolidated financial statements, for
"Receivables from sales financing" please refer to
The methods and processes for determining the
expected residual values of the leased products under-
lying the valuation are appropriate. The assumptions
and parameters incorporated in the forecast model for
the residual value are appropriate as a whole.
Our observations
research institutes. We ensured the computational
accuracy of the forecast values by verifying key cal-
culation steps.
By means of inquiries, inspecting internal calcula-
tion methods and analysing the disposal proceeds
of vehicles, among other methods, we obtained an
understanding of the development of leased products,
the underlying residual value risks and business pro-
cesses for the identification, management, monitoring
and measurement of residual value risks.
The key estimated value for the purposes of subse-
quent measurement is the expected residual value
at the end of the lease term.
We reviewed the appropriateness and effectiveness of
the internal control system, particularly in relation to
the determination of expected residual values. This
included the audit of the compliance of the relevant IT
systems as well as the interfaces implemented therein
by our IT specialists.
The estimation of future residual values is subject to
judgement and is complex due to the large number
of assumptions to be made and the amount of data
incorporated in the determination. For the residual
value forecasts, BMW Group uses internally avail-
able data on historical values, current market data
as well as forecasts from external market research
institutes.
Our audit approach
There is a risk for the financial statements that the
residual values expected for the end of the lease terms
are not appropriately assessed and the impairment
losses or reversal of impairment losses required for
the leased products are not recognised in sufficient
amounts.
The financial statement risk
In addition, we evaluated the appropriateness of the
forecasting methods, the model assumptions as well
as the parameters used for the determination of the
residual values based on the validations carried out
by BMW Group. For this purpose, we inquired with
BMW Group's experts responsible for the management
and monitoring of residual value risks and inspected
the internal analysis on residual value developments
and residual value forecasts as well as the validation
results. Furthermore, we evaluated the processes
for processing external forecast values from market
BMW Group offers end customers, dealerships and
importers various financing models for vehicles
and other assets. In this regard, current and non-
current receivables from sales financing totalling
EUR 86,783 million were recognised as at the reporting
date. Impairment losses amounting to EUR 1,032 mil-
lion were recognised on these receivables as at the
reporting date.
A key component of our audit was to assess the
appropriateness of the risk classification procedures,
transfer between stages and the risk provisioning
parameters used, which are derived based on histori-
cal default probabilities and loss given default by
taking account of the anticipated effects of future
trends in relevant macroeconomic criteria. We also
analysed the validations of parameters that are reg-
ularly conducted. To assess the default risk, we also
used purposive sampling of individual cases to verify
that the attributes for assignment to the respective
risk categories were suitably available and the impair-
ment losses had been calculated using the parameters
defined for these risk categories. In addition we
assessed loans for correct risk classification based
on random samples.
There is a risk for the financial statements that the
creditworthiness of dealerships, importers and end
customers is assessed incorrectly, the risk provisioning
parameters are derived incorrectly and an impairment
loss required on receivables from sales financing is not
recognised or not recognised in a sufficient amount.
241
242
Statement on
Corporate
Governance
→ Independent
Auditor's Report
Our audit approach
By means of inquiries, inspecting internal calculation
methods and analysis, among other methods, we
obtained a comprehensive understanding of the
development of credit portfolios, the associated
counterparty-related risks and the business processes
for the identification, management, monitoring and
measurement of counterparty credit risks.
We also assessed the methodology for determining the
expected loss on a yearly basis or for the remaining
term to maturity, default rates and the credit expo-
sure in the event of default and for determining and
presenting the 'transfer between stages' of receivables
based on significant changes in the credit risk of a
borrower.
We also audited the appropriateness and effectiveness
of the internal control system in relation to the risk
classification procedures as well as the derivation of
the significant rise in credit risk from changes in risk
classification. In addition, we evaluated the relevant
IT systems and internal processes. The audit included
a review by our IT specialists of the appropriateness
of the systems concerned and associated interfaces to
ensure the completeness of data as well as the audit
of automated controls for data processing.
Our observations
The risk provisioning methodology, internal processes
and the assumptions and risk parameters used for the
determination of receivables from sales financing are
suitable for the early identification of credit risks and
determining impairment losses in accordance with the
applicable financial reporting standards.
Valuation of provisions for statutory and non-statutory
warranty obligations and product guarantees
BMW Group leases vehicles to end customers as part
of operating leases. As at the reporting date, the value
of leased products amounted to EUR 38,572 million.
Please refer to note 4 "accounting policies as well as
assumptions, judgements and estimates" in the notes
to the consolidated financial statements, for "Other
provisions" please refer to note 33.
Impairment losses have been determined on the basis
of expected credit losses since financial year 2018.
This method takes into account probabilities of default
and loss given default, estimates of the amount receiv-
able in the event of default, setting criteria for the
transfer between stages for determining a significant
change in the default risk of borrowers, assumptions
on future cash flows and macroeconomic scenarios,
the determination of which is subject to considerable
judgement and estimation uncertainties in each case.
The financial statement risk
Harald Krüger
Valuation of residual values of leased products
The financial statement risk
RESPONSIBILITY
STATEMENT BY THE
COMPANY'S LEGAL
REPRESENTATIVES
Statement pursuant to § 117 No. 1 of the
Securities Trading Act (WpHG) in conjunction
with § 297 (2) sentence 4 and § 315 (1) sentence
5 of the German Commercial Code (HGB)
"To the best of our knowledge, and in accordance with
the applicable reporting principles, the Consolidated
Financial Statements give a true and fair view of the
assets, liabilities, financial position and profit of the
Group, and the Group Management Report includes
a fair review of the development and performance of
the business and the position of the Group, together
with a description of the principal opportunities and
risks associated with the expected development of
the Group."
Munich, 19 February 2019
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management
Milagros Caiña Carreiro-Andree Klaus Fröhlich
Pieter Nota
Dr. Nicolas Peter
Peter Schwarzenbauer
Dr.-Ing. Andreas Wendt
Oliver Zipse
239
240
Please refer to note 4 "accounting policies as well as
assumptions, judgements and estimates" in the notes
to the consolidated financial statements, for "Leased
products" please refer to note 23.
Statement on
Corporate
Governance
INDEPENDENT
AUDITOR'S REPORT
To Bayerische Motoren Werke
Aktiengesellschaft, Munich
Report on the Audit of the Consoli-
dated Financial Statements and of
the Group Management Report
Opinions
We have audited the consolidated financial statements
of Bayerische Motoren Werke Aktiengesellschaft,
Munich, and its subsidiaries (the Group or BMW Group),
which comprise the consolidated balance sheet as
at 31 December 2018, and the consolidated income
statement, consolidated statement of comprehensive
income, consolidated statement of changes in equity
and consolidated statement of cash flows for the finan-
cial year from 1 January to 31 December 2018, and
notes to the consolidated financial statements, includ-
ing a summary of significant accounting policies. In
addition, we have audited the combined management
report of Bayerische Motoren Werke Aktiengesellschaft
(hereinafter referred to as the "group management
report”) for the financial year from 1 January to
31 December 2018. In accordance with German legal
requirements we have not audited the content of the
corporate governance statement which is included
in the section “Corporate Governance Statement
(Section 289f HGB)" of the group management report.
In our opinion, on the basis of the knowledge obtained
in the audit,
the accompanying consolidated financial state-
ments comply, in all material respects, with the
IFRSS as adopted by the EU, and the additional
requirements of German commercial law pursu-
ant to Section 315e (1) HGB [Handelsgesetz-
buch: German Commercial Code] and, in com-
pliance with these requirements, give a true
and fair view of the assets, liabilities, and finan-
cial position of the Group as at 31 December
2018, and of its financial performance for the
financial year from 1 January to 31 Decem-
ber 2018, and
the accompanying group management report as
a whole provides an appropriate view of the
Group's position. In all material respects, this
group management report is consistent with
the consolidated financial statements, complies
with German legal requirements and appro-
priately presents the opportunities and risks of
future development. Our opinion on the group
management report does not cover the content
of the corporate governance statement men-
tioned above.
Pursuant to Section 322 (3) sentence 1 HGB, we declare
that our audit has not led to any reservations relating
to the legal compliance of the consolidated financial
statements and of the group management report.
Basis for the Opinions
We conducted our audit of the consolidated financial
statements and of the group management report in
accordance with Section 317 HGB and EU Audit
Regulation No 537/2014 (referred to subsequently
as "EU Audit Regulation") and in compliance with
German Generally Accepted Standards for Financial
Statement Audits promulgated by the Institut der
Wirtschaftsprüfer (IDW) [Institute of Public Audi-
tors in Germany]. Our responsibilities under those
requirements and principles are further described
in the "Auditor's Responsibilities for the Audit of
the Consolidated Financial Statements and of the
Group Management Report" section of our auditor's
report. We are independent of the group entities in
accordance with the requirements of European law
and German commercial and professional law, and we
have fulfilled our other German professional respon-
sibilities in accordance with these requirements. In
addition, in accordance with Article 10 (2) (f) of
the EU Audit Regulation, we declare that we have
not provided non-audit services prohibited under
Article 5 (1) of the EU Audit Regulation. We believe
that the evidence we have obtained is sufficient and
appropriate to provide a basis for our opinions on the
consolidated financial statements and on the group
management report.
Key Audit Matters in the Audit of the Consolidated
Financial Statements
Key audit matters are those matters that, in our pro-
fessional judgement, were of most significance in our
audit of the consolidated financial statements for the
financial year from 1 January to 31 December 2018.
These matters were addressed in the context of our
audit of the consolidated financial statements as a
whole, and in forming our opinion thereon, we do not
provide a separate opinion on these matters.
→ Independent
Auditor's Report
Provisions for statutory and non-statutory warranty
obligations and product guarantees are included in
the consolidated financial statements of BMW Group
as a significant component in ‘Other provisions'. The
provisions for statutory and non-statutory warranty
obligations and product guarantees amounted to
EUR 5,158 million as at 31 December 2018.
Furthermore, management is responsible for the
preparation of the group management report that,
as a whole, provides an appropriate view of the
Group's position and is, in all material respects, con-
sistent with the consolidated financial statements,
complies with German legal requirements, and
appropriately presents the opportunities and risks
of future development. In addition, management is
responsible for such arrangements and measures
(systems) as they have considered necessary to ena-
ble the preparation of a group management report
that is in accordance with the applicable German
legal requirements, and to be able to provide suffi-
cient appropriate evidence for the assertions in the
group management report.
There is a risk for the financial statements that the
valuation of provisions for statutory and non-statutory
warranty obligations and product guarantees is not
appropriate.
Capital expenditure (excluding capitalised development costs)
Capital expenditure ratio (capital expenditure/revenues)
Equity
Equity ratio
Non-current provisions and liabilities
Current provisions and liabilities
Balance sheet total
€ million
125,442
121,964
121,671
110,343
Current assets
€ million
73,542
66,864
61,831
€ million
5,029
4,688
3,731
3,826
%
5.2
4.8
4.0
83,538
Non-current assets
BALANCE SHEET
6,396
9,815
10,675
9,665
9,224
Return on sales (earnings before tax/revenues)
%
10.1
10.9
10.3
10.0
Income taxes
€ million
2,575
2,000
2,755
2,828
Effective tax rate
%
26.2
18.7
28.5
30.7
Net profit for the year
€ million
7,207
8,675
6,910
4.2
€ million
58,088
54,107
2,713
4,459
5,792
5,404
PERSONNEL
Workforce at year-end³
Personnel cost per employee
DIVIDEND
Dividend total
Dividend per share of common stock/preferred stock
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
² Excluding Husqvarna, deliveries up to 2013: 59,776 units; production up to 2013: 59,426 units.
€
134,682
101,178
129,932
100,760
124,729
99,575
122,244
97,136
€ million
€
2,303
3.504/3.524
2,630
4.00/4.02
2,300
3.50/3.52
2,102
3.20/3.22
3 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners.
4 Proposal by management.
€ million
€ million
Free cash flow Automotive segment
7,880
47,363
42,764
%
27.8
27.7
25.1
24.8
€ million
79,983
69,634
73,183
63,819
€ million
70,909
71,765
67,989
65,591
€ million
208,980
195,506
188,535
172,174
CASH FLOW STATEMENT
Cash and cash equivalents at balance sheet date
€ million
10,979
9,039
6,122
Earnings before tax
9,593
9,386
evaluate the overall presentation, structure and
content of the consolidated financial statements,
including the disclosures, and whether the con-
solidated financial statements present the under-
lying transactions and events in a manner that
the consolidated financial statements give a true
and fair view of the assets, liabilities, financial
position and financial performance of the Group
in compliance with IFRSS as adopted by the EU
and the additional requirements of German com-
mercial law pursuant to Section 315e (1) HGB.
obtain sufficient appropriate audit evidence re-
garding the financial information of the entities
or business activities within the Group to express
opinions on the consolidated financial state-
ments and on the group management report. We
are responsible for the direction, supervision
and performance of the group audit. We remain
solely responsible for our opinions.
evaluate the consistency of the group manage-
ment report with the consolidated financial
statements, its conformity with [German] law,
and the view of the Group's position it provides.
- perform audit procedures on the prospective in-
formation presented by management in the
group management report. On the basis of suf-
ficient appropriate audit evidence we evaluate,
in particular, the significant assumptions used
by management as a basis for the prospective
information, and evaluate the proper derivation
of the prospective information from these as-
sumptions. We do not express a separate opin-
ion on the prospective information and on the
assumptions used as a basis. There is a substan-
tial unavoidable risk that future events will dif-
fer materially from the prospective information.
We communicate with those charged with governance
regarding, among other matters, the planned scope
and timing of the audit and significant audit findings,
including any significant deficiencies in internal con-
trol that we identify during our audit.
We also provide those charged with governance with
a statement that we have complied with the relevant
independence requirements, and communicate with
them all relationships and other matters that may
reasonably be thought to bear on our independence,
and where applicable, the related safeguards.
From the matters communicated with those charged
with governance, we determine those matters that
were of most significance in the audit of the consoli-
dated financial statements of the current period and
are therefore the key audit matters. We describe these
matters in our auditor's report unless law or regulation
precludes public disclosure about the matter.
245
246
Statement on
Corporate
Governance
→ Independent
Auditor's Report
Other Legal and Regulatory
Requirements
Further Information pursuant to Article 10 of the
EU Audit Regulation
We were elected as group auditor for the financial year
from 1 January to 31 December 2018 at the annual
general meeting on 17 May 2018. We were engaged
by the Audit Committee of the Supervisory Board
on 7 June 2018. Taking into account the transitional
provisions of Article 41 (2) of the EU Audit Regula-
tion, we have been the group auditor of Bayerische
Motoren Werke Aktiengesellschaft for more than 30
consecutive years.
We declare that the opinions expressed in this audi-
tor's report are consistent with the additional report
to the Audit Committee pursuant to Article 11 of the
EU Audit Regulation (long-form audit report).
German Public Auditor Responsible
for the Engagement
The German Public Auditor responsible for the
engagement is Mr Andreas Feege.
Munich, 27 February 2019
KPMG AG
Wirtschaftsprüfungsgesellschaft
Sailer
Wirtschaftsprüfer
[German Public Auditor]
Feege
Wirtschaftsprüfer
[German Public Auditor]
OTHER
INFORMATION
→Page 248 BMW Group Ten-year Comparison
conclude on the appropriateness of manage-
ment's use of the going concern basis of account-
ing and, based on the audit evidence obtained,
whether a material uncertainty exists related to
events or conditions that may cast significant
doubt on the Group's ability to continue as a go-
ing concern. If we conclude that a material un-
certainty exists, we are required to draw attention
in the auditor's report to the related disclosures
in the consolidated financial statements and in
the group management report or, if such disclo-
sures are inadequate, to modify our respective
opinions. Our conclusions are based on the au-
dit evidence obtained up to the date of our audi-
tor's report. However, future events or condi-
tions may cause the Group to cease to be able to
continue as a going concern.
→Page 250 Glossary - Explanation of Key Figures
evaluate the appropriateness of accounting poli-
cies used by management and the reason-
ableness of estimates made by management and
related disclosures.
identify and assess the risks of material misstate-
ment of the consolidated financial statements
and of the group management report, whether
due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropri-
ate to provide a basis for our opinions. The risk
of not detecting a material misstatement result-
ing from fraud is higher than for one resulting
from error, as fraud may involve collusion, for-
gery, intentional omissions, misrepresentations,
or the override of internal controls.
Our audit approach
In order to evaluate the appropriateness of the
valuation method used for the determination of the
provisions for statutory and non-statutory warranty
obligations and product guarantees including the
assumptions and parameters, through discussions
with the departments responsible, we primarily
obtained an understanding of the process for deter-
mining the assumptions and parameters. We audited
the appropriateness and effectiveness of controls to
determine the assumptions and parameters. With
the involvement of our IT specialists, we reviewed
the IT systems utilised to verify their appropriateness.
We compared the amount of provisions from the prior
year with expenses selected according to risk and
which actually arose for damage claims, as well as with
technical measures, in order to arrive at a conclusion
on the forecast accuracy.
Based on a deliberate sample of vehicle models,
the computational accuracy of the valuation model
used across the Group including a tool for rate-
based planning was verified with the support of our
actuaries. The measurement parameters included
therein, such as cost components, were reconciled
with actual costs. We evaluated the assumptions
concerning the extent to which the historical values
are representative for the expected damage sus-
ceptibility, for the expected value of damage per
vehicle in terms of material and labour cost and for
the anticipated claim.
Our observations
The method for the valuation of provisions for
statutory and non-statutory warranty obligations
and product guarantees is appropriate and has been
applied consistently. The measurement parameters
and assumptions applied are appropriate as a whole.
Other Information
Management is responsible for the other information.
The other information comprises:
-
the corporate governance statement and
the remaining parts of the annual report, with
the exception of the audited consolidated finan-
cial statements and group management report
and our auditor's report.
Our opinions on the consolidated financial statements
and on the group management report do not cover
the other information, and consequently we do not
express an opinion or any other form of assurance
conclusion thereon.
In connection with our audit, our responsibility is
to read the other information and, in so doing, to
consider whether the other information
is materially inconsistent with the consolidated
financial statements, with the group manage-
ment report or our knowledge obtained in the
audit, or
otherwise appears to be materially misstated.
243
244
Statement on
Corporate
Governance
→ Independent
Auditor's Report
Responsibilities of Management and the
Supervisory Board for the Consolidated Financial
Statements and the Group Management Report
Management is responsible for the preparation of
consolidated financial statements that comply, in
all material respects, with IFRSS as adopted by the
EU and the additional requirements of German
commercial law pursuant to Section 315e (1) HGB
and that the consolidated financial statements, in
compliance with these requirements, give a true and
fair view of the assets, liabilities, financial position,
and financial performance of the Group. In addition,
management is responsible for such internal control
as they have determined necessary to enable the
preparation of consolidated financial statements
that are free from material misstatement, whether
due to fraud or error.
In preparing the consolidated financial statements,
management is responsible for assessing the Group's
ability to continue as a going concern. They also
have the responsibility for disclosing, as applicable,
matters related to going concern. In addition, they
are responsible for financial reporting based on the
going concern basis of accounting unless there is an
intention to liquidate the Group or to cease operations,
or there is no realistic alternative but to do so.
The Supervisory Board is responsible for overseeing
the Group's financial reporting process for the prepa-
ration of the consolidated financial statements and of
the group management report.
Auditor's Responsibilities for the Audit of the
Consolidated Financial Statements and of the
Group Management Report
Our objectives are to obtain reasonable assurance
about whether the consolidated financial statements
as a whole are free from material misstatement,
whether due to fraud or error, and whether the
group management report as a whole provides an
appropriate view of the Group's position and, in all
material respects, is consistent with the consolidated
financial statements and the knowledge obtained in
the audit, complies with the German legal require-
ments and appropriately presents the opportunities
and risks of future development, as well as to issue
an auditor's report that includes our opinions on the
consolidated financial statements and on the group
management report.
Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in
accordance with Section 317 HGB and the EU Audit
Regulation and in compliance with German Generally
Accepted Standards for Financial Statement Audits
promulgated by the Institut der Wirtschaftsprüfer
(IDW) will always detect a material misstatement.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of
these consolidated financial statements and this group
management report.
We exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
obtain an understanding of internal control
relevant to the audit of the consolidated finan-
cial statements and of arrangements and meas-
ures (systems) relevant to the audit of the group
management report in order to design audit
procedures that are appropriate in the circum-
stances, but not for the purpose of expressing
an opinion on the effectiveness of these systems.
BMW Group is responsible for the legally prescribed
product liability and the warranty in the respective
sales market. Moreover, additional warranties are
granted to differing extents. In order to assess the
liabilities arising from warranty, guarantee and
goodwill for vehicles sold, information on the type
and volume of damages arising and on remedial
measures is recorded and evaluated at vehicle model
level. The expected amount of obligations arising
from warranty claims is extrapolated from costs of
the past and provided for. For specific or anticipated
individual circumstances, for example recalls, addi-
tional provisions are set aside provided they have not
already been taken into account. The determination of
provisions is associated with unavoidable estimation
uncertainties, is complex and is subject to a high
degree of risk of change, depending on factors such
as detected deficiencies becoming known and claims
made by vehicle owners.
→Page 252 Index
→ Page 255 Financial Calendar
2,359,756 2,279,503
145,555 151,004
FINANCIAL SERVICES
Contract portfolio
contracts
Business volume (based on balance sheet carrying amounts)
€ million
5,235,207
133,210
5,380,785
124,719
123,394
5,114,906 4,718,970
111,191
INCOME STATEMENT
Revenues
€ million
97,480
98,282
94,163
92,175
Gross profit margin
%
19.0
20.3
19.9
19.7
Earnings before financial result
€ million
9,121
9,899
2,505,741
185,682
→ Page 254 Index of Graphs
2,541,534
162,687
2,490,664 2,463,526 2,367,603 2,247,485
165,566 164,153 145,032 136,963
→Page 256 Contacts
5
5
Other
Information
Ten-year
Comparison
Glossary-
Explanation
of Key Figures
Index
Index of Graphs
Financial Calendar
Contacts
248
Other
Information
→ BMW Group
Ten-year
Comparison
BMW GROUP
TEN-YEAR COMPARISON
DELIVERIES
Automobiles
Motorcycles²
PRODUCTION VOLUME
Automobiles
Motorcycles²
2018
20171
2016
2015
units
units
units
units
A measure of the potential maximum loss in value of
an item during a set time period, based on a specified
probability.
Gross margin
1.30/1.32
56,844
62,009
67,013
74,425
81,305
86,193
97,959
210
3,243
4,907
5,111
5,329
5,817
49.2
33.1
33.5
34.5
32.5
33.2
203
1,610
2,476
2,692
2,564
2,890
52,184
0.8
50,530
43,151
19.5
21.7
22.0
23.2
25.7
24.2
19,915
23,930
27,103
30,606
35,600
37,437
4.7
3.8
4.0
5.4
6.5
5.7
2,383
2,312
2,720
4,151
4,967
4,601
39,944
49,004
8.0
10.7
10.2
66,233
75,245
80,974
84,347
96,390
Contract portfolio
3,085,946
3,190,353
3,592,093
3,846,364
4,130,002
4,359,572
FINANCIAL SERVICES
Motorcycles²
Automobiles
PRODUCTION VOLUME
Motorcycles²
Automobiles
DELIVERIES
1,258,417
82,631
1,481,253
99,236
1,738,160
110,360
2,006,366 1,861,826
110,127 113,811
2,165,566
133,615
1,286,310
87,306
61,202
Business volume (based on balance sheet carrying amounts)
INCOME STATEMENT
Revenues
10.4
10.8
413
4,853
7,383
7,803
7,893
8,707
289
5,111
8,018
8,275
58,288
7,978
10.5
18.1
21.1
20.2
20.1
21.2
50,681
60,477
68,821
76,848
76,059
80,401
9,118
51,643
52,834
49,113
revenues.
Investments in property, plant and equipment and
other intangible assets (excluding capitalised
development costs) as a percentage of Group
Capital expenditure ratio
The sum of the balance sheet line items “Leased prod-
ucts” and “Receivables from sales financing" (current
and non-current), as reported in the balance sheet for
the Financial Services segment.
Business volume in balance sheet terms
A securitised debt instrument in which the issuer
certifies its obligation to repay the nominal amount
at the end of a fixed term and to pay a fixed or variable
rate of interest.
Bond
The process of combining separate financial state-
ments of Group entities into Group Financial State-
ments, depicting the financial position, net assets
and results of operations of the Group as a single
economic entity.
Consolidation
A form of corporate financing involving the sale of
receivables to a financing company.
Asset-backed financing transactions
Short-term debt instruments with a term of less than
one year which are usually sold at a discount to their
face value.
Commercial paper
GLOSSARY EXPLANATION
OF KEY FIGURES
-
of Key Figures
→ Glossary-
Explanation
Information
Other
250
249
Dividend per share of common stock/preferred stock
DIVIDEND
Dividend total
Personnel cost per employee
Workforce at year-end³
Capitalisation rate
Capitalised development costs as a percentage of
research and development expenditure.
Cash flow
Liquid funds generated (cash inflows) or used (cash
outflows) during a reporting period.
Goodwill
RoE in the Financial Services segment is calculated as
segment profit before taxes, divided by the average
amount of equity capital attributable to the Financial
Services segment.
Return on equity (ROE)
ROCE in the Automotive and Motorcycles segments
is measured on the basis of relevant segment profit
before financial result and the average amount of
capital employed in the segment concerned. Capital
employed corresponds to the sum of all current and
non-current operational assets, less liabilities that do
not incur interest.
Return on capital employed (ROCE)
A hedge against exposures to fluctuations in the fair
value of a balance sheet item.
Fair value hedge
The amount for which an asset could be exchanged,
or a liability settled, between knowledgeable, willing
parties in an arm's length transaction.
Fair value
total.
Equity capital as a percentage of the balance sheet
Equity ratio
PERSONNEL
The effective tax rate is calculated by dividing the
income tax expense by the Group profit before tax.
A hedge against exposures to the variability in fore-
casted cash flows, particularly in connection with
exchange rate fluctuations.
Cash flow hedge
revenues.
Profit/loss before financial result as a percentage of
EBIT margin
Abbreviation for "Earnings Before Interest and Taxes",
equivalent in the BMW Group income statement to
"Profit/loss before financial result”.
EBIT
Basic earnings per share are calculated for common
and preferred stock by dividing the net profit after
minority interests, as attributable to each category of
stock, by the average number of shares in circulation.
Earnings per share of preferred stock are computed
on the basis of the number of preferred stock shares
entitled to receive a dividend in each of the relevant
financial years.
Earnings per share (EPS)
Financial swap agreements, under which creditors of
securities (usually bonds) pay premiums to the seller
of the CDS to hedge against the risk that the issuer of
the bond will default. As with credit default insurance
agreements, the party receiving the premiums gives
a commitment to compensate the bond creditor in
the event of default.
Similar to "value at risk" (see definition below).
Cash flow at risk
Effective tax rate
1,963,798 1,845,186 1,668,982 1,461,166
115,215 106,358 104,286
98,047
Cash and cash equivalents at balance sheet date
Free cash flow Automotive segment
Balance sheet total
4,471
3,166
3,809
3,003
3,481
7,767
7,432
7,776
8,370
7,671
7,688
101,953
110,164
123,429
131,835
138,377
154,803
36,919
40,134
47,213
48,395
51,134
59,078
45,119
46,100
1,456
116,324
92,337
110,351
89,869
Current provisions and liabilities
Non-current provisions and liabilities
Equity
Equity ratio
Capital expenditure ratio (capital expenditure/revenues)
Capital expenditure (excluding capitalised development costs)
BALANCE SHEET
Non-current assets
Current assets
Net profit for the year
Income taxes
Effective tax rate
Return on sales (earnings before tax/revenues)
Earnings before tax
Earnings before financial result
Gross profit margin
CASH FLOW STATEMENT
0.30/0.32
852
1,508
2.30/2.32
1,640
2.50/2.52
1,707
2.60/2.62
1,904
2.90/2.92
72,349
83,141
84,887
96,230
95,453
100,306
105,876
89,161
197
Goodwill corresponds to the consideration paid to
acquire an entity, less the fair value of the separate
assets acquired and liabilities assumed. The buyer
is willing to pay the additional amount in return for
future expected earnings.
2,117,965
123,495
2010
→ 53
Workforce
BMW Group apprentices at 31 December
Employee attrition rate at BMW AG → 62
Proportion of female employees in management
functions at BMW AG/BMW Group → 62
Proportion of female executives within manage-
ment/function levels I and II at BMW AG
→ 61
→ 215
Further information
Exchange rates compared to the euro
→ 42
Oil price trend
Precious metals price trend
Steel price trend → 43
→ 42
→ 41
BMW Group Compliance Management System
→218
Overview of compensation system of the Board
of Management: cash benefits and pension
contribution → 224
Overview of compensation system of the Board
of Management: variable remuneration → 224
FINANCIAL CALENDAR
2019
20 March 2019
Annual Accounts Press Conference
21 March 2019
Analyst and Investor Conference
7 May 2019
Quarterly Report to 31 March 2019
16 May 2019
Annual General Meeting
→ 48
1 August 2019
BMW Group key automobile markets 2018
BMW Group deliveries of motorcycles → 53
BMW Group - key motorcycle markets 2018
BMW Group locations → 34 et seq.
→ Index of Graphs
↑ ↑
Financial Calendar
INDEX OF GRAPHS
Finances
BMW Group in figures
→ 6
Development of BMW AG stock
→ 20,21
BMW Group value drivers → 36
Contract portfolio of Financial Services segment
→ 54
BMW Group new vehicles financed or leased by
Financial Services segment → 54
Contract portfolio retail customer financing of
Financial Services segment 2018 → 55
Development of credit loss ratio
Regional mix of BMW Group purchase volumes
2018
→ 58
→ 55
BMW Group change in cash and cash equivalents
→ 71
BMW Group composition financial liabilities
BMW Group financial liabilities by maturity
Balance sheet structure - Group → 76
Balance sheet structure - Automotive segment
BMW Group value added 2018
→ 74
→ 74
→ 76
→ 79
Risk management in the BMW Group
→ 90
Sales volume and locations
-
Quarterly Report to 30 June 2019
6 November 2019
Quarterly Report to 30 September 2019
ir@bmwgroup.com
The BMW Group on the Internet
Further information about the BMW Group is
available online at www.bmwgroup.com.
Investor Relations information is available directly
at → www.bmwgroup.com/ir.
Information about the various BMW Group brands
is available at www.bmw.com, www.mini.com
and → www.rolls-roycemotorcars.com
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This version of the Annual Report is a translation
from the German version. Only the original German
version is binding.
PUBLISHED BY
Bayerische Motoren Werke
Aktiengesellschaft
80788 Munich
Germany
Telephone +49 89 382-0
+49 89 382-1 46 61
E-mail
Fax
Telephone +49 89 382-2 53 87
2020
18 March 2020
Annual Report 2019
18 March 2020
Annual Accounts Press Conference
19 March 2020
Analyst and Investor Conference
6 May 2020
Quarterly Report to 31 March 2020
14 May 2020
Annual General Meeting
5 August 2020
Other
Information
Quarterly Report to 30 June 2020
Quarterly Report to 30 September 2020
255
256
Other
Information
→ Contacts
CONTACTS
Business and Finance Press
Telephone +49 89 382-2 45 44
+49 89 382-2 41 18
Fax
E-mail
+49 89 382-2 44 18
presse@bmwgroup.com
Investor Relations
4 November 2020
254
253
→166
→153
Intangible assets → 123, 148
Inventories → 76, 83, 153
Investments accounted for using the equity method
and other investments → 149 et seq.
K
Key data
L
per share
→23
Lease business
Leased products
→ 54 et seq.
→ 148
Locations → 34 et seq.
List of investments → 190 et seq.
D
Dealer organisation/dealerships
Declaration with respect to the
Corporate Governance Code
Digitalisation → 28, 59 et seq.
Dividend → 22, 143 et seq.
→ 27,59
→ 201
Dow Jones Sustainability Index World
E
Earnings per share → 5,143
→ 29
EBIT margin/return on sales
Efficient Dynamics
Employees 4, 45, 61 et seq., 87
Equity
Exchange rates
→ 77, 154 et seq.
→ 63
Income taxes → 67, 141 et seq., 161
→65, 81, 110 et seq., 139 et seq.
Income statement
Cost of materials → 78 et seq.
Cost of sales → 66, 139
2011
2012
2013
2014
→ 48 et seq.
G
→ 129 et seq.
→ 54 et seq.
B
Balance sheet structure
→ 76
Bonds →74, 164
→ 5, 37, 45 et seq., 88 et seq.
Group tangible, intangible and investment
assets → 146 et seq.
→ 70 et seq., 114 et seq.
Capital expenditure 5, 67 et seq.
Cash and cash equivalents
Cash flow → 5, 71 et seq., 114 et seq.
CO2 fleet emissions → 4, 31 et seq., 46, 63 et seq., 88
Compensation Report
Compliance → 218 et seq.
Connected Drive
→ 28
Consolidated companies
Consolidation principles
Contingent liabilities
Corporate Governance
→ 223 et seq.
→ 119 et seq.
→ 119 et seq.
→167
→ 200 et seq.
C
2009
→ 41 et seq., 86 et seq., 99, 121, 176 et seq.
Mandates of members of the Board of Management
→ 202
→ 151
Refinancing →73 et seq.
Related party relationships → 180 et seq.
Remuneration system → 224 et seq.
Report of the Supervisory Board
Research and development
Revenue reserves → 154
→ 8 et seq.
→ 28 et seq., 57
Revenues → 5, 45 et seq., 65 et seq., 68 et seq., 81, 139
Risks and opportunities
→ 90 et seq.
ROCE → 5, 37 et seq., 46 et seq., 88
ROE
→ 5,37 et seq., 47, 88
S
Sales volume
→ 4, 46 et seq., 48 et seq., 53, 88 et seq.
Segment information → 184 et seq.
Selling and administrative expenses
Statement of Comprehensive Income
Stock → 20 et seq.
Sustainability → 30 et seq., 63 et seq.
→ 67,140
→ 110, 145
T
Tangible, intangible and investment assets
→ 146 et seq.
Trade payables
Trade receivables
Receivables from sales financing
Rating → 22
R
→148
Mandates of members of the Supervisory Board
→ 203 et seq.
Marketable securities
Motorcycles segment
N
Net profit 5,81
→ 71, 125
→ 53
0
Other financial result
→ 140
Other investments → 146 et seq.
Other operating income and expenses
Other provisions → 161
M
Outlook → 84 et seq.
→ 140 et seq.
Pension provisions
Performance indicators
87 et seq.
Personnel expenses
Production → 51 et seq.
77,83, 156 et seq.
→ 4 et seq., 36 et seq., 45 et seq.,
→ 143
Production network → 32 et seq., 51 et seq.
Profit before financial result → 5 et seq., 67
Profit before tax → 5 et seq., 45, 65, 66, 87, 89
Property, plant and equipment
Purchasing → 58
P
Value at risk
Credit default swap (CDS)
Post-tax return on sales
→ 67,81
Financial result
Financial reporting rules
→ 168 et seq.
→74, 77, 162 et seq.
Financial liabilities
Financial instruments
→ 76, 83, 152 et seq.
→ 122 et seq.
Automotive segment
Accounting policies
Apprentices → 61
A
Financial assets
Financial Services segment
F
→ Index
Other
Information
252
251
Research and development expenditure ratio
Research and development expenditure as a percent-
age of Group revenues.
The sum of research and non-capitalised development
cost and capitalised development cost (not including
the associated scheduled amortisation).
Research and development expenditure
revenues.
Gross profit as a percentage of Group revenues.
Liquidity
Cash and cash equivalents as well as marketable secu-
rities and investment funds.
Group profit/loss before tax as a percentage of Group
INDEX
Group net profit as a percentage of Group revenues.
Pre-tax return on sales
→ 11
601,995
601,995
601,995
601,995
601,995
Stock exchange price in €¹
Year-end closing price
High
Low
70.70
Number of shares in 1,000
86.83
97.63
89.77
96.26
90.83
92.25
122.60
95.51
69.86
77.71
65.10
88.75
2018
COMMON STOCK
150
BMW AG stock
22
22
tion of IFRS 15,
see note 6 to the
Group Financial
Statements.
first-time applica-
adjusted due to
* Prior year figures 32.0% (2017: 30.3 %*).
The Board of Management and the Supervisory Board
are proposing to the Annual General Meeting to use
BMW AG's unappropriated profit of €2,303 million
(2017: €2,630 million) for the payment of a dividend
of €3.50 per share of common stock (2017: €4.00) and
a dividend of €3.52 per share of preferred stock (2017:
€4.02). The payout ratio for 2018 therefore stands at
Dividend below previous year
2017
2014
For more than 40 years, BMW AG has enabled its
employees to participate in its success. Since 1989,
this participation has taken the form of an Employee
Share Programme. In 2018, a total of 521,524 shares
of preferred stock were issued to employees under
the terms of this programme.
The assessment of both rating agencies reflects
the attractive product launches that are part of the
current model offensive, the excellent positioning
of the BMW Group with respect to the challenges
faced by the automobile industry and a strong
operating performance. BMW AG's solid capital
structure and prudent financial approach also under-
pins the dependable financial profile and excellent
creditworthiness of the BMW Group as a whole.
Consequently, the Company not only has good access
to international capital markets, but also benefits
from attractive refinancing conditions.
Since December 2013, BMW AG has had a long-term
rating of A+ (stable outlook) and a short-term rating
of A-1 from the rating agency Standard & Poor's.
This represents the highest rating currently given by
Standard & Poor's to a European car manufacturer.
In January 2017, Moody's raised its long-term rating
for BMW AG from A2 (positive outlook) to A1 (stable
outlook). The P-1 short-term rating was confirmed.
stable
stable
A+
A-1
P-1
A1
Non-current financial liabilities
Current financial liabilities
Outlook
Standard &
Poor's
2016
Employee Share Programme
In this context, and with the approval of the Super-
visory Board, in 2018 the Board of Management
increased BMW AG's share capital by €521,500 from
€657,600,600 to €658,122,100 by issuing 521,500 new
non-voting shares of preferred stock. This increase
was implemented on the basis of Authorised Capital
2014 contained in Article 4 (5) of the Articles of Incor-
poration. The new shares of preferred stock carry the
same rights as existing shares of preferred stock. The
newly issued shares of preferred stock for employees
are entitled to receive dividends with effect from the
financial year 2019. In addition, 24 shares of preferred
stock were repurchased via the stock market or were
acquired as a result of cancelled employee purchases
relating to the previous year.
To Our
Dear Shareholders,
The EURO STOXX 50 fared slightly better than the
DAX, finishing the year 14.3% lower at 3,001 points.
From May onwards, the Prime Automobile Index was
significantly weaker on account of the factors referred
to above. Higher upfront expenditure by automotive
companies for future technologies and possible trade
conflicts between the USA and China on the one hand
and the USA and Europe on the other dampened
market sentiment. The transition to a new emissions
standard (Worldwide Harmonised Light Vehicle Test
Procedure, WLTP) led to delivery bottlenecks for some
automobile manufacturers. These developments were
also reflected in the prices of auto stocks. As a result,
the sector index fell by 27.2% over the course of the
year, closing at 1,228 points.
BMW stock initially bucked the downward trend in
the first quarter of 2018. Since the second quarter,
however, BMW stock partially succumbed to the
general sector trend and also registered price losses.
Despite the challenging conditions currently facing
the automobile industry, which also resulted in the
BMW Group adjusting its outlook for the year in
September, BMW stock nevertheless outperformed
the market as a whole in the third quarter. Uncer-
tainties in the fourth quarter, exacerbated by fears
of a disorderly Brexit and an escalation in the trade
disputes between the USA and China and the USA
and Europe, exerted downward pressure on share
prices. Accordingly, BMW stock closed the year
with a performance similar to that of the DAX. BMW
common stock finished the year at €70.70, down by
18.6% since the beginning of the year. BMW preferred
stock performed similarly to BMW common stock,
finishing the year at €62.10, 16.8% lower than the
closing price recorded one year earlier.
Although affected by the generally unfavourable mar-
ket environment, BMW stock held its value relatively
well, particularly in comparison with the sector index.
150
Shareholders
→BMWAG Stock and
Capital Markets
in 2018
At the end of 2018, with a market capitalisation of
some €46 billion, the BMW Group remained among
the ten most valuable German enterprises listed on
the stock market.
Ratings remain at top level
The BMW Group continues to be the best-rated car-
maker in Europe.
Company rating
Moody's
200
Index: December 2013 = 100
100
→ 10
The DAX closed the stock exchange year at
10,559 points, down 18.3% compared to the end of
2017 (12,918 points). Compared to its high for the
year (13,560 points), the DAX lost 22.1% in value by
the end of the year.
24
DAX
BMW preferred stock
100
Prime Automobile
BMW common stock
50
50
2014
2015
2016
2017
2018
2019
Source: Reuters.
21
European Commission President Juncker at the end
of July, which raised hopes of a possible rapproche-
ment in the trade dispute, seemed to ease the situ-
ation and helped drive up share prices temporarily.
However, renewed rumours of tariff hikes between
the EU and the US in November again caused market
unease. In addition to trade policy issues, the budget
debate in Italy as well as discussions regarding the
potential repercussions of Brexit darkened the mood
on capital markets during the fourth quarter. Towards
the end of the year, market sentiment was influenced
by the US Federal Reserve's (Fed) monetary policies.
A further rise in the key interest rate prior to the
year-end caused share prices to fall once again.
BMW AG development of stock
Negative impact on capital markets in 2018
At the beginning of the 2018 stock exchange year,
markets benefited initially from the prospect of robust
global growth and an easing of political tensions on
the Korean peninsula. Accordingly, the German stock
index (DAX) recorded an all-time high of 13,560 points
in January 2018. Subsequently, however, stock market
developments were negatively affected by the results
of parliamentary elections in Italy and the intensifi-
cation of the trade dispute between China and the
USA. Initial fears were confirmed at the beginning of
the third quarter when higher tariffs were introduced
in July on goods traded between China and the USA.
Uncertain prospects of a rapprochement in the trade
dispute caused prices to fluctuate more widely as
the year progressed, resulting in a generally volatile
market environment. Alongside the US-China trade
conflict, American import duties on steel and alumini-
um coming from the European Union (EU) also caused
uncertainty as from the end of the second quarter.
Moreover, there were discussions regarding a potential
increase in US import duties on European automobile
imports which had a dampening effect on stock mar-
kets. A meeting between US President Trump and
mobile
Shareholders
To Our
20
20
19
19
Chairman of the Board of Management
Harald Krüger
H. 35"
Yours
We aim to ensure that your Company remains an attractive investment as we move towards
the future.
Above all, we are committed to focusing all our efforts on bringing the EBIT margin in the
Automotive segment back within our target range of 8 to 10 percent.
At the BMW Group, we continue to navigate our own course. Our aim remains to be both a
driving force and an innovator, able to lead individual mobility into a new era for our customers:
one that is sustainable, connected and autonomous.
The current business and political environment remains complex and challenging, overshadowed
by uncertainty. That is not going to change any time soon. But we do not shy away from such
challenges. This is what spurs us to give our best and search for new and innovative solutions.
It also applies in our competition with both new and established companies.
Your Company is innovative, profitable and versatile. This year, the Board of Management
and Supervisory Board will propose a dividend of 3.50 euros per share of common stock and
3.52 euros per share of preferred stock. This is the second-highest dividend the company has
ever paid in its history. BMW AG associates in Germany will also benefit from the company's
positive performance through our profit-sharing programme.
→ BMW AG Stock and
Capital Markets
in 2018
BMW AG STOCK
AND CAPITAL
MARKETS
IN 2018
DAX
Prime
Auto-
BMW
BMW
preferred common
stock
stock
60
83.0
88.1
100.0
75.68
120
in %
Development of BMW AG stock compared to
stock market indices since 30 December 2013
→ 09
Numerous political uncertainties unsettled capital mar-
kets over the course of 2018 and dampened the mood
on stock markets. In particular, global trade disputes
and political uncertainties in Europe dominated stock
market developments and negatively impacted investor
sentiment. Since the introduction of higher customs
tariffs on goods traded between China and the USA on
6 July 2018, the American-Chinese trade dispute had a
particularly negative effect on global stock exchanges
and therefore also on auto stocks worldwide.
→ www.bmwgroup.com/ir
Ratings remain at top level
BMW AG stock outperforms sector
Political uncertainties unsettle
capital markets
110.5
77.41
2015
Number of shares in 1,000
→Page 36 Management System
→Page 40 Report on Economic Position
→Page 40 General and Sector-specific Environment
→Page 44 Overall Assessment by Management
→Page 45 Comparison of Forecasts for 2018 with Actual Results in 2018
→Page 48 Review of Operations
→Page 48 Automotive Segment
→ Page 53 Motorcycles Segment
→ Page 54 Financial Services Segment
→Page 57 Research and Development
→Page 26 Organisation and Business Model
→Page 58 Purchasing and Supplier Network
→Page 61 Workforce
→Page 63 Sustainability
→Page 65 Results of Operations, Financial Position and Net Assets
→Page 80 Comments on Financial Statements of BMW AG
→ Page 84 Report on Outlook, Risks and Opportunities
Page 84
Outlook
→Page 90 Risks and Opportunities
→ Page 103 Internal Control System Relevant for Accounting
and Financial Reporting Processes
→ Page 104 Disclosures Relevant for Takeovers and Explanatory Comments
→ Page 59 Sales and Marketing
→Page 26 General Information and Group Profile
REPORT
COMBINED MANAGEMENT
4.12
6.78
8.81
8.23
5.30
88.26
82.305
72.08
65.11
57.03
3 Weighted average number of shares for the year.
Stock weighted according to dividend entitlements.
5 Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
23
24
14
To Our
Shareholders
→ BMW AG Stock and
Capital Markets
in 2018
Intensive communication with capital markets
continued
The BMW Group continued to inform investors, ana-
lysts and rating agencies throughout 2018 with regular
quarterly and year-end financial reports. The com-
prehensive information package provided for capital
market participants included numerous one-on-one
and group meetings, dedicated socially responsible
investment (SRI) roadshows for investors using sus-
tainability criteria in their investment decisions, and
roadshows as well as conferences for debt investors
and credit analysts. Topics discussed included busi-
ness model developments, digitalisation and other
technological trends in the automobile industry as
well as the relevance of alternative drivetrain systems.
Apart from participating in various conferences and
roadshows, product presentations and a technology
workshop were held for analysts and investors in
Munich during the course of the year. Further infor-
mation on the BMW Group's capital market commu-
nications is available at www.bmwgroup.com/ir.
2
2
Combined
Management
Report
General Information
Motorcycles segment
The Motorcycles business is also clearly focused on
the premium segment. The model range currently
comprises motorcycles for the Sport, Tour, Roadster,
Heritage, Adventure and Urban Mobility (with
scooter models) segments. BMW Motorrad also offers
a broad range of equipment options to enhance rider
safety and comfort. The motorcycles business sales
network is organised similarly to that of the auto-
mobiles business. Currently, BMW motorcycles are
sold by more than 1,200 dealerships and importers
in over 90 countries.
Financial Services segment
The BMW Group is also a leading provider of financial
services in the automobile sector, operating more
than 50 entities and cooperation arrangements with
local financial services providers and importers
worldwide. The segment's main business is credit
financing and the leasing of BMW Group brand cars
and motorcycles to retail customers. Customers can
also choose from an attractive array of insurance
and banking products. Operating under the brand
name Alphabet, the BMW Group's international
multi-brand fleet business provides financing and
comprehensive management services for corporate
car fleets in 19 countries. In addition, international
customers are serviced by Alphabet cooperation
partners in numerous other countries. Through
its multi-brand business Alphera, the BMW Group
provides credit financing, leasing and other services
to retail customers.
The segment also supports the BMW Group's dealer-
ship organisation, for example by financing dealer-
ship vehicle inventories.
28
Combined
Management
Report
General Information
and Group Profile
Organisation and
Business Model
→ Research and
Development
Research and Development
A major factor in the success of the BMW Group is
its consistent focus on the future. A long tradition
of innovation is an integral part of its corporate phi-
losophy. Shaping individual mobility and finding
innovative solutions today for the needs of tomorrow
is a key driving force. Research and development
(R&D) are therefore of key importance for the
BMW Group as a premium supplier and ensure its
long-term economic success.
As part of its Strategy NUMBER ONE > NEXT, the
BMW Group is focusing on the topics of electric
mobility, digitalisation and autonomous driving.
When developing new technologies, the emphasis
is always on creating added benefit for customers.
Anticipating the needs and wishes of customers in all
fields of technology and implementing developments
in a way that adds value for the customer are also
key prerequisites for the Group's success going for-
ward. The BMW Group summarises the major trends
of individual mobility in the term D+ACES (Design,
Autonomous, Connected, Electrified, Services).
Accordingly, the BMW Group's R&D activities include
the following five key topics:
1. Design
The BMW Group sees design as the characteristic
combination of aesthetics and technology. Out-
standing design involves focusing keenly on the
requirements of customers and anticipating
their wishes, enabling the BMW Group to con-
tinue finding ideal solutions for the (mobility)
needs of its customers. As a premium provider,
the BMW Group not only aspires to meeting its
customers' requirements, but also to exceeding
their expectations in every respect. A ground-
breaking design underlines the distinctive charac-
ter of each new vehicle and thus strengthens all
of the Group's brands.
2. Autonomous
Since 2018, the BMW Group has pooled its con-
siderable development expertise in the fields of
state-of-the-art driver assistance systems and
highly or fully autonomous driving at its own de-
velopment centre. During the final phase of de-
velopment, some 1,800 people will be working
there. The clear aim is to create an open plat-
form for highly and fully automated driving that
will serve as an industry standard going forward.
Today already, the BMW Group offers driver assis-
tant systems for partially automated driving.
With the BMW iNEXT, the Group will offer highly
automated driving for the first time from 2021.
3. Connected
Digital change is of great significance for the au-
tomobile industry. One of the most important
effects of digitalisation is that the vehicle itself
becomes the focal point of the customer's digital
experience. The BMW Group recognised cus-
tomer trends at an early stage and, with BMW
Connected and a growing range of digital of-
ferings, it is well prepared to meet demand aris-
ing in this field. This is not merely developing
and integrating new technologies and services
for the vehicle. The focus is very much on cus-
tomers and their aspirations for modern-day mo-
bility. Digital services that the customer is used
to should be available seamlessly and without
restriction - both inside and outside the vehicle.
The option of using BMW Group services almost
anywhere and at any time is the basic prerequi-
site for offering a range of digital services geared
solely to customers and their personal needs.
These include, for example, the availability of
personalised and context-based information
within the vehicle.
For customers, the experience begins before pur-
chasing the vehicle, for example through virtual
reality options that offer new ways to configure
the vehicle and explore products interactively.
The customer can also be kept in the loop while
waiting for the new vehicle to be manufactured,
thus ensuring greater involvement in the produc-
tion process from an early stage. The BMW Con-
nectedDrive Store enables customers to reserve
new services at any time for a specified period.
The BMW Intelligent Personal Assistant has been
available in BMW vehicles since March 2019.
Autonomous driving, electrification and ever-
greater connectivity will open up opportunities
for completely new experiences and ways to
shape travel in the future. At the same time,
however, those opportunities will also change
people's wishes and lifestyles. Precisely this
development is supported by the BMW Group's
intelligent platform, which will enable drivers
to switch seamlessly and without restrictions from
one vehicle to the next with just one customer
profile, across each vehicle's life cycle. Moreover,
in future all products and services relating to
individual mobility will be bundled here and grad-
ually developed to form a comprehensive digital
ecosystem.
The global sales network of the automobile business
currently comprises around 3,500 BMW, 1,600 MINI
and 140 Rolls-Royce dealerships. Within Germany,
sales are conducted through branches of the
BMW Group and independent authorised dealer-
ships. Sales outside Germany are handled primarily
by subsidiary companies and by independent import
companies in some markets.
8.85
The MINI brand is an icon that promises superior
driving fun in the premium small car segment.
Rolls-Royce is the ultimate marque in the ultra-luxury
segment with a tradition stretching back over more
than 100 years. Rolls-Royce Motor Cars specialises in
bespoke customer experiences and offers the highest
level of both quality and service.
Automotive segment
and Group Profile
Economic Position
Outlook, Risks and
Opportunities
26
Combined
Management
Report
General Information
and Group Profile
→ Organisation and
Business Model
GENERAL
INFORMATION
AND GROUP
PROFILE
Over 140,000 electrified vehicles
delivered
Increasing R&D expenditure
secures future business
Customer in focus with innovative
offerings
High investments in the flexibility of
the production network
ORGANISATION AND
BUSINESS MODEL
→ www.bmwgroup.com/company
This Combined Management Report incorporates the
management reports of Bayerische Motoren Werke
Aktiengesellschaft (BMW AG) and the BMW Group.
General information on the BMW Group is provided
below. There have been no significant changes com-
pared to the previous year.
Bayerische Motoren Werke Aktiengesellschaft
(BMW AG), based in Munich, Germany, is the parent
company of the BMW Group. The general purpose of
the Company is the production and sale of engines,
engine-equipped vehicles, related accessories and
products of the machinery and metal-working
industry as well as the rendering of services related
to the aforementioned items. The BMW Group is
sub-divided into the Automotive, Motorcycles and
Financial Services operating segments. The seg-
ment Other Entities primarily comprises holding
companies and Group financing companies. The
BMW Group operates on a global scale and is rep-
resented in more than 140 countries worldwide. At
the end of the reporting period, the BMW Group
employed a workforce of 134,682 people.
Founded in 1916 as Bayerische Flugzeugwerke AG
(BFW), Bayerische Motoren Werke G.m.b.H. came
into being in 1917 before finally becoming Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) in 1918.
The BMW Group comprises BMW AG itself and all
subsidiaries over which BMW AG has either direct
or indirect control. BMW AG is also responsible for
managing the BMW Group as a whole.
The BMW Group is one of the most successful mak-
ers of automobiles and motorcycles worldwide and
among
the largest industrial companies in Germany.
It is the only manufacturer that focuses exclusively on
the premium segment with all its brands. With BMW,
MINI and Rolls-Royce, the BMW Group owns three of
the best-known premium brands in the automotive
industry. In addition to its strong market position
in the premium segment of the global motorcycles
sector, the BMW Group is also successful in the
financial services business. Moreover, in recent years
the BMW Group has evolved into one of the leading
providers of premium services for individual mobility.
27
27
In 2016, the BMW Group presented its Strategy
NUMBER ONE > NEXT. At the heart of Strat-
egy NUMBER ONE > NEXT is a commitment to
future-oriented activity with the development of
products, brands and services in the premium seg-
ment for individual mobility. New technologies such
as alternative drivetrains, digitalisation and connec-
tivity are further key areas of focus. Furthermore,
the strategy emphasises the increasing importance
of a customer-oriented approach.
Presentation of segments
In order to provide a better insight into the Group,
this report also includes a presentation of the
operating segments Automotive, Motorcycles and
Financial Services.
The core BMW brand caters to a very broad array of
customer requirements, ranging from fuel-efficient
and innovative models fitted with Efficient Dynamics
to outstanding high-performance BMW M vehicles. A
wide
range of plug-in hybrid vehicles is also available
and being continuously expanded. At the same time,
the BMW Group continues to redefine the meaning
of premium with its BMW i models. With an even
greater focus on innovation and sustainability, BMWi
embodies the vehicle of the future, with electric
drivetrains, connectivity, intelligent lightweight con-
struction, exceptional design and newly developed
mobility services.
PREFERRED STOCK
200
Dividend
Preferred stock
Earnings per share of common stock³
Earnings per share of preferred stock4
Free cash flow Automotive segment
Equity
1 Xetra closing prices.
2 Proposed by management.
3.50²
4.00
3.50
3.20
2.90
3.522
4.02
3.52
3.22
2.92
10.82
13.075
10.45
9.70
8.83
10.84
13.095
Common stock
10.47
9.72
59.08
56,127
55,605
55,114
54,809
54,500
Stock exchange price in €1
Year-end closing price
High
Low
62.10
74.64
72.70
77.41
67.84
82.50
78.89
74.15
92.19
74.60
60.70
67.29
56.53
58.96
KEY DATA PER SHARE IN €
Switzerland
Country
Products
BMW Group Research and Innovation
Centre (FIZ), Munich, Germany
▲ Research and development
network in Europe
Partner plant, Graz,
Austria
Partner plant, Born,
Netherlands
Partner plants
in Europe
BMW Group plant Oxford, UK
BMW Group plant Swindon, UK
Rolls-Royce Manufacturing Plant,
Goodwood, UK
BMW Group plant Hams Hall, UK
BMW Group plant Steyr, Austria
BMW Group plant Wackersdorf
BMW Group plant Regensburg
BMW Group plant Munich
BMW Group plant Leipzig
BMW Group plant Landshut
BMW Group plant Eisenach
BMW Group plant Dingolfing
BMW Group plant Berlin
■ Production in Europe
Malta
Slovenia¹
Italy
Portugal
Spain
Ireland
BMW Group Research and
Technology, Munich, Germany
BMW Group Autonomous Driving
Campus, Unterschleißheim, Germany
BMW Group Designworks, Munich,
Germany
BMW Car IT, Munich, Germany
BMW Group Lightweight
BMW GROUP PLANTS
Araquari
Berlin
Chennai
Dingolfing
Eisenach
Hams Hall
Landshut
Leipzig
Manaus
Munich
Oxford
Rayong
France
Regensburg
San Luis Potosí¹
Spartanburg
Steyr
Swindon
Wackersdorf
Brazil
Germany
India
Germany
Germany
United Kingdom
Germany
Germany
Brazil
Germany
United Kingdom
Construction and Technology Center,
Landshut, Germany
Rosslyn
Belgium
Country
Netherlands
The main function of the BMW Group's four partner
plants is to serve regional markets. During the year
under report, BMW and MINI vehicles were also
manufactured in Jakarta (Indonesia), Cairo (Egypt),
Kaliningrad (Russia) and Kulim (Malaysia).
Locations
PARTNER PLANTS
Jakarta
Cairo
Kaliningrad
Kulim
Locations
Products
Indonesia
Egypt
BMW 3 Series, BMW 5 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X5, MINI Countryman
BMW 3 Series, BMW 5 Series, BMW 7 Series, BMW X1, BMW X3, BMW X5, BMW X6
Russia BMW 3 Series, BMW 5 Series, BMW 7 Series, BMW X1, BMW X3, BMW X4, BMW X5, BMW X6
Malaysia
BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 6 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X4, BMW X5, MINI Countryman
The BMW Group also awards production contracts to
external partners for specific types of vehicle as well as
motorcycles. During the period under report, Magna
Steyr Fahrzeugtechnik produced the BMW 5 Series
Sedan and BMW Z4 in Graz (Austria). Moreover, ¬
various MINI models and the BMW X1 were assembled
at VDL Nedcar in Born (Netherlands). BMW motor-
cycles and scooters were also manufactured by the part-
ner companies TVS Motor Company in Hosur (India)
and Loncin Motor Co., Ltd in Chongqing (China).
Locations
CONTRACT PRODUCTION
Born
Chongqing
Graz
Hosur
Country
Netherlands
China
Austria
India
Products
MINI Hatch, MINI Convertible, MINI Countryman, BMW X1
Scooter
BMW 5 Series, BMW Z4
Motorcycles
BMW 1 Series, BMW 2 Series, BMW 3 Series, BMW X1
Petrol engines, production of core engine parts
33
BMW 5 Series, BMW X3
China
Mexico
USA
Austria
United Kingdom
Germany
United Kingdom
BMW 3 Series, BMW X1, BMW X3, BMW X4
BMW motorcycles, Maxi-Scooters, car brake discs
BMW 3 Series, BMW 5 Series, BMW 6 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X4, BMW X5, MINI Countryman
BMW 3 Series, BMW 4 Series, BMW 5 Series, BMW 6 Series,
BMW 7 Series, BMW 8 Series, BMW M
Chassis and drivetrain components
Components for electric mobility
Rolls-Royce bodywork, pressed parts
Toolmaking, outer body parts for Rolls-Royce, aluminium tanks for BMW Motorrad
Petrol engines for BMW, MINI
BMW i8 plug-in hybrid engines
Core engine parts
Lightweight construction components, electric drivetrain systems and special engines
BMW 1 Series, BMW 2 Series, BMW i, BMW M
Motorcycles
BMW 3 Series, BMW 4 Series, BMW M
Petrol and diesel engines, high-performance engines for M models
Core engine parts
MINI Hatch, MINI Clubman
BMW 3 Series, BMW 5 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X4, BMW X5
Motorcycles
BMW 1 Series, BMW 2 Series, BMW 3 Series, BMW 4 Series,
BMW X1, BMW X2, BMW M
BMW 3 Series, BMW X3
BMW 3 Series
BMW X3, BMW X4, BMW X5, BMW X6, BMW X7, BMW M
Petrol and diesel engines for BMW and MINI
Core engine parts
High-performance engines for M models
Pressed parts and bodywork components
Distribution centre for parts and components
Cockpit assembly
Processing of carbon fibre components
Rolls-Royce Phantom², Ghost, Wraith, Dawn, Cullinan²
Rolls-Royce Manufacturing Plant Goodwood
1 2018 only pre-series production, plant opens in 2019.
2 Fuel consumption and CO2 emissions information are available on page 108.
The plants in Shenyang (China) are operated by the
joint venture BMW Brilliance Automotive (BBA).
The Shenyang site comprises the Dadong and Tiexi ¬
automobile plants. Tiexi also has an engine plant with
a foundry and a battery factory.
Locations
Country
JOINT VENTURE BMW BRILLIANCE
AUTOMOTIVE HOLDINGS LTD.
Dadong (Shenyang)
China
Tiexi (Shenyang)
China
Tiexi (Shenyang)
Products
UK
33
Combined
BMW Group Designworks, Newbury
Park, USA
BMW Group Technology Office USA,
Mountain View, USA
BMW Group Engineering and
Emission Test Center,
Oxnard, USA
BMW Group ConnectedDrive Lab
China, Shanghai, China, and
BMW Group Designworks Studio
Shanghai, China
BMW Group Technology Office,
Shanghai, China
BMW Group Engineering China,
Beijing, China
BMW Group Engineering Japan,
Tokyo, Japan
BMW Group Engineering USA,
Woodcliff Lake, USA
BMW Technology, Chicago, USA
Sales subsidiaries and
Financial Services
locations worldwide
1 Sales locations only.
² 2018 only pre-series production, plant opens in 2019.
Russia
India
China
South Korea
Japan
Hong Kong
Thailand
Malaysia
Singapore¹
Indonesia¹
Australia
BMW Group locations in Europe
→ 13
Norway
Germany
▲ Research and development
network outside Europe
34
outside Europe
Partner plant, Chongqing, China
Partner plant, Hosur, India
Partner plant, Jakarta, Indonesia
Partner plant, Cairo, Egypt
Partner plant, Kaliningrad, Russia
Partner plant, Kulim, Malaysia
BMW Group plant Spartanburg, USA
BMW Brilliance Automotive, China
(joint venture-3 plants)
Management
Report
General Information
and Group Profile
→ Organisation and
Business Model
BMW Group locations worldwide
→ 12
43
7 Sales subsidiaries and
Financial Services
locations worldwide
31
Production and
assembly plants
16
Research and
development
locations
Headquarters
Canada
USA
Mexico
United Arab
Emirates
Brazil
Argentina¹
South Africa
New Zealand
☐
Production
Thailand
■BMW Group plant Araquari, Brazil
BMW Group plant Chennai, India
BMW Group plant Manaus, Brazil
BMW Group plant Rayong, Thailand
BMW Group plant Rosslyn, South Africa
BMW Group plant San Luis Potosí²,
Mexico
Partner plants
BMW Brilliance Automotive joint venture in China.
Eight production sites are operated by partners or
contract manufacturers. The same standards of
quality, safety and sustainability apply at all loca-
tions within the BMW Group's production network
worldwide.
outside Europe
Production Network
10,147
12,420
7,888
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
6,182
Automotive
2017
2018
2017
2018
2017
2018
Return on capital employed in %
capital employed in € million
Profit before financial result in € million
Average
Average capital
employed
=
ROCE Automotive
49.8
77.7
Capital employed corresponds to the sum of all
current and non-current operational assets, less
liabilities that do not incur interest (e.g. trade payables
and other provisions).
Due to its key importance for the Group as a whole,
the Automotive segment is managed on the basis of
additional key performance indicators which have a
significant impact on RoCE and hence on segment
performance. These value drivers are the number of
vehicle deliveries and the operating return on sales
(EBIT margin: segment-related profit/loss before
financial result as a percentage of segment revenues)
as the key performance indicator for segment prof-
itability. The management system also takes into
account average CO2 emissions for the fleet, which,
through their influence on ongoing development
costs and due to regulatory requirements, can have
Average
capital employed in € million
Profit before financial result in € million
Average capital
employed
7
ROCE
Motorcycles
Profit before
financial result
→ 16
Return on capital employed*
As with the Automotive segment, the Motorcycles
segment is managed on the basis of RoCE. Capital
employed is determined on the same basis as in the
Automotive segment. The strategic RoCE target for
the Motorcycles segment is 26%.
Profit before
financial result
Motorcycles segment
General Information
and Group Profile
Report
Combined
Management
38
88
37
36
By managing the business on the basis of key value
drivers, it is possible to gain a better understanding
of the causes of changes in the RoCE and to define
suitable measures to influence it.
a significant long-term impact on Group performance.
Fleet emissions correspond to average CO2 emissions
of new cars sold in the EU-28 countries.
→Management System
The most comprehensive key performance indica-
tor used for the Automotive segment is RoCE. This
indicator provides information on the profitability of
capital employed and the operational business. ROCE
is measured on the basis of segment profit before
financial result and the average capital employed in
the segment. The strategic target for the Automotive
segment's RoCE is 26%.
Automotive segment
and return on equity (ROE) for the Financial Services
segment. These indicators combine a wide range of
relevant economic information, such as profitabil-
ity (return on sales) and capital efficiency (capital
turnover) to provide a measurement of segment
performance and the development of enterprise value.
Report
Management
Combined
36
35
35
Greece
Bulgaria¹
Romania¹
General Information
and Group Profile
Hungary¹
Austria
Poland
Republic¹
Czech
Denmark
Finland¹
Sweden
Sales subsidiaries and
Financial Services
locations Europe
BMW Group Diesel Competence
Centre, Steyr, Austria
Slovakia¹
Return on capital employed in %
→ Management System
The business management system applied by the
BMW Group follows a value-based approach that
focuses on profitability, consistent growth, value
enhancement for capital providers and job security.
Capital is considered to be employed profitably when
the amount of profit generated sustainably exceeds
the cost of equity and debt capital. In this way, the
desired degree of corporate autonomy is also secured
in the long term.
→ 15
Return on capital employed*
Operating performance at segment level is managed at
an aggregated level on the basis of returns on capital.
Depending on the business model, the segments are
measured on the basis of return on total capital or
equity. Specifically, return on capital employed (ROCE)
is used for the Automotive and Motorcycles segments
Management of operating performance
at segment level
Due to the high level of aggregation, it is impractical
to manage the business on the basis of value added.
This key indicator therefore only serves for reporting
purposes. Relevant value drivers having a significant
impact on business performance and therefore on
enterprise value are defined for each controlling
level. The financial and non-financial value drivers
are reflected in the key performance indicators used
to manage the business. In the case of project-related
decisions, the system follows a project-oriented
management logic that is based on value added and/or
profitability, thereby providing a fundamental basis
for decision-making.
Revenues
Expenses
Average weighted
cost of capital rate
Capital employed
MANAGEMENT SYSTEM
Profit
Capital turnover
Return on sales
×
Return on capital
(ROCE or RoE)
Value added
→ 14
BMW Group - value drivers
The BMW Group's internal management system is
based on a multi-layered structure. Operating manage-
ment occurs primarily at segment level. In order to
manage long-term corporate performance and assess
strategic issues, additional key performance indicators
are taken into account within the management system
at Group level. In this context, value added serves as
one of several indicators for the contribution made
to enterprise value during the financial year. This
approach is made operational at both Group and
segment level through key financial and non-finan-
cial performance indicators (value drivers). The link
between value added and the relevant value drivers
is shown in a simplified form below.
7
Cost of capital
The production network comprises a total of 31 loca-
tions in 15 countries, whereby 20 of the 31 locations
are BMW Group plants. Three locations belong to the
2018
2018
To coincide with the 15th anniversary of BBA, the
joint venture announced extensive investments in
new and existing plant structures in order to cover
future market requirements. The BMW Group intends
to increase its stake in BBA from 50 to 75%. During
an anniversary celebration, the BMW Group signed
an agreement to that effect with its partner Brilliance
China Automotive Holdings Ltd. (CBA). The contrac-
tual term of the joint venture, which is due to end in
2028, is to be extended up to 2040. After approval
by the Annual General Meeting of CBA on 18 Janu-
ary 2019, the agreement is also subject to regulatory
approvals.
The BMW Group and Daimler AG are merging their
mobility services in a new joint venture in order
to achieve dynamic growth in a highly competitive
environment. In this way, both companies are pro-
moting the vision of pure electric and autonomous on-
demand mobility simultaneously. The aim is to further
expand existing offerings in the areas of car-sharing,
ride-hailing, parking, charging und multimodality
and to interlock even more closely with one another
in the long term. The new mobility offering is to be
accessible, intuitive and aligned towards the needs
of the user. The newly founded company seeks to
increase the quality of urban life and to prepare the
way for a world with autonomous vehicles.
18.1
14.8
In order to secure the success of the business in the long
term, the BMW Group enters into specific cooperation
agreements and partnerships with companies both
from the automotive sector but also with technology
leaders in other industries. Against a backdrop of
rapid technological change, the aim of collaborating
with external partners is to combine expertise in order
to bring innovations to customers within the shortest
time possible.
Cooperation Agreements and
Partnerships
→ Sustainability
→ Cooperation
Agreements and
Partnerships
Organisation and
Business Model
General Information
and Group Profile
Management
Report
Combined
30
In 2018, numerous awards and prizes once again
underscored the BMW Group's high level of innovative
expertise, particularly in design, the use of innovative
technologies as well as the intelligent connectivity of
drivers, vehicles and environment.
and CO₂ emis-
sions informa-
tion are available
on page 108.
* Fuel
consumption
note 9
Year-on-year, research and development expenditure
rose significantly to €6,890 million (2017: €6,108 mil-
lion; +12.8%). The R&D expenditure ratio stood at
7.1% (2017: 6.2%). The ratio of capitalised development
costs to total research and development expenditure
(capitalisation ratio) stood at 43.3% for the period
under report (2017: 39.7%). Amortisation of capitali-
sed development costs totalled €1,414 million (2017:
€1,236 million; 14.4%). Further information on R&D
expenditure is provided in the "Report on Economic
→see Position (Results of Operations)" and in → note 9 to
the Group Financial Statements.
At 31 December 2018, over 15,000 people at 16 locations
in five countries were working in the BMW Group's
global research and innovations network.
Additionally, the BMW Group signed an agreement
with the Chinese manufacturer Great Wall Motor
Company Limited for the production of electric MINI
vehicles in China in a 50-50 joint venture. In addition
to electric MINI Vehicles, the joint venture, Spotlight
Automotive Limited, will also produce electric vehicles
for Great Wall Motor. The formal establishment of
the new company remains subject to approval from
the relevant Chinese authorities. Together with the
planned increase of share in BBA, the BMW Group
is significantly expanding its presence in China and
underscoring its local engagement.
1 EU-28
Sustainability
The BMW Group is a pioneer of sustainability not only
within the automotive industry, but across other sec-
tors, too. Long-term thinking and responsible action
have long been the foundations of the BMW Group's
distinct identity and its economic success. As early as
1973, the BMW Group was among the first to appoint
an environmental officer in the automobile sector.
Today, the Sustainability Board, comprising all mem-
bers of the Board of Management, sets the strategic
direction along with binding targets. Since 2001,
the BMW Group has been committed to the United
Nations Environment Programme, the UN Global
Compact and the Cleaner Production Declaration.
→ Production Network
Organisation and
Business Model
General Information
and Group Profile
Combined
Management
Report
32
32
31
Further information on the topics of sustainability
and human resources within the BMW Group is
available in the sections Sustainability and Workforce,
respectively, of the Group Management Report and
in the Sustainable Value Report 2018 published on
the Company's website at www.bmwgroup.com/svr.
In 1959, Herbert Quandt secured the independence of
BMW AG, thus laying the foundation for the successful
development of the BMW Group. In recognition of
his entrepreneurial achievements, in 1970 BMW AG
established the "BMW Stiftung Herbert Quandt”,
which has meanwhile been renamed the "BMW Foun-
dation Herbert Quandt" with expanded endowment
capital. With its Responsible Leadership programmes,
a global network and impact-oriented investments,
the BMW Foundation Herbert Quandt supports the
sustainable development goals of the United Nations'
Agenda 2030.
The BMW Group aims to be the leading provider
of premium mobility services going forward.
To achieve this goal, it is essential to have a clear
understanding of the needs of customers world-
wide. This knowledge is the basis for providing
an attractive, comprehensive range of services.
These include easy-to-use, digitally supported
mobility services that also feature bring-and-
collect services or help customers find free park-
ing spaces in urban environments.
BMW Foundation Herbert Quandt
Social engagement is also an integral part of the
BMW Group's understanding of its corporate respon-
sibility. For several years now, the BMW Group has
firmly supported intercultural exchange. In part-
nership with the UN Alliance of Civilizations, the
BMW Group presents the Intercultural Innovation
Award for exemplary projects in this field. Since 2011,
the Company has presented the "BMW Group Award
for Social Commitment" every year to employees who
have made an exceptional contribution through their
outstanding volunteer work.
The BMW Group attaches great importance to training
and developing its workforce. In 2018, investment in
training and development programmes across the
Group amounted to €373 million (2017: €349 million).
In addition, 1,656 trainees were hired worldwide.
A total of 4,964 young people are currently under-
going vocational training or participating in internal
programmes to develop young talent.
The BMW Group has set itself the goal of being a
leader in the use of renewable energy in production
and the value chain. In 2018, 79% (2017: 81%) of
the BMW Group's bought-in electricity worldwide
came from renewable sources. In view of increasingly
complex supplier relationships, it is important for
the BMW Group to work together with suppliers to
increase transparency and resource efficiency along
the supply chain. The BMW Group requires suppliers
to comply with environmental and social standards
across the value chain.
With effect from September 2018, all vehicles in the
EU are required to be approved in accordance with
the new WLTP testing cycle. However, the calculation
of CO2 fleet emissions by the EU Commission will
not be converted to WLTP until 2021. Therefore, for
reporting purposes up to and including 2020, WLTP
fleet emissions must be translated back to the previ-
ously applicable values calculated in accordance with
the outgoing New European Driving Cycle (NEDC).
Due to the changed test conditions used for WLTP
purposes, values for emissions are higher when trans-
lated back to a NEDC basis (NEDC-correlated). In
order to ensure comparability, CO₂ fleet emissions for
2017 (122 g CO2/km according to NEDC) were con-
verted to a correlated NEDC value of 128 g CO2/km
under WLTP test conditions and published in the
Quarterly Report to 30 June 2018. The conversion
to WLTP at the BMW Group went according to plan.
WLTP
to planned
conversion to
Since 1995, the BMW Group has cut the CO2 emis-
sions of its new vehicles sold in Europe¹ by more
than 42%. Average CO2 emissions in Europe¹ in
2018 amounted to 128 g CO2/km (adjusted value for
2 Value according 2017: 128 g CO2/km)². In 2018, more than 140,000
electrified vehicles were sold within one year for
the first time.
The BMW Group takes a holistic approach to sustaina-
bility management that encompasses the entire value
chain. Apart from the reduction of CO2 emissions,
key components of the Group's sustainability strategy
include operational environmental protection, sus-
tainability in the supply chain, employee orientation
and social commitment.
The principles and importance of managing the busi-
ness on a sustainable basis are emphasised in the
new Strategy NUMBER ONE > NEXT, which includes
a clear commitment to preserving resources. The
BMW Group remains fully committed to ecological
and social sustainability along the entire value chain
as well as to comprehensive product responsibility.
The Group addresses current social challenges, pri-
marily where its strengths make it the most effective.
The main focus here is on problem-solving approaches
that are internationally applicable and have a tangi-
ble long-term impact according to the principle of
"helping people to help themselves”. For this purpose,
the BMW Group works together with the BMW Foun-
dation Herbert Quandt.
5. Services
The Vision 100 study presented for the Rolls-Royce
brand in 2016 gave customers a first glimpse into
the future of automobile luxury powered by elec-
tric drivetrains.
at the IAA Cars in the same year. The series
launch of all-electric MINI vehicles is scheduled
to begin in 2019.
Average equity capital
RoE Financial
Services
Profit before tax
of return on equity. RoE is defined as segment profit
before tax, divided by the average amount of equity
capital in the Financial Services segment. In view
of generally increasing regulatory requirements, a
greater volume of equity capital will be allocated to
the segment in future, which will result in a lower
RoE. In this context, the long-term target return was
changed with effect from the 2018 financial year from
at least 18% to at least of 14%.
→ 17
Return on equity
As is common practice in the banking sector, the
Financial Services segment is managed on the basis
Financial Services segment
In view of its increasing strategic importance, the
Motorcycles segment adopted the operating return
on sales (EBIT margin: segment-related profit/loss
before financial result as a percentage of segment
revenues) as a key performance indicator with effect
from the financial year 2017. The long-term target
range is between 8 and 10%. Used in combination
with the number of motorcycle deliveries as a non-
financial value driver, the segment can exert a greater
influence on the development of RoCE.
Financial Services
34.0
609
616
207
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
175
Motorcycles
2017
2018
2017
28.4
2017
Profit before tax in € million
Return on equity in %
With its MINI Electric, MINI is reinterpreting the
urban tradition of the brand for the electric age
and reinventing individual mobility for the city.
The market launch of the MINI* brand's first
plug-in hybrid in 2017 was followed by the pre-
sentation of the all-electric MINI Electric Concept
As an important pillar of the BMW brand, vehi-
cles equipped with plug-in hybrid drivetrains
represent a good alternative product offering for
customers. All plug-in models are equipped with
a smart energy management system that ensures
ideal interaction between the combustion engine
and the electric motor. The option to drive fully
electrically, added efficiency gained through elec-
tric assistance features, and the spontaneous re-
sponse characteristics provided by the additional
electric drivetrain lead to a new harmony of dri-
ving pleasure and sustainability. The flexibility of
the technologies used makes it possible to extend
the broad range of models fitted with plug-in
hybrid drivetrains as required.
The BMW i brand reflects Efficient Dynamics in
its most systematic form. Vehicle architectures
customised for electric mobility, innovative elec-
tric and plug-in hybrid drivetrains, and the use
of new types of materials are the results of an inte-
grated approach that is also reflected in a re-
source-efficient selection of materials and the
intensive use of renewable energy in the pro-
duction process. This strategy contributes to a
very favourable environmental footprint made
by BMW i vehicles over their entire product life
cycle.
Another topic of strategic importance for the
BMW Group is the continuous optimisation of
the energy efficiency of its automobiles and
motorcycles, including the electrified vehicles
manufactured for the BMW, MINI, Rolls Royce
and BMW Motorrad brands. Under the term
Efficient Dynamics, the BMW Group has been
successfully working for years on reducing fuel
consumption and vehicle emissions through the
development of highly efficient combustion
engines, the electrification of drivetrains, intelli-
gent lightweight construction, improved aero-
dynamics and coordinated energy management
in vehicles.
4. Electrified
NUMBER ONE > NEXT.
Alongside automated driving, systematically
enhancing the scope of connectivity on the road
to a digital, emission-free future is one of the
key areas in which the BMW Group is helping
transform the mobility sector with its Strategy
29
29
Average equity capital in € million
12,167
14,630
2,207
2,161
2017
2018
2017
2018
2017
2018
South Africa
Germany
46
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 459,581 units, 2017: 384,124 units, 2016: 316,200 units, 2015: 282,000 units, 2014: 275,891 units).
2017
2016
2015
2014
50
50
US Dollar
Japanese Yen
Chinese Renminbi
100
British Pound
150
200
Russian Rouble
- 100
150
200
Index: December 2013=100
The US dollar/euro exchange rate fluctuated between
1.13 and 1.25 US dollars to the euro during 2018, fin-
ishing the twelve-month period at an average rate of
1.18 US dollars to the euro. As previously announced,
the US Federal Reserve continued to raise key interest
rates during the period under report. With effect
from the end of the year, the ECB discontinued its
purchases of securities, sending out the first clear
signals that its highly expansionary monetary policy
is coming to an end.
Currency markets
Emerging markets remained on a stable growth course
with GDP up overall against the previous year, includ-
ing rises in Russia (+2.3%), Brazil (+1.3%) and India
(+7.3%). The upward trend in Russia was driven
by a number of sectors. Investment and industrial
production increased markedly. Domestic consumer
spending was at a similar level to the previous year.
The positive trend benefited from a further drop
in unemployment. Economic recovery in Brazil
remained sluggish. Although private consumer
spending developed positively in 2018, the country's
high unemployment rate was only reduced slightly.
Government spending also increased. The Indian
economy grew at a steady rate. Apart from strong
growth in private spending, the manufacturing sector
also made a positive contribution.
2018
with the growth rate almost halved compared to one
year earlier. The export sector slowed down in 2018
after a strong previous year.
2019
41
2014
50
Price in US Dollar
Price in €
100
150
Source: Reuters.
50
100
150
Price per barrel of Brent Crude
→ 20
Oil price trend
The currencies of major emerging economies fell
during 2018. The Russian rouble and the Brazilian
real lost 12% and 20% respectively against the euro.
The Indian rupee depreciated by 10% against the euro.
twelve-month period. The Japanese yen also continued
to depreciate year-on-year with an average exchange
rate of 130 yen to the euro during the year under
report.
The Chinese renminbi continued to lose value com-
pared to the previous year, recording an average
exchange rate of 7.81 renminbi to the euro for the
The British pound's fluctuations against the euro
reflected the progress of difficult negotiations towards
an orderly Brexit. The value of the British currency fell
temporarily to 0.91 pounds to the euro before finishing
the year at an average rate of 0.89 pounds to the euro.
Economic Position
→ General and Sector-
specific Environment
Report on
Combined
Management
Report
42
42
Source: Reuters.
→ 19
Combined
In Japan, the growth rate for 2018 fell sharply to 0.8%,
mainly due to a significant decline in private consumer
spending. In addition, various natural catastrophes
temporarily curtailed production. Furthermore,
demand for capital goods only increased moderately,
Project decisions are based on calculations derived
from expected cash flows of the individual project.
Calculations are made for the full term of a project,
incorporating future years in which the project is
expected to generate cash flows. Project decisions
are taken on the basis of net present value and the
internal rate of return calculated for the project.
Value-based project management
Operational business in the Automotive and Motor-
cycles segments is largely shaped by its life-cycle-
dependent project character. Projects have a substantial
influence on future business performance. Project
decisions are therefore a crucial component of financial
management in the BMW Group.
Capital employed comprises the average amount
of Group equity employed during the year as a
whole, the financial liabilities of the Automotive
and Motorcycles segments, and pension provisions.
The earnings amount corresponds to Group profit
before tax, adjusted for interest expense incurred in
conjunction with the pension provision and on the
financial liabilities of the Automotive and Motor-
cycles segments (earnings before interest expense
and taxes). The cost of capital is the minimum rate of
return expected by capital providers in return for the
capital employed. Since capital employed comprises
an equity capital (e.g. share capital) and a debt capital
element (e.g. bonds), the overall cost of capital rate
is determined on the basis of the weighted average
rates for equity and debt capital, measured using
standard market procedures. The pre-tax average
weighted cost of capital for the BMW Group in 2018
was 12%, unchanged from the previous year.
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
10,086
BMW Group
4,174
2,788
6,804
7,298
10,978
2017
2018
2017
2018
2017
2018
Value added Group
Cost of capital (equity + debt capital)
Earnings amount
in € million
The net present value of a project indicates the extent
to which a project will be able to generate a positive
contribution to earnings over and above the cost of
capital. A project with a positive net present value
enhances value added and therefore results in an
increase in enterprise value. The internal rate of return
of the project corresponds to the average return on
capital employed in the project. It is equivalent to the
multi-year average RoCE for an individual project. It is
therefore consistent with one of the key performance
indicators.
For all project decisions, the project criteria and
long-term periodic results impact are measured and
incorporated in the long-term Group forecast. This
approach enables an analysis of the impact of project
decisions on periodic earnings and rates of return for
each year during the term of the project. The overall
result is a cohesive management model.
39
10
Economic growth in China came in at 6.6% in 2018,
slightly down on the previous year. Demand from
private households remained at a similarly high
level to previous years. By contrast, the willingness
of companies to invest fell significantly, reflected in
a growth rate of only 5.9% in 2018. This outcome
was a desired development and in line with the
gov-
ernment's intended transformation of the Chinese
economy to one of sustainable economic growth and
greater financial market stability. Over the course of
the year, however, tariff increases imposed by the USA
on Chinese products exacerbated the factors holding
down the domestic economy, causing the Chinese
government to undertake fiscal measures to prevent
the economy from slowing too quickly.
GDP in the USA rose for the ninth consecutive year in
2018, growing by 2.9% on the back of strong domestic
demand. Alongside increased household spending
encouraged by the tax reform, government-related
demand also increased considerably. Consumer
sentiment within private households was shored
up by a historically low unemployment rate of less
than 4% and rising wages. Corporate investments
and industrial production also grew robustly. Strong
economic growth combined with an inflation rate of
2.4% provided impetus for the Fed to raise interest
rates over the course of 2018.
Economic performance in the United Kingdom was
dominated by continuing uncertainty regarding the
terms of Brexit and hence the country's future relation-
ship with the EU. Despite a further slight decline in
the unemployment rate, private consumer sentiment
declined further. Similarly, the public sector had only
a limited degree of leverage to counter the overall
slowdown in market momentum. As a consequence,
economic growth in the reporting period slowed for
the fourth year in succession to stand at 1.3%. The
situation was exacerbated by the Bank of England
raising its benchmark interest rates in an attempt to
hold down price inflation.
The eurozone economy continued to grow. At around
1.9%, however, the increase was below the previous
year's rate. Key economies in the region remained
on growth course, with economic output up in
Germany (+1.5%), France (+1.6%), Italy (+1.0%) and
Spain (+2.5%). Increased investment activity, rising
exports and robust domestic demand from both
private consumers and the state contributed to the
positive economic development. Within this favoura-
ble environment, the unemployment rate continued to
fall and is now at its lowest level since 2008. As a result
of the related rise in inflation, the European Central
Bank (ECB) decided to phase out its securities purchase
programme by December 2018 and to reinvest only
principal repayments from maturing securities.
The global economy grew by 3.7% in 2018, similar to
the previous year. Despite political uncertainties, all
regions saw economic growth, albeit with varying
degrees of strength. While momentum slowed in
Europe and China, economic output in the USA grew
at a significantly faster pace than in 2017, thereby bol-
stering the growth of global gross domestic product.
General economic environment
SECTOR-SPECIFIC
ENVIRONMENT
GENERAL AND
✓ -8.1%
€9,815 million
2015
Group profit before tax
down moderately
Automobile and motorcycle deliveries
reach record levels
ON ECONOMIC
POSITION
REPORT
specific Environment
→ General and Sector-
Economic Position
Report on
Management
Report
Combined
40
Business performance impacted by
various factors
2016
2017
2018
Overall assessment of business performance
Despite challenging conditions and volatility on
international markets, the BMW Group can look
back on an overall positive business performance
in 2018. Despite some downward trends in figures
in the past financial year, the BMW Group's results
of operations, financial position and net assets are all
indicative of the enterprise's solid financial condition.
Overall, despite the various economic challenges,
business developed in line with management's
revised expectations. This assessment also takes into
account events after the end of the reporting period.
BY MANAGEMENT
OVERALL ASSESSMENT
In the UK, the market for pre-owned premium vehicles
was slightly down on previous years. North American
markets developed positively. So far, markets in Asia
have been largely unaffected by discussions about
types of engine.
In some European countries, in particular Germany
and to some extent in Southern Europe, diesel
engines were the subject of political debate in 2018.
In Germany, the first driving bans were imposed on
older diesel vehicles. Although markets for pre-owned
cars in the premium segment reacted across the board
with price decreases for diesels, only a small number
of the affected vehicles remain in the BMW Group's
portfolio. By contrast, prices for petrol vehicles in the
premium segment remained stable.
The pace of economic growth in Japan slowed during
2018, partly due to the numerous natural disasters.
With inflation well below the target rate of 2%, the
Japanese central bank decided to retain its highly
expansionary monetary policy.
The Chinese economy lost a certain amount of
momentum in 2018. Despite the trade dispute with
the USA, the People's Bank of China (PBOC) retained
its interest rate policy and left the benchmark interest
rate unchanged.
Despite the trade dispute with China, the US Federal
Reserve maintained its strategy of normalising mon-
etary policy during 2018. Over the course of the year,
it resolved on four occasions to raise the benchmark
interest rate, in each case by 0.25%, taking it to a
range of 2.25 -2.50%.
After a weak first six-month period, the UK economy
recorded stronger-than-expected growth during the
second half of 2018. In August, the Bank of England
(BOE) decided to raise key interest rates in view of solid
growth figures and to counter inflationary pressures.
The ECB's policy of monetary expansion remained
largely unchanged. The volume of bond purchases
was reduced from €30 billion to €15 billion in Octo-
ber 2018 and the purchase programme definitively
ended with effect from the end of the year.
International interest rate environment and
development of pre-owned vehicle prices
The global economy continued to grow robustly in
2018. With the exception of the Fed, major central
banks supported this development with their con-
tinued expansionary approach.
in 2018
Forecasts for 2018
with Actual Results
Comparison of
→ Overall Assessment
by Management
↑ ↑ ↑
Economic Position
→ General and Sector-
specific Environment
Report on
Report
Management
Combined
COMPARISON OF
FORECASTS FOR 2018
WITH ACTUAL RESULTS
IN 2018
The following section provides information on the key
financial and non-financial performance indicators
for the Group and its segments, which is used as the
basis for the internal management of the BMW Group.
As part of the analysis of operations and the financial
condition of the BMW Group, forecasts made the pre-
vious year for the financial year 2018 are compared
with the actual outcomes in 2018.
In an ad hoc announcement issued on 25 Septem-
ber 2018, the BMW Group reported on its decision to
revise its forecast for the financial year 2018 in light
of a new assessment. The main reasons given for the
revision are stated below:
45
45
As foreseen in the outlook for the financial year 2018,
there was a slight increase in the size of the workforce,
which was thus in line with expectations.
In the period under report, the size of the workforce
increased slightly by 3.7% to 134,682 employees (2017:
129,932 employees). Projects relating to vehicle elec-
trification and autonomous driving were the main
reason for the workforce increase. Operating growth
at segment level and the expansion of financial and
mobility services also contributed to the higher
headcount.
Workforce at year-end: slight increase
Group profit before tax fell moderately and was thus
in line with adjusted expectations, as revised in the
Quarterly Report to 30 September 2018.
have been
adjusted due to
the first-time
application of
IFRS 15, see
note 6 to the
Group Financial
At €9,815 million, Group profit before tax in 2018
was the second-best figure in the company's history
and moderately down on the previous year's record
*Prior year figures level (2017: €10,675* million; -8.1%). In the Annu-
al Report 2017 it was expected that profit before
tax would remain at the previous year's level. The
factors described above had a dampening effect on
the BMW Group's earnings performance during the
Statements. twelve-month period under report.
Profit before tax: moderate decrease
Group
44
The BMW Group remains fully committed to its goal
of spearheading the transformation of the industry. It
continues to strive for sustained high profitability as
the cornerstone of its Strategy NUMBER ONE > NEXT.
In addition to continuing the current product roll-
out, ongoing cost and efficiency measures will also
be intensified.
Group profit before tax is expected to show a
moderate year-on-year decrease (previously:
in line with the previous year).
The EBIT margin in the Automotive segment is
expected to be at least 7% (previously: 8 to
10%).
In the Automotive segment, revenues are fore-
cast to be slightly lower than the previous year
(previously: slight year-on-year increase).
Against this background, the BMW Group adjusted its
outlook for the financial year 2018 as follows:
markets.
In addition, continuing international trade con-
flicts were aggravating the market situation and
feeding uncertainty. These circumstances resulted
in greater-than-expected distortions in demand
and unexpected pressure on pricing in several
Increased goodwill and warranty measures re-
sulted in significantly higher additions to provi-
sions in the Automotive segment.
The BMW Group implemented the requirements
of the WLTP regulations at an early stage. How-
ever, the industry-wide shift to the new WLTP
test cycle resulted in significant supply distor-
tions on several European markets and unexpect-
edly intense competition. In line with its flexible
production and sales strategy, the BMW Group
responded to these circumstances by reducing
its volume planning with a clear focus on earn-
ings quality.
-
-
These circumstances had a significant impact on
Group profit before tax and the EBIT margin of the
Automotive segment both in the third quarter and in
the fourth quarter.
→ 18
43
Source: Working Group for the Iron and Metal Processing Industry.
2019
2018
2017
2016
2015
2014
100
100
600
Platinum
Palladium
1,200
Gold
1,800
600
1,200
1,800
Price in US Dollar
→ 21
Precious metals price trend
2019
Source: Reuters.
Energy and raw materials prices
Steel markets experienced some sharp price rises
during 2018, especially in the USA. The US Admin-
istration increased tariffs on steel by 25%, making
this particular raw material more expensive for the
domestic market. In addition, the price of coking coal
went up by around 10%. Moreover, both the USA and
the EU continued to apply protectionist measures on
steel products from various countries.
Prices for precious and non-ferrous metals fell mar-
kedly overall towards the end of 2018. Only palladium,
which is mainly used in petrol engines, saw a price
2019
2018
2017
2016
2015
2014
60
Motorcycle markets in the 250 cc plus class generally
performed well during 2018. The number of new
registrations worldwide increased 3.1 % year-on-year.
European markets in particular developed well, grow-
ing at an overall rate of 7.4%. Germany registered
growth of 8.6%. Increases in new registrations were
also recorded in Italy (+6.3%) and Spain (+16.3%).
The French motorcycle market was 6.0% up on the
previous year. The US market continued to perform
weakly and contracted by 4.5%.
International motorcycle markets
Vehicle registrations in major emerging markets rose
for the second year in succession in 2018. Russia
recorded growth of 10.3% to 1.6 million units. New
registrations in Brazil went up by 12.1% (2.1 million
units).
33
Overall, European automobile markets finished at
the previous year's level (15.6 million units; 0.0%). A
look at individual markets, however, shows a mixed
picture for registrations. While Spain (1.3 million
units; +7.0%) and France (2.2 million units; +3.0%)
again saw year-on-year growth, new registrations were
down in Italy (1.9 million units; -3.3%) and Germany
(3.4 million units; -0.2%). The automobile market in
the UK continues to suffer from uncertainties related
to the progress of Brexit, with registrations down by
6.8% to 2.4 million units.
International automobile markets
........
100
140
Index: January 2014=100
→ 22
Steel price trend
On oil markets, concerns regarding a state bank-
ruptcy in Venezuela and the reintroduction of export
sanctions against Iran fuelled fears of a possible
under-supply. Overall, the average price per barrel
rose significantly from 54 US dollars to 72 US dollars
year-on-year. WTI, the benchmark for crude oil in the
USA, followed a similar trend, with an average price of
around 65 US dollars per barrel for the year as a whole.
Prices for lithium and cobalt, which are used as raw
materials in batteries, were highly volatile during 2018.
Whereas multi-year highs were still being recorded in
the first half of the year, prices fell sharply during the
second six-month period.
increase.
The upward trend of the previous years on inter-
national automotive markets failed to continue in
2018, with registration figures for passenger cars and
light commercial vehicles falling worldwide by 2.2%
to 85.8 million vehicles. New registration figures
fell for the first time in years in China (23.1 mil-
lion units; -6.3%) and were flat in both the USA
(17.3 million units; +0.3%) and Japan (5.1 million
units; +0.7%).
Value added Group*
Exchange rates compared to the euro
-
On the American continent, market conditions were
characterised by intense competition and fluctuations
in demand, in some cases on a high scale. Nevertheless,
the BMW Group increased deliveries in the region by
1.5% to 457,715 units (2017: 451,136 units). Business
in the USA remained at the previous year's level, with
355,993 units delivered (2017: 353,819 units; +0.6%).
BMW Group - key automobile markets 2018
→ 24
as a percentage of deliveries
Other 28.3
Japan 3.1
Italy 3.1
France 3.5
UK 9.6
25.7 China
14.2 USA
12.5 Germany
BMW Group deliveries of vehicles by region and market
→ 25
in 1,000 units
2018
2017
2016
2015
2014
Europe
thereof Germany
thereof UK
high level (2017: 1,101,760 units; -0.3%). Deliveries in
Germany increased by 4.9% to 310,441 units (2017:
295,805 units). In the UK, volumes fell slightly year-
on-year to 238,308 units (2017: 241,674 units; -1.4%),
not least due to the ongoing uncertainty about the
outcome of the Brexit negotiations.
In Europe, the BMW Group's sales performance
was dampened by various factors, including the
diesel debate in some countries. Nevertheless, with
deliveries of 1,098,523 units of its three brands, the
BMW Group came very close to the previous year's &
The BMW Group continued to grow its business in
Asia in 2018, recording a 3.3% increase in deliveries
of BMW, MINI and Rolls-Royce brand vehicles to a
total of 876,614* units (2017: 848,826* units). In China,
sales figures developed positively, mainly due to a
strong second half-year, rising to 640,803* units (2017:
595,020 units; +7.7%).
Asia and Americas slightly up, Europe at
previous year's level
%
moderate decrease
FINANCIAL SERVICES SEGMENT
Return on equity
slight decrease
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 459,581 units).
3 EU-28.
%
14.8 (-3.3%pts)
Americas
slight decrease
48
Combined
Management
Report
Report on
Economic Position
→ Review of Operations
→ Automotive Segment
REVIEW OF OPERATIONS
Automotive Segment
Deliveries rise to new record level
The BMW Group delivered 2,490,664* BMW, MINI and
Rolls-Royce brand vehicles worldwide in 2018, thereby
setting a new record for the eighth year in succession
(2017: 2,463,526* units; +1.1%), comprising 2,125,026*
BMW (2017: 2,088,283* units; +1.8%), 361,531 MINI
(2017: 371,881 units; -2.8%) and 4,107 Rolls-Royce
(2017: 3,362 units; +22.2%) brand vehicles.
47
year's level
= earnings amount
(cost of capital rate x
capital employed)
1,092.2
747.3
685.8
658.4
thereof China*
640.8
595.0
516.8
464.1
456.7
Other markets
57.9
61.8
67.7
65.4
62.7
Total*
2,490.7
2,463.5
2,367.6
2,247.5
2,118.0
848.8
876.6
Asia*
397.0
1,000.4
914.6
310.4
295.8
298.9
286.1
272.3
238.3
241.7
252.2
1,101.8
231.0
457.7
451.1
460.4
495.9
482.3
thereof USA
356.0
353.8
366.5
405.7
205.1
28.4 (-5.6%pts)
1,098.5
slight increase
joint venture
BMW Brilliance
Automotive Ltd.,
Shenyang
(2018: 459,581
units, 2017:
384,124 units).
2 EU-28.
In the Quarterly Report to 30 September 2018, the
original forecast for segment revenues was revised
from a slight increase to a slight decrease. Thanks
to the slightly higher number of vehicles delivered,
actual revenues were in line with the previous year's
level and therefore exceeded the most recent forecast.
Going forward, the BMW Group intends to place
greater emphasis on the quality of earnings in its
management of the business. Given that the EBIT
margin already takes account of revenues, segment
revenues will no longer be reported as one of the key
performance indicators going forward.
EBIT margin: at least 7%
The EBIT margin (profit before financial result divided
by revenues) came in at 7.2% (2017: 9.23%; −2.0 per-
centage points). As forecast in the Quarterly Report
to 30 September 2018, the EBIT margin exceeded 7%
and was therefore in line with revised expectations. In
the Annual Report 2017 an EBIT margin in the range
of 8 to 10% was originally expected.
Return on capital employed: significant decrease
The Automobile segment's RoCE in 2018 fell to 49.8%
(2017: 77.73%; -27.9 percentage points), mainly
reflecting earnings developments. The main reasons
for the decrease were higher investments in the
electrification of the BMW Group's vehicle fleet,
digitalisation and the expansion and rejuvenation of
the model portfolio as well as the expansion of the
production network. However, the long-term target
ROCE for the Automotive segment was well above the
minimum target of 26%.
As foreseen in the outlook for the financial
year
2018, the RoCE decreased significantly, in line with
expectations.
Motorcycles segment
Deliveries to customers: in line with previous year's level
In 2018, deliveries of motorcycles reached a new record
level of 165,566 units (2017: 164,153 units; +0.9%).
In the Quarterly Report to 31 March 2018, a slight
increase was forecast for the full twelve-month period.
Due to the limited availability of products in conjunc-
tion with various model changes, deliveries in 2018
were only in line with the previous year's level. The
original forecast in the Annual Report 2017 expected
a solid increase in deliveries of motorcycles.
EBIT margin in target range of between 8 and 10%
The EBIT margin in the Motorcycles segment (profit
before financial result divided by revenues) came in
at 8.1% (2017: 9.11%; -1.0 percentage points). As
foreseen for the financial year 2018, the EBIT margin
was within the target range of between 8 and 10% and
therefore in line with expectations.
Return on capital employed: moderate decrease
The return on capital employed (RoCE) for the Motor-
cycles segment in 2018 was 28.4%, moderately down ¬
on the previous year's level (2017: 34.01%; -5.6 per-
centage points). In the original forecast in the Annual
Report 2017, a slight increase was expected. The most
recent forecast in the Quarterly Report to 30 Septem-
ber 2018 still assumed that ROCE would be in line with
the previous year's level. The shortfall was attributable
to the ramp-up situation in the segment due to various
model changes. The long-term target RoCE of 26% for
the Motorcycles segment was surpassed.
Financial Services segment
Return on equity slightly below previous year's level
As expected in the Annual Report 2017, the return on
equity generated by the Financial Services segment in
2018 was slightly lower than one year earlier at 14.8%
(2017: 18.1%; -3.3 percentage points). The decrease
was due to more stringent regulatory requirements for
equity capital. Nevertheless, the internal RoE target
of at least 14% was achieved.
The key performance indicators of the BMW Group
and its segments can be summarised as below.
BMW Group comparison of 2018 forecasts with actual outcomes 2018
→ 23
GROUP
Profit before tax
Fleet carbon dioxide (CO2) emissions²:
in line with previous year's level
Workforce at year-end
As foreseen in the outlook for the financial
year 2018,
Automotive segment deliveries increased slightly and
were therefore in line with expectations.
In 2018, the BMW Group delivered a record num-
ber of vehicles to customers for the eighth year in
succession. Despite significant ongoing political
and economic uncertainties due to trade disputes,
regulatory requirements and the unclear outcome of
the Brexit negotiations, deliveries of BMW, MINI and
Rolls-Royce brand vehicles worldwide increased slight-
ly by 1.1% to 2,490,664¹ units (2017: 2,463,526¹ units). 'Including the
Favourable market conditions in Asia had a positive
impact on automobile deliveries. In Europe, volume
figures matched the previous year's high level despite
fewer deliveries in the UK and Italy. In the Americas
region, the BMW Group recorded a slight increase in
the number of deliveries.
Q1: in line with last
-
earnings amount
cost of capital
=
Value added
Group
return on sales and value added. Value added, as
a highly aggregated performance indicator, also
provides an insight into capital efficiency and the
(opportunity) cost of capital required to generate
Group profit. A positive value added means that
a company is generating more value than the cost
of capital.
The information provided by these two key perfor-
mance indicators is further complemented by pre-tax
Strategic management and quantification of financial
implications for long-term corporate planning are
performed primarily at Group level. The key perfor-
mance indicators are Group profit before tax and the
size of the Group's workforce at the year-end. Group
profit before tax provides a comprehensive measure
of the Group's overall performance after consolida-
tion effects and a transparent basis for comparing
performance, particularly over time. The size of the
Group's workforce is monitored as an additional key
non-financial performance indicator.
Strategic management at Group level
Management
Report
Report on
Economic Position
→ Comparison of
Forecasts for 2018
with Actual Results
in 2018
Automotive segment
Deliveries to customers: slight increase
have been
adjusted due to
Revenues: in line with previous year's level
At €85,846 million, segment revenues were in line
3 Prior year figures with the previous year's level (2017: €85,742³ million;
+0.1%), whereby the translation of foreign currencies
the first-time
had a negative impact, particularly in the first quarter.
application of
IFRS 15, see The various adverse factors described above also held
down revenues.
note 6 to the
Group Financial
Statements.
Deliveries of the core BMW brand in 2018 totalled
2,125,026¹ units (2017: 2,088,283¹ units; +1.8%),
thereby setting a new volume record. MINI remained
slightly below the previous year's record figure and,
with 361,531 units, achieved its second highest num-
ber of deliveries to date (2017: 371,881 units; -2.8%).
Rolls-Royce Motor Cars achieved a new record level
of 4,107 units (2017: 3,362 units; +22.2%).
AUTOMOTIVE SEGMENT
CO2 emissions from fleet vehicles delivered in Europe
in 2018 amounted to 128 g CO2/km (adjusted value
for 2017: 128 g CO2/km; 0.0%) and were therefore in
line with the previous year. This was achieved despite
a further decline in the share of diesel vehicles and
also thanks to the significant growth in deliveries of
electrified models. The original forecast had foreseen
a slight decrease.
Fleet emissions³
9,815(-8.1%)
moderate decrease
134,682 (+3.7%)
slight increase
128 (0.0%)
in line with last
year's level
85,846 (+0.1%)
in line with last
year's level
7.2 (-2.0%pts)
between 8 and 10
significant decrease
Q3: at least 7
%
in 2018
%
solid increase
Q1: slight increase
units
165,566 (+0.9%)
in line with last
year's level
between 8 and 10
%
Deliveries to customers²
8.1 (-1.0%pts)
49.8 (-27.9%pts)
significant decrease
Actual outcome
2,490,664 (+1.1%)
slight increase
€ million
Revenues
EBIT margin
Return on capital employed
MOTORCYCLES SEGMENT
Deliveries to customers
EBIT margin
Return on capital employed
Forecast for 2018
in 2017 Annual Report
during the year
in line with last year's level
Forecast revision
€ million
slight increase
slight increase
slight decrease
units
g CO2/km
Q3: moderate decrease
slight increase
Q3: slight decrease
Asia/Pacific 8.7
Slight growth in fleet business
*EU Bank comprises BMW Bank GmbH, its branches in Italy, Spain and Portugal, and its
subsidiary in France.
Growth in insurance brokerage business
With an increase of 3.2% in 2018, the number of
newly brokered insurance contracts grew to 1,381,093
contracts (2017: 1,337,652 contracts). At 31 Decem-
ber 2018, the total number of brokered insurance
contracts stood at 3,906,550 (2017: 3,649,362 con-
tracts; + 7.0%).
26.7 Americas
The BMW Group is one of Europe's foremost leasing
and full-service providers. The Financial Services
segment's fleet management business, under the
brand name Alphabet, offers leasing and financing
arrangements as well as specific services to com-
mercial customers. The number of fleet contracts
rose by 3.0% during the financial year 2018. At
31 December 2018, the segment was thus managing
a portfolio of 700,080 fleet contracts (2017: 679,895
contracts).
32.8 Europe/
Middle East/Africa
China 10.7
EU Bank✶ 21.1
Deposit business volume up on previous year
Customer deposits represent an important source of
refinancing for the Financial Services segment. The
volume of deposits stood at €14,359 million at the end
of the reporting period, representing a solid increase
over one year earlier (2017: €13,572 million; +5.8%).
55
→ Research and
99
56
Combined
Management
Report
Report on
Economic Position
Review of Operations
→Financial Services
Segment
in % per region
Development
Risk profile
55
Solid year-on-year growth in dealership financing
The total volume of dealership financing continued
to grow during the financial year 2018, standing at
€20,438 million at the end of the reporting period
(2017: €19,161 million; +6.7%).
22.3
Decrease in multi-brand financing
41.7
Despite ongoing political and economic uncertainties,
such as the diesel debate in European countries con-
cerning higher levels of emissions from diesel vehicles
as well as Brexit and trade conflicts, the risk profile
across the Financial Services segment's total portfolio
remained stable at a low level.
46.8
21.2
22.1
20.8
30
Leasing 20.9
27.3
Financing 20.8
24.2
26.0
28.8
0
2014
2015
2016
2017
2018
*Until 2015 excluding Rolls-Royce.
The total portfolio of financing and leasing contracts
with retail customers developed positively again in
2018, with a solid increase of 6.3% year-on-year. In
total, 5,235,207 contracts were in place with retail
customers at 31 December 2018 (2017: 4,926,228
contracts) in the Financial Services segment. The
China region recorded the fastest growth rate of all
regions, significantly growing its contract portfolio by
25.6% year-on-year. The Europe/Middle East/Africa
region (+7.0%), the EU Bank* region (+6.2%) and
the Americas region (+2.2%) also registered solid
or slight year-on-year growth respectively, whereas
the Asia/Pacific region saw a slight decrease in its
contract portfolio (−2.5%).
Contract portfolio retail customer financing
of Financial Services segment 2018
→ 35
Multi-brand financing in the Financial Services seg-
ment registered a significant drop (-13.5%) in new
business in 2018, with the number of new contracts
falling to 136,283 contracts (2017: 157,626 contracts).
The total portfolio comprised 401,007 contracts at
31 December 2018, slightly lower than one year earlier
(2017: 406,813 contracts; -1.4%). The reason for the
decline was a stronger focus on the Group's own
brands within this line of business.
0.25
38.0
Germany
→ 36
Economic Position
Review of Operations
→ Purchasing and
Supplier Network
→Sales and Marketing
Purchasing and Supplier Network
Ensuring access to resources in a
volatile environment
With its globally oriented organisation, the Purchasing
and Supplier Network ensures access to all necessary
external resources in an environment that remains
highly volatile. Activities include the procurement
and quality assurance of production materials, raw
materials, capital goods and services as well as the
manufacturing of vehicle components produced
in-house. External suppliers are selected systematically
according to the criteria of quality, innovation, flexibil-
ity and cost. In 2018, procurement activities focused
on components for the fast-growing percentage of
electrified vehicles.
Connecting procurement markets
The BMW Group remains committed to its strategy of
maintaining a regional balance with regard to growth
in delivery, production and purchasing volumes. The
strategy makes an important contribution to natural
hedging against currency fluctuations. The global
distribution of purchasing volumes for production
materials and raw materials is closely linked to pro-
duction volumes in the BMW Group's global plant
network. Global distribution remained largely stable
in the financial year 2018.
Global trade policy influences purchasing
Report on
Global trade policy is increasingly influencing the
BMW Group's purchasing activities as well as its
globally interlinked supply chains. With its pur-
chasing strategy, the Group is pursuing the goal of
increasing its own competitiveness and at the same
time contributing towards cutting customs costs. This
is achieved, for example, through localisation in free
trade areas with minimum requirements in terms
of local value creation and through the intelligent
controlling of material flows within a global network.
The BMW Group's purchasing function also works
to ensure the greatest possible flexibility to allow for
short-term changes in trade policy.
→ 37
in %, basis: production material
Asia 6.5
14.9
North America
Rest of Western
Europe 17.0
1.2 Other
22.4 Eastern Europe
46.3
196,455
Regional mix of BMW Group
purchase volumes 2018
Combined
Management
Report
58
Furthermore, in May 2018 the BMW Group became
the first international automotive manufacturer to
obtain a test licence for autonomous driving within
China. Level 4 functions (fully automated driving) are
being trialled by a test fleet comprising the latest mod-
els of the current BMW 7 Series on approximately six
kilometres of designated test routes in the Chinese city
of Shanghai. The development team, which is made
up of more than 60 experts, is currently collecting data
that reflect urban traffic in all its complexity. These
data will serve as the basis for developing machine
learning algorithms capable of depicting highly auto-
mated driving strategies.
in %
0.5
15
0.50
!!!!!
2014
2015
2016
2017
2018
The risk profile of the segment's credit financing port-
folio also remained stable at a low level. The credit
loss ratio on the total credit portfolio amounted to
0.25% at 31 December 2018, and therefore below the
previous year's level (2017: 0.34%).
Proceeds generated from the sale of BMW and MINI
brand vehicles again rose slightly in the financial year
2018 due to volume and mix effects. Market values sta-
bilised in North America. By contrast, the European
pre-owned vehicle market experienced a downward
trend, in line with expectations, mainly in the wake
of the diesel engine debate.
Further information on the risk situation is provided
in the section Risks and Opportunities.
57
52
Research and Development
→ www.bmwgroup.com/innovation
In 2018 the research and development division at the
BMW Group faced a series of challenges, which were
successfully met. Firstly, as part of the model offensive,
the Company developed new vehicles and vehicle
concepts. Secondly, it played a key role in advancing
the technologies that will drive tomorrow's world,
such as autonomous driving, battery research and
electric mobility as well as software development
and connectivity. Moreover, the transition to the new
WLTP testing cycle was successfully completed during
the course of the year.
Autonomous Driving Campus working at full speed
In May 2018, the BMW Group celebrated the official
opening of its Autonomous Driving Campus in Unter-
schleißheim near Munich. On 23,000 square metres
of office space, the BMW Group is rapidly developing
state-of-the-art driver assistance systems as well as
highly and fully automated driving technology. The
campus has created many new jobs, particularly for
IT specialists and software developers in the fields
of artificial intelligence, machine learning and data
analysis.
At the end of 2018, around 1,300 experts from the
BMW Group as well as from external partners such as
Fiat Chrysler Automobiles, Intel and Mobileye were
already working in Unterschleißheim. On campus,
the associates actively practise an open, agile way of
working (Large Scale Scrum - LeSS), enabling the
teams to tackle the high complexity of their tasks more
quickly and with greater efficiency. This approach
enables the BMW Group to focus keenly on developing
new key technologies such as artificial intelligence
and driving simulation.
Driver assistance and autonomous driving continue to
play key roles in the BMW Group's forward-oriented
strategy. During the year under report, a total of
80 vehicles were deployed to test the new technolo-
gies on highways and in urban environments across
Europe, the USA and China.
Substantial expansion of R&D activities in China
As part of its corporate strategy, the BMW Group
took a number of decisive steps in 2018 in the field of
research and development to secure the future of the
enterprise as a whole. China is playing an increasingly
significant role for the BMW Group as a driver of
innovation and future mobility.
Following the R&D centre in Shenyang, the BMW Group
opened a new location in Beijing in May 2018, where
topics such as requirements management, testing and
validation as well as the development of systems and
services are now handled. In June, the BMW Group
added a third location - Shanghai - to its Chinese
R&D network. The R&D centre in Shanghai will focus
on autonomous driving, digital services and futuristic
design and expand existing collaboration arrangements
with leading high-tech companies. The R&D team
comprises over 200 technical specialists and design-
ers. The two new locations are intended to bolster the
BMW Group's local innovative strength in China.
Development of credit loss ratio
50.0
157,799
60
56,037
64,311
-12.9
2.6
BMW 8 Series
923
BMW X1
286,827
286,743
BMW 7 Series
0.0
BMW X2
67,576
3.2
BMW X3
201,637
146,395
37.7
9.5
BMW X4
13.5
45,950
1.3
26,606
BMW 2 Series
152,215
181,113
-16.0
7.2
BMW 3 Series
366,475
409,005
-10.4
11,052
17.2
109,887
133,104
-17.4
5.2
BMW 5 Series
382,753
10.2
18.0
BMW 6 Series
BMW 4 Series
9.4
52,167
2.2
Economic Position
Review of Operations
→ Automotive Segment
MINI achieves second-best year
2018 was the second-best year in MINI's history.
Worldwide deliveries totalled 361,531 units (2017:
371,881 units; -2.8%). Deliveries of the MINI Countryman 7
increased by almost one fifth to 99,750 units (2017:
84,888 units; +17.5%). The MINI Hatch (3- and 5-door)
achieved a volume of 182,189 units (2017: 194,070
units; -6.1%).
Deliveries of MINI vehicles by model variant
→ 27
in units
MINI Hatch (3- and 5-door)
Report on
MINI Convertible
MINI Countryman
MINI total
Proportion of
MINI sales volume
2018
2017
Change in %
2018 in %
182,189
MINI Clubman
-11.9
Combined
Management
Report
*Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 459,581 units, 2017: 384,124 units).
BMW X5
155,575
180,905
-14.0
7.3
BMW X6
35,040
40,531
-13.5
50
1.6
37,545
33,676
11.5
1.8
BMW total
2,125,026
2,088,283
1.8
100.0
BMW i
194,070
-1.0
199,980
299,939
269,309
11.4
11.8
191,888
127,440
50.6
7.6
211,660
308
168,969
8.3
63
64,431
50,272
28.2
2.5
42,660
38,064
12.1
25.3
1.7
0.2
3,308
-19.7
6.2
50,224
53,105
-5.4
2.0
15,612
21,084
-26.0
31.6
0.6
10,956
8,952
22.4
0.4
7,752
12,768
-39.3
0.3
4,353
06
201,968
2,541,534
1.4
German plants play leading role within network
Overall, the Group's German manufacturing plants
in Munich, Dingolfing, Regensburg and Leipzig again
produced over one million vehicles in 2018.
At the same time, important innovations are being
further developed and tested at these plants. Moreover,
they are playing a key role in integrating e-mobility
throughout the BMW Group's production network.
In 2018 alone, more than €1 billion were invested in
the Group's German production sites for continu-
ous modernisation projects and to prepare them for
electric mobility.
The technologies used in making electric drivetrain
components and batteries are developed at the proto-
type construction centre in Munich. The Dingolfing
and Landshut plants play a leading role as centres of
competence for the production of electric drivetrain
systems. Electric motors for the BMW Group's elec-
trified vehicles are also produced at these plants. The
batteries required are produced at the three battery
factories in Dingolfing (Germany), Spartanburg (USA)
and Shenyang (China). In Thailand, the BMW Group
works closely with a partner that manufactures bat-
teries for electrified vehicles produced locally.
The ability to produce electric drivetrain systems,
batteries and prototypes for battery cells in-house
gives the BMW Group a decisive competitive edge
that enables it to secure valuable knowledge of new
technologies, gain important system expertise and
leverage cost advantages.
In the future, the Group intends to concentrate its
battery cell expertise in an in-house competence cen-
tre. The aim is to continue developing the technology
and to fully analyse and understand the value-added
processes of the battery cell. The competence centre
is due to be opened in 2019.
49.6
BMW* deliveries rise to new record level
In 2018, BMW brand deliveries rose to 2,125,026 units
(2017: 2,088,283; +1.8%), reaching a new record high
for the eighth year in succession. The BMW 5 Series,
the BMW 6 Series and the X Family all made
major contributions to this result. Moreover, the
fleet of electrified vehicles is continually gaining
in significance.
At 199,980 units, deliveries of the BMW 1 Series
were almost at their previous year's level (2017:
201,968 units; -1.0%). Now nearing the end of its
model life cycle, deliveries of the BMW 3 Series were
down on the previous year, in line with expectations
(366,475 units; 2017: 409,005 units; -10.4%). The new
BMW 3 Series Sedan celebrated its world première
in autumn 2018, amid great acclaim from customers
and media alike. Deliveries of the BMW 5 Series 7
→ Automotive Segment
→ Motorcycles
Segment
rose significantly by 10.2% to 382,753 units (2017:
347,313 units). The BMW 6 Series benefited from the
new Gran Turismo model and achieved a volume of
26,606 units worldwide (2017: 11,052 units).
49
Deliveries of BMW vehicles by model variant*
→ 26
in units
2018
2017
Change in %
Proportion of
BMW sales volume
2018 in %
BMW 1 Series
The BMW X family again enjoyed high demand
in 2018. Worldwide deliveries of 792,605 X units
represented a significant 12.1% increase year-on-
year (2017: 706,741 units). The BMW X3 made an
important contribution to this performance, with
deliveries up by more than one third to 201,637 units
(2017: 146,395 units; +37.7%). Now coming to the
end of its life cycle, BMW X5 deliveries fell short
of the previous year, in line with expectations
(155,575 units; 2017: 180,905 units; -14.0%). The
successor to the X5 has been available since Novem-
ber 2018 and will generate additional impetus from
2019 onwards.
2,505,741
Review of Operations
Report on
100.0
Goodwood
San Luis Potosí²
Tiexi (BBA)³
Dadong (BBA)³
Born (VDL Nedcar)4
Graz (Magna Steyr)4
Partner plants
Group
Economic Position
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2018: 491,872 units, 2017: 396,749 units).
3 Joint Venture BMW Brilliance Automotive Ltd., Shenyang.
4 Contract production.
The BMW Group's production system is based on
the Strategy NUMBER ONE > NEXT and is ideally
prepared for the future. The system is characterised
by unique flexibility, outstanding efficiency and
robust processes, enabling the BMW Group to
respond rapidly to changing market situations
and fluctuations in regional demand. This level of
manufacturing expertise gives the Group a crucial
competitive edge and makes a key contribution to
its overall profitability.
Its production network leverages innovative technolo-
gies from the fields of digitalisation and Industry 4.0,
standardised modules and intelligent mixed manu-
facturing methods. The production system ensures
consistent premium quality and enables a high level
of customisation for customers. MINI buyers, for
example, can optionally design selected components
to suit their individual tastes.
To ensure full capacity utilisation of its production
network in the long term and to be capable of
responding rapidly and flexibly to changing customer
requirements, the BMW Group pursues the strategy of
integrating the production of all-electric and plug-in
hybrid vehicles in its existing manufacturing system.
In 2018, the Group produced electrified vehicles at
ten different locations worldwide. In the future, every
BMW Group production plant in Europe will also
manufacture electrified vehicles.
52
52
Combined
Management
Report
2 2018 only pre-series production, plant opens in 2019.
-6.1
347,313
32,356
solidated entity.
Financial Services
only includes
automobile mar-
kets in which the
The proportion of new BMW Group vehicles either
leased or financed by the Financial Services segment
in the financial year 2018 amounted to 50.0%, 3.2 per-
*The calculation centage points up on the previous year (2017: 46.8%)*,
mainly due to growth in credit financing in China.
Credit financing and leasing business with retail
customers remain key elements in the success of the
Financial Services segment. During the period under
report, 1,908,640 new credit financing and leasing
contracts were concluded with customers, slightly
up (+4.4%) on the previous year (2017: 1,828,604
contracts). A slight increase in new contracts was
recorded for both credit financing (+4.3%) and leasing
business (+4.5%). Overall, leasing accounted for 33.1%
and credit financing for 66.9% of new business.
Slight growth in new business
3,000
4,360
4,719
5,381
5,115
5,708
6,000
in 1,000 units
→ 33
Contract portfolio of
Financial Services segment
Continued growth for Financial Services
As in the previous year, the Financial Services segment
continued to perform very well within a highly com-
petitive market environment and therefore remained
firmly on growth course. In balance sheet terms, busi-
ness volume grew by 6.8% to stand at €133,210 mil-
lion (2017: €124,719 million). The contract portfolio
under management at 31 December 2018 comprised
5,708,032 contracts and therefore grew solidly by 6.1%
year-on-year (2017: 5,380,785 contracts).
Financial Services Segment
Segment
segment is repre- In the pre-owned financing and leasing business
sented by a con- for BMW and MINI, the segment recorded a slight
increase in the number of new contracts signed in the
period under report, up by 2.2% to 396,610 contracts
(2017: 387,937 contracts).
The total volume of new credit financing and leasing
contracts concluded with retail customers during
the twelve-month period under report amounted to
€55,817 million, slightly higher than one year earlier
(2017: €55,049 million; +1.4%) and despite negative
exchange rate effects.
2014
223,817
371,316
-3.9
14.0
328,862
376,580
-12.7
12.9
319,592
338,259
Review of Operations
→Financial Services
-5.5
244,248
246,043
-0.7
9.6
234,501
2018
2017
2016
2015
12.7
356,749
Economic Position
Combined
Management
Report
145.0
164.2 165.6
90
180
in 1,000 units
50.4
→ 31
BMW Group deliveries of motorcycles
Effect of model change felt particularly in Europe
The model change in the mid-class segment had a
particularly significant impact on the European mar-
ket, causing motorcycle deliveries to fall slightly by
3.3% to 98,144 units in 2018 (2017: 101,524 units). At
23,824 units, deliveries to customers in Germany were
down year-on-year (2017: 26,664 units; -10.7%).
Italy saw a slight decrease, with deliveries falling to
14,110 units (2017: 14,430 units; -2.2%). By contrast,
volumes remained similar to the previous year's level
in Spain (11,124 units; 2017: 11,193 units; −0.6%)
and France (16,615 units; 2017: 16,607 units; 0.0%).
In the USA, BMW Motorrad reported a slight increase
of 2.2% to 13,842 units despite difficult market con-
ditions (2017: 13,546 units).
Deliveries of motorcycles reached a new record level
of 165,566 units in 2018 (2017: 164,153 units; +0.9%),
marking the eighth successive year of growth.
Motorcycle deliveries increase
Motorcycles Segment
The engine manufacturing plants in Munich, Hams
Hall (UK), Steyr (Austria) and Shenyang (China) sup-
ply both diesel and petrol engines for the production
network. The BMW Group's largest engine plant in
Steyr also serves as the development centre for diesel
engines worldwide. In Steyr, more than 700 techni-
cians and engineers are working on making the drive-
trains of the future generate even fewer emissions and
operate more efficiently and powerfully with the help
of state-of-the-art testing and measuring technology.
Worldwide network for conventional drivetrain
production
4.8
9.2
International production network
By expanding its international production network,
the BMW Group follows global market developments
with the aim of ensuring a balanced distribution of
added value. In 2018, the Group announced the
construction of a new plant in Hungary in order to
increase capacity in its global production network in
the long term.
In 2018, the Group's largest plant in Spartanburg
(USA) began producing the first BMW X7 and the
new BMW X4 and BMW X5 models. The plant, which
specialises in the BMW X Series ranging from the X3
to the X7, produces a total of five different models for
the world market.
60
137.0
123.5
2014
54
53
UK 5.5
6.7 Spain
8.4 USA
8.5 Italy
Other 46.5
10.0 France
14.4 Germany
Report on
BMW Motorrad presented a total of eight new models
at the international motorcycle trade shows in Cologne
(INTERMOT) and Milan (EICMA), comprising the
R 1250 GS, R 1250 GS Adventure, R 1250 RT, R 1250 R,
R 1250 RS, C 400 GT, F 850 GS Adv. and S 1000 RR. In
the case of the third generation of the S 1000 RR, BMW
Motorrad's customers can now select a BMW M package
for the first time. The R 1250 models are also equipped
with new engines that generate more power, especially
at lower speeds, and help improve energy efficiency.
A total of 162,687 motorcycles rolled off BMW Motor-
rad's production lines at five locations during the year
under report (2017: 185,682 units; -12.4%). Since
July 2018, BMW Motorrad scooters have also been
manufactured by BMW Motorrad's partner Loncin
Motor Co., Ltd in Chongqing, China.
Motorcycle production down year-on-year due to
model changes
as a percentage of sales volume
→ 32
BMW Group - key motorcycle markets 2018
2018
2017
2016
2015
Eight new models introduced
555
51
Proportion of
production in %
Phantom*
830
235
Ghost
958
1,098
-12.8
Wraith/Dawn
1,775
2,029
-12.5
Cullinan*
544
Rolls-Royce total
4,107
3,362
22.2
Delivery target of 140,000 electrified automobiles
achieved
The BMW Group succeeded in reaching its target of
delivering more than 140,000 electrified vehicles in
the financial year 2018, underlining its leading posi-
tion worldwide in terms of combined deliveries of
all-electric and plug-in hybrid vehicles and as market
leader in Europe.
Change in %
2017
2018
in units
33,351
-3.0
8.9
47,236
59,572
-20.7
13.1
99,750
84,888
With a total of 142,617 units, deliveries of BMW Group
electrified vehicles rose by more than a third in 2018
(2017: 103,080 units; +38.4%). Deliveries of BMWi
and BMW plug-in hybrid models increased by one
third to 129,398 units in the year under report (2017:
97,281 units; +33.0%). With a total of 91,853 units,
BMW plug-in hybrids made an important contribu-
tion to this performance (2017: 63,605 units; +44.4%).
Deliveries of the electrified MINI Countryman*, avail-
able since June 2017, totalled 13,219 units during the
year under report (2017: 5,799 units).
17.5
361,531
371,881
-2.8
100.0
Rolls-Royce with record deliveries
year
In 2018, Rolls-Royce Motor Cars marked its best
in over 100 years of corporate history with 4,107 deliv-
eries worldwide (2017: 3,362 units; +22.2%). The
Rolls-Royce Phantom* (830 units; 2017: 235 units)
and the new Rolls-Royce Cullinan* (544 units), the
latter of which has been available to customers since
November 2018, contributed substantially to this
performance.
Deliveries of Rolls-Royce vehicles
by model variant
→ 28
27.6
Deliveries of electrified models
→ 29
in units
2018
Due to the high global demand for these models,
the plants in Dadong (China) and Rosslyn (South
Africa) have also been producing the BMW X3 since
2018. Previously, the Rosslyn plant had produced the
BMW 3 Series for over 35 years. The new BMW Group
plant in San Luis Potosí (Mexico) will take over these
capacities going forward. The first BMW 3 Series
Sedans have already been successfully produced there
as pre-series models. The plant in Mexico is due to be
officially opened in mid-2019.
in units
Spartanburg
Dingolfing
Regensburg
Leipzig
Oxford
Munich
→ 30
in %
BMW Group new vehicles financed or
leased by Financial Services segment*
Rosslyn
Rayong
Chennai
Araquari
2018
2017
Change in %
→ 34
Vehicle production of the BMW Group by plant
(2017: 2,123,947¹ units; +2.1%), 368,685 MINI (2017:
378,486 units; -2.6%) and 4,353 Rolls-Royce brand
vehicles (2017: 3,308 units; +31.6%).
Production reaches new all-time high
2017
Change in %
BMW i
37,545
33,676
11.5
BMW iPerformance
91,853
63,605
44.4
A new production volume record of 2,541,534¹ units
(2017: 2,505,741¹ units; +1.4%) was set during the
year under report, comprising 2,168,496¹ BMW 7
In 2018, the BMW Group celebrated the 15th anniver-
sary of the successful BMW Brilliance Automotive
(BBA) joint venture in Shenyang (China). A total of six
BMW models are manufactured at the two BBA plants
in Dadong and Tiexi. The BMW X2 will become the
seventh model in 2019.
MINI Electric
13,219
5,799
Total
142,617
103,080
38.4
*Fuel consumption and CO2 emissions information are available on page 108.
-28.8
-2,000
7,240
8,675
Due to currency effects, BMW Group revenues
remained at a similar level to the previous year.
Adjusted for currency factors, revenues grew slightly
on the back of higher delivery volumes and a good
financing portfolio performance. The positive impact
of volume growth was held down by intense compe-
tition on the markets. The unexpectedly high level
of competition was due in particular to the reaction of
competitors to the early implementation of WLTP
regulations. Trade conflicts and uncertainties also
exacerbated the situation and had an unfavourable
impact on selling prices.
Loss from discontinued operations
2018
Europe
Asia
in %
→ 43
BMW Group revenues by region
Group revenues by region were as follows:
2017*
-2,575
Economic Position
Report on
Combined
Management
Report
66
99
65
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
46.1
46.0
30.9
20.0
20.9
-0.9
8.1
9.1
-1.0
Group
3.0
2.8
Other regions
7
20.8
20.2
Americas
30.2
69
positive effect of the growth in vehicle deliveries. The
currency impact was mainly attributable to changes in
the exchange rates of the US dollar, Chinese renminbi,
Russian rouble and Australian dollar against the euro.
The net amount reported for other operating income
and expenses had a positive effect. Profit before tax
for the year ended 31 December 2018 was moderately
down on the previous year.
Gross profit for the twelve-month period under report
fell moderately year-on-year. A combination of higher
research and development expenses, intense com-
petition and currency effects more than offset the
The BMW Group had a worldwide workforce of
134,682 employees at the end of the reporting period
(31 December 2017: 129,932 employees).
2018
in %
-17.2
13.09
10.84
-17.2
13.07
10.82
Earnings per share of preferred stock in €
Earnings per share of common stock in €
-16.9
8,675
7,207
Net profit
-33
2017*
-16.5
Change in %pts
10.1
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
7.5
18.7
26.2
Effective tax rate
-1.3
20.3
19.0
Gross margin
-1.4
8.8
7.4
Post-tax return on sales
-0.8
10.9
Pre-tax return on sales
Profit from continuing operations
-9,558
-8.1
The BMW Group again achieved top rankings in
prestigious sustainability ratings in 2018, thereby
underlining its leading position as a sustainable
enterprise. In the Dow Jones Sustainability Indices
(DJSI) rating, the BMW Group is the only German
automobile maker to have been included once again
in the two indices "World" and "Europe" and has
been continuously represented since the indices were
established in 1999. In the CDP rating (formerly the
Carbon Disclosure Project), the Group achieved the
category "Leadership" with a rating of A- in the year
under report. Furthermore, the Group was again listed
in the British FTSE4Good Index in 2018.
Fleet CO2 emissions at previous year's level
The development of sustainable products and services
is an integral part of the BMW Group's business model.
The fleet-wide deployment of Efficient Dynamics
technologies and electrification are contributing to a
continual reduction in CO2 emissions. The electrifica-
tion of the fleet continued to make progress in 2018.
Due to the expansion of the model range, deliveries
of electrified BMW Group vehicles in 2018 increased
significantly and, at 142,617 units, surpassed the pre-
viously announced target of 140,000 units. Efficient
Dynamics and electrification form the basis for future
compliance with statutory CO2 and fuel consumption
limits going forward. The BMW Group has reduced
the CO2 emissions of its newly sold vehicles in Europe
by approximately 42% between 1995 and 2018.
63
63
64
Combined
Management
Report
Report on
Top rankings in sustainability ratings
Economic Position
→ Sustainability
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
In 2018, the BMW Group's fleet of new vehicles sold
in Europe (EU-28) had an average fuel consumption of
4.9 litres of diesel and 6.0 litres of petrol per 100 km
respectively. CO2 emissions averaged 128 g/km
(adjusted value for 2017: 128 g/km). Despite a further
decline in the share of diesel vehicles, the figure was in
line with the previous year, also thanks to a significant
growth in deliveries of electrified models.
Clean production
In 2018, at 2.12 MWh per vehicle produced, the
BMW Group slightly reduced the amount of energy
consumed in the production process compared with
the previous year (2017: 2.17 MWh; -2.3%). This was
mainly due to the use of a new painting technology
at various locations, such as at the Munich plant, and
the installation of LED lighting throughout the entire
production network.
Through measures to boost energy efficiency and
the purchase and in-house generation of electricity
from renewable sources at BMW Group manufactur-
ing sites, production-related CO2 emissions fell by
2.4% to 0.40 tonnes per vehicle produced in the year
under report compared with the previous year (2017:
0.41 tonnes).
In 2018, at 2.39 m³ per vehicle produced, water
consumption was slightly higher than the previous
year's level (2017: 2.22 m³; +7.7%). This was mainly
due to above-average temperatures at the sites, which
had a direct impact on water consumption. The non-
recyclable waste from production processes rose to
4.27 kg per vehicle produced during the reporting
period (2017: 3.86 kg; +10.6%). This was mainly due
to a change in the structure of the waste disposal
companies at the Shenyang site. As a result, specific
waste streams, such as sludge from the wastewater
treatment plant, could not be recycled in the year
under report. Additionally, the high moisture content
from household waste at the plant in Rosslyn, South
Africa hindered recycling.
Sustainability along the value chain
Review of Operations
As part of a regular materiality analysis, social chal-
lenges are continually monitored and analysed in
order to gauge their significance, from the point of
view of both external and internal stakeholders. The
results of the materiality analysis are described in
greater detail in the Sustainable Value Report 2018.
The BMW Group is in continual dialogue with a large
number of stakeholders, both in Germany and abroad.
Stakeholder feedback provides the BMW Group with
a clear picture of how current trends are changing
the business environment and is incorporated in the
strategic considerations of the Company. For example,
in the course of 2018, stakeholder dialogue events on
the topics of urban mobility and digitalisation were
held in Los Angeles, Melbourne, Shenzhen, Rotter-
dam and Berlin.
Stakeholder dialogues and materiality analysis as
basis for sustainability management
-2.0
Sustainability
The Group's workforce is becoming increasingly
international. Employees from over 110 countries
work together successfully for BMW AG. Moreover, a
balanced age structure in the workforce encourages
an exchange of ideas and knowledge between gen-
erations and plays a key role in reducing the loss of
know-how when valuable employees retire.
* Number of employees on unlimited employment contracts leaving the Company.
*Since 2017 including maternity leave.
2018
2017
→ www.bmwgroup.com/responsibility
In order to secure its future existence, the BMW Group
consistently integrates sustainability in its business
model. The Company sees global challenges such as
climate change and urbanisation as opportunities
to drive innovation. In its constant endeavours, the
BMW Group concentrates on three main fields:
The development of products and services
that provide sustainable individual mobility
(e.g. electric mobility and services such as
DriveNow and ReachNow)
The efficient use of resources along the entire
value chain
• Responsibility towards employees and society
Further information on sustainability within the
BMW Group and related topics is provided in the
Sustainable Value Report 2018, which is published
online at www.bmwgroup.com/svr.
Through its sustainability policy, the BMW Group
supports the achievement of the UN's Sustainable
Development Goals (SDG), which were adopted in
September 2015.
The Sustainable Value Report is published together
with the Annual Report and is drawn up in accordance
with the "Comprehensive" option of the standards
of the Global Reporting Initiative (GRI). This is the
highest level of transparency set out in the GRI stand-
ards, in which all relevant information and indicators
of the aspects identified as material are reported on.
The Sustainable Value Report is drawn up subject to
a limited assurance engagement in accordance with
IASE 3000 (International Standard on Assurance
Engagements 3000 (Revised): “Assurance Engage-
ments other than Audits or Reviews of Historical
Financial Information").
Based on the requirements of the German CSR Direc-
tive Implementation Act, BMW AG has been required
since the financial year 2017 to publish a non-financial
declaration at both Company and Group level. The
declaration is published jointly for BMW AG and the
BMW Group as a separate combined non-financial
report within the Sustainable Value Report.
The separate combined non-financial report is availa-
ble online within the Sustainable Value Report 2018
at www.bmwgroup.com/svr.
Sustainability criteria also play a key role in the selec-
tion and assessment of suppliers. The BMW Group has
therefore comprehensively integrated sustainability
management in its purchasing processes. This also
includes greater transparency, which results from
close collaboration between the Group and its sup-
pliers. The BMW Group is also involved in initiatives
aimed at standardising sustainability requirements
and establishing verification mechanisms for critical
raw materials.
Sustainability in human resources policies
In 2018, the BMW Group continued to consolidate
its position as one of the most attractive employers
worldwide. Its leading role in terms of sustainability
contributes significantly to the high degree of employee
loyalty within the BMW Group and is one of the
reasons for the low staff attrition rate. This enables
the BMW Group to maintain a low level of personnel
recruitment expenditure. Further information is
provided in the section Workforce.
Social engagement
-0.8
18,556
19,953
-7.0
-9,560
123
-494
9,121
9,899
-7.9
Financial result
Profit before tax
694
776
-10.6
9,815
10,675
-78,329
Income taxes
-78,924
98,282
Social engagement is firmly anchored in the
BMW Group's understanding of its corporate role.
As a globally operating company, the BMW Group
assumes responsibility and is concerned with current
social challenges. Its commitment focuses on long-
term solutions that are internationally applicable and
have a long-term impact according to the principle of
"helping people to help themselves". In doing so, the
company concentrates on its core competencies, such
as intercultural understanding, social inclusion and
the conservation of resources.
RESULTS OF OPERATIONS,
FINANCIAL POSITION AND
NET ASSETS
Results of operations
Deliveries of BMW, MINI and Rolls-Royce brand
vehicles during the financial year 2018 increased
slightly by 1.1% year-on-year to 2,490,664 units. The
BMW Group condensed income statement
→ 42
figure includes 459,581 units (2017: 384,124 units)
manufactured by the joint venture BMW Brilliance
Automotive Ltd., Shenyang.
in € million
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
Other operating income and expenses
Profit before financial result
2018
2017*
Change in %
97,480
-0.8
9.2
Research and development expenditure ratio
-2.9
0.9
6.2
7.1
2016
0.5
5.0
5.5
Capitalisation rate
Research and development expenses as a percentage of revenues
2017*
2018
in %
year.
→ 45
BMW Group performance indicators relating to research and development expenses
financial services business were offset by positive
currency effects. Inter-segment eliminations reduced
the Group's warranty expense for the
Change in %pts
43.3
39.7
3.6
Economic Position
Report on
Report
Combined
Management
98
68
The income tax expense for the year amounted to
€2,575 million (2017: €2,000 million).
Overall, profit before tax decreased moderately to
€9,815 million (2017: €10,675 million).
The financial result dropped by €82 million to €694 mil-
lion and was therefore significantly down on the pre-
vious year, partly due to a €107 million deterioration
in the result from equity accounted investments.
The main factors here were the €183 million positive
earnings effect in the previous year arising on the
sale of shares in HERE International B.V., Amsterdam,
offset by a €107 million improvement in the earnings
contribution from BMW Brilliance Automotive Ltd.
on the back of higher volumes. The financial result
for the financial year 2018 was also influenced by the
change in other financial result. The previous year's
figure contained the positive effect of fair value meas-
urement gains on commodity derivatives totalling
€236 million. As a result of the first-time application of
IFRS 9, most of these effects - without the adjustment
to comparative figures – are now recognised directly
in equity. Unlike the result from equity accounted
investments and the other financial result, both the
result on investments and the net interest result had
a positive impact on earnings in the financial year
under report. The result on investments included a
gain of €209 million arising in conjunction with the
revaluation of the DriveNow companies.
Profit before financial result (EBIT) fell by €778 million
to €9,121 million (2017: €9,899 million).
The net amount of other operating income and
expenses improved significantly from negative
€494 million to positive €123 million, mainly due to
lower allocations to provisions for litigation.
Depreciation and amortisation on property, plant
and equipment and intangible assets recorded in cost
of sales and in selling and administrative expenses
totalled €5,113 million (2017: €4,822 million).
At €9,558 million, selling and administrative expenses
were similar to one year earlier.
Due to a continuation of the product initiative, vehicle
electrification and development work on autonomous
driving, research and development expenses amount-
ed to €5,320 million (2017: €4,920 million), a solid
increase over the previous year. As a result, total
research and development expenditure - comprising
research costs, non-capitalised development costs and
capitalised development costs (excluding amortisation
thereon) – amounted to €6,890 million in the year
under report (2017: €6,108 million). The higher level
of capitalised development costs was mainly related
to the production start of new models, modules and
architectures.
62
67
*Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
The Group's cost of sales were in line with the
previous year. Higher research and development
expenses as well as higher cost of sales relating to 7
0.8
78,329
78,924
1,801
2,051
thereof interest expense relating to financial services business
2.0
22,932
23,383
Cost of sales relating to financial services business
-0.4
43,442
43,262
Manufacturing costs
Change in %
2017*
2018
in € million
→ 44
BMW Group cost of sales
13.9
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Research and development expenses
4,920
4.9
2,857
2,996
-17.5
2,097
1,729
Cost of sales
Other cost of sales
Warranty expenses
7.4
2,081
2,234
14.4
1,236
1,414
thereof amortisation of capitalised development costs
Service contracts, telematics and roadside assistance
8.1
5,320
Results of operations by segment
BMW Group revenues by segment
→ 46
Change in %
20171
2018
1.2
-0.8
98,282
97,480
11.1
-8.1
-17,306
-18,710
-7.6
-14.3
7
6
4.5
2.2
6,977
27,567
8,717
169
19.1
16.2
Change in %pts
20171
2018
-8.1
10,675
9,815
-534
553
80
-45
-2.1
2,207
2,161
-17.6
205
-20.0
7.2
28,165
-4.4
BMW Group margins by segment
Group
Eliminations
Other Entities
Financial Services
Motorcycles
Automotive
in € million
→ 47
BMW Group profit/loss before tax by segment
Group
Eliminations
Other Entities
Financial Services
Motorcycles
Automotive
in € million
→ 48
-1.4
in %
Gross profit margin
2,272
2,173
2.2
0.1
85,742
85,846
change² in %
Change in %
20171
2018
Currency adjusted
2 The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year figures.
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
EBIT margin
Gross profit margin
Motorcycles
EBIT margin
Automotive
2015
Since 2018, MINI Yours Customized has enabled its
customers to personalise their interior products via
3D printing and order them directly online. This
service was given the German Innovation Award in
the category "Excellence in Business to Consumer".
BMWAG 11.3
3.7
129,932
134,682
Group
1.7
117
119
Other
4,750
4,613
4,700
2,500
4,595
4,964
2.5
8,645
8,860
Financial Services
5.8
3,506
3,709
Motorcycles
3.7
2014
5,000
121,994
2014
2016
7.0
as a percentage of workforce
in %
→ 41
Proportion of female employees in manage-
ment functions at BMW AG/BMW Group*
The proportion of women in the workforce as a whole,
as well as in management functions and young talent
development programmes, increased during the finan-
cial
year under report. The percentage of women in the
total BMW Group workforce rose to 19.9% (BMW AG:
16.5%), above the internal target range of 15 to 17%.
The number of women in management functions rose
to 17.2% across the BMW Group (BMW AG: 15.1%).
In the year under report, female representation in the
BMW Group's trainee and student programmes stood
at 44% and 28% respectively.
Diversity is a key factor in ensuring the BMW Group's
continued competitiveness. Emphasis is placed on
the three aspects of gender, cultural background and
age/experience. The aim is to ensure equal opportu-
nities for all employees and at the same time utilise
and promote the diversity of the Group's workforce.
To achieve this end, a broad array of measures was
implemented within the BMW Group during 2018.
Further information on this topic is also provided in
the Sustainable Value Report 2018. → www.bmwgroup.com/svr
Diversity as a competitive factor
→ 40
Employee attrition rate at BMW AG*
The Group also came out top again in Trendence's
Young Professional Barometer Germany. In the Tren-
dence Graduate Study Germany, the BMW Group
retained first place in the business management and
engineering target groups and improved its position
for the IT target group, where it moved into second
place. It also improved its rankings in the Universum
study "Young Professionals Germany”, finishing first,
second and third in the categories Business, Engineer-
ing and IT respectively. Based on the overall results of
studies across all sectors, the BMW Group remained
one of the world's highest-ranked companies in 2018.
2015
In the period under report, BMW Group China was
also named the most attractive employer in the auto-
motive industry in both the local Universum Students
Survey and the Zhaopin Most Attractive Employer
Award.
→ Sustainability
Review of Operations
→ Workforce
Economic Position
Report on
Combined
Management
Report
62
62
61
High level of investment in employee qualification
Spending on training and development increased to
€373 million year-on-year (2017: €349 million; +6.9%).
By training its workforce in areas such as electric
mobility, robotics, data analysis and artificial intel-
ligence, the BMW Group is creating an important
foundation for the future success of its Strategy
NUMBER ONE > NEXT. Managers are also closely
involved in training and are prepared in the areas
of transformation process design and leadership in
agile organisations.
2018
2017
BMW Group remains a highly attractive employer
In 2018, the BMW Group was once again ranked
among the world's most attractive employers. In the
latest "World's Most Attractive Employers" rankings
published by the agency Universum, the BMW Group
was once again named the most attractive automotive
company in the world.
3.5
Automotive
Change in %
Report on
Combined
Management
Report
60
60
in 2018.
Apart from the M vehicles, BMW M GmbH also offers
special driving safety training courses under the brand
name BMW Driving Experience. During the financial
year 2018, more than 25,000 participants completed
training courses in Germany alone. Demand for the
training courses also grew internationally. Accordingly,
the international network partner of BMW M was
expanded to include China and South Africa. Alto-
gether, the BMW Driving Experience trained around
105,000 participants at international training locations
Highest-ever number of deliveries for BMW M
The year 2018 was the most successful in the history
of BMW M GmbH. The main contributors to BMW M
deliveries in the High Performance segment, apart
from the M2*, were again the BMW M3 and M4 models
as well as the new BMW M5*. Within the Performance
segment, the new BMW X3 M40i* accounted for the
majority of deliveries. The strong demand at BMW M
also led to growth in BMW M certified dealerships.
During 2018, their number grew to more than 1,000
certified dealerships worldwide.
of five new models and also introduced two model
revisions as well as two new variants of BMW M
vehicles worldwide. The new BMW X2 went on
sale at dealerships in March 2018, followed by the
i8 Roadster* in May. The new X4 became available
to customers in July. The fourth generation of the
successful BMW X5 model and the new BMW 8 Series
Coupé were both launched in November. The Active
Tourer and Gran Tourer models of the BMW 2 Series
both underwent model revisions in the year under report,
and BMW M GmbH added the M2 and M5 Competition
as well as the M3 CS* variants to its portfolio.
During the year under report, BMW launched a total
BMW broadens model range
In line with its Strategy NUMBER ONE > NEXT, the
BMW Group is increasingly investing in digital services.
The aim is to develop and successfully operate new
digital business models with a rigorously customer-
oriented approach. This enables the BMW Group to
additionally differentiate itself and underscores the
attractiveness of its vehicle portfolio. A directly acces-
sible customer base makes it possible to disseminate
offers of new products and services, which customers
can also benefit from after purchasing their vehicles.
Currently, the range of digital offerings is focused on
the areas MyCar (e.g. remote access to vehicle func-
tions such as air conditioning), MyJourney (e.g. real-
time traffic information and parking services), MyLife
(e.g. music streaming services) and MyAssistant (BMW
Intelligent Personal Assistant). The level of interest
in digital services has grown steadily in recent years.
Economic Position
Review of Operations
→ Sales and Marketing
Digitisation promotes individual mobility
In addition to its BMWi vehicles, in 2018 the
BMW Group successfully offered a range of six BMW
plug-in hybrid models and one MINI plug-in* world-
wide. The BMW Group is committed to providing flex-
ible platforms where customers have the free choice of
drivetrain system depending on their personal pref-
erence. The advantage for the BMW Group lies in its
flexible response to uncertain demand developments
and the best possible utilisation of plant capacity.
Since its market launch in 2014, the BMW i8 has been
one of the best-selling hybrid sports cars. Launched
in 2018, the new BMW i8 Roadster* offers an emotional
combination of electric mobility and the experience of
open-top driving. Apart from its remarkable design,
pioneering technologies and sustainable mobility
concept, it stands above all for the driving pleasure
typically epitomised by BMW.
The BMWi offers not only trendsetting vehicle con-
cepts but also connected mobility services and a new
understanding of premium, which is determined in
particular by sustainability. The all-electric BMW i3* *Fuel
has meanwhile established itself as one of the most
successful electric vehicles in its segment. With a cell
capacity increased to 120 ampere hours (Ah) and a
current gross energy content of 42.2 kilowatt hours
(kWh), a new generation of high-voltage batteries
is helping the BMW i3* and its sporty sister model
the BMW i3s* to extend its reach by about 30% to
travel longer distances of up to 260 km. The entire
production chain is supplied with green energy for
both of these models and they are also 95% recyclable.
on page 108.
consumption
and CO₂ emis-
sions informa-
tion are available
BMW i remains on road to success
The BMW Group's sales and distribution network
currently comprises some 3,500 BMW, 1,600 MINI
and 140 Rolls-Royce dealerships worldwide. Sales are
conducted via independent authorised distributors,
branch offices of the BMW Group, subsidiaries, and
independent import companies in some markets.
→ www.bmwgroup.com/brands
Sales and Marketing
59
59
As a systems provider, BMW i provides its customers
with solutions that go far beyond the vehicle itself:
BMWi 360° ELECTRIC and ChargeNow are compre-
hensive service offerings for charging both at home
and away from home. Energy services such as grid
integration for electric vehicles and battery storage
applications are also available. Additional offerings
include charging technologies such as inductive charg-
ing as well as charging infrastructure projects such as
the super-fast charging network Ionity.
→ 39
→ Workforce
In 2018, due to external factors, the MINI brand was
unable to quite match the high level of deliveries seen
the previous year. In particular, a changed competitive
environment caused by the conversion to the new
WLTP testing cycle played a decisive role. Uncertainty
also arose from ongoing trade disputes. In several
markets, this led to considerable sales disruptions
and unexpectedly fierce competition. Nevertheless,
MINI managed to increase its share for small and
compact cars in the premium segment compared to
the previous year in more than 60% of its markets.
31.12.2017
31.12.2018
BMW Group apprentices at 31 December
The realignment of the dual vocational training system
launched in the previous year moved to the implemen-
tation phase during 2018. At the start of training in
2018, three new training profiles were introduced at
the German plant locations, namely for IT applications
development, IT systems integration, and electronics
for automation technology. Moreover, a new training
programme was established with twelve dual courses
of study, in which recruits can acquire a bachelor's
degree in STEM subjects (science, technology, engi-
neering and mathematics). At the same time, new
teaching content was added to existing job profiles
and appropriate technical equipment acquired. Meas-
ures were also initiated at international locations to
restructure fields of expertise, focusing on automation
technology, robotics and additive manufacturing
processes. The total number of apprentices and
participants in development programmes for young
talent increased slightly to 4,964 (2017: 4,750; +4.5%).
Realignment of dual vocational training
→ 38
BMW Group employees
At 31 December 2018, the BMW Group had a world-
wide workforce of 134,682 employees, a slight increase
(+3.7%) compared to the end of previous financial
year (2017: 129,932 employees). The increase was
partly attributable to the further expansion of the
global production network. Moreover, in conjunction
with the implementation of the Group's Strategy
NUMBER ONE > NEXT, a growing number of experts
continued to be hired in future-oriented fields such as
artificial intelligence and autonomous driving, electric
mobility, smart production and logistics, as well as
data analysis, software architecture, agile software
development and innovative drivetrain systems.
Slight increase in workforce
→ www.bmwgroup.com
Workforce
MINI achieves second-best year
In December 2018, at the beginning of the fifth sea-
son, BMW i Andretti Motorsport entered the ABB
FIA Formula E Championship as a works team. The
drivetrain of the racing car was developed in close
collaboration with the engineers of BMW i and BMW
Motorsport and embodies the technology transfer
between motor racing and series development like
no other motorsport project before it. Apart from
its sporting commitment, BMWi remains an official
partner of Formula E and, within the scope of this
partnership, provides the support vehicle fleet, includ-
ing the BMW i8 Coupé* as a safety car for the races.
In September 2018, the BMW Group introduced
the Intelligent Personal Assistant, which has been
available in the first vehicles and in the Connected
app as from March 2019. It explains the workings
of the vehicle to the customer and enables access to
functions and information by voice control. The assis-
tant supports drivers, learns their preferences and
knows their preferred settings, such as seat heating or
frequently used navigation destinations. The abilities
of the self-learning personal assistant are supported
by artificial intelligence and continuously enhanced.
BMW Intelligent Personal Assistant
100.0
In these times of digitalisation, the focus is on the
mobility and service requirements of premium
customers. Using digitalised channels such as BMW
Connected, customers are able to view their vehicle
status and also make use of functions outside the
vehicle. Offers and interactions connected with
services, maintenance and repairs can therefore be
synchronised via all customer channels (physically,
online or via the vehicle).
and CO2 emis-
sions informa-
tion are available
on page 108.
* Fuel
consumption
The BMW Group's services business again recorded
significant growth in the year under report. In
order to achieve this, continuous investments are
being made in a sustainable, flexible, global logistics
network that can optimally supply customers with
spare parts, accessories and lifestyle products on a
worldwide basis.
Enhancement and customisation
of the services business
Launched in November 2018, the new Cullinan* is
the first Rolls-Royce to exhibit outstanding driving
characteristics both on and off the road. At its world
première in May and the press event in October, the
Cullinan* was extremely well received by customers
and international media representatives alike. The
top-of-the-range model, the Rolls-Royce Phantom*,
which has been on the market since the beginning
of 2018, is extremely popular and contributed sig-
nificantly to the record year for Rolls-Royce Motor
Cars. At Rolls-Royce Motor Cars, the term bespoke
refers to equipment configurations with which the
vehicles are highly individualised in accordance with
customer requirements. The result is the creation of
unique vehicles that make a major contribution to
the company's success and secure Rolls-Royce Motor
Cars an outstanding position in the luxury segment.
Rolls-Royce Cullinan* successfully
takes to the road
The second generation of the MINI Countryman in
particular remains a cornerstone of the MINI brand.
Deliveries increased significantly year-on-year, with
the highly successful plug-in hybrid model making
a key contribution. Moreover, the MINI Convertible
was one of the best-selling vehicles of its kind in a
competitive market. Demand for the John Cooper
Works models also remained high, with a new record
share of total MINI deliveries.
BMW enters Formula E
2.70 2.64 2.78
117,664
1.41
12.5
13.3
14.0
BMW Group 13.5
14.3
15.1
2.08
15.3
16.0
17.2
18
100.0
¡III
2014
2015
2016
2017
2018
in € million
33.4
33,187
Gross value added
-0.9
66.6
66,673
33,452
66,056
66.6
33.4
intangible and investment assets
Depreciation and amortisation of total tangible,
Bought-in costs
8,441
8.5
8,455
8.4
-0.2
Net value added
24,746
-0.8
-17.3
13.1
15,630
1,123
1.1
-11.9
774
0.8
720
0.7
7.5
99,243
15.6
100.0
100.0
-0.9
53,132
53.5
51,043
51.0
4.1
12,924
24.9
100,125
24,997
Employees
-1.0
-12.4
4,814
19.5
5,959
23.8
-19.2
Minority interest
90
0.4
10.5
86
4.7
Net value added
24,746
100.0
24,997
100.0
-1.0
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
² Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
0.3
2,630
9.3
2,303
ALLOCATION
1.0
Providers of finance
Government/public sector
Shareholders
Group
12,479
50.4
12,052
48.2
3.5
2,283
9.2
2,066
8.3
10.5
2,777
11.2
2,204
8.9
26.0
25.0
2018
in %
989
98.2
41.0
Automotive segment
Group
0.1
27.7
27.8
Change in %pts
31.12.2017*
31.12.2018
in %
→ 59
BMW Group equity ratio
Group equity rose by €3,981 million to €58,088 million,
increased primarily by the profit of €7,117 million
attributable to shareholders of BMW AG and decreased
by the dividend payment of €2,630 million.
33
60
66
100
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
2017*
2018
2017*
42.0
-1.0
Financial Services segment
10.2
2018
Net valued added by the BMW Group remained at a
high level in the financial year 2018.
added benefits employees. The remaining proportion
in the Group is retained to finance future operations.
The
gross value added amount treats depreciation as
a component of value added which, in the allocation
statement, would be treated as internal financing.
BMW Group value added statement
→ 60
The value added statement shows the value of work
performed by the BMW Group during the financial
year, less the value of work bought in. Deprecia-
tion and amortisation, cost of materials, and other
expenses are treated as bought-in costs in the value
added calculation. The allocation statement applies
value added to each of the participants involved in
the value added process. The bulk of the net value
Value added statement
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Economic Position
Report on
Combined
Management
Report
2018
78
→ see
note 2
→ see
note 6
Overall, the results of operations, financial position
and net assets position of the BMW Group remained
stable during the year under report.
The line items "Assets held for sale" and "Liabilities
in connection with assets held for sale" relate to the
discontinued operations of the DriveNow companies.
Further information is provided in → note 2 to the
Group Financial Statements.
The significant increase in other liabilities includes
the effect of higher return right liabilities for future
leased vehicles in conjunction with the introduction of
IFRS 15. Further information is provided in → note 6
to the Group Financial Statements.
Financial liabilities increased solidly compared to the
end of the previous year, mainly due to the issue of
new long-term bonds.
Pension provisions decreased significantly compared
to the end of the financial year 2017. Higher discount
rates and lower inflation expectations in Germany and
the UK as well as a revision of mortality tables in the
UK contributed to this development.
* Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
-0.5
10.7
77
8%
thereof cash and cash equivalents 9%
0
2018
2017*
2018
5%
thereof cash and cash equivalents 5%
34%
H
196
20171
20171
2017*
in € million
WORK PERFORMED
Revenues
Financial income
Other income
Total output
Change
in %
Other expenses
97,480
98.2
98,282
in %
-0.8
Balance sheet structure - Automotive segment
Balance sheet total in € billion
41% Current provisions and liabilities
17% Non-current provisions and liabilities
41%
54%
Current assets 53%
#] ||
42% Equity
37% Current provisions and liabilities
35% Non-current provisions and liabilities
28% Equity
→ 58
18%
94
94
94
97
- 33
66
46%
Non-current assets 47%
97
100
41%
Cost of materials²
2017
28%
-6,384
-406
130
937
-807
6,793
4,334
2,459
133
-1,113
1,246
Refinancing
-6,790
A broad range of instruments on international money
and capital markets is used to refinance worldwide
operations. Funds raised are used almost exclusively to
finance the BMW Group's Financial Services business.
1. The ability to act through permanent access
to strategically important capital markets
2. Autonomy through the diversification of refi-
nancing instruments and investors
3. Focus on value through the optimisation of
financing costs
Financing measures undertaken at corporate level
ensure access to liquidity for the Group's operating
subsidiaries at standard market conditions and con-
sistent credit terms. Funds are acquired in line with
a target liability structure, comprising a balanced
mix of financing instruments. The use of longer-term
instruments to fund the Group's Financial Services
business and the maintenance of a sufficiently high
liquidity reserve serves to avoid the liquidity risk in
the portfolio. This conservative financial approach
also helps the Group's rating. Further information
is provided in the section Liquidity risks within the
"Report on Outlook, Risks and Opportunities".
On account of its good ratings and the high level
of acceptance it enjoys on capital markets, the
BMW Group was again able to refinance operations
at favourable conditions on debt capital markets
during the financial year 2018. In addition to bonds,
loan notes and private placements, the Group also
issued commercial paper. As in previous years, all
issues were in high demand, not only from private
investors but also in particular from institutional
investors. In addition, retail customer and dealership
financing receivables as well as rights and obligations
from leasing contracts are securitised in the form of
asset-backed securities (ABS) financing arrangements.
Specific banking instruments, such as the customer
deposits used by the Group's own banks in Germany
and the USA, are also employed for financing purposes.
In addition, loans are taken from international banks.
73
74
Combined
Management
Report
Report on
Economic Position
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
The overall objective of Group financing is to ensure
the solvency of the BMW Group at all times, focusing
on three areas:
Change
2018
-299
Net cash inflows and outflows for the Financial Ser-
vices segment were as follows:
Net cash flows for the Financial Services segment
→ 53
in € million
Cash inflow (+)/outflow (-) from operating activities
Cash inflow (+)/outflow (-) from investing activities
Cash inflow (+)/outflow (-) from financing activities
Net
The increase in cash outflow from the Financial Ser-
vices segment's operating activities was mainly due to
the lower net profit for the year. The decrease in cash
inflow from investing activities was largely attributable
to cash proceeds received in the previous year from
the disposal of investments and other business units
(€970 million). Cash inflow from financing activities
was mainly driven by new loans raised and an increase
in asset-backed securities financing.
2018
2017
Change
8,631
7,157
1,474
4,321
4,336
-15
7,694
9,774
-2,080
20,646
21,267
-621
-1,158
-1,480
322
19,488
19,787
BMW Group composition financial liabilities
*Excluding derivative financial instruments.
→ 54
Derivate instruments 1,675
12,921
later
than 5
→ see
notes 31,
35 and 39
At 31 December 2018, liquidity remained at a solid
level of €16.3 billion.
The BMW Group also has access to a syndicated credit
line, which was newly agreed upon in July 2017. The
syndicated credit line of €8 billion has a minimum
term up to July 2023 and is being made available by a
consortium of 44 international banks. The credit line
was not being utilised at 31 December 2018.
Further information with respect to financial liabilities
is provided in → notes 31, 35 and 39 to the Group
Financial Statements.
0
Maturity (years)
within
1
between
1-5
2017 2018
2017 2018
2017 2018
9,683
In 2018, the BMW Group issued four euro bench-
mark bonds on the European capital market with a
total issue volume of €7.3 billion, as well as bonds
on the US capital market with a total issue volume
of US$ 7 billion. Bonds were also issued in British
pounds, Canadian dollars and Chinese renminbi for
a total amount of €1.8 billion. Private placements
totalling €4.1 billion were also issued.
BMW Group condensed balance sheet at 31 December
→ 56
in € million
ASSETS
Group
Currency adjusted
2018
20171
Change in %
change² in %
Proportion of
balance sheet
total in %
2018
Net assets
2.4
13.1
1.5
38%
Liabilities to banks
13,196
Liabilities from
customer deposits
(banking) 14,359
Asset-backed financing
transactions 17,335
Other 1,206
Bonds
53,346
A total of nine public ABS transactions were executed
in 2018, including three in the USA, two in China and
one each in Germany, France, Canada and the UK with
a total volume equivalent to €5.9 billion. Further funds
were also raised via new ABS conduit transactions in
Japan, the UK, Germany, Canada, Australia and the
USA amounting to €2.7 billion. Other transactions
remain in place in Germany, Switzerland, South
Korea, South Africa and Australia, amongst others.
The following table provides an overview of amounts
utilised at 31 December 2018 in connection with the
BMW Group's money and capital market programmes:
Programme
Programme
framework
Amount
utilised*
in € billion
Euro Medium Term Notes
Australian Medium Term Notes
Commercial Paper
BMW Group financial liabilities by maturity
→ 55
*Measured at exchange rates at the relevant transaction dates.
in € million
60,000
30,000
51,851
43,865
41,100
38,825
50.0
36.6
in € million
Net financial assets Automotive segment
Less: external financial liabilities*
Financial assets
Effects of exchange rate and changes in composition of Group
Change in cash and cash equivalents
The decrease in cash inflow from the Group's operat-
ing activities was due to the lower net profit for the
year and higher working capital. The lower increase
in receivables from financial services compared to the
previous year had an offsetting effect.
The higher level of cash outflow from the Group's
investing activities mainly reflects a rise in invest-
ments in intangible assets and property, plant and
equipment, increased expenditure for investment
assets (primarily relating to the acquisition of the
DriveNow companies) and lower proceeds from the
disposal of investment assets. The decreased level of
investments in marketable securities and investment
funds had an offsetting effect.
The increase in cash inflow from the Group's financing
activities resulted mainly from the issue of bonds and
from new loans taken up. The repayment of commer-
cial paper had an offsetting effect.
The cash outflow from investing activities exceeded the
cash inflow from operating activities by €2,312 million
in the financial year 2018. In the previous year, the
shortfall had been lower at €254 million.
2018
2017
Change
5,051
5,909
-858
-7,363
Cash inflow (+)/outflow (-) from financing activities
-6,163
4,296
1,572
2,724
-44
-159
115
1,940
1,159
781
BMW Group change in cash and cash equivalents
→ 50
in € million
-1,200
Cash inflow (+)/outflow (-) from operating activities
Cash inflow (+)/outflow (-) from investing activities
in € million
Cash flows from operating activities are determined
indirectly, starting with Group and segment net profit.
By contrast, cash flows from investing and financing
activities are based on actual payments and receipts.
Automotive segment
Automotive segment revenues remained at a similar
level to the previous year due to currency factors.
Adjusted for currency factors, they rose slightly, par-
tially as a result of higher delivery volumes. Despite
the volume growth achieved, market competition
intensified to an unexpectedly high level, mainly
reflecting the reaction of competitors to the early
implementation of WLTP regulations. Trade conflicts
and other uncertainties also exacerbated the situation
and had an unfavourable impact on selling prices. The
segment's cost of sales went up slightly year-on-year,
with higher research and development expenses as
well as raw materials costs contributing to the increase.
Additions to provisions in connection with goodwill
and warranty measures also had an effect on cost of
sales. Warranty expenses include the accrued expense
for vehicle recall actions, the cost of which is expected
to exceed amounts previously recognised. In this
context, a figure of €793 million was allocated to the
warranty provision, partially in connection with the
exhaust gas recirculation cooler. The lower volume
of ongoing warranty expenditure compared with the
previous year had a positive impact.
At €7,880 million, selling and administrative expenses
were similar to one year earlier.
The net amount of other operating income and
expenses improved from negative €525 million to
positive €134 million in the year under report, mainly
due to lower allocations to provisions for litigation.
At €795 million, the Automotive segment's financial
result was slightly down on the previous year, influ-
enced by the factors described above for the Group.
Profit before tax for the year was significantly lower
than one year earlier.
Motorcycles segment
Motorcycles segment revenues decreased slightly year-
on-year, mainly due to the ramp-up situation caused
by multiple model changes and compounded by a
combination of product mix and currency effects.
Profit before tax for the twelve-month period was
significantly lower than one year earlier.
Financial Services segment
Despite unfavourable foreign currency translation
effects, Financial Services segment revenues rose
slightly year-on-year on the back of portfolio growth.
Cost of sales relating to financial services business
increased by €555 million (2017: €23,986 million).
The net amount of other operating income and
expenses deteriorated from negative €17 million to
negative €82 million. The decline was mainly due to
higher expenses for litigation.
The segment's risk profile remained stable during the
financial year 2018. Whereas price levels on the North
American pre-owned vehicle market improved slightly,
residual values for pre-owned vehicles in Germany
dropped slightly, mainly because of the debate on
diesel bans in a number of cities.
Profit before tax in the Financial Services segment was
slightly down on the previous year, primarily due to
negative foreign currency translation effects.
Other Entities segment/Eliminations
Profit before tax in the Other Entities segment fell
significantly year-on-year. Among other things, higher
administrative expenses arising in connection with
the adjustment to the existing pension obligation
in the UK (Guaranteed Minimum Pension) had a
negative impact. In addition, lower market interest
rates caused the net interest result to deteriorate.
Inter-segment eliminations increased Group profit
before tax by €553 million in the financial year 2018,
a year-on-year improvement of €1,087 million. This
was mainly due to the positive impact of reversals in
conjunction with the strong portfolio growth of prior
years for leased products and the favourable effect of
lower margin eliminations in 2018.
69
69
70
Combined
Management
Report
Report on
Economic Position
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
Financial position
The consolidated cash flow statements for the Group
and the Automotive and Financial Services segments
show the sources and applications of cash flows
for the financial years 2018 and 2017, classified
according to operating, investing and financing
activities. Cash and cash equivalents in the cash flow
BMW Group cash flows
→ 49
statements correspond to the amounts disclosed in
the balance sheet.
15,000
10,000
9,039
-5,000
9,352
10,848
Cash inflow (+)/outflow (-) from investing activities
-6,769
-6,544
Adjustment for net investment in marketable securities and investment funds
Free cash flow Automotive segment
130
155
2,713
4,459
-1,496
-225
-25
-1,746
The decrease in cash inflow from the Automotive
segment's operating activities was mainly due to a
combination of lower net profit for the year and higher
working capital. Cash outflow from investing activities
was influenced in particular by higher disbursements
for investments in intangible assets and property,
plant and equipment.
71
22
72
Combined
Management
Report
Report on
Economic Position
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
In the Automotive segment, net financial assets com-
prised the following:
Net financial assets Automotive segment
→ 52
in € million
Cash and cash equivalents
Marketable securities and investment funds
Intragroup net financial assets
Cash inflow (+)/outflow (-) from operating activities
75
Change
2018
+5,051
-7,363
15,000
+4,296
10,979
-44
10,000
0
Cash and
cash
equivalents
31.12.2017
Cash inflow
from
operating
activities
Cash outflow
from
Cash inflow
from
investing
activities
financing
activities
Group composition
Currency
translation,
changes in
Cash and
cash
equivalents
31.12.2018
Free cash flow for the Automotive segment was as
follows:
Free cash flow Automotive segment
→ 51
in € million
5,000
0
2017
15
Commercial paper 2,480
Total assets
2.7
2.7
12,707
13,047
5.7
29.6
29.6
9,115
11,816
Trade receivables
Inventories
Other assets
1.4
-19.2
-16.9
3,559
2,956
6.2
Deferred and current tax
2,546
-4.5
EQUITY AND LIABILITIES
100.0
6.1
6.9
195,506
208,980
0.2
461
5.3
21.8
21.5
9,039
10,979
Assets held for sale
Cash and cash equivalents
1.2
-4.5
2,667
Equity
3.7
10,334
4.6
6.4
36,257
38,572
Leased products
9.5
6.7
7.2
18,471
19,801
Property, plant and equipment
5.2
15.8
15.9
9,464
10,971
Intangible assets
18.5
-25.6
Investments accounted for using the equity method
2,769
7,685
Financial assets
41.4
7.2
7.9
80,434
86,783
Receivables from sales financing
0.4
6.0
7.1
690
739
Other investments
1.3
-5.2
-5.2
2,624
58,088
-26.0
7.4
Financial assets decreased significantly compared
to 31 December 2017, mainly due to changes in the
volume of currency derivatives and their fair value
measurement. Lower fair values as well as a change in
the volume of commodity derivatives also contributed
to this development.
Report on
Combined
Management
Report
76
66
Receivables from sales financing increased solidly
over the twelve-month period, mainly due to larger
credit financing volumes in the USA, the UK and
China. A total of 1,277,207 new credit financing
contracts were signed during the financial year 2018.
Compared to the end of the previous financial
year,
the contract portfolio under management grew by
7.0% to 3,889,344 contracts.
Leased products also went up solidly year-on-year
on the back of portfolio growth in various countries,
including Germany and France. Adjusted for currency
factors, leased products increased slightly.
Property, plant and equipment rose solidly compared
to the previous financial year, with investments in the
X5 and X7 models as well as in the 3 Series in particular
contributing to the increase.
Intangible assets were significantly higher than one
year earlier, mainly due to the increase in capitalised
development costs.
The balance sheet total of the BMW Group increased
solidly compared to 31 December 2017.
1 Prior year figures adjusted due to first-time application of IFRS 15, see note 6 to the Group Financial Statements.
2 The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year figures.
100.0
6.1
6.9
195,506
208,980
Total equity and liabilities
7
0.0
→ see
note 6
Balance sheet structure - Group
54,107
209
38%
Current assets 40%
-70
62%
Non-current assets 60%
140
196
209
210
70
10
140
210
Balance sheet total in € billion
→ 57
Other assets were significantly higher than one year ear-
lier. The increase was attributable, among other items,
to the higher volume of return right assets for future
leased vehicles in conjunction with the introduction of
IFRS 15, higher receivables from companies in which
an investment is held and an increase in prepayments.
Further information relating to IFRS 15 is provided in
→ note 6 to the Group Financial Statements.
62
Economic Position
→ Results of Opera-
tions, Financial Posi-
tion and Net Assets
27.8
-9.7
3,281
2,964
Deferred and current tax
5.7
-1.2
11,999
11,854
Other provisions
1.1
-28.6
-28.4
3,252
2,330
Pension provisions
Liabilities in conjunction with assets held for sale
7.6
-14.4
1.4
-2.0
9.7
9.8
Financial liabilities
10.4
18,488
20,416
Other liabilities
66
-1.0
-0.6
4.6
9,669
103,597
9,731
9.5
8.2
94,648
Trade payables
49.6
Equity
2,177
Pension provisions
Registered profit-sharing certificates
Other provisions
Provisions
658
658
2,153
214
9,605
2,303
2,630
15,241
15,046
28
Unappropriated profit available for distribution
29
10,103
Revenue reserves
4,185
Subscribed capital
139
4,080
Cash and cash equivalents
Current assets
6,542
4,218
28,545
24,280
Capital reserves
Prepayments
483
Surplus of pension and similar plan assets over liabilities
668
1,290
Total assets
45,535
41,472
EQUITY AND LIABILITIES
535
7,824
Outlook
8,038
At €4,811 million (2017: €4,643 million), inventories
were higher than one year earlier due to an increase
in goods for resale.
Receivables from subsidiaries, most of which relate to
intragroup financing receivables, rose to €8,570 million
(2017: €7,641 million).
The increase in other receivables and other assets to
€3,595 million (2017: €2,827 million) was mainly due
to higher receivables from companies with which
an investment relationship exists and to higher tax
receivables.
Equity increased by €195 million to €15,241 million.
The equity ratio changed from 36.3% to 33.5 %, mainly
due to the increased balance sheet total.
In order to secure pension obligations, cash funds
totalling €550 million were transferred to BMW Trust
e. V., Munich, in conjunction with a Contractual Trust
Arrangement (CTA), to be invested in plan assets. Plan
assets are offset against the related guaranteed obliga-
tions. The resulting surplus of assets over liabilities is
reported in the BMW AG balance sheet on the line item
Surplus of pension and similar plan assets over liabilities.
Provisions for pensions increased from €139 million
to €214 million, after offsetting of pension liabilities
with pension assets.
Other provisions decreased year on year, mainly due
to a change in the valuation method used for provisions
for warranties, goodwill and product guarantees as
well as to a reduction in litigation and liability risks.
Additions to provisions for selling and marketing
obligations had an offsetting effect.
Liabilities to banks decreased by €420 million, mainly
as a result of the repayment of project-related loans.
The carrying amount of investments decreased to
€3,559 million (2017: €3,676 million), mainly as a result
of an impairment loss of €119 million (2017: reversal
of impairment losses of €70 million) recognised on the
investment in SGL Carbon SE, Wiesbaden in order to
reduce its carrying amount to the lower market value.
The increase in liabilities to subsidiaries in the amount of
€4,483 million was mainly due to intragroup refinancing.
Deferred income increased by €483 million to
€3,168 million and included mainly amounts for
services still to be performed relating to service and
maintenance contracts.
Cash and cash equivalents increased by €2,324 million
to €6,542 million, mainly due to the surplus from
operating activities and as a result of the higher level
of financial liabilities to subsidiaries. The repayment
of loans as well as the payment of the dividend for
the previous financial year had an offsetting effect.
Risks and opportunities
BMW AG's performance is essentially dependent on
the same set of risks and opportunities that affect the
BMW Group and which are described in detail in the
Report on Outlook, Risks and Opportunities section
of the Combined Management Report. As a general
rule, BMW AG participates in the risks entered into
by Group companies in proportion to the respective
shareholding percentage.
BMW AG is integrated in the group-wide risk man-
agement system and internal control system of the
BMW Group. Further information is provided in the
section Internal Control System Relevant for Accounting
and Financial Reporting Processes within the Combined
Management Report.
Due to its significance in the Group and its close ties
with Group companies, expectations for BMW AG
with respect to its financial and non-financial
performance indicators correspond largely to the
BMW Group's outlook for the Automotive segment.
This is described in detail in the Report on Outlook,
Risks and Opportunities section of the Combined
Management Report.
2,827
KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin, has
issued an unqualified audit opinion on the financial
statements of BMW AG, of which the balance sheet and
the income statement are presented here. The BMW AG
financial statements for the financial year 2018 will be
submitted to the operator of the electronic version of
the German Federal Gazette and can be obtained via the
Company Register website. These financial statements
are available from BMW AG, 80788 Munich, Germany.
Liquidity within the BMW Group is managed centrally
by BMW AG on the basis of a group-wide liquidity
concept. This involves concentrating a significant part
of the Group's liquidity at the level of BMW AG. An
important instrument in this context is the cash pool
based at BMW AG. The liquidity position reported
by BMW AG therefore reflects the global activities of
BMW AG and other Group companies.
Capital expenditure on intangible assets and prop-
erty, plant and equipment in the year under report
totalled €2,975 million (2017: €2,628 million), up by
13.2% compared to the previous year. Depreciation
and amortisation amounted to €2,470 million (2017:
€2,350 million).
41,472
2,685
8,608
Liabilities to banks
Trade payables
Liabilities to subsidiaries
Other liabilities
Liabilities
Deferred income
Total equity and liabilities
545
965
5,560
5,619
12,670
8,187
285
333
19,060
15,104
3,168
45,535
8,469
3,595
-4,078
8,570
-872
-1,563
Profit after income tax
2,820
3,213
Other taxes
Net profit
Transfer to revenue reserves
Income taxes
Unappropriated profit available for distribution
-16
2,801
3,197
-498
-567
2,303
2,630
Despite the higher number of deliveries, revenues
were 1.1% lower than in the previous financial
year. The decrease was mainly due to exchange-rate
effects, selling price adjustments and the change in
the valuation method used to measure provisions for
warranties, goodwill and product guarantees. In geo-
graphical terms, the decrease mainly related to Europe
and the USA. Revenues totalled €78,355 million (2017:
€79,215 million), of which Group internal revenues
accounted for €58,707 million (2017: €59,736 million)
or 74.9% (2017: 75.4%).
-19
-541
-1,452
Financial result
79,215
-63,841
-62,817
14,514
16,398
883
-3,958
Administrative expenses
-2,803
-2,733
Research and development expenses
-5,859
-5,168
Other operating income and expenses
1,026
-303
Result on investments
2,344
1,081
Cost of sales increased by 1.6% to €63,841 million,
mostly due to the higher number of deliveries and the
rise in cost of materials. The change in the valuation
method used for provisions for warranties, goodwill
and product guarantees had an offsetting effect. Gross
profit decreased by €1,884 million to €14,514 million.
7,641
overall
Research and development expenses related mainly to
new vehicle models in conjunction with the continued
product offensive (including the new 3 Series and
X models), expenses for the development of refer-
ence architectures and drivetrain systems as well as
Property, plant and equipment
11,976
11,455
Investments
3,559
3,676
Tangible, intangible and investment assets
15,787
288
15,419
4,811
4,643
Trade receivables
Receivables from subsidiaries
Other receivables and other assets
Marketable securities
947
766
Inventories
252
Intangible assets
ASSETS
higher expenditure for the electrification of vehicles
and autonomous driving. Compared to the previous
year, research and development expenses increased
by 13.4%.
The net amount of other operating income and
expenses improved by €1,329 million to a net positive
amount of €1,026 million. The year-on-year change
resulted mainly from the reversal of provisions for
warranty, goodwill and product guarantees due to the
changed valuation method as well as to lower alloca-
tions or higher reversals to provisions for litigation
and liability risks.
Results on investments benefited from higher income
arising under profit transfer arrangements with Group
companies. By contrast, the financial result deteriorated
year-on-year by €911 million, mainly due to higher
interest expenses for pension liabilities and expenses
incurred for the corresponding plan assets as well as
an impairment loss recognised on the investment in
SGL Carbon SE, Wiesbaden.
The expense for income taxes relates primarily to
current tax for the financial year 2018.
After deducting the expense for taxes, the Company
reported a net profit of €2,801 million, compared to
€3,197 million in the previous year.
82
62
Financial and net assets position
BMW AG Balance Sheet at 31 December
Combined
Management
Report
Report on
Economic Position
→ Comments on
Financial Statements
of BMW AG
→ 63
in € million
2018
2017
Selling and administrative expenses went up
year-on-year, partly reflecting the impact of the larger
workforce as well as higher expenses for selling and
marketing obligations.
84
Deliveries to customers: slight increase expected
The BMW Group expects a further year-on-year
increase in deliveries of BMW, MINI and Rolls-Royce
brand vehicles and aims to occupy a leading posi-
tion in the global premium segment again in 2019.
Balanced growth in major sales regions will help to
compensate for volatilities in individual markets.
Assuming economic conditions do not deteriorate,
deliveries to customers are forecast to rise slightly to
a new high (2018: 2,490,664¹ units).
Management
Report
units).
2 Fuel consumption
and CO₂ emis-
sions information
are available
on page 108.
3 EU-28
Deliveries to customers: solid increase expected
The BMW Group expects business in the Motorcycles
segment to develop positively in the current year.
Business is predicted to benefit from the extensive
measures taken to rejuvenate the segment's product
range in the previous year as well as from the array
of new models presented at international motorcy-
cle trade fairs in autumn 2018. The addition of the
mid-class C 400 GT Scooter has also expanded the
segment's product range designed for the urban
environment. Overall, a solid increase in deliveries
of BMW motorcycles to customers is forecast for 2019
(2018: 165,566 units).
EBIT margin in target range between 8 and 10%
expected
The EBIT margin in the Motorcycles segment in 2019
is forecast to lie within the target range between 8 and
10% (2018: 8.1%).
(2018: 459,581 Motorcycles segment
Return on capital employed: solid increase expected
Due to the product initiatives described above, the
Motorcycles segment is expected to generate a solid
year-on-year increase in RoCE in 2019 (2018: 28.4%).
The long-term target RoCE of 26% for the Motorcycles
segment will therefore be surpassed.
Return on equity expected at previous year's level
The BMW Group forecasts a stable business per-
formance for the Financial Services segment in the
financial year 2019. The return on equity is expected
to remain at the previous year's level (2018: 14.8%).
Gross profit
Cost of sales
Revenues
4
81
Financial Services segment
2017
Combined
As stated in the Annual Report 2017, the use of
return on capital employed (RoCE) as a performance
indicator was due to be reviewed, partly in connec-
tion with the introduction of IFRS 16 (Leases). The
review confirmed the significance of ROCE as a key
performance indicator, in particular with a view to
managing profitability and capital efficiency. The use
of this indicator is also closely linked to the Group's
project-oriented management logic.
88
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
1 Includes the
joint venture
BMW Brilliance
Automotive,
Shenyang Ltd.
→ Outlook
78,355
The BMW 8 Series Coupé launched in November 2018
and the new X5 models are expected to contribute
to sustained growth. Moreover, in autumn 2018 the
BMW Group announced the launching of numerous
new models during the first quarter of 2019. These
include the seventh generation of the BMW 3 Series
Sedan, the new BMW 8 Series Convertible and the
new BMW X7 and Z4 models. Other new models
will follow over the course of 2019. The Rolls-Royce
Cullinan², which has been available to customers since
November 2018, is expected to stimulate demand and
make an important contribution to the success of the
Company.
Fleet CO2 emissions³: slight decrease expected
Given that the effects of the conversion to WLTP and
the further course of the diesel debate are difficult to
assess, any forecast for 2019 is subject to a particu-
larly high degree of uncertainty. Nevertheless, the
BMW Group aims to reduce its average fleet CO2 emis-
sions slightly for the year 2019 (2018: 128 g CO2/km).
EBIT margin in target range between 6 and 8%
expected
Against the background of the challenges referred
to above, an EBIT margin within a range of 6 to 8%
is expected for the Automotive segment the core
business of the BMW Group - for the 2019 financial
year (2018: 7.2%).
Return on capital employed: significant decrease
expected
Automotive segment
88
2018
→ 62
-0.4% Minority interest
19.5% Group
9.3% Shareholders
11.2% Government/public sector
9.2% Providers of finance
24.9 Net value added
79
50.4% Employees
Cost of materials 53.5
13.1 Other expenses
Depreciation and amortisation 8.5
in %
→ 61
BMW Group value added 2018
C
in € million
Combined
Report on
BMW AG Income Statement
Results of operations
80
60
At 31 December 2018, BMW AG employed a workforce
of 89,842 people (31 December 2017: 87,940 people).
BMW AG develops, manufactures and sells automo-
biles and motorcycles as well as spare parts and acces-
sories manufactured in-house, by foreign subsidiaries
and by external suppliers, and performs services
related to these products. Sales activities are carried
out primarily through branches, subsidiaries, inde-
pendent dealerships and importers. In 2018, BMW AG
increased automobile deliveries by 25,782 units to
2,519,897 units. This figure includes 490,582 units
relating to series sets supplied to the joint venture
BMW Brilliance Automotive Ltd., Shenyang, an
increase of 93,833 units over the previous year.
Management
Report
Business environment and review of operations
The general and sector-specific environment of BMW AG
is essentially the same as that of the BMW Group and is
described in the Report on Economic Position section
of the Combined Management Report.
The key financial and non-financial performance
indicators for BMW AG are essentially identical and
concurrent with those of the Automotive segment of
the BMW Group. These are described in detail in the
Report on Economic Position section of the Combined
Management Report.
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
based in Munich, Germany, is the parent company of
the BMW Group. The comments on the BMW Group
and Automotive segment provided in earlier sections
apply to BMW AG, unless presented differently in
the following section. The Financial Statements of
BMW AG are drawn up in accordance with the pro-
visions of the German Commercial Code (HGB) and
the relevant supplementary provisions contained in
the German Stock Corporation Act (AktG).
COMMENTS ON FINANCIAL
STATEMENTS OF BMW AG
Financial Statements
of BMW AG
→ Comments on
Economic Position
Differences between the accounting treatment of the
German Commercial Code and International Financial
Reporting Standards (IFRS), according to which the
BMW Group Financial Statements are prepared, are
mainly to be found in connection with the capitali-
sation of intangible assets, the creation of valuation
units, the recognition and measurement of financial
instruments and provisions as well as the recognition
of deferred tax assets. Differences also arise in the
presentation of assets and liabilities and of items in
the income statement.
87
The Automotive segment's RoCE is expected to drop
significantly in 2019 (2018: 49.8%). The decrease is
partly due to the introduction of IFRS 16 (Leases).
Further reasons are higher investments in the elec-
trification of the vehicle fleet, digitalisation, the expan-
sion and rejuvenation of the model portfolio and the
expansion of the production network. Furthermore,
the segment's earnings trend is likely to have a damp-
ening effect on RoCE. However, the long-term target
ROCE of at least 26% for the Automotive segment will
be surpassed.
note 5
Economic momentum in the USA is expected to weaken
only slightly compared with the previous year. The
high employment rate, combined with the ongoing
economic stimulus from the tax reform, should con-
tinue to have a positive impact on economic activity in
2019, as a result of which the economy is expected to
grow by 2.4%. The US Federal Reserve will most likely
continue pursuing a moderately restrictive monetary
policy. Unexpected developments, in particular in US
domestic policy, could result in a less favourable outlook.
In China, reducing overcapacities and strengthening
domestic consumption will continue to have priority
in 2019. Against this backdrop, GDP is still forecast
to rise by 6.2%. Achieving a balance between short-
term measures aimed at stabilising the economy and
restructuring the Chinese economy on a long-term
basis will remain the government's most difficult task.
Therefore, the risk of a significant economic downturn
in China cannot be entirely ruled out.
The Japanese economy is forecast to grow by only
1.0% in 2019. Demand for capital goods as well as
domestic consumer spending could help drive growth.
The weak yen is also likely to bolster exports.
Emerging markets could see growth on a par with the
previous year, with economic expansion predicted
for India (+7.3%), Russia (+1.4%) and Brazil (+2.4%).
85
98
86
Combined
Management
Report
The UK's economic performance in the outlook period
will be influenced significantly by the progress of EU
exit negotiations. The lack of planning certainty con-
tinues to weigh on companies and private households
alike. Consequently, GDP growth of only 1.4% is
forecast for 2019. Uncertainty remains at a high level.
Report on Outlook,
Opportunities
→ Outlook
Currency markets
Currencies of particular importance for the interna-
tional operations of the BMW Group are the US dollar,
the Chinese renminbi, the Japanese yen and the
British pound. All of these currencies are expected
to remain volatile in 2019.
The US economy is likely to remain strong in 2019,
potentially giving the US Federal Reserve more scope
for further interest rates hikes. The Fed has announced,
however, that it will take a more cautious approach in
2019 than in previous years. After ending its securities
purchasing programme, the ECB indicated the possi-
bility of an interest rate increase in the third quarter
2019 at the earliest, which would mean a departure
from its highly expansive monetary policy. In this
context, the euro could gradually appreciate in value
against the US dollar over the course of 2019.
The economic links between the USA and China sug-
gest that the Chinese renminbi is likely to develop
relatively synchronously to the US dollar. For this
reason, the renminbi is expected to depreciate slightly
against the euro in 2019.
The value of the British pound is currently being
determined to a large extent by the progress of Brexit
negotiations. Accordingly, the most likely scenario is
a volatile sideways movement of the pound against
the euro.
The Japanese central bank's highly expansionary
monetary policy is unlikely to change in 2019, so
that the euro/yen exchange rate will probably follow
a sideways trend. However, it cannot be ruled out
that the euro will appreciate slightly against the yen.
Risks and
The currencies of numerous emerging markets could
come under pressure against the US dollar and the
euro, due to the continuing normalisation of monetary
policies in the USA and Europe, which could result in
capital outflows from emerging markets. This applies in
particular to countries such as Russia, Brazil and India.
Gross domestic product in the eurozone is only
expected to grow by around 1.5% in 2019. Germany's
economy should see growth on a similar scale (+1.4%).
The growth prospects of other member states in the
eurozone are expected to be on the modest side.
France (+1.4%) and Italy (+0.7%) are likely to see an
increase in GDP over the outlook period. Based on an
expected growth rate of 2.2%, the Spanish economy
is set to grow faster than the eurozone average.
Economic outlook
Report on Outlook,
Risks and
Opportunities
→ Outlook
REPORT ON OUT-
LOOK, RISKS AND
OPPORTUNITIES
Growth in deliveries planned
EBIT margin in the range
of 6 to 8%
Global economic growth is currently forecast at just
over 3% in 2019. At the same time, the outlook for
the global economy remains exposed to an array of
uncertainties. These include above all the exit negotia-
tions between the EU and the UK as well as the future
foreign trade policy of the US administration. In the
event of unfavourable developments, global growth
could be significantly affected. The debt situation of
Chinese companies as well as the high level of national
debt in Japan and some eurozone countries could
also jeopardise stability on financial markets. Last
but not least, the global economy could also be neg-
atively impacted by excessively restrictive monetary
policies imposed by the Fed in the USA and the ECB
in Europe. Further information on political and global
economic risks is also available in the section Risks
and Opportunities.
Business environment remains
volatile
The report on outlook, risks and opportunities describes
the expected development of the BMW Group, includ-
ing the significant risks and opportunities, from a
Group management perspective. In line with the
Group's internal management system, the outlook
covers a period of one year. Risks and opportunities
are managed on the basis of a two-year assessment.
The report on risks and opportunities therefore
addresses a period of two years.
The report on outlook, risks and opportunities con-
tains forward-looking statements. These are based
on the BMW Group's expectations and assessments
and are subject to uncertainty. As a result, actual out-
comes can deviate either positively or negatively from
the expectations described below - for example on
account of political and/or economic developments.
The continuous forecasting process ensures the
BMW Group's ability to exploit opportunities quickly
and systematically as they arise and react in a similar
way to unexpected risks. The principal risks and
opportunities are described in detail in the section
Risks and Opportunities. The matters discussed
therein are relevant for all of the BMW Group's key
performance indicators and could result in variances
between the outlook and actual outcomes.
Assumptions used in the outlook
The following outlook relates to a forecast period
of one year and is based on the composition of the
BMW Group during that time. The outlook takes
account of all information available at the time of
reporting, and any which could have an effect on the
overall performance of the Group. The expectations con-
tained in the outlook are based on the BMW Group's
forecasts for 2019 and reflect its most recent status.
Along with other inputs, they represent a consensus
of opinions of leading organisations, such as economic
research institutes and banks. The basis and principal
assumptions of the forecast are set out below:
In the UK, the ongoing uncertainties in connection with
the Brexit negotiations are impairing the reliability of
forecasts drawn up by businesses. This applies to the
BMW Group as well, which could be further adversely
affected due to the necessary preparations. Notwith-
standing these difficulties, the assumption is that the
UK will leave the EU in an orderly manner.
The BMW Group also anticipates that trade tensions
between the USA and China will continue to be a
source of uncertainty. The Group also assumes that
trade between the EU and the USA will not be subject
to additional tariffs.
The BMW Group and Daimler AG are merging their
mobility services in a new joint venture. Following
approval by the antitrust authorities, the agreement
between the two companies was concluded with effect
from 31 January 2019. It is currently assumed that the
impact on earnings during the forecast period will be
of minor significance.
OUTLOOK
88
Selling expenses
In China, fiscal policy will focus on safeguarding the
country's financial stability. In order to bolster the
economy in the event of an aggressive trade war, the
Chinese central bank could reduce the minimum
reserve ratio and cut taxes further.
Additionally, the forecast for China is a decrease of
0.6% in passenger car registrations to 23.0 million
units. The downward trend on the Japanese auto-
mobile market is set to continue in 2019 (5.0 million
units; -2.4%).
Registrations in Russia are expected to rise by around
8.4% in 2019 to 1.8 million units on the back of
economic recovery. In Brazil, registration figures are
also expected to increase by 11.6% to 2.3 million units
in the current year.
International motorcycle markets
The BMW Group expects the world's motorcycle mar-
kets in the 250 cc plus class to grow slightly in 2019.
In Europe, the upward trend is expected to continue
in the major markets of Germany, France, Italy and
Spain. Conversely, the US motorcycle market is fore-
cast to see a slight fall in new registrations in 2019.
International interest rate environment
A moderate slowdown is predicted for the global
economy in 2019. The main reasons for slower growth
are the weaker impact of fiscal incentives in the USA
accompanied by tighter monetary policies in many
emerging markets. Unemployment in many indus-
trialised countries is at a low level.
In view of significantly increasing economic risks,
low inflation and political pressure to maintain loose
monetary policies, the ECB is not expected to raise
its benchmark interest rate from the current record
low of zero per cent until the economic climate has
brightened.
The uncertainty surrounding the ongoing Brexit nego-
tiations will continue to weigh on the UK economy
in 2019. The Bank of England's monetary policy over
the coming months will be geared to managing the
economic impact of the Brexit negotiations.
The US Federal Reserve is likely to pursue a more
restrictive monetary policy again in 2019.
After a weaker performance in 2018, a reversal of
this trend in 2019 is not expected for registrations
on international automobile markets (85.5 million
units; -0.3%).
Japan's central bank is likely to maintain its ultra-ex-
pansive monetary policy in order to drive inflation
and stimulate the economy.
The USA is unlikely to maintain a sustainable recovery
in 2019 after the previous year's dip. Based on current
forecasts, the downward trend in US registrations is
likely to continue (17.0 million units; −1.6%).
Expected consequences for the BMW Group
Future developments on international automobile
markets also have a direct impact on the BMW Group.
While competition could intensify further in contract-
ing markets, new opportunities may appear in growth
regions. Challenges in the competitive environment
will have a significant effect on sales volumes in
some countries. Due to its global business model, the
BMW Group is well placed at all times to capitalise
on any opportunities that present themselves, even at
short notice. Coordination between the Group's sales
and production networks also enables it to balance
out the impact of unforeseeable developments in the
various regions. Investments in markets important for
the future also form a basis for further growth, while
simultaneously strengthening the global presence of
the BMW Group. Thanks to its three premium brands –
BMW, MINI and Rolls-Royce the BMW Group
expects the positive development in vehicle deliveries
-
In view of increasingly unpredictable political devel-
opments, actual economic performance in some
regions may deviate from expected trends and out-
comes. Potential sources of political unpredictability
include policies affecting trade and customs tariffs,
security developments and possible further interna-
tional trade conflicts.
Group
Profit before tax: significant decrease expected
Competition on international automobile markets
is set to remain fierce in 2019. Furthermore, politi-
cal and economic developments in Europe remain
increasingly uncertain. Above all, this is due to the
currently unforeseeable impact of Brexit. In addition,
it is difficult to predict how trade tensions between the
USA and the EU on the one hand and the USA and
China on the other are likely to develop. Volatilities
on international currency and raw materials markets
could also have a negative impact on Group profit
before tax. Further information is provided in the
macroeconomic risks and opportunities section of
the Risks and Opportunities Report.
The BMW Group holds a leading position among com-
petitors in various new fields of technology, including
digitalisation and autonomous driving. Given its firm
intention to expand in these areas, investments in
future-oriented projects will remain at a high level.
The BMW Group also plans to electrify drivetrain
systems across its entire model portfolio. Additional
challenges are likely to arise in the future as a conse-
quence of new regulatory measures. The production
network will also be further expanded during the
outlook period. Due to these external challenges and
the upfront expenditure necessary to secure future
operations, the Group's pre-tax profit is expected to
decrease significantly (2018 adjusted: €9,627 million).
Workforce size at year-end expected at previous
year's level
In connection with the projects referred to above, the
need for suitably qualified staff across the BMW Group
will remain high during the current year. According
to current estimates, the size of the workforce is
expected to remain at the previous year's level (2018:
134,682 employees).
Outlook for the BMW Group
Application of International Financial Reporting Stan-
dard IFRS 16 (Leases) is mandatory with effect from
1 January 2019. Comparative figures for the year 2018
are required to be adjusted accordingly. In order to
ensure a transparent presentation of changes in key
financial performance indicators, the outlook shows
values adjusted in accordance with IFRS 16 as well as
the actual values reported for 2018. With regard to key
financial performance indicators for 2019, the outlook
is based on values for 2018 adjusted in accordance with
IFRS 16. Further information on IFRS 16 is provided in
→ note 5 to the Group Financial Statements.
→ see
International automobile markets
to continue.
Europe's automobile markets are forecast to see a
slight increase (15.8 million units; +1.0%), with contri-
butions to growth coming particularly from Germany
(3.5 million units; +1.9%). In France (2.2 million
units; -0.3%) and Italy (1.9 million units; -0.2%),
automobile markets are likely to contract slightly
in 2019. For the UK, registration forecasts are also
negative (2.3 million units; -2.3%).
BMW AG STOCK AND
20183 2019
→ 08
BOARD OF MANAGEMENT
in € million
11,000
CAPITAL MARKETS IN 2019
FINANCIAL CALENDAR
CONTACTS
1
To Our
Shareholders
BMW Group in
Figures
Report of the
Supervisory Board
Statement
STATEMENT OF THE
CHAIRMAN OF THE
the Chairman of
the Board of
Management
BMW AG Stock and
Capital Markets
80
10,675
To Our
→ Report of the
Supervisory Board
Norbert Reithofer
Chairman of the Supervisory Board
REPORT OF THE
SUPERVISORY BOARD
20182 2019
2017
2016
2015
5,500
7,118
9,224
9,627
9,665
Shareholders
of
2017
Power of Choice
9,386
9,593
Group profit before financial result (EBIT)1
-3.0
-19,443
-18,875
-17,306
-20,017
-19,097
Eliminations1
-16.7
5
6
9,899
7
7
Other Entities
6.8
29,598
27,705
27,567
25,681
23,739
9.0
2,368
2,173
2,272
2,069
6
8,933
7,411
-17.0
-575
Eliminations¹
29
-27
14
-17
169
Other Entities
6.4
2,312
2,172
2,194
2,184
1,981
Financial Services¹
10.9
194
175
207
187
182
Motorcycles
-27.2
4,499
6,182
7,888
7,695
7,836
Automotive
1,990
Financial Services¹
Motorcycles
6.8
Total capital expenditure²
Change in %
2019
2018
2017
2016
2015
in € million
→ 04
Further financial performance figures
0.2
15.0
14.8
18.1
21.2
20.2
RoE in % (change in %pts)
FINANCIAL SERVICES SEGMENT
1.0
29.4
28.4
34.0
33.0
31.6
ROCE in % (change in %pts)
0.1
8.2
8.1
9.1
5,890
-663
5,823
8,013
91,682
85,846
85,742
86,424
85,536
Automotive
7.6
104,210
96,855
98,282
94,163
92,175
Group revenues¹
-5.4
2,567
2,713
4,459
5,792
5,404
Free cash flow Automotive segment
17.7
6,017
5,113
4,822
4,806
4,659
Depreciation and amortisation
-2.9
7,784
7,112
9.0
-404
377
1,300
2,468.7 2,483.3 2,538.4
2,352.4
2,257.9
2,600
ANNUAL REPORT 2019
in 1,000 units
→ 07
BMW Group revenues
→ 05
BMW Group deliveries of automobiles 1,2
→ BMW Group
in Figures
Shareholders
0
To Our
5
3 Group profit before tax as a percentage of Group revenues.
2 Expenditure for capitalised development costs, other intangible assets and property, plant and equipment.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
1 Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
-3.1
6.8
9.9
10.9
10.3
10.0
Pre-tax return on sales ¹³ in % (change in %pts)
-29.5/-29.5
60
2015
2016
2017
2016
2015
55
96.9
92.2 94.2
98.3
110
104.2
in € billion
³ Prior year's figures adjusted due to a change in accounting policy in connection with the
adoption of IFRS 16; see note 6 to the Group Financial Statements. In addition, figures for
the prior year have been adjusted due to changes in presentation of selected items, which
are not material overall.
2018³ 2019
2017
2016
2015
5,500
7,411
8,933
9,386
9,899
9,593
11,000
in € million
→ 06
BMW Group profit before financial result (EBIT)
² Delivery figures have been adjusted retrospectively going back to 2015. The basis for the
adjustments is a review of sales data in prior periods for the BMW Group's most important
markets (China, USA, Germany, UK, Italy and Japan). The retrospective adjustment en-
ables better comparability. Additional information can be found in the section "Comparison
of Forecasts for 2019 with Actual Results in 2019".
(2015: 281,357 units, 2016: 311,473 units, 2017: 385,705 units, 2018: 455,581 units,
2019: 538,612 units).
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
2019
2018
-28.9
5,022
7.47/7.49
10.60/10.62
44
6.0
2,272
2,143
2,207
2,166
1,975
Financial Services¹
10.7
187
169
205
185
179
Motorcycles
-36.0
4,467
6,977
8,717
7,916
7,523
Automotive
-26.1
7,118
9,627
10,675
9,665
9,224
Group profit before tax (EBT)1
-12.5
Other Entities
431
211
80
15.4
-29.9
4,978
7,097
-33
7,064
8,675
13.07/13.09
10.45/10.47
6,910
6,396
9.70/9.72
Earnings per share¹ in €
Group net profit'
Profit/loss from discontinued operations
8,675
6,910
6,396
Profit/loss from continuing operations¹
-2,140
-2,530
-2,000
-2,755
-2,828
Group income taxes¹
-24.8
288
383
-534
-772
-664
Eliminations¹
-96
-45
170
9.1
1,989,817
358,586
4,037
2,352,440
MOTORCYCLES SEGMENT
GROUP
→ 01
Key non-financial performance indicators
BMW GROUP IN FIGURES
→ BMW Group
in Figures
To Our
Shareholders
the Board of
Management
BMW AG Stock and
Capital Markets
Statement of
the Chairman of
Report of the
Supervisory Board
BMW Group in
Figures
To Our
Shareholders
1
→Page 24 Contacts
Workforce at year-end¹
→Page 24 Financial Calendar
→ Page 18 Statement of the Chairman of the Board of Management
→Page 8 Report of the Supervisory Board
→Page 4 BMW Group in Figures
TO OUR SHAREHOLDERS
→ annualreport.bmwgroup.com/2019
Discover the Power of Choice from Rob, Faith and
Sachiko as well as our financial year 2019 in our
digital Annual Report.
themselves what
they want and
desire. That's the
Power of Choice.
Ultimately, they
decide for
mobility demands.
Our customers
across the globe
have different
For further details of the official fuel consumption figures and official specific CO2 emissions
of new cars, please refer to the "Manual on fuel consumption, CO₂ emissions and power
consumption of new cars", available at www.dat.de/co2/.
The figures have been calculated based on the new WLTP test cycle and adapted to NEDC
for comparison purposes. In these vehicles, different figures than those published here may
apply for the assessment of taxes and other vehicle-related duties which are (also) based
on CO₂ emissions.
The figures for fuel consumption, CO₂ emissions and power consumption are calculated
based on the measurement methods stipulated in the current version of Regulation
(EU) 715/2007. This information is based on a vehicle with basic equipment in Germany;
ranges take into account differences in wheel and tire size selected as well as optional
equipment and can change based on configuration. Fuel consumption and CO2 emissions
information are available on page 70.
→Page 22 BMW AG Stock and Capital Markets in 2019
2015
2016
2017
MANAGEMENT REPORT
→Page 26 General Information and Group Profile
→Page 26 Organisation and Business Model
→ Page 44 Management System
→Page 48 Report on Economic Position
→ Page 48 General and Sector-specific Environment
→Page 52 Overall Assessment by Management
→Page 53 Comparison of Forecasts for 2019 with Actual Results in 2019
→Page 64 Review of Operations
→Page 76 Comments on Financial Statements of BMW AG
→ Page 82 Report on Outlook, Risks and Opportunities
→Page 82 Outlook
→ Page 88 Risks and Opportunities
2,483,292
128
2,468,658
128
2,352,440
124
127
Fleet emissions in g CO2/km 4,5
2,257,851
Deliveries 2,3
AUTOMOTIVE SEGMENT
-0.7
133,778
134,682
129,932
124,729
122,244
Change in %
2019
2018
ROB VAN ROON
NETHERLANDS
SOUTH AFRICA
FAITH MKHOMBE
JAPAN
→ Page 200
→Page 200 Corporate Governance
CORPORATE
GOVERNANCE
4
List of Investments at 31 December 2019
→ Page 190
Segment Information
→Page 184
Other Disclosures
→Page 164
Notes to the Statement of Comprehensive Income
Notes to the Balance Sheet
→ Page 142
→ Page 141
Notes to the Income Statement
→ Page 133
Accounting Principles and Policies
Notes to the Group Financial Statements
→ Page 116
Statement of Changes in Equity
→Page 114
→Page 112 Cash Flow Statement
Balance Sheet
→Page 110
Statement of Comprehensive Income
→Page 108
3
GROUP FINANCIAL
STATEMENTS
EBIT margin in % (change in %pts)
→Page 108 Income Statement
→ Page 201
COMBINED
(Part of the Combined Management Report)
Information on the Company's Governing Constitution
Board of Management
Supervisory Board
TADAMI SACHIKO
→Page 256 BMW Group Ten-year Comparison
OTHER INFORMATION
5
→Page 247 Independent Auditor's Report
Responsibility Statement by the
Company's Legal Representatives
Glossary - Explanation of Key Figures
(Part of the Combined Management Report)
Compensation Report
Compliance and Human Rights in the BMW Group
→ Page 246
→Page 242
→ Page 211
→Page 208
Overview of Supervisory Board committees
and their composition
→ Page 207
Members of the Supervisory Board
→ Page 204
Members of the Board of Management
→ Page 203
Explanatory Comments
→ Page 102 Disclosures Relevant for Takeovers and
Corporate Governance Statement
→Page 202
→Page 202 Declaration of Compliance
Shareholders and Annual General Meeting
→Page 202
Internal Control System Relevant for Accounting and
Financial Reporting Processes
→ Page 101
→ Page 201
2
→ Page 116
→Page 24 Financial Calendar
4 EU-28.
1 Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time working arrangements and low income earners.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2015: 281,357 units, 2016: 311,473 units, 2017: 385,705 units, 2018: 455,581 units, 2019: 538,612 units).
3 Delivery figures have been adjusted retrospectively going back to 2015. The basis for the adjustments is a review of sales data in prior periods for the BMW Group's most important markets
(China, USA, Germany, UK, Italy and Japan). The retrospective adjustment enables better comparability. Additional information can be found in the section "Comparison of Forecasts for 2019
with Actual Results in 2019".
5.0
2,003,782
1,908,640
1,828,604
1,811,157
1,655,961
15.0
187,116
162,687
185,682
145,555
5 From 2018, adjusted value based on planned conversion to WLTP (Worldwide Harmonised Light Vehicles Test Procedure).
151,004
FINANCIAL SERVICES SEGMENT
BMW
Production volume
MOTORCYCLES SEGMENT
0.9
25.3
5,455
2,564,025
-4.3
352,729
1.7
2,205,841
2,168,496
368,685
4,353
2,541,534
2,123,947
378,486
3,308
2,505,741
New contracts with retail customers
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2015: 287,755 units, 2016: 305,726 units, 2017: 396,749 units, 2018: 491,872 units, 2019: 536,509 units).
Key financial performance indicators
→ 03
→Page 24 Contacts
29.0
-20.8
49.8
77.7
74.3
72.2
ROCE in % (change in %pts)
4.9
7.2
9.2
8.9
9.2
EBIT margin in % (change in %pts)
AUTOMOTIVE SEGMENT
-26.1
7,118
9,627
10,675
9,665
9,224
Profit before tax¹ in € million
Change in %
2019
2018
2017
2016
2015
GROUP
2,002,997
352,580
4,179
2,359,756
2,279,503
-2.3
Total6
165,566
164,153
145,032
136,963
Deliveries
MOTORCYCLES SEGMENT
-0.8
2.2
2,538,367
127
BMW
GROUP
THE NEXT
100 YEARS
GEORGIAS
HT 3616A
EG
B
M
MINI
Rolls-Royce
Motor Cars Limited
CONTENTS
→Page
→Page
1
4 BMW Group in Figures
8 Report of the Supervisory Board
1,933,647
342,008
3,848
→Page 18 Statement of the Chairman of the
Board of Management
Page 22 BMW AG Stock and Capital Markets in 2019
175,162
5.8
TO OUR SHAREHOLDERS
→ 02
BMW6
MINI
Further non-financial performance figures
2.2
Rolls-Royce
21.6
5,100
-4.6
347,474
3.3
2,185,793
2,114,963
364,135
4,194
2,483,292
2,093,026
372,194
3,438
2,468,658
BMW Group profit before tax
2,538,367
Total 2,3
AUTOMOTIVE SEGMENT
2015
2016
2,257,851
2017
2018
2019
Production volume
Deliveries
Rolls-Royce³
BMW 2,3
1,913,213
340,880
3,758
MINI³
Change in %
Given the long lead times in developing new prod-
ucts and processes, additional opportunities are not
expected to have a significant impact on earnings
during the outlook period.
Risks relating to production processes and technology
fields can lead to unplanned interruptions in produc-
tion or additional costs due to vehicle recall actions.
If risks arising from production processes and tech-
nologies were to materialise, they could have a high
earnings impact over the two-year assessment period.
The corresponding risk amounts are classified as high.
During the process of expanding the division-based
perspective by a process-oriented perspective, the
individual risks were combined to create an overall
view of the development and production process. As
a result, the risk assessment was increased compared
to the previous year.
Risks and opportunities relating to operations
Risks and opportunities relating to production
and technologies
have been, or are being, introduced, including entry
restrictions, congestion charges or, in some situations,
highly restrictive registration rules. These may impact
local demand for the BMW Group vehicles affected
and hence have a negative impact on sales, margins
and, possibly, the residual values of these vehicles.
The BMW Group is addressing this risk, for example,
by broadening its range of electrified vehicles.
Local restrictions affecting product usage in specific
sectors may limit BMW Group sales in individual mar-
kets. In some urban areas, for instance, local measures
A potential further intensification in competition
could put pressure on sales volumes, selling prices and
margins. For instance, the planned introduction of the
RDE II standard could result in market distortions -
similar to those which arose on the conversion to the
new WLTP test procedure in 2018 – even though the
BMW Group is compliant with the new requirements.
Changes in customer behaviour can also be brought
about by changes in attitudes, values, environmental
factors and fuel or energy prices. The BMW Group's
flexible sales and production processes enable risks to
be reduced and newly arising opportunities in market
and product segments to be taken.
Risks and opportunities relating to purchasing
Purchasing risks relate primarily to supply risks caused
by the failure of a supplier as well as to threats to
BMW Group-relevant know-how within the supplier
network. Production problems at the level of suppliers
could lead to consequences from increased expendi-
ture for the BMW Group to production interruptions
and a corresponding reduction in sales volume.
The increasing complexity of the supplier network,
especially at the level of lower tier suppliers, whose
operations can only be influenced indirectly by the
BMW Group, is a further potential cause of down-
times at supplier locations. Moreover, the increased
threat of cyberattacks along the value chain affects
supply security maintenance and the protection of
BMW Group-relevant know-how. In order to ensure
a uniform level of information security for all parties
concerned along the value chain, the BMW Group
impresses on suppliers the importance of obtaining
appropriate IT security certification. The BMW Group
employs a comprehensive set of monitoring and
proactive control measures to ensure that supply
industry participants are able to rise to the current
challenges facing them.
of new competitors could also have effects which are
difficult to predict. Unforeseen consumer preferences
and changes in brand perceptions can give rise to
opportunities and risks. If market risks were to mate-
rialise, they could have a high earnings impact over
the two-year assessment period. The risk amount is
classified as high.
emergence
New opportunities are being sought to create added
value for customers, and thereby to realise significant
opportunities with respect to sales growth and pric-
ing. Further development of the product and mobil-
ity portfolio and expansion in growth regions offer
the most important medium- to long-term growth
opportunities for the BMW Group. Continued growth
depends above all on the ability to develop innovative
products and services and bring them to market. If the
negative impact of the current competitive situation
is reduced more quickly than expected, additional
opportunities will arise for the BMW Group. Com-
pared to the assumptions made in the outlook, the
BMW Group expects these opportunities to have no
significant earnings impact over the two-year assess-
ment period.
Potential causes of production downtimes include fire,
machine and tooling breakdowns, IT malfunctions,
temporary disruption in utility supply or transporta-
tion and logistical disruptions. All production units
have a variety of measures in place to deal with
potential production interruptions and downtimes,
some of which are integrated into the planning
process and can be implemented operationally with
a high degree of flexibility. These measures are highly
relevant in terms of both the amount of damage and
the probability of occurrence of risks. Examples
include the interchangeability of production facilities,
preventive maintenance of production facilities, the
maintenance of adequate safety stock levels and the
management of spare parts across the plant network.
94
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
Technical fire protection systems, rapid response by
on-site fire brigades and appropriate employee train-
ing represent the three key strategies for preventing
or reducing potential damage from fires. Furthermore,
policies are in place with insurance companies of high
credit standing for fire-related events that lead to
significant production interruptions at the Group's
or at suppliers' premises. Measures undertaken in
conjunction with the latest challenges posed by Brexit
include appropriate increases in levels of safety stocks,
enhancing flexibility along the supply chain and estab-
lishing specific IT solutions to handle related financial
and logistics processing issues. In addition, in order
to counter the risk of limited availability of products,
particularly at the start of production for new vehicle
projects, appropriate quality management processes
are in place to monitor and secure their success.
Targeted cyberattacks could cause damage to pro-
duction facilities, resulting in long downtimes and,
consequently, substantial losses. This threat is being
countered by the rollout of new detection, analysis
and response measures.
Vehicles may be damaged or destroyed due to natural
hazards or other risks during transport from produc-
tion plants to the sales regions. As a consequence
of the growing number of major claims, deductible
amounts included in transport insurance policies have
already risen significantly. In fact, as more and more
insurance companies withdraw from this market seg-
ment, there is a risk that it could become economically
unviable to take out insurance, as a result of which the
BMW Group would be required to bear the losses itself.
The BMW Group recognises appropriate provisions
for statutory and non-statutory warranty obligations.
It cannot be ruled out, however, that additional costs
could arise in connection with vehicle recall actions
that are either not covered or not fully covered by pro-
visions. Despite thorough quality assurance processes,
such risks can always arise if materials and/or
processing procedures used prove insufficient, in
some cases years after the launch of a product. Further
information on risks relating to provisions for statutory
and non-statutory warranty obligations is provided in
→ note 33 of the Group Financial Statements.
→ see
note 33
The BMW Group sees opportunities in production
processes and technology fields primarily through
the competitive edge gained from mastering new
and complex technologies. Digitalisation within the
production area is being driven by technological and
IT innovations. Lean processes will remain the basis
for efficient production systems in the future. Digital
solutions invariably offer added value if they add to
the efficiency of serial processes. A good example of
this in the field of production logistics is the use of
smart transport robots, which help optimise processes
relating to parts handling and order picking.
In addition to economic factors and sector-specific
political conditions, increasingly fierce competition
among established manufacturers and the
93
Risk is also reduced through flexible working hour
models and working time accounts as well as the
ability to build individual vehicle models or engine
types with a high degree of flexibility - either addi-
tionally or alternatively - at other sites, depending on
requirements. The focus is on ensuring that customers
can take delivery of their vehicle, both on time and
in the premium quality expected.
→ Risks and
Opportunities
The BMW Group's earnings could also be positively
affected in the short to medium term by changes in
trade policies. A possible reduction in tariff barri-
ers, import restrictions or direct excise duties could
lower the cost of materials or enable products and
services to be offered to customers at lower prices.
Further opportunities for the earnings performance
of the BMW Group from changes in legislation and
regulatory requirements compared to the outlook are
classified as insignificant.
Medium
Stable Insignificant
Stable Significant
Stable Significant
Stable
Stable
If purchasing risks were to materialise, they could have
a high earnings impact over the two-year assessment
period. The level of risk attached to purchasing risks
is classified as medium. Through an intensified imple-
mentation of measures regarding fire protection and
protection from cyberattacks at the level of suppliers,
the risk has decreased compared to the previous year.
Decreased
Stable
Stable
91
97
Macroeconomic risks and opportunities
Economic conditions influence business performance
and hence the results of operations, financial posi-
tion and net assets of the BMW Group. Unforeseen
disruptions in global economic relations can have
highly unpredictable effects. Economic risks can
result in lower purchasing power in the countries
and regions affected and cause reduced demand for
the products and services offered by the BMW Group,
while at the same time having a negative impact on
production. Macroeconomic risks could - due to sales
volume fluctuations have a high earnings impact
over the two-year assessment period. Overall, the
risk amounts attached to macroeconomic risks are
classified as high.
In view of the political events of recent years, global
economic developments continue to be subject to a
high degree of uncertainty, in particular with respect
to potential barriers to global trade. A reorientation
of US economic policy, changes within the EU and
possible economic agendas by parties within the EU
that are critical of globalisation and could therefore
jeopardise stability could lead to more restrictive trade
practices in the coming years.
A possible introduction of further trade barriers,
including anti-dumping customs duties and duties
aimed at protecting national security by the
US administration, could have a significantly adverse
impact on the BMW Group's operations through
less favourable conditions for importing vehicles.
Moreover, countermeasures by the USA's trading
partners could slow down global economic growth
and have a sustained adverse impact on the export
of vehicles produced in the USA. The BMW Group's
"production follows the market" strategy involves
local production both in the USA and with other
important trade partners. Local production reduces
the existing risk of trade barriers. Nevertheless, any
increase in trade barriers would have an adverse
impact on the BMW Group.
42
92
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
The withdrawal of the UK from the EU could have
a long-term adverse impact on the BMW Group,
particularly as a result of increased trade barriers in
the form of customs duties in relation to the Euro-
pean single market. Any such trade barriers could
have a negative impact on volumes and costs both
for vehicles and components produced in the EU
for the UK as well as those produced in the UK for
the European market. In extreme cases, this could
result in production losses due to delays in customs
clearance. In addition, it cannot be ruled out that
Brexit could lead to reduced customer spending in the
wake of weaker economic performance, particularly
in the UK, but also in parts of the EU. In the short and
medium term, uncertainty regarding the outcome of
the negotiations with the EU on a trade agreement by
31 December 2020 is likely to exacerbate these factors
and cause further unfavourable currency effects. A
possible further economic downturn in countries of
the EU could also potentially reduce growth prospects
for the BMW Group. European integration with a
unified economic and currency area is an important
pillar of economic stability in Europe.
The transition in China from an investment-driven to
a consumer-driven economy is associated with slower
growth rates and, potentially, greater instability in
the short to medium term on financial markets. If
the Chinese economy were to grow at a significantly
slower pace than expected, the consequence would
be not only a decline in automobile sales, but also,
potentially, lower demand for raw materials, which
would have a negative impact above all on emerging
economies such as Brazil, Russia or South Africa.
A drop in raw material prices could result for the
BMW Group in lower demand from these countries,
while at the same time bringing down raw material
procurement costs for the BMW Group. Turmoil on
the Chinese property, stock and banking markets
as well as the pursuit of overly restrictive monetary
policies by the US Federal Reserve could pose consid-
erable risks for global financial market stability, such
as increased currency fluctuations and unfavourable
consequences for emerging markets in particular.
Furthermore, increasing political unrest, military con-
flicts, terrorist activities, natural disasters or pandemics
could have a lasting negative impact on the global
economy and international capital markets.
The enormous uncertainty currently regarding the
global spread and impact of the coronavirus makes
it difficult to make an accurate forecast of vehicle
deliveries. If the sales situation across all markets
does not normalise after a few weeks, further effects
on the BMW Group's vehicle deliveries to customers
as well as on upstream and downstream processes
may materialise that cannot be assessed in terms of
either their duration or negative impact. The Group
is observing the situation closely and is taking appro-
priate measures.
Should the global economy develop significantly
better than presented in the outlook, opportunities
could arise for the BMW Group's revenues and earn-
ings. Significantly stronger GDP growth in China,
demand-oriented reforms within the eurozone, the
intensification of trade relations between the EU and
the UK, de-escalation of the trade dispute between
the USA and its trading partners or more robust
consumer spending in emerging markets due to ris-
ing raw material prices could result in significantly
stronger sales volume growth, reduced competitive
pressures and corresponding improvement in pric-
ing. The planned expansion of production capacities
will enable emerging opportunities to be exploited.
Macroeconomic opportunities that could generate
a sustainable impact on earnings are currently clas-
sified by the BMW Group as insignificant.
Strategic and sector risks and opportunities
Changes in legislation and regulatory requirements
The sudden introduction of more stringent legis-
lation and regulations, particularly with regard to
emissions, safety and consumer protection as well
as regional vehicle-related purchase and usage taxes,
represents a significant risk for the automobile indus-
try. Country- and sector-specific trade barriers may
also change at short notice. A sudden tightening
of regulations in any of these areas may necessi-
tate significantly higher investments and ongoing
expenses or influence customer behaviour. If the risk
of market disruptions as a result of unforeseeable
short-term changes in legislation and regulations
were to materialise, this could have a high negative
impact on earnings over the two-year assessment
period and beyond. The risk amount attached to
these risks is classified as high.
At present, the BMW Group can observe a continu-
ous trend towards more stringent vehicle emissions
regulations, particularly in relation to conventional
drivetrain systems. The BMW Group is addressing this
risk on the one hand through its ongoing systematic
development of highly efficient combustion engines,
with the aim of further reducing fuel consumption and
emissions. At the same time, it is pressing ahead with
its plan for electrified vehicles across all brands and
model series. A main focus area of the BMW Group is
the systematic electrification of all brands and model
series. By the end of 2021, the BMW Group aims to
have more than one million electrified vehicles on
the roads.
Further risks can result from the tightening of existing
import and export regulations. These lead primarily
to additional expenses, but can also restrict imports
and exports of vehicles or parts.
An established regulatory framework for innovative
mobility solutions as well as government incentives
are important prerequisites for introducing product
innovations, such as automated driving, and for
scaling up the range of electric mobility offerings.
In the case of BMW Group electrified vehicles, a
faster expansion of charging infrastructure could
increase acceptance and help boost sales of planned
or recently introduced product innovations com-
pared to forecast. This includes implementation of
the 360° ELECTRIC portfolio in the field of electric
mobility and collaboration with Toyota on hydrogen
fuel cell technology.
Market development
Close cooperation between carmakers and suppliers in
the development and production of vehicles and the
provision of services generates economic benefits, but
also raises levels of dependency. Potential reasons for
the failure of individual suppliers include in particular
IT-related risks, non-compliance with sustainability or
up,
95
Pension obligations are influenced in particular by
fluctuations of market yields on corporate bonds, as
well as by other economic and demographic para-
meters. Opportunities and risks arise depending
on changes in these parameters. If risks relating to
pension obligations materialised, they could have a
high earnings impact over the two-year assessment
period. Despite the high level of external funding,
the risk amounts relating to pension obligations are
classified as high. Within a favourable capital mar-
ket environment, the return generated by growth-
oriented pension assets may exceed expectations and
reduce the deficit of the relevant pension plans. This
could have a significantly favourable impact on the
net asset position of the BMW Group.
note 39
Future pension payments are discounted on the basis
of market yields on high-quality corporate bonds.
These yields are subject to market fluctuation and
therefore influence the level of pension obligations.
Changes in other parameters, such as rises in infla-
tion and longer life expectancy, also impact pension
obligations and payments.
Regulatory requirements can influence the amount
of pension obligations. The BMW Group's pension
obligations are mainly held in external pension funds
or trust arrangements and the related assets legally
separated from those of the Group. The amount of
funds required to finance pension payments out
of operations in the future is substantially reduced
by the fact that the Group's pension obligations
are mainly settled out of pension fund assets. The
pension assets of the BMW Group comprise inter-
est-bearing securities, equities, real estate and other
investment classes. Assets held by pension funds and
trust arrangements are monitored continuously and
managed on a risk-and-return basis. Diversification
of investments also helps to mitigate risk. In order
to reduce fluctuations in pension funding shortfalls,
investments are structured to match the timing of
pension payments and the expected development of
pension obligations. Remeasurements on the liability
and fund asset sides are recognised net of deferred
taxes in other comprehensive income and hence
directly in equity (within revenue reserves).
Further information on risks in conjunction with
→ see pension provisions is provided in → note 32 of the
Group Financial Statements.
note 32
Risks and opportunities relating to the
Financial Services segment
The categories of risk relating to financial services
comprise credit and counterparty risk, residual value
risk, interest rate risk, operational risks and liquidity
risk. Evaluation of liquidity risk for the Financial
Services segment is included in the liquidity risk
category for the Group as a whole.
The segment's total risk exposure was covered at all
times during the 2019 financial year by the avail-
able risk-covering assets. As a result, the Financial
Services segment's risk-bearing capacity was assured
at all times.
46
97
96
98
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
Credit and counterparty risks and opportunities
relating to the Financial Services segment
Credit and counterparty default risk arises within the
Financial Services segment if a contractual partner
(e.g. a customer or dealer) either becomes unable or
only partially able to fulfil its contractual obligations,
so that lower income is generated or losses incurred.
If credit and counterparty risks were to materialise,
they could have a medium earnings impact over the
two-year assessment period. The risk amount is clas-
sified as medium. The BMW Group classifies potential
opportunities in this area as insignificant.
Initial and continuous creditworthiness testing is
an important aspect of the BMW Group's credit risk
management. For this reason, every borrower's credit-
worthiness is tested for all credit financing and leasing
contracts entered into by the BMW Group. Opportu-
nities may arise if the managed portfolio performs
better over time than estimated when the credits were
granted. Intensive management of purchasing pro-
cesses and collateral assessment as well as favourable
macroeconomic developments could boost these
opportunities. In the case of retail customer financing,
creditworthiness is assessed using validated scoring
systems integrated into the purchasing process. In
the area of dealership financing, creditworthiness is
assessed by means of ongoing credit monitoring and
an internal rating system that takes account not only
of the material credit standing of the borrower, but
also of qualitative factors such as past reliability in
business relations. Changes in the creditworthiness of
customers arising during the credit term are covered
by risk provisioning procedures. The credit risk of the
individual customers is quantified on a monthly basis
and, depending on the outcome, taken into account
within the risk provisioning system. Macroeconomic
developments are currently subject to a higher degree
of volatility. If developments are more favourable than
assumed in the outlook, credit losses may be reduced,
leading to a positive earnings impact.
Residual value risks and opportunities relating to the
Financial Services segment
Risks and opportunities arise in conjunction with
leasing contracts if the market value of a leased vehicle
at the end of the contractual term of a lease differs
from the residual value estimated at the inception
of the lease and factored into the lease payments. A
residual value risk exists if the expected market value
of the vehicle at the end of the contractual term is
lower than its estimated residual value at the date
the contract is entered into. If residual value risks
were to materialise, they could have a high earnings
impact from the Group's perspective over the two-year
assessment period. A high earnings impact would
then arise for the affected Financial Services and
→ see
note 39
Automotive segments. The risk amount is classified
as high for the Group as a whole. Opportunities can
arise out of a positive deviation between the actual
market value and the original residual value forecast.
The BMW Group classifies potential residual value
opportunities as significant.
Medium
Each vehicle's estimated residual value is calculated
on the basis of historical external and internal data.
This estimation provides the expected market value
of the vehicle at the end of the contractual period.
Developments on pre-owned car markets represents
an important factor for the BMW Group. In 2019, the
electrification of vehicles also played a major role in
the public debate. Prices in pre-owned vehicle markets
in the premium segment remained within the normal
range. As part of the management of residual value
risks, the net present value of risk costs is calculated
at contract inception. Market developments are
observed throughout the contractual period and the
risk assessment updated.
Risks and opportunities relating to
pension obligations
95
Further information on risks in conjunction with
financial instruments is provided in → note 39 to the → see
Group Financial Statements.
The major part of the Financial Services segment's
credit financing and leasing business is refinanced on
capital markets. Liquidity risks can arise in the form
of rising refinancing costs or from restricted access to
funds as a consequence of the general market situation.
If liquidity risks were to materialise, they would be
likely to have a low earnings impact over the two-year
assessment period. The risk amount associated with
liquidity risk, including the risk of the BMW Group's
rating being downgraded, is classified as low.
quality standards, insufficient financial strength of a
supplier, the occurrence of natural hazards, fires and
insufficient supply of raw materials.
As part of supplier preselection, the BMW Group
checks for compliance with the sustainability standards
for the supplier network. This includes consideration of
and compliance with internationally recognised human
rights and applicable labour and social standards.
In addition, the technical and financial capabilities
of suppliers are monitored, especially where mod-
ular-based production is concerned. Supplier sites
are assessed for exposure to natural hazards, such as
floods or earthquakes, in order to identify supply risks
regarding parts and materials at an early stage and
implement appropriate precautions. Fire risks at series
suppliers are evaluated by means of questionnaires,
compliance with a defined set of criteria and selective
site inspections. The risks associated with the supply
of raw materials are countered by reducing the use
of raw materials or substituting them with alternative
raw materials.
By monitoring and developing global supplier markets,
the BMW Group continuously strives to optimise its
competitiveness by working together with the world's
best product and service providers.
Within the Purchasing and Supplier Network, oppor-
tunities arise above all in the area of global sourcing
and associated efficiency improvements. Making
good use of suppliers' innovations is an important
prerequisite for developing future-oriented mobility
products and services. Similarly, favourable loca-
tion-specific cost factors, in particular those arising
in connection with local supplier structures in close
proximity to new and existing BMW Group produc-
tion plants as well as the introduction of innovative
production technologies, could lead to lower cost
of materials for the BMW Group. One goal of the
BMW Group is to have battery cells manufactured
in Europe. A key prerequisite for this is the further
development of battery cell technology and exper-
tise of the processes for cell production. Contracts
have been concluded with various suppliers as part
of the electrification strategy. Integration of previ-
ously unidentified innovations from the supplier
market in the Group's product range could provide
a further source of opportunities. The BMW Group
offers innovative suppliers numerous possibilities for
creating specific contractual arrangements which are
attractive for those developing innovative solutions.
Compared to the assumptions made in the outlook,
the BMW Group does not expect such additional
opportunities to have a significant earnings impact
over the two-year assessment period.
Risks and opportunities relating to the sales network
In order to sell its products and services, the BMW Group
employs a global sales network, comprising primarily
independent dealerships, branches, subsidiaries and
importers. In addition, a pilot project for direct sales
will be launched in South Africa in 2020. Any threat
to the continued activities of parts of the sales network
would entail risks for the BMW Group. The occur-
rence of sales and marketing risks is associated with
a low earnings impact over the two-year assessment
period. The risk amount is classified as low.
New developments in the field of digital commu-
nication and connectivity in particular offer new
opportunities for the BMW Group's brands. Based
on data from the vehicle, customers can elect to use a
specified service, at which stage they will be required to
consent to the transfer of the relevant telematics data.
Service providers that are requested to perform the
work receive the necessary data via the BMW Group's
secure back-end. This information provides the basis
for customised, data-based and innovative service
options. Additional opportunities could arise if new
sales channels contribute to greater brand reach to
customer groups than currently envisaged in the
outlook. Compared to the assumptions made in the
outlook, the BMW Group expects these opportunities
to have no significant earnings impact over the two-
year assessment period.
Information, data protection and IT
Increasing digitalisation across all areas of business
places considerable demands on the confidentiality,
integrity and availability of electronically processed
data and the associated use of information technology
(IT). In addition to the increased threat of cybercrime,
regulations covering the handling of personal data are
becoming more stringent, for example as a result of
the EU General Data Protection Regulation. If risks
relating to information security, data protection and
IT were to materialise, they could have a high earnings
impact over the two-year assessment period. Despite
extensive security measures and constant efforts to
ensure compliance with applicable data protection
legislation, the risks in this area are classified as high.
In addition to cyberattacks and direct physical inter-
vention, lack of knowledge or misconduct on the
part of employees may also represent a danger to the
confidentiality, integrity and availability of informa-
tion, data and systems. Direct consequences include
expenditure required to limit the immediate damage
and to restore systems promptly. Negative impacts on
revenue due to the non-availability of products and
services or disruptions in the production of compo-
nents or vehicles are also possible. A further indirect
result could be reputational damage.
96
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Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
With the advance of digitalisation, the BMW Group
is improving the customer experience in its existing
lines of business. At the same time, new business
segments are emerging, which have only become
feasible as a result of innovation in the area of
information technology. The development and pro-
vision of digital services for customers, increased
vehicle connectivity and automated driving solu-
tions are opening up new opportunities. Via BMW
ConnectedDrive and BMW CarData, the range of
services and apps on offer to customers is constantly
being expanded and updated. Since March 2019,
the BMW Intelligent Personal Assistant enables
customers to access functions and information by
voice interaction with an intelligent, digital charac-
ter. The BMW Group expects these opportunities
to have no significant earnings impact over the
assessment period as compared to the assumptions
made in the outlook.
Financial risks and risks relating to the use of
financial instruments
Currency risks and opportunities
As an internationally operating enterprise, the
BMW Group conducts business in a variety of cur-
rencies, thus giving rise to currency risks and oppor-
tunities. A substantial portion of Group revenues,
purchasing and funding occur outside the eurozone
(particularly in China and the USA). Regularly up-
dated cash-flow-at-risk models and scenario analyses
are used to measure currency risks and opportunities.
If currency risks were to materialise, they could be
associated with a medium earnings impact over
the two-year assessment period. The risk amount
attached to currency risks is classified as medium.
Significant opportunities can arise if currency devel-
opments are favourable for the BMW Group.
Operational currency management is based on the
results of currency risk analyses. The BMW Group
manages currency risks at both strategic (medium and
long term) and operational level (short and medium
term). Medium- and long-term measures include
increasing production volumes and purchase volumes
in foreign currency regions (natural hedging). Currency
risks are managed in the short to medium term and for
operational purposes by means of hedging on financial
markets. The principal objective is to increase planning
reliability for the BMW Group. Hedging transactions
are entered into only with financial partners of good
credit standing. Opportunities are also secured through
the use of options during specific market phases.
Risks and opportunities relating to
raw material prices
As a large-scale manufacturing company, the
BMW Group is exposed to purchase price risks, par-
ticularly in relation to raw materials used in vehicle
production. The analysis of raw material price risk
is based on planned purchases of raw materials and
components containing those raw materials. If risks
relating to raw materials prices were to materialise,
they could have a medium earnings impact over
the two-year assessment period. The risk amount is
classified as medium. Significant opportunities could
arise if raw materials prices developed favourably for
the BMW Group.
Changes in commodity prices are monitored on the
basis of a well-defined management process. The
principal objective is to increase planning reliability
for the BMW Group. Price fluctuations for precious
metals (platinum, palladium, rhodium), non-ferrous
metals (aluminium, copper, lead, nickel) and, to some
extent, for steel and steel ingredients (iron ore, coking
coal) and energy (gas, electricity) are hedged using
financial derivatives and supply contracts with fixed
pricing arrangements.
Liquidity risks
Based on the experience of the financial crisis, a
liquidity concept has been drawn
which is rigor-
ously adhered to and continuously developed. Use
of the "matched funding principle" to finance the
Financial Services segment's operations generally
eliminates liquidity risks. Solvency is assured at all
times throughout the BMW Group by maintaining a
liquidity reserve and by the broad diversification of
refinancing sources. Regular measurement and mon-
itoring ensure that cash inflows and outflows for the
various maturities and currencies offset each other.
This approach is incorporated in the BMW Group's
liquidity concept. The liquidity position is monitored
continuously and managed through Group-wide
planning of financial requirements and funding. A
diversified refinancing strategy reduces dependency
on any specific type of instrument. Moreover, the
BMW Group's solid financial and earnings position
results in high credit ratings from internationally
recognised rating agencies.
Medium
RISKS AND OPPORTUNITIES
Macroeconomic risks and opportunities
Medium
The following criteria apply for the purposes of clas-
sifying the risk amount:
Opportunities management system and
opportunity identification
A dynamic market environment also gives rise to
opportunities. The BMW Group continually monitors
macroeconomic trends as well as developments within
the sector and overall environment. This includes
external regulations, suppliers, customers and com-
petitors. Identifying opportunities is an integral part of
the strategic planning process of the BMW Group. The
Group's product and service portfolio is continually
reviewed on the basis of these analyses. This results,
for example, in new product projects being presented
to the Board of Management for consideration. Prob-
able measures aimed at increasing profitability are
already incorporated in the outlook.
Continuous monitoring of major business processes
and strict cost controls are essential for ensuring
strong profitability and return on capital employed.
In order to be able to compete successfully in the long
term and at the same time help advance the move
towards climate neutrality that is being demanded by
politicians and society alike, it is the BMW Group's
policy to design flexible platforms for rear- and front-
wheel drive vehicles, enabling it to produce different
drivetrain systems on the back of a single architecture
and therefore optimise plant structures.
The implementation of identified opportunities is
undertaken on a decentralised basis within the rele-
vant functions. The significance of opportunities for
the BMW Group is classified on a qualitative basis in
the categories "significant" and "insignificant".
Class
Low
Medium
High
Risk amount
> €0-50 million
> €50-400 million
> € 400 million
Risks and opportunities
The following table provides an overview of all risks
and opportunities and indicates their significance
for the BMW Group. Overall, no risks which could
threaten the continued existence of the BMW Group
were identified either at the balance sheet date or at
the date on which the Group Financial Statements
were drawn up.
Opportunities
Change compared
to prior year
Risks
Classification of Change compared
risk amount
to prior year
Classification
High
The risk amount, which indicates the significance of
risks for the BMW Group, corresponds to the average
earnings impact, taking into account probability of
occurrence and risk mitigation measures that are
already taking effect.
> €2,000 million
> €500-2,000 million
> €0-500 million
Interest rate risks and opportunities relating to the
Financial Services segment
This formal structure reinforces the network's visibility
and underlines the importance of risk management
within the BMW Group. Responsibilities and tasks
of the centralised risk management function and the
Network Representatives are clearly documented and
accepted. In view of the dynamic growth of business
and the increasingly volatile environment in which it
operates, the BMW Group's Corporate Audit reviews
its risk management system for effectiveness and
appropriateness on an annual basis.
Other functions such as compliance (see the section
Corporate Governance) and the internal control sys-
tem (see the section Internal Control System) form
key interfaces with the risk management system.
As an independent part of the organisation, Group
Internal Audit also ensures the appropriateness and
effectiveness of these functions.
During 2019, the risk management system was fur-
ther enhanced by focusing on the concept of simula-
tion-based risk aggregation and by looking at risks not
only from the perspective of areas of responsibility, but
also from a process-oriented perspective, with a view to
improving the informative value of risk-bearing capac-
ity and in order to gain a better insight into the chains
of effects between individual risks. For this purpose,
individual risks from different areas of responsibil-
ity were allocated to the relevant process steps and
dependencies between individual risks mapped out.
Risk management process
The risk management process covers the entire Group
and comprises the early identification of risks, detailed
analysis and risk assessment, the coordinated use of
relevant management tools as well as monitoring and
evaluation of measures taken.
Significant risks reported from within the network are
firstly presented for review to the Risk Management
Steering Committee, chaired by Group Controlling.
After review, the risks are reported to the Board of
Management and the Supervisory Board. All risks
are assessed using a loss distribution approach,
thereby enabling better comparability of risks for
both internal and external reporting purposes. Risks
are classified according to the extent of their average
earnings impact, taking into account the probability of
occurrence (risk amount) or the risk-bearing capacity
(potential worst-case earnings impact).
Risk assessment for the BMW Group is performed in
conjunction with the calculation of risk-bearing capac-
ity. For this purpose, risks measured on a worst-case
basis are aggregated using a value-at-risk model
(99% confidence level) with correlation effects taken
into account, and compared with the asset cushion.
The risk-bearing capacity is regularly monitored by
means of an integrated limit system for individual
risk categories.
The risk management system is regularly examined
by Group Internal Audit. The incorporation of
new insights and requirements ensures continual
improvement to the system. Training programmes
and information events are regularly conducted
across the BMW Group, particularly within the risk
management network. These measures are essential
ways of preparing those involved in the process for
new or additional demands.
Alongside comprehensive risk management, sustain-
able business practice also constitutes a core strategic
principle for the BMW Group. Sustainability-related
risks are therefore also integrated in the Group-wide
risk network. In accordance with the CSR Directive
Implementation Act, risks that can have an impact on
the non-financial aspects referred to in the law were
reviewed as part of the reporting process. Significant
risks in this context are defined as risks from business
activities, business relationships and products/ser-
vices of the BMW Group that are highly likely to
have a serious adverse impact. No significant risks
were identified during the review. The Group's Non-
Financial Declaration is provided in the Sustainable
Value Report 2019, which is available on the Internet
at → www.bmwgroup.com/svr.
In the Financial Services segment risk management also
addresses regulatory requirements, such as Basel III.
Internal methods to identify, measure, manage and
monitor risks within the Financial Services segment
comply with national and international standards.
Risk management within the Financial Services busi-
ness is built on the prevailing risk culture, the defined
risk strategy, the internal capital adequacy assessment
process framework and a set of rules comprising prin-
ciples and guidelines. The risk management process
is ensured in organisational terms by means of a clear
division between front- and back-office activities and
a comprehensive internal control system. The main
tool used to manage risks within the Financial Services
segment is ensuring the segment's risk-bearing capac-
ity. Risks - in the sense of unexpected losses - must
be covered at all times. This is achieved by means of
risk-covering assets (asset cushions) in the form of
equity capital derived from the entity's risk appetite.
Unexpected losses are measured according to various
value-at-risk models, which are validated at regular
intervals. Risks are also aggregated after taking
account of correlation effects. In addition to assessing
the Group's ability to bear risk, stress scenarios are
also examined. The segment's risk-bearing capacity
is also regularly monitored by means of an integrated
limit system for the various risk categories.
Stable
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Risks and
Opportunities
→ Risks and
Opportunities
Risk measurement
Based on their significance with respect to the results
of operations, financial position and net assets of the
BMW Group, risks are classified as high, medium or
low. The impact of risks is measured and reported net
of risk mitigation measures that are already taking
effect (net basis).
In the following sections, "earnings impact" is used
consistently to cover the overall impact on results of
operations, financial position and net assets.
The potential earnings impact arising on the occur-
rence of a risk, measured on the basis of a worst-case
scenario over the two-year assessment period, is
classified as follows:
Class
Low
Medium
High
Potential earnings impact
in a worst case scenario
90
Insignificant
Stable
Strategic and sector risks and opportunities
Information, data protection and IT
Financial risks and opportunities
Foreign currencies
Raw materials
Liquidity
Pension obligations
Risks and opportunities relating to the provision of financial services
Credit risk
Residual value
Interest rate changes
Operational risks
Legal risks
Stable
Medium
Significant
Stable
Medium
Stable
Significant
Stable
Low
Stable
High
Stable
Significant
Stable
Decreased
High
Insignificant
High
Changes in legislation and regulatory requirements
High
Stable
Insignificant
Stable
Market developments
High
Stable
Insignificant
Stable
Risks and opportunities relating to operations
Production and technology
Stable
High
Insignificant
Stable
Purchasing
Medium
Decreased
Insignificant
Stable
Sales network
Low
Stable
Insignificant
Stable
Increased
Interest rate risks in the Financial Services segment
relate to potential losses caused by changes in market
interest rates. These can arise when fixed interest rate
periods do not match for assets and liabilities recog-
nised in the balance sheet. If interest rate risks were
to materialise, they could have a medium earnings
impact over the two-year assessment period. The risk
amount is classified as medium. Favourable interest
rate developments compared to the outlook represent
opportunities which the BMW Group classifies as
significant. Interest rate risks in the Financial Services
business are managed by matching maturities for
refinancing and by employing interest-rate deriva-
tives. If the relevant recognition criteria are fulfilled,
derivatives used by the BMW Group are accounted for
as hedging instruments. Further information on risks
in conjunction with financial instruments is provided
in → note 39 to the Group Financial Statements.
Great importance is attached to the protection of the
confidentiality, integrity and availability of business
information as well as employee and customer data,
for instance as a result of unauthorised access or mis-
use. Data security is an integral component of all busi-
ness processes and is aligned with the International
Standard ISO/IEC 27001. As part of risk management,
information security, data protection and IT risks are
systematically documented, allocated appropriate
measures by the departments concerned and contin-
uously monitored with regard to threat level and risk
mitigation. Regular analyses and controls as well as
rigorous security management ensure an appropri-
ate level of security. Despite continuous testing and
preventative security measures, it is impossible to
eliminate risks completely in this area. All employees
are required to treat with care information such as
confidential business, customer and employee data,
to use information systems securely and to handle
risks with transparency. Group-wide requirements
are documented in a comprehensive set of principles,
guidelines and instructions, such as, for example, the
Privacy Corporate Rules for handling personal data.
Regular communication and awareness-raising mea-
sures create a high level of security and risk awareness.
With regard to cooperation agreements and business
partnerships, the BMW Group protects its intellec-
tual property as well as customer and employee data
through clear instructions on information security
and data protection and the use of information
technology. Information pertaining to key areas of
expertise as well as sensitive personal data are subject
to particularly stringent security measures. Technical
data protection incorporates industry-wide standards
and good practices. Responsibility for information
security and data protection lies for each Group
entity with the Board of Management or relevant
management team.
6,977
As well as shares of common stock, the Company
has also issued non-voting shares of preferred stock.
Further information can be found in the section
"Composition of subscribed capital".
When the Company issues non-voting shares of
preferred stock to employees in conjunction with its
Employee Share Programme, these shares are gener-
ally subject to a Company-imposed blocking period
of four years, calculated from the beginning of the
calendar year in which the shares are issued.
Contractual holding period arrangements also apply to
shares of common stock acquired by Board of Manage-
ment members and certain senior department heads
in conjunction with the share-based remuneration
programmes (Compensation Report of the Corporate
Governance section; → note 41 to the Group Financial
Statements).
Direct or indirect investments in capital exceeding
10% of voting rights
Based on the information available to the Company,
the following direct or indirect holdings exceeding
10% of the voting rights at the end of the reporting
period were held at the stated reporting date:¹
in %
Stefan Quandt, Germany
AQTON SE, Bad Homburg v. d. Höhe, Germany
Restrictions affecting voting rights or the transfer
of shares
AQTON Verwaltung GmbH, Bad Homburg v. d. Höhe, Germany
Susanne Klatten, Germany
Susanne Klatten Beteiligungs GmbH, Bad Homburg v. d. Höhe, Germany
1 Based on voluntary notifications provided by the listed shareholders as at 31 December 2018.
2 Controlled entities, of which 3% or more are attributed: AQTON SE, AQTON Verwaltung GmbH, AQTON GmbH & Co. KG für Automobilwerte.
3 Controlled entities, of which 3% or more are attributed: AQTON Verwaltung GmbH, AQTON GmbH & Co. KG für Automobilwerte.
4 Controlled entities, of which 3% or more are attributed: AQTON GmbH & Co. KG für Automobilwerte.
5 Controlled entities, of which 3% or more are attributed: Susanne Klatten Beteiligungs GmbH.
Direct share of
voting rights
Indirect share of
AQTON GmbH & Co. KG für Automobilwerte, Bad Homburg v. d. Höhe, Germany
voting rights
note 41
(c) uniform payment of any other dividends on
shares of common and preferred stock, provided
the shareholders do not resolve otherwise at
the Annual General Meeting
reporting processes at both individual entity and
Group level, taking account of the principle of the
separation of duties. Important accounting-related
IT systems incorporate controls which, among others,
prevent business transactions from being recorded
incorrectly and ensure that business transactions are
recorded completely and in good time and measured
properly in accordance with applicable requirements.
Controls are also in place to test the appropriateness
of consolidation procedures.
As part of the ongoing development of IT systems for
accounting and financial reporting processes, whether
at individual entity or Group level, such controls are
adapted to take account of new requirements and
opportunities arising with advances in information
technology. In addition, the BMW Group uses data
analysis tools to identify and subsequently eliminate
any control weaknesses.
Responsibilities for ensuring the effectiveness of
the internal control system in relation to individual
entity and Group accounting and financial reporting
processes are clearly defined and allocated to the rele-
vant line and process managers. These report annually
on their assessment of the effectiveness of the internal
control system for accounting and financial reporting.
The assessment also includes the results of internal
and external audits as well as of ongoing data analysis.
In this context, the Group's units confirm the effec-
tiveness of the internal control system for accounting
and financial reporting. The results of the assessment
are gathered and documented with the aid of appro-
priate tools. Weaknesses in the control system are
eliminated, taking into account their potential impact
on accounting processes. The Board of Management
and Audit Committee are briefed annually on the
assessment of the effectiveness of the internal control
system for accounting and financial reporting. The
Board of Management and, where appropriate, the
Supervisory Board are informed immediately in the
event of any significant changes in the effectiveness
of the internal control system.
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→ Disclosures Relevant
for Takeovers
→ see
and Explanatory
Comments
EXPLANATORY COMMENTS
Composition of subscribed capital
The subscribed capital (share capital) of BMW AG
amounted to €658,862,500 at 31 December 2019
(2018: €658,122,100) and, in accordance with Article 4
no. 1 of the Articles of Incorporation is sub-divided
into 601,995,196 shares of common stock (91.37%)
(2018: 601,995,196; 91.47%) and 56,867,304 shares of
non-voting preferred stock (8.63%) (2018: 56,126,904;
8.53%), each with a par value of €1. The Company's
shares are issued to bearer.
The rights and duties of shareholders derive from the
German Stock Corporation Act (AktG) in conjunction
with the Company's Articles of Incorporation, the
full text of which is available at www.bmwgroup.com. The
right of shareholders to have their shares evidenced
is excluded in accordance with the Articles of Incor-
poration. The voting power attached to each share
corresponds to its par value. Each €1 of par value
of share capital represented in a vote entitles the
holder to one vote (Article 18 no. 1 of the Articles of
Incorporation).
*Disclosures
pursuant to
§ 289a and
§315a HGB.
The Company's shares of preferred stock are shares
within the meaning of § 139 ff. AktG, which carry a
cumulative preferential right in terms of the allocation
of profit and for which voting rights are excluded.
These shares confer voting rights only in exceptional
cases stipulated by law, in particular when the prefer-
ence amount has not been paid or has not been fully
paid in one year and the arrears are not paid in the
subsequent year alongside the full preference amount
due for that year. With the exception of voting rights,
holders of shares of preferred stock are entitled to
the same rights as holders of shares of common stock.
Article 24 of the Articles of Incorporation confers
preferential treatment to the non-voting shares of
preferred stock with regard to the appropriation of the
Company's unappropriated profit. Accordingly, the
unappropriated profit is required to be appropriated
in the following order:
(a) subsequent payment of any arrears on dividends
on non-voting shares of preferred stock in the
order of accruement
(b) payment of an additional dividend of €0.02 per
€1 par value on non-voting preferred shares
DISCLOSURES RELEVANT
FOR TAKEOVERS* AND
0.2
25.62
9.0
An agreement concluded with an international
consortium of banks relating to a syndicated
credit line, which was not being utilised at the
balance sheet date, entitles the lending banks
to give extraordinary notice to terminate the credit
line, such that all outstanding amounts, including
interest, would fall due immediately if one or more
parties jointly acquire direct or indirect control
of BMW AG. The term control is defined as the
acquisition of more than 50% of the share capital
of BMW AG, the right to receive more than 50% of
the dividend or the right to direct the affairs of
the Company or appoint the majority of mem-
bers of the Supervisory Board.
A cooperation agreement concluded with
Peugeot SA relating to small (1- to 1.6-litre)
petrol engines entitles each of the cooperation
partners to give extraordinary notification of
termination in the event of a competitor acquiring
control over the other contractual party and if
any concerns of the other contractual party re-
garding the impact of the change of control on
the cooperation arrangements are not resolved
during the subsequent discussion process.
BMW AG acts as guarantor for all obligations aris-
ing from the joint venture agreement relating
to BMW Brilliance Automotive Ltd. in China. This
agreement grants an extraordinary right of termi-
nation to either joint venture partner in the event
that - either directly or indirectly - more than 25%
of the shares of the other party are acquired by a
third party or the other party is merged with
another legal entity. The termination of the joint
venture agreement may result in the sale of the
shares to the other joint venture partner or in the
liquidation of the joint venture entity.
Framework agreements are in place with finan-
cial institutions and banks (ISDA Master Agree-
ments) with respect to trading activities with
derivative financial instruments. These agree-
ments include an extraordinary right of termina-
tion which triggers actions in the event that the
creditworthiness of the party involved is signifi-
cantly weaker following a direct or indirect acqui-
sition of beneficially owned equity capital that
confers the power to elect a majority of the Super-
visory Board of a contractual party or any other
ownership interest that enables the acquirer to
exercise control over a contractual party or which
constitutes a merger or a transfer of net assets.
Financing agreements in place with the European
Investment Bank (EIB) entitle the EIB to request
early repayment of the loans in the event of an
imminent or actual change in control of BMW AG,
if the EIB has reason to assume - after the change
in control has taken place or 30 days after it has
made a request to discuss the situation - that the
change in control could have a significantly
adverse impact, or if the borrower refuses to hold
any such discussions. A change in control of
BMW AG arises if one or more individuals take
over or lose control of BMW AG, with control
being defined in the above-mentioned financ-
ing agreements as (i) holding or having control
over more than 50% of the voting rights, (ii) the
right to appoint the majority of the members of
the Board of Management or Supervisory Board,
(iii) the right to receive more than 50% of divi-
dends payable or (iv) any other comparable con-
trolling influence over BMW AG.
BMW AG and Daimler AG have entered into a
Joint Venture Agreement relating to mobility
services in the areas of car sharing, ride hailing,
parking, charging and multimodality, which
entitles both Daimler AG and BMW AG (here-
after principals) to initiate a bidding procedure
in the event that (i) the other principal receives
notice in accordance with § 33 of the German
Securities Trading Act (WpHG) that - including
shares attributed pursuant to § 34 WPHG - a
shareholding of more than 50% has been attained
or, in accordance with § 20 AktG of the German
Stock Corporation Act (AktG) that a sharehold-
ing of more than 50% has been attained or (ii)
a shareholder or a third party - including shares
attributed pursuant to § 30 WPHG - holds more
than 50% of the voting rights or shares in the
other principal, or (iii) the other principal has
concluded a control agreement as dependent
company. The outcome of such a bidding pro-
cedure is that the joint venture will go to the
principal making the highest bid.
-
Several supply and development contracts between
BMW AG and various industrial customers, all
relating to the sale of components for drivetrain
systems, grant an extraordinary right of ter-
mination to the relevant industrial customer in
specified cases of a change in control at BMW AG
(for example BMW AG merges with a third party
or is taken over by a third party; an automobile
manufacturer acquires more than 50% of the voting
rights or share capital of BMW AG).
BMW AG is party to the shareholder agreement
relating to There Holding B.V., which is the
majority shareholder of the HERE Group. In
accordance with the shareholder agreement,
each contractual party is required to offer its
directly or indirectly held shares in There
Holding B.V. for sale to the other shareholders
in the event of a change in control. A change
in control of BMW AG arises if a person or entity
takes over or loses control of BMW AG, with
control defined as (i) holding or having control
over more than 50% of the voting rights, (ii)
the possibility to control more than 50% of vot-
ing rights exercisable at Annual General Meet-
ings on all or nearly all matters, or (iii) the right
to determine the majority of members of the
Board of Management or the Supervisory Board.
Furthermore, a change in control occurs if com-
petitors of the HERE Group or certain potential
competitors of the HERE Group from the tech-
nology sector acquire at least 25% of BMW AG.
If none of the other shareholders acquire these
shares, the other shareholders are entitled to
resolve that There Holding B.V. be dissolved.
-
The development collaboration agreement between
BMW AG, Intel Corporation and Mobileye Vision
Technologies Ltd., relating to the development of
technologies used in highly and fully automated
vehicles, may be terminated by any of the con-
tractual parties if a competitor of one of the
parties acquires and subsequently holds at least
30% of the voting shares of one of the contrac-
tual parties.
The collaboration agreement between BMW AG
and Mercedes-Benz AG relating to the develop-
ment of technologies for second-generation auto-
mated driving (from 2024) may be terminated by
either party if a third party - directly or indirectly -
acquires at least 30% of the voting rights in one
of the contractual parties (§ 29 (2) and § 30 of the
German Securities Acquisition and Takeover
Act (WPÜG)).
BMW AG has agreed with Great Wall Motor
Company Limited to establish the joint venture
Spotlight Automotive Ltd. in China. The agree-
ment grants an extraordinary right of termina-
tion to either joint venture partner in the event
that – either directly or indirectly - more than
25% of the shares of the other party are acquired
by a third party or the other party is merged
with another legal entity. The termination of the
joint venture agreement may result in the sale
of the shares to the other joint venture partner
or in the liquidation of the joint venture entity.
105
106
Combined
Management
Report
→ Disclosures Relevant
for Takeovers
and Explanatory
Comments
Compensation agreements with members of the
Board of Management or with employees in the
event of a takeover bid
The development collaboration agreement between
BMW AG, FCA US LLC and FCA Italy S.p.A.,
relating to the development of technologies used
in automated vehicles, may be terminated by
any of the contractual parties if certain competi-
tors in the technology sector acquire and sub-
sequently hold at least 30% of the voting shares
of the other contractual party.
BMW AG is party to the following major agreements,
which contain provisions that would apply in the event
of a change in control or the acquisition of control as a
result of a takeover bid:
Significant agreements of the Company taking
effect in the event of a change in control following
a takeover bid
and Explanatory
Comments
16.63
16.64
16.6
0.2
20.75
20.7
The voting percentages disclosed above may have
changed subsequent to the stated date if these changes
were not required to be reported to the Company.
As the Company's shares are issued to bearer, the
Company is generally aware of changes in sharehold-
ings only if such changes are subject to mandatory
notification rules.
Shares with special rights which confer
control rights
There are no shares with special rights which confer
control rights.
Control of voting rights when employees
participate in capital and do not exercise their
control rights directly
Like all other shareholders, employees exercise their
control rights pertaining to shares they have acquired
in conjunction with the Employee Share Programme
and/or the share-based remuneration programme
directly on the basis of relevant legal provisions and
the Company's Articles of Incorporation.
Statutory regulations and Articles of Incorporation
provisions with regard to the appointment and
removal of members of the Board of Management
and changes to the Articles of Incorporation
The appointment or removal of members of the Board
of Management is based on the rules contained in
§84f. AktG in conjunction with § 31 of the German
Co-Determination Act (MitbestG).
Amendments to the Articles of Incorporation must
comply with $179 ff. AktG. Amendments must be
decided upon by the shareholders at the Annual
General Meeting (§ 119 (1) no.5, § 179 (1) AktG). The
Supervisory Board is authorised to approve amend-
ments to the Articles of Incorporation which only affect
its wording (Article 14 no. 3 of the Articles of Incorpo-
ration). Resolutions are passed at the Annual General
Meeting by simple majority of votes exercised unless
otherwise explicitly required by binding provisions
of law or, when a majority of share capital is required,
by simple majority of shares represented in the vote
(Article 20 no. 1 of the Articles of Incorporation).
Authorisations of the Board of Management in
particular with respect to the issuing or buying
back of shares
The Board of Management is authorised to buy back
shares and sell repurchased shares in situations spec-
ified in § 71 AktG, for example to avert serious and
imminent damage to the Company and/or to offer
shares to persons employed or previously employed
by BMW AG or one of its affiliated companies.
In accordance with Article 4 no. 5 of the Articles of
Incorporation, the Board of Management is authorised,
with the approval of the Supervisory Board, to increase
for cash contributions BMW AG's share capital during
the period until 15 May 2024 by up to €4,259,600 for
the purposes of an Employee Share Programme by
issuing new non-voting shares of preferred stock,
which carry the same rights as existing non-voting
preferred stock (Authorised Capital 2019). Subscrip-
tion rights of existing shareholders are excluded. No
conditional capital is in place at the reporting date.
103
104
Combined
Management
Report
→ Disclosures Relevant
for Takeovers
10.60
BMW AG has not concluded any compensation
agreements with members of the Board of Manage-
ment or with employees for situations involving a
takeover offer.
14
10.62
The assessment of overall risk situation is based on a
consolidated view of all significant individual risks.
The overall risk situation for the BMW Group remains
unchanged compared to the previous year. Similarly,
there has also been no significant change in the
opportunities situation.
In addition to the risk categories described above,
unforeseen events could have a negative impact on
business operations and hence on the BMW Group's
results of operations, financial position and net assets
as well as on its reputation. A comprehensive risk
management system is in place to ensure that the
BMW Group successfully manages these risks.
Management of the BMW Group does not see any
threat to the BMW Group's status as a going concern.
As in the previous year, identified risks are considered
to be manageable. Were they to materialise, however,
they could like the opportunities - have an impact
on the underlying key performance indicators, which
could therefore result in deviations from the outlook.
The BMW Group's financial position is stable, with
liquidity requirements currently covered by available
liquidity and credit lines.
INTERNAL CONTROL
SYSTEM* RELEVANT FOR
ACCOUNTING AND
FINANCIAL REPORTING
PROCESSES
The internal control system relevant for accounting
and financial reporting processes has the task of
ensuring that accounting and financial reporting by
the BMW Group is both accurate and reliable. Inter-
nationally recognised standards for internal control
systems have been taken into account in the design
of the components of the BMW Group's internal
control system. The system comprises:
Group-wide mandatory accounting guidelines,
controls integrated into processes and
IT systems,
organisational measures incorporating the
principle of the separation of duties, and
Overall assessment of the risk and opportunities
situation
process-independent monitoring measures.
Guidelines for recognising, measuring and allocating
items to accounts are available to all employees via
the intranet. New accounting standards are assessed
for their impact on the BMW Group's accounting
and financial reporting. Accounting guidelines and
processes are reviewed continuously and revised at
least once a year or more frequently, if necessary.
* Disclosures
pursuant to § 289
and § 315 HGB.
Controls are integrated into accounting and financial
² Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
6,370
4,221
31
Total comprehensive income attributable to shareholders of BMW AG
4,467
The internal control system is subject to continuous
improvement, with system effectiveness assessed
regularly on the basis of centralised and decentralised
process analyses, analyses of data within the various
financial systems and audit procedures. The principal
features of the internal control system, as far as they
relate to individual entity and Group accounting and
financial reporting processes, are described below.
107
note 38
Processes
99
99
Operational risks relating to the
Financial Services segment
Operational risks are defined in the Financial Services
segment as the risk of losses arising as a consequence
of unsuitability or failure of internal procedures
(process risks), people (personnel-related risks), sys-
tems (infrastructure and IT risks) and external events
(external risks). The recording and measurement of
risk scenarios, loss events and countermeasures in
the operational risk management system provide the
basis for a systematic analysis and management of
potential or materialised operational risks. Annual
self-assessments are also carried out. If operational
risks were to materialise, they would be likely to have
a low earnings impact over the two-year assessment
period. The risk amount is classified as medium.
Legal risks
The BMW Group is exposed to various legal risks, not
least as a result of its global operations. Legal risks may
result from non-compliance with laws or other legal
requirements or from legal disputes with business
partners or other market participants. If legal risks
were to materialise, they could have a high earnings
impact over the two-year assessment period. The risk
amount attached to significant identified legal risks
is classified as medium. However, it cannot be ruled
out that new legal risks, as yet unforeseen, could
materialise that could have a high earnings impact
for the BMW Group.
The increasing globalisation of the BMW Group's
operations and of business interdependencies in
general, combined with the variety and complexity
of legal provisions, including, increasingly, import
and export regulations, give rise to an increased risk
of non-compliance with applicable law. A Compliance
Management System is in place at BMW Group to
ensure that the representative bodies, managers
and staff across the globe consistently act in a lawful
manner. In 2019 the system was further enhanced,
particularly with a focus on the characteristics of
the roles and responsibilities in the Group-wide
Compliance Management as well as the monitoring
of compliance trainings and additional preventative
activities. Further information on the BMW Group's
Compliance Management System can be found in the
section Corporate Governance.
Like all entities with international operations, the
BMW Group is confronted with legal disputes, alleged
claims (particularly relating to warranties and product
liability or rights infringements) and proceedings
initiated by government agencies. Any of these could,
amongst other consequences, have an adverse impact
on the Group's reputation. Such proceedings are
The BMW Group recognises appropriate levels of
provision for lawsuits. In addition, a part of these
risks is insured where this makes business sense. Any
additional risks from legal proceedings are reported
as other contingent liabilities. It cannot be ruled out,
however, that damages could arise that are either not
covered or not fully covered by insurance policies
or provisions or reported as contingent liabilities.
In accordance with IAS 37 (Provisions, Contingent
Liabilities and Contingent Assets), the required infor-
mation is not provided if the BMW Group concludes
that disclosure of the information could seriously
prejudice the outcome of the relevant legal proceed-
ings. Further information on contingent liabilities
is provided in → note 38 to the Group Financial see
Statements.
typical for the sector or may result as a consequence
of realigning product or purchasing strategies to
changed market conditions. Particularly in the US
market, class action lawsuits and product liability
risks can have substantial financial consequences
and cause damage to the Group's public image.
More rigorous application or interpretation of exist-
ing regulations could result in a greater number of
recalls. The high quality of the Group's products,
which is ensured by regular quality audits and ongo-
ing improvement measures, helps reduce this risk.
The BMW Group has reviewed the objections and
the case information from the EU Commission.
In December 2019 the BMW Group submitted a
detailed reply to the objections of the Commission.
The EU Commission will examine the response and,
on the basis of that, determine the next procedural
steps. Therefore, the financial impacts cannot yet be
definitively assessed.
100
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
→ Risks and
Opportunities
→ Internal Control
System Relevant for
Accounting and
Financial Reporting
Compared with the risk situation presented in the
Group Management Report 2018, the assessment
of legal risks in conjunction with antitrust allega-
tions made against five German car manufacturers
has become more concrete following receipt of the
Statement of Objections from the EU Commission.
The EU Commission alleges that the manufacturers
colluded with the aim of restricting innovation and
competition with regard to certain exhaust treatment
systems for diesel- and petrol-driven passenger vehi-
cles. The current investigations are solely concerned
with possible infringements of competition law. The
EU Commission is not alleging that the BMW Group
conducted a deliberate and unlawful manipulation
of the emissions control system. The Statement of
Objections leads the BMW Group to believe that it
is probable ("more likely than not") that the Com-
mission will issue a significant fine. The BMW Group
will contest the Commission's allegations with all
legal means at its disposal if necessary. A provision
of approximately €1.4 billion was recognised in
accordance with International Financial Reporting
Standards for negative financial impacts that cannot
yet be definitively assessed.
Total comprehensive income attributable to minority interests
6,460
4,328
-217
387
935
7,064
5,022
-1,254
32
Derivative financial instruments
Marketable securities (at fair value through other comprehensive income)
Items not expected to be reclassified to the income statement in the future
-867
Deferred taxes
Net profit
20182
2019
Note
in € million
→ 64
Statement of Comprehensive Income for Group
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
1 Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
Remeasurement of the net defined benefit liability for pension plans
718
42
-30
Total comprehensive income
-604
-694
19
-1,322
173
192
544
674
171
-157
-3
-620
125
Other comprehensive income for the period after tax
Items that can be reclassified to the income statement in the future
Currency translation foreign operations
Other comprehensive income from equity accounted investments
Deferred taxes
Costs of hedging
-1,381
-706
7.49
GROUP FINANCIAL
STATEMENTS
90
→ Page 108 Statement of Comprehensive Income
12
-109
51
149
129
-293
694
-32
795
Financial result
-7
Profit/loss before tax
7,118
9,627
7.47
14
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
Dilutive effects
10.62
7.49
-6
Other financial result
-6
-8
6,182
194
175
Result from equity accounted investments
24
632
136
632
Interest and similar income
11
179
397
420
567
1
Interest and similar expenses
11
-499
-386
-737
-533
14
4,499
Basic earnings per share of preferred stock in €
7.47
44
Profit/loss from discontinued operations
124
131
5,124
3,113
7,097
4,978
Profit/loss from continuing operations
-33
-45
-1,853
-1,354
-2,530
-2,140
13
Income taxes
169
187
→ Page 108 Income Statement
-56
44
-33
Net profit/loss
14
Basic earnings per share of common stock in €
124
131
5,061
3,127
6,974
4,915
31
Attributable to shareholders of BMW AG
30
30
90
107
Attributable to minority interest
124
131
5,091
3,157
7,064
5,022
10.60
8,933
136
Profit/loss before financial result
Income Statement
→ Statement of Com-
prehensive Income
BMW GROUP
INCOME STATEMENT
STATEMENT OF COMPREHENSIVE INCOME
Income Statement for Group and Segments
→ 63
in € million
→ BMW Group
Automotive
Group
information)
Note
2019
2018¹
2019
Motorcycles
(unaudited supplementary
information)
2018
(unaudited supplementary
Statements
Group
Financial
108
→Page 110 Balance Sheet
7,411
→Page 112 Cash Flow Statement
→ Page 114 Statement of Changes in Equity
→ Page 116
Notes to the Group Financial Statements
Accounting Principles and Policies
Notes to the Income Statement
→ Page 116
→Page 133
→ Page 141
→Page 142
→Page 164
Notes to the Statement of Comprehensive Income
Notes to the Balance Sheet
3
Group Financial
Statements
Income Statement
Statement of
Comprehensive
Income
Balance Sheet
Cash Flow
Statement
Notes
→Page 184 Segment Information
→ Page 190 List of Investments at 31 December 2019
2019
2018
Other Disclosures
Cost of sales
-7,762
-7,880
-264
-263
Other operating income
10
1,031
774
976
-9,568
810
4
Other operating expenses
-2,316
-651
-2,335
-676
Revenues
-1
-1
2
-9,367
10
Selling and administrative expenses
96,855
9
7
91,682
85,846
104,210
2,173
8
-86,147
-78,477
-78,062
2,368
13,928
-1,911
-1,738
435
Gross profit
18,063
18,378
13,620
-71,918
457
Investments in marketable securities and investment funds
623
1,087
Proceeds from the disposal of investment assets and other business units³
-209
Acquisitions of subsidiaries and other business units
50
-1,598
Expenditure for investment assets
107
32
Proceeds from the disposal of intangible assets and property, plant and equipment
21
-164
-775
Proceeds from non-current financial liabilities4
Proceeds from the sale of marketable securities and investment funds
25
-2,630
Proceeds from subsidies for intangible assets and property, plant and equipment
-2,366
33
3,761
-7,363
-7,284
Cash inflow/outflow from financing activities
Change in other financial liabilities
Repayment of non-current financial liabilities4
Interest paid²
Intragroup financing and equity transactions
Payment of dividend for the previous year
Payments into equity
Cash inflow/outflow from investing activities
822
-3,725
-7,777
Change in inventories
5,051
Changes in working capital
-5,724
-3,560
Change in receivables from sales financing
-1,642
-3,825
Change in leased products
312
-1,176
Change in deferred taxes
-34
4
Gain/loss on disposal of tangible and intangible assets and marketable securities
-632
-199
150,517
-143,500
Change in trade receivables
-6,902
Change in trade payables
Change in other operating assets and liabilities
3,662
940
1,096
-88
1,512
-328
429
112
14
-403
-1,560
-619
-1,117
Total investment in intangible assets and property, plant and equipment
Cash inflow/outflow from operating activities
Change in provisions
-136
30,762
-1,751
305
3
-165
61
☐
170
91
1
-299
-136
-1,984
308
1,602
1,886
1,638
-345
5,853
4,982
54
-3,600
24
-930
-71
-284
1
-35
3
-632
-136
33
23
83
-262
34
33
-44
1,641
1,600
9,039
10,979
Cash and cash equivalents as at 1 January
1,940
1,057
Change in cash and cash equivalents
-25
-83
-19
-28
Effect of changes in composition of Group on cash and cash equivalents
Effect of exchange rate on cash and cash equivalents
4,296
4,790
-1,161
Cash and cash equivalents as at 31 December
-22,564
12,036
1 Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
5,091
3,157
20181
2019
2018¹
2019
information)
Financial Services
(unaudited supplementary
information)
(unaudited supplementary
Automotive
4 Gross cash flows presented, which were presented as net amounts in the prior year.
³ Includes dividends received from investment assets amounting to €643 million (2018: €384 million).
2 With the exception of interest from lease liabilities, interest relating to financial services business is classified as revenues/cost of sales.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
10,979
Result from equity accounted investments
Pension provisions
-200
9
55
328
299
-40,272
-44,152
-39
184
-3,841
22
44,624
1,168
45,942
50,373
60,234
61,762
102
36,333
-3,749
-68
-43,139
-46,956
75
17
26,938
156,500
-91,132 -65,683
24,971
40,552
71,181
79,193
-91,119 -65,585
-98
-13
12,339
11
12,595
12
23,171
950
43,990
943
50,829
17,239
25,705
39,639
49,865
19,170
18,170
65,878
47,882
50,592
-65,968
-91,677
48,775
351
873
1,985
2,075
64,692
5,081
5,106
-98
-13
460
669
50,256 -91,690 -66,066
146,221
156,500
112,897
34
4,576
3,804
106
102
128
372
49
47
-17,438
20,683 -17,784
21,972
14,806
15,545
91,596 -155,872 -127,273
146,221
111
112,897
ASSETS
Current tax expense
Profit/loss from discontinued operations
Net profit
20181
2019
in € million
5,022
Group
BMW GROUP
Cash Flow Statement
→ BMW Group
Statements
Group
Financial
112
CASH FLOW STATEMENT
7,064
-44
33
Other non-cash income and expense items
5,113
6,017
Depreciation and amortisation of tangible, intangible and investment assets
-199
51
Other interest and similar income/expenses²
170
91
Interest received²
-1,972
-3,389
Income taxes paid
2,218
3,316
111
Total equity and liabilities
Current provisions and liabilities
Liabilities in conjunction with assets held for sale
Cash and cash equivalents
Financial assets
Current tax
Other assets
Receivables from sales financing
Trade receivables
Inventories
Non-current assets
Other assets
Deferred tax
Financial assets
Receivables from sales financing
Other investments
Investments accounted for using the equity method
Leased products
Property, plant and equipment
Intangible assets
Assets held for sale
91,596 -155,872 -127,273
Current assets
EQUITY AND LIABILITIES
Trade payables
Other liabilities
Current tax
Financial liabilities
Other provisions
Non-current provisions and liabilities
Other liabilities
Financial liabilities
Deferred tax
Other provisions
Equity
Minority interest
Equity attributable to shareholders of BMW AG
Accumulated other equity
Revenue reserves
Capital reserves
Subscribed capital
Total assets
208
-3,589
321
6,460
90
6,370
-572
-906
-12
168
-604
-604
-572
-906
-12
168
Net profit*
7,064
90
6,974
1 January 2018 (as adjusted
due to accounting policy change)
Effects of accounting policy change*
1 January 2018 (as originally reported)
54,092
436
53,656
5
1,515
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2018*
-2,630
-2,630
34
NOTES TO
THE GROUP
FINANCIAL
STATEMENTS
Policies
Principles and
→ Accounting
Financial Statements
Notes to the Group
Statements
Group
Financial
116
115
31 December 2018*
Other changes
11
Premium arising on capital increase
relating to preferred stock
Subscribed share capital increase
Dividend payments
-127
57,829
529
3
-130
57,300
-569
558
-1,326
-2
-51
34
out of Authorised Capital
-1,494
54,208
-116
436
43
43
1
1
-2,366
-63
-2,303
Net profit
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2019
5,022
-694
4,328
107
4,221
128
-760
-551
566
-694
128
-551
30
566
107
4,915
1 January 2019 (adjusted according to IFRS 16)
57,797
529
57,268
30
→ see
note 45
29
-6
53,772
-116
5
1,515
11
-1,494
Total
Minority
interest
Equity
attributable to
shareholders
of BMW AG
Costs of
hedging
financial
instruments
Securities
Translation
differences
8
15
Derivative
31 December 2019
Other changes
Premium arising on capital increase
relating to preferred stock
Subscribed share capital increase
out of Authorised Capital
Dividend payments
59,907
583
59,324
-447
104
10
94
Accumulated other equity
-569
ACCOUNTING PRINCIPLES
01
-758
-222
130
-1,255
-390
-193
-39
43
59
-11
60
381
-427
-18
109
1,745
332
-59
-7
683
Foreign currency translation and measurement
The financial statements of consolidated companies
which are presented in a foreign currency are trans-
lated using the modified closing rate method. Under
this method, assets and liabilities are translated at the
closing exchange rate, whilst income and expenses are
translated at the average exchange rate. Differences
arising on foreign currency translation are presented
in "Accumulated other equity".
03
The other changes to the Group reporting entity do
not have a material impact on the results of operations,
financial position and net assets of the Group.
The YOUR NOW companies were contributed into a
holding company with effect from 31 December 2019.
As a result of the contribution, the BMW Group and
the Daimler Group each held equal shares in Blitz
18-353 GmbH (renamed YOUR NOW Holding GmbH
in January 2020), Munich. The contribution was
accounted for as an exchange transaction without
economic substance and executed on the basis of
carrying amounts.
The work on opening balance sheets at the merger
date and the calculation of the final purchase prices
have not yet been finalised. For this reason, the final
purchase prices cannot yet be determined definitively.
Similarly, purchase price allocations have not yet
been finalised.
-831
-5,726
Financial Services
(unaudited supplementary
3,616
3,660
19,268
19,764
-
-24,089
-25,938
-18,875
-19,443
6
5
27,705
Since 1 February 2019, the joint ventures are accounted
for in the BMW Group Financial Statements using the
equity method. The BMW Group's share of the loss
recorded for the YOUR NOW companies during the
financial year 2019 amounted to €662 million. This
figure includes impairment losses totalling €277 million.
Revised business expectations gave rise to an indication
of impairment, thereby triggering an impairment test.
As part of this process, impairment losses totalling
€240 million were recognised in the BMW Group Finan-
cial Statements on the carrying amount of individual
YOUR NOW companies. These impairment losses are
included in the line item “Result on investments".
The amounts recognised as impairment losses partly
reflect decisions taken at the level of ShareNow and
ReachNow not to serve certain markets in the future.
In this context, the result from equity accounted
investment also includes expenses arising from the
recognition of provisions and impairment losses.
29,598
2019
2018
information)
(unaudited supplementary
Eliminations
2019
2018¹
information)
(unaudited supplementary
Other Entities
2019
information)
2018¹
activities.
As a result of the merger, the investments in the com-
panies previously held by the BMW Group were remea-
sured to their fair value. DriveNow GmbH & Co. KG,
Munich, including its subsidiaries and DriveNow
Verwaltungs GmbH, Munich (DriveNow), are part
of the agreement. These entities were contributed
in kind to Car2Go Deutschland GmbH, Berlin, on a
fully realised profit basis, in return for shares in that
company. Up to 31 January 2019, DriveNow was
accounted for as a discontinued operation. Profit
after tax amounted to €44 million and resulted pri-
marily from the contribution of DriveNow to Car2Go
Deutschland GmbH. This amount is reported in the
income statement as part of the result from discon-
tinued operations. The remaining BMW companies
included in the agreement were not previously fully
consolidated on the grounds of immateriality. The
transaction gave rise to a preliminary positive impact
of €329 million which is included in the result on
investments. This amount comprises sale proceeds
of €232 million and revaluation gains of €97 million
arising on the remaining shares. The transaction
resulted in a total cash outflow of €890 million, com-
prising an inflow of €295 million and an outflow of
€1,185 million. The items described above relating
to YOUR NOW also have an impact on the Group's
and Automotive segment's cash flows from investing
On 28 March 2018, the BMW Group signed an agree-
ment with the Daimler Group regarding the merger of
certain business units that provide mobility services.
Following approval by the relevant antitrust author-
ities, the transaction was closed on 31 January 2019.
Existing on-demand mobility offerings in the areas of
car sharing, ride-hailing, parking, charging and multi-
modality have been combined with future strategic
expansion in mind. As a result of the business com-
bination, following the final signing of contracts,
the BMW Group and the Daimler Group each held
equal shares in Car2Go Deutschland GmbH, Berlin
(ShareNow), Blitz 18-353 GmbH, Munich (FreeNow),
Parkmobile Group Holding B.V., Amsterdam
(ParkNow), Digital Charging Solutions GmbH, Berlin
(ChargeNow) and Moovel Group GmbH, Berlin
(ReachNow). The joint ventures are combined under
the name YOUR NOW.
No longer included
first time in 2019
Included for the
217
194
23
31 December 2018
Included at
16
16
Total
Foreign
in 2019
Germany
The BMW Group Financial Statements include BMW AG
and all material subsidiaries over which BMW AG -
either directly or indirectly - exercises control. This
also includes 56 structured entities, consisting of asset-
backed securities entities and special-purpose funds.
Group reporting entity and
consolidation principles
02
The presentation of selected items (such as the reclas-
sification of vehicles held for sale in the financial
services business) has been changed in the financial
year 2019. The items affected are not significant
overall. The changes in presentation are explained
in the notes relating to the relevant balance sheet and
income statement line items. Prior year figures have
been adjusted accordingly.
spread of the coronavirus, the Board of Management
on 16 March 2020 adjusted the original outlook for
the BMW Group, the assumptions regarding the
development of the global economy and the economic
risks and opportunities for the financial year 2020
in the Combined Management Report, as well as the
statement regarding the Events after the end of the
reporting period and once again gave approval for
the publication of the Group Financial Statements.
On 10 March 2020, the Board of Management granted
approval for publication of the Group Financial State-
ments. Based on current developments regarding the
In order to provide a better insight into the results of
operations, financial position and net assets of the
BMW Group, and going beyond the requirements of
IFRS 8 (Operating Segments), the Group Financial
Statements also include an income statement and a
balance sheet for the Automotive, Motorcycles, Finan-
cial Services and Other Entities segments. The Group
Cash Flow Statement is supplemented by a statement
of cash flows for the Automotive and Financial Services
segments. Inter-segment transactions relate primarily
to internal sales of products, the provision of funds for
Group companies and the related interest. A description
of the nature of the business and the major operating
activities of the BMW Group's segments is provided in
→ note 45 ("Explanatory notes to segment information").
The income statement for the BMW Group and seg-
ments is presented using the cost of sales method.
Key figures presented in the report have been rounded
in accordance with standard commercial practise. In
certain cases, this may mean that values do not add
up exactly to the stated total and that percentages
cannot be derived from the values shown.
The Group currency is the euro. All amounts are dis-
closed in millions of euros (€ million) unless stated
otherwise.
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (BMW Group
Financial Statements or Group Financial Statements)
at 31 December 2019 were drawn up in accordance
with International Financial Reporting Standards
(IFRS), as endorsed by the European Union (EU), and
the supplementary requirements of §315e (1) of the
German Commercial Code (HGB). The Group Finan-
cial Statements and Combined Management Report
will be submitted to the operator of the electronic
version of the German Federal Gazette and can be
obtained via the Company Register website. Bayerische
Motoren Werke Aktiengesellschaft, which has its
seat at Petuelring 130, Munich, is registered in the
Commercial Register of the District Court of Munich
under the number HRB 42243.
Basis of preparation
In relation to fully consolidated companies, the follow-
ing changes took place in the Group reporting entity
in the financial year 2019:
AND POLICIES
2
31 December 2019
Associated companies and joint ventures are accounted
for using the equity method, with measurement on
initial recognition based on acquisition cost.
In the case of a joint venture, the parties which have
joint control only have rights to the net assets of the
arrangement.
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
Group
Financial
Statements
118
117
The BMW Group has also signed an agreement
with the Chinese automobile manufacturer
Great Wall Motor Company Limited (Great Wall)
for the joint development and production of
electric vehicles in China. Vehicle development
and production will be carried out by the
jointly controlled company Spotlight Automotive
Limited (Spotlight). Spotlight was founded on
27 December 2019 following approval by the
Chinese authorities. The BMW Group and
Great Wall each hold 50% of the joint operation's
equity. In addition to electric MINI vehicles,
Spotlight will also develop and produce electric
vehicles for Great Wall. At 31 December 2019,
the joint development and production arrange-
ments with Spotlight are included in the Group
Financial Statements on a proportionate basis.
The BMW Group and Daimler AG are working
together on a long-term strategic cooperation in
the field of highly automated driving systems.
The BMW Group is party to a cooperation
with Toyota Motor Corporation, Toyota City,
which developed a sports car.
-
The following three major arrangements are accounted
for as joint operations:
In the case of a joint operation, the parties that have
joint control of the arrangement have rights to the
assets, and obligations for the liabilities, relating
to the arrangement. Assets, liabilities, revenues
and expenses of a joint operation are recognised
proportionately in the Group Financial Statements
on the basis of the BMW Group entity's rights and
obligations (proportionate consolidation).
Included at
Joint operations and joint ventures are forms of joint
arrangements. Such an arrangement exists when a
BMW Group entity jointly carries out activities with
a third party on the basis of a contractual agreement.
An entity is deemed to be controlled if BMW AG -
either directly or indirectly - has power over it, is
exposed or has rights to variable returns from it and
has the ability to influence those returns.
assessment.
If indications exist of a change in the judgement of
(joint) control, the BMW Group undertakes a new
When assessing whether an investment gives rise to
a controlled entity, an associated company, a joint
operation or a joint venture, the BMW Group con-
siders contractual arrangements and other circum-
stances, as well as the structure and legal form of the
entity. Discretionary decisions may also be required.
All consolidated subsidiaries have the same year-end as
BMW AG with the exception of BMW India Private Ltd.
and BMW India Financial Services Private Ltd., whose
year-ends are 31 March in accordance with local legal
requirements.
|
24
26
24
207
186
21
An entity is classified as an associated company if
BMW AG - either directly or indirectly - has the abil-
ity to exercise significant influence over the entity's
operating and financial policies. As a general rule,
the Group is assumed to have significant influence
if it holds 20% or more of the entity's voting power.
558
-1,326
Effects from the first-time application of IFRS 16
BMW GROUP
STATEMENT OF CHANGES IN EQUITY
in € million
31 December 2018 (as originally reported)
Effects of accounting policy change*
31 December 2018 (as adjusted
due to accounting policy change)
Effects from the first-time application of IFRS 16
1 January 2019 (adjusted according to IFRS 16)
Net profit
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2019
Dividend payments
Subscribed share capital increase
out of Authorised Capital
Premium arising on capital increase
relating to preferred stock
Other changes
31 December 2019
in € million
Subscribed
Capital
Revenue
Note
capital
reserves
Changes in Equity
→ BMW Group
Statement of
Statements
Financial
Change in receivables from sales financing
Changes in working capital
Change in inventories
Change in trade receivables
Change in trade payables
Change in provisions
Change in other operating assets and liabilities
Cash inflow/outflow from operating activities
Total investment in intangible assets and property, plant and equipment
Proceeds from subsidies for intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investment assets
Acquisitions of subsidiaries and other business units
Proceeds from the disposal of investment assets and other business units³
Investments in marketable securities and investment funds
Proceeds from the sale of marketable securities and investment funds
Cash inflow/outflow from investing activities
reserves
Payments into equity
Intragroup financing and equity transactions
Interest paid²
Proceeds from non-current financial liabilities4
Repayment of non-current financial liabilities4
Change in other financial liabilities
Cash inflow/outflow from financing activities
Effect of exchange rate on cash and cash equivalents
Effect of changes in composition of Group on cash and cash equivalents
Change in cash and cash equivalents
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
The reconciliation of liabilities from financing activities is presented in note 35.
113
114
Group
Payment of dividend for the previous year
31
658
2,118
1 January 2018 (as adjusted
due to accounting policy change)
Net profit*
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2018*
Dividend payments
658
2,084
50,877
6,974
718
7,692
-2,630
-116
Subscribed share capital increase
Premium arising on capital increase
relating to preferred stock
34
34
Other changes
-77
31 December 2018*
31
658
2,118
55,862
* Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
out of Authorised Capital
Change in leased products
50,993
658
56,121
-259
658
2,118
55,862
-32
658
2,118
55,830
4,915
-867
4,048
2,084
-2,303
92
31
659
2,161
57,667
Note
Subscribed
capital
Capital
reserves
Revenue
reserves
1 January 2018 (as originally reported)
Effects of accounting policy change*
31
43
Change in deferred taxes
Gain/loss on disposal of tangible and intangible assets and marketable securities
Result from equity accounted investments
187
118
-1,198
9,690
9,352
-5,345
-6,790
-6,734
-7,618
-19
-13
50
Derivative
18
3
31
105
1
2
-1,557
-145
-209
1,087
1,210
57
2
2
-507
attributable to
differences
31 December 2018 (as adjusted
due to accounting policy change)
57,829
-32
-32
529
57,300
-569
558
-1,326
31 December 2018 (as originally reported)
Effects of accounting policy change*
-1,732
58,088
-259
-259
Translation
529
-569
558
-1,326
Total
interest
of BMW AG
hedging
Minority
shareholders
Costs of
financial
instruments
Securities
57,559
5
-3,692
-63
827
6,793
-22
-31
6
28
-25
446
1,474
90
129
8,631
7,157
5,300
1,985
9,077
8,631
2,075
1,985
Net profit
Profit/loss from discontinued operations
Current tax expense
Income taxes paid
Interest received²
Other interest and similar income/expenses²
Depreciation and amortisation of tangible, intangible and investment assets
Other non-cash income and expense items
1,856
-268
-1,053
491
465
3,562
356
199
-7,165
-6,769
129
130
33
25
-2,366
-2,630
-2,085
877
2,099
-136
5,491
5,097
-1
173
1
132,408
-605
-410
-133,089
12,940
-12,071
-2
-197
6
Equity
393
66,744
70,647
1,016
543
1,773
1,762
632
13
70
81
5,354
5,605
5,530
5,530
5,788
64
96
2,089
2,820
2,330
2,330
3,335
23236
Other liabilities
35
64,772
2,680
1,017
5,100
963
34
Current tax
101
105
5,433
6,962
5,871
5,871
7,421
33
Other provisions
Financial liabilities
640
17,034
19,577
79,698
81,659
85,502
Non-current provisions and liabilities
506
569
7,558
7,929
5,293
5,293
746
Deferred tax
Other provisions
Pension provisions
658
658
659
31
Subscribed capital
EQUITY AND LIABILITIES
1,276
1,447
97,118
113,062
208,938
211,304
Capital reserves
228,034
749
877
51,915
64,973
461
461
84,736
84,738
90,630
Current assets
463
Assets held for sale
12
Total assets
1,158
31
2,118
39,778
40,174
57,829
57,797
59,907
Equity
529
529
583
Minority interest
57,300
57,268
2,161
59,324
Equity attributable to shareholders of BMWAG
-1,338
-1,338
-1,163
31
Accumulated other equity
55,862
55,830
57,667
31
Revenue reserves
2,118
31
1,158
704
933
-68
695
1,168
138
139
-20
-49
48,333
51,079
-10,765
-11,289
6,660
-39
6,847
1
-7,855
-7,739
20182
46,114
50,348
30
89
1
1
403
389
1
2019
512
84
187
125
91
84
1,325
1,009
38,700
41,407
91
103
609
808
-61,207
485
-64,182
47,019
98,339
105,908
-40,610
-43,184
33,956
38,919
2,835
3,351
-1,918
-1,853
28
41,340
11
2018
(unaudited supplementary
Liabilities in conjunction with assets held for sale
187
183
24,639
34,902
15,826
15,826
17,966
36
Other liabilities
348
413
64
8,360
9,669
9,669
10,182
37
879
1,929
38,825
39,260
46,093
35
Trade payables
Financial liabilities
8,814
information)
62
Current provisions and liabilities
Eliminations
2019
2018²
information)
(unaudited supplementary
Other Entities
2019
information)
(unaudited supplementary
Financial Services
1 The figures to 1 January 2019 have been adjusted, based on the first-time application of IFRS 16, see note 6 to the Group Financial Statements.
2 Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
1,276
62
1,447
113,062
208,938
211,304
228,034
Total equity and liabilities
636
701
40,306
53,311
71,411
71,848
82,625
97,118
Accumulated other equity
8,631
10,979
Other financial result
Profit/loss before financial result
Result from equity accounted investments
Interest and similar income
Interest and similar expenses
Other operating expenses
Other operating income
Selling and administrative expenses
Gross profit
Revenues
Cost of sales
289
201
-81
-67
1,581
1,523
60
77
289
201
-81
-67
1,641
1,600
289
201
-81
-67
Financial result
Profit/loss before tax
Income taxes
Profit/loss from continuing operations
Profit/loss from discontinued operations
Net profit/loss
Attributable to minority interest
Intangible assets
2018
2019
2018
information)
Motorcycles
(unaudited supplementary
2019
information)
(unaudited supplementary
Automotive
1.1.20191 31.12.2018²
2019
1,641
Note
ASSETS
in € million
BALANCE SHEET AT 31 DECEMBER 2019
BMW GROUP
at 31 December 2019
Balance Sheet
→ BMW Group
Statements
Group
Financial
110
109
Attributable to shareholders of BMW AG
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
Group
1,600
-94
-87
12
4
431
377
-27
29
2,172
2,312
230
225
-80
-125
1,515
-124
-208
-193
126
173
42
73
16
24
-79
-24
-1,362
-1,341
-80
21
1,178
-1,360
-36
29
-502
-672
383
288
-45
-96
2,143
2,272
-48
-89
-1,761
-18
-29
-40
-51
-221
-27
-37
1,312
1,672
-1,145
-1,419
-14
-7
-125
11,729
10,971
10,971
Receivables from sales financing
167
186
2,287
2,228
2,546
2,546
2,518
30
Trade receivables
568
679
25
13,071
14,248
14,248
15,891
29
Inventories
527
570
45,203
48,089
124,202
126,566
137,404
14,404
Non-current assets
41,407
38,700
10,979
12,036
Cash and cash equivalents
2
1
21,859
33,492
9,749
9,749
11,614
28
Other assets
38,700
618
1,378
1,378
1,209
27
Current tax
4,988
4,772
6,675
6,675
5,955
26
Financial assets
1,000
9,077
33
4,633
Other investments
2,624
3,199
2,624
2,624
3,199
24
Investments accounted for using the equity method
38,259
38,259
42,609
23
703
Leased products
407
19,372
22,749
19,801
22,163
23,245
22
Property, plant and equipment
95
127
10,472
11,212
399
36
739
5,144
2,203
847
847
1,325
28
Other assets
3,043
3,451
1,638
1,640
2,194
13
739
Deferred tax
131
1,010
1,010
1,370
26
Financial assets
48,313
48,313
51,030
25
Receivables from sales financing
4,843
216
13.4
Financial Services
Current information is taken into account when
determining the lease term if the contract con-
tains options to extend or terminate the lease.
10.9
12.0
10.9
2018
2019
Motorcycles
Automotive
in %
Amounts are discounted on the basis of a market-
related cost of capital rate. Impairment tests are
performed for accounting and financial reporting pur-
poses for the Automotive and Motorcycles cash-gener-
ating units using a risk-adjusted pre-tax cost of capital
(WACC) that is updated annually. In the case of the
Financial Services cash-generating unit, a pre-tax cost
of equity capital is used, as is customary in the sector.
The following discount factors were applied:
The BMW Group determines the value in use on the
basis of a present value computation. Cash flows
used for this calculation are derived from long-term
forecasts approved by management. These long-term
forecasts are based on detailed forecasts drawn up
at an operational level, covering a planning period
of six years. For the purposes of calculating cash
flows beyond the planning period, a residual value
is assumed which does not take growth into account.
Forecasting assumptions are continually adjusted to
current information and regularly compared with
external sources. The assumptions used take account
in particular of expectations of the profitability of the
product portfolio, future market share development,
macroeconomic developments (such as currency,
interest rate and raw materials prices) as well as the
legal environment and past experience.
As part of the process of assessing recoverability, it is
generally necessary to apply estimations and assump-
tions - in particular regarding future cash inflows and
outflows and the length of the forecast period – which
could differ from actual amounts. Actual amounts
may differ from the assumptions and estimations
used if business conditions develop differently to
expectations.
If the reason for a previously recognised impairment
loss no longer exists, the impairment loss is reversed
up to the level of the recoverable amount, but no
higher than the amortised acquisition or manu-
facturing cost. Impairment losses on goodwill are
not reversed.
For the purpose of the impairment test, the carrying
amount of an asset (or a cash-generating unit) is com-
pared with the recoverable amount. The first step of
the impairment test is to determine the value in use.
If the value in use is lower than the carrying amount,
the next step is to determine the fair value less costs
to sell and compare the amount so determined with
the asset's carrying amount. If the fair value is lower
than the carrying amount, an impairment loss is
recognised, reducing the carrying amount to the
higher of the asset's value in use or fair value less
costs to sell.
If there is any indication of impairment of intangible
assets, or if an annual impairment test is required
(i.e. intangible assets with an indefinite useful life,
intangible assets during the development phase and
goodwill), an impairment test is performed. Each
individual asset is tested separately unless the cash
flows generated by the asset are not sufficiently inde-
pendent from the cash flows generated by other assets
or other groups of assets. In this case, impairment is
tested at the level of a cash-generating unit.
Goodwill arises on first-time consolidation of an ac-
quired business when the cost of acquisition exceeds
the Group's share of the net fair value of the assets,
liabilities and contingent liabilities identified during
the acquisition.
Development costs are capitalised if all of the criteria
specified by IAS 38 are met. They are measured on the
basis of direct costs and directly attributable overhead
costs. Project-related capitalised development costs
are amortised on a straight-line basis following the
start of production over the estimated product life
cycle (usually eight to twelve years).
Intangible assets are measured at acquisition or manu-
facturing cost. Intangible assets with finite useful lives
are amortised on a straight-line basis over their useful
lives of between three and 20 years. Impairment losses
are recognised where necessary. Intangible assets with
indefinite useful lives are tested annually for impair-
ment. Internally generated intangible assets mainly
comprise development costs for vehicle, module and
architecture projects.
Earnings per share are calculated as follows: Basic
earnings per share are calculated for common and
preferred stock by dividing the net profit for the year
after minority interests and attributable to each cate-
gory of stock, by the average number of outstanding
shares. Net profit for the year is accordingly allocated
to the different categories of stock. The portion of the
net profit that is not being distributed is allocated
to each category of stock based on the number of
outstanding shares. Profits available for distribution
are determined directly on the basis of the dividend
resolutions passed for common and preferred stock.
Diluted earnings per share are calculated and sepa-
rately disclosed in accordance with IAS 33.
Public sector grants are not recognised until there is
reasonable assurance that the conditions attaching to
them have been complied with and the grants will be
received. The resulting income is recognised in cost
of sales over the periods in which the costs occur that
they are intended to compensate.
Revenues also include interest income from financial
services. Interest income arising on finance leases as
well as on retail customer and dealership financing
is recognised using the effective interest method
and reported as interest income on credit financing
within revenues.
Revenues from leases of own-manufactured vehicles
are recognised at Group level in accordance with
the requirements for manufacturer or dealer lessors.
In the case of operating leases, revenues from lease
payments are recognised on a straight-line basis
over the lease term. In the case of finance leases,
revenues are recognised at the lease commencement
date at the amount of the fair value of the leased
asset and reduced by any unguaranteed residual
value of vehicles that are expected to be returned to
the Group at the end of the lease term. Similarly, cost
of sales is reduced for unguaranteed residual values.
In addition, initial direct costs are recognised as cost
of sales at the lease commencement date.
Principles and
Policies
Notes to the Group
Financial Statements
→ Accounting
12.0
Group
Financial
Statements
11.5
In order to determine a target internal rate of return,
risk-adjusted cost of capital rates are averaged for the
recent past. For the purposes of long-term product and
investment decisions, the following target internal
rates of return are used:
Group
Financial
Statements
122
121
For machinery used in multiple-shift operations,
depreciation rates are increased to account for the
additional utilisation. If there is any indication of
impairment of property, plant and equipment, an
impairment test is performed as described above for
intangible assets.
3 to 21
2 to 25
Other equipment, factory and office equipment
Plant and machinery
Factory and office buildings, residential buildings, fixed
installations in buildings and outside facilities
in years
The risk-adjusted discount rate, calculated using a
CAPM model, also takes into account specific peer-
group information relating to beta-factors, capital
structure data and borrowing costs. In conjunction
with the impairment tests for cash-generating units,
sensitivity analyses are performed for the main
assumptions in order to rule out that possible changes
to the assumptions used to determine the recoverable
amount would result in the requirement to recognise
an impairment loss.
The following useful lives are applied throughout the
BMW Group:
All items of property, plant and equipment are measured
at acquisition or manufacturing cost less accumulated
depreciation and accumulated impairment losses. The
cost of internally constructed plant and equipment
comprises all costs which are directly attributable
to the manufacturing process as well as an appro-
priate proportion of production-related overheads.
This includes production-related depreciation and
amortisation as well as an appropriate proportion
of administrative and social costs. Financing costs
are not included in acquisition or manufacturing
cost unless they are directly attributable to the asset.
The carrying amount of items of depreciable property,
plant and equipment is written down according to
scheduled usage-based depreciation - as a general
rule on a straight-line basis - over the useful lives of
the assets. Depreciation is recorded as an expense
in the income statement.
13.4
At the date of initial application, the balance sheet
total increased by €2,407 million as a result of leases
previously classified as operating leases. The reclas-
sification resulted in a slight decline in the equity
ratio. For a small number of real estate contracts,
the carrying amount of right-of-use assets has been
determined as if IFRS 16 had been applied from the
commencement of the lease. After offsetting deferred
tax effects amounting to €13 million, this resulted in
a reduction of approximately €32 million in Group
revenue reserves at 1 January 2019. The BMW Group's
profit before financial result for the financial year
2019 benefited from a positive effect of €27 million.
Furthermore, cash flows from operating activities
increased and cash flows from financing activities
decreased by €494 million.
12.0
12.0
12.0
12.0
2018
2019
Financial Services
Automotive
Motorcycles
in %
13.4
Notes to the Group
Financial Statements
120
Revenues from the sale of products, for which
repurchase arrangements or rights of return are in
place, are not recognised immediately in full. Instead,
revenues are either recognised proportionately, or
the difference between the sales and repurchase
price is recognised in instalments over the term of the
contract depending on the nature of the agreement.
In the case of vehicles sold to a dealership that are
expected to be repurchased in a subsequent period
as part of leasing operations, revenues are not recog-
nised at Group level at the time of the sale of the
vehicle. Instead, assets and liabilities relating to the
right of return vehicles are recognised.
7.87
7.82
0.88
0.88
0.89
0.85
2018
2019
31.12.2018
31.12.2019
Average rate
Closing rate
US-Dollar
Thai Baht
Russian Rubel
Korean Won
Japanese Yen
Chinese Renminbi
British Pound
1 Euro =
The exchange rates of currencies which have a material
impact on the Group Financial Statements were as
follows:
settlement, are recognised in the income statement.
Non-monetary balance sheet items denominated in
foreign currencies are rolled forward on the basis of
historical exchange rates.
In the single entity accounts of BMW AG and its sub-
sidiaries, foreign currency receivables and payables
are measured on initial recognition using the exchange
rate prevailing at the date of first-time recognition.
At the end of the reporting period, foreign currency
receivables and payables are measured using the clos-
ing exchange rate. The resulting unrealised gains and
losses, as well as realised gains and losses arising on 7
7.73
119
7.81
125.77
the beginning of a contract and is therefore deferred
as a contract liability. The deferred amount is released
over the service period and recognised as revenues in
the income statement. As a rule, amounts are released
on the basis of the expected expense trend, as this
best reflects the performance of the service. If the
sale of products includes a determinable amount for
services (multiple-component contracts), the related
revenues are deferred and recognised as income in the
same way. Variable consideration components, such
as bonuses, are measured at the expected value, and,
in the case of multiple-component contracts allocated
to all performance obligations unless directly attrib-
utable to the sale of a vehicle.
Revenues from contracts with customers include in
particular revenues from the sale of products (primar-
ily new and pre-owned vehicles and related products)
as well as revenues from services. Revenue is recog-
nised when control is transferred to the dealership
or retail customer. In the case of sales of products,
this is usually at the point in time when the risks and
rewards of ownership are transferred. Revenues are
stated net of settlement discount, bonuses and rebates
as well as interest and residual value subsidies. The
consideration arising from these sales usually falls
due for payment immediately or within 30 days. In
exceptional cases, a longer payment period may also
be agreed. In the case of services, control is trans-
ferred over time. Consideration for the rendering of
services to customers usually falls due for payment at
Accounting policies, assumptions, judgements
and estimations
04
Argentina has fulfilled the definition of a hyperinfla-
tionary economy since 1 July 2018. For this reason,
IAS 29 (Financial Reporting in Hyperinflationary
Economies) is being applied for the BMW subsidiary
in Argentina. The price indices published by the
Federación Argentina de Consejos Profesionales de
Ciencias Económicas (FACPCE) are used to adjust
non-monetary assets and liabilities and items in
the income statement. The resulting effects are not
material for the BMW Group.
1.18
1.12
1.14
1.12
38.15
34.76
37.01
33.40
74.07
72.43
79.72
69.60
1,298.78
1,304.68
1,271.07
1,297.79
130.36
122.06
121.81
→ Accounting
Principles and
Policies
8 to 50
The lease liability is measured on initial recognition at
the present value of the future lease payments. Sub-
sequent to initial recognition, the carrying amount of
the lease liability is increased to reflect interest on the
lease liability and reduced, without income statement
impact, by the lease payments made. Lease liabilities
are reported within financial liabilities, while interest
expense is reported as part of net interest result. In
the cash flow statement, both the repayment portion
and the interest portion of lease payments are shown
as cash outflows from financing activities.
1.1.2019
1.1.2019
1.1.2020
13.1.2016
26.9.2019
EU
Date of
mandatory
application
Date of
mandatory
application
IASB
Date of
issue by
IASB
(Amendments to IFRS 9, IAS 39, IFRS 7)
Uncertainty Over Income Tax Treatments
Interest Rate Benchmark Reform
IFRIC 23
IFRS 7
IFRS 9, IAS 39,
Leases
IFRS 16
Standard/Interpretation
Standards and Revised Standards significant for the
BMW Group applied for the first time in the finan-
cial year 2019:
Financial reporting rules
05
In the case of leased items of property, plant and equip-
ment, a right-of-use asset and a liability for the out-
standing lease payments are recognised with effect
from the date on which the leased asset becomes
available for use by the BMW Group. The acquisition
cost for the right-of-use asset is calculated as the sum
of the present value of the future lease payments, any
lease payments made at or before the commencement
date, any initial direct costs incurred by the lessee
and the estimated costs of dismantling, removing or
restoring the leased asset. Lease incentives granted
by the lessor are deducted. Right-of-use assets are
depreciated on a straight-line basis over the shorter
of the useful life of the leased asset and the expected
lease term. If ownership of the leased asset is auto-
matically transferred at the end of the lease term or
the exercise of a purchase option is reflected in the
lease payments, the right-of-use asset is amortised
on a straight-line basis over the expected useful life
of the leased asset. Right-of-use assets are reported
in the balance sheet within the relevant line items
for property, plant and equipment. The amortisation
expense on right-of-use assets is reported in the
income statement in cost of sales as well as in selling
and administrative expenses.
The share-based remuneration programme for Board
of Management members and senior heads of depart-
ment entitles BMW AG to elect whether to settle its
commitments in cash or with shares of BMW AG
common stock. Based on the decision to settle in cash,
the share-based remuneration programmes for Board
of Management members and senior heads of depart-
ment are accounted for as cash-settled, share-based
remuneration programmes. Further information on
share-based remuneration programmes is provided
Share-based remuneration programmes which are ex-
pected to be settled in shares are measured at their fair
value at grant date. The related expense is recognised
as personnel expense in the income statement over
the vesting period and offset against capital reserves.
Share-based remuneration programmes expected to
be settled in cash are revalued to their fair value at
each balance sheet date between the grant date and
the settlement date and on the settlement date itself.
The expense is recognised as personnel expense in
the income statement over the vesting period and
presented in the balance sheet as a provision.
→ see
note 41
note 33
1.1.2020
7.6.2017
1.1.2019
1.1.2019
Initial direct costs were not taken into account
when measuring right-of-use assets at the time
of initial application.
Leases expiring no later than 31 December 2019
are accounted for as short-term leases regardless
of the original lease term.
An impairment review of individual right-of-
use assets was not performed. Instead, the
assessment of the existence of onerous leases in
accordance with IAS 37 (Provisions, Contin-
gent Liabilities and Contingent Assets) is used
as a practical expedient. No provisions for
onerous leases were recognised at 31 Decem-
ber 2018.
-
-
- no reassessment was made at the date of initial
application as to whether or not existing con-
tracts constituted a lease based on IFRS 16.
Instead, the previous assessment made under
IAS 17 and IFRIC 4 was retained.
The new Standard has been applied with effect from
1 January 2019 using the modified retrospective
method. On transition to the new Standard, the
BMW Group applied the following practical expe-
dients permitted for lessees by IFRS 16:
The new Standard IFRS 16 (Leases) requires a new
approach to accounting for leases by lessees. In prin-
ciple, every lease is now required to be accounted for
at the level of the lessee as a financing transaction,
reflecting the fact that the distinction between ope-
rating and finance leases has been eliminated.
Up to 31 December 2018, the accounting treatment of
a lease was determined in accordance with IAS 17 on
the basis of the extent to which the risks and rewards
attached to the leased item were transferred to the
lessee. Leased items of property, plant and equip-
ment whose economic ownership was attributed to
the BMW Group (finance leases) were measured on
initial recognition at their fair value or, if lower, at the
net present value of minimum lease payments. The
assets were depreciated using the straight-line method
over their estimated useful lives or, if shorter, over the
contractual lease period. Obligations for future lease
payments were recognised at their net present value
in other financial liabilities. In the case of leases that
did not transfer substantially all the risks and rewards
incidental to ownership from the Group to the lessee
(operating leases), lease payments were previously
recognised in the income statement on a straight-line
basis over the lease term.
(a) First-time application of IFRS 16 - Accounting
for leases as lessee
Changes in accounting policy for leases
The recognition and measurements of provisions
for litigation and liability risks necessitates making
assumptions in order to determine the probability of
liability, the amount of claim and the duration of the
06
Notes to the Group
Financial Statements
Statements
Group
Financial
128
127
Other financial reporting standards issued by the
IASB and not yet applied are not expected to have
any significant impact on the BMW Group Financial
Statements. With the exception of the benchmark
interest rate reform, the BMW Group has not applied
any other new accounting rules before their manda-
tory date.
Other accounting rules required to be applied for
the first time in the financial year 2019 did not have
any significant impact on the BMW Group Financial
Statements.
IFRIC 23 clarifies the accounting for uncertainties
regarding income tax issues and transactions. Due
to accounting practises previously followed, based on
the consistent application of IAS 12, the BMW Group
is not affected by IFRIC 23.
→ see
note 6
The amendments to IFRS 9, IAS 39 and IFRS 7 pro-
vide relief with regard to the expected impact of the
interest rate benchmark reform on hedge accounting
and are being applied early by the BMW Group. The
amendments provide temporary relief from applying
specific hedge accounting requirements in the case of
hedging relationships directly affected by the interest
rate benchmark reform. Accordingly, hedge account-
ing requirements must be applied as if the benchmark
interest rate, on which the hedged cash flows and cash
flows from the hedging instrument are based, were
not changed by the benchmark interest rate reform.
Consequently, the amendments to IFRS 9 and IAS 39
ensure that hedge accounting is not required to be
discontinued specifically as a result of the bench-
mark interest rate reform. The relief is applied to all
BMW Group hedging relationships affected by the
uncertainties arising from the benchmark interest
rate reform.
Changes due to the new accounting standard IFRS 16
are described in → note 6.
→ Accounting
Principles and
Policies
Provisions for statutory and non-statutory warranties
are recognised at the point in time when control over
the goods is transferred to the dealership or retail
customer or when it is decided to introduce new
warranty measures. With respect to the level of the
provision, estimations are made in particular based
on past experience of damage claims and processes.
Future potential repair costs and price increases
per product and market are also taken into account.
Provisions for warranties for all companies of the
BMW Group are adjusted regularly to take account
of new information, with the impact of any changes
recognised in the income statement. Further infor-
mation is provided in → note 33. Similar estimates → see
are also made in conjunction with the measurement
of expected reimbursement claims.
innote 41.
Related party disclosures comprise information on
associated companies, joint ventures and non-con-
solidated subsidiaries as well as individuals which
have the ability to exercise a controlling or significant
influence over the financial and operating policies
of the BMW Group. This includes all persons in key
positions of the Company, as well as close members
of their families or intermediary entities. In the case
of the BMW Group, this also applies to members of
the Board of Management and the Supervisory Board.
Details relating to these individuals and entities are
→ see provided in → note 40 and in the list of investments
disclosed in → note 46.
Where hedge accounting is applied, changes in fair
value of derivate financial instruments are presented
as part of other financial result in the income state-
ment or within other comprehensive income as a
component of accumulated other equity, depending
on whether the hedging relationship is classified as
a fair value hedge or a cash flow hedge. Fair value
hedges are mainly used to hedge interest rate risks
relating to bonds, other financial liabilities and receiv-
ables from sales financing. For selected fixed-interest
assets, part of the interest rate risk is hedged on a
portfolio basis in accordance with IAS 39. In this case,
swaps are used as the hedging instrument. Hedge
relationships are terminated and redesignated on a
monthly basis at the end of each reporting period,
thereby taking account of the constantly changing
content of each portfolio. The currency basis is not
designated as part of the hedging relationship in the
case of interest rate hedges accounted for as fair value
hedges. Accordingly, changes in the market value of
such instruments are recorded as costs of hedging
within accumulated other equity. Amounts accumu-
lated in equity are reclassified to other financial result
within income statement over the term of the hedging
relationship. Ineffectiveness of hedging relationships
is also recognised in other financial result.
The BMW Group applies the option to recognise the
credit risks arising from the fair values of a group
of
derivative financial assets and liabilities on the basis
of their total net amount. Portfolio-based valuation
adjustments (credit valuation adjustments and debit
valuation adjustments) to the individual derivative
financial assets and financial liabilities are allocated
using the relative fair value approach (net method).
Derivative financial instruments are used within the
BMW Group for hedging purposes in order to reduce
currency, interest rate, fair value and market price
risks. Derivative financial instruments are recognised
as of the trade date, measured at their fair value. Fair
values are determined on the basis of valuation models.
Observable market price, tenor and currency basis
spreads are taken into account in the measurement
of derivative financial instruments. Furthermore, the
Group's own credit risk and that of counterparties is
taken into account on the basis of credit default swap
values for market contracts with matching terms.
The BMW Group writes off financial assets when it has
no reasonable expectation of recovering the amounts
concerned. This may be the case, for instance, if the
debtor is deemed not to have sufficient assets or other
sources of income to service the debt.
notes 40 and 46
Group
Financial
Statements
124
123
The measurement of the change in default risk is based
on a comparison of the default risk at the date of initial
recognition and at the end of the reporting period.
The default risk at the end of each reporting period is
determined on the basis of credit checks, current key
performance indicators and any overdue payments.
Loss allowances on trade receivables are determined
primarily on the basis of information relating to over-
due amounts. In the case of marketable securities and
investment funds, the BMW Group usually applies
the option not to allocate financial assets with a low
default risk to different stages. Accordingly, assets
with an investment grade rating are always allocated to
stage 1. The loss allowance on these assets is calculated
using the input factors available on the market, such
as ratings and default probabilities.
With the exception of receivables from operating
leases and trade receivables, the BMW Group applies
the general approach described in IFRS 9 to deter-
mine impairment of financial assets. Under the general
approach, loss allowances are measured on initial
recognition on the basis of the expected 12-month
credit loss (stage 1). If the credit loss risk at the end
of the reporting period has increased significantly
since initial recognition, the impairment allowance
is measured on the basis of lifetime expected credit
losses (stage 2 - general approach). The BMW Group
applies the simplified approach described in IFRS 9
to operating lease and trade receivables, whereby the
amount of the loss allowance is measured subsequent
to the initial recognition of the receivable on the basis
of lifetime expected credit losses (stage 2 – simplified
approach). For the purposes of allocating an item to
stage 2, it is irrelevant whether the credit risk of the
assets concerned has increased significantly since
initial recognition. In the case of credit-impaired assets
which had not been credit-impaired at the time they
were acquired or originated, an impairment allowance
is recognised at an amount equal to lifetime expected
credit losses (stage 3). This is the case regardless of
whether the general or simplified approach is applied.
As a general rule, the BMW Group assumes that a
receivable is in default if it is more than 90 days
overdue or if there are objective indications of insol-
vency. Credit-impaired assets are identified as such
on the basis of this definition of default. In the case
of stage 3 assets, interest income is calculated on the
asset's carrying amount less any impairment loss.
Loss allowances on receivables from sales financing
are determined primarily on the basis of past expe-
rience with credit losses, current data on overdue
receivables, rating classes and scoring information.
Forward-looking information (for instance forecasts of
key performance indicators) is also taken into account
if, based on past experience, such indicators show a
substantive correlation to actual credit losses.
Receivables from sales financing are measured at amor-
tised cost using the effective interest rate method. This
also includes receivables from vehicle finance leases
which are measured at an amount equal to the net
investment in the lease.
Items reported under other investments within the scope
of IFRS 9 are measured at fair value through profit or
loss. Investments in subsidiaries, joint arrangements
and associated companies that are not material to the
BMW Group and which do not fall within the scope of
IFRS 9 are also included in other investments.
The market values of financial instruments measured
at fair value are determined on the basis of market
information available at the balance sheet date, such as
quoted prices or using appropriate measurement meth-
ods, in particular the discounted cash flow method.
Depending on the business model and the structure of
contractual cash flows, financial assets are classified
as measured at amortised cost, at fair value through
other comprehensive income or at fair value through
profit or loss. The category "at fair value through other
comprehensive income" at the BMW Group comprises
mainly marketable securities and investment funds
used for liquidity management purposes. Selected
marketable securities and investment funds, money
market funds within cash and cash equivalents as
well as convertible bonds are recognised at fair value
through profit or loss, as their contractual cash flows
do not solely represent payments of principal and
interest. The BMW Group does not make use of the
option to measure equity instruments at fair value
through other comprehensive income or debt instru-
ments at fair value through profit or loss.
The Group's financial assets include in particular other
investments, receivables from sales financing, mar-
ketable securities and investment funds, derivative
financial assets, trade receivables and cash and cash
equivalents. As a general rule, non-derivative finan-
cial assets are accounted for on the settlement date.
Investments accounted for using the equity method are
measured provided no impairment has been recog-
nised - at cost of investment adjusted for the Group's
share of earnings and changes in equity capital. If
there is any indication that an investment is impaired,
an impairment test is performed on the basis of a
discounted cash flow method. An indication exists, for
example, in the event of a serious shortfall compared
to budget, the loss of an active market or if funds are
required to avoid insolvency.
-
Assumptions and estimations are required regard-
ing future residual values, since these represent
a significant part of future cash inflows. Relevant
factors to be considered include the trend in market
prices and demand on the pre-owned vehicle market.
The assumptions are based on internally available
historical data and current market data as well as
on forecasts of external institutions. Furthermore,
assumptions are regularly validated by comparison
with external data.
Group products recognised by BMW Group entities as
leased products under operating leases are measured at
manufacturing cost, including any initial direct costs.
All other leased products are measured at acquisition
cost. All leased products are depreciated over the
period of the lease using the straight-line method
down to their expected residual value. Where the
recoverable amount of a lease exceeds the asset's car-
rying amount, changes in residual value expectations
are recognised by adjusting scheduled depreciation
prospectively over the remaining term of the lease.
If the recoverable amount is lower than the asset's
carrying amount, an impairment loss is recognised for
the shortfall. A test is carried out at each balance sheet
date to determine whether an impairment loss recog-
nised in prior years no longer exists or has decreased.
In such cases, the carrying amount of the asset is
increased to the recoverable amount, at a maximum
up to the amount of the asset's amortised cost.
As lessee, the BMW Group makes use of the applica-
tion exemptions available for short-term leases and
leases of low-value assets.
Determining which items are to be counted as lease
payments including the issue of the lease term
underlying those payments - and which discount rate
to apply involves using estimates and assumptions
that may
differ from actual outcomes.
IFRS 16 requires that lease payments are discounted
as a general rule using the interest rate implicit in
the lease. However, since the interest rate in leases
entered into by the BMW Group cannot readily be
determined, amounts are discounted on the basis
of the incremental borrowing rate, comprising the
risk-free interest rate in the relevant currency for
matching maturities plus a premium for the credit
risk. Specific risks attached to an asset are generally
not taken into account, given that collateral received
in the context of alternative financing arrangements
is not relevant within the BMW Group.
The lease payments to be taken into account to
measure the right-of-use asset and the lease liability
comprise fixed payments, variable lease payments
that depend on an index or an interest rate as well
as amounts expected to be payable under residual
value guarantees. If it is reasonably certain that a
purchase or lease extension option will be exercised,
the relevant payments are also included. Payments
for periods for which the lessee has an option to
terminate a lease unilaterally are only included in
the lease payments if it is reasonably certain that
the termination option will not be exercised. For the
purposes of assessing options, the BMW Group takes
account of all facts and circumstances that create
an economic incentive to exercise or not to exercise
the option.
The time values of option transactions and the interest
component - including the currency basis - of forward
currency contracts are not designated as part of the
hedging relationship in the case of currency hedges
accounted for as cash flow hedges. Changes in the
market value of such components are recorded as
costs of hedging on a separate line within accumulated
other equity. Amounts recorded in accumulated other
equity from currency hedges are reclassified to cost
of sales when the related hedged item is recognised
in profit or loss. Ineffectiveness is recognised directly
in cost of sales.
In the case of raw materials hedges that are accounted
for as cash flow hedges, the hedging instruments are
designated in full as part of the hedging relationship.
As an exception to this general rule, the interest
component of raw materials derivative instruments
redesignated in conjunction with the first-time
application IFRS 9 was not designated as part of
the hedging relationship. Changes in the fair value
of this component are recorded as costs of hedging
on a separate line within accumulated other equity.
Amounts recorded in accumulated other equity are
included in the carrying amount of inventories on
initial recognition.
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
The recoverability of deferred tax assets is assessed at
each balance sheet date on the basis of planned tax-
able income in future financial years. If with a proba-
bility of more than 50 percent future tax benefits will
not be realised, either in part or in total, a valuation
allowance is recognised on the deferred tax assets. The
calculation of deferred tax assets requires assumptions
to be made with regard to the level of future taxable
income and the timing of recovery of deferred tax
assets. These assumptions take account of forecast
operating results and the impact on earnings of the
reversal of taxable temporary differences. Since future
business developments cannot be predicted with cer-
tainty and to some extent cannot be influenced by the
BMW Group, the measurement of deferred tax assets
is subject to uncertainty.
If the recognition and measurement criteria relevant
for provisions are not fulfilled and the outflow of
resources on fulfilment is not unlikely, the potential
obligation is disclosed as a contingent liability.
legal dispute. The assumptions made, especially the
assumption about the outcome of legal proceedings,
are subject to a high degree of uncertainty. The appro-
priateness of assumptions is regularly reviewed, based
on assessments undertaken both by management
and external experts, such as lawyers. If new devel-
opments arise in the future that result in a different
assessment, provisions are adjusted accordingly.
The measurement of provisions for statutory and
non-statutory warranty obligations (statutory, contrac-
tual and voluntary) involves estimations. In addition
to manufacturer warranties prescribed by law, the
BMW Group offers various further standard (assur-
ance-type) warranties depending on the product
and sales market. No provisions are recognised for
additionally offered service packages that are treated
as separate performance obligations.
Other provisions are recognised when the BMW Group
has a present legal or constructive obligation towards
a third party arising from past events, the settlement
of which is probable, and when the amount of the
obligation can be reliably estimated. Provisions with a
remaining period of more than one year are measured
at their net present value.
Remeasurement of the net liability can result from
changes in the present value of the defined benefit
obligation, the fair value of the plan assets or the
asset ceiling. Remeasurement can result, amongst
others, from changes in financial and demographic
parameters, as well as changes following the portfolio
development. Remeasurements are recognised imme-
diately in other comprehensive income and hence
directly in equity (within revenue reserves).
Deferred income taxes are recognised for all temporary
differences between the tax and accounting bases of
assets and liabilities, including differences arising on
consolidation procedures, as well as on unused tax
losses and unused tax credits. Deferred tax assets
and liabilities are measured at the tax rates that are
expected to apply to the period when the asset is
realised or the liability settled, based on tax rates
and tax laws that have been enacted or substantively
enacted by the balance sheet date.
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
Group
Financial
Statements
126
125
income statement.
Net interest expense on the net defined benefit lia-
bility and net interest income on net defined benefit
assets are presented separately within the financial
result. All other costs relating to allocations to pension
provisions are allocated to costs by function in the
Past service cost arises where a BMW Group com-
pany introduces a defined benefit plan or changes
the benefits payable under an existing plan. This cost
is recognised immediately in the income statement.
Similarly, gains and losses arising on the settlement
of a defined benefit plan are recognised immediately
in the income statement.
In the case of funded plans, the pension obligation is
offset against plan assets measured at their fair value.
If the plan assets exceed the pension obligation, the
surplus is tested for recoverability. In the event that
the BMW Group has a right of reimbursement or a
right to reduce future contributions, it reports an asset
(within Other financial assets), measured on the basis
of the present value of the future economic benefits
attached to the plan assets. For funded plans, in cases
where the obligation exceeds plan assets, a liability is
recognised under pension provisions.
The calculation of the amount of the provision requires
assumptions to be made with regard to discount rates,
salary trends, employee fluctuation and the life ex-
pectancy of employees. Discount rates are determined
by reference to market yields at the end of the report-
ing period on high quality fixed-interest corporate
bonds. The salary trend relates to the expected future
rate of salary increase which is estimated annually
based on inflation and the career development of
employees within the Group.
Deferred tax liabilities on taxable temporary differences
arising from investments in subsidiaries, branches and
associated companies and interests in joint arrange-
ments are not recognised if the Group is able to control
the timing of the reversal and it is probable that the
temporary difference will not reverse in the foreseeable
future. This is particularly the case if it is intended that
profits will not be distributed, but rather will be used
to maintain the substance and expand the volume of
business of the entities concerned.
Current income taxes are calculated within the
BMW Group on the basis of tax legislation applicable
in the relevant countries. To the extent that judgement
was necessary to determine the treatment and amount
of tax items presented in the financial statements,
there is in principle a possibility that local tax author-
ities may take a different position.
As a general rule, each income tax treatment is consid-
ered independently when accounting for uncertainties
in income taxes. If it is not considered probable that an
income tax treatment will be accepted by the local
tax authorities, the BMW Group uses the most likely
amount of the tax treatment when determining tax-
able profit and the tax base.
Work in progress and finished goods, as well as vehi-
cles held for sale in the financial services business,
are stated at the lower of manufacturing cost and net
realisable value. Manufacturing cost comprises all
costs which are directly attributable to the manufac-
turing process as well as an appropriate proportion
of production-related overheads. This includes
production-related depreciation and amortisation
and an appropriate proportion of administrative and
social costs. Financing costs are not included in the
acquisition or manufacturing cost of inventories.
Inventories of raw materials, supplies and goods for
resale are stated at the lower of average acquisition
cost and net realisable value.
Financial liabilities, with the exception of lease liabil-
ities, are measured on first-time recognition at their
fair value. For these purposes, transaction costs are
taken into account except in the case of financial
liabilities allocated to the category "measured at fair
value through profit or loss". Subsequent to initial
recognition, liabilities are - with the exception of
derivative financial instruments - measured at amor-
tised cost using the effective interest method.
pro-
Provisions for pensions are measured using the
jected unit credit method. Under this method, not
only obligations relating to known vested benefits
at the reporting date are recognised, but also the
effect of future expected increases in pensions and
salaries. The calculation is based on independent
actuarial valuations which take into account the
relevant biometric factors.
Cash and cash equivalents comprise mainly cash on
hand and cash at bank with an original term of up to
three months. With the exception of money market
funds, cash and cash equivalents are measured at
amortised cost.
-11,744
1,773
135
than 3
1,562
-
Tax loss carryforwards - all relating to foreign opera-
tions amounted to €954 million (2018: €2,045 mil-
lion). This includes one tax loss carryforward
amounting to €519 million (2018: €542 million), on
which a valuation allowance of €177 million (2018:
€185 million) was recognised on the related deferred
tax asset. The decrease in tax losses available for
carryforward was mainly attributable to tax reform
in the USA. For entities with tax losses available for
carryforward, a net surplus of deferred tax assets
over deferred tax liabilities is reported amounting
to €292 million (2018: €234 million). Deferred tax
assets are recognised on the basis of management's
assessment that there is material evidence that the
entities will generate future taxable profits, against
which deductible temporary differences can be offset.
It is expected for instance that tax-allowable start-up
losses incurred for the plant opened in 2019 in San
Luis Potosí, Mexico, can be utilised against future
planned income.
Tax loss carryforwards amounting to €553 million
(2018: €1,551 million) can be used indefinitely, while
€401 million (2018: €494 million) expire after more
years.
Capital losses available for carryforward in the United
Kingdom which do not relate to ongoing operations
increased to €1,938 million (2018: €1,841 million) due
to currency factors. As in previous years, deferred tax
assets recognised on these tax losses – amounting to
€329 million (2018: €313 million) -
- 
were fully written
down since they can only be utilised against future
capital gains.
Group
Financial
Statements
Deferred tax assets and deferred tax liabilities are
netted for each relevant tax entity if they relate to the
same tax authorities.
137
138
Notes to the Group
* Prior year's figures adjusted.
Financial Statements
The deferred tax amount reported in the position
eliminations relates mostly to the balance sheet line
item Leased products.
Net
13,755
-13,123
632
→ Notes to the
13,517
Valuation allowances on tax loss carryforwards
-177
-185
Valuation allowances on capital losses
Starting with financial obligations for operating leases
at 31 December 2018, lease liabilities can be reconciled
to the opening balance at 1 January 2019 as follows:
-329
Netting
-13,123
-11,744
Deferred taxes
2,194
1,638
-313
Deferred taxes recognised directly in equity amounted
to €2,015 million (2018: €1,457 million).
-9,558
Income Statement
Exchange rate impact and other changes
Deferred taxes at 31 December (assets (-)/ liabilities (+))
1 Prior year's figures adjusted.
2 The figures to 1 January 2019 have been adjusted, based on the first-time application of IFRS 16, see note 6.
50
116
-2
-1,562
Taxable temporary differences relating to invest-
ments in subsidiaries, associated companies and
joint ventures amount to €21,215 million (2018:
€17,051 million). No deferred taxes are recognised
on these taxable temporary differences because the
BMW Group is able to determine the timing of the
reversal of the temporary differences and it is prob-
able that the temporary differences will not reverse
in the foreseeable future, in particular in view of
the fact that there is no intention to distribute the
profits, but rather to use them to maintain their
substance and reinvest in the companies concerned.
No computation was made of the potential impact
of income taxes on the grounds of proportionality.
Deferred tax liabilities on expected dividends amount
to €64 million and relate primarily to dividends from
foreign subsidiaries and joint ventures.
The tax returns of BMW Group entities are checked
regularly by German and foreign tax authorities.
Taking account of numerous factors - including
interpretations, commentaries and legal decisions
relating to the various tax jurisdictions as well as
past experience - adequate provision has been made,
to the extent identifiable and probable, for potential
future tax obligations.
14
Earnings per share
13,880
135
-12
thereof from currency translation
222
2019
2018¹
Deferred taxes at 1 January (assets (-)/ liabilities (+))²
122
164
Deferred tax expense (+)/income (-) recognised through income statement
-1,176
312
Change in deferred taxes recognised directly in equity
-558
-457
thereof relating to fair value gains and losses on financial instruments and marketable securities recognised directly in equity
thereof relating to the remeasurements of net liabilities for defined benefit pension plans
-170
-677
-376
in € million
15,823
Municipal trade tax rate
1,539
Diluted earnings per share of common stock in €
10.62
-0.22
10.84
Basic earnings per share of preferred stock in €
10.60
-0.22
10.82
10.82
Basic earnings per share of common stock in €
-143
7,117
Attributable to shareholders of BMW AG
7,064
-143
7,207
Net profit/loss
-2,530
6,974
-0.22
10.60
Diluted earnings per share of preferred stock in €
Total comprehensive income attributable to shareholders of BMW AG
Total comprehensive income
Net profit
in € million
Income Statement
→ Notes to the
Principles and
Policies
→ Accounting
Financial Statements
Notes to the Group
→ 69
BMW Group change in presentation of statement of comprehensive income
for the period from 1 January to 31 December 2018
Statements
Group
Financial
132
131
10.62
-0.22
10.84
45
-2,575
Income taxes
9,627
Impact of
accounting
As originally
reported
in € million
→ 68
BMW Group change in presentation of income statement
for the period from 1 January to 31 December 2018
209,379
399
208,980
Total equity and liabilities
15,826
709
15,117
6,075
-3
6,078
thereof other liabilities
thereof other provisions
71,615
706
policy changes
BMW Group change in presentation of cash flow statement
for the period from 1 January to 31 December 2018
As amended
Cost of sales
-188
9,815
8,933
-188
9,121
-9,568
-10
18,378
-178
18,556
97,315
-78,937
-13
-78,924
-165
97,480
Profit/loss before tax
Profit/loss before financial result
Selling and administrative expenses
Gross profit
Revenues
→ 70
in € million
Cash inflow/outflow from operating activities
08
3,728
3,996
and finance leases
Interest income on loan financing
9,995
10,746
Income from lease instalments
10,163
11,020
leased to customers
Sales of products previously
68,029
73,433
Sales of products and related goods
133
Comparative figures for the previous financial year
have been adjusted to reflect the change in accounting
→ see policy for manufacturer lessors (see → note 6) and
the change in the presentation of amortisation of
initial direct costs for finance leases and receivables
originated. These were previously recorded as cost
of sales and are now reported as reductions of rev-
enues (amount adjusted for the financial year 2018:
€460 million).
Interest income on loan financing and finance leases
includes interest calculated on the basis of the effec-
tive interest method totalling €3,687 million (2018:
€3,423 million). This interest income is not reported
separately in the income statement as it is not signif-
icant compared to total Group revenues.
note 6
Revenues from service contracts,
2018*
telematics and roadside assistance
2,784
44,558
48,690
Manufacturing costs
The major part of revenues expected to arise from the
Group's order book at the end of the reporting period
relates to the sale of vehicles. Revenues resulting from
those sales will be recognised in the short term. The
services included in vehicle sale contracts that will be
recognised as revenues in subsequent years represent
only an insignificant portion of expected revenues.
Accordingly, use has been made of the practical
expedient contained in IFRS 15, permitting an entity
not to disclose information on a quantitative basis
due to the short-term nature of items and the lack of
informational value of such disclosures.
An analysis of revenues by segment is shown in the
explanatory comments on segment information
provided in → note 45. Revenues from the sale of see
products and related goods are generated primarily in
the Automotive segment and, to a lesser extent, in the
Motorcycles segment. Revenues from sales of products
previously leased to customers, income from lease
instalments and interest income on loan financing and
finance leases are allocated to the Financial Services
segment. Other income relates mainly to the Auto-
motive segment and the Financial Services segment.
note 45
Revenues recognised from contracts with customers
in accordance with IFRS 15 totalled €89,610 million
(2018: €81,871 million).
2018*
2019
* Prior year's figures adjusted.
in € million
96,855
104,210
Revenues
2,156
2,195
Other income
Cost of sales comprises:
Cost of sales
2,820
70,909
2019
Revenues by activity comprise the following:
6,370
-143
6,513
6,460
-143
6,603
7,064
-143
7,207
As amended
accounting
policy changes
reported
As originally
Impact of
thereof change in other operating assets and liabilities
thereof change in provisions
thereof change in receivables from sales financing
thereof change in deferred taxes
thereof net profit
As originally
reported
in € million
Impact of
accounting
policy changes
5,051
Revenues
07
NOTES TO THE INCOME
STATEMENT
877
180
697
-94
-12
-82
-5,650
20
-5,670
310
-45
355
7,064
-143
7,207
5,051
As amended
Total current provisions and liabilities
5,293
-6
1,577
11
1,566
73,462
-34
73,496
1,537
-93
1,630
1,971
6
1,965
48,457
-18
48,475
121,985
-105
122,090
Total assets
7,485
thereof other assets
-45
195,586
69,585
-31
69,616
Total non-current provisions and liabilities
50,877
-116
50,993
thereof revenue reserves
53,656
-116
53,772
thereof equity attributable to shareholders of BMW AG
54,092
-116
54,208
Total equity
EQUITY AND LIABILITIES
195,447
-139
7,440
thereof other provisions
thereof current tax
thereof other assets
2,512
105
2,407
-258
2,665
4
69
-102
2,694
Present value of finance lease liabilities at 31 December 2018
Total lease liabilities at 1 January 2019
Lease liabilities for former operating leases at 1 January 2019
Gross lease liabilities for former operating leases at 1 January 2019
Discounting impact
Other
Application of practical expedients for leases of low-value assets and short-term leases
Change in assessment of leases
Financial obligations for operating leases at 31 December 2018
in € million
129
→ 65
Reconciliation of opening balance
Lease liabilities were discounted using a weighted
average incremental interest rate of 1.94% at 1 Jan-
uary 2019.
Total current assets
(b) Changes in methods used to account
for leases as lessor
As a result of the revised definition of initial direct
costs contained in IFRS 16, the BMW Group has
changed the timing of income statement recognition
for volume-dependent bonuses relating to Financial
Services segment sales promotions. Rather than being
spread over the term of the underlying lease, these
costs are now recognised as an expense in full in the
period in which the entitlement to the bonus arises.
This resulted in a retrospective decrease in Group
revenue reserves at 1 January 2018 of €101 million,
after offset of deferred tax amounting to €44 million
(31 December 2018: reduction of revenue reserves of
€113 million, after offset of deferred tax amounting
to €49 million).
thereof deferred tax
thereof receivables from sales financing
Total non-current assets
ASSETS
As amended
Impact of
accounting
policy changes
As originally
reported
in € million
→ 66
BMW Group change in presentation of balance sheet at 1 January 2018
statement, statement of comprehensive income and
cash flow statement for the financial year 2018.
The tables below show the impact of accounting pol-
icy changes on the balance sheets at 1 January 2018
and 31 December 2018, as well as on the income
Principles and
Policies
→ Accounting
Financial Statements
Notes to the Group
Group
Financial
Statements
130
The BMW Group is also required to account for
finance leases concluded with retail customers via the
Financial Services segment in accordance with the
requirements applicable to manufacturers or dealers.
For this reason, revenues and cost of sales arising on
the sale of vehicles which will subsequently be leased
to customers under finance lease arrangements are
now recognised at a later date. Revenues and cost of
sales relating to vehicle sales are no longer recognised
at the time of sale, but rather at the commencement
of the lease. Revenues are recognised on the basis of
the leased asset's fair value, reduced by any unguar-
anteed residual value of vehicles that are expected
to be returned to the Group. Similarly, cost of sales
is reduced for unguaranteed residual values. In addi-
tion, initial direct costs incurred by the Financial
Services segment are recognised at Group level as
cost of sales. Overall, this resulted in a retrospective
decrease in Group revenue reserves at 1 January 2018
of €15 million, after offset of deferred tax amounting
to €4 million (31 December 2018: decrease of revenue
reserves of €146 million, after offset of deferred tax
amounting to €44 million). The adoption of these
requirements did not have any significant impact
on the accounting in the Automotive and Financial
Services segments.
In conjunction with the adoption of IFRS 16, the meth-
ods used to account for leases as a lessor have also
been reviewed, resulting in a change of accounting
policy as described below with effect from the finan-
cial year 2019. The change in accounting policy has
been applied retrospectively in accordance with IAS 8,
with comparative figures adjusted. In this context, the
opening balance sheet at 1 January 2018 and figures
for the financial year 2018 have been adjusted.
Cost of sales relating to financial services
5,632
thereof deferred tax
-259
58,088
Total equity
EQUITY AND LIABILITIES
209,379
399
208,980
10,257
467
9,790
1,378
12
1,366
84,017
479
83,538
1,918
-108
2,026
57,829
1,638
thereof equity attributable to shareholders of BMW AG
-259
5,299
1,773
-33
1,806
thereof other liabilities
983
5,767
-9
5,776
thereof other provisions
79,935
-48
79,983
Total non-current provisions and liabilities
55,862
-259
56,121
thereof revenue reserves
57,300
57,559
5,632
48
48,089
13,451
8
00
13,443
6,367
6,367
Total equity and liabilities
thereof other liabilities
thereof other provisions
71,770
8
71,762
Total current provisions and liabilities
5,045
5,045
2,135
-31
2,166
thereof other liabilities
195,586
1,590
-139
BMW Group change in presentation of balance sheet at 31 December 2018
-20
48,109
125,362
-80
125,442
Total assets
thereof other assets
thereof current tax
Total current assets
thereof other assets
thereof deferred tax
thereof receivables from sales financing
Total non-current assets
ASSETS
As amended
Impact of
accounting
policy changes
As originally
reported
in € million
→ 67
195,447
business
thereof deferred tax
22,042
Deferred taxes are determined on the basis of tax
rates which are currently applicable or expected to
apply in the relevant national jurisdictions when the
amounts are recovered. After taking account of an
average municipal trade tax multiplier rate (Hebesatz)
of 428.0 (2018: 428.0), the underlying income tax rate
for Germany was as follows:
The tax expense resulting from the change in the
valuation allowance on deferred tax assets relating
to tax losses available for carryforward and temporary
differences amounted to €7 million (2018: €24 million).
The tax expense was reduced by €30 million (2018:
€41 million) as a result of utilising tax loss carry-
forwards, for which deferred tax assets had not
previously been recognised and in conjunction with
previously unrecognised tax credits and temporary
differences.
Income Statement
Notes to the Group
Financial Statements
→ Notes to the
Group
Financial
Statements
136
135
The difference between the expected tax expense
based on the underlying tax rate for Germany and
actual tax expense is explained in the following
reconciliation:
The previous year's figures have been adjusted due to
the change in accounting policy for volume-dependent
bonuses and for manufacturer lessors (see → note 6).
* Prior year's figures adjusted.
2,530
2,140
Income taxes
-284
263
carryforwards and tax credits
thereof relating to tax loss
→ see
note 6
in € million
Profit before tax
2019
314
909
Non-deductible expenses
-173
-314
Tax-exempt income
Tax increases (+)/tax reductions (-) due to:
-436
-373
Variances due to different tax rates
2,965
2,192
30.8%
30.8%
2019
Tax rate applicable in Germany
Expected tax expense
9,627
7,118
2018*
596
-1,439
differences
thereof relating to temporary
thereof subsidiaries:
-233
-232
Other interest and similar expenses
-62
-41
benefit liability for pension plans
Net interest expense on the net defined
-91
-226
on other long-term provisions
Expense relating to interest impact
397
179
Interest and similar income
8
9
thereof from subsidiaries:
397
4
Equity accounted
Interest and similar expenses
Net interest result
312
-1,176
deferred tax income (-)
Deferred tax expense (+)/
2,218
3,316
Current tax expense
2018*
2019
in € million
Taxes on income of the BMW Group comprise the
following:
Income taxes
13
Sundry other financial result comprises mainly in-
come and expenses arising on the measurement of
stand-alone derivatives and fair value hedge rela-
tionships, as well as income and expenses from the
measurement and sale of marketable securities and
shares in investment funds.
note 2
The result on investments includes revaluation effects
relating to YOUR NOW. Further information is pro-
→ see vided in → note 2 to the Group Financial Statements.
The figure reported for the previous year included
a positive valuation effect relating to the DriveNow
companies amounting to €209 million.
11
-2
-386
-320
-499
5
-158
Tax expense (+)/benefits (-)
for prior years
3
3
5,175
4,085
489
324
359
780
171
53
3,077
3,186
22
17
Provisions
Capital Losses
Tax loss carryforwards
Other investments
Sundry other assets
Leased products
22
Property, plant and equipment
20
1,185
23,623
3,226
3,883
620
647
2,570
3,544
Eliminations
Liabilities
29
42
5,323
6,239
313
329
578
306
3,254
3,454
1,125
179
Intangible assets
2019
15.0
15.0
Corporate tax rate
26.3%
30.1%
Effective tax rate
2,530
2,140
Actual tax expense
2018
2019
in %
-56
-100
Other variances
90
-17
Effects from tax rate changes
-162
Solidarity surcharge
2018*
5.5
* Prior year's figures adjusted.
2018*
2019
Deferred tax liabilities
Deferred tax assets
in € million
The allocation of deferred tax assets and liabilities to
balance sheet line items at 31 December is shown in
the following table:
Other variances include various reconciling items.
Tax income relating to prior years resulted primarily
from adjustments to income tax receivables and pro-
visions for prior years, which were largely attributable
to the successful conclusion of intergovernmental tax
treaties covering the topic of transfer pricing.
Tax increases as a result of non-deductible expenses
and tax reductions due to tax-exempt income increased
compared to one year earlier. The tax increases were
due to provisions and impairment losses on invest-
ments that are non-deductible for tax purposes as well
as to non-deductible withholding tax.
Deferred taxes for non-German entities are calculated
on the basis of the relevant country-specific tax rates.
These ranged in the financial year 2019 between 9.0%
and 40.0% (2018: between 9.0% and 45.0%).
30.8
30.8
German income tax rate
15.0
15.0
15.8
15.8
surcharge
Corporate tax rate including solidarity
5.5
Other interest and similar income
-16
-109
Exchange losses
-1,414
-1,667
Amortisation
5,320
5,952
Research and development expenses
774
1,031
Other operating income
262
401
Sundry operating income
2018
2019
in € million
96
41
Gains on the disposal of assets
-181
8
-135
Expense for additions to provisions
Profit attributable to common stock
Profit attributable to preferred stock
6,974.4
4,914.5
€ million
Net profit attributable to the shareholders of BMW AG
20181
Sundry operating expenses
6,890
6,419
-48
-173
write-downs
Total research and development
expenditure
Expense for impairment losses and
2,984
2,134
development costs
-193
-1,732
New expenditure for capitalised
€ million
losses and write-downs
216
Cost of sales
2,996
3,675
Other cost of sales
1,717
2,566
Warranty expenditure
1,844
1,641
and roadside assistance
Expenses for service contracts, telematics
5,320
5,952
Research and development expenses
2,035
2,288
to financial services business
51
thereof: interest expense relating
86,147
Income from the reversal of impairment
78,477
Cost of sales is reduced by public-sector subsidies
in the form of reduced taxes on assets and reduced
consumption-based taxes amounting to €105 million
(2018: €88 million).
433
Income from the reversal of provisions
185
148
Exchange gains
2018
2019
in € million
Other operating income and expenses comprise the
following items:
Other operating income and expenses
10
→ see
note 6
Research and development expenditure was as follows:
Comparative figures for the previous financial year
have been adjusted to reflect the change in accounting
policy for volume-dependent bonuses and for manu-
facturer lessors (see → note 6) as well as the change in
the presentation of amortisation of initial direct costs
for finance leases and receivables originated. These
were previously recorded as cost of sales and are now
reported as reductions of revenues (amount adjusted
for the financial year 2018: €460 million).
Income Statement
Notes to the Group
Financial Statements
→ Accounting
Principles and
Policies
→ Notes to the
Group
Financial
Statements
134
Expenses for impairment losses on receivables from
sales financing recognised in the income statement
for the financial year 2019 amounted to €219 million
(2018: €142 million). Because the impairments are of
minor importance compared to total Group cost of
sales, a separate disclosure has not been provided in
the income statement.
* Prior year's figures adjusted.
€ million
15
6,383.6
590.8
2018
in € million
Other financial result
12
in € million
Net interest result
11
The BMW Group has examined the objections and
gained access to the documents in the EU Commission's
investigation file. In December 2019, the BMW Group
submitted a detailed response to the EU Commission,
which the latter will now examine before determining
the next steps in the proceedings. Consequently, it
is not yet possible to assess the ultimate financial
impact definitively.
In an ad hoc announcement dated 5 April 2019,
the BMW Group reported that the EU Commission
had informed it of a "Statement of Objections" in
conjunction with ongoing antitrust proceedings.
The EU Commission alleges that the manufacturers
colluded with the aim of restricting innovation and
competition with regard to certain exhaust treat-
ment systems for diesel- and petrol-driven passenger
vehicles. The allegation concerns selective catalytic
reduction (SCR) systems and the use of petrol par-
ticulate filters (OPF). The Commission's preliminary
view is that the conduct objected to may be in breach
of EU competition rules. The Statement of Objections
leads the BMW Group to conclude that it is probable
("more likely than not") that the EU Commission will
issue a significant fine. The resulting requirement
to recognise a provision increased other operating
expenses by approximately €1.4 billion in 2019.
The expense for additions to provisions includes
litigation and other legal risks. Income from the
reversal of provisions includes income arising on
the reassessment of risks from legal disputes.
Impairment losses recognised on receivables from
contracts with customers amounted to €48 million
(2018: €47 million).
Income from the reversal of and expenses for the
recognition of impairment allowances and write-
downs relate mainly to impairment allowances on
receivables.
→ see
note 6
The previous year's figure has been adjusted due to
the change in accounting policy for volume-dependent
bonuses (see → note 6).
* Prior year's figures adjusted.
9,568
9,367
expenses
Total selling and administrative
Income from investments in subsidiaries
and participations
387
278
Other financial result
2018
4,494.4
420.1
2019
-105
-189
Sundry other financial result
-105
-189
3,720
financial instruments
156
80
Result on investments
-122
-307
Expenses from investments in subsidiaries
and participations
9
13
thereof from subsidiaries:
Income (+) and expenses (-) from
3,711
2019
Average number of preferred stock shares in circulation
2.502
€
10.62
7.49
€
10.60
7.47
1 Prior year's figures adjusted.
Dividend per share of preferred stock
Dividend per share of common stock
4|4|
Basic/diluted earnings per share of preferred stock
Basic/diluted earnings per share of common stock
55,605,380
601,995,196
601,995,196
56,122,857
number
number
Administrative expenses
Average number of common stock shares in circulation
3.50
€
€
3.52
5,656
2.522
Selling expenses
2018*
2019
in € million
Selling and administrative expenses relate mainly to
expenses for marketing, personnel and IT.
5,848
09
123
Selling and administrative expenses
Other operating income and expenses
-1,285
-230
-275
2 Proposal by management.
-2,316
-651
Other operating expenses
Participations
-1
412
596
1
28
29
Non-current marketable securities
74
671
→ Notes to the
690
Other investments
145
146
Group
Financial
Statements
Notes to the Group
Financial Statements
458
21
Balance Sheet
739
480
7,697
408
829 Other facilities, factory and office equipment
Advance payments made and
construction in progress
Property, plant and equipment
Intangible assets
114
3,488
Plant and machinery
3,707
7,592
38,259
36,257
73
Leased products²
2,769
Investments accounted for using
the equity method
Investments in non-consolidated
189
2
191
253
249
subsidiaries
2,624
Intangible assets mainly comprise capitalised devel-
opment costs on vehicle, module and architecture
projects as well as subsidies for tool costs, licences,
purchased development projects, software and pur-
chased customer lists.
147
As in the previous year, there was no requirement to
recognise impairment losses or reversals of impair-
ment losses on intangible assets in 2019.
The carrying amount of leased products was adjusted
due to changes in presentation of initial direct costs
(previously reported as other assets) and vehicles com-
ing out of leases (now reported as part of inventories)
(adjustment effect at 31 December 2018: decrease of
€313 million).
22
Property, plant and equipment
(including right-of-use assets arising from leases)
No impairment losses were recognised in 2019, as in
the previous year.
As in the previous year, no financing costs were
recognised as a cost component of property, plant
and equipment in 2019.
Right-of-use assets arising from leases of land and
buildings relate primarily to logistics and office
premises and, to a lesser extent, to selling and pro-
duction premises. In order to secure these premises
and, in the interests of flexibility, the property rental
agreements concerned often contain extension and
termination options.
24
Investments accounted for using the equity method
Investments accounted for using the equity method
comprise the joint venture BMW Brilliance Automotive
Ltd. (BMW Brilliance), the YOUR NOW companies,
the joint venture IONITY Holding GmbH & Co. KG
(IONITY) and the interest in the associated
company
THERE Holding B.V. (THERE).
BMW Brilliance produces BMW brand models for the
Chinese market and also has engine manufacturing
facilities, which supply the joint venture's two plants
with petrol engines.
Impairment losses amounting to €198 million (2018:
€235 million) were recognised on leased products in
2019 as a consequence of changes in residual value
expectations. Income from the reversal of impairment
losses amounted to €74 million (2018: €92 million).
The BMW Group intends to increase its stake in
the BMW Brilliance joint venture from 50% to 75%.
On 11 October 2018, the BMW Group signed an
agreement with its joint venture partner, a wholly
owned subsidiary of Brilliance China Automotive
Holdings Ltd. (CBA), to acquire an additional 25%
shareholding in BMW Brilliance. The two partners
agreed on a purchase price of an equivalent of €3.6 bil-
lion. The contractual term of the joint venture, which
would currently expire in 2028, is to be extended to
2040 as part of the agreement. The prerequisite for
the extension is the acquisition of the additional
shares as agreed. The agreement was approved at
the CBA shareholders' meeting on 18 January 2019
and remains subject to the approval of the relevant
authorities. The transaction is scheduled to be closed
in 2022. The closing will result in BMW Brilliance
being fully consolidated in the BMW Group Financial
Statements and is expected to result in the recognition
of a significant valuation gain in the financial year in
which the transaction closes.
Together with Daimler AG, Stuttgart (Daimler AG),
the Ford Motor Company and the Volkswagen Group,
the BMW Group operates the joint venture IONITY
Holding GmbH & Co. KG, whereby each of the par-
ties has an equal shareholding. IONITY's business
model envisages the construction and operation of
high-performance charging stations for battery electric
vehicles in Europe.
note 2
Together with Audi AG, Daimler AG and other com-
panies, the BMW Group holds shares in THERE.
HERE International B.V. (HERE) is an associated
company of THERE. HERE's digital maps are laying
the foundations for the next generation of mobility
and location-based services, providing the basis for
new assistance systems and, ultimately, fully auto-
mated driving.
Capital increases were made at the level of THERE
in January 2019, with BMW AG participating with an
amount of €69 million. Since then, BMW AG's stake
in THERE amounts to 29.7%.
In December 2019, it was announced that Mitsubishi
Corporation (MC) and Nippon Telegraph and Tele-
phone Corporation (NTT) will jointly acquire a 30%
stake in HERE. The transaction is subject to the
approval of the antitrust authorities and is expected
to be closed during the first half of 2020.
148
Land, titles to land, buildings, including
buildings on third party land
Group
Financial
Statements
Notes to the Group
With effect from 31 January 2019, the BMW Group
completed the merger of several mobility services
companies under the name YOUR NOW. Further
information is provided in → note 2 to the Group → see
Financial Statements.
Other intangible assets include a brand-name right
amounting to €43 million (2018: €41 million) which
is allocated to the Automotive segment and is not
subject to scheduled amortisation since its useful life
is deemed to be indefinite. The asset is subject to a
limited right of ownership. The €2 million increase
in the carrying amount is entirely due to currency
factors. Intangible assets also include goodwill of
€33 million (2018: €33 million) allocated to the Auto-
motive cash-generating unit (CGU) and goodwill of
€347 million (2018: €347 million) allocated to the
Financial Services CGU.
later than five years
Minimum lease payments
20,894
As in the previous year, no financing costs were recog-
nised as a cost component of intangible assets in 2019.
23
Leased products
Minimum lease payments of non-cancellable oper-
ating leases amounting to €20,894 million (2018:
€18,880 million) fall due as follows:
in € million
within one year
31.12.2019
31.12.2018
9,804
8,980
18,880
between one and two years
between two and three years
3,278
between three and four years
1,073
between four and five years
225
between one and five years
25
9,863
37
6,489
2,525
18,471
Investments in non-consolidated
35,503
11
1,410
1 Including €74 million recognised through the income statement.
² Prior year's figures adjusted due to the change in the presentation of vehicles coming out of leases, as well as initial direct costs.
3 Including assets under construction of €2,017 million.
Depreciation and amortisation
Carrying amount
Translation
1.1.2018
123
differences
Reclassi-
fications
Value
adjustments¹
Disposals 31.12.2018
31.12.2018
31.12.2017
4,556
1,414
5
1,075
Current year
5
12
28
Financial Statements
2,769
547
692
2,624
subsidiaries
Participations
Non-current marketable securities
Other investments
1,286
438
8
5
444
820
9
115
6
938
28
3
19,801
195
5
6,420
6,122
27,838
154
2,886
2,767
28,111
10,078
8,995
5,310
1,970
270
175
2,082
908
2,3953
34,774
200
3,504
2,975
17
5,636
33
29
1,609
956
5,014
9,976
8,409
5
380
380
Development costs
Goodwill
348
92
615
675
Other intangible assets
1,048
6,202
10,971
9,464
Intangible assets
4,966
1,183
→ Notes to the
-382
Balance Sheet
2019
2018
2019
2018
2019
2018
2019
IONITY
2018
DriveNow
2019
Revenues
Scheduled depreciation
21,910
651
17,766
636
424
14
150
Profit/loss before financial result
2,374
2018
1,922
YOUR NOW
BMW Brilliance
2,963
475
522
987
51
37
Eliminations
-960
-898
THERE
Carrying amount
2,065
475
522
987
51
37
in € million
DISCLOSURES RELATING TO
THE INCOME STATEMENT
1,686
2,646
-1,349
1
-383
-337 -1,805
-24
Other comprehensive income
-14
-250
1
-7
Total comprehensive income
1,561
1,933
-344
-1,805
-24
-15
Group dividend income*
1,284
384
*Including dividends received in the amount of €643 million (2018: €384 million).
the equity method
1,311
-29
1,947
-15
-18
Interest income
84
62
Interest expense
5
23
1
Income taxes
thereof from continuing operations
654
28
5
3
Profit/loss after tax
1,947
1,561
-383
-337 -1,805
-24
535
Group's interest in net assets
149
205
175
48
Current assets
7,381
6,570
467
2
1,116
70
1,643
110
2,937
2,937
1
2
818
50
102
Equity
5,293
thereof cash and cash equivalents
5,926
1,763
6,714
in € million
DISCLOSURES RELATING TO
BMW Brilliance
THERE
YOUR NOW
2019
2018
2019
2018
1,131
2019
IONITY
2018
2019
2018
2019
2018
THE BALANCE SHEET
Non-current assets
7,248
DriveNow
1,597
1,764
2,106
AGGREGATED FINANCIAL
INFORMATION
Assets
Provisions and liabilities
9,337
14,629 13,284
7,358
1,598
1,765
2,759
RECONCILIATION OF
245
1
1
653
40
9
Net assets
5,292 5,926 1,597
1,764
2,106
158
39
81
887
205
149
Non-current financial liabilities
87
71
112
Non-current provisions and liabilities
1,271
1,193
184
5
3
Current provisions and liabilities
7,978
6,094
1
1
469
30
6
thereof current financial liabilities
Financial information relating to equity accounted
investments is summarised in the following tables:
Investments accounted for using
2,525
17,098
After
tax
Remeasurement of the net defined benefit liability for pension plans
Marketable securities (at fair value through other comprehensive income)
Derivative financial instruments
-1,254
387
-867
935
-217
718
42
-12
30
-30
18
-12
-706
211
6
-3
Other comprehensive income from equity accounted investments
Currency translation foreign operations
-433
187
-620
Deferred
taxes
91
125
Costs of hedging
-945
436
-1,381
-495
-34
3
Before
tax
taxes
59
-1
-17
-29
-706
-1,381
-229
-333
-477
-1,048
125
-620
-611
-973
736
353
-3
After
Deferred
Before
tax
2018
2019
-604
tax
-694
173
192
544
674
171
-157
-1,322
-30
-157
-124
385
Other intangible assets
1,798
11
448
Intangible assets
17,173
11
2,582
1,733
15,391
385
182
2,075
1,915
17,851
Land, titles to land, buildings, including
45
-8
751
22
2,387
from leases
Goodwill
thereof right-of-use assets
99
397
1,013
115
14,023
buildings on third party land
15,449
33
2,134
Development costs
544
544
192
192
Other comprehensive income
-1,252
558
-694
-1,061
457
-604
Other comprehensive income relating to equity ac-
counted investments is reported in the Group
Statement of Changes in Equity within currency trans-
lation differences with a positive amount of €22 mil-
lion (2018: negative amount of €24 million), within
derivative financial instruments with a negative amount
of €56 million (2018: positive amount of €39 million)
and costs of hedging with a positive amount of €37 mil-
lion (2018: negative amount of €139 million).
141
142
NOTES TO THE BALANCE SHEET
Group
Financial
Disposals 31.12.2019
Reclassi-
fications
Additions
Acquisition and manufacturing cost
Translation
differences
1.1.2019
14,990
in € million
20
Balance Sheet
→ Notes to the
Financial Statements
Notes to the Group
Statements
Analysis of changes in Group tangible,
intangible and investment assets 2019
3,107
42
Deferred taxes on components of other comprehen-
sive income are as follows:
Most of the expenses for leases for low-value assets
and short-term leases relate to low-value assets.
The BMW Group is party to leases at the end of the
reporting period which have not yet commenced.
These leases could give rise to future cash outflows
amounting to €42 million.
Total cash outflows for leases in 2019 amount to
€591 million.
Information on right-of-use assets and lease liabilities
and further explanatory comments are provided in
→ note 4 (Accounting policies, assumptions, judgments
and estimates), note 6 (Changes in accounting policy
for leases), note 20 (Analysis of changes in Group
tangible, intangible and investment assets in 2019),
note 22 (Property, plant and equipment (including
right-of-use assets arising from leases) and note 35
(Financial liabilities).
(b) As lessor
year was:
in € million
2019
2019
2018
Employees
125,893
123,337
Apprentices and students gaining work
experience
7,389
Average number of employees
133,282
→ Notes to the
Notes to the Group
Financial Statements
Notes to the
Income Statement
Statements
Group
Financial
↑ ↑
140
→ see
notes 4, 6, 20,
22 and 35
Variable lease payments are based on distance driven.
The agreements have, in part, extension and purchase
options.
1,389
885
19
171
Income from variable lease payments for operating leases
Income from variable lease payments for finance leases
Financial income on the net investment in finance leases
Selling profit or loss on the sale of vehicles previously
leased to retail customers under finance leases
8,228
131,565
The number of employees at the end of the reporting
period is disclosed in the Combined Management
Report.
Statement of
The average number of employees during the
843
12,479
45,851
Earnings per share of preferred stock are computed
on the basis of the number of preferred stock shares
entitled to receive a dividend in each of the relevant
financial years. As in the previous year, diluted earn-
ings per share correspond to basic earnings per share.
Basic/diluted earnings per share from continuing
operations amounted to €7.40 per share of common
stock and €7.42 per share of preferred stock.
The previous year's figures have been adjusted due to
the change in accounting policy for volume-dependent
bonuses and for manufacturer lessors (see note 6). → see
note 6
16
Leases
(a) As lessee
In terms of accounting for leases as a lessee, the fol-
lowing amounts are included in the income statement
for the financial
year 2019:
in € million
Expenses for leases of low-value assets and
short-term leases
Expenses relating to variable lease payments
2019
-94
not included in the measurement of lease liabilities
Interest expenses arising on the measurement of
lease liabilities
-3
-54
15
12,451
Personnel expenses
948
Social insurance expenses
10,249
1,387
1,133
Personnel expenses include €72 million (2018:
€45 million) of costs relating to workforce measures.
The total pension expense for defined contribution
plans of the BMW Group amounted to €148 million
(2018: €122 million). Employer contributions paid to
state pension insurance schemes totalled €667 mil-
lion (2018: €645 million).
Pension and welfare expenses
Wages and salaries
2018
2019
in € million
The income statement includes personnel expenses
as follows:
Personnel expenses
10,370
in € million
Comprehensive
17
Government grants and government assistance
Income from asset-related and performance-related
grants, amounting to €41 million (2018: €29 million)
and €199 million (2018: €83 million) respectively, was
recognised in the income statement in 2019.
These amounts relate mainly to public sector grants
aimed at the promotion of regional structures as well
as to subsidies received for plant expansions.
NOTES TO THE STATEMENT
OF COMPREHENSIVE
INCOME
19
Disclosures relating to the statement of
comprehensive income
Other comprehensive income for the period after tax
comprises the following:
in € million
2019
2018
Remeasurement of the net defined benefit liability for pension plans
Deferred taxes
-1,254
935
387
-217
Items not expected to be reclassified to the income statement in the future
-867
Other comprehensive income for the period after tax
Items that can be reclassified to the income statement in the future
Currency translation foreign operations
Other comprehensive income from equity accounted investments
Deferred taxes
thereof reclassifications to the income statement
thereof gains/losses arising in the period under report
18
Costs of hedging
thereof gains/losses arising in the period under report
Derivative financial instruments
thereof reclassifications to the income statement
thereof gains/losses arising in the period under report
Marketable securities (at fair value through other comprehensive income)
718
thereof reclassifications to the income statement
Income
Other services mainly include consulting services
relating to production processes.
The audit of financial statements comprises mainly
the audit of the Group Financial Statements and the
separate financial statements of BMW AG and its
subsidiaries, and, in accordance with current require-
ments, all work related thereto, including the review
of the Interim Group Financial Statements.
Fee expense for the Group auditor
The fee expense pursuant to § 314 (1) no. 9 HGB recog-
nised in the financial year 2019 for the Group auditor 7
in € million
and the PwC network of audit firms amounted to
€19 million (2018: €24 million, KPMG International)
and consists of the following:
PwC International
(2018: KPMG International)
2019
thereof: PwC GmbH
(2018: KPMG AG)
2018
2019
2018
Audit of financial statements
Other attestation services
Tax advisory services
Other services
Fee expense
14
17
Services provided during the financial year 2019 by
the Group auditor PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft, Frankfurt am Main,
Munich branch, on behalf of BMW AG and sub-
sidiaries under its control relate to the audit of the
financial statements, other attestation services, tax
advisory services and other services.
7
7
2
2
1
Other attestation services include mainly project-
related audits, comfort letters and statutorily
prescribed, contractually agreed or voluntarily com-
missioned attestation work.
3222
19
3
1
1
5
4
24
Plant and machinery
139
224
240
3,199
2,624
Investments accounted for using
the equity method
Investments in non-consolidated
191
480
-322
-219
88
204
253
subsidiaries
11
-11
240
501
458
671
-311
-230
589
703
739
 ྨ| | |
Participations
28
Non-current marketable securities
Other investments
143
144
499
Leased products
38,259
42,609
275
2,147
76
1,025
31
31
73
712
1,9913
2,395
35,503
216
4,202
7,592
95
4,732
2,493
37,428
7,333
5,086
Advance payments made and
construction in progress
Property, plant and equipment
from leases
908 Other facilities, factory and office equipment
thereof right-of-use assets
from leases
Group
Financial
Statements
thereof right-of-use assets
from leases
thereof right-of-use assets
Land, titles to land, buildings, including
buildings on third party land
12
19,801
23,245
Plant and machinery
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
Analysis of changes in Group tangible, intangible
and investment assets 2018
Plant and machinery
201
2,888
1,119
2,852
38,189
Other facilities, factory and office equipment
2,799
20
294
60
183
2,990
Advance payments made and
construction in progress
18
1,409
18,580
38,190
735
43,634
Leased products²
55,304
11,730
3,123
314
53,245
Property, plant and equipment
2,395
6
-1,551
4,868
6
82
277
in € million
Acquisition and manufacturing cost
1.1.2018
Translation
differences
Additions
Reclassi-
fications
Disposals 31.12.2018
Development costs
Goodwill
Other intangible assets
Intangible assets
12,965
2,984
385
1,750
12
161
75
11,088
buildings on third party land
Land, titles to land, buildings, including
17,173
1,084
372
1,798
385
14,990
959
3,145
12
15,100
125
322
36,833
2,082
57,666
380
5,202
2,575
60,673
Leased products
45,851
619
20,513
17,041
49,942
Investments accounted for using
the equity method
2,624
2,876
2,061
3,439
28
86
4
938
292
293
Property, plant and equipment
139
444
Other investments
Non-current marketable securities
Participations
subsidiaries
Investments in non-consolidated
2
1,000
1,991
-1,713
1,253
2,581
14
2,187
40,061
thereof right-of-use assets
from leases
1
Other facilities, factory and office equipment
3,061
23
75
6
82
23
311
63
1,297
18
2,392
construction in progress
Advance payments made and
104
3
2
33
1
71
from leases
thereof right-of-use assets
3,172
1
28
286
1,410
1,169
906
615
Other intangible assets
1,899
6,122
11,729
10,971
Intangible assets
5,310
44
794
2
46
6,104
9,345
6,420
10,884
6
28
29,177
2,172
-6
166
3,086
28,111
2,3872
2,681
5
430
1
158
Development costs
Goodwill
426
380
Reclassi-
fications
Current year
Translation
differences
1.1.2019
Carrying amount
Depreciation and amortisation
Value
adjustments'
3 Including assets under construction of €1,555 million.
1 Including €71 million recognised through the income statement.
1,292
380
349
225
6
2 Carrying amounts at 1.1.2019 (from the first-time application of IFRS 16).
Disposals
10,078
1,815
4,948
1,733
5
6,202
10,443
148
4
9,976
5
1,667
5,014
31.12.2019 31.12.2018
31.12.2019
1,183
-3
-3
-3
in € million
3,201
3,201
Gains (-) or losses (+) arising from changes in financial assumptions
Gains (-) or losses (+) arising from changes in demographic assumptions
Gains (-) or losses (+) arising from experience adjustments
Changes in the limitation of the net defined benefit asset to the
asset ceiling
-2,002
3,201
-4
Pensions and other benefits paid
-4
Transfers to fund
Employee contributions
-2,002
Translation differences and other changes
31 December 2019
thereof pension provision
thereof assets
-527
-527
-4
-2,002
-191
-3
78
31.12.2018*
Receivables from sales financing comprise the fol-
lowing:
Receivables from sales financing
25
2,310
Effect of limitation
of the net defined
benefit asset to the
asset ceiling
Net defined
benefit liability
2,313
473
473
473
485
-444
41
41
Credit financing for retail customers
-191
31.12.2019
-191
-3
-3
3
31 December 2018
-1,104
Translation differences and other changes
thereof pension provision
thereof assets
Effect of limitation
Defined
benefit
obligation
Plan assets
Total
of the net defined
benefit asset to the
asset ceiling
22,710
-19,477
Pensions and other benefits paid
3,233
Net defined
benefit liability
3,236
508
508
508
475
-413
62
and dealerships
62
59
3
-78
Employee contributions
Gains (-) or losses (+) arising from changes in financial assumptions
Gains (-) or losses (+) arising from changes in demographic assumptions
Gains (-) or losses (+) arising from experience adjustments
Changes in the limitation of the net defined benefit asset to the
asset ceiling
1,103
-1
-1
473
-455
18
18
24,652
-21,340
3,312
2
Transfers to fund
3,314
-21
-527
in € million
1 January 2018
EXPENSE/INCOME
Current service cost
Interest expense (+)/income (−)
Past service cost
Gains (-) or losses (+) arising from settlements
REMEASUREMENTS
Gains (-) or losses (+) on plan assets, excluding amounts included
in interest income
3,335
71,104
1,099
Finance lease receivables
Stage 2
Stage 1
The estimated fair value of vehicles held as collateral
for credit-impaired receivables at the end of the report-
ing period totalled €541 million (2018: €506 million).
The carrying amount of assets held as collateral and
reclaimed as a result of payment default amounted to
€39 million (2018: €42 million).
Impairment allowances include €74 million (2018:
€113 million) on credit-impaired receivables relating
to finance leases.
Impairment allowances at 31 December 2018
Other changes
Changes in risk parameters
Write-off of receivables
Derecognition and origination of receivables
Reclassification to Stage 3
Reclassification to Stage 2
Reclassification to Stage 1
Impairment allowances at 1 January 2018
in € million
517
12
209
361
Impairment allowances at 31 December 2019
44
24
-24
44
Stage 3
General
Simplified
Total
-3
59
33
-17
-10
59
110
138
-1
-23
-4
Other changes
51
79
-7
-21
-4
-20
3
1,019
450
12
192
365
-21
-8
1
31
482
12
175
363
Impairment allowances at 1 January 2019
Total
Simplified
General
Stage 3
Stage 2
Stage 1
1,032
in € million
Impairment allowances on receivables from sales
financing in accordance with IFRS 9, which only arise
within the Financial Services segment, developed
as follows:
The figures for the previous financial year have been
restated for the change in accounting policy for
→ see manufacturer lessors (see → note 6), as well as for
the change in the presentation of initial direct costs
previously reported within other assets (adjustment
effect at December 31, 2018: increase of €700 mil-
lion) and of residual value risk provisions, previously
reported within other provisions (adjustment effect at
31 December 2018: decrease of €441 million).
note 6
7
* Prior year's figures adjusted.
87,013
92,437
sales financing
Receivables from
20,054
21,333
149
66,959
Reclassification to Stage 1
-13
-40
Changes in risk parameters
-152
-133
-17
-2
Write-off of receivables
-23
-15
-26
17
2
Derecognition and origination of receivables
175
-24
-6
Reclassification to Stage 3
74
-16
107
-17
Reclassification to Stage 2
-12
-1
144
59
256
-10
54
1
1
55
Real estate
394
325
716
678
36
1,110
1,039
Cash and cash equivalents
20
12
1
1
21
13
Absolute return funds
632
669
640
thereof non-investment grade
918
851
216
7,169
7,306
6,402
746
879
16,705
15
14,450
Debt instruments
911
1,009
256
605
270
1,168
1,280
thereof investment grade
316
307
316
307
thereof mixed funds
(funds without a rating)
595
702
1
8,653
31
1,303
The expected change arising from benefit payments
out of plan assets - which does not have an income
statement impact - is predicted to exceed employer
contributions to plan assets in the coming year by
€65 million. Plan assets of the BMW Group include
own transferable financial instruments amounting to
€8 million (2018: €5 million).
The BMW Group is exposed to risks arising both from
defined benefit plans and defined contribution plans
with a minimum return guarantee. The discount rates
used to calculate pension obligations are subject to
market fluctuation and therefore influence the level of
the obligations. Furthermore, changes in other actuar-
ial parameters, such as expected rates of inflation, also
have an impact on pension obligations. In order to
reduce currency exposures, a substantial portion of
plan assets is either invested in the same currency as
the underlying plan or hedged by means of currency
derivatives. As part of the internal reporting proce-
dures and for internal management purposes, finan-
cial risks relating to the pension plans are reported
using a value-at-risk approach by reference to the
pension deficit. The investment strategy is also subject
to regular review together with external consultants,
with the aim of ensuring that investments are struc-
tured to match the timing of pension payments and
the expected development of pension obligations. In
this way, fluctuations in pension funding shortfalls
are reduced.
158
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Notes to the
Balance Sheet
The defined benefit obligation relates to current
employees, pensioners and former employees with
vested benefits as follows:
in %
Current employees
Pensioners
Former employees with vested benefits
Defined benefit obligation
Germany
United Kingdom
Other
31.12.2019
31.12.2018
31.12.2019
31.12.2018
31.12.2019
31.12.2018
-20
18,937
21,340
1,049
883
1,339
Other
710
537
219
212
104
67
1,033
816
Total without quoted market price
65
2,667
1,831
1,765
137
170
4,635
4,487
31 December
11,320
9,721
9,137
8,167
2,552
Total with quoted market price
124
15
-18,937
2,310
2,313
2,330
-17
Since 1 July 2019, future entitlements relating to
former members of two defined benefit plans in the
USA are being accounted for via a defined contribu-
tion plan. Past service cost resulted mainly from the
complete closure of the defined benefit plans.
7
Depending on the cash flow profile and risk struc-
ture of the pension obligations involved, plan assets
relating to defined benefit plans are invested in a
diversified portfolio.
Plan assets in Germany, the UK and other countries
comprised the following:
157
in € million
COMPONENTS OF PLAN ASSETS
Germany
United Kingdom
Other
Total
2019
2018
2019
2018
2019
2018
2019
21,247
14
14
6
-10
999
999
999
-1,274
-1,274
-1,274
-416
-416
-416
-264
2018
-264
-658
-658
-658
73
-73
-
-632
689
57
57
8
-264
Equity instruments
Debt instruments
thereof investment grade
2,202
757
550
7
34
3,002
2,786
Real estate funds
19
93
19
2,238
93
74
221
29
47
103
|g|
268
Absolute return funds
Other
109
15
Money market funds
-10
thereof non-investment grade
thereof mixed funds
2,031
1,565
584
407
91
172
2,705
2,144
6,513
5,604
6,648
(funds without a rating)
5,774
552
13,754
11,930
4,275
3,402
5,891
5,224
585
518
10,752
9,144
592
-1
The BMW Group is not subject to any unified external
minimum equity capital requirements. Within the
Financial Services segment, however, there are a
number of individual entities which are subject to
equity capital requirements of relevant regulatory
banking authorities.
-129
Proportion of total capital
103,597
116,740
Total financial liabilities
38,825
46,093
Current financial liabilities
64,772
70,647
Non-current financial liabilities
35.6%
33.7%
Proportion of total capital
57,300
59,324
Equity attributable to shareholders
of BMW AG
31.12.2019 31.12.2018*
in € million
The capital structure at the end of the reporting period
was as follows:
note 6
→ see
→ see
note 6
In order to manage its capital structure, the BMW Group
uses various instruments, including the amount of
dividends paid to shareholders and share buybacks.
Moreover, the BMW Group actively manages debt
capital, carrying out funding activities with a target
debt structure in mind. A key aspect in the selection
of financial instruments is the objective to achieve
matching maturities for the Group's financing require-
ments. In order to reduce non-systematic risk, the
BMW Group uses a variety of financial instruments
available on the world's capital markets to achieve
diversification.
66.3%
64.4%
Total capital
176,064
Germany
in € million
Based on the measurement principles contained in
IAS 19, the following balance sheet carrying amounts
apply to the Group's pension plans:
United Kingdom
Germany
The following mortality tables are applied in countries,
in which the BMW Group has significant defined
benefit plans:
Weighted duration of all pension obligations in years
Pension level trend
Discount rate
in %
The assumptions stated below, which depend on the
economic situation in the relevant country, are used
to measure the defined benefit obligation of each
pension plan. In Germany, the so-called "pension
entitlement trend" (Festbetragstrend) remained at
2.0%. The following weighted average values have
been used for Germany, the UK and other countries:
67.6
most of the defined benefit plans have been closed
to new entrants.
Pension provisions
32
→ Notes to the
Balance Sheet
Notes to the Group
Financial Statements
Group
Financial
Statements
154
153
The previous year's figures have been adjusted due to
the change in accounting policy for volume-dependent
bonuses and for manufacturer lessors (see → note 6).
Equity attributable to shareholders of BMW AG in-
creased during the financial year by 3.5% primarily
reflecting the increase in revenue reserves.
* Prior year's figures adjusted.
160,897
In the case of defined benefit plans, the BMW Group
is required to pay the benefits it has granted to
present and past employees. Defined benefit plans
may be covered by provisions or pension assets. In
Germany, pension entitlements are mostly covered
by assets transferred to BMW Trust e. V., Munich, in
conjunction with a Contractual Trust Arrangement
(CTA). Funded plans also exist in the UK, the USA,
Switzerland, Belgium and Japan. In the meantime, &
United Kingdom
The capital structure is managed in order to meet
needs arising from changes in economic conditions
and the risks of the underlying assets.
Capital management disclosures
Common stock
2019
Preferred stock
Shares issued/in circulation at 31 December
Less: shares repurchased and re-issued
Shares issued in conjunction with Employee Share Programme
Shares issued/in circulation at 1 January
Balance Sheet
Number of shares issued
Equity
31
→ Notes to the
Financial Statements
Notes to the Group
Group
Financial
Statements
152
statement.
Expenses for impairment losses and income from the
reversal of impairment losses is not significant and
is therefore not reported separately in the income
In the case of trade receivables, collateral is generally
held in the form of vehicle documents and bank guar-
antees so that the risk of bad debt loss is very
limited.
From the financial year 2019 onward, certain advance
payments to suppliers for raw materials, supplies and
finished goods amounting to €536 million, which were
previously reported within other assets, have been
reclassified to inventories. The previous year's figures
have been adjusted accordingly (adjustment effect at
31 December 2018: increase of €609 million).
The expense recorded in conjunction with inven-
tories during the financial year 2019 amounted to
€62,633 million (2018: €58,079 million). At 31 Decem-
ber 2019, the carrying amounts of inventories expected
to be realised after more than twelve months amount
to €445 million (2018: €452 million).
Out of the total amount of recognised for inventories
at 31 December 2019, inventories measured at net
realisable value amounted to €973 million (2018:
€680 million). Write-downs to net realisable value
in the financial year 2019 amounted to €126 million
(2018: €54 million), while reversals of write-downs
amounted to €22 million (2018: €22 million).
54
2018
2019
2018
56,126,904
Further information regarding the transition effects
recognised directly in equity on the initial application
of IFRS 16 is provided in → note 6.
Accumulated other equity comprises amounts recog-
nised directly in equity resulting from the translation
of the financial statements of foreign subsidiaries,
changes in the fair value of derivative financial instru-
ments and marketable securities, costs of hedging
recognised directly in equity as well the related
deferred taxes.
Accumulated other equity
The proposed distribution was not recognised as a
liability in the Group Financial Statements.
Distribution of a dividend of €2.50 per share of
common stock (€1,505 million)
Distribution of a dividend of €2.52 per share of
preferred stock (€141 million)
-
It is proposed that the unappropriated profit of
BMW AG for the financial year 2019 amounting to
€1,646 million be utilised as follows:
Revenue reserves comprise the non-distributed earn-
ings of companies consolidated in the Group Financial
Statements. In addition, remeasurements of the net
defined benefit obligation for pension plans are also
presented in revenue reserves.
Revenue reserves
Capital reserves include premiums arising from the
issue of shares and totalled €2,161 million (2018:
€2,118 million). The change amounting to €43 million
related to the share capital increase in conjunction
with the issue of shares of preferred stock to employees.
The BMW Group's objectives with regard to capital
management are to safeguard over the long-term the
Group's ability to continue as a going concern and to
provide an adequate return to shareholders.
Capital reserves
Issued share capital increased by €0.7 million as a
result of the issue to employees of 740,400 new shares
of non-voting preferred stock. BMW AG is authorised
up to 15 May 2024 to issue 5 million shares of non-
voting preferred stock amounting to nominal €5.0 mil-
lion. At the end of the reporting period, 4.3 million
of these amounting to nominal €4.3 million remained
available for issue.
In 2019, a total of 744,447 shares of preferred stock
was sold to employees at a reduced price of €46.10 per
share in conjunction with the Company's Employee
Share Programme. These shares are entitled to receive
dividends for the first time with effect from the finan-
cial
year 2020.
All Company stock is issued to bearer and each share
has a par value of €1.00. Preferred stock, to which no
voting rights are attached, bear an additional dividend
of €0.02 per share.
601,995,196
601,995,196
56,126,904
56,867,304
24
601,995,196
55,605,404 601,995,196
521,524
744,447
4,047
In addition, 4,047 previously issued shares of pre-
ferred stock were acquired and re-issued to employees
in conjunction with the Employee Share Programme.
Other
31.12.2019
31.12.2018
-17
-21
-16
-15
-5
-2
thereof assets
2,330
3,335
382
262
125
371
1,823
2,702
thereof pension provision
2,313
3,314
382
246
110
366
1,821
The most significant of the BMW Group's pension
plans are described below.
Germany
Both employer- and employee-funded benefit plans
exist in Germany. Benefits paid in conjunction with
these plans comprise old-age retirement pensions as
well as invalidity and surviving dependents' benefits.
The increase to current pension payments for inflation
is carried out in accordance with § 16 of the Company
Pensions Act (Betriebsrentengesetz).
The defined benefit plans have been closed to new
entrants since 2014. Defined contribution plans with
a minimum rate of return, comprising employer- and
employee-funded components, continue to exist. The
fact that the plan involves a minimum rate of return
means that the defined contribution entitlements are
classified in accordance with IAS 19 as defined benefit
plans. In the case of defined benefit plans involving
the payment of a pension, the amount of benefits to
be paid is determined by multiplying a fixed amount
by the number of years of service.
Total
Plan assets
Defined
benefit
obligation
Gains (-) or losses (+) on plan assets, excluding amounts included
in interest income
REMEASUREMENTS
Gains (-) or losses (+) arising from settlements
Past service cost
Interest expense (+)/income (−)
Current service cost
EXPENSE/INCOME
1 January 2019
2,702
in € million
The change in the net defined benefit liability for pension
Balance Sheet
→ Notes to the
Notes to the Group
Financial Statements
Group
Financial
Statements
156
155
The defined benefit pension plans are administered
by BMW Pension Trustees Limited, Farnborough,
and BMW (UK) Trustees Limited, Farnborough,
both trustee companies which act independently
of the BMW Group. BMW (UK) Trustees Limited,
Farnborough, is represented by ten trustees and
BMW Pension Trustees Limited, Farnborough, by five
trustees. A minimum of one third of the trustees must
be elected by plan participants. The trustees represent
the interests of plan participants and decide on invest-
ment strategies. Funding contributions to the funds
are determined in agreement with the BMW Group.
Defined benefit plans exist in the United Kingdom
which are closed for all plan participants. Vested
benefits remain in place. New benefits are covered
by contributions made to a defined contribution plan.
United Kingdom
The assets of the German pension plans are invested
by BMW Trust e. V., Munich, in accordance with a
CTA. The representative bodies of this entity are
the Board of Directors and the Members' General
Meeting. BMW Trust e. V., Munich, currently has
seven members and three members of the Board of
Directors elected by the Members' General Meeting.
The Board of Directors is responsible for investments,
drawing up and deciding on investment guidelines as
well as monitoring compliance with those guidelines.
The members of the association can be employees,
employee representatives, senior executives and
members of the Board of Management of BMW AG.
An ordinary Members' General Meeting takes place
once every calendar year, and deals with a range
of matters, including receiving and approving the
association's annual report, ratifying the activities of
the Board of Directors and adopting changes to the
association's statutes.
plans can be derived as follows:
Carrying amounts at 31 December
3
2
United Kingdom
Germany
S2PA tables and S2PA light tables with weightings
Mortality Table 2018 G issued by Prof. K. Heubeck (with invalidity rates reduced by 70%)
17.2
16.0
19.0
19.2
20.2
21.3
2.25
Other
2.15
1.38
3.66
2.42
2.69
1.92
1.91
1.00
31.12.2018
31.12.2019
31.12.2018
31.12.2019
1.62
72
Total
31.12.2018
3
2
asset to asset ceiling
Effect of limiting net defined benefit
21,247
18,937
24,652
21,340
1,428
1,049
1,127
883
8,167
9,137
9,721
31.12.2019
11,320
8,277
9,503
11,542
14,022
obligations
Present value of defined benefit
31.12.2019 31.12.2018
31.12.2018
31.12.2019
31.12.2018
31.12.2019
Fair value of plan assets
-105
2
-1
28
23
20,054
21,333
30
due later than five years
13,908
due between one and five years
433
due between four and five years
Income tax assets totalling €1,209 million (2018:
→ see €1,378 million, adjusted see → note 6) include claims
amounting to €186 million (2018: €222 million),
which are expected to be settled after more than one
year. Claims may be settled earlier than this depend-
ing on the timing of the underlying proceedings.
Income tax assets
note 6
3,421
due between three and four years
4,968
due between two and three years
6,225
due between one and two years
6,123
6,256
due within one year
Net investment in finance leases
27
Unrealised interest income
2,267
2,261
Other assets
413
Collateral assets
933
1,086
Expected reimbursement claims
Financial assets comprise:
Financial assets
26
1,747
1,935
Other taxes
22,315
1,916
an investment is held
Receivables from companies in which
3,779
4,807
leased products
Return right assets for future
The carrying amount of the net investment in finance
leases remained largely unchanged over the reporting
period.
31.12.2018*
31.12.2019
in € million
Other assets comprise:
2,641
293
23,600
32
Balance Sheet
→ Notes to the
in € million
Notes to the Group
Financial Statements
Finance leases are analysed as follows:
Statements
Group
Financial
150
1,032
482
12
175
363
-61
15
2
-24
-54
30
26
-1
1
4
31.12.2019
31.12.2018
Allowances for impairment and credit risk
The carrying amounts of receivables relating to the
credit card business comprises the following:
due later than five years
15,480
due between one and five years
529
due between four and five years
244
-18
262
Net carrying amount
Allowance for impairment
Gross carrying amount
24
3,775
5,462
due between two and three years
6,811
due between one and two years
6,811
6,991
due within one year
31.12.2018
31.12.2019
in € million
Gross investment in finance leases
due between three and four years
Prepaid expenses
396
460
1,286
Work in progress, unbilled contracts
10,548
11,491
Finished goods and goods for resale
Impairment allowances on trade receivables in accor-
dance with IFRS 9 developed as follows:
31.12.2018*
31.12.2019
2,546
2,518
Net carrying amount
-34
-46
Allowances for impairment of stage 3
-20
-26
simplified procedure
Allowances for impairment of stage 2-
2,600
2,590
Gross carrying amount
31.12.2018
31.12.2019
1,208
Raw materials and supplies
1,674
1,247
-7
Utilised
-26
-7
Reversed (-)
21
30
Allocated (+)
60
54
Balance at 1 January
in € million
2018
* Prior year's figures adjusted.
14,248
15,891
636
632
Advance payments to suppliers
Inventories
in € million
609
808
financial services business
Vehicles held for sale in the
2019
in € million
Inventories comprise the following:
Inventories
9,749
847
1,325
11,614
thereof current
1,977
1,620
Derivative instruments
thereof non-current
5,316
5,391
investment funds
Loans to third parties
Marketable securities and
12,939
Other assets
1,173
1,353
Sundry other assets
31.12.2018
31.12.2019
in € million
295
308
Receivables from subsidiaries
10,596
Exchange rate impact and other changes
Balance at 31 December
54
* Prior year's figures adjusted.
29
151
Trade receivables comprise the following:
Trade receivables
30
In addition, the previous year's figures have been
adjusted due to the change in the presentation of
vehicles coming out of leases that were previously
reported within leased products (adjustment effect
at 31 December 2018: increase of €592 million).
Collateral assets comprise mainly customary collat-
eral (banking deposits) in connection with the sale
of receivables.
adjusted to reflect the change in accounting policy
for volume-dependent bonuses and for manufacturer
lessors (see note 6) as well as the change in the pre- → see
sentation of deferred initial direct costs for operating
and finance leases and receivables originated. These
items are now reported within leased products and
receivables from sales financing (adjustment effect at
31 December 2018: decrease of €939 million).
note 6
From the financial year 2019 onward, certain advance
payments to suppliers for raw materials, supplies and
finished goods amounting to €536 million, which were
previously reported within other assets (line item
Prepaid expenses) have now been reclassified to inven-
tories. The previous year's figures have been adjusted
accordingly (adjustment effect at 31 December 2018:
decrease of €609 million). Furthermore, the compar-
ative figures for the previous financial year have been
In June 2019, the Financial Services segment sold a
credit card portfolio based in the USA and amounting
to €216 million for strategic reasons.
20
1,010
6,675
thereof current
1,370
thereof non-current
7,685
7,325
Financial assets
128
260
Other
244
Credit card receivables
5,955
65.9
21,247
77.3
1,155
increase of 1 year
-2.7
-567
-3.3
-810
decrease of 0.25%
2.8
597
3.7
905
increase of 0.25%
15.7
3,334
17.4
4.7
770
3.6
decrease of 1 year
64.3
-18,937
In the UK, the sensitivity analysis for the pension
level trend also takes account of restrictions due to
caps and floors.
-0.7
-147
-0.8
-192
4,290
decrease of 0.25%
156
0.8
200
increase of 0.25%
-3.7
-4.4
-1,097
0.7
decrease of 0.75%
-779
-2,652
100.0
100.0
100.0
3.9
6.8
51.5
54.5
5.0
18.8
29.0
48.5
45.5
29.3
-12.5
27.4
100.0
100.0
4.8
The sensitivity analysis provided below shows the
extent to which changes in individual factors - inde-
pendently of each other - could influence the defined
benefit obligation at the end of the reporting period.
-3,352
100.0
increase of 0.75%
in %
in € million
-13.6
31.12.2018
in € million
in %
Change in defined benefit obligation
Pension entitlement trend
Average life expectancy
Pension level trend
Discount rate
It is only possible to aggregate sensitivities to a limi-
ted extent. Since the change in obligation follows
31.12.2019
a non-linear pattern, estimates made on the basis
of the specified sensitivities are only possible with
this restriction. The calculation of sensitivities using
ranges other than those specified could result in a dis-
proportional change in the defined benefit obligation.
BMW Group has been notified that the U.S. Securities
and Exchange Commission ("SEC") is conducting an
investigation related to vehicle sales practices and
reporting of delivery figures. The potential risks for
BMW Group related to the SEC's investigation cannot
be quantified at the present time. Further disclosures
pursuant to IAS 37.86 cannot be provided at present.
Purchase commitments for
property, plant and equipment
31.12.2018
In addition to liabilities, provisions and contingent
liabilities, the following commitments exist for the
BMW Group at the end of the reporting period:
in € million
Other financial obligations
In September 2019, the Japan Fair Trade Commission
conducted a search at BMW Japan Corp. in connection
with its market practises in relation to distributors.
These investigations are ongoing. Possible risks for
the BMW Group can neither be foreseen in detail nor
quantified at present. Further disclosures pursuant to
IAS 37.86 cannot be provided at present.
31.12.2019
3,128
Group
Financial
Purchase commitments for
intangible assets
2,146
1,554
165
166
Statements
Notes to the Group
Financial Statements
→ Other Disclosures
Regulatory authorities have ordered the BMW Group
to recall various vehicle models in conjunction with
airbags supplied by the Takata group of companies.
Provision for the costs involved has been recognised
within warranty provisions. In addition to the risks
already covered by warranty provisions, it cannot be
ruled out that further BMW Group vehicles will be
affected by future recall actions. Further disclosures
pursuant to IAS 37.86 cannot be provided at present.
39
3,486
The European Commission is currently conducting
an investigation in connection with antitrust allega-
tions against five German car manufacturers. The
BMW Group has provided for the potential outcome
of the investigation in the form of a provision mea-
sured on the basis of the Statement of Objections, at
→ see the best possible estimate (see also → note 10). In con-
nection with these allegations, numerous class action
lawsuits have been brought in the USA and Canada
as well as several private lawsuits in South Korea.
The class action lawsuits in the USA were initially
dismissed on the basis of the lack of conclusiveness.
The applicants resubmitted their claims in mid-2019
in an amended form. A decision on the five manufac-
turers' renewed claims for the dismissal of the class
action lawsuits is still pending. Class action lawsuits
in Canada and private lawsuits in South Korea are
at an early stage. Further civil lawsuits based on the
allegations are possible. In addition, the Chinese State
Administration for Market Regulation (SAMR) opened
antitrust proceedings against BMW AG in March 2019.
These proceedings are still at an early stage. Possible
risks for the BMW Group can neither be foreseen in
detail nor quantified at present. Further disclosures
pursuant to IAS 37.86 cannot be provided at present.
Litigation
The BMW Group determines its best estimate of
contingent liabilities on the basis of the information
available at the date of preparation of the Group
Financial Statements. This assessment may change
over time and is adjusted regularly on the basis of new
information and circumstances. A part of the risks is
covered by insurance.
Financial instruments
Contingent liabilities and other financial
commitments
Contingent liabilities
The following contingent liabilities existed at the
balance sheet date:
in € million
Investment subsidies
Guarantees
Other
Contingent liabilities
note 10
31.12.2019
284
139
275
125
46
14
618
351
1,087
765
Other contingent liabilities comprise mainly risks
relating to taxes and customs duties.
31.12.2018
The carrying amounts of financial instruments are
assigned to IFRS 9 categories in the following table.
462
ASSETS
50
444
3,889
1,058
40
14
260
11,574
2,518
38
Receivables from subsidiaries
308
Receivables from companies in which an investment is held
2,641
Collateral assets
413
Remaining other assets
1,519
8,058
Total
90,342
1,244
in € million
326
461
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Marketable securities and investment funds
Loans to third parties
Credit card receivables
Other
Cash and cash equivalents
Trade receivables
Other assets
At amortised cost
31.12.2019
At fair value
through other com-
prehensive income
At fair value
through profit
or loss
Not assigned to an
IFRS 9 category
70,625
242
21,812
OTHER DISCLOSURES
31.12.2018*
Notes to the Group
paper:
Issue volume
in relevant currency
(ISO-Code)
Weighted average
maturity period
(in days)
Weighted average
nominal interest rate
(in %)
BMW US Capital, LLC
USD 2,587 million
22
1.7
BMW Finance N.V.
EUR 300 million
31
-0.4
BMW India Financial Services Private Ltd.
INR 1,100 million
297
6.8
36
Other liabilities
Other liabilities comprise the following items:
Issuer
in Mio. €
The following details apply to commercial
6.8
KRW 120,000 million
3.0
2.6
fixed
CNY 6,000 million
3.0
4.8
fixed
INR 4,000 million
3.0
8.1
fixed
GBP 1,450 million
4.3
1.5
fixed
NOK 1,000 million
10.0
3.3
fixed
CHF 600 million
0.5
Refund liabilities for future leased products
Contract liabilities
Deferred income
519
781
192
92
109
102
1,834
2,003
23,066
21,119
Contract liabilities relate to obligations for service and
repair work as well as telematics services and roadside
assistance agreed to be part of the sale of a vehicle
(in some cases multi-component arrangements).
An amount of €2,255 million (2018: €2,134 million)
was released from contract liabilities in the financial
year and recognised as revenues from contracts
with customers.
Deferred income includes down payments received
on leases with customers as well as deferred grants.
Grants comprise mainly public sector funds to
promote regional structures and which have been
invested in the production plants in Brazil, Mexico,
Leipzig and Berlin. The grants are partly subject to
holding periods for the assets concerned of up to five
years and/or minimum employment figures. Grant
income is recognised in the income statement over
the useful lives of the assets to which it relates.
The previous year's figures have been adjusted for the
change in accounting policy for manufacturer lessors
(see note 6).
→ see
note 6
37
Trade payables
As in the previous year, trade payables are due within
one year.
163
164
Group
Financial
Statements
297
585
850
815
Bonuses and sales aides
Other taxes
Deposits received
Other advanced payments received for orders
Payables to other companies in which an investment is held
Payables to subsidiaries
Social security
Sundry
Other liabilities
* Prior year's figures adjusted.
Financial Statements
→ Other Disclosures
31.12.2019
6,103
5,021
5,038
4,976
3,635
3,112
2,971
2,940
1,265
945
3,889
2,045
1,020
LIABILITIES
in € million
Receivables from sales financing
Marketable securities and investment funds
Bonds
Asset-backed financing transactions
Liabilities from customer deposits (banking)
Liabilities to banks
* Prior year's figures adjusted - see note 25.
31.12.2019
Fair value
Carrying amount
Fair value
31.12.2018
Carrying amount*
73,699
70,625
90,445
87,013
446
444
680
predominantly short-term nature, the fair value of
other financial assets and liabilities measured at amor-
tised cost corresponds to the carrying amount. For
this reason, these items are not disclosed separately.
675
The following table shows the fair values and carrying
amounts of financial assets and liabilities that are
measured at cost or amortised cost and whose carry-
ing amounts differ from their fair value. Due to their ¬
Group
Financial
Statements
Other
Trade payables
Other liabilities
105
1,101
9,669
697
556
422
Payables to subsidiaries
Payables to other companies in which an investment is held
92
781
Remaining other liabilities
5,665
Total
118,129
1,675
* Prior year's figures adjusted - see note 25. The carrying amounts of cash flow hedges and fair value hedges are categorised as at fair value through profit or loss for the sake of clarity.
Receivables from sales financing are shown including finance and operating leases.
167
168
Notes to the Group
Financial Statements
→ Other Disclosures
62,757
62,165
53,831
Derivative instruments (liabilities)
Interest rate risks
31.12.2019
Level hierarchy in accordance with IFRS 13
Level 1
Level 2
Level 3
4,582
365
106
355
462
14
1,274
74
267
5
1,155
Currency risks
723
Raw material market price risks
218
Other risks
Raw material market price risks
Currency risks
Interest rate risks
53,346
19,659
19,549
17,443
17,335
14,739
14,657
14,374
14,359
12,071
Lease liabilities
11,436
13,196
With effect from the financial year 2019, the fair
value and carrying amounts of receivables from
sales financing do not include receivables relating to
finance and operating leases. The fair value of these
receivables amounts to €22,741 million (carrying
amount: €21,812 million) at the balance sheet date.
At 31 December 2019, financial assets and liabilities
measured at fair value in accordance with IFRS 97
are classified in the following table on the basis of
their measurement levels in accordance with IFRS 13.
Where the fair value was required for a financial
instrument for disclosure purposes, the discounted
cash flow method was used, taking account of the
BMW Group's own default risk. The fair values of
these items are allocated to Level 2 in accordance
with IFRS 13.
in € million
Marketable securities, investment funds and collateral assets
Other investments
Cash equivalents
Loans to third parties
Derivative instruments (assets)
13,277
31,682
Other derivative instruments
Cash flow hedges
Payables to subsidiaries
192
Payables to other companies in which an investment is held
519
Remaining other liabilities
4,749
17,606
Total
127,391
fixed
21,577
in € million
ASSETS
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Marketable securities and investment funds
Other liabilities
Loans to third parties
2,895
271
Financial liabilities
Bonds
62,165
Liabilities to banks
11,436
Liabilities from customer deposits (banking)
14,657
Commercial paper
2,615
Asset-backed financing transactions
19,549
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Lease liabilities
Other
Trade payables
1,327
10,182
805
1,020
Credit card receivables
Other
Cash and cash equivalents
Collateral assets
293
Remaining other assets
1,444
Total
104,665
3,671
4,264
LIABILITIES
Financial liabilities
Bonds
53,346
Liabilities to banks
13,196
Liabilities from customer deposits (banking)
14,359
Commercial paper
2,480
Asset-backed financing transactions
17,335
Derivative instruments
1,916
Receivables from companies in which an investment is held
295
Receivables from subsidiaries
At amortised cost
31.12.2018*
At fair value
through other com-
prehensive income
At fair value
through profit
or loss
87,013
429
840
654
483
Fair value hedges
675
970
17
3
244
128
10,094
885
2,546
Trade receivables
Other assets
3,671
0.8
fixed
SEK 500 million
46,093
55,536
15,111
116,740
31.12.2018
Maturity within
in € million
one year
Maturity between
one and five years
Maturity later
than five years
Total
Bonds
9,762
32,592
10,992
53,346
Asset-backed financing transactions
5,732
11,603
17,335
Liabilities from customer deposits (banking)
1,327
10,961
419
637
14,657
Liabilities to banks
7,903
2,204
1,329
11,436
Lease liabilities
544
1,363
988
2,895
Commercial paper
2,615
2,615
Derivative instruments
Other
Financial liabilities
1,149
886
61
2,096
271
3,289
109
14,359
12,921
103,597
Planned future cash outflows from variable lease
payments, which are not taken into account in the
measurement of lease liabilities, are expected to
amount to €56 million.
Similarly, potential future cash outflows amounting
to €1,393 million (undiscounted) have not been taken
into account in the measurement of lease liabilities
as it is not reasonably certain that the leases will be
renewed (or not terminated). These cash outflows
relate to periods of up to 59 years.
Liabilities related to financing activities can be recon-
ciled as follows:
in € million
1.1.2019
Cash inflows/
outflows
Changes due to
the acquisition
or disposal of
companies
Changes due to
exchange rate
factors
Changes in
fair values
Other changes
31.12.2019
Bonds
53,346
7,342
618
859
62,165
Asset-backed financing transactions
51,851
38,825
Financial liabilities
1,101
Liabilities to banks
8,678
3,293
1,225
13,196
Lease liabilities
9
49
47
105
27
Commercial paper
2,480
Derivative instruments
Other
646
915
114
1,675
557
110
434
2,480
17,335
3,414
Liabilities from customer deposits (banking)
6
1,448
3
-1,713
-67
2,496
1,495
Other obligations
2,087
-7
2,341
10
10
-440
-698
3,293
2,489
Other obligations for ongoing
operational expenses
1,348
25
2,819
912
social expenses
1,617
33
Other provisions
Other provisions changed during the year as follows:
in € million
1.1.2019*
Translation
differences
Additions
Reversal of
discounting
thereof due
Utilised
Reversed
31.12.2019 within one year
Statutory and non-statutory warranty
obligations, product guarantees
5,147
69
2,831
168
-2,561
-104
5,550
Obligations for personnel and
-377
-38
1,870
→ Notes to the
Balance Sheet
35
Financial liabilities
Financial liabilities of the BMW Group comprise the
following:
31.12.2019
in € million
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
Total
Bonds
14,077
35,801
12,287
62,165
Asset-backed financing transactions
7,952
11,597
19,549
Notes to the Group
Financial Statements
Group
Financial
Statements
160
159
1,820
Other provisions
11,401
93
7,532
181
-5,091
-907
13,209
7,421
11,216
* Prior year's figures adjusted.
Provisions for obligations for personnel and social
expenses comprise mainly performance-related remu-
neration components, early retirement part-time work-
ing arrangements and employee long-service awards.
The provisions for other obligations cover numerous
identifiable specific risks and uncertain obligations, in
particular for litigation and liability risks, including the
provision recognised for the ongoing EU Commission's
antitrust proceedings. Further information is provided
in note 10.
Other obligations for ongoing operational expenses
include in particular expected payments for bonuses
and other price deductions.
→ see
note 28
→ see
note 10
note 6
The figures for the previous financial year have been
restated for the change in accounting policy for
→ see manufacturer lessors (see → note 6), as well as for the
changes in the presentation of residual value risk pro-
visions for finance leases and vehicle financing, which
were previously reported in other provisions and
have now been reclassified to receivables from sales
financing (adjustment effect at 31 December 2018:
decrease of €441 million).
34
Income tax liabilities
Current income tax liabilities totalling €963 million
(2018: €1,158 million) include €89 million (2018:
€96 million) which are expected to be settled after
more than twelve months. Liabilities may be settled
earlier than this depending on the timing of the
underlying proceedings.
Depending on when claims occur, it is possible that
the BMW Group may be called upon to fulfil the
warranty or guarantee obligations over the whole
period of the warranty or guarantee. Expected reim-
bursement claims at 31 December 2019 amounted to
€1,086 million (2018: €933 million) and are disclosed
within other assets (see → note 28).
1,869
345
19,549
2.4
fixed
EUR 25,900 million
6.3
0.8
fixed
JPY 19,100 million
5.8
0.4
fixed
CNY 11,500 million
2.3
3.8
fixed
HKD 2,166 million
4.8
2.3
fixed
USD 2,050 million
5.3
2.5
3.0
fixed
NOK 500 million
2.5
→ Notes to the
Balance Sheet
Bonds comprise:
Issuer
Interest
Issue volume
in relevant currency
(ISO-Code)
Weighted average
maturity period
(in years)
Weighted average
nominal interest rate
(in %)
BMW Finance N.V.
variable
EUR 5,000 million
1.9
0.0
variable
SEK 1,500 million
4.0
0.7
variable
USD 700 million
2.4
variable
SEK 1,750 million
5.0
1.8
7.6
1.0
fixed
AUD 30 million
5.0
3.0
BMW Canada Inc.
variable
CAD 200 million
2.0
2.0
fixed
CAD 2,400 million
3.4
2.2
Other
variable
GBP 940 million
1.4
1.0
variable
EUR 2,500 million
fixed
3.0
6.2
fixed
NOK 1,500 million
3.8
1.9
fixed
GBP 1,150 million
5.8
1.5
fixed
AUD 290 million
Notes to the Group
Financial Statements
6.9
RON 240 million
1.0
4.0
BMW US Capital, LLC
variable
USD 3,658 million
2.7
2.0
fixed
USD 13,655 million
3.3
Statements
Group
Financial
162
296
Other (excluding interest payable)
626
Liabilities relating to financing activities
101,976
202
7,322
36
864
1,059
903
3,217
114,477
in € million
1.1.2018
Cash inflows/
outflows
Changes due to
the acquisition
or disposal of
companies
Changes due to
exchange rate
factors
Changes in
fair values
Other changes
31.12.2018
Bonds
-233
529
investment is held
Financial liabilities towards companies in which an
14,359
202
96
14,657
Liabilities to banks
13,196
-1,754
-43
44
-7
44,880
11,436
105
-440
6
3,224
2,895
Commercial paper
2,480
134
1
2,615
Lease liabilities
3.0
7,784
-33
105
2,480
Financial liabilities towards companies in which an
investment is held
739
-210
529
Other (excluding interest payable)
604
-31
38
15
626
Liabilities relating to financing activities
93,883
7,037
1,063
-33
26
101,976
161
13,196
14,359
3
17,335
Asset-backed financing transactions
16,855
288
192
Liabilities from customer deposits (banking)
13,572
557
227
Liabilities to banks
12,658
707
679
Lease liabilities
114
-9
Commercial paper
4,461
-2,021
40
40
8
53,346
-141
Liabilities from customer deposits (banking)
Valuation method
1,821
12,090
20,345
8,751
2,317
1,378
12,446
11,277
3,505
27
14,809
10,182
10,182
2,618
2,618
750
1,958
1,686
4,394
1,524
758
-26
2,256
33,826
18,485
598
52,909
-32,302
8,255
65,049
12,595
37,477
With gross settlement
Cash outflows
Cash inflows
With net settlement
Cash outflows
Total financial liabilities
in € million
NON-DERIVATIVE FINANCIAL LIABILITIES
Bonds
Asset-backed financing transactions
Liabilities to banks
Liabilities from customer deposits (banking)
Trade payables
-17,727
Commercial paper
DERIVATIVE FINANCIAL LIABILITIES
With gross settlement
Cash outflows
Cash inflows
With net settlement
Cash outflows
Total financial liabilities
31.12.2019
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
Total
14,977
Other financial liabilities
DERIVATIVE FINANCIAL LIABILITIES
-624
374
9,669
9,669
2,478
2,478
20
318
454
792
731
665
1,396
19,218
11,639
213
31,070
-18,487
-10,974
-213
-29,674
245
515
81
841
245
515
81
841
14,485
107
3,368
11,010
338
374
338
22
23
23
735
735
58,708
58,443
15,683
132,834
31.12.2018
Maturity within
-50,653
one year
Maturity later
than five years
Total
10,789
34,196
11,546
56,531
6,942
11,710
18,652
9,848
3,804
900
14,552
Maturity between
one and five years
Other financial liabilities
Commercial paper
Trade payables
on default probabilities. The related gross carrying
amounts in accordance with IFRS 9 are allocated as
follows:
in € million
Stage 1
31.12.2019
Stage 2
Stage 3
General
Simplified
Total
Expected
credit loss
Gross carrying amount of financial assets
with good credit ratings
85,399
696
378
86,473
272
Gross carrying amount of financial assets
with medium credit ratings
4,102
1,167
22
5,291
199
Gross carrying amount of financial assets
with poor credit ratings
38
704
16
Receivables from sales financing are allocated to inter-
nally defined rating categories based on credit risk.
The classification into creditworthiness levels is based
2,600
2,590
Total
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Other Disclosures
Credit risk
The BMW Group is exposed to counterparty credit
risks if contractual partners, for example a retail cus-
tomer or a dealership, are unable or only partially able
to meet their contractual obligations. Information on
the management of credit risk for receivables from
financial services is provided in the Combined Man-
agement Report (see section Report on Outlook, Risks
and Opportunities).
Notwithstanding the existence of collateral accepted,
the carrying amount of financial assets (with the
exception of derivative financial instruments) gener-
ally represents the maximum credit risk. In addition,
the credit risk is increased by additional unutilised
loan commitments in the dealership financing
line of business. Total credit risk at the end of the
reporting period amounted to €31,943 million (2018:
€29,403 million).
In the case of all relationships underlying non-deriva-
tive financial instruments, in order to minimise the
credit risk and depending on the nature and amount
of exposure, collateral is required, credit information
and references obtained or historical data based on the
existing business relationship, in particular payment
behaviour, reviewed.
In the case of trade receivables, customers are regularly
assessed with regard to their credit risk. Depending
on contractual status, necessary measures, such as
dunning procedures, are initiated in good time.
The credit risk relating to cash deposits and derivative
financial instruments is minimised by the fact that the
Group only enters into such contracts with parties of
first-class credit standing.
Within the financial services business, items financed
for retail customers and dealerships (such as vehi-
cles, facilities and property) serve as first-ranking
collateral with a recoverable value. Security is also
put up by customers in the form of collateral asset
pledges, asset assignment and first-ranking mortgages,
supplemented where appropriate by warranties and
guarantees. Items previously held as collateral that
are subsequently acquired relate mainly to vehicles.
As a rule, these assets can be converted into cash
at short notice through the dealership organisation.
Creditworthiness testing is an important aspect of
the BMW Group's credit risk management. Every
borrower's creditworthiness is tested for all credit
financing and lease contracts entered into by the
BMW Group. In the case of retail customer financing,
creditworthiness is assessed using validated scoring
systems integrated into the acquisition process. In
the area of dealership financing, creditworthiness is
assessed by means of ongoing credit monitoring and
an internal rating system that takes account not only
of the material credit standing of the borrower, but
also of qualitative factors such as past reliability in
business relations.
The credit risk on trade receivables is assessed
mainly on the basis of information relating to over-
due amounts. The gross carrying amounts of these
receivables are allocated in accordance with IFRS 9
to overdue ranges used for management purposes
as follows:
in € million
Not overdue
1-30 days overdue
1,014
31.12.2019
1,947
2,066
369
375
31-60 days overdue
89
34
61-90 days overdue
40
29
More than 90 days overdue
145
96
31.12.2018
1,772
628
Total
37
990
592
Total
84,385
2,422
510
990
88,307
1,050
* Prior year's figures adjusted.
Further disclosures relating to credit risk - in particu-
lar with regard to the amounts of impairment losses
recognised - are provided in the explanatory notes
to the relevant categories of receivables in → notes 25, → see
26 and 30.
607
notes 25,
173
174
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Other Disclosures
Liquidity risk
The following table shows the maturity structure of
expected contractual cash flows (undiscounted) for
financial liabilities:
in € million
NON-DERIVATIVE FINANCIAL LIABILITIES
Bonds
Asset-backed financing transactions
Liabilities to banks
Liabilities from customer deposits (banking)
26 and 30
51,732
187
Gross carrying amount of financial assets
89,539
2,567
416
1,014
93,536
1,099
in € million
Stage 1
31.12.2018
Stage 2
Stage 3
General
Simplified
with poor credit ratings
Total*
Gross carrying amount of financial assets
with good credit ratings
79,805
753
421
121
80,979
269
Gross carrying amount of financial assets
with medium credit ratings
4,393
1,062
52
5,507
189
Expected
credit loss
54,576
13,088
119,396
Interest rate risks
in € million
Cash Flow Hedges
Currency risks
Raw material price risks
Fair Value Hedges
Interest rate risks
The following tables show key information on hedged
items for each risk category as well as the balances
7
in € million
Cash Flow Hedges
Currency risks
Raw material price risks
Fair Value Hedges
Interest rate risks
in € million
Cash Flow Hedges
Currency risks
Raw material price risks
Fair Value Hedges
Interest rate risks
31.12.2019
Carrying Amounts
Nominal amounts
Assets
Liabilities
Change in fair value
Fair Value Hedges
Raw material price risks
Cash Flow Hedges
Currency risks
in € million
124.92
125.29
Cash flow at risk
419
327
Average
hedging rates
Raw material price risks
31.12.2019
31.12.2018
Disclosures on hedging measures
The following disclosures on hedging measures
include derivatives of fully consolidated companies
that have been designated as a hedging instrument.
The amounts shown in the table are stated before
deferred taxes and take account of additional effects
arising from the application of the modified closing
rate method.
Aluminium (EUR/t)
Lead (EUR/t)
Copper (EUR/t)
Palladium (EUR/oz)
Platinum (EUR/oz)
1,833
1,797
of designated
components
1,815
5,173
5,279
1,022
745
916
945
Information on average interest hedge rates is not
provided, since interest rate derivatives designated
as hedging instruments are used exclusively to hedge
items in fair value hedges. The hedge rates therefore
correspond in each case to current market interest rate
level. Most of the hedges used in this context relate
to variable yield curves relating to the euro, US dollar
and British pound currency areas.
177
178
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Other Disclosures
The following tables provides information on the nomi-
nal amounts, carrying amounts and fair value changes
of contracts designated as hedging instruments:
1,784
23,843
60
590
Liabilities
Change in value
of hedged items
Continuing hedge
relationships
8,631
58,723
Carrying Amounts
Assets
479
-250
-23
-759
31.12.2018
Terminated hedge
Balances in accumulated other equity
relationships
Liabilities
Change in value
of hedged items
Continuing hedge
relationships
-119
941
453
-262
8,930
49,846
-33
Terminated hedge
relationships
Balances in accumulated other equity
1,288.91
31.12.2019
Carrying Amounts
-479
3,571
266
215
250
59,999
1,244
271
758
31.12.2018
Carrying Amounts
Nominal amounts
Assets
Assets
Liabilities
26,256
651
363
121
3,667
189
334
-453
52,580
654
556
27
of designated components within accumulated other
equity:
Change in fair value
of designated
components
172
1,328.59
0.79
Interest rate risk
Interest rate risks arise when funds are borrowed and
invested with differing fixed-rate periods or differing
terms. At the BMW Group, all items subject to, or
bearing, interest are exposed to interest rate risk and
can therefore affect both the assets and liabilities side
of the balance sheet.
The fair value of the Group's interest rate portfolios
was as follows at the end of the reporting period:
in € million
31.12.2019
31.12.2018
Fair values of interest rate portfolios
55,697
60,356
Interest rate risk is managed through the use of in-
terest rate derivatives. As part of the implementation
of the risk management strategy, interest rate risks
are monitored and managed at regular intervals. The
interest rate contracts used for hedging purposes
comprise mainly swaps, which, if hedge accounting
is applied, are accounted for as fair value hedges. The
economic relationship between the hedged item and
the hedging instrument is based on the fact that the
main parameters of the hedged item and the related
hedging instrument, such as start date, term and
currency, are the same.
For selected fixed-interest assets, part of the interest
rate risk is hedged on a portfolio basis. In this case,
swaps are used as the hedging instrument. Hedge
relationships are terminated and redesignated on a
monthly basis at the end of each reporting period,
thereby taking account of the constantly changing
content of each portfolio.
As a result of the ongoing reform and replacement
of specific benchmark interest rates, uncertainty
arises regarding the timing and exact nature of those
changes. Overall, a considerable number of contracts
within the BMW Group are directly affected by the
reform of benchmark interest rates. Hedging rela-
tionships within the BMW Group are based primarily
on USD LIBOR and GBP LIBOR reference interest
rates, whereby those rates are designated as the
hedged risk in fair value hedges. In the case of these
hedging relationships, uncertainty arises with respect
to the identifiability of the designated benchmark
interest rates.
The transition to the newly created and/or revised
benchmark interest rates is being managed and moni-
tored within the framework of a multidisciplinary
project, the
e scope of which is likely to cover changes to
systems, processes, risk and valuation models, as well
as dealing with the related impact at an accounting
and financial reporting level. The uncertainty arising
from interest rate benchmark reform is expected to
persist most likely until the end of 2021.
The BMW Group applies a value-at-risk approach
throughout the Group for internal reporting purposes
and to manage interest rate risk. This approach is
based on a historical simulation in which the potential
future fair value losses of the interest rate portfo-
lios are compared across the Group with expected
amounts on the basis of a holding period of 250 days
and a confidence level of 99.98%. The risk mitigating
effect of correlations between the various portfolios
is taken into account when the risks are aggregated.
The following table shows for interest-rate-sensitive
exposures of the BMW Group the potential fair value
fluctuation compared with the expected value, mea-
sured on the basis of the value-at-risk approach:
in € million
Value at risk
Raw materials price risk
31.12.2019
31.12.2018
1,094
1,123
The BMW Group is exposed to market price risks on
raw materials. In order to hedge these risks, the Group
mainly used forward commodity contracts. As part of
the implementation of the risk management strategy,
the extent to which risk exposures should be hedged
is decided at regular intervals and the corresponding
hedging ratio defined.
The economic relationship between the hedged item
and the hedging instrument is based essentially on
the fact that they have the same basis and term. The
BMW Group designates only the commodity price
index-linked raw material surcharge as a hedged item.
Other price components contained in the contract are
not designated as being part of the hedge relationship
as no effective hedging instruments exist for these
components.
The starting point for analysing raw materials price
risk is to identify planned purchases of raw materials
or components containing raw materials, the so-called
"exposure". At each reporting date, the exposure
the following financial year amounted to:
for
The nominal amounts of hedging instruments were
Notes to the Group
Financial Statements
→ Other Disclosures
Group
Financial
Statements
176
175
The cash flows from non-derivative liabilities com-
prise principal repayments and the related interest.
The amounts disclosed for derivative instruments
comprise only cash flows relating to derivatives that
have a negative fair value at the balance sheet date.
In the case of derivatives with a negative fair value,
an overall positive cash flow can arise due to the
various yield curves used. At 31 December 2019 credit
commitments available at short notice to dealerships
which had not been called upon at the end of the
reporting period amounted to €10,776 million (2018:
€9,010 million).
Solvency is assured at all times by managing and
monitoring the liquidity situation on the basis of
a rolling cash flow forecast. The resulting funding
requirements are covered by a variety of instruments
placed on the world's financial markets, with the aim
to minimise risk by matching maturities with financ-
ing requirements and in alignment with a dynamic
target debt structure.
As a further reduction of risk, a syndicated credit line
totalling €8 billion (2018: €8 billion) from a consortium
of international banks is available to the BMW Group.
Intragroup cash flow fluctuations are balanced out by
the use of daily cash pooling arrangements.
Further information is provided in the Combined
Management Report.
Market risks
The principal market risks to which the BMW Group
is exposed are currency risk, interest rate risk and raw
materials market price risk.
Protection against such risks is provided in the first
instance though natural hedging which arises when
the values of non-derivative financial instruments
have matching maturities and amounts (netting).
Derivative financial instruments are used to reduce
the risk remaining after netting.
Currency, interest rate and raw materials market price
risks of the BMW Group are managed at a corporate
level.
Further information is provided in the "Report on
Outlook, Risks and Opportunities” section of the
Combined Management Report.
Currency risk
As an enterprise with worldwide operations, the
BMW Group conducts business in a variety of cur-
rencies, from which currency risks arise. In order to
hedge currency risks, the BMW Group holds, as at
31 December 2019, derivative financial instruments
mostly in the form of forward currency contracts and
currency swaps.
As part of the implementation of the risk management
strategy, the extent to which risk exposures should be
hedged is decided at regular intervals. The economic
relationship between the hedged item and the hedging
instrument is based essentially on the fact that they
are denominated in the same currency and have the
same maturities.
as follows:
The BMW Group measures currency risk using a cash-
flow-at-risk model. The analysis of currency risk is
based on forecast foreign currency transactions which
could result in exposures to surpluses of foreign cur-
rency cash inflows and cash outflows. At the end of
the reporting period, the overall currency exposure –
in each case for the following year and determined by
aggregating the individual currency exposures based
on their absolute amount - was as follows:
Currency exposure
31.12.2019
31.12.2018
33,950
28,407
This exposure is compared to all hedges that are in
place. The net cash flow surplus represents an uncov-
ered risk position. The cash-flow-at-risk approach
involves showing the impact of potential exchange
rate fluctuations on operating cash flows on the basis
of probability distributions. Volatilities and correla-
tions serve as the main input factors to determine the
relevant probability distributions.
The potential negative impact on earnings is calcu-
lated at the reporting date for each currency for the
following financial year on the basis of current market
prices and exposures with a confidence level of 95%.
The risk mitigating effect of correlations between the
various currencies is taken into account when the
risks are aggregated.
The following table shows the potential negative impact
for the BMW Group for the following year resulting
from unfavourable changes in exchange rates, mea-
sured on the basis of the cash-flow-at-risk approach.
in € million
Cash flow at risk
31.12.2019 31.12.2018
487
431
in € million
in € million
Maturity within
one year
31.12.2019
Maturity later
than five years
17,159
9,097
Interest rate risks
4,619
24,295
12,027
Raw material price risks
Nominal amounts of
hedging intruments
1,526
2,109
32
23,304
35,501
and five years
12,059
The following table shows the average hedging rates of
hedging transactions used by the BMW Group.
Currency risks
Average
hedging rates
31.12.2019
31.12.2018
EUR/CNY
8.26
8.26
EUR/USD
1.16
1.17
EUR/GBP
0.87
Currency risks
EUR/KRW
EUR/JPY
Maturity
between one
31.12.2018
Maturity
between one
and five years
Maturity later
than five years
in € million
Raw material price exposures
31.12.2019
31.12.2018
Currency risks
14,823
9,020
Interest rate risks
6,672
29,691
12,938
Maturity within
one year
4,382
Raw material price risks
Nominal amounts of
hedging intruments
1,651
1,920
23,146
40,631
12,938
This
exposure is compared to all hedges that are in
place. The net cash flow surplus represents an uncov-
ered risk position. The cash-flow-at-risk approach
involves showing the impact of potential raw materials
market price fluctuations on operating cash flows
on the basis of probability distributions. Volatilities
and correlations serve as input factors to assess the
relevant probability distributions.
The potential negative impact on earnings is calculated
at the reporting date for each raw materials category
for the following financial year on the basis of current
market prices and exposure with a confidence level of
95%. The risk mitigating effect of correlations between
the various categories of raw materials is taken into
account when the risks are aggregated.
The following table shows the potential negative impact
for the BMW Group resulting from fluctuations in
prices across all categories of raw materials, measured
on the basis of the cash-flow-at-risk approach. The
risk at each reporting date for the following financial
year was as follows:
in € million
31.12.2019 31.12.2018
in € million
4,174
note 19
2018
Interest income arising on financial assets measured
at amortised cost mainly relates to the interest income
earned on credit financing and reported within
revenues. Interest expense for financial liabilities
measured at amortised cost amounted to €1.9 billion
(2018: €1.8 billion).
As part of the process of analysing valuations, the
external fund manager reviews the investment-specific
milestones, including an analysis of key financial,
technical and liquidity-specific performance indica-
tors. Based on this analysis, it is considered whether
the price set at the most recent financing round is
acceptable as a reasonable market valuation, in par-
ticular for early-stage or growth-phase investments.
Key performance indicators used for the purpose
of milestone analysis are highly dependent on the
business model underlying the investment; typical
technical key performance indicators relate to licenses &
Financial instruments allocated to Level 3 relate
mainly to investments in a private equity fund. For
valuation purposes, the investment advisor provides
the external fund manager with relevant, invest-
ment-specific information on an ongoing basis (at
least quarterly). The latter subsequently assesses the
underlying individual companies in accordance with
the guidelines for international private equity and
venture capital valuations (IPEV).
Notes to the Group
Financial Statements
→ Other Disclosures
Group
Financial
Statements
170
169
Exercise price
and patents held, the stage of technology development
such as evidence of feasibility and prototypes, market
entries, customer and user growth and appointments
to key management positions. Key financial perfor-
mance indicators used are revenues, EBITDA and the
corresponding growth rate and/or development of
specific contribution margins. Key liquidity-specific
performance indicators are cash on hand, cash burn
rates and prospects for future financing rounds.
Technical
company-specific ratios
Liquidity-specific ratios
Financial ratios
Financial ratios
Technical
company-specific ratios
Liquidity-specific ratios
Financial ratios
Technical
company-specific ratios
Liquidity-specific ratios
(quantitative and qualitative factors)
Market-based approach
Milestone analysis
Market-based approach
Milestone analysis
(quantitative and qualitative factors)
Input Parameter
Market-based approach
Milestone analysis
(quantitative and qualitative factors)
A detailed listing and quantification of potential sen-
sitivities is not considered meaningful in view of the
valuation methodology applied. A change of +/-10%
in the relevant input parameter (price of the last
financing round) would normally also give rise to a
similar change of +/-10% in the valuation. Similarly,
a significant reduction in growth rates or margins
could result in impairment and therefore to a lower
valuation of an investment.
The balance sheet carrying amount of Level 3 financial
instruments developed as follows:
in € million
3
265
Options on
unquoted equity
instruments
Convertible bonds
Unquoted equity
instruments
31 December 2018
Gains (+)/losses (-) recognised in accumulated other equity
Gains (+)/losses (-) recognised in the income statement
Currency translation differences
Disposals
Additions
1 January 2018
in € million
Gains and losses recognised in the income state-
ment in the financial year 2019 included unrealised
gains and losses totalling a net positive amount of
€32 million.
31 December 2019
Gains (+)/losses (-) recognised in accumulated other equity
Gains (+)/losses (-) recognised in the income statement
Currency translation differences
Disposals
Additions
1 January 2019
5
90
Options on unquoted equity instruments
355
Level hierarchy in accordance with IFRS 13
Raw material market price risks
Currency risks
Interest rate risks
Derivative instruments (liabilities)
Other risks
Raw material market price risks
Level 1
Currency risks
Derivative instruments (assets)
Loans to third parties
Cash equivalents
Other investments
Marketable securities, investment funds and collateral assets
in € million
Net gains and losses arising on financial instruments
measured at fair value through other comprehensive
income relate to marketable securities and shares
→ see in investment funds and are disclosed in → note 19.
Interest income arising on financial assets measured
at fair value through other comprehensive income
amounted to €49 million (2018: €58 million) and
interest expense to €41 million (2018: €47 million).
Interest rate risks
Level 2
Level 3
4,641
31.12.2019
Fair value
Convertible bonds
Unquoted equity instruments
in € million
Financial instruments recognised at fair value for
which no market price is available are allocated to
Level 3. Fair values are determined in accordance with
the following table:
With effect from 30 June 2019, marketable securities
amounting to €187 million were transferred from
Level 1 to Level 2 in view of the fact that their fair value
is determined on the basis of observable market data. T
Any transfers between fair value hierarchy levels are
made at the end of the relevant reporting period.
409
343
923
4
191
713
1,069
3
885
265
164
14
14
31.12.2018
-3
-913
-913
-833
-833
1,675
1,977
2,096
787
1,620
Reported on
assets side
31.12.2018
Reported on Reported on equity
assets side and liabilities side
31.12.2019
Gross amount of derivatives which can be offset in case of insolvency
Net amount after offsetting
Balance sheet amounts as reported
in € million
Reported on equity
and liabilities side
1,263
1,064
762
Net gains and losses arising on financial assets mea-
sured at amortised cost mainly include exchange
rate gains and losses as well as expenses and income
relating to impairment losses. Net gains and losses
arising on financial liabilities measured at amortised
cost mainly include exchange rate gains and losses.
-38
Net gains and losses of financial instruments measured
at fair value through profit or loss mainly include gains
and losses arising on the fair value measurement of
stand-alone derivatives, on marketable securities and
shares in investment funds, and on other investments.
155
296
203
160
-150
-1,012
Financial liabilities measured at amortised cost
Financial assets measured at amortised cost
Financial instruments measured at fair value through profit or loss
in € million
The following table shows the net gains and losses
arising on financial instruments in accordance with
IFRS 9:
Gains and losses on financial instruments
7
Non-derivative financial assets and liabilities are only
offset if a legally enforceable right currently exists and
it is actually intended to offset the relevant amounts.
No financial assets and liabilities have been netted
in the BMW Group due to the fact that the necessary
requirements for netting have not been met.
171
payables relating to derivative financial instruments
are not netted due to non-fulfilment of the stipulated
criteria. Offsetting would have the following impact
on the carrying amounts of derivatives:
2019
Offsetting of financial instruments
Convertible bonds
Financial Instru-
Options on
unquoted equity
Unquoted equity
instruments
374
5
14
instruments
355
34
33
-41
104
Financial Instru-
ments Level 3
Derivative financial instruments of the BMW Group
are subject to legally enforceable master netting agree-
ments or similar contracts. However, receivables and
272
5
ments Level 3
5
2
272
4
111
265
10
10
47
45
|| 2
3
106
115
-6
2
-2
-4
103
3
BY OPERATING SEGMENT
85,846
2,368
2,173
29,598
27,705
4,499
Segment result
91,682
6,182
194
175
Total revenues
1,280
-6
-3
in € million
17,594
18,058
Inter-segment revenues
26,425
28,210
2,176
2,374
68,252
73,624
External revenues
SEGMENT INFORMATION
2,272
1,388
2,143
in € million
136
712
13,836
2,624
Cash Flow Hedges
Currency risks
16,193
3,199
31.12.2018*
31.12.2019
31.12.2018
31.12.2019
31.12.2018
31.12.2019
Financial Services
Motorcycles
Automotive
Investments accounted for using the equity method
Result from equity accounted investments
Segment assets
11,142
97
110
4,982
5,853
Depreciation and amortisation on non-current assets
24,767
27,544
147
149
7,853
7,607
Capital expenditure on non-current assets
632
10,122
Raw material price risks
Interest rate risk
Interest rate risks
-6
Currency risks
Raw material price risk
in € million
Designated
component
Costs
Costs
of hedging
of hedging
Designated
component
Costs
of hedging
Opening balance at 1 January 2019
940
Change in fair value during the reporting period
-19
-480
-13
-262
12
13
250
-1
Reclassification to profit or loss
for continuing hedge relationships
for terminated hedge relationships
-491
716
9
618
23
-614
-622
12
-497
-614
in € million
Cash Flow Hedges
Currency risks
Raw material price risks
Fair Value Hedges
Interest rate risks
Designated components and costs of hedging within
accumulated other equity changed as follows:
2019
Change of
designated com-
ponents in other
comprehensive
income
Change in costs of
hedging in other
comprehensive
income
Hedge
ineffectiveness
-931
income statement
recognised in
Hedge
ineffectiveness
income
Change in costs of
hedging in other
comprehensive
Fair Value Hedges
-1
2018
income
Change of
designated com-
ponents in other
comprehensive
117
-961
264
recognised in
income statement
9
15,545
-32
* Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6. In addition, figures for the prior year
have been adjusted due to changes in presentation of selected items, which are not material overall.
17,105
Reconciliation of depreciation and
amortisation on non-current assets
Total for reportable segments
Elimination of inter-segment items
Total Group depreciation and
amortisation on non-current assets
26,593
28,297
on non-current assets
Total Group capital expenditure
-6,174
-7,003
Elimination of inter-segment items
32,767
35,300
Total for reportable segments
on non-current assets
Reconciliation of capital expenditure
15,201
9,627
383
288
-6
-7
795
Reclassification to acquisition costs for inventories
8,455
6,869
Reconciliation of segment result
Total for reportable segments
Financial result of Automotive segment
Financial result of Motorcycles segment
Elimination of inter-segment items
Group profit before tax from
continuing operations
2018*
2019
in € million
The total of the segment figures can be reconciled to
the corresponding Group figures as follows:
The information disclosed for capital expenditure and
depreciation and amortisation relates to non-current
property, plant and equipment, intangible assets and
leased products.
7,118
The Other Entities' segment result includes interest
and similar income amounting to €1,515 million (2018:
€1,178 million) and interest and similar expenses
amounting to €1,419 million (2018: €1,145 million).
-6,356
10,749
228,034
Total Group assets
7,084
-127,273
-155,872
Elimination of inter-segment items
6,859
Other Entities segment
Non-operating assets -
131,415
140,955
Financial Services segment
Total liabilities -
613
688
-6,600
not subject to interest
45
47
Non-operating assets - Motorcycles
34,643
38,257
48,639
58,612
113,772
138,488
Reconciliation of segment assets
Total for reportable segments
Non-operating assets - Automotive
Liabilities of Automotive segment
not subject to interest
31.12.2018*
31.12.2019
in € million
8,601
Liabilities of Motorcycles segment
The result of the Financial Services segment was
negatively impacted by impairment losses totalling
€254 million (2018: €302 million) recognised on leased
products. Income from the reversal of impairment
losses on leased products amounted to €95 million
(2018: €118 million).
Write-downs on inventories to their net realisable
value amounting to €126 million (2018: €54 million)
were recognised by the Automotive segment in the
financial year 2019. The reversal of impairment losses
increased the segment result of the Automotive seg-
ment by €22 million (2018: €22 million).
Notes to the Group
Financial Statements
→ Segment Information
136
9,627
7,118
1,172
249
-45
-96
96,855
104,210
-18,875
-19,443
6
5
-18,875
-7,003
-19,443
3
96,855
104,210
2
2
2019
2018*
2018*
Group
2019
Reconciliation to Group figures
2018
2019
Other Entities
4
-6,174
28,297
632
26,593
Group
Financial
Statements
188
187
Investments accounted for using the equity method
2,624
Segment assets
208,938
228,034
3,199
95,166
89,546
84,512
106,038
Capital expenditure on non-current assets
Depreciation and amortisation on non-current assets
Result from equity accounted investments
Segment result
Total revenues
External revenues
Inter-segment revenues
-6,356
-6,600
10,749
8,601
Other Entities
Reconciliation to Group figures
14,806
Group
31.12.2018
31.12.2019
31.12.2018*
31.12.2019
31.12.2018*
SEGMENT INFORMATION
BY OPERATING SEGMENT
31.12.2019
Closing balance at 31 December 2019
Business relationships of the BMW Group with other
associated companies and joint ventures as well as
with non-consolidated subsidiaries are small in scale.
-497
42
Declaration with respect to the Corporate
Governance Code
The Board of Management and the Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft have
issued the prescribed Declaration of Compliance
pursuant to § 161 of the German Stock Corporation
Act. It is included in the Corporate Governance State-
ment, which is available on the BMW Group website
at www.bmwgroup.com/ir.
43
Compensation of members of the Board of
Management and Supervisory Board
The total compensation of the current members of
the Board of Management and the Supervisory Board
of BMW AG expensed for the financial year 2019 in
accordance with IFRS comprised the following:
in € million
2019
2018
The compensation arrangements applicable for
members of the Supervisory Board for the financial
year 2019 do not include any stock options, value
appreciation rights comparable to stock options or
any other stock-based compensation components.
Apart from vehicle sales, service loaners, vehicle lease
and financing contracts at customary conditions, no
advances or loans were granted to members of the
Board of Management and the Supervisory Board of
BMW AG or its subsidiaries, nor were any contingent
liabilities entered into on their behalf.
Further details about the remuneration of current
members of the Board of Management and the
Supervisory Board can be found in the Compensa-
tion Report, which is part of the Combined Manage-
ment Report.
Compensation to members of the
Board of Management
30.0
Further details on the remuneration of the Manage-
ment Board are provided in the Compensation Report,
which is part of the Combined Management Report.
28.8
8.1
8.2
Variable remuneration
20.9
20.3
thereof Performance Cash Plan
8.3
5.3
Share-based remuneration component
1.0
0.3
Allocation to pension provisions
2.9
3.4
Fixed remuneration
Benefits in conjunction with the
The fair value of the programmes for Board of Manage-
ment members and senior heads of department at the
date of grant of the share-based remuneration com-
ponents was €1,374,798 (2018: €1,919,680 million),
based on a total of 19,983 shares (2018: 22,245 shares)
of BMW AG common stock or a corresponding cash-
based settlement measured at the relevant market
share price prevailing on the grant date.
The total carrying amount of the provision for the
share-based remuneration component of current
and former Board of Management members and
senior heads of department at 31 December 2019
was €5,851,703 million (2018: €4,745,518 million).
Entrust Datacard Corp.
153
103
10
2
Apart from vehicle sales, service loaners, leasing and
financing contracts at customary conditions, compa-
nies of the BMW Group concluded no further trans-
actions with members of the Board of Management
or Supervisory Board of BMW AG. This also applies
to close members of the families of those persons.
BMW Trust e. V., Munich, administers assets on a
trustee basis to secure obligations relating to pensions
in Germany and is therefore a related party of the
BMW Group in accordance with IAS 24. This entity
has no assets of its own. It had no income or expenses
during the period under report. BMW AG bears ex-
penses on an immaterial scale and performs services
for BMW Trust e. V., Munich.
For disclosures relating to the compensation of key
management personnel, please see → note 43 and the
Compensation Report.
41
Share-based remuneration
The BMW Group provides three share-based pro-
grammes: one for eligible employees, one for senior
heads of department and one for members of the
Board of Management.
Employee Share Programme
→ see
note 43
In connection with the Employee Share Programme,
non-voting shares of preferred stock in BMW AG were
granted in 2019 to qualifying employees at favourable
conditions (see → note 31 for the number and price → see
The total expense recognised in 2019 for the share-
based remuneration component of current and
former Board of Management members and senior
heads of department was €1,979,477 million (2018:
€609,890 million).
of issued shares). Participants in the programme
were entitled in 2019 to acquire packages of 10, 17 or
25 shares of preferred stock (2018: 7, 12 or 17) with
a discount in each case of €13.00 (2018: €20.00) per
share compared to the market price (average closing
price in Xetra trading in the period from 5 November
to 8 November 2019: €59.10). The programme was
open to employees who have been in an employment
relationship with BMW AG or by a wholly-owned
BMW AG subsidiary in Germany, provided that the
management of the subsidiary concerned has decid-
ed to participate in the programme. At the date of
the announcement of the programme, there was a
requirement for the employment relationship to have
existed without interruption for at least one year and
for it to continue until the transfer of the shares of
preferred stock. Shares of preferred stock acquired
in conjunction with the Employee Share Programme
are subject to a vesting period of four years, starting
from 1 January of the year in which the shares were
acquired. In the financial year under report, 744,447
(2018: 521,524) shares of preferred stock were acquired
by employees. This figure includes 740,400 (2018:
521,500) shares out of Authorised Capital 2019, with
the remainder bought back via the stock exchange.
Every year the Board of Management of BMW AG
decides whether the programme is to be continued.
note 31
181
182
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Other Disclosures
Programme for senior heads of department and
members of the Board of Management
The share-based remuneration programme for qualify-
ing senior heads of department, introduced with effect
for financial years beginning after 1 January 2012, is
closely based on the programme for Board of Manage-
ment members and is aimed at rewarding a long-term,
entrepreneurial approach to running the business on a
sustainable basis. Under the terms of the programme,
participants give a commitment to invest an amount
equivalent to 20% of their earnings-related bonus in
shares of BMW common stock and to hold the shares
so acquired for a minimum of four years. With effect
from 1 July 2019, the share-based compensation pro-
gramme was revised and the investment requirement
increased to 26% of the earnings-related bonus. In
return for the investment requirement, BMW AG pays
100% of the investment amount as a net subsidy. Once
the four-year holding period requirement has been
fulfilled, the participants receive – for each three
common stock shares held and at the Company's
option - one additional share of common stock or the
cash equivalent, to be decided at BMW AG's discretion.
For financial years beginning after 1 January 2011,
BMW AG has added a share-based remuneration
component to the existing compensation system for
Board of Management members.
Members of the Board receive a cash compensation
(investment component) for the specific purpose of
investment - after tax and deductions in shares
-
of common stock of BMW AG. For financial years
from 2018 onwards, the investment component cor-
responds to 45% of the gross bonus. The investment
component is paid after the end of the Annual General
Meeting, at which the separate financial statements
of BMW AG for the relevant financial year are pre-
sented. The shares of common stock are purchased
immediately after the investment component has been
paid out. Shares of common stock purchased in this
way by Board members are required to be held for a
period of four years. At the end of the holding period,
Board members receive from BMW AG, for
every three
shares of common stock held, either one additional
share of common stock or the cash equivalent, to be
decided at BMW AG's discretion. In the event of death
or invalidity, special rules apply for early payment
of share-based remuneration components based on
the target amounts. Insofar the service contract is
prematurely terminated and the Company has an
extraordinary right of termination, or if the Board
member resigns without the Company's agreement,
entitlements to amounts as yet unpaid relating to
share-based remuneration are forfeited.
The members of the Board of Management in office at
the end of the reporting period hold 36,921 shares of
BMW common stock based on holding requirements
arising from share-based remuneration for the finan-
cial years 2015 to 2018 (2018: 65,960).
The share-based remuneration component is measured
at its fair value at each balance sheet date between
grant and settlement date, and on the settlement date.
The amounts are recognised as personnel expense
on a straight-line basis over the vesting period and
reported in the balance sheet as a provision.
The cash-settlement obligation for the share-based
remuneration component is measured at its fair
value at the balance sheet date (based on the closing
price of BMW AG common stock in Xetra trading at
31 December 2019).
In the financial year 2019, the BMW Group recorded
a personnel expense of €10 million (2018: €10 million)
for the Employee Share Programme, corresponding
to the difference between the market price and the
reduced price of the shares of preferred stock pur-
chased by employees.
termination of board activity
7.1
3.9
The activities of the BMW Group are broken down
into the operating segments Automotive, Motorcycles,
Financial Services and Other Entities.
Within the Automotive segment the BMW Group devel-
ops, manufactures, assembles and sells automobiles
and off-road vehicles, under the brands BMW, MINI
and Rolls-Royce as well as spare parts, accessories
and mobility services. BMW and MINI brand products
are sold in Germany through branches of BMW AG
and by independent, authorised dealerships. Sales
outside Germany are handled primarily by subsidiary
companies and by independent import companies in
some markets. Rolls-Royce brand vehicles are sold in
the USA as well as in China, Korea, Italy, Russia and
Thailand via subsidiary companies and elsewhere by
independent, authorised dealerships.
Activities relating to the development, manufacture,
assembly and sale of motorcycles as well as spare
parts and accessories are reported in the Motorcycles
segment.
Automobile leasing, fleet business, multi-brand
business, retail and dealership financing, customer
deposit business and insurance activities are the main
activities allocated to the Financial Services segment.
Holding and Group financing companies are re-
ported in the Other Entities segment. This segment
also includes the operating companies BMW (UK)
Investments Ltd. and Bavaria Lloyd Reisebüro GmbH,
which are not allocated to one of the other segments.
Internal management and reporting
Segment information is prepared as a general rule
in conformity with the accounting policies adopted
for preparing and presenting the Group Financial
Statements. Exceptions to this general principle
include the treatment of inter-segment warranties,
the earnings impact of which is allocated to the
Automotive and Financial Services segments on
the basis used internally to manage the business. In
addition, intragroup repurchase agreements between
the Automotive and Financial Services segments
pursuant to IFRS 15, impairment allowances on
intragroup receivables and changes in the value of
consolidated other investments pursuant to IFRS 9
are also excluded. Intragroup leasing arrangements
are not reflected in the internal management and
reporting system on a IFRS 16 basis and therefore,
in accordance with IFRS 8, do not give rise to any
changes in the presentation of segment information.
Inter-segment receivables and payables, provisions,
income, expenses and profits are eliminated upon
consolidation. Inter-segment revenues are based on
market prices. Centralised functions are included in
the segments concerned. Expenses for centralised
administrative functions allocated to the Financial
Services segment are not settled in cash.
The role of “chief operating decision maker” with
respect to resource allocation and performance
assessment of the reportable segment is embodied
in the full Board of Management. For this purpose,
different measures of segment performance as well as
segment assets are taken into account in the operating
segments.
The Automotive and Motorcycles segments are
managed on the basis of return on capital employed
(ROCE). The relevant measure of segment results
used is therefore profit before financial result.
Capital employed is the corresponding measure of
segment assets used to determine how to allocate
resources and comprises all current and non-current
operational assets after deduction of liabilities used
operationally which are generally not subject to
interest (e.g. trade payables).
The success of the Financial Services segment is mea-
sured on the basis of return on equity (ROE). Profit
before tax therefore represents the relevant measure
of segment earnings. The measure of segment assets
in the Financial Services segment corresponds to net
assets, defined as total assets less total liabilities.
The success of the Other Entities segment is assessed
on the basis of profit or loss before tax. The corre-
sponding measure of segment assets used to manage
the Other Entities segment is total assets less asset-
side income tax items and intragroup investments.
185
186
Group
Financial
For the purposes of presenting segment information,
the activities of the BMW Group are divided into
operating segments in accordance with IFRS 8. The
segmentation follows the internal management and
reporting system and takes account of the organ-
isational structure of the BMW Group based on
the various products and services of the reportable
segments.
Statements
→ Segment Information
Segment information by operating segment is as
follows:
in € million
Automotive
Motorcycles
Financial Services
2019
2018*
2019
2018
2019
2018*
The accumulated amount of hedge-related fair value
adjustments is €8 million for assets (2018: €15 million)
and €1,012 million (2018: €243 million) for liabilities. 7
Notes to the Group
Financial Statements
Explanatory notes to segment information
Information on reportable segments
45
SEGMENT INFORMATION
44
Compensation to members of the
Supervisory Board
5.6
5.6
Fixed compensation and attendance fees
2.0
2.0
Variable compensation
3.6
3.6
Total expense
45.6
41.7
thereof due within one year
28.6
30.7
→ Segment Information
Notes to the Group
Financial Statements
Statements
Group
Financial
184
183
367
financial year that could have a major impact on
the results of operations, financial position and net
assets of BMW AG and the BMW Group.
Current assessments and assumptions for the finan-
cial year 2020, to the extent already known to the
BMW Group, have been taken into account and
described in the outlook report. Apart from these
assessments, no further significant negative effects
are known or can be estimated at the present time.
However, further negative effects could arise in the
course of the year.
The continuing spread of the coronavirus and
the impact on the business development of the
BMW Group is being continually monitored. Based
on current developments, the BMW Group expects
that the increasing spread of the coronavirus and the
necessary containment measures will have a nega-
tive impact on BMW Group vehicle deliveries in all
key sales markets. Risks also exist for upstream
and downstream processes, for example, through
possible bottlenecks due to supply shortages. For
the Financial Services segment, risk provisioning
expense is expected to increase.
Events after the end of the reporting period
On 30 January 2020, the World Health Organisation
(WHO) declared an international health emergency
due to the outbreak of coronavirus. Since 11 March
the WHO has characterised the spread of the corona-
virus as a pandemic.
Pension obligations to current members of the Board
of Management are covered by provisions amounting
to €14.6 million (2018: €19.7 million), determined
in accordance with IAS 19. Pension obligations to
former members of the Board of Management and
their surviving dependants, also determined in
accordance with IAS 19, amounted to €113.1 million
(2018: €91.0 million).
The total remuneration of former members of the
Board of Management and their dependants amounted
to €16.0 million (2018: €9.2 million).
Since the financial year 2018, variable cash com-
pensation has been supplemented by a multi-year
and future-oriented Performance Cash Plan (PCP).
The PCP evaluation period comprises three years,
the grant year and the two subsequent years. The
PCP bonus is paid out after the end of the three-year
evaluation period.
No other events have occurred since the end of the
-22
693
5
-51
-2
Closing balance at 31 December 2018
940
-614
-13
-262
12
179
180
Group
Financial
Statements
Notes to the Group
Financial Statements
→ Other Disclosures
The nominal amount of hedging instruments directly
affected by the reform of benchmark interest rates is ¬
€11,269 million (of which USD LIBOR €8,949 million,
GBP LIBOR €1,907 million).
Reclassification to acquisition costs for inventories
40
Transactions of Group entities with related parties
were carried out without exception in the normal
course of business with each of the parties concerned
and at market conditions.
in € million
Supplies and services
performed
2019
7
A significant proportion of the BMW Group's transac-
tions with related parties relates to the joint venture
BMW Brilliance Automotive Ltd.
Supplies and services
received
2018
2019
Receivables
Payables
at 31 December
at 31 December
Related party relationships
2018
7
-68
5
8
1
-6
5
in € million
Currency risks
Interest rate risk
Designated
component
Costs
Costs
of hedging
of hedging
Raw material price risk
Designated
component
Costs
33
of hedging
1,875
6
235
Change in fair value during the reporting period
120
-966
-20
-453
14
Reclassification to profit or loss
for continuing hedge relationships
-987
319
for terminated hedge relationships
Opening balance at 1 January 2018
2019
2018
2019
34
DELTON Logistics S.à r.l.
1,473
21,596
14
1,871
2,235
DELTON Technology SE
6
SOLARWATT GmbH
453
358
1
8
20
4
2,529
2,322
462
UnternehmerTUM GmbH
104
58
EnviroChemie GmbH
28
2,651
107
401
1,527
52
355
341
65
ALTANA AG
23,386
3,536
2,065
2018
BMW Brilliance Automotive Ltd.
9,227
7,691
107
99
2,639
1,829
496
772
Stefan Quandt, Germany, is a shareholder and Deputy
Chairman of the Supervisory Board of BMW AG.
He is also the sole shareholder and Chairman of
the Supervisory Boards of DELTON Health AG, Bad
Homburg v.d.H., and DELTON Technology SE,
Bad Homburg v.d.H., as well as the sole shareholder
of DELTON Logistics S.à r.l., Grevenmacher, which
via its subsidiaries, performed logistic-related services
for the BMW Group during the financial year 2019.
In addition, the Delton companies held by Stefan
Quandt acquired vehicles from the BMW Group by
way of leasing.
Stefan Quandt, Germany, is also the indirect major-
ity shareholder of SOLARWATT GmbH, Dresden.
Cooperation arrangements are in place between the
BMW Group and SOLARWATT GmbH, Dresden,
within the field of electric mobility. The focus of this
cooperation is on the provision of complete photo-
voltaic solutions for rooftop systems and carports
to BMW i customers. In 2019 SOLARWATT GmbH,
Dresden, acquired vehicles from the BMW Group
by way of leasing.
Susanne Klatten, Germany, is a shareholder and
member of the Supervisory Board of BMW AG and
also a shareholder and Deputy Chairwoman of the
Supervisory Board of ALTANA AG, Wesel. In 2019,
ALTANA AG, Wesel, acquired vehicles from the
BMW Group, mainly by way of leasing.
Susanne Klatten, Germany, is also the sole share-
holder and Chairwoman of the Supervisory Board
of UnternehmerTUM GmbH, Garching. In 2019,
the BMW Group bought in services from Unterne-
hmerTUM GmbH, Garching, mainly in the form of
consultancy and workshop services.
In addition, Susanne Klatten, Germany, and Stefan
Quandt, Germany, are indirectly sole shareholders of
Entrust Datacard Corp., Shakopee, Minnesota. Stefan
Quandt is also a member of the supervisory board of
this entity. In 2019, Entrust Datacard Corp., Shakopee,
Minnesota, acquired vehicles from the BMW Group
by way of leasing.
Seen from the perspective of BMW Group entities,
the volume of transactions with the above-mentioned
entities was as follows:
in € thousand
DELTON Health AG (formerly DELTON AG)
2018
2019
2018
Payables
at 31 December
2019
27
at 31 December
2018
2019
2018
Supplies and services
received
2019
Supplies and services
performed
Receivables
Hedge relationships give rise to the following effects:
* Prior year's figures adjusted due to a change in accounting policy in connection with the
adoption of IFRS 16; see note 6. In addition, figures for the prior year have been adjusted
due to changes in presentation of selected items, which are not material overall.
208,938
→ Report of the
Meetings
Manfred Schoch
Dr.-Ing. Norbert Reithofer
Supervisory Board Member
The attendance rate at the meetings of the Supervisory Board and its committees was 99.6%
overall. The following table shows attendance by individual member:
Disclosure of attendance at meetings by individual members
The composition of the Presiding Board and the committees of the Supervisory Board remained
unchanged during the financial year 2019. The Supervisory Board plans to make a mutually
agreed change to the position of chair of the Audit Committee directly following the 2020
Annual General Meeting. As in the past, the future chairperson also needs to meet the required
criteria as an independent financial expert. The composition of the Supervisory Board and its
committees is contained in the Corporate Governance Report and the Statement on Corporate
Governance, which is available on our website. You can also find the curricula vitae of the
Supervisory Board members on our website.
Messrs Franz Haniel, Ralf Hattler and Jürgen Wechsler resigned from the Supervisory Board
with effect from the end of the Annual General Meeting 2019. We would like to thank all three of
them for their faithful, constructive cooperation during their respective periods of office on the
Supervisory Board. Mr Haniel was a member of the Supervisory Board for a period of 15 years.
Composition of the Supervisory Board, the Presiding Board and the Supervisory
Board's committees
Peter Schwarzenbauer left the Board of Management on 31 October 2019 after reaching the
stipulated retirement age. We wish to thank him for his dedication, his excellent work and
the dynamic contribution he made to the field of digitalisation in particular. As part of the
realignment of Board member portfolios, Mr Pieter Nota has been given combined responsibility
for all BMW Group brands as head of "Customer, Brands, Sales" and the size of the Board
has been reduced overall.
In 2019, we resolved to extend the mandate of one Board of Management member.
With effect from 1 November 2019, Ilka Horstmeier was appointed member of the Board of
Management with responsibility for Human Resources and as Labour Relations Director.
Ms Horstmeier has worked for the BMW Group since 1995, most recently as Managing Director
of the Dingolfing plant.
The mandate of Milagros Caiña Carreiro-Andree was terminated by mutual agreement with
effect from 31 October 2019. We would like to thank Ms Caiña Carreiro-Andree for her
positive contribution to the further development of human resource policies throughout
the BMW Group.
With effect from 1 October 2019, Dr Milan Nedeljković was appointed member of the Board of
Management and assumed responsibility for Production. Dr Nedeljković joined the BMW Group
in 1993 and, after serving as Managing Director of the Leipzig and Munich production plants,
most recently worked as Senior Vice President for Corporate Quality.
On 16 August 2019, Dr Andreas Wendt was temporarily given Board responsibility for
Production in addition to his role as Board member responsible for the Purchasing and
Supplier Network.
The Supervisory Board appointed Oliver Zipse as Chairman of the Board of Management with
effect from 16 August 2019. Mr Zipse initially became a Board of Management member with
responsibility for Production in 2015 and has worked for the BMW Group since 1991. Apart
from his expertise in the field of production, he has also gained a wealth of experience in
various strategic management functions.
The mandate of the Chairman of the Board of Management, Harald Krüger, was terminated by
mutual agreement on 15 August 2019, after Mr Krüger had previously informed the Chairman
of the Supervisory Board that he was not available for a further term of office. We wish to
thank Mr Krüger for his outstanding work and the key momentum he provided with great
enthusiasm during his long tenure at the BMW Group as Chairman and Member of the Board
of Management as well as in his previous functions.
The Supervisory Board made several decisions regarding the composition of the Board of
Management during the 2019 financial
year:
Composition of the Board of Management
Supervisory Board
→ Report of the
Attendance
Attendance in %
Stefan Quandt
Stefan Schmid
5
5
100
5
5
95
21
100
21
21
100
22
100
21
21
100
22
22222
Dr. Kurt Bock
Christiane Benner
Dr. Karl-Ludwig Kley
To Our
Shareholders
14
13
The Mediation Committee, which is prescribed by law, did not need to convene during the
financial year 2019.
With regard to Board of Management compensation, the Supervisory Board spent a significant
amount of time addressing issues related to the Act on the Implementation of the Second Share-
holder Rights Directive (ARUG II) and the new version of the German Corporate Governance
Code as well as assessing any resulting need for change at the BMW Group. We intend to revise
the compensation system for the Board of Management during the financial year 2020 and
will put forward the revised system for shareholder approval at the Annual General Meeting
to be held in the financial year 2021.
The Board of Management also reported on the current status of diversity concepts for
the Group.
In the third quarter, the Supervisory Board conferred extensively on the BMW Group's fore-
casts for the period from 2020 to 2025. In this context, the Board of Management outlined
the currently volatile nature of external business conditions, highlighting in particular risks
arising from trade policies and weaker economic forecasts for certain markets. The potential
impact of a range of risk scenarios on forecasts was also discussed at length. After a thorough
examination, the Supervisory Board approved the BMW Group's long-term corporate forecast.
Based on this long-term assessment, the Board of Management presented the annual budget
for the financial year 2020, which the Supervisory Board likewise deliberated upon at length.
We paid particular attention to the implementation of Strategy NUMBER ONE > NEXT.
The Board of Management elaborated on the current status, highlighting changes in the market
environment attributable to trade conflicts, regulatory issues - especially fleet CO2 emis-
sions - as well as corporate social responsibility considerations. Together with the Board of
Management, we discussed in detail the decisions reached and measures taken to implement
the strategy over the past 12 months. The Board of Management reported in detail on its
strategies adopted for brands and design, for products as well as for customer experience
and services, focusing in particular on the expansion of the Group's electrified product
portfolio and the luxury segment. The strategic fields of technology and digitalisation were
also the subject of intensive debate, specifically focusing on the core topics of electric mobility
and automated driving.
The Supervisory Board also deliberated at length on important issues arising in the Board of
Management's various areas of responsibility. For instance, the Board of Management
presented the core elements of the Group's Finance function, including a description of its
financing strategy. We also considered the strategy and risk profile of the Financial Services
segment. In addition to strategy realignment within the sales organisation, a further topic
of focus was the contribution of the Purchasing and Supplier Network to the profitability
and future viability of the BMW Group. The Board of Management reported in detail on the
current status of and overall strategy regarding the BMW brand.
The Board of Management also informed us about important current topics such as the opening
of the BMW plant in Mexico, the Battery Cell Competence Centre in Munich and the new
#NEXTGen technology and future fair held at the BMW Welt site in Munich. The Board of
Management also reported on the state of negotiations with FC Bayern and the BMW Group's
participation at the IAA in Frankfurt. Moreover, the Board of Management kept the Supervisory
Board well informed on matters of product quality, the joint venture with Great Wall Motor
and the cooperation with Northvolt in the field of battery cell production.
In its regular reports on the BMW Group's current situation, the Board of Management report-
ed to the Supervisory Board on new models and model revisions in the Automotive and
Motorcycles segments, delivery volumes (in particular of electrified models) and the competitive
situation, as well as the development of new and total business volume in the Financial Services
segment. Any variances from budget were also brought to the Supervisory Board's attention.
The Board of Management's status reports also covered changes in the workforce size as well
as economic developments in key markets.
Supervisory Board
→ Report of the
To Our
Shareholders
10
9
I personally held a number of individual discussions with investor representatives on Super-
visory Board-related matters, especially in light of the planned changes to the German Cor-
porate Governance Code. The main topics discussed were the compensation of the Board of
Management, the independence of Supervisory Board members and the planned change in
the compensation system for the Supervisory Board.
The Audit Committee and the full Supervisory Board also deliberated at great length on the
challenges posed by trade conflicts as well as the various Brexit scenarios.
The work of the Supervisory Board focused in particular on the strategic development of the
BMW Group against the backdrop of digitalisation and electrification, including the core topic
of automated driving. Key cooperations, such as the joint venture with Daimler in the field of
mobility services, were subject to intensive scrutiny.
The Supervisory Board continuously monitored the running of the business in a thorough
manner and advised the Board of Management on matters relating to the management and
further development of the BMW Group. In five meetings of the full Supervisory Board
(including one two-day meeting), we deliberated in detail with the Board of Management on
the performance of the BMW Group. The Board of Management also kept the Supervisory
Board well informed on matters of particular significance between meetings. Furthermore, the
Chairman of the Supervisory Board was in frequent direct contact with the Chairman of the
Board of Management, as was the Chairman of the Audit Committee with the Chief Financial
Officer regarding current topics.
In 2019, we made major decisions regarding the leadership of the BMW Group, with
Mr Oliver Zipse designated as new Chairman of the Board of Management and two new
members appointed to the Board.
Focus of the Supervisory Board's activities during the past financial year
The Supervisory Board performed the duties incumbent upon it with the utmost diligence.
With its product portfolio firmly on the right track, the BMW Group is well positioned to meet
the challenges posed by technological change.
The BMW Group faced numerous challenges in 2019. Despite retaining its leading position in
the premium segment in terms of delivery volumes, it did not generate the level of earnings
we aspire to. In our capacity as Supervisory Board, we stand firmly behind the Board of Man-
agement's objective of increasing profitability again in the coming years and continuing in the
long and highly successful tradition of the BMW Group despite the difficult global economic
conditions. Customer focus is always our highest priority. At the same time, the BMW Group
is committed to assuming a pioneering role in the field of sustainability. The importance we
attach to this topic is most evident in the rapid expansion of our range of electrified vehicles
driven by the BMW Group's new model offensive this year.
Dear Shareholders,
For the financial year 2019, the Supervisory Board examined the structure and level of compen-
sation paid to the members of the Board of Management. In this context, we took into account
trends in Group business performance, executive manager compensation and the remuneration
of BMW Group employees in Germany. Based on comparative studies conducted by an external
compensation consultant, we concluded that the compensation of the members of the Board
of Management is commensurate. Detailed information on the compensation of the Board of
Management is contained in the Compensation Report.
100
We also addressed the compensation of the Supervisory Board, which has remained unchanged
since 2013, and spoke in favour of changing to a purely fixed compensation model. A corresponding
proposal will be submitted for shareholder approval at the Annual General Meeting 2020.
We also reviewed current targets for the composition of the Supervisory Board and the com-
petency profile set out for its members. We concluded that the composition of the Supervisory
Board at 31 December 2019 was in line with the targets stipulated in the diversity concept, the
competency profile and other composition targets. In view of the major strategic importance
of automated driving, we have decided to expand our competency profile to include the fields
of digitalisation and artificial intelligence. The composition targets for the financial year 2020
were further developed in line with the recommendations contained in the draft version of the
new German Corporate Governance Code. An overview of the members of the Supervisory
Board, describing their specific fields of expertise, is available in the Statement on Corporate
Governance on our website.
The Nomination Committee held one meeting during the financial year 2019, at which it addressed
the subject of succession planning for shareholder representatives on the Supervisory Board going
forward, taking into account the composition targets decided upon by the Supervisory Board.
A key aspect of the Personnel Committee's work during its five meetings held during 2019
involved preparing decisions in connection with the composition of the Board of Management.
The Personnel Committee held discussions on Board of Management compensation, not least
against the background of the implementation of ARUG II and revision of the German Corporate
Governance Code. In individual cases it also granted approval for Board of Management members
to assume mandates outside the Group.
Furthermore, the main results of the audits conducted by Group Internal Audit, along with
details of further audit planning, were reported to the Audit Committee. The Audit Committee
also discussed risk management and the BMW Group's current risk profile as well as the internal
control system and the report on major legal disputes. The EMIR audit report ("European Market
Infrastructure Regulation”) pursuant to § 32 of the German Securities Trading Act (WPHG)
was also presented to the Audit Committee by an auditor, and the effectiveness of the system
in place at BMW AG to ensure compliance with regulatory requirements was confirmed.
The Audit Committee concurred with the decision of the Board of Management to raise the
Company's share capital in accordance with Article 4 (5) of the Articles of Incorporation
(Authorised Capital 2019) by €740,400 and to issue a corresponding number of new non-voting
bearer shares of preferred stock in conjunction with an Employee Share Programme.
The Board of Management also reported in detail to the Audit Committee on the mutually
agreeable completion of proceedings initiated by the German Federal Cartel Office in 2016
regarding the purchase of long steel by the BMW Group. The proceedings were terminated
in November 2019 with the imposition of a fine of €28 million, which the Company did not
contest. The Board of Management stressed that the exchange of information in question had
no effect on the selling prices of BMW Group vehicles.
At the following meeting of the Supervisory Board, the Chairman of the Audit Committee
reported on these matters in great detail. At the recommendation of the Audit Committee, the
Supervisory Board decided to obtain a second opinion from an independent antitrust law expert
in addition to the advice received from the law firm engaged by the Company. At a subsequent
meeting of the Audit Committee, the expert confirmed the Company's legal opinion and its
defence strategy.
The Audit Committee continued to deal intensively with the EU Commission's investigation
into the antitrust allegations in connection with the former working groups of several German
automobile manufacturers. Subsequent to receiving the EU Commission's Statement of Objec-
tions in April 2019, which resulted in the BMW Group recognising a significant provision for
a possible fine, the Audit Committee held a separate meeting on this topic. At that meeting,
the Audit Committee was provided with detailed information concerning allegations made
by the EU Commission and was fully briefed on the Company's viewpoint, which denies the
allegations and intends to contest them - with all the legal means at its disposal if necessary.
The Company's Chief Legal Counsel and a representative of the law firm engaged by the
Company explained the Company's legal position to the Committee.
In February 2019, the Board of Management informed the Audit Committee of the result of the
proceedings conducted by the Public Prosecutor's Office Munich regarding a faulty software
update. Based on its classification as a misdemeanour, a fine of €8.5 million was imposed,
which the Company accepted. The investigations undertaken by the Public Prosecutor did
not identify any evidence of test-stand-related defeat devices, fraud or any other deliberate
legal violations.
"Compliance 4.0".
During the year under report, the Audit Committee again dealt intensively with the topic
of compliance within the BMW Group. In his regular report, the Chairman of the Com-
pliance Committee provided a summary of ongoing compliance-related proceedings and
presented the improvements being made to the compliance system, which is now known as
The quarterly financial reports were discussed with the Board of Management prior to their
publication. Representatives of the external auditors were present when the Half-Year Financial
Report was discussed at the end of July 2019.
The Audit Committee discussed PwC's fee proposal for the audits of the Company and Group
Financial Statements 2019 and for the review of the Half-Year Financial Report, and deemed
it appropriate. Following the approval at the Annual General Meeting held in May 2019, the
Audit Committee appointed PwC for the relevant engagements and specified audit focus areas.
It also approved the scope of non-audit services to be provided by PwC and subsequently
received regular reports on the relevant matters.
The meeting held in February 2019 focused primarily on preparing for the Supervisory Board
meeting at which the financial statements and on the planned change of the Group auditor
were examined. The committee recommended to the full Supervisory Board that Pricewa-
terhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (PwC) be elected as Company and
Group auditor at the Annual General Meeting 2019. Prior to this, PwC issued a Declaration
of Independence, and the planned scope of non-audit services to be provided by PwC was
discussed. In connection with the audits of the financial statements for the financial year 2018,
which were performed for the last time by KPMG Wirtschaftsprüfungsgesellschaft mbH, the
Audit Committee considered the scope of non-audit services provided by KPMG entities to the
BMW Group in 2018. There were no indications of conflicts of interest, grounds for exclusion
or lack of independence on the part of the auditor.
The Audit Committee held five meetings and two telephone conference calls during the
financial year 2019.
The Presiding Board convened four times during the year under report. Its focus was on
preparing the detailed agenda of full Supervisory Board meetings, unless a committee was
responsible for doing so. Working closely with the Board of Management and senior heads of
department, we made suggestions for topics to be reported on at Supervisory Board meetings.
Furthermore, the Presiding Board devoted time to following the latest developments regarding
corporate governance.
Description of Presiding Board and committee work
The Supervisory Board has established a Presiding Board and four committees, whose work
during the financial year 2019 was reported on by their respective chairpersons at the subsequent
meetings of the full Supervisory Board. You can read more about the tasks, the composition
and the working methods of the Presiding Board and the various committees of the Supervisory
Board in the Statement on Corporate Governance on our website.
Supervisory Board
To Our
Shareholders
12
11
We reviewed the efficiency of our work on the Supervisory Board and prepared for the related
deliberations within the full Supervisory Board based on a questionnaire and detailed individual
discussions between the Chairman and all members. Overall, the work of the Supervisory
Board was deemed efficient and given a positive assessment. Valuable feedback and suggestions
relating to the work of the Supervisory Board were welcomed and will be taken up in the
new financial year.
No conflicts of interest pertaining to members of the Supervisory Board arose during the year
under report. Significant transactions with Supervisory Board members and other related
parties as defined by IAS 24, including their close relatives and intermediary entities, were
examined on a quarterly basis.
We also deliberated intensively on corporate governance within the BMW Group and the
application of the recommendations contained in the German Corporate Governance Code.
In December, the Board of Management and the Supervisory Board issued their Declaration of
Compliance with the German Corporate Governance Code. We intend to fully comply with all
recommendations made in the Code in the version dated 7 February 2017, which was valid at
the date of the Declaration. The wording of the Declaration of Compliance is available in the
Statement on Corporate Governance on our website.
Verena zu Dohna-Jaeger¹
We therefore wish to express our gratitude to him in particular for his many years of loyal service
to the BMW Group. Within the framework of elections pursuant to the German Co-Determi-
nation Act, the employees elected Verena zu Dohna-Jaeger and Dr Thomas Wittig as members
of the Supervisory Board, the former as representative of IG Metall and the latter as executive
staff representative. The remaining employee representatives were re-elected. The Annual
General Meeting elected Dr Vishal Sikka, founder and CEO of Vianai Systems, Inc., as a new
member of the Supervisory Board. Susanne Klatten and Stefan Quandt, both entrepreneurs,
were re-elected as shareholder representatives.
4
PwC audited the Company and Group Financial Statements of BMW AG for the financial year
2019 as well as the Combined Company and Group Management Report - as authorised for
issue by the Board of Management on 10 March 2020 - and issued an unqualified audit opinion,
signed by the auditor Petra Justenhoven as independent auditor (Wirtschaftsprüferin) and
by Andreas Fell as independent auditor (Wirtschaftsprüfer) and auditor responsible for the
performance of the engagement.
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft ("PwC") was appointed as
auditor for the first time for the financial year 2019. PwC conducted a review of the condensed
Interim Group Financial Statements and Interim Group Management Report for the six-month
period ended 30 June 2019 and presented the findings of its review to the Audit Committee.
No issues were identified that might indicate that the condensed Interim Group Financial
Statements and Interim Group Management Report had not been prepared in accordance
with the applicable provisions in all material respects.
Examination of financial statements, including the separate non-financial report and
the proposal for the appropriation of profits
Supervisory Board
→ Report of the
To Our
Shareholders
16
15
100
5
5
100
4
4
100
1
1
100
4
4
100
At its meeting held on 27 February 2020, the Audit Committee initially considered in detail
the preliminary version of the Company and Group Financial Statements for the finan-
cial year 2019, the Combined Management Report (including the Statement of Corporate
Governance), the auditor's long-form reports and the Board of Management's proposal for
the appropriation of profits.
Immediately after authorising their issue, the Board of Management submitted the Company
and Group Financial Statements for the 2019 financial year, the Combined Management Report
(including the Statement of Corporate Governance) and the proposal for the appropriation of
profits to the Supervisory Board. The long-form audit reports of the auditor were also made
available to the Supervisory Board without delay.
At its meeting on 12 March 2020, the Audit Committee carefully examined and deliberated
on these documents before they were considered in detail at the plenary session of the
Supervisory Board.
Chairman of the Board of Management
Oliver Zipse
Management
of the Board of
→ Statement of the
Chairman
Shareholders
To Our
18
17
Norbert Reithofer
Chairman of the Supervisory Board
5
Yours
Munich, 17 March 2020
The readiness of our employees to deliver outstanding performance alongside their passion and
enthusiasm for the enterprise and its products make us confident in the ability of the BMW Group
to successfully shape individual mobility as a technological pioneer moving forward.
We wish to express our appreciation to the members of the Board of Management and the
entire workforce of the BMW Group worldwide for their commitment and joint achievements
in the financial year 2019.
Expression of appreciation by the Supervisory Board
4
Due to the rapidly deteriorating situation caused by the proliferation of coronavirus, the Board
of Management resolved on 16 March 2020 to revise the forecast for the financial year 2020 and
to draw up the Company and Group Financial Statements anew, together with the Combined
Management Report. In a telephone conference of the Audit Committee held on the same day,
the Board of Management reported in detail on the adjustments made. Representatives of
the auditor reported on the supplementary audit performed and the findings identified and
confirmed that no objections had arisen in the course of this work. After thorough examination
and deliberation, the Audit Committee recommended that the Supervisory Board approve
the revised versions of the Company and Group Financial Statements for the financial year
2019. After concluding its own examination, the Supervisory Board determined that it had no
objections and accordingly approved the revised versions of the Company and Group Financial
Statements for the financial year 2019 on 17 March 2020. The Company Financial Statements
have therefore been adopted.
We also examined the proposal of the Board of Management to use the unappropriated profit
to pay a dividend of €2.50 per share of common stock and €2.52 per share of non-voting
preferred stock, in each case on shares entitled to receive a dividend. We consider the proposal
appropriate and have therefore given it our approval.
Based on a thorough examination conducted by the Audit Committee and the full Supervisory
Board, we concurred with the results of the external audit. In accordance with the conclusion
reached after the examination by the Audit Committee and the Supervisory Board, no objections
were raised. The Group and Company Financial Statements of Bayerische Motoren Werke
Aktiengesellschaft for the financial year 2019 drawn up by the Board of Management were
subsequently approved at our meeting held on 12 March 2020.
The representatives of the external auditor confirmed that the risk management system estab-
lished by the Board of Management is capable of identifying at an early stage any developments
that might threaten the Company's going-concern status. They confirmed that no material
weaknesses in the internal control system and risk management system with regard to the
financial reporting process were identified. Similarly, they did not identify in the course
of their audit work any facts that were inconsistent with the contents of the Declaration of
Compliance pursuant to § 161 of the German Stock Corporation Act (AktG) issued by the
Board of Management and the Supervisory Board.
At the respective meetings, the Board of Management provided the Audit Committee and the
Supervisory Board with detailed explanations of the financial reports presented. Representatives
of the external auditor were also present at both meetings. They reported on the main findings of
their audit, explained the key audit matters and answered additional questions put by members
of the Audit Committee and the Supervisory Board. The Audit Committee and the Supervisory
Board reviewed the key audit issues and the related audit procedures in great detail.
On behalf of the Supervisory Board
5
Furthermore, in conjunction with the presentation of the Sustainable Value Report, the Audit
Committee and the Supervisory Board considered the separate non-financial report of BMW AG
(Company and Group) at 31 December 2019 drawn up by the Board of Management. The
Board of Management provided a detailed explanation of the reports at the meetings. Repre-
sentatives of the auditor presented the main findings of their audit and answered additional
questions put by the members of the Supervisory Board. PwC performed a “limited assurance"
review of these reports and issued an unqualified statement thereon. The Supervisory Board
acknowledged and approved the separate non-financial report (Company and Group) drawn
up by the Board of Management.
5
Prof. Dr. Renate Köcher
100
6
6
Susanne Klatten
80
4
5
Prof. Dr. Reinhard Hüttl
100
5
5
Dr.-Ing. Heinrich Hiesinger
1
1
Ralf Hattler²
100
1
1
Franz Haniel²
100
100
5
5
100
Horst Lischka
100
100
5
5
2 Supervisory Board Member until 16 May 2019
Werner Zierer
Dr. Thomas Wittig'
Jürgen Wechsler²
5
Dr. Vishal Sikka¹
Brigitte Rödig
1 Supervisory Board Member since 16 May 2019
Simone Menne
100
5
5
5
Willibald Löw
100
Dr. Dominique Mohabeer
5
1,480
160
100
Financial Services Vehicle Trust, Wilmington, Delaware
889
-670
692
BMW Financial Services NA LLC, Wilmington, Delaware
968
100
100
586
BMW Canada Inc., Richmond Hill, Ontario
100
452
0
100
0
0
174
0
0
0
2,281
0
0
0
The Americas
BMW (US) Holding Corp., Wilmington, Delaware
BMW Manufacturing Co. LLC, Wilmington, Delaware
BMW Bank of North America Inc., Salt Lake City, Utah
4,012
529
0
100
BMW Financial Services de Mexico S.A. de C.V. SOFOM, Mexico City
493
BMW de Argentina S.A., Buenos Aires
Rolls-Royce Motor Cars NA LLC, Wilmington, Delaware
BMW Leasing de Mexico S.A. de C.V., Mexico City
BMW Insurance Agency Inc., Wilmington, Delaware
BMW Consolidation Services Co. LLC, Wilmington, Delaware
100
100
100
100
100
100
BMW Leasing do Brasil S.A., São Paulo
100
0
100
BMW of North America LLC, Wilmington, Delaware
BMW of Manhattan Inc., Wilmington, Delaware
BMW de Mexico S.A. de C.V., Mexico City
632
100
BMW do Brasil Ltda., Araquari
179
9
100
100
BMW US Capital LLC, Wilmington, Delaware
-97
100
BMW Financeira S.A. Credito, Financiamento e Investimento, São Paulo
100
BMW SLP, S.A. de C.V., Villa de Reyes
100
140
0
Bayerische Motoren Werke
Aktiengesellschaft
0
Non-current assets
2018*
2019
2018*
Germany
13,428
13,556
39,237
34,856
China
20,564
18,959
199
90
USA
Rest of Europe
Rest of Asia
100
10,975
11,344
15,284
17,373
31,154
2019
32,805
22,470
15,979
19,720
Eliminations
Other regions
Rest of the Americas
21,297
External revenues
in € million
Information by region
BLMC Ltd., Farnborough
Sutum ROM GmbH, Salzburg 11, 14
13
Bavarian Sky S.A., Compartment German Auto Loans 6, Luxembourg 13
Bavarian Sky S.A., Compartment German Auto Loans 7, Luxembourg¹
Bavarian Sky S.A., Compartment German Auto Loans 8, Luxembourg 13
Bavarian Sky S.A., Compartment German Auto Loans 9, Luxembourg 13
Bavarian Sky S.A., Compartment German Auto Leases 5, Luxembourg 13
Bavarian Sky S.A., Compartment A, Luxembourg 13
Bavarian Sky S.A., Compartment B, Luxembourg 13
Triumph Motor Company Ltd., Farnborough
Bavarian Sky Europe S.A. Compartment A, Luxembourg 13
Bavarian Sky UK 1 plc, London 13
Bavarian Sky UK 2 plc, London 13
Bavarian Sky UK A Ltd., London 13
Bavarian Sky UK B Ltd., London 13
Bavarian Sky UK C Ltd., London 13
100
Bavarian Sky FTC, Compartment French Auto Leases 3, Paris 13
0
BMW Central Pension Trustees Ltd., Farnborough
Alphabet Luxembourg S.A., Leudelange
In the information by region, external sales are based
on the location of the customer. The information dis-
closed for non-current assets relates to property, plant
and equipment, intangible assets and leased products.
Eliminations disclosed for non-current assets relate
to leased products.
In the reconciliation of segment assets to Group assets,
eliminations relate mainly to intragroup financing
balances.
The reconciliation of segment figures to the corre-
sponding total Group figures shows the elimination
of inter-segment items. Revenues with other segments
result mainly from the sale of vehicles, for which the
Financial Services segment has concluded a financing
or lease contract. Eliminations of inter-segment items
in the reconciliation to the Group profit before tax,
capital expenditure and depreciation and amortisation
mainly result from the sale of vehicles in the Automo-
tive segment, which are subsequently accounted for
as leased vehicles in the Financial Services segment. 7
Dr.-Ing. Andreas Wendt
Dr. Nicolas Peter
Pieter Nota
Riley Motors Ltd., Farnborough
Dr. Milan Nedeljković
Klaus Fröhlich
Oliver Zipse
The Board of Management
100
100
100
Ilka Horstmeier
BMW Acquisitions Ltda., São Paulo
BMW Asia Pte. Ltd., Singapore
SB Acquisitions LLC, Wilmington, Delaware
100
100
100
100
100
1,756
BMW Holding Malaysia Sdn Bhd, Kuala Lumpur
PT BMW Indonesia, Jakarta
100
BMW Asia Technology Centre Sdn Bhd, Kuala Lumpur
100
51
BMW China Services Ltd., Beijing
BMW Malaysia Sdn Bhd, Kuala Lumpur
100
45
107
100
BMW Korea Co. Ltd., Seoul
196
32
100
BMW Leasing (Thailand) Co. Ltd., Bangkok
BMW India Private Ltd., Gurgaon
174
100
BMW India Financial Services Private Ltd., Gurgaon
112
1
100
BMW Manufacturing (Thailand) Co. Ltd., Rayong
18
BMW Credit (Malaysia) Sdn Bhd, Kuala Lumpur
BMW Asia Pacific Capital Pte Ltd., Singapore
BMW Lease (Malaysia) Sdn Bhd, Kuala Lumpur
Notes to the Group
Financial Statements
→ List of Investments
at 31 December 2019
2019-2 ABL, Tokyo 13
2019-3 ABL, Tokyo 13
Bavarian Sky China 2018-1, Beijing 13
Bavarian Sky China 2018-2, Beijing 13
Bavarian Sky China 2019-1, Beijing 13
Bavarian Sky China 2019-2, Beijing 13
Group
Financial
Statements
Bavarian Sky China 2019-3, Beijing 13
BMW Australia Finance Ltd., Mulgrave
BMW Australia Ltd., Melbourne
BMW Financial Services New Zealand Ltd., Auckland
BMW New Zealand Ltd., Auckland
BMW Sydney Pty. Ltd., Sydney
BMW Melbourne Pty. Ltd., Melbourne
Oceania
83
2018-3 ABL, Tokyo 13
2019-1 ABL, Tokyo 13
0
BMW Tokio Corp., Tokyo
2015-2 ABL, Tokyo 13
2016-1 ABL, Tokyo 13
2016-2 ABL, Tokyo 13
2017-1 ABL, Tokyo 13
2017-2 ABL, Tokyo 13
194
2017-3 ABL, Tokyo 13
2018-2 ABL, Tokyo 13
g| g| g| g| ༠༐ ༠༐ ༠༐ ༠༐ ༠༐ ༠༐
100
100
100
0
2018-1 ABL, Tokyo 13
205
BMW (Thailand) Co. Ltd., Bangkok
58
100
100
100
100
100
OO
100
0
0|0|
0
0
0
0
0
0
0
193
BMW Canada Auto Trust 2018-1, Richmond Hill, Ontario¹³
BMW Auto Leasing LLC, Wilmington, Delaware
BMW FS Securities LLC, Wilmington, Delaware
100
100
100
100
BMW Canada Auto Trust 2019-1, Richmond Hill, Ontario 13
100
100
BMW Manufacturing LP, Woodcliff Lake, New Jersey
BMW FS Receivables Corp., Wilmington, Delaware
BMW Receivables 1 Inc., Richmond Hill, Ontario
BMW Receivables Ltd. Partnership, Richmond Hill, Ontario
BMW Receivables 2 Inc., Richmond Hill, Ontario
BMW Extended Service Corp., Wilmington, Delaware
BMW Vehicle Lease Trust 2017-2, Wilmington, Delaware 13
BMW Vehicle Lease Trust 2018-1, Wilmington, Delaware¹³
BMW Vehicle Lease Trust 2019-1, Wilmington, Delaware 13
BMW Vehicle Owner Trust 2016-A, Wilmington, Delaware 13
BMW Vehicle Owner Trust 2018-A, Wilmington, Delaware 13
BMW Vehicle Owner Trust 2019-A, Wilmington, Delaware 13
BMW Floorplan Master Owner Trust Series 2018-1, Wilmington, Delaware 13
BMW Canada 2018-A, Richmond Hill, Ontario 13
BMW Canada Auto Trust 2017-1, Richmond Hill, Ontario 13
BMW FS Funding Corp., Wilmington, Delaware
BMW Facility Partners LLC, Wilmington, Delaware
BMW Manufacturing Indústria de Motos da Amazônia Ltda., Manaus
0
861
541
65
100
BMW China Automotive Trading Ltd., Beijing
502
456
BMW Japan Finance Corp., Tokyo
100
232
64
100
Herald International Financial Leasing Co. Ltd., Tianjin
228
29
BMW Japan Corp., Tokyo
BMW (South Africa) (Pty) Ltd., Pretoria
100
568
109
100
BMW Financial Services (South Africa) (Pty) Ltd., Midrand
SuperDrive Investments (RF) Ltd., Cape Town 13
167
11
100
49
0
Asia
BMW Automotive Finance (China) Co. Ltd., Beijing
BMW Financial Services Korea Co. Ltd., Seoul
2,441
321
58
Africa
1,565
Alphabet Austria Fuhrparkmanagement GmbH, Salzburg
3,591
100
90
373
BMW (UK) Ltd., Farnborough
191
100
43
380
100
44
495
100
97
578
100
193
968
55
100
BMW Financial Services (GB) Ltd., Farnborough
1,085
219
100
BMW Russland Trading OOO, Moscow
BMW (Schweiz) AG, Dielsdorf
BMW (UK) Manufacturing Ltd., Farnborough
BMW Finance S.N.C., Guyancourt
BMW Italia S.p.A., San Donato Milanese
1,020
95
100
BMW Motoren GmbH, Steyr
291
189
100
35
BMW Finance N.V., The Hague
211
BMW Austria Leasing GmbH, Salzburg
176
BMW Financial Services Scandinavia AB, Sollentuna
225
165
138
11
Alphabet Nederland B.V., Breda 10
BMW Vertriebs GmbH, Salzburg
129
29
BMW Austria Bank GmbH, Salzburg
1,125
BMW France S.A.S., Montigny-le-Bretonneux
34
BMW i Ventures SCS SICAV-RAIF, Senningerberg
288
20
100
ALPHABET (GB) Ltd., Farnborough
277
100
58
Rolls-Royce Motor Cars Ltd., Farnborough
233
91
100
BMW Iberica S.A., Madrid
228
100
BMW España Finance S. L., Madrid
100
7
Europe 12
BMW Holding B.V., The Hague
Equity
in € million
Profit/loss
in € million
Capital invest-
ment in %
FOREIGN²
4,594
100
3,558
100
1,988
100
327
-6
1
LARGUS Grundstücks-Verwaltungsgesellschaft mbH, Munich
BMW Vermögensverwaltungs GmbH, Munich
BMW Finanz Verwaltungs GmbH, Munich
BMW Verwaltungs GmbH, Munich 3,6
Parkhaus Oberwiesenfeld GmbH, Munich
BMW High Power Charging Beteiligungs GmbH, Munich 4,6
Alphabet Fuhrparkmanagement GmbH, Munich4
Alphabet International GmbH, Munich 4, 5, 6
Bürohaus Petuelring GmbH, Munich
BMW Hams Hall Motoren GmbH, Munich 4, 5, 6
BMW Fahrzeugtechnik GmbH, Eisenach 3, 5, 6
BMW Anlagen Verwaltungs GmbH, Munich 3,6
Bavaria Wirtschaftsagentur GmbH, Munich 3, 5, 6
Rolls-Royce Motor Cars GmbH, Munich 4, 5, 6
BAVARIA-LLOYD Reisebüro GmbH, Munich
BMW M GmbH Gesellschaft für individuelle Automobile, Munich 3, 5, 6
BMW Vertriebszentren Verwaltungs GmbH, Munich
121
100
100
BMW International Holding B.V., Rijswijk 10
9,111
1,141
100
BMW Österreich Holding GmbH, Steyr
3,106
100
791
BMW (UK) Holdings Ltd., Farnborough
1,431
589
100
BMW International Investment B.V., The Hague
1,246
100
153
3,941
100
100
100
100
100
100
100
21,702
100
100
100
51
100
100
100
100
3,904
Alphabet Belgium Long Term Rental NV, Aartselaar
52221222
100
100
100
BMW (UK) Capital plc, Farnborough
BiV Carry ISCS, Senningerberg
BMW (UK) Investments Ltd., Farnborough
Société Nouvelle WATT Automobiles S.A.R.L., Saint-Quentin-en-Yvelines
Alphabet Polska Fleet Management Sp. z o.o., Warsaw
at 31 December 2019
→ List of Investments
Notes to the Group
Financial Statements
Group
Financial
Statements
192
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
* Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6. In addition, figures for the prior year have
been adjusted due to changes in presentation of selected items, which are not material overall.
69,031
77,583
96,855
104,210
Group
189
-7,855
388
453
2,641
2,445
3,406
3,834
-7,739
100
190
Notes to the Group
Financial Statements
BMW Bank GmbH, Munich³
BMW INTEC Beteiligungs GmbH, Munich 3,6
BMW Beteiligungs GmbH & Co. KG, Munich6
DOMESTIC¹, 12
Companies
→ 71
Group
Financial
Statements
Affiliated companies (subsidiaries) of BMW AG at 31 December 2019
7
The List of investments of BMW AG pursuant to
§ 285 and § 313 HGB is presented below. Disclosures
List of investments at 31 December 2019
46
LIST OF INVESTMENTS AT
31 DECEMBER 2019
→ List of Investments
at 31 December 2019
for equity and earnings and for investments are not
made if they are of "minor significance" for the results
of operations, financial position and net assets of
BMW AG pursuant to § 286 (3) sentence 1 no. 1 HGB
and § 313 (3) sentence 4 HGB. It is also shown in the
list which subsidiaries apply the exemptions available
in § 264 (3) and § 264 b HGB with regard to the publica-
tion of annual financial statements and the drawing up
of a management report and/or notes to the financial
statements (footnotes 5 and 6). The Group Financial
Statements of BMW AG serve as exempting consoli-
dated financial statements for these companies.
100
100
100
BMW Financial Services B.V., Rijswijk 10
BMW Norge AS, Fornebu
Alphabet Italia Fleet Management S.p.A., Rome
Alphabet España Fleet Management S.A.U., Madrid
BMW Financial Services Polska Sp. z o.o., Warsaw
100
BMW Northern Europe AB, Stockholm
100
100
100
100
100
100
100
100
100
BMW Belgium Luxembourg S.A./N.V., Bornem
BMW Malta Ltd., Floriana
100
100
100
100
100
100
BMW Financial Services Belgium S.A./N.V., Bornem
30
10
100
Swindon Pressings Ltd., Farnborough
BMW Bank 000, Moscow
BMW Finanzdienstleistungen (Schweiz) AG, Dielsdorf
Bavaria Reinsurance Malta Ltd., Floriana
100
100
100
100
BMW Romania S.R.L., Bucharest 11
BMW Italia Retail S.r.I., Rome
BMW Automotive (Ireland) Ltd., Dublin
Alphabet France S.A.S., Saint-Quentin-en-Yvelines
BMW Danmark A/S, Copenhagen
BMW Czech Republic s.r.o., Prague
BMW Renting (Portugal) Lda., Porto Salvo
BMW Madrid S.L., Madrid
Alphabet UK Ltd., Glasgow
BMW Slovenia distribucija motornih vozil d.o.o., Ljubljana¹¹
BMW Bulgaria EOOD, Sofia 11
100
100
100
BMW Slovenská republika s.r.o., Bratislava
100
Park Lane Ltd., Farnborough
BMW Distribution S.A.S., Vélizy-Villacoublay
BMW Austria GmbH, Salzburg
BMW Services Ltd., Farnborough
100
100
Alphabet France Fleet Management S.N.C., Saint-Quentin-en-Yvelines
BMW Australia Trust 2011-2, Mulgrave 13
BMW Amsterdam B.V., Amsterdam
BMW Retail Nederland B.V., The Hague
BMW Portugal Lda., Porto Salvo
BMW Financial Services (Ireland) DAC, Dublin
BMW Financial Services Denmark A/S, Copenhagen
BMW Hellas Trade of Cars A.E., Kifissia
BMW Nederland B.V., Rijswijk
Oy BMW Suomi AB, Helsinki
Alphabet Fuhrparkmanagement (Schweiz) AG, Dielsdorf
Bavarian Sky Australia Trust A, Mulgrave 13
100
→ 72
PDB - Partnership for Dummy Technology and Biomechanics GbR, Gaimersheim
FOREIGN7
Bavarian & Co Co. Ltd., Incheon
BMW Albatha Finance PSC, Dubai
BMW Albatha Leasing LLC, Dubai
BMW AVTOTOR Holding B.V., Amsterdam
Critical TW S.A., Porto
Equity
in € million
Profit/loss
in € million
Capital invest-
ment in %
The Retail Performance Company GmbH, Munich
205
25
2,106
-1,805
50
5,293
1,947
50
1,597
-383
29.7
218
50
-24
Digital Energy Solutions GmbH & Co. KG, Munich
Encory GmbH, Unterschleißheim
DOMESTIC7
100
70
100
100
100
195
196
Group
Financial
Statements
Notes to the Group
Financial Statements
→ List of Investments
at 31 December 2019
BMW AG's associated companies, joint ventures
and joint operations at 31 December 2019
→ 73
Companies
Joint ventures - equity accounted
DOMESTIC
IONITY Holding GmbH & Co. KG, Munich
Blitz 18-353 GmbH, Munich 8, 11, 14
FOREIGN
BMW Brilliance Automotive Ltd., Shenyang
Associated companies - equity accounted
FOREIGN
THERE Holding B.V., Amsterdam³
Joint operations – proportionately consolidated entities
FOREIGN
Spotlight Automotive Ltd., Zhangjiagang 8, 11
Not equity accounted or proportionately consolidated entities
50
100
50
20
7 These entities are neither consolidated nor accounted for using the equity method due to their overall immateriality for the Group Financial Statements.
8 The amounts shown for entities accounted for using the equity method and for proportionately consolidated entities correspond to the annual financial statements drawn up in accordance with uniform
IFRS rules. Equity not denominated in euro is translated into euro using the closing exchange rate at the balance sheet date, earnings are translated using the average rate.
⁹ Including power to appoint representative bodies.
1º Exemption pursuant to Article 2:403 of the Civil Code of the Netherlands (Burgerlijk Wetboek).
11 First-time consolidation.
12 Deconsolidation in the financial year 2019: DriveNow GmbH & Co. KG, Munich, Drive Now Verwaltungs GmbH, Munich, Drive Now Austria GmbH, Vienna, DriveNow UK Ltd., London, DriveNow Sverige AB,
Sollentuna, DriveNow Belgium S.p.r.l., Brussels, Drive Now Italy S.r.I., Milan, BMW Coordination Center V.o.F., Bornem, BMW Services Belgium N.V., Bornem, BMW Roma S.r.l., Rome (merger),
APD Industries plc, Birmingham, BMW Den Haag B.V., The Hague
13 Control on basis of economic dependence.
14 Other: Blitz 18-353 GmbH, Munich, has been operating under the name YOUR NOW GmbH since 3 January 2020. Sutum ROM GmbH was merged with BMW Romania S.R.L., Bucharest, effective
14 January 2020.
4,6
3,1
15,6
20,4
6 Exemption from publication of financial statements applied in accordance with § 264 (3) and § 264 b HGB.
9,8
6,2
9,1
18,3
49,0
197
198
Group
Financial
Statements
Notes to the Group
Financial Statements
→ List of Investments
at 31 December 2019
BMW AG's non-consolidated companies at 31 December 2019
16,7
5 Exemption from drawing up a management report applied in accordance with § 264 (3) and § 264 b HGB.
4 Profit and Loss Transfer Agreement with a subsidiary of BMW AG.
3 Profit and Loss Transfer Agreement with BMW AG.
20
40
40
25
50
51
BMW AG's participations at 31 December 2019
→ 74
Companies
DOMESTIC
Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern
GSB Sonderabfall-Entsorgung Bayern GmbH, Baar-Ebenhausen
Hubject GmbH, Berlin
IVM Industrie-Verband Motorrad GmbH & Co. Dienstleistungs KG, Essen
Joblinge gemeinnützige AG Berlin, Berlin
Joblinge gemeinnützige AG Leipzig, Leipzig
Joblinge gemeinnützige AG München, Munich
Racer Benchmark Group GmbH, Landsberg am Lech
SGL Carbon SE, Wiesbaden
Equity
Profit/loss
in € million
in € million
FOREIGN7
SGL Composites LLC, Dover, Delaware
1 The amounts shown for the German subsidiaries correspond to the annual financial statements drawn up in accordance with German accounting requirements (HGB).
2 The amounts shown for the foreign subsidiaries correspond to the annual financial statements drawn up in accordance with uniform IFRS rules. Equity and earnings not denominated in euro are translated
into euro using the closing exchange rate at the balance sheet date.
50
100
Capital invest-
ment in %
100
BMW i Ventures GmbH, Munich
FOREIGN7
Europe
Alphabet Insurance Services Polska Sp. z o.o., Warsaw
BMW (GB) Ltd., Farnborough
BMW (UK) Pensions Services Ltd., Hams Hall
BMW Car Club Ltd., Farnborough
BMW Drivers Club Ltd., Farnborough
BMW Financial Services Czech Republic s.r.o., Prague
BMW Group Benefit Trust Ltd., Farnborough
BMW Hungary Korlátolt Felelősségű Társaság, Vecsés
BMW i Ventures B.V., The Hague
BMW Car IT GmbH, Munich4
BMW Manufacturing Hungary Kft., Vecsés
100
100
100
100
100
100
100
100
100
100
100
100
BMW Manufacturing Russland 000, Kaliningrad
Automag GmbH, Munich
Alphabet Fleetservices GmbH, Munich4
DOMESTIC7
Companies
100
400
29
169
12
22
Equity
in € million
0
0
0
0
0
0
0
0
0
100
100
100
100
100
0
0
Profit/loss
in € million
Capital invest-
ment in %
BMW Mobility Development Center s.r.o., Prague
BMW Motorsport Ltd., Farnborough
100
Cezwei HU GmbH, Salzburg
100
100
100
100
100
100
100
100
Asia
BMW China Investment Ltd., Beijing
BMW Finance (United Arab Emirates) Ltd., Dubai
BMW Financial Services Hong Kong Ltd., Hong Kong
BMW Financial Services Singapore Pte Ltd., Singapore
BMW Hong Kong Services Ltd., Hong Kong
BMW India Foundation, Gurgaon
BMW India Leasing Private Ltd., Gurgaon
BMW Insurance Services Korea Co. Ltd., Seoul
BMW Mobility Services Ltd., Sichuan Tianfu New Area (Chengdu Section)
BMW Philippines Corp., Manila
BMW Technology Office Israel Ltd., Tel Aviv
Herald Hezhong (Peking) Automotive Trading Co. Ltd., Beijing
THEPSATRI Co. Ltd., Bangkok
100
100
51
BMW Russland Automotive 000, Kaliningrad
100
100
100
100
BMW Middle East Retail Competency Centre DWC-LLC, Dubai
100
John Cooper Garages Ltd., Farnborough
John Cooper Works Ltd., Farnborough
Cezwei PL GmbH, Salzburg
100
000 BMW Leasing, Moscow
U.T.E. Alphabet España-Bujarkay, Sevilla
100
100
100
100
Munich, 16 March 2020
100
100
100
100
100
BMW Automobile Distributors (Pty) Ltd., Midrand
BPF Midrand Property Holdings (Pty) Ltd., Midrand
Multisource Properties (Pty) Ltd., Midrand
100
100
Africa
BMW Technology Corp., Wilmington, Delaware
Designworks/USA Inc., Newbury Park, California
MINI Business Innovation LLC, Wilmington, Delaware
Mini Urban X Accelerator SPV LLC, Wilmington, Delaware
Toluca Planta de Automoviles S.A. de C.V., Mexico City
BMW Leasing de Argentina S.A., Buenos Aires
BMW Operations Corp., Wilmington, Delaware
BMW Experience Centre Inc., Richmond Hill, Ontario
BMW i Ventures Inc., Wilmington, Delaware
BMW i Ventures LLC, Wilmington, Delaware
217-07 Northern Boulevard Corp., Wilmington, Delaware
The Americas
90
100
Horst Lischka² (b.1963)
Dr.-Ing. Heinrich Hiesinger (b.1960)
Member since 2017, elected until the AGM 2022
Former Chairman of the Board of Management
of thyssenkrupp AG
Head of Purchasing Indirect Goods and Services,
Raw Material, Production Partner
Mandates
Deutsche Post AG (since 15 May 2019)
Member since 2009, elected until the AGM 2024
General Representative of IG Metall Munich
(since 19 March 2019, former MAN Truck & Bus AG)
Städtisches Klinikum München GmbH⭑
Member since 1997, elected until the AGM 2024
KraussMaffei Group GmbH*
MAN Truck & Bus SE*
Prof. Dr. rer. nat. Dr. h.c. Reinhard Hüttl (b.1957)
Member since 2008, elected until the AGM 2023
Chairman of the Executive Board
of Helmholtz-Zentrum Potsdam
Member since 2017 until 16 May 2019
Susanne Klatten (b.1962)
Deutsches GeoForschungsZentrum - GFZ
University Professor
Mandates
Ralf Hattler³ (b.1968)
2 Employee representatives (union representatives).
DELTON Technology SE*
elected until the AGM 2024
Department head with the Executive Board of
IG Metall
Entrepreneur
Mandates
ABB AG
Stefan Schmid¹ (b.1965)
Member since 2007, elected until the AGM 2024
Deputy Chairman of the Supervisory Board
Chairman of the Works Council, Dingolfing
Heraeus Holding GmbH*
TBG AG*
1 Employee representatives (Company employees).
◆ Not listed on the stock exchange.
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
Franz Haniel (b.1955)
Member since 2004 until 16 May 2019
Entrepreneur
Mandates
-
Franz Haniel & Cie. GmbH*, Chairman
³ Employee representatives (members of senior management).
Mandates
205
ALTANA AG*, Deputy Chairwoman
UnternehmerTUM GmbH*, Chairwoman
◆ Not listed on the stock exchange.
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
206
Corporate
Governance
→ Members of the
Supervisory Board
→ Overview of
Supervisory Board
committees and
their composition
3 Employee representatives (members of senior management).
Jürgen Wechsler² (b.1955)
Former Regional Head of IG Metall Bavaria
Mandates
Schaeffler AG, Deputy Chairman
Siemens Healthcare GmbH*, Deputy Chairman
(until 18 March 2019)
Dr. Thomas Wittig³ (b.1960)
Member since 16 May 2019,
elected until the AGM 2024
Senior Vice President Financial Services
Member since 16 May 2019,
Mandates
Member since 2011 until 16 May 2019
2 Employee representatives (union representatives).
1 Employee representatives (Company employees).
Oracle Corporation (since 6 December 2019)
Willibald Löw¹ (b.1956)
Member since 1999, elected until the AGM 2024
Chairman of the Works Council, Landshut
Simone Menne (b.1960)
Member since 2015, elected until the AGM 2021
Member of supervisory boards
Mandates
- Deutsche Post AG
Springer Nature AG & Co. KGaA
Johnson Controls International plc
Russell Reynolds Associates Inc.*
(since 19 January 2019)
Dr. Dominique Mohabeer¹ (b.1963)
Member since 2012, elected until the AGM 2024
Member of the Works Council, Munich
Prof. Dr. rer. pol. Renate Köcher (b.1952)
Member since 2008, elected until the AGM 2022
Director of Institut für Demoskopie
Allensbach Gesellschaft zum Studium der
öffentlichen Meinung mbH
Mandates
Infineon Technologies AG
Nestlé Deutschland AG⭑
Robert Bosch GmbH⭑
Brigitte Rödig¹ (b.1963)
Member since 2013, elected until the AGM 2024
Member of the Works Council, Dingolfing
Dr. Vishal Sikka (b.1967)
Member since 16 May 2019,
elected until the AGM 2024
CEO & Founder, Vianai Systems, Inc.
Mandates
SGL Carbon SE, Chairwoman
Verena zu Dohna-Jaeger² (b.1975)
(23 September 2019 until 17 December 2019)
AQTON SE*, Chairman
Finance
Dr. Nicolas Peter (b.1962)
E.ON SE
Mandates
Development
Klaus Fröhlich (b.1960)
LOGISTRIAL Real Estate AG⭑
-
Mandates
Mandates
Deutsche Telekom AG
-
Mandates
Chairman (until 15 August 2019)
Harald Krüger (b.1965)
Rolls-Royce Motor Cars Limited*, Chairman
(since 1 April 2019)
Mandates
Customer, Brands, Sales (since 1 April 2019)
Sales and Brand BMW, Aftersales BMW Group
(until 31 March 2019)
Milagros Caiña Carreiro-Andree (b.1962)
Human Resources, Labour Relations Director
(until 31 October 2019)
Pieter Nota (b.1964)
BMW Brilliance Automotive Ltd.*,
Peter Schwarzenbauer (b.1959)
Transformation Electromobility
BMW Bank GmbH*, Chairman
→Members of the
Supervisory Board
Corporate
Governance
204
203
Dr. Andreas Liepe
General Counsel:
Membership of equivalent national or foreign boards of business enterprises.
Deputy Chairman
Membership of other statutory supervisory boards.
(16 August 2019 until 30 September 2019)
Dr.-Ing. Andreas Wendt (b.1958)
Purchasing and Supplier Network
Production
Human Resources, Labour Relations Director
(since 1 November 2019)
Ilka Horstmeier (b.1969)
Rolls-Royce Motor Cars Limited*, Chairman
(until 31 March 2019)
Scout24 AG
Mandates
(1 April 2019 until 31 October 2019)
MINI, Rolls-Royce, BMW Motorrad,
Customer Engagement and Digital Business
Innovation BMW Group (until 31 March 2019)
Not listed on the stock exchange.
Entrust Datacard Corp.*
(until 7 October 2019)
(until 31 October 2019)
Dr. rer. pol. Kurt Bock (b.1958)
Member since 2018, elected until the AGM 2023
Former Chairman of the Board of
Management of BASF SE
Mandates
-
-
FUCHS PETROLUB SE, Chairman
(since 7 May 2019)
Fresenius Management SE*
Münchener Rückversicherungs-Gesellschaft
Continental AG, Deputy Chairwoman
Aktiengesellschaft in Munich
Member since 1997, elected until the AGM 2024
Deputy Chairman of the Supervisory Board
Entrepreneur
Mandates
-
DELTON Health AG*, Chairman
DELTON Technology SE*, Chairman
Frankfurter Allgemeine Zeitung GmbH*
(since 24 June 2019)
Stefan Quandt (b.1966)
BMW Motoren GmbH, Chairman
Mandates
Christiane Benner² (b.1968)
BMW (South Africa) (Pty) Ltd.*, Chairman
MEMBERS OF THE
SUPERVISORY BOARD
Dr. jur. Karl-Ludwig Kley (b.1951)
Member since 2008, elected until the AGM 2021
Deputy Chairman of the Supervisory Board
Chairman of the Supervisory Board of E.ON SE
and of the Deutsche Lufthansa Aktiengesellschaft
Mandates
-
E.ON SE, Chairman
Deutsche Lufthansa Aktiengesellschaft, Chairman
Member since 2014, elected until the AGM 2024
Second Chairwoman of IG Metall
Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer (b.1956)
Mandates
Siemens Aktiengesellschaft
Henkel AG & Co. KGaA (Shareholders' Committee)
Manfred Schoch¹ (b.1955)
Member since 1988, elected until the AGM 2024
Deputy Chairman of the Supervisory Board
Chairman of the European
and General Works Council
Industrial Engineer
Member since 2015, elected until the
Annual General Meeting (AGM) 2020
Chairman of the Supervisory Board
Former Chairman of the Board of
Management of BMW AG
BMW Automotive Finance (China) Co., Ltd.*,
Chairman
BMW AG ensures that the Supervisory Board and
its committees are appropriately equipped to carry
out their duties. This includes providing a central
Supervisory Board office to support the chairpersons
in their coordination work.
Member since 2001, elected until the AGM 2024
202
201
Taking into account the specific circumstances of the
BMW Group and the number of Board members, the
Supervisory Board has set up a Presiding Board and
four committees: the Personnel Committee, the Audit
Committee, the Nomination Committee and the Medi-
ation Committee. These serve to raise the efficiency
of the Supervisory Board's work and facilitate the
handling of complex issues.
The Supervisory Board has stated specific targets for
its composition, agreed to a diversity concept and
determined a competency profile. Members of the
Supervisory Board are responsible for undertaking
any training required for the performance of their
duties. The Company provides them with appropriate
assistance therein.
The Supervisory Board regularly assesses the efficiency
of its activities. To this end, shared discussion is con-
ducted within the Supervisory Board and individual
meetings held with the Chairman, prepared on the
basis of a questionnaire sent in advance, which is
drawn up by the Supervisory Board.
Members of the Supervisory Board are obliged to
inform the full Supervisory Board of any conflicts
of interest, in particular those resulting from a
consultant or executive function with clients, sup-
pliers, lenders or other business partners, so that
the Supervisory Board can report to the shareholders
at the Annual General Meeting on its treatment of
the issue. Significant and non-temporary conflicts of
interest of a Supervisory Board member result in the
termination of mandate.
Members of the Supervisory Board of BMW AG are
obliged to act in the best interests of the enterprise as a
whole. They may not pursue personal interests in their
decisions or take advantage of business opportunities
intended to benefit the BMW Group.
BMW AG's Supervisory Board is composed of ten
shareholder representatives (elected by the Annual
General Meeting) and ten employee representatives
(elected in accordance with the Co-Determination
Act). The ten Supervisory Board members represent-
ing employees comprise seven Company employees,
including one executive staff representative, and three
members elected following nomination by unions. The
Supervisory Board has the task of advising and super-
vising the Board of Management in its management of
BMW AG. It is involved in all decisions of fundamental
importance for BMW AG. The Supervisory Board
appoints the members of the Board of Management
and decides upon the level of compensation they
receive. The Supervisory Board can revoke appoint-
ments for important reasons.
Corporate
Governance
Supervisory Board
Terms of procedure approved by the Board of Man-
agement contain a plan for the allocation of areas of
responsibility among the individual Board members.
Deliberations are held and decisions taken by the
Board of Management as a collegiate body at full Board
meetings, at Product and Customer full Board meetings
(since 1 November 2019) and at Sustainability Board
meetings (combined with full Board meetings with
effect from 1 November 2019). The Board of Manage-
ment also deliberates and makes decisions at meetings
of its Customer committee (since 1 November 2019) and
its Senior Executives and Operations committees. The
overall framework for developing business strategies,
the use of resources, the implementation of strategies
and matters of particular importance to BMW AG are
decided upon at full Board of Management meetings.
Members of the Board of Management are required
to act in the enterprise's best interests and may not
pursue personal interests in their decisions or take
advantage of business opportunities intended for the
benefit of the BMW Group. Individual members of
the Board of Management of BMW AG are required
to disclose
any conflicts of interest to the Supervisory
Board without delay and inform the other members
of the Board of Management accordingly.
In accordance with § 7 of the Articles of Incorporation,
the Board of Management of BMW AG comprises two
or more persons; other than that the number of mem-
bers of the Board of Management is determined by the
Supervisory Board. At 31 December 2019, the Board
of Management comprised seven members. The Board
of Management decides on the principal guidelines
for managing the enterprise, determines and agrees
upon the strategic orientation with the Supervisory
Board, and ensures its implementation. The Board of
Management is also responsible for ensuring that all
provisions of law and internal regulations are com-
plied with. Further details on compliance within the
BMW Group are available in the section “Corporate
Governance, Compliance and Human Rights in the
BMW Group" of the Annual Report. The Board of
Management is also responsible for ensuring that
appropriate risk management and risk controlling
systems are in place throughout the Group.
The Board of Management manages the enterprise
under its own responsibility, acting in the best inter-
ests of the BMW Group with the aim of achieving sus-
tainable growth in value. The interests of shareholders,
employees and other stakeholders are also taken into
account in the pursuit of this aim.
Board of Management
The close interaction between Board of Management
and Supervisory Board in the interests of the enter-
prise as described above is also known as a "two-tier
board structure".
The designation BMW Group comprises Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) and
its Group entities. BMW AG is a stock corporation
(Aktiengesellschaft) within the meaning of the
German Stock Corporation Act (Aktiengesetz) and
has its registered office in Munich, Germany. It has
three representative bodies: the Annual General
Meeting, the Supervisory Board and the Board of
Management. The duties and powers of those bodies
derive from the Stock Corporation Act and the Arti-
cles of Incorporation of BMW AG. Shareholders, as
the owners of the business, exercise their rights at
the Annual General Meeting. The Board of Manage-
ment is responsible for managing the enterprise and
is monitored and advised by the Supervisory Board.
The Supervisory Board appoints the members of the
Board of Management and can, for an important rea-
son, revoke an appointment at any time. The Board
of Management informs the Supervisory Board and
reports to it regularly, promptly and comprehen-
sively, in line with the principles of conscientious
and faithful accountability and in accordance with
the law and the reporting duties determined by
the Supervisory Board. The Board of Management
requires the approval of the Supervisory Board for
certain major business proceedings. The Supervisory
Board is not, however, authorised to undertake man-
agement measures itself.
Further information on the composition and work
procedures of the Board of Management and its com-
mittees is available at www.bmwgroup.com/scg (Corporate
Governance).
Information on the Company's
Governing Constitution
→ Supervisory Board
Shareholders and
Annual General
Meeting
→ Corporate Govern-
ance Statement
(Member since 7 October 2019,
BMW Motoren GmbH*, Chairman
BMW (South Africa) (Pty) Ltd.*, Chairman
(since 1 November 2019)
Mandates
Dr. Milan Nedeljković (b.1969)
Production (since 1 October 2019)
BOARD OF MANAGEMENT
MEMBERS OF THE
Further information on corporate management and
governance, including the declaration of compliance
according to § 161 of the German Stock Corporation
Act, can be found in the Corporate Governance State-
ment (sections 289 f and 315 of the German Commer-
cial Code (HGB)) at → www.bmwgroup.com/compliancedeclaration
(Corporate Governance).
→ Declaration of
Compliance
Corporate Governance Statement
Declaration of Compliance
Shareholders may exercise their voting rights at the
Annual General Meeting either in person, via a proxy
or via a representative designated by BMW AG. Voting
rights may also be exercised by postal vote.
Werner Zierer¹ (b.1959)
The shareholders of BMW AG exercise their rights at
the Annual General Meeting. The Annual General
Meeting decides in particular on the utilisation of
unappropriated profit, the ratification of the acts of
the members of the Board of Management and of the
Supervisory Board, the appointment of the external
auditor, changes to the Articles of Incorporation and
specified capital measures and elects the shareholders'
representatives to the Supervisory Board.
Shareholders and Annual General Meeting
Further information on the composition and work
procedures of the Supervisory Board and its com-
mittees is available at → www.bmwgroup.com/scg (Corporate
Governance).
Composition of the Presiding Board and the various
committees is based on legal requirements, the Arti-
cles of Incorporation, rules of procedure and corporate
governance principles, while taking into particular
account the expertise of Board members.
→Members of the
Board of
Management
Once a year, the Board of Management and the Super-
visory Board of BMW AG issue a Declaration of Compli-
ance pursuant to § 161 of the German Stock Corporation
Act (AktG) with regard to the recommendations of the
"Government Commission on the German Corporate
Governance Code", as officially published and valid
at the date of the Declaration. BMW AG's current and
previous Declarations of Compliance are available
online at → www.bmwgroup.com/compliancedeclaration (Corporate
Governance). In the Declaration of Compliance issued
in December 2019, the Board of Management and
the Supervisory Board declared that all recommen-
dations of the German Corporate Governance Code
(version dated 7 February 2017) will be complied with
going forward.
Chairman since 4 December)
The Board of Management and Supervisory Board
report below on corporate governance at BMW AG in
accordance with Section 3.10 of the German Corpo-
rate Governance Code (DCGK) in the version dated
7 February 2017 and principle 22 DCGK in the version
dated 16 December 2019.
CORPORATE
GOVERNANCE
4
Corporate
Governance
Company's Govern-
ing Constitution
Board of
Management
Supervisory Board
Compliance
Compensation
Report
→ Page 202 Shareholders and Annual General Meeting
Supervisory Board
→Page 202 Declaration of Compliance
→Page 202
→ Page 203
Members of the Board of Management
→ Page 204
Members of the Supervisory Board
→ Page 207
Overview of Supervisory Board committees and their composition
Compliance and Human Rights in the BMW Group
→ Page 208
Corporate Governance Statement
Good corporate governance - acting in accordance
with the principles of responsible management
aimed at increasing enterprise value on a sustainable
basis - is an essential requirement for the BMW Group
embracing all areas of the business. Corporate culture
within the BMW Group is founded on transparent
reporting and internal communication, corporate
governance in the interest of all stakeholders, trustful
cooperation both of the Board of Management and the
Supervisory Board as well as among employees, and
compliance with applicable law.
→Page 201
Information on the Company's Governing Constitution
Board of Management
→ Supervisory Board
Management
Board of
Constitution
Governing
Company's
Information on the
Corporate
Governance
→Page 201
200
→Page 246 Responsibility Statement by the Company's
Legal Representatives
→ Page 242 Glossary - Explanation of Key Figures
(Part of the Combined Management Report)
→Page 211 Compensation Report
CORPORATE
GOVERNANCE
→Page 200 Corporate Governance
→ Page 200
(Part of the Combined Management Report)
→Page 247 Independent Auditor's Report
Oliver Zipse (b.1964)
Moreover, the system for the compensation of mem-
bers of the Board of Management is presented to the
Annual General Meeting for approval in the case of
significant changes, but at least every four years.
Mandates
AUDIT COMMITTEE
supervision of the financial reporting process, the effectiveness of the internal control
system, the risk management system, as well as the performance of Supervisory
Board duties in connection with audits pursuant to § 32 of the German Securities Trading
Act (WPHG)
― supervision of external audit, in particular auditor independence and additional work
performed by external auditor
-
preparation of proposals for election of external auditor at Annual General Meeting,
engagement (recommendation) of external auditor, determination of additional areas of
audit emphasis and fee agreements with external auditor
Chairman (since 16 August 2019)
Production (until 15 August 2019)
Group Financial Statements
― discussion of interim reports with Board of Management prior to publication
Norbert Reithofer¹, Manfred Schoch, Stefan Quandt, Stefan Schmid,
Karl-Ludwig Kley
― preparation of the Supervisory Board's audit of the non-financial reporting, preparation of
the selection of the auditor for non-financial reporting and engagement of the auditor
supervision of internal audit system and compliance as well as the audit and supervision of
any needs for action related to possible violations of duties by members of the Board of
Management in preparation of a resolution in the Supervisory Board
- amendments to Articles of Incorporation only affecting wording
― established in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of procedure
Karl-Ludwig Kley 1, 2, Norbert Reithofer, Manfred Schoch, Stefan Quandt,
Stefan Schmid
NOMINATION COMMITTEE
-identification of suitable candidates as shareholder representatives on the Supervisory
Board to be put forward for inclusion in the Supervisory Board's proposals for election at
the Annual General Meeting
established in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of procedure
MEDIATION COMMITTEE
proposal to Supervisory Board if resolution for appointment of Board of Management
member has not been carried by the necessary two-thirds majority of Supervisory Board
members' votes
― decision on approval for utilisation of Authorised Capital 2019
established as required by law
― established in accordance with the recommendation contained in the German Corporate
Governance Code, activities based on terms of procedure
― conclusion, amendment and revocation of employment contracts (in conjunction with
the resolutions taken by the Supervisory Board regarding the compensation of the Board
of Management) and other contracts with members of the Board of Management
― decisions relating to the approval of ancillary activities of Board of Management
Chairman of the Works Council, Regensburg
1 Employee representatives (Company employees).
2 Employee representatives (union representatives).
³ Employee representatives (members of senior management).
◆ Not listed on the stock exchange.
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
Overview of Supervisory Board committees
members, including acceptance of non-BMW Group supervisory mandates as well as the
approval of transactions requiring Supervisory Board approval by dint of law (e.g. loans
to Board of Management or Supervisory Board members)
and their composition
Members
PRESIDING BOARD
-
preparation of Supervisory Board meetings to the extent that the subject matter to be
discussed does not fall within the remit of a committee
― activities based on terms of procedure
Norbert Reithofer¹, Manfred Schoch, Stefan Quandt, Stefan Schmid,
Karl-Ludwig Kley
PERSONNEL COMMITTEE
preparation of decisions relating to the appointment and revocation of appointment of
members of the Board of Management, the compensation and the regular review of the
Board of Management's compensation system
Principal duties, basis for activities
Norbert Reithofer¹, Susanne Klatten, Karl-Ludwig Kley, Stefan Quandt
- preparation of Supervisory Board's resolution on Company and
Norbert Reithofer, Manfred Schoch, Stefan Quandt, Stefan Schmid
BMW Group Compliance Committee
BMW Group Compliance Committee ←
Office
Compliance Controls
Compliance Reporting
Compliance Case
Management
Compliance Processes
and IT Systems
BMW Group Compliance
Network
Compliance Instruments
of the BMW Group
Report
Annual
Compliance
Reporting Run
Legal Compliance
Monitoring and Trends
Compliance
(In line with the recommendations of the German Corporate Governance
Code, the Nomination Committee comprises only shareholder
representatives.)
Preventive Excellence
Compliance Academy and Culture
Compliance Codes and
Internal Regulations
Compliance Communications
The decisions taken by the BMW Group Compliance
Committee are drafted in concept and implemented
operationally by the BMW Group Compliance Com-
mittee Office. The BMW Group Compliance Commit-
tee Office has more than 20 employees and is allocated
in organisational terms to the Chairman of the Board
of Management. For operational implementation of
compliance topics, it is supported by a Group-wide
compliance network of around 240 BMW Group
Compliance Responsibles (heads of the local units)
and over 70 local Compliance Officers (heads of the
local compliance functions). The specific compliance
activities required for financial services business are
coordinated by a separate compliance department
within the Financial Services segment.
Compliance Strategy
Annual
Risks and
Report
Board of Management BMW AG
(In accordance with statutory requirements, the Mediation Committee
comprises the Chairman and Deputy Chairman of the Supervisory Board
and one member each selected by shareholder representatives and
employee representatives.)
1 Chair.
It is planned to bring about a change in the position
of Chair of the Audit Committee directly following
the 2020 Annual General Meeting. In line with the
requirements profile, the intention is for an indepen-
dent financial expert to continue to hold this position
in the future.
207
208
Corporate
Governance
Compliance and
² (Independent) financial expert within the meaning of §§ 100 (5) and 107 (4) AktG, no. 5.3.2 GCGC.
COMPLIANCE AND
HUMAN RIGHTS IN
THE BMW GROUP
BMW Group Compliance Management System
→ 75
Responsible and lawful conduct is fundamental to
the success of the BMW Group. Compliance is an
integral part of our corporate culture and the reason
why customers, shareholders, business partners and
the general public place their trust in us. The Board of
Management and the employees of the BMW Group
are obliged to act responsibly and in compliance with
applicable laws and regulations. The BMW Group also
expects its business partners to conduct themselves
in the same manner.
The BMW Group Compliance Management System
is designed to ensure that the BMW Group, its repre-
sentative bodies, its managers and staff act in a lawful
manner. Particular emphasis is placed on measures
to ensure compliance with antitrust legislation and
avoid the risk of corruption or money laundering.
Activities to avoid non-compliance with the law
are managed and monitored by the BMW Group
Compliance Committee. These activities include
legal monitoring, internal compliance regulations,
communications and training activities, complaint
and case management, compliance reporting and
compliance controls, as well as following through
with sanctions in cases of non-compliance.
The BMW Group Compliance Committee reports
regularly and on a case-by-case basis to the Board of
Management and the Audit Committee of the Super-
visory Board on all compliance-related issues, includ-
ing the progress made in refining the BMW Group
Compliance Management System, details of inves-
tigations performed, known infringements of the
law, sanctions imposed and corrective/preventative
measures implemented. This also ensures the Board of
Management and Supervisory Board are immediately
notified of any cases of particular significance. On
the basis of this information, the Board of Manage-
ment keeps track of and analyses compliance-related
developments and trends and initiates the measures
needed to improve the Compliance Management
System. In 2019 the system was further enhanced, par-
ticularly with a focus on the characteristics of the roles
and responsibilities in the Group-wide Compliance
Management as well as the monitoring of compliance
training and additional preventative activities.
Supervisory Board BMW AG
Human Rights in
the BMW Group
Annual
It is essential for compliance at the BMW Group that
employees are aware of and comply with applicable
legal regulations. The BMW Group does not tolerate
violations of the law by its employees. Culpable
violations of the law result in employment-contract
sanctions and may involve personal liability conse-
quences for the employee involved.
The BMW Group is committed to respecting interna-
tionally recognised human rights and gears its due dil-
igence process towards the UN Guiding Principles on
Business and Human Rights, focusing on topics and
areas of activity where it can leverage its influence as
a commercial enterprise. The BMW Group stated its
position clearly back in 2005, with the Joint Decla-
ration on Human Rights and Working Conditions at
the BMW Group, which was updated in 2010. In 2018,
for further clarification, the BMW Group published
its Code on Human Rights and Working Conditions,
which strengthens the Company's commitment to
human rights and outlines how it promotes human
rights and implements the core labour standards
of the ILO.
Compliance is also an important factor in safeguarding
the future of the BMW Group workforce. With this
in mind, the Board of Management and the national
and international employee representative bodies of
the BMW Group have agreed on a binding set of joint
principles for lawful conduct. Employee representa-
tives are regularly involved in the process of refining
compliance management within the BMW Group.
COMPENSATION REPORT
(PART OF THE COMBINED
MANAGEMENT REPORT)
The following section describes the principles govern-
ing the compensation of the Board of Management
for financial years since 2018. A description of the
stipulations set out in the Company's statutes relat-
ing to the compensation of the Supervisory Board is
also provided. In addition to explaining the system of
compensation, details of components of compensation
are also provided with figures. Furthermore, the com-
pensation of each member of the Board of Management
and the Supervisory Board for the financial year 2019
is disclosed by individual member and analysed with
its component parts.
1. Board of Management compensation
The Supervisory Board reviews the appropriateness
of the compensation system annually. In preparation,
the Personnel Committee also consults remuneration
studies. In order to check that the compensation
system is in line with peers, the Supervisory Board
especially compares compensation paid by other
DAX companies. For a vertical view, it compares Board
compensation with the salaries of executive managers
and with the average salaries of employees of BMW AG
based in Germany, also with regard to salary devel-
opment over time. During the consultative process,
consideration is also given to the recommendations
of an independent external remuneration expert as
well as to input from investors and analysts.
The full Supervisory Board is responsible for determin-
ing and regularly reviewing the system and structure
of the Board of Management's compensation as well
as for determining the compensation of individual
Board members. The Supervisory Board's Personnel
Committee is responsible for the preparatory work
relating to those tasks.
The Supervisory Board presents the compensation
system to the Annual General Meeting for shareholder
approval whenever significant changes are proposed,
but at least once every four years. The currently valid
compensation system was approved by the Annual
General Meeting in 2018.
Principles of compensation
The compensation system for the Board of Management
at BMW AG is designed to encourage a management
approach focused on the sustainable development of
the BMW Group. A further principle of the compensa-
tion system at the BMW Group is that of consistency.
This means that compensation systems for the Board
of Management, executive management and employ-
ees of BMW AG are composed of similar elements.
The Supervisory Board performs an annual review to
ensure that all Board of Management compensation
components are appropriate, both individually and in
total, and do not encourage the Board of Management
to take inappropriate risks for the BMW Group. At
the same time, the compensation model used for the
Board of Management needs to be attractive for highly
qualified executives in a competitive environment.
Managers, in particular, bear a high degree of respon-
sibility and must set a good example with regard to
preventing infringements. Managers throughout the
BMW Group acknowledge this principle by signing
a written declaration, in which they also undertake
to make staff working for them aware of legal risks.
Managers must, at regular intervals and on their
own initiative, verify compliance with the law. It
is important to signal to employees that they take
compliance risks seriously and that disclosing rele-
vant information is extremely valuable. In dealings
with their staff, managers remain open to discussion
and listen to differing opinions. Any indication of
non-compliance with the law must be rigorously and
judiciously investigated.
Responsibilities
Compliance with and implementation of compli-
ance rules and processes are audited regularly by
Corporate Audit and subjected to control checks
by the BMW Group Compliance Committee Office.
Corporate Audit carries out on-site audits as part of
its regular activities. The BMW Group Compliance
Committee also engages Corporate Audit to perform
compliance-specific checks and, if necessary, brings
in Corporate Security to investigate suspected cases.
A BMW Group Compliance Spot Check, a sample test
specifically designed to identify potential corruption
risks, and two antitrust compliance validations (to
identify and audit possible antitrust risks) were
carried out in addition in 2019.
than 35,000 managers and employees worldwide have
so far completed antitrust compliance training and
currently hold a valid certificate. Additional classroom
training and multi-day coaching sessions are also held
for all key compliance topics in local markets. The main
emphasis here is on training in antitrust law.
Compliance and
Human Rights in
the BMW Group
Corporate
Governance
210
209
Through the Group-wide reporting system, compli-
ance responsibles across all organisational units of
the BMW Group report, on both a regular and ad hoc
basis, on the compliance status of their respective
units, on any identified legal risks and incidences of
non-compliance, as well as on sanctions and correc-
tive/preventative measures implemented.
Various IT systems support BMW Group employees
with the assessment, approval and documentation
of compliance-relevant matters. For example, all
exchange activities with competitors must be docu-
mented and approved in a special compliance IT system.
The same applies to verifying legal admissibility and
documenting benefits, especially in connection with
corporate hospitality. The BMW Group also uses an
IT-based Business Relations Compliance programme
to ensure the reliability of its business relations. Rel-
evant business partners are checked and evaluated
for potential compliance risks. Appropriate measures
are implemented to manage compliance risks based
on the results of the evaluation. A further IT system
is used to verify customer integrity as required under
anti-money-laundering regulations.
the
Any member of staff with questions or concerns
relating to compliance is expected to discuss these
matters with their managers and with the relevant
departments within the BMW Group: in particular,
with the BMW Group Compliance Committee Office,
Legal Affairs and Corporate Audit. The BMW Group
Compliance Contact also serves as a further point of
contact and provides non-employees with a system for
reporting concerns relating to compliance. Commu-
nication with the BMW Group Compliance Contact
may remain anonymous, if preferred. BMW Group
employees worldwide also have the opportunity to
submit information about possible breaches of the law
within the Company anonymously and confidentially
in several languages via the BMW Group SpeakUP
Line. All compliance-related queries and concerns
are documented and followed up by the BMW Group
Compliance Committee Office using an electronic
Case Management System. If necessary, Corporate
Audit, Corporate Security, the legal departments or
the Works Council may be called upon to assist in
process.
Existing employee training activities were restructured
and refined with the creation of the BMW Group
Compliance Academy in 2019. As well as impart-
ing knowledge, its online and classroom training
options with Company-specific case studies play
an important role in reinforcing compliance in the
corporate culture. The online training modules must
be repeated by the required target groups every two
years and include a final test. Successful completion
of the test is confirmed by a certificate. More than
48,500 managers and staff worldwide have so far
received training in the basic principles of compli-
ance and hold a valid training certificate. Successful
completion of the training programme is mandatory
for all BMW Group managers. The Company makes
sure that newly recruited managers and promoted
staff undergo compliance training. In this way, the
BMW Group achieves almost full training coverage for
its managers in compliance matters. Online training
in antitrust compliance is mandatory for managers
and staff exposed to antitrust risks as a result of their
functions or on specific occasions. A total of more
Various internal media and communications materi-
als are used to raise employee awareness across all
compliance issues, including newsletters, employee
newspapers and the compliance homepage in the
BMW Group intranet, where employees can find all
compliance-related information and training materi-
als. A Group-wide Compliance Day was organised for
the first time in 2019 to boost employee awareness of
the importance of creating a culture of transparency
and trust.
Compliance measures are determined and prioritised
on the basis of a regular Group-wide compliance risk
assessment that relies on data-based risk indicators
and transaction validation, among other methods.
The various elements of the BMW Group Compliance
Management System are shown in the diagram on the
previous page and are applicable to all BMW Group
organisational units worldwide. The BMW Group
Legal Compliance Code, which forms the core of the
Group's Compliance Management System, is supple-
mented by an internal set of rules. The BMW Group
Policy "Antitrust Compliance", which establishes
binding rules of conduct for all employees across the
BMW Group to prevent unlawful restriction of compe-
tition, deserves particular mention. The BMW Group
Policy "Corruption Prevention" and the BMW Group
Instruction "Corporate Hospitality and Gifts" deal with
lawful handling of gifts and benefits and define appro-
priate assessment criteria and approval procedures.
The compensation of members of the Board of Man-
agement is determined by the full Supervisory Board
on the basis of performance criteria and after taking
into account any remuneration received from Group
companies. The principal performance criteria are the
tasks and exercise of mandate of the Board member,
the economic situation as well as the performance and
future prospects of the BMW Group. The Supervisory
Board sets ambitious and relevant parameters as the
basis for variable compensation. It also ensures that
variable components based on multi-year criteria take
account of both positive and negative developments
and that the overall incentive is on the long term. As
a general rule, targets and comparative parameters
may not be changed retrospectively.
→ Compensation
Report
211
Allocation table fixed in advance for a period of three financial years
Corporate
Governance
In the event of death or invalidity, special rules apply
for early payment of performance cash plans and
share-based remuneration components based on
the target amounts. Insofar as the service contract
is prematurely terminated and the Company has an
extraordinary right of termination, or if the Board
member resigns without the Company's agreement,
entitlements to amounts as yet unpaid relating to per-
formance cash plans and share-based remuneration
are forfeited.
Other
At the end of the holding period, Board members
receive from the Company for every three shares of
common stock held, either one additional share of
common stock or the cash equivalent, to be decided
at the Company's discretion (matching component).
Upper limits have been defined for both the invest-
ment component and the matching component
(see Overview of compensation system and compen-
sation components).
At the end of the Annual General Meeting at which
the separate financial statements of BMW AG for the
relevant financial year are presented, members of the
Board of Management receive a cash compensation
(investment component) for the specific purpose of
investment - after tax and deductions - in shares of
common stock of BMW AG. The investment compo-
nent corresponds to 45% of the gross bonus. The
shares of common stock are purchased immediately
after the investment component has been paid out.
As a general rule, the acquired shares are required
to be held by Board members for four years. This
period also applies if a Board member leaves the
Board of Management.
Share-based remuneration
Members of the Board of Management who were
Board members on 1 January 2018 receive advance
payments out of the Performance Cash Plan 2018 and
the Performance Cash Plan 2019 in the years 2019 and
2020. At the end of each relevant evaluation period,
the advance payment is set off or repaid, depending
on the amount then determined. The advance pay-
ment for each relevant year is €0.5 million for a Board
member in the first period of office and €0.6 million
from the second period of office or the fourth year of
mandate. For the Chairman of the Board of Manage-
ment the amount is €0.9 million p.a.
PCP FACTOR
Value between 0.9 and 1.1
Forecast trend in business development
-Individual contribution to profitability
area of responsibility
Status of compliance in each Board member's
Trend in business development
·Value between 0 and 1.8
Group post-tax return on sales
multi-year performance factor:
Based on Group net profit and
Measurement based on
Average earnings factor
X
MULTI-YEAR PERFORMANCE FACTOR
MULTI-YEAR EARNINGS FACTOR
→ 81
PCP factor overview
- Capped at 180% of target amount
A one-year post-contractual non-competition clause
has been agreed with Board members under spec-
ified circumstances. During that one-year period,
the former Board member is entitled to receive
monthly compensation equivalent to 60% of his or
her previous base remuneration, reduced by any
amount of other income exceeding 40% of the base
remuneration. The Company may unilaterally waive
the requirement to comply with the post-contractual
non-competition clause.
Cash payment at end of evaluation period
215
Corporate
Governance
Formula: 30% target amount x earnings factor
Capped at 180% of target amount, see section Remuneration caps
Payment at the end of the Annual General Meeting at which the separate
financial statements of BMW AG are presented
€1.0 million (from second period of office or fourth year of mandate)
€1.8 million (Chairman of the Board of Management)
€0.85 million (first period of office)
-
-
-
Target amount p.a. (at 100% target achievement):
(at 100% target achievement corresponds to 70% of target amount)
b) Performance-related bonus
(at 100% target achievement corresponds to 30% of target amount)
a) Earnings-related bonus
(sum of earnings-related bonus and performance-related bonus)
Bonus
€1.80 million p.a.
Chairman of the Board of Management:
€0.95 million p.a. (from second period of office or fourth year of mandate)
€0.80 million p.a. (first period of office)
Member of the Board of Management:
Parameter/measurement base
BASE SALARY
Component
components
Overview of compensation system and compensation
→ Compensation
Report
216
Base amount p.a. (30% target amount per bonus):
CASH PAYMENT
PCP FACTOR
→ Compensation
Report
→ 79
Bonus overview
Corporate
Governance
214
213
a maximum 1.8.
The criteria include in particular innovation (economic
and ecological, for example in the reduction of car-
bon dioxide emissions), the Group's market position
compared to its competitors, customer focus, ability
to adapt, leadership, corporate culture, promotion
of compliance and integrity, contribution to the
Group's attractiveness as an employer, progress in
implementing the diversity concept, and activities that
foster corporate social responsibility. The Supervisory
Board also draws comparisons with competitors. The
individual performance factor lies between zero and
The performance-related component is calculated using
a performance factor which the Supervisory Board sets
for each member of the Board of Management and
which is multiplied by 70% of the target bonus amount.
The Supervisory Board sets the performance factor on
the basis of a detailed evaluation of the contribution
made by Board members to sustainable and long-term
business development over a period of at least three
financial years. The evaluation by the Supervisory
Board is based on predefined criteria that take into
account the Group's long-term success, the interests
of shareholders and stakeholders as well as social
responsibility.
Group net profit after tax (in € billion)
11.0
Upper limit
9.0
6.9 7.2
1.500
1.520²
1.637
1.800
5.0 5.3
3.0
Lower limit
1.000
0.7983
3 Earnings factor 2019.
2 Earnings factor 2018.
1 Simplified depiction.
3.0 Lower limit
EARNINGS COMPONENT BONUS
X
Earnings factor
Value between 0 and 1.8
TARGET AMOUNT
→ 80
Performance Cash Plan overview
In addition to the multi-year earnings factor, the
Supervisory Board also determines a multi-year per-
formance factor after the end of the evaluation period.
To this end, the Supervisory Board takes account of
in particular the business development during the
evaluation period, the forecast trend in the business
development, the Board member's individual contri-
bution to profitability and the status of compliance
within the Board member's area of responsibility.
The multi-year performance factor can be between
0.9 and 1.1.
In order to determine the multi-year earnings factor,
an earnings factor is calculated for each year of the
three-year evaluation period and an average is then
calculated for the evaluation period. As for the earn-
ings-related component of the bonus, the earnings
factor for each individual year within the evaluation
period is determined on the basis of Group net profit
and post-tax return on sales for the relevant year.
The maximum earnings factor is 1.8. The underlying
measurement values are determined in advance for
a period of three financial years and may not be
changed retrospectively.
7
In order to determine the PCP factor, a multi-year
earnings factor is multiplied by a multi-year perfor-
mance factor. The PCP factor is capped at a maximum
value of 1.8.
The PCP evaluation period comprises three years,
the grant year and the two subsequent years. PCP
entitlements are paid in cash. The bonus is paid out
after the end of the Annual General Meeting, at which
the separate financial statements of BMW AG for the
third
year
of the evaluation period are presented.
Since the financial year 2018, variable cash com-
pensation includes a multi-year and future-oriented
Performance Cash Plan (PCP). The PCP is calculated
at the end of a three-year evaluation period by mul-
tiplying a predefined target amount by a factor that
is based on multi-year target achievement (the PCP
factor). The PCP target amount (100%) amounts to
€0.85 million p.a. for a Board member in the first
period of office, €0.95 million p.a. from the second
period of office or the fourth year of mandate and
€1.6 million p.a. for the Chairman of the Board of
Management. The maximum amount that can be paid
to a Board member is capped at 180% of the PCP
target amount p.a.
Performance Cash Plan
of target amount
Capped at 180%
Cash payment
TOTAL
• Qualitative, mainly non-financial parameters
Contribution to sustainable and long-term
business development over a period of
at least three financial years
-
Basis for performance factor:
Value between 0 and 1.8
x 0.7 of target amount
Performance factor
PERFORMANCE COMPONENT
Group post-tax return on sales
Group net profit
Basis for earnings factor:
x 0.3 of target amount
0.135
€0.255 million (first period of office)
€0.54 million (Chairman of the Board of Management)
Performance
Cash Plan
Bonus
Chairman of the Board of Management
in the second period of office or from fourth year of mandate
Member of the Board of Management
in the first period of office
Member of the Board of Management
in € p.a.
REMUNERATION CAPS (MAXIMUM REMUNERATION)
Member of the Board of Management: €350,000
Chairman of the Board of Management: €500,000
Pension contributions p. a.:
Pension based on amounts credited to individual savings accounts for contributions paid
and interest earned, various forms of disbursement
Principal features
Defined contribution system with guaranteed minimum rate of return
Model
RETIREMENT AND SURVIVING DEPENDANTS' BENEFITS
Overview of compensation system and compensation
components onwards
→ Compensation
Report
Governance
Corporate
218
217
Contractual agreement, main points: non-cash benefits from use of Company car, insurance
premiums, contributions towards security systems
OTHER REMUNERATION
― Maximum remuneration, see section Remuneration caps
Cash compen-
sation for share
acquisition
Once the four-year holding period requirement is fulfilled, Board of Management mem-
bers receive for each three common stock shares held either - at the Company's option -
one further share of common stock or the equivalent amount in cash
Share-based compensation programme
of matching
component
212
The annual contribution paid by the Company is
€350,000 for a Board member and €500,000 for the
Chairman of the Board of Management. The guaran-
teed minimum rate of return p.a. corresponds to the
maximum interest rate used to calculate insurance
reserves for life insurance policies (guaranteed interest
on life insurance policies). When granting pension
entitlements, the Supervisory Board considers the
targeted level of pension provision in each case as well
as the resulting expense for the BMW Group.
In the case of death or invalidity, a minimum benefit
is payable based on the number of contributions
possible up to the age of 60 (subject to maximum of
ten contributions).
If a member of the Board of Management with a vested
entitlement dies prior to the commencement of bene-
fit payments, a surviving spouse or registered partner,
or otherwise surviving children - in the latter case
depending on their age and education - are entitled
to receive benefits as surviving dependants.
The amount of the benefits to be paid is determined
on the basis of the amount accrued in each Board
member's individual pension savings account. The
amount on this account results from annual contri-
butions paid in, plus interest earned depending on
the type of investment.
If a mandate is terminated, the defined contribution
system provides, in the case of death or invalidity, for
amounts accumulated on individual pension accounts
to be paid out as a one-off amount or in instalments.
For entitlements arising before 2016, there is an
option to receive payment as a lifelong pension or in
a combined form. Former Board members are entitled
to receive the retirement benefit at the earliest upon
reaching the age of 60, or in the case of entitlements
awarded for the first time after 1 January 2012, upon
reaching the age of 62.
With effect from 1 January 2010, the provision of
retirement benefits for members of the Board of
Management was changed to a defined contribution
system with a guaranteed minimum return. Retire-
ment benefits remain unchanged as part of the new
compensation system applicable for financial years
from 2018 onwards, as they are appropriate and in
line with customary market practice.
Retirement benefits
*Including base salary, other fixed remuneration elements and pension contribution. The overall cap is lower than the sum of the maximum amounts for each of the individual components.
9,850,000
729,000
1,458,000
2,880,000
3,240,000
5,500,000
405,000
810,000
1,710,000
1,800,000
4,925,000
344,500
688,500
1,530,000
1,530,000
Total*
Monetary value
€0.30 million (from second period of office or fourth year of mandate)
Share acquisition immediately after payment of earmarked cash remuneration
Maximum remuneration, see section Remuneration caps
Share-based remuneration programme
b) Multi-year performance factor
a) Multi-year earnings factor
VARIABLE REMUNERATION
Performance Cash Plan
Parameter/measurement base
Component
€2.268 million (Chairman of the Board of Management)
€1.26 million (from second period of office or fourth year of mandate)
€1.071 million (first period of office)
- Maximum amount of performance-related bonus p.a.:
Performance factor may not exceed 1.8
Criteria for the performance factor include: innovation (economic and ecological, for
example in the reduction of carbon dioxide emissions), the Group's market position
compared to its competitors, customer focus, ability to adapt, leadership, corporate
culture, promotion of compliance and integrity, contribution to the Group's attractiveness
as an employer, progress in implementing the diversity concept, and activities that
foster corporate social responsibility
·Primarily qualitative, non-financial criteria, expressed in terms of a performance factor
aimed at measuring the Board member's contribution to the sustainable and long-term
development and the future viability of the Company over a period of at least three finan-
cial years
€0.70 million (from second period of office or fourth year of mandate)
€1.26 million (Chairman of the Board of Management)
€0.595 million (first period of office)
Base amount p.a. (70% target amount per bonus):
Formula: 70% target amount x performance factor
€0.972 million (Chairman of the Board of Management)
€0.54 million (from second period of office or fourth year of mandate)
€0.459 million (first period of office)
Maximum amount of earnings-related bonus p.a.:
Earnings factor may not exceed 1.8
― The earnings factor is 1.0 in the event of a Group net profit of €5.3 billion and a post-tax
return on sales of 5.6%
share of the shareholders of BMW AG) and Group post-tax return on sales
Earnings factor is derived from Group net profit (from the financial year 2022: earnings
a) Cash remuneration component
(investment component)
Payment at the end of the Annual General Meeting at which the separate financial
statements of BMW AG for the relevant financial year are presented
b) Share-based remuneration component
(matching component)
| | || |
€0.81 million (Chairman of the Board of Management)
€0.45 million (from second period of office or fourth year of mandate)
€0.3825 million (first period of office)
Cash remuneration p.a. at 100% target achievement of the bonus:
Earmarked cash remuneration amounting to 45% of the gross bonus
Requirement for Board of Management members to hold the acquired shares of common
stock for four years
Requirement for Board of Management members to invest an amount of 45% of the
gross bonus after tax and contributions in BMW AG common stock
Multi-year performance factor can be between 0.9 and 1.1
Criteria include in particular the trend in business development during the evaluation
period, the forecast trend in business development, individual contribution to profitability
and the status of compliance within the Board member's area of responsibility
Determined by Supervisory Board at end of evaluation period
Average for evaluation period calculated
Earnings factor for each year may not exceed 1.8
and Group post-tax return on sale
Earnings factor for each year of three-year evaluation period derived from Group net profit
ments of BMW AG for the third year of the evaluation period are presented
Payment at the end of the Annual General Meeting at which the separate financial state-
PCP factor may not exceed 1.8
PCP factor: multi-year earnings factor x multi-year performance factor
Formula: PCP factor x target amount
Capped at 180% of target amount, see section Remuneration caps
Three-year evaluation period
€0.95 million (from second period of office or fourth year of mandate)
€1.6 million (Chairman of the Board of Management)
€0.85 million (first period of office)
-
-
Target amount p.a. (at 100% target achievement):
4.8
VARIABLE REMUNERATION
7.3
Fixed remuneration
² Simplified depiction of target amounts for the variable cash remuneration of the Chairman
of the Board of Management. Excludes basic salary, other remuneration and pension
contribution. Based on the assumption that the share price remains unchanged for the
calculation of the matching component.
Performance
component
of the bonus
approx. 29
Earnings-based
component
of the bonus
approx. 12
approx. 37
Performance
Cash Plan
Share-based remuneration
approx. 22
in %
→ 77
Overview of compensation system: depiction of
variable remuneration (target compensation)²
1 Simplified depiction of target amounts for the variable cash remuneration of the Chairman
of the Board of Management and pension contribution. Excludes other remuneration.
Based on the assumption that the share price remains unchanged for the calculation of the
matching component.
5.6
the bonus
approx. 8
component of
Earn-
ings-based
Cash Plan
approx. 24
Performance
approx. 14
remuneration
Share-based
Base salary
approx. 27
Pension contribution
approx. 8
in %
→ 76
Overview of compensation system: depiction of
allocation to cash benefits (target compensation)
and pension contribution¹
Compensation system, compensation components
Board of Management compensation comprises fixed
and variable cash elements as well as a share-based
component. Retirement and surviving dependants'
benefit entitlements are also in place. The compensa-
tion components are described in more detail below.
→ Compensation
Report
Fixed remuneration consists of a base salary, which is
paid monthly, and fringe benefits (other remuneration
elements such as the use of Company cars, insurance
premiums and contributions towards security sys-
tems). With effect from the financial year 2018, the
base salary is €0.8 million p.a. for a Board member
during the first period of office, €0.95 million p.a. for
a Board member from the second period of office or
the fourth year of mandate and €1.8 million p.a. for
the Chairman of the Board of Management.
Variable remuneration
Performance component
of the bonus approx. 19
Bonus
The variable remuneration of the Board of Manage-
ment comprises three components:
bonus
Performance Cash Plan and
share-based remuneration
Payment of a discretionary additional bonus is not
provided for. An upper limit has been set for each
component of variable remuneration (see Overview of
compensation system and compensation components).
In the case of 100% target achievement, the bonus
comprises an earnings-related component of 30%
and a performance-related component of 70%. The
target bonus (100%) is €0.85 million p.a. for a Board
member during the first period of office, €1.0 million
p.a. from the second period of office or the fourth year
of mandate and €1.8 million p.a. for the Chairman of
the Board of Management. For all Board members, the
upper limit of the bonus is set at 180% of the relevant
target bonus.
In order to calculate the earnings-related component,
an earnings factor is determined on the basis of the
target parameters and multiplied by 30% of the target
bonus amount. The level of the earnings-related com-
ponent depends on the degree to which the targets
set by the Supervisory Board for Group net profit
(from the financial year 2022: earnings share of the
shareholders of BMW AG) and Group post-tax return
on sales are achieved. The degree of achievement
is expressed in an earnings factor. The underlying
measurement values are determined in advance for a
period of three financial years and may not be changed
retrospectively. The earnings factor is capped at a
maximum of 1.8. The bonus is paid out after the end
of the Annual General Meeting, at which the sepa-
rate financial statements of BMW AG for the relevant
financial year are presented.
An earnings factor of 1.000 would give rise to a profit-
related component of €0.255 million for a Board
member in the first period of office, €0.3 million
from the second period of office or the fourth year
of mandate and €0.54 million for the Chairman of
the Board of Management. For instance, in the event
of a Group net profit of €5.3 billion and a post-tax
return on sales of 5.6%, the earnings factor is 1.000.
Similarly, a Group net profit of €6.9 billion and a post-
tax return on sales of 7.3% gives rise to an earnings
factor of 1.500 and a Group net profit of €9.0 billion
and a post-tax return on sales of 8.0% to one of 1.637. ¬
A minimum earnings factor of 0.135 arises in the
event of a Group net profit of €3 billion and a post-
tax return on sales of 3%. If the Group net profit
were below €3 billion or the post-tax return on sales
below 3%, the earnings factor would be zero. In this
case, a profit-related component would not be paid.
The maximum earnings factor of 1.800 is reached in
the event of a Group net profit of €11 billion and
a post-tax return on sales of 9%. In exceptional
circumstances, for instance major acquisitions or
disposals, the Supervisory Board may adjust the
earnings factor.
Earnings components: allocation table for calculating earnings factor¹
→ 78
9.0 Upper limit
043
8.0
Group post-tax return on sales in %
7.4
(-)
(-)
332,591
(-)
280
18,026
555,722
(-)
(-)
800,000
(-)
396,448
12,013
173
221,727
(2,988,273)
(95,040)
(1,100)
(-)
1,330,361
(2,574,435)
72,251
2,204,145
70,856
1,016
1,304,275
(2,516,716)
(80,784)
(935)
(1,597,320)
1,036
2,227,648
965
1,330,361
(1,879,200)
(86,746)
(1,004)
(1,597,320)
(-)
2,223,394
67,299
2,666,107
2,227,405
1,135
(1,785,240)
2,036,351
Monetary value
Number
Total
Total
Compensation
compensation component
(matching component)⁹
1,725
(1,045)
Share-based
Performance
Variable cash compensation
Performance
Cash Plan
2018-20208
The final number of matching shares is determined in each case when the requirement to invest in BMW AG common stock has been fulfilled. See note 41 to the Group Financial Statements
for a description of the accounting treatment of the share-based compensation component.
⁹ Provisional amount/cash value calculated at grant date (date on which the entitlement became binding in law in accordance with German Accounting Standard 17 (DRS 17).
8 PCP is paid out after the end of the relevant three-year evaluation period.
7 Disclosures for the previous year include amounts relating to a member of the Board of Management who left office with effect from the end of the financial year 2018.
6 Member of the Board of Management until 31 October 2019.
Cash Plan
2019-20218
79,155
103,037
(90,288)
1,565,130
(3,006,202)
(102,038)
(1,181)
(1,879,200)
(1,879,200)
70,856
1,016
3,460,227
1,304,275
(171,158)
(1,981)
(3,382,560)
3,159,674
93,870
1,346
1,855,626
(2,800,522)
(5,376,110)
(1,181)
(102,038)
(2,983,015)
916,667
1,194,624
PCP 2019-20212
PCP 2018-2020²
Performance Cash Plan
1,092,903
0 1,639,355
910,753
798,000
665,000
566,666
Performance component of the bonus 2018 (three-year plan term)1
Performance component of the bonus 2019 (three-year plan term)1
433,200
311,477
285,000
702,581
0
390,323
24,994
924,994
50,947
1,320,839
900,000
1,269,892
Performance component of the bonus
900,000
24,994
924,994
2,150,323
Share-based remuneration programme
526,935
0
103,037
Share-based remuneration component
(matching component) 2019 for holding obligation 2020-2024
90,288
(matching component) 2018 for holding obligation 2019-2023
Share-based remuneration component
(matching component) 2017 for holding obligation 2018-2022
Share-based remuneration component
(matching component) 2016 for holding obligation 2017-2021
712,900
Share-based remuneration component
Share-based remuneration component
631,971
0 1,053,871
585,484
(investment component) 2019 for holding obligation 2020-20241
Cash remuneration component
554,040
427,500
(investment component) 2018 for holding obligation 2019-20231
Cash remuneration component
(matching component) 2015 for holding obligation 2016-2020
1,269,892
50,947
1,320,839
1,269,892
50,947
1,320,839
1,320,839
Total7
Andreas Wendt
Peter Schwarzenbauer
Nicolas Peter
Pieter Nota
Milan Nedeljković5
Ilka Horstmeier4
Klaus Fröhlich
Milagros Caiña Carreiro-Andree³
Harald Krüger²
223
Oliver Zipse¹
(634,004)
(21,645)
659,614
(782,828)
9,728
(9,087)
12,611,058
(15,008,860)
(277)
(399,330)
2,305,313
72,251
1,036
1,330,361
21,426,083
(24,014,510)
224
Corporate
Governance
→ Compensation
Report
1,269,892
50,947
FY 2018
FY 2019
FY 2018
FY 2019 (Max)
FY 2019 (Min)
FY 2019
Payout
Grants
MULTI-YEAR VARIABLE REMUNERATION
Earnings-based component of the bonus¹
ONE-YEAR VARIABLE REMUNERATION
Total
Fringe benefits (other compensation)
Fixed compensation
BASE SALARY
in €
of the Board of Management in accordance with the
requirements of the German Corporate Governance
Code in the version dated 7 February 2017.
Member of the Board of Management
since 13 May 2015
since 16 August 2019
Chairman of the Board of Management
Oliver Zipse
In addition to the disclosures required by German
commercial law and the accounting principles required
to be applied, the following tables show the amounts
awarded and payments made to individual members
5 Member of the Board of Management since 1 October 2019.
4 Member of the Board of Management since 1 November 2019.
(7,801,613)
2 Member and Chairman of the Board of Management until 15 August 2019.
Other
(583,200)
Klaus Fröhlich
950,000
71,822
1,021,822
1,079,400
485,730
(950,000)
(1,296,000)
(64,033)
(1,296,000)
(583,200)
Ilka Horstmeier4
133,333
29,375
162,708
152,915
68,812
(-)
(1,014,033)
(-)
(1,024,964)
(950,000)
(1,231,200)
(554,040)
Harald Krüger²
8,697,280
1,122,581
87,597
1,210,178
1,279,742
575,884
(74,964)
(1,800,000)
(1,822,392)
(2,332,800)
(1,049,760)
Milagros Caiña Carreiro-Andree³
791,667
60,607
852,274
899,500
404,775
(22,392)
(924,994)
(-)
(-)
829,988
917,490
412,871
(800,000)
(38,612)
(838,612)
(1,101,600)
(495,720)
Peter Schwarzenbauer
29,988
791,667
829,014
899,500
404,775
(950,000)
(51,777)
(1,001,777)
(1,296,000)
(583,200)
Andreas Wendt
37,347
(-)
800,000
(495,720)
Milan Nedeljković5
200,000
5,105
205,105
229,373
103,218
(-)
(-)
(-)
Nicolas Peter
(-)
Pieter Nota
800,000
20,782
820,782
917,490
412,871
(800,000)
(90,369)
(890,369) (1,101,600)
(-)
(24,994)
(900,000)
631,971
219
220
Corporate
Governance
→ Compensation
Report
The expected amount of variable cash remuneration
(bonus, cash component of share-based remuneration,
PCP) for the remaining term of the contract from the
date of departure from the Board of Management totals
€1.9 million, where necessary taking into account
forecast figures. This includes a bonus for the period
from 1 November to 31 December 2019 amounting to
€0.2 million and the proportionate amount of the cash
component of remuneration (investment component)
for this period amounting to €0.1 million. The cash
value of the cash remuneration component of the
share-based remuneration programme (matching
component) for the period from 1 November 2019
to 31 December 2019 amounts to €0.01 million. The
expected cash value of the matching component for
the relevant proportionate period in the financial year
2020 amounts to €0.05 million. The proportionate
amount of pension contribution for the 2019 and
2020 financial years is €0.1 million and €0.2 million
respectively. Compensation for the agreed one-year
non-competition clause amounts to €0.6 million.
A provision has been recognised for remuneration
relating to the period after 31 December 2019.
Mr Schwarzenbauer left the Board of Management at
the end of 31 October 2019. Under the terms of his
service contract, a one-year post-contractual non-com-
petition clause applies. The proportionate amount of
compensation relating to the financial year 2019 is
€0.1 million. The corresponding figure for the remain-
ing period from 1 January 2020 to 31 October 2020 is
€0.5 million, for which a provision has been recognised.
In line with the recommendation of the German
Corporate Governance Code dated 7 February 2017,
Board of Management service contracts provide for
severance pay to be paid to the Board member in
the event of premature termination by the Company
without important reason, the amount of which is
limited to a maximum of two years' compensation
(severance payment cap). If the remaining term of the
contract is less than two years, the severance payment
is reduced proportionately. For these purposes, annual
compensation comprises base remuneration, the target
bonus amount and the target PCP amount for the last
full financial year before termination.
No commitments or agreements exist for payment of
compensation in the event of early termination of a
Board member's mandate due to a change of control or
a takeover offer. No members of the Board of Manage-
ment received any payments or relevant commitment
from third parties in 2019 on account of their activities
as members of the Board of Management.
Remuneration caps
Ms Caiña Carreiro-Andree left the Board of Manage-
ment at the end of 31 October 2019 and was released
from her duties for the remaining period of her ser-
vice contract (until 30 June 2020). The proportionate
amount of base and other remuneration relating to
the period after her departure from the Board and
to the financial year 2019 amounts to €0.2 million.
Fixed remuneration relating to the financial year 2020
amounts to €0.5 million.
The Supervisory Board has stipulated upper limits
for all variable remuneration components and for the
remuneration of members of the Board of Manage-
ment in total. The upper limits are shown in the table
Overview of compensation system and compensation
components.
Revision of Board of Management compensation for
financial years
from 2021 onwards
Regulations governing management board compen-
sation and the reporting thereof were again reformed
by lawmakers through the implementation of the EU's
Second Shareholder Rights Directive (ARUG II). More-
over, the Government Commission on the German
Corporate Governance Code revised the recommenda-
tions and suggestions relating to management board
compensation in its revised version of the German
Corporate Governance Code dated 16 December 2019.
The Supervisory Board has examined the new regula-
tions and intends to revise the compensation system
for the Board of Management of BMW AG during the
financial year 2020. The revised compensation system
will be submitted for approval by the shareholders at
the Annual General Meeting held during the finan-
cial year 2021. The Supervisory Board will also take
account of input from investors when revising the
compensation system.
Total compensation of the Board of Management for
the financial year 2019 (2018)
The total compensation of the current members of the
Board of Management of BMW AG for the financial
year 2019 amounted to €21.4 million (2018: €24.0 mil-
lion), of which €8.1 million (2018: €8.2 million) relates
to fixed components including other remuneration.
Variable components amounted to €12.6 million (2018:
€15.0 million) and the share-based remuneration com-
ponent to €0.7 million (2018: €0.8 million).
The BMW Group achieved a net profit of €5,022 mil-
lion (2018: €7,207 million) and a post-tax return on
sales of 4.8% (2018: 7.4%). According to the defined
allocation table, these results yield an earnings factor
of 0.798 (2018: 1.520) for the earnings component
relevant for the bonus of members of the Board of
Management in office during the financial year 2019.
The Supervisory Board set a performance factor of
1.20 (2018: 1.20) for the performance component of
Board members for the financial
year 2019.
In determining the performance factor, the Super-
visory Board uses various criteria to evaluate the
contribution of Board members to the sustainable
and long-term development and future viability of
the Company. In this context, the Supervisory Board
considers developments over recent years as well as
the impact of planning decisions going forward.
A central topic of focus was innovation performance,
particularly in the area of electrification. The Super-
visory Board took into account continuous growth in
the number of electrified vehicles delivered in recent
years as well as the measures taken to accelerate the
penetration of technologies relating to electrification,
including the opening of the new battery cell com-
petence centre. Also considered were the continuous
progress made in reducing the fleet's CO2 emissions
as well as the planning decisions taken – such as
the development of the product portfolio – to ensure
compliance with emission thresholds. The develop-
ment of the market position was another focus area
of the evaluation. Here, the Supervisory Board took
into account in particular the BMW Group's achieve-
ments in confirming its position as the world's lead-
ing premium automobile manufacturer for the 16th
consecutive year and setting a new delivery volume
record for the ninth consecutive year. Furthermore,
the Supervisory Board also considered the Board
of Management's decision to successively integrate
electrified models into the production system. The
focus on flexible plant structures is a prerequisite for
the further expansion of electrification. As part of the
evaluation of other performance criteria, the Supervi-
sory Board also assessed in particular the Company's
ability to adapt to change, measured for example in
terms of developments in the area of cooperation
arrangements and strategic investments. In the area
of Corporate Social Responsibility, consideration
was given to the BMW Group's activities to promote
children and young people through educational
programmes and road safety education as well as to
the BMW Group's excellent performance in various
sustainability indices over a number of years. The
BMW Group's attractiveness as an employer was eval-
uated by reference to various studies over a period of
several years, in which the BMW Group was ranked
among the top employers.
2019
The overall upper limits (caps) have not changed in
conjunction with the revised compensation system
for financial years from 2018 onwards and are lower
than the sum of the maximum amounts of the various
individual components.
2018
to €0.06 million. The expected cash value of the match-
ing component for the relevant proportionate period in
the financial year 2020 amounts to €0.05 million. The
Company will pay a pension contribution of €0.2 mil-
lion for the period from the date of departure from the
Board of Management up to 31 December 2019 and a
corresponding proportionate amount of €0.2 million
for the financial year 2020. Compensation for the
agreed one-year post-contractual non-competition
clause amounts to €1.1 million. A provision has been
recognised for remuneration relating to the period
after 31 December 2019.
Members of the Board of Management who retire
immediately after their service on the Board, or
who are deemed to be in an equivalent position, are
entitled to acquire vehicles and other BMW Group
products and services at conditions that also apply to
BMW pensioners and to lease BMW Group vehicles in
accordance with the guidelines applicable to senior
heads of departments. Retired Chairmen of the Board
of Management are entitled to use a BMW Group
vehicle as a company car on a similar basis to senior
heads of departments, and depending on availability
and against payment, use BMW chauffeur services.
1 Member of the Board of Management since 13 May 2015, Chairman of the Board of Management since 16 August 2019.
(4,657,922)
(10,350,938)
(8,222,822)
(421,209)
102,701
3,913,778
8,155,411
496,271
Termination benefits on premature termination of
Board activities, benefits paid by third parties
In agreement with the Supervisory Board, Mr Krüger
resigned from the Board of Management at the end of
15 August 2019 and was released from his duties for
the remaining term of his service contract, which ends
on 30 April 2020. The proportionate amount of base
and other remuneration relating to the period after
his departure from the Board and to the financial year
2019 amounted to €0.7 million. The proportionate
amount of base remuneration relating to the finan-
cial year 2020 amounts to €0.6 million. The expected
amount of variable cash remuneration (bonus, cash
component of share-based remuneration, PCP) for
the remaining term of the contract from the date
of departure from the Board of Management totals
€3.5 million, where necessary taking into account
forecast figures. This includes the bonus for the period
from 16 August to 31 December 2019 amounting to
€0.8 million as well as the proportionate amount of
the cash component of remuneration (investment
component) for this period amounting to €0.3 million.
The cash value of the cash component of share-based
remuneration (matching component) for the period
from 16 August 2019 to 31 December 2019 amounts
7,659,140
(123,930)
(275,400)
(213,029)
(13,029)
(200,000)
412,871
917,490
902,701
In the event of the death of a Board member during
the service contract term, the base remuneration
for the month of death and a maximum of three
further calendar months are paid to entitled surviving
dependants.
Total'
in € million
Amount
Proportion in %
222
Corporate
Governance
→ Compensation
Report
Compensation of the individual members
of the Board of Management for the
financial year 2019 (2018)
Fixed compensation
Variable cash compensation
in € or
221
number of matching shares
Other
compensation
Total
Bonus
Share-based
compensation
component (invest-
ment component)
Oliver Zipse¹
1,269,892
50,947
1,320,839
1,404,380
Base salary
The following table shows the compensation of the
members of the Board of Management in accordance
with commercial law and the accounting principles
required to be applied.
* Matching component; provisional number/cash value calculated at grant date (date on which the entitlement became binding in accordance with German Accounting Standard 17 (DRS 17)).
The final number of matching shares is determined in each case when the requirement to invest in BMW AG common stock has been fulfilled.
100.0
Amount
Proportion in %
Fixed compensation
Variable cash compensation
8.1
37.8
8.2
34.2
12.6
58.9
15.0
62.5
Share-based compensation component*
0.7
3.3
0.8
3.3
Total compensation
21.4
100.0
24.0
3 Member of the Board of Management until 31 October 2019.
Total
950,000
74,964
1,024,964
Total compensation
Cash remuneration component
Share-based remuneration programme
600,000
0 1,710,000
950,000
600,000
950,000
PCP 2019-20212
PCP 2018-2020²
(investment component) 2018 for holding obligation 2019-20231
Performance Cash Plan
0 1,260,000
700,000
Performance component of the bonus 2019 (three-year plan term)1
840,000
700,000
Performance component of the bonus 2018 (three-year plan term)¹
Performance component of the bonus
MULTI-YEAR VARIABLE REMUNERATION
456,000
840,000
239,400
450,000
Cash remuneration component
79,155
(matching component) 2019 for holding obligation 2020-2024
Share-based remuneration component
95,040
(matching component) 2018 for holding obligation 2019-2023
Share-based remuneration component
(matching component) 2017 for holding obligation 2018-2022
Share-based remuneration component
(matching component) 2016 for holding obligation 2017-2021
583,200
Share-based remuneration component
Share-based remuneration component
2,966
(matching component) 2014 for holding obligation 2015-2019
Share-based remuneration component
485,730
810,000
0
450,000
(investment component) 2019 for holding obligation 2020-20241
(matching component) 2015 for holding obligation 2016-2020
0
300,000
0
since 9 December 2014
Member of the Board of Management
Development
Klaus Fröhlich
4 Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
3 Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
² Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
3,004,515 3,939,518
in €
4,583,3334 3,881,226
1,922,369 4,789,774 3,527,002 2,709,069 3,585,294
295,446 295,446 354,224 295,446 354,224
3,039,797
295,446
Income earned on an employed or a self-employed
basis up to the age of 63 may be offset against instal-
ment payments. In addition, certain circumstances
have been specified, in the event of which the Com-
pany no longer has any obligation to pay benefits.
Transitional payments are not provided.
3,335,243
Total compensation
Pension expense³
Total
Other
337,500
2,217,815
540,000
BASE SALARY
Fringe benefits (other compensation)
300,000
64,033
1,014,033
71,822
1,021,822
950,000
950,000
950,000
64,033
1,014,033
950,000
71,822
1,021,822
950,000
71,822
1,021,822
1,021,822
Fixed compensation
950,000
71,822
FY 2018
FY 2019 (Min) FY 2019 (Max)
FY 2019
Grants
FY 2018
Payout
Earnings-based component of the bonus¹
ONE-YEAR VARIABLE REMUNERATION
Total
FY 2019
405,000
Other
Total
63,750
(investment component) 2019 for holding obligation 2020-20241
Cash remuneration component
(investment component) 2018 for holding obligation 2019-20231
Cash remuneration component
Share-based remuneration programme
0
255,000
0
0
141,667
PCP 2018-20202
Performance Cash Plan
119,000
178,500
0
99,167
Performance component of the bonus 2019 (three-year plan term)1
Performance component of the bonus 2018 (three-year plan term)1
33,915
PCP 2019-20212
76,500
114,750
Share-based remuneration component
³ Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
"Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
² Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
442,768
820,8334
221,041
384,435
58,333
844,875
58,333
162,708
58,333
68,812
58,333
580,138
Total compensation
Pension expense³
Total
Other
57,417
0
12,013
(matching component) 2019 for holding obligation 2020-2024
521,805
0
42,500
29,375
162,708
Human Resources, Industrial Relations Director
Member of the Board of Management
Ilka Horstmeier
→ Compensation
Report
Corporate
Governance
228
227
Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
4
³ Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
since 1 November 2019
² Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
3,543,245 3,846,352
5,500,000 3,862,192
1,375,149
3,854,304
3,189,918 3,493,233
353,327 353,119
1,021,822 5,746,822 3,509,073
353,327 353,327 353,119
3,500,977
353,327
Total compensation
Pension expense³
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
in €
BASE SALARY
Fixed compensation
162,708
162,708
162,708
29,375
29,375
29,375
133,333
133,333
133,333
133,333
FY 2019
FY 2018
FY 2019 FY 2019 (Min) FY 2019 (Max)
FY 2018
Payout
Grants
Performance component of the bonus
MULTI-YEAR VARIABLE REMUNERATION
Earnings-based component of the bonus¹
ONE-YEAR VARIABLE REMUNERATION
Fringe benefits (other compensation)
Total
55,095
70,856
(matching component) 2019 for holding obligation 2020-2024
Share-based remuneration component
558,203
(investment component) 2019 for holding obligation 2020-20241
Cash remuneration component
1,049,760
810,000
(investment component) 2018 for holding obligation 2019-20231
Cash remuneration component
Share-based remuneration programme
561,290
558,203
0 1,796,129
900,000
1,600,000
PCP 2019-20212
PCP 2018-20202
Performance Cash Plan
942,968
903,677 1,414,452
903,677
Performance component of the bonus 2019 (three-year plan term)1
997,849
1,512,000
909,290
Share-based remuneration component
Other
454,645
91,011
93,870
(matching component) 2019 for holding obligation 2020-2024
Share-based remuneration component
171,158
(matching component) 2018 for holding obligation 2019-2023
Share-based remuneration component
575,884
(matching component) 2017 for holding obligation 2018-2022
(matching component) 2016 for holding obligation 2017-2021
Share-based remuneration component
(matching component) 2015 for holding obligation 2016-2020
Share-based remuneration component
57,105
(matching component) 2014 for holding obligation 2015-2019
Share-based remuneration component
88,157
(matching component) 2013 for holding obligation 2014-2018
Share-based remuneration component
1,260,000
Performance component of the bonus 2018 (three-year plan term)¹
820,000
Total
Fringe benefits (other compensation)
Fixed compensation
BASE SALARY
in €
since 1 December 2008 until 13 May 2015
13 May 2015 until 15 August 2019
Member of the Board of Management
Chairman of the Board of Management
Harald Krüger
ONE-YEAR VARIABLE REMUNERATION
4 Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
2 Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
4,476,542 3,630,189
7,137,0974 3,662,738
1,727,291
4,911,512
4,070,090 3,276,900
406,452 353,289
1,320,839 7,393,904 3,309,449
406,452 406,452 353,289
4,505,060
406,452
³ Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
Earnings-based component of the bonus¹
MULTI-YEAR VARIABLE REMUNERATION
Performance component of the bonus
336,774
540,000
606,194
336,774
336,774
22,392
1,822,392
1,800,000
1,122,581
87,597
1,210,178
1,800,000
22,392
1,822,392
1,122,581
87,597
1,210,178
1,122,581
87,597
1,210,178
1,210,178
1,122,581
87,597
FY 2019
FY 2018
FY 2019 (Max)
FY 2019 (Min)
FY 2019
Grants
FY 2018
Payout
Total
Pension expense³
Pension expense³
4,100,551 3,099,843 6,390,888 6,203,550 3,684,199 6,192,309
316,758 316,758 316,758 504,831 316,758 504,831
(investment component) 2018 for holding obligation 2019-20231
Cash remuneration component
Share-based remuneration programme
500,000
0 1,425,000
791,667
600,000
950,000
PCP 2019-20212
450,000
PCP 2018-20202
700,000
700,000 1,050,000
700,000
Performance component of the bonus 2019 (three-year plan term)1
840,000
700,000
Performance component of the bonus 2018 (three-year plan term)1
456,000
199,500
Performance Cash Plan
300,000
583,200
(investment component) 2019 for holding obligation 2020-20241
I
102,038
(matching component) 2018 for holding obligation 2019-2023
Share-based remuneration component
I
Share-based remuneration component
(matching component) 2016 for holding obligation 2017-2021
Share-based remuneration component
(matching component) 2015 for holding obligation 2016-2020
Cash remuneration component
Share-based remuneration component
(matching component) 2014 for holding obligation 2015-2019
Share-based remuneration component
81,130
(matching component) 2013 for holding obligation 2014-2018
Share-based remuneration component
404,775
675,000
315,000
375,000
52,520
450,000
0
250,000
Fixed compensation
BASE SALARY
in €
1 July 2012 until 31 October 2019
Member of the Board of Management
Human Resources, Industrial Relations Director
Milagros Caiña Carreiro-Andree
Report
→ Compensation
Fringe benefits (other compensation)
Corporate
Governance
225
* Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
3 Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
2 Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
4,000,957 6,697,140
6,143,0114 6,708,381
3,416,601
4,417,309
226
Total
ONE-YEAR VARIABLE REMUNERATION
Earnings-based component of the bonus¹
1,024,964
74,964
60,607
852,274
950,000
791,667
791,667
60,607
852,274
852,274
852,274
60,607
60,607
791,667
791,667
FY 2019
FY 2018
FY 2019 (Max)
FY 2019 FY 2019 (Min)
Grants
FY 2018
Payout
Performance component of the bonus
MULTI-YEAR VARIABLE REMUNERATION
Total compensation
Contributions falling due under the defined contri-
bution model are paid into an external fund in con-
junction with a trust model that is also used to fund
pension obligations to employees.
(matching component) 2017 for holding obligation 2018-2022
3,011,122 3,337,716
992,662
(-)
(-)
(-)
Milan Nedeljković
87,500
87,500
1,421,605
1,421,152
Pieter Nota
Nicolas Peter
Peter Schwarzenbauer?
Andreas Wendt
Total8
(-)
(-)
359,979
993,548
58,333
58,333
Ilka Horstmeier5
Milagros Caiña Carreiro-Andree4
295,446
297,688
3,463,676
3,463,676
(354,224)
(357,468)
(2,561,031)
362,125
(2,560,943)
353,327
355,573
3,256,267
3,256,267
(353,119)
(356,382)
(2,660,630)
(2,660,630)
Klaus Fröhlich
760,562
760,306
(350,000)
(2,754,201)
(2,775,150)
355,573
(132,500) (1,886,766)
2,890,450 27,962,636 27,960,893
(19,703,788) (19,703,287)
2,414,082
(1,886,766)
1 Service cost differs due to the different valuation bases used to measure pension obligations for HGB purposes (expected settlement amount)
and for IFRS purposes (present value of the defined benefit obligation).
² Member of the Board of Management since 13 May 2015, Chairman of the Board of Management since 16 August 2019.
3 Member and Chairman of the Board of Management until 15 August 2019.
(132,500)
2,876,116
4 Member of the Board of Management until 31 October 2019.
6 Member of the Board of Management since 1 October 2019.
7 Member of the Board of Management until 31 October 2019.
8 Prior year's figures comprise only members of the Board of Management at 31 December 2018.
237
238
Corporate
Governance
→ Compensation
Report
2. Supervisory Board compensation
5 Member of the Board of Management since 1 November 2019.
(5,753,776)
2,414,082
(2,188,159)
(350,000)
(350,276)
(350,041)
353,327
355,573
2,656,550
2,656,550
(353,119)
353,327
(356,382)
(2,004,567)
291,667
291,667
2,682,925
2,682,925
(353,119)
(356,382)
(2,188,161)
(2,004,567)
Responsibilities, provisions of Articles of
Incorporation
(5,753,913)
(504,831)
(46,218)
(268,257)
104,384
356,008
(-19,097)
(254,591)
668
668
(-)
(-)
1,516
(-)
1,516
76,736
100,397
(23,661)
(23,661)
150,428
359,649
143,912
(458,341)
(30,821)
Klaus Fröhlich
Ilka Horstmeier5
Milan Nedeljković
Pieter Nota
Nicolas Peter
Peter Schwarzenbauer
Andreas Wendt
Total8
231,415
Expense in 2019
Provision at
31.12.2019 in
accordance with
HGB and IFRS1
135,272
358,043
(29,002)
(222,771)
170,267
571,504
in accordance with
HGB and IFRS
(51,812)
(80,987)
139,649
Service cost in
accordance with
HGB for the
financial year 20191 financial year 20191
Defined benefit
obligation IFRS¹
Defined benefit
obligation HGB¹
Oliver Zipse²
406,452
406,452
3,054,273
IFRS for the
3,054,125
(356,550)
(2,298,444)
(2,298,405)
Harald Krüger³
316,758
319,966
7,259,148
7,259,148
(353,289)
(509,486)
Service cost in
accordance with
Pension entitlements
441,254
(32,264)
(354,125)
34,672
36,304
(1,632)
(1,632)
957,504
in €
2,456,758
(1,786,110)
Provisional number or provisional monetary value calculated on the basis of the closing price of BMW common stock in the Xetra trading system on 30 December 2019 (€73.14) (fair value at reporting date).
2 Member of the Board of Management since 13 May 2015, Chairman of the Board of Management since 16 August 2019.
3 Member and Chairman of the Board of Management until 15 August 2019.
* Member of the Board of Management until 31 October 2019.
5 Member of the Board of Management since 1 November 2019.
6 Member of the Board of Management since 1 October 2019.
7 Member of the Board of Management until 31 October 2019.
* Disclosures for the previous year include amounts relating to a member of the Board of Management who left office during the financial year 2018.
(274,927)
Milagros Caiña Carreiro-Andree4
The compensation of the Supervisory Board is specified
either by a resolution of the shareholders at the Annual
General Meeting or in the Articles of Incorporation.
The compensation provisions valid for the financial
year under report were resolved by shareholders at
the Annual General Meeting on 14 May 2013 and
are set out in Article 15 of BMW AG's Articles of
Incorporation, which are available at → www.bmwgroup.com
within the section "Company" (menu items "Company
Portrait” and “Corporate Governance") as well as in
"BMW Group Download Centre".
The fixed and earnings-related components in combi-
nation are intended to ensure that the compensation
of Supervisory Board members is appropriate in
relation to the tasks of Supervisory Board members
and the Company's financial condition and also
takes account of the Company's performance over
several years.
Other
86,125
0
18,026
(matching component) 2019 for holding obligation 2020-2024
Share-based remuneration component
103,218
172,125
0
95,625
(investment component) 2019 for holding obligation 2020-20241
Cash remuneration component
(investment component) 2018 for holding obligation 2019-20231
Cash remuneration component
Share-based remuneration programme
382,500
0
Total
Pension expense³
Total compensation
743,756
in €
Member of the Board of Management
since 1 April 2018
Customer, Brands, Sales
Pieter Nota
→ Compensation
Report
Corporate
Governance
230
229
212,500
³ Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
625,196
1,231,2504
292,605
831,256
537,696
87,500
205,105 1,228,355
87,500 87,500
87,500
² Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
PCP 2019-20212
PCP 2018-2020²
Performance Cash Plan
Earnings-based component of the bonus¹
MULTI-YEAR VARIABLE REMUNERATION
Performance component of the bonus
Payout
FY 2018
Grants
FY 2019
FY 2019 (Min)
ONE-YEAR VARIABLE REMUNERATION
FY 2019 (Max)
FY 2019
200,000
5,105
205,105
200,000
5,105
205,105
200,000
200,000
5,105
205,105
FY 2018
BASE SALARY
Total
Fixed compensation
178,500
267,750
0
148,750
Performance component of the bonus 2019 (three-year plan term)1
Performance component of the bonus 2018 (three-year plan term)¹
50,873
114,750
Fringe benefits (other compensation)
0
5,105
205,105
Milan Nedeljković
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
Production
Member of the Board of Management
since 1 October 2019
in €
BASE SALARY
63,750
Compensation principles, compensation components
The Supervisory Board of BMW AG receives a fixed
compensation component as well as an earnings-
related compensation component, which is oriented
toward sustainable growth. The earnings-related
component is based on average earnings per share
of common stock for the remuneration year and the
two preceding financial years.
Fixed compensation
ONE-YEAR VARIABLE REMUNERATION
Share-based remuneration component
86,746
(matching component) 2018 for holding obligation 2019-2023
Share-based remuneration component
412,871
688,500
0
382,500
(investment component) 2019 for holding obligation 2020-20241
Cash remuneration component
495,720
382,500
(investment component) 2018 for holding obligation 2019-20231
Cash remuneration component
Share-based remuneration programme
500,000
0 1,530,000
(matching component) 2019 for holding obligation 2020-2024
72,251
344,500
Other
In accordance with the Articles of Incorporation, each
member of BMW AG's Supervisory Board receives, in
addition to the reimbursement of reasonable expenses,
a fixed amount of €70,000 (payable at the end of the
year) as well as earnings-related compensation of €170
for each full €0.01 by which the average amount of
(undiluted) earnings per share (EPS) of common stock
reported in the Group Financial Statements for the
remuneration year and the two preceding financial
years exceeds a minimum amount of €2.00, payable
after the Annual General Meeting held in the fol-
lowing year. An upper limit corresponding to twice
the amount of the fixed compensation is in place for
the earnings-related compensation. The limit for a
member of the Supervisory Board with no additional
compensation-relevant function is set at €140,000.
With fixed compensation elements and an earnings-
related compensation component oriented toward
sustainable growth, the compensation structure in
place for BMW AG's Supervisory Board complies with
the recommendation on supervisory board compensa-
tion contained in section 5.4.6 paragraph 2 sentence 2
of the German Corporate Governance Code (version
dated 7 February 2017).
The German Corporate Governance Code (version
dated 7 February 2017) also recommends in sec-
tion 5.4.6 paragraph 1 sentence 2 that the exercising
of chair and deputy chair positions in the Supervisory
Board as well as the chair and membership of commit-
tees should also be considered in the compensation.
Accordingly, the Articles of Incorporation of BMW AG
stipulate that the Chairman of the Supervisory Board
shall receive three times the amount and each Deputy
Chairman shall receive twice the amount of the
remuneration of a Supervisory Board member. Each
chairman of the Supervisory Board's committees
receives twice the amount and each member of a
committee receives one-and-a-half times the amount
of the remuneration of a Supervisory Board mem-
ber, provided the relevant committee convened for
meetings on at least three days during the financial
year. If a member of the Supervisory Board exercises
more than one of the functions referred to above,
the compensation is measured only on the basis of
the function that is remunerated with the highest
amount.
In addition, each member of the Supervisory Board
receives an attendance fee of €2,000 for each full
meeting of the Supervisory Board (Plenum) which
the member has attended, payable at the end of the
financial year. Attendance at more than one meeting
on the same day is not remunerated separately.
The Company also reimburses to each member of the
Supervisory Board reasonable expenses and any value-
added tax arising on the member's remuneration. The
amounts disclosed below are net amounts.
In order to perform his duties, the Chairman of the
Supervisory Board has the use of an office, with
administrative support, as well as access to the BMW
car service.
850,000
4,925,000 3,409,642
3,335,512
2,987,716
350,000
3,059,642 2,651,143
350,000 359,979
820,782 4,913,782
359,979 359,979
2,975,533
359,979
Total compensation
Pension expense³
Total
1,180,761
500,000
850,000
PCP 2019-20212
820,782
20,782
20,782
800,000
800,000
800,000
800,000
800,000
820,782
800,000
FY 2019
FY 2018
FY 2019 FY 2019 (Min) FY 2019 (Max)
Payout
Grants
Performance component of the bonus
MULTI-YEAR VARIABLE REMUNERATION
Earnings-based component of the bonus¹
FY 2018
Fringe benefits (other compensation)
Total
20,782
820,782
20,782
PCP 2018-20202
Performance Cash Plan
714,000
0 1,071,000
595,000
Performance component of the bonus 2019 (three-year plan term)1
714,000
Performance component of the bonus 2018 (three-year plan term)1
90,396
387,600
255,000
459,000
0
255,000
890,396
820,782
890,396
90,396
203,490
Harald Krüger³
595,000
in €
Payout
FY 2018
Grants
FY 2019 FY 2019 (Min) FY 2019 (Max)
FY 2018
FY 2019
791,667
791,667
37,347
37,347
829,014
829,014
791,667
37,347
829,014
950,000
51,777
1,001,777
791,667
950,000
37,347
829,014
Total
Fringe benefits (other compensation)
Fixed compensation
BASE SALARY
829,988 4,922,988
353,327 353,327
3,001,896 2,660,349 2,935,932
353,119 353,327 353,119
3,333,114
1,183,315
4,925,000 3,355,015
3,013,676 3,289,051
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
2 Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
51,777
³ Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
"Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
232
Corporate
Governance
→ Compensation
Report
Peter Schwarzenbauer
Transformation Electromobility
Member of the Board of Management
since 1 April 2013 until 31 October 2019
in €
231
1,001,777
ONE-YEAR VARIABLE REMUNERATION
Earnings-based component of the bonus¹
500,000
Share-based remuneration programme
Cash remuneration component
(investment component) 2018 for holding obligation 2019-20231
450,000
583,200
Cash remuneration component
(investment component) 2019 for holding obligation 2020-20241
0 1,425,000
375,000
675,000
404,775
Share-based remuneration component
(matching component) 2013 for holding obligation 2014-2018
60,779
Share-based remuneration component
(matching component) 2014 for holding obligation 2015-2019
52,520
0
2,979,787
353,327
791,667
950,000
250,000
0
450,000
300,000
199,500
456,000
MULTI-YEAR VARIABLE REMUNERATION
Performance component of the bonus
600,000
Performance component of the bonus 2018 (three-year plan term)1
840,000
Performance component of the bonus 2019 (three-year plan term)1
583,333
0 1,050,000
700,000
Performance Cash Plan
PCP 2018-20202
PCP 2019-20212
700,000
Share-based remuneration component
Total compensation
Total
800,000
800,000
800,000
800,000
29,988
29,988
829,988
829,988
29,988
829,988
38,612
838,612
29,988
38,612
829,988
838,612
ONE-YEAR VARIABLE REMUNERATION
Earnings-based component of the bonus¹
255,000
800,000
800,000
FY 2019
FY 2018
² Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
3 Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
4 Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
Nicolas Peter
Finance
Member of the Board of Management
since 1 January 2017
in €
0
BASE SALARY
Fringe benefits (other compensation)
Oliver Zipse²
Payout
FY 2018
Grants
FY 2019
FY 2019 (Min)
FY 2019 (Max)
Fixed compensation
459,000
255,000
203,490
495,720
Cash remuneration component
(investment component) 2019 for holding obligation 2020-20241
382,500
0
688,500
412,871
Share-based remuneration component
382,500
(matching component) 2017 for holding obligation 2018-2022
(matching component) 2018 for holding obligation 2019-2023
80,784
Share-based remuneration component
(matching component) 2019 for holding obligation 2020-2024
67,299
0
344,500
Other
Share-based remuneration component
Pension expense³
(investment component) 2018 for holding obligation 2019-20231
Share-based remuneration programme
387,600
MULTI-YEAR VARIABLE REMUNERATION
Performance component of the bonus
Performance component of the bonus 2018 (three-year plan term)¹
595,000
714,000
Performance component of the bonus 2019 (three-year plan term)1
595,000
Cash remuneration component
0 1,071,000
Performance Cash Plan
PCP 2018-2020²
PCP 2019-20212
850,000
500,000
850,000
0 1,530,000
500,000
714,000
(matching component) 2015 for holding obligation 2016-2020
Total
(matching component) 2016 for holding obligation 2017-2021
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
2 Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
3 Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
* Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
233
234
Corporate
Governance
→ Compensation
Report
For financial years from 2018 onwards, a new variable
compensation component was introduced in the form
of the Performance Cash Plan. The PCP is paid out after
the end of the relevant three-year evaluation period. In
the case of the PCP for the financial year 2019, the eval-
uation period covers the financial years 2019 to 2021.
The target amount for the PCP 2019-2021 is €1.195 mil-
lion for Mr Zipse, €0.95 million for Mr Fröhlich,
€0.142 million for Ms Horstmeier, €0.213 million for
Mr Nedeljković and €0.85 million each for Mr Nota,
Dr Peter and Dr Wendt. The proportionate amount of
the target amount is €0.998 million for Mr Krüger and
€0.792 million each for Ms Caiña Carreiro-Andree and
Mr Schwarzenbauer. Due to the fact that the criteria for
the evaluation period 2019 to 2021 have not yet been
fully met, this component is not included in variable
compensation for the financial
year 2019.
In the financial year 2019, advance payments totalling
€4.27 million were made to the members of the
Board of Management, who belonged to the Board at
1 January 2018, for the PCP 2018-2020. This figure
includes advance payments to Mr Krüger, Ms Caiña
Carreiro-Andree and Mr Schwarzenbauer totalling
€2.10 million.
At the end of each relevant evaluation period, the
advance payments are set off or repaid, depending
on the amount then determined. In the financial year
2019, an expense of €8.3 million (2018: €5.3 million)
was recognised for the PCP in accordance with IAS 19.
Members of the Board of Management hold a total of
92,519 shares of BMW common stock (2018: 65,690)
which are subject to holding requirements relating
to the financial years 2015 – 2018 (cash remuneration
components 2015-2018). The cash remuneration
component for the financial year 2019 will be paid
after the Annual General Meeting 2020. The purchase
of shares of BMW common stock takes place imme-
diately thereafter.
Shares of BMW common stock held by individual
members of the Board of Management subject to
holding requirements in connection with share-based
remuneration for the financial years 2015-2018¹
in €
Oliver Zipse²
Harald Krüger³
Milagros Caiña Carreiro-Andree4
Klaus Fröhlich
744,859
2,586,389
887,799
4,925,0004
Share-based remuneration component
(matching component) 2018 for holding obligation 2019-2023
21,645
Share-based remuneration component
(matching component) 2019 for holding obligation 2020-2024
72,251
0
344,500
Ilka Horstmeier5
Other
Pension expense³
Total compensation
3,057,452
353,327
902,701 4,995,701
353,327 353,327
755,299 2,233,062
132,500 353,327
612,359
132,500
3,410,779
1,256,028
Total
Milan Nedeljković6
Pieter Nota
Nicolas Peter
3 Member and Chairman of the Board of Management until 15 August 2019.
* Member of the Board of Management until 31 October 2019.
5 Member of the Board of Management since 1 November 2019.
Member of the Board of Management since 1 October 2019.
7 Member of the Board of Management until 31 October 2019.
(65,690)
In addition, an expense of €2.9 million (2018: €3.4 mil-
lion) was recognised in the financial year 2019 for
current members of the Board of Management for
the period after the end of their service relationship.
This relates to the expense for allocations to pension
provisions in accordance with IAS 19.
Total benefits paid to former members of the Board of
Management and their surviving dependants for the
financial year 2019 amounted to €16.0 million (2018:
€9.2 million). This total figure of former members
of the Board of Management also includes amounts
2 Member of the Board of Management since 13 May 2015, Chairman of the Board of Management since 16 August 2019.
totalling €10.3 million, as reported above, in con-
nection with the departure of Mr Krüger, Ms Caiña
Carreiro-Andree and Mr Schwarzenbauer from the
Board of Management. Some of these amounts have
not yet been paid.
235
236
Corporate
Governance
→ Compensation
Report
Share-based component of the individual members
of the Board of Management for the
financial year 2019 (2018)¹
Pension obligations to former members of the Board
of Management and their surviving dependants are
fully covered by pension provisions amounting to
€113.1 million (2018: €91.0 million), recognised in
accordance with IAS 19.
412,871
1 Only takes into account shares of BMW common stock acquired with the cash remuneration component relating to the Board of Management's
share-based remuneration programme and for which the four-year holding requirement has not yet expired.
988
Peter Schwarzenbauer?
Andreas Wendt
Total
11,938
(7,821)
24,788
(19,528)
15,608
92,519
(13,294)
Share-based remuneration component
(9,106)
3,954
(-)
6,736
(3,053)
15,202
(12,888)
13,305
688,500
Total¹
382,500
2,977,476 3,894,875
1 The bonus and cash remuneration component reported for the financial years 2019 and 2018 in accordance with the German Corporate Governance Code will be paid in 2020 and 2019 respectively.
Purchasing and Supplier Network
2 Advance payments relating to the PCP 2019-2021 and the PCP 2018-2020 reported for the 2019 and 2018 financial years will be paid in 2020 or 2019.
³ Pension expense measured in accordance with IAS 19 reflects the expense recognised by the Company; this amount was not paid in the financial year.
4 Agreed cap. The cap is lower than the sum of the maximum amounts of the various individual components.
since 1 October 2018
in €
BASE SALARY
Fixed compensation
Fringe benefits (other compensation)
Total
ONE-YEAR VARIABLE REMUNERATION
Andreas Wendt
Earnings-based component of the bonus¹
MULTI-YEAR VARIABLE REMUNERATION
Performance component of the bonus
4,583,3334 3,856,934
1,120,681
3,503,815 2,685,809 3,541,756
353,119 291,667 353,119
829,014 4,766,514
291,667 291,667
(matching component) 2017 for holding obligation 2018-2022
I
I
Share-based remuneration component
0
(matching component) 2018 for holding obligation 2019-2023
Share-based remuneration component
(matching component) 2019 for holding obligation 2020-2024
Grants
70,856
337,500
I
Other
Total
Pension expense³
Total compensation
3,191,537
2,899,870
291,667
102,038
Payout
FY 2019
FY 2019 (Min) FY 2019 (Max)
0
1,071,000
714,000
Performance Cash Plan
PCP 2018-2020²
PCP 2019-20212
212,500
850,000
595,000
0
0
Share-based remuneration programme
Cash remuneration component
(investment component) 2018 for holding obligation 2019-20231
95,625
123,930
Cash remuneration component
(investment component) 2019 for holding obligation 2020-20241
1,530,000
Share-based remuneration component
Performance component of the bonus 2019 (three-year plan term)1
148,750
FY 2018
FY 2019
FY 2018
800,000
102,701
902,701
Member of the Board of Management
800,000 800,000
102,701 102,701
902,701 902,701
178,500
200,000 800,000
13,029 102,701
213,029 902,701
13,029
213,029
255,000
0
459,000
63,750
203,490
96,900
Performance component of the bonus 2018 (three-year plan term)¹
200,000
Corporate
Governance
Similar to "value at risk" (see definition below).
of Key Figures
Earnings per share (EPS)
A new or used vehicle will be recorded as a deliv-
ery once handed over to the end user (which also
includes leaseholders under lease contracts with
BMW Financial Services). In the US and Canada, end
users also include (1) dealers when they designate a
vehicle as a service loaner or demonstrator vehicle
and (2) dealers and other third parties when they
purchase a company vehicle at auction and dealers
when they purchase company vehicles directly from
BMW Group. Deliveries may be made by BMW AG,
one of its international subsidiaries, a BMW Group
retail outlet, or independent third party dealers. The
vast majority of deliveries – and hence the reporting
to BMW Group of deliveries – is made by independent
third party dealers. Retail vehicle deliveries during
a given reporting period do not correlate directly to
the revenue that BMW Group recognises in respect
of such reporting period.
Deliveries
Financial swap agreements, under which creditors of
securities (usually bonds) pay premiums to the seller
of the CDS to hedge against the risk that the issuer of
the bond will default. As with credit default insurance
agreements, the party receiving the premiums gives
a commitment to compensate the bond creditor in
the event of default.
Credit default swap (CDS)
Cash flow at risk
The
process of combining separate financial state-
ments of Group entities into Group Financial State-
ments, depicting the financial position, net assets
and results of operations of the Group as a single
economic entity.
Consolidation
Short-term debt instruments with a term of less than
one year which are usually issued at a discount to
their face value.
Commercial paper
Liquid funds generated (cash inflows) or used (cash
outflows) during a reporting period.
Cash flow
Capitalised development costs as a percentage of
research and development expenditure.
Capitalisation rate
Investments in property, plant and equipment and
other intangible assets (excluding capitalised devel-
opment costs) as a percentage of Group revenues.
Capital expenditure ratio
of the forecast.
The calculation of average CO2 fleet emissions of a
manufacturer is reported through the weighted aver-
age of CO2 emissions by all vehicles newly registered
in the reporting period. The calculation is based on
the volume of new registrations of the manufacturer
in the EU in the calendar year as well as the individual
vehicle-specific CO2 emissions, which have been cal-
culated based on the WLTP test cycle and adapted to
the New European Driving Cycle (NEDC). Additional
effects from the recognition of eco-innovations are not
taken into consideration in the disclosure of fleet emis-
sions for 2019. For the 2020 forecast, the disclosure
relates purely to a reduction of the CO₂ fleet emissions
and not the CO2 fleet limit, which the BMW Group
needs to achieve. This means that the recognition of
super credits, phase-in and eco-innovations is not part
CO₂ fleet emissions
The sum of the balance sheet line items “Leased prod-
ucts” and “Receivables from sales financing" (current
and non-current), as reported in the balance sheet for
the Financial Services segment.
Business volume in balance sheet terms
A securitised debt instrument in which the issuer
certifies its obligation to repay the nominal amount
at the end of a fixed term and to pay a fixed or variable
rate of interest.
Bond
A form of corporate financing involving the sale of
receivables to a financing company.
Asset-backed financing transactions
A hedge against exposures to the variability in fore-
casted cash flows, particularly in connection with
exchange rate fluctuations.
Cash flow hedge
GLOSSARY EXPLANATION
OF KEY FIGURES
-
→ Glossary-
Explanation
242
Werner Zierer¹
With the exception of purchase, rental, leasing and
financing contracts for vehicles on customary terms
and conditions and the advance payments relating to
the PCP 2018-2020 described above, neither BMW AG
nor any of its subsidiaries granted loans or advances to
members of the Board of Management or the Super-
visory Board during the financial year 2019, nor were
any contingent liabilities entered into on their behalf.
(70,000)
81,032
52,688
2,000
26,344
Thomas Wittig²
Jürgen Wechsler¹,3
(-)
(-)
139,532
87,688
8,000
43,844
Vishal Sikka²
(220,000)
(140,000)
(10,000)
(70,000)
220,000
140,000
10,000
70,000
Brigitte Rödig¹
(220,000)
(140,000)
(10,000)
(70,000)
Basic earnings per share are calculated for common
and preferred stock by dividing the net profit after
minority interests, as attributable to each category of
stock, by the average number of shares in circulation.
Earnings per share of preferred stock are computed
on the basis of the number of preferred stock shares
entitled to receive a dividend in each of the relevant
financial years.
220,000
(8,000)
241
(140,000)
43,844
3. Other
A detailed description of the proposal will be included
in the invitation to the Annual General Meeting 2020.
The Supervisory Board and Board of Management
propose to submit a proposal to the Annual General
Meeting 2020 to change Supervisory Board compensa-
tion for financial years beginning after 1 January 2020
to an exclusively fixed compensation. The proposal of
an exclusively fixed compensation model also corre-
sponds to the new suggestion for supervisory board
remuneration put forward by the Government Com-
mission on the German Corporate Governance Code
in the Code version dated 16 December 2019, section
G.18. The proposed model is intended to strengthen
the independent advisory and control function of the
Supervisory Board. At the same time, the proposal will
also help to simplify the compensation system.
Revision of Supervisory Board compensation for
financial years from 2020 onwards
4 Disclosures for the previous year include amounts relating to a member of the Supervisory Board who left office during the financial year 2018.
3 Member of the Supervisory Board until 16 May 2019.
1 These employee representatives have - in line with the guidelines of the Deutscher Gewerkschaftsbund - requested that their remuneration be paid into the Hans Böckler-Stiftung.
2 Member of the Supervisory Board since 16 May 2019.
(5,628,565)
(3,620,377)
(188,000)
(1,820,188)
5,639,692
3,623,128
196,000
1,820,564
Total4
(220,000)
(140,000)
(10,000)
(70,000)
220,000
140,000
10,000
70,000
(-)
(-)
139,532
87,688
8,000
(218,000)
EBIT
Abbreviation for "Earnings Before Interest and Taxes",
equivalent in the BMW Group income statement to
"Profit/loss before financial result". This is comprised
of revenues less cost of sales, selling and administra-
tive expenses and the net amount of other operating
income and expenses.
Oliver Zipse
Profit/loss before financial result as a percentage of
248
247
We conducted our audit of the consolidated financial
statements and of the group management report
in accordance with § 317 HGB and the EU Audit
Regulation (No. 537/2014, referred to subsequently
as "EU Audit Regulation") in compliance with Ger-
man Generally Accepted Standards for Financial
Statement Audits promulgated by the Institut der
Wirtschaftsprüfer [Institute of Public Auditors in
Germany] (IDW). Our responsibilities under those
requirements and principles are further described
in the “Auditor's Responsibilities for the Audit of
the Consolidated Financial Statements and of the
Group Management Report" section of our auditor's
report. We are independent of the group entities
in accordance with the requirements of European
law and German commercial and professional law,
and we have fulfilled our other German professional
responsibilities in accordance with these require-
ments. In addition, in accordance with Article 10 (2)
point (f) of the EU Audit Regulation, we declare that
we have not provided non-audit services prohibited
under Article 5 (1) of the EU Audit Regulation. We
believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our
audit opinions on the consolidated financial state-
ments and on the group management report.
Basis for the Audit Opinions
the accompanying consolidated financial state-
ments comply, in all material respects, with
the IFRS as adopted by the EU, and the addi-
tional requirements of German commercial
law pursuant to § [Article] 315e Abs. [paragraph] 1
HGB [Handelsgesetzbuch: German Commer-
cial Code] and, in compliance with these require-
ments, give a true and fair view of the assets,
liabilities, and financial position of the Group as
at December 31, 2019, and of its financial per-
formance for the financial year from January 1
to December 31, 2019, and
In our opinion, on the basis of the knowledge obtained
in the audit,
We have audited the consolidated financial statements
of Bayerische Motoren Werke Aktiengesellschaft,
Munich, and its subsidiaries (the Group), which com-
prise the consolidated balance sheet as at Decem-
ber 31, 2019, the consolidated income statement,
consolidated statement of comprehensive income,
consolidated statement of changes in equity and
consolidated statement of cash flows for the financial
year from January 1 to December 31, 2019, and notes
to the consolidated financial statements, including a
summary of significant accounting policies.
Audit Opinions
Pursuant to § 322 Abs. 3 Satz [sentence] 1 HGB, we
declare that our audit has not led to any reservations
relating to the legal compliance of the consolidated
financial statements and of the group manage-
ment report.
the accompanying group management report as
a whole provides an appropriate view of the
Group's position. In all material respects, this
group management report is consistent with
the consolidated financial statements, complies
with German legal requirements and appro-
priately presents the opportunities and risks of
future development. Our audit opinion on
the group management report does not cover
the content of those parts of the group man-
agement report listed in the "Other Information"
section of our auditor's report.
Corporate
Governance
Report on the Audit of the Consoli-
dated Financial Statements and of
the Group Management Report
INDEPENDENT
AUDITOR'S REPORT
Dr.-Ing. Andreas Wendt
Dr. Nicolas Peter
Pieter Nota
Dr. Milan Nedeljković
Ilka Horstmeier
Klaus Fröhlich
140,000
The Board of Management
Bayerische Motoren Werke
Aktiengesellschaft
To Bayerische Motoren Werke
Aktiengesellschaft, Munich
Munich, 16 March 2020
→ Independent
Key Audit Matters in the Audit of the Consolidated
Financial Statements
The Company's disclosures on the applied "Accounting
policies, assumptions, judgments and estimations" are
contained in the notes to the consolidated financial
statements under note 4 and on leased products are
contained under note 23.
Based on our audit procedures, we were able to
satisfy ourselves that the methods and processes for
determining the expected residual values of leased
products underlying the valuation are appropriate
and the assumptions and parameters included in the
forecast model for the residual value are appropriate
as a whole.
As part of our audit we obtained an understanding of
the development of operating leases, the underlying
residual value risks as well as the business processes
for the identification, management, monitoring and
measurement of residual value risks, among other
things by inquiries and inspection of documents
related to the internal calculation methods. Further-
more we evaluated the appropriateness and effec-
tiveness of the internal control system, particularly
regarding the determination of expected residual
values. This included the evaluation of the propriety
of the relevant IT systems as well as the implemented
interfaces therein by our IT specialists. In addition,
we evaluated the appropriateness of the forecasting
methods, the model assumptions as well as the
parameters used for the measurement of the residual
values based on the validations carried out by the
BMW Group. For this purpose, we inquired with the
BMW Group's experts responsible for the management
and monitoring of residual value risks and inspected
the internal analysis on residual value developments
and residual value forecasts as well as the validation
results. We examined the mathematically correctness
of the forecast values using the key calculation steps.
Against this background and due to the resulting
significant uncertainties with regard to estimates
in the context of measuring the residual values of
the leased products, this matter was of particular
significance in the context of our audit.
available data on historical empirical values, current
market data and market estimates as well as forecasts
by external market research institutes. The estimation
of future residual values is subject to judgment due to
the large number of assumptions to be made by the
executive directors and the amount of data included
in the determination.
The BMW Group leases vehicles to end customers
under operating leases (leased products). At the
balance sheet date, the figure reported under the
"leased products" line item for operating leases was
EUR 42,609 million (approximately 18.7% of total
assets). Leased products are measured at cost, which is
depreciated on a straight-line basis over the lease term
to the expected residual value (recoverable amount). A
key estimated value for subsequent measurement of
leased products is the expected residual value at the
end of the lease term. The BMW Group uses internally
Measurement of leased products
Hereinafter we present the key audit matters:
Reference to further information
Audit approach and findings
Auditor's Report
Matter and issue
Our presentation of these key audit matters has been
structured in each case as follows:
Measurement of provision for risks relating to
an EU antitrust proceeding
Measurement and recognition of YOUR NOW
equity investments
Valuation of provisions for statutory and non-
statutory warranty obligations and product
guarantees
Valuation of receivables from sales financing
Measurement of leased products
-
-
In our view, the matters of most significance in our
audit were as follows:
Key audit matters are those matters that, in our
professional judgment, were of most significance in
our audit of the consolidated financial statements
for the financial year from January 1 to December 31,
2019. These matters were addressed in the context
of our audit of the consolidated financial state-
ments as a whole, and in forming our audit opinion
thereon; we do not provide a separate audit opinion
on these matters.
-
EBIT margin
Statement pursuant to § 117 No. 1 of the
Securities Trading Act (WpHG) in conjunction
with § 297 (2) sentence 4 and § 315 (1) sentence
5 of the German Commercial Code (HGB)
"To the best of our knowledge, and in accordance with
the applicable reporting principles, the Consolidated
Financial Statements give a true and fair view of the
assets, liabilities, financial position and profit of the
Group, and the Group Management Report includes
a fair review of the development and performance of
the business and the position of the Group, together
with a description of the principal opportunities and
risks associated with the expected development of
the Group."
→ Independent
Auditor's Report
Gross profit as a percentage of Group revenues.
Gross profit margin
Goodwill corresponds to the consideration paid to
acquire an entity, less the fair value of the separate
assets acquired and liabilities assumed. The buyer
is willing to pay the additional amount in return for
future expected earnings.
Goodwill
Free cash flow is derived from cash flows from oper-
ating and investing activities. The cash flows from
investing activities from the purchase and sale of
marketable securities and investment funds is not
included. Cash flows from the purchase and sale of
shares and the dividend payout from investments
accounted for using the equity method are included
in the cash flows from investing activities.
Free cash flow
A hedge against exposures to fluctuations in the fair
value of a balance sheet item.
Fair value hedge
The amount for which an asset could be exchanged,
or a liability settled, between knowledgeable, willing
parties in an arm's length transaction.
Fair value
Liquidity
of Key Figures
Corporate
Governance
244
243
Equity capital as a percentage of the balance sheet
total.
Equity ratio
The effective tax rate is calculated by dividing the
income tax expense by the Group profit before tax.
Effective tax rate
EBIT plus financial result.
EBT
revenues.
→ Glossary-
Explanation
RESPONSIBILITY
STATEMENT BY THE
COMPANY'S LEGAL
REPRESENTATIVES
Cash and cash equivalents as well as marketable secu-
rities and investment funds.
Group net profit as a percentage of Group revenues.
→ Responsibility
Statement by the
Company's Legal
Representatives
Corporate
Governance
246
245
The BMW Group's workforce comprises the employees
of BMW AG and those of all companies in which it
holds a majority interest, irrespective of the treat-
ment of those companies for consolidation purposes.
Employees with dormant employment contracts,
employees in the non-work phases of pre-retirement
part-time working arrangements and low-income
earners are not included.
Workforce size
Comprises in-house vocational training provided by
the BMW Group in 11 countries as well as the further
training of BMW Group employees and temporary
staff working for consolidated companies worldwide.
Vocational and further training
A measure of the potential maximum loss in value of
an item during a set time period, based on a specified
probability.
Value at risk
Post-tax return on sales
-
Return on equity (ROE)
ROCE in the Automotive and Motorcycles segments
is measured on the basis of relevant segment profit
before financial result and the average amount of
capital employed - at the end of the last five quar-
ters in the segment concerned. Capital employed
corresponds to the sum of all current and non-current
operational assets, less liabilities that generally do not
incur interest.
Return on capital employed (RoCE)
The engineering, IT and process expertise required for
the (pre-)development of hardware and software for
all BMW Group products and services is combined at
the Group's international research and development
locations.
Research and development locations
Research and development expenditure ratio
Research and development expenditure as a percent-
age of Group revenues.
Research and development expenditure
The sum of research and non-capitalised development
cost and capitalised development cost (not including
the associated scheduled amortisation).
revenues.
Group profit/loss before tax as a percentage of Group
Pre-tax return on sales
RoE in the Financial Services segment is calculated
as segment profit before taxes, divided by the aver-
age amount of equity capital - at the end of the last
five quarters attributable to the Financial Services
segment.
10,000
122,0004
Dominique Mohabeer¹
430,000
280,000
10,000
140,000
Stefan Schmid (Deputy Chairman)¹
(430,000)
(280,000)
(10,000)
(140,000)
430,000
280,000
10,000
140,000
Stefan Quandt (Deputy Chairman)
(430,000)
(280,000)
(10,000)
(140,000)
430,000
280,000
10,000
(140,000)
(8,000)
(280,000)
(428,000)
140,000
10,000
70,000
Kurt Bock
(218,000)
(140,000)
(8,000)
(70,000)
220,000
140,000
140,000
10,000
Christiane Benner¹
(430,000)
(280,000)
(10,000)
(140,000)
428,000
280,000
70,000
140,000
Karl-Ludwig Kley (Deputy Chairman)
70,000
220,000
Manfred Schoch (Deputy Chairman)¹
(420,000)
35.7
2.0
35.7
2.0
Proportion in %
Amount
Proportion in %
Amount
2018
2019
fur-
any
ther compensation or benefits from the BMW Group
for advisory or agency services personally rendered.
Supervisory Board members did not receive
Total compensation
Variable compensation
Fixed compensation
in € million
239
remuneration of €2.0 million (2018: €2.0 million)
and variable remuneration of €3.6 million (2018:
€3.6 million). The earnings-related remuneration for
the financial year 2019 was capped at the maximum
amount stipulated in the Articles of Incorporation.
In accordance with Article 15 of the Articles of Incor-
poration, the compensation of the Supervisory Board
for activities during the financial year 2019 totalled
€5.6 million (2018: €5.6 million). This includes fixed 7
Total compensation of the Supervisory Board for the
financial year 2019
3.6
64.3
3.6
64.3
(10,000)
(210,000)
640,000
420,000
10,000
210,000
Norbert Reithofer (Chairman)
Total
Variable
compensation
Attendance fee
(640,000)
compensation
in €
Compensation of the individual members of the
Supervisory Board for the financial year 2019 (2018)
Report
→ Compensation
Corporate
Governance
240
100.0
5.6
100.0
5.6
Fixed
(43,656)
8,000
(87,312)
Horst Lischka¹
(8,000)
(140,000)
(10,000)
(70,000)
220,000
140,000
10,000
70,000
Renate Köcher
(218,000)
(140,000)
(8,000)
(70,000)
220,000
140,000
10,000
70,000
Susanne Klatten
Total
Variable
compensation
70,000
10,000
140,000
220,000
(218,000)
(140,000)
(8,000)
(70,000)
220,000
140,000
10,000
70,000
Simone Menne
(220,000)
Attendance fee
(140,000)
(70,000)
220,000
140,000
10,000
70,000
Willibald Löw¹
(220,000)
(140,000)
(10,000)
(70,000)
(10,000)
compensation
(220,000)
in €
(70,000)
81,032
52,688
2,000
26,344
Ralf Hattler³
(218,000)
81,032
52,688
(140,000)
(8,000)
(10,000)
(70,000)
26,344
Franz Haniel³
(-)
(-)
139,532
87,688
8,000
43,844
Fixed
(138,968)
2,000
(140,000)
Verena zu Dohna-Jaeger¹, 2
Heinrich Hiesinger
(220,000)
4 Due to the requirements of his employer, Prof. Dr. Hüttl has waived his Supervisory Board compensation until further notice, to the extent that such compensation exceeds the amount of €200,000
(excluding value added tax) p.a.
3 Member of the Supervisory Board until 16 May 2019.
² Member of the Supervisory Board since 16 May 2019.
1 These employee representatives have - in line with the guidelines of the Deutscher Gewerkschaftsbund - requested that their remuneration be paid into the Hans Böckler-Stiftung.
(200,000)
(120,000)
(10,000)
(70,000)
200,000
8,000
Compensation of the individual members of the
Supervisory Board for the financial year 2019 (2018)
Reinhard Hüttl4
(220,000)
(140,000)
(10,000)
(70,000)
220,000
140,000
10,000
70,000
70,000
-
The executive directors are responsible for the other
information. The other information comprises the
following non-audited parts of the group management
report:
Other Information
In our view, this matter was of particular significance
for our audit due to the significant uncertainties con-
cerning the outcome of the EU antitrust proceeding
and the potential effects on BMW AG's assets, liabil-
ities, financial position and financial performance.
In our view, the estimates made by the executive
directors regarding the recognition and measurement
of the provision for the risks from the EU antitrust
proceeding described above and the associated risk
provision in the consolidated financial statements are
sufficiently documented and substantiated.
With the knowledge that estimated values result in an
increased risk of accounting misstatements and that
the executive directors' recognition and measurement
decisions have a direct effect on consolidated result,
we evaluated the appropriateness of the carrying
amounts, with the involvement of an internal PwC
antitrust law expert. Furthermore, we also held reg-
ular meetings with the Company's legal department
in order to receive information regarding updates
on current developments and the reasons for the
corresponding estimates. The development of the
aforementioned risks arising from the EU antitrust
proceeding, including the executive directors' esti-
mates concerning the potential proceeding outcomes,
was provided to us by the Company in writing. In
addition, we obtained and evaluated an external legal
confirmation as at the balance sheet date.
In April 2019, the BMW Group was notified by the
European Commission of complaints in a pending
antitrust proceeding. The European Commission
accuses various manufacturers of colluding to restrict
competition in the field of innovation. In this con-
nection, a EUR 1.4 billion provision for litigation and
risk provisioning was recognized in the consolidated
financial statements under the balance sheet item
"Other provisions". The risk assessment to be made
on developments in the EU antitrust proceeding and
the estimation of whether or not a provision must
be recognized to cover the risks, and if so, in what
amount the current obligation must be measured, is
subject to a high degree of uncertainties and charac-
terized by the estimates and assumptions made by
the executive directors.
The Company's disclosures on the applied "Accounting
policies, assumptions, judgments and estimations" are
contained in the notes to the consolidated financial
statements under note 4 and on "Other operating
expenses" are contained under note 10.
the statement on corporate governance pur-
suant to § 289f HGB and § 315 d HGB included
in section "Statement on Corporate Gover-
nance (§ 289 f HGB)" of the group management
report
In connection with our audit, our responsibility is
to read the other information and, in so doing, to
consider whether the other information
the separate non-financial report pursuant to
§ 289 b Abs. 3 HGB and § 315 b Abs. 3 HGB
The other information comprises further the remaining
parts of the annual report – excluding cross-references
to external information - with the exception of the
audited consolidated financial statements, the audited
group management report and our auditor's report.
Our audit opinions on the consolidated financial
statements and on the group management report
do not cover the other information, and consequently
we do not express an audit opinion or any other form
of assurance conclusion thereon.
is materially inconsistent with the consolidated
financial statements, with the group manage-
ment report or our knowledge obtained in the
audit, or
otherwise appears to be materially misstated.
251
252
Corporate
Governance
Measurement of provision for risks relating to an
EU antitrust proceeding
→ Independent
Auditor's Report
the corporate governance report pursuant to
No. 3.10 of the German Corporate Governance
Code
The Company's disclosures on the applied "Account-
ing policies, assumptions, judgments and estimations"
are contained in the notes to the consolidated finan-
cial statements under note 2 and on the YOUR NOW
equity investments are contained under note 24.
→ Independent
As part of our audit, we examined and evaluated the
methodological procedure adopted for the purposes
of calculating the fair value for the determination of
the reversal of impairment losses, among other things.
We compared the future cash inflows used in the cal-
culation against the underlying budget and assessed
their appropriateness. Moreover, we examined the
methodological procedure used in the purchase price
allocation. In connection with the impairment loss,
we assessed whether a triggering event had occurred.
We examined the impairment test conducted by the
BMW Group based on the occurrence of a triggering
event and assessed its methodical correctness. After
comparing the future cash inflows used against the
budget adopted by the shareholders, we examined
in particular the derivation of the discount rate used.
19.7
Responsibilities of the Executive Directors and the
Supervisory Board for the Consolidated Financial
Statements and the Group Management Report
The executive directors are responsible for the prepa-
ration of the consolidated financial statements that
comply, in all material respects, with IFRS as adopted
by the EU and the additional requirements of German
commercial law pursuant to § 315 e Abs. 1 HGB and
that the consolidated financial statements, in com-
pliance with these requirements, give a true and fair
view of the assets, liabilities, financial position, and
financial performance of the Group. In addition the
executive directors are responsible for such internal
control as they have determined necessary to enable
the preparation of consolidated financial statements
that are free from material misstatement, whether
due to fraud or error.
Valuation of receivables from sales financing
The BMW Group offers end customers, dealerships
and importers various financing models for vehicles.
In this context, current and non-current receivables
from sales financing totaling EUR 92,437 million are
reported in the consolidated statement of financial
position as at the balance sheet date (approximately
EUR 40.4% of total assets). Impairment losses amount-
ing to EUR 1,099 million were recognized on these
receivables as at the balance sheet date. In order to
determine the amount of the necessary valuation
allowances to be recognized with respect to receiv-
ables from sales financing, the BMW Group, among
others, evaluates the creditworthiness of the dealers,
importers and end customers, as well as any loss ratios,
and risk provisioning parameters are derived based on
historical default probabilities and loss ratios.
The determination of the valuation allowances by the
executive directors is subject to a significant degree
of judgment due to several value-influencing factors
such as the estimation of creditworthiness, the deter-
mination of probabilities of default and loss ratios and
was therefore of particular significance in the context
of our audit.
As part of our audit we obtained a comprehensive
understanding of the development of receivables from
sales financing, the associated default-related risks
as well as the business processes for the identifica-
tion, management, monitoring and measurement of
default risks, among other things by inquiries and
inspection of documents on the internal calculation
methods. Furthermore we evaluated the appropriate-
ness and effectiveness of the internal control system
regarding the determination of the impairment loss
to recognize. In this context, we also evaluated the
relevant IT systems and internal processes. The eval-
uation included an assessment by our IT specialists
of the appropriateness of the systems concerned and
associated interfaces to ensure the completeness of
data as well as the audit of automated controls for
data processing. As part of our audit we assessed in
particular the appropriateness of the risk classification
procedures as well as the risk provisioning parameters
used. For this purpose, we analyzed in particular the
validations of parameters that are regularly conducted
by the Company. To assess the default risk, we also
used targeted sampling of individual cases to examine
whether the attributes for assignment to the respective
risk categories were suitably available and the impair-
ment losses had been calculated using the parameters
defined for these risk categories.
In our view, the assumptions and parameters used in
the measurement of receivables from sales financing
were appropriate overall.
The Company's disclosures on the applied "Accounting
policies, assumptions, judgments and estimations" are
contained in the notes to the consolidated financial
statements under note 4 and on "receivables from
sales financing" are contained under note 25.
Valuation of provisions for statutory and non-statu-
tory warranty obligations and product guarantees
Provisions for statutory and non-statutory war-
ranty obligations as well as product guarantees are
included in the consolidated financial statements of
BMW Group as a material amount in other provi-
sions. The provisions amounted to EUR 5,550 million
(approximately 2.4% of total assets) as at December
31, 2019. BMW Group is responsible for the legally
required warranty and product guarantees in the
respective sales market. In order to estimate the
liabilities arising from statutory and non-statutory
warranty obligations and product guarantees for
vehicles sold, information on the type and volume
of damages arising and on remedial measures is
recorded and analyzed at vehicle model level. The
expected amount of obligations is extrapolated from
costs of the past and recognized as a provision in
the corresponding amount, if the criteria of IAS 37
have been met. For specific or anticipated individual
circumstances, for example recalls, additional provi-
sions are recognized provided they have not already
been taken into account.
The determination of provisions is associated with
unavoidable estimation uncertainties and is subject
to a high risk of change, depending on factors such
as notification of detected defects as well as claims
made by vehicle owners. Against this background,
this matter was of particular significance during
our audit.
The valuation parameters and assumptions used by the
executive directors are overall in line with our expec-
tations and are also within the ranges considered by
us to be acceptable.
249
Corporate
Governance
Auditor's Report
In order to assess the appropriateness of the valuation
method used for the determination of the provisions
for statutory and non-statutory warranty obligations
as well as product guarantees including the assump-
tions and parameters, we primarily obtained an
understanding of the process for determining the
assumptions and parameters through discussions with
the responsible employees of the BMW Group. We
also evaluated the appropriateness as well as effective-
ness of controls for determining the assumptions and
parameters. With the involvement of our IT specialists,
we checked the IT systems used regarding their com-
pliance. We compared the expenses for claims and
technical actions with actual costs incurred in order to
draw conclusions on the forecast accuracy. Based on a
targeted sample of vehicle models, the mathematically
correctness of the valuation model used across the
Group was examined. We examined and evaluated the
assumptions used by the BMW Group concerning the
extent to which the past values were representative of
the expected susceptibility of damage, the expected
value of damage per vehicle (comprising parts and
labor input) as well as the expected assertion of claims
from statutory and non-statutory warranties.
In our view, the method for the valuation of provisions
for statutory and non-statutory warranty obligations
as well as product guarantees is overall appropriate.
Taking into consideration the information available,
we believe that, overall, the measurement parameters
and assumptions used by the executive directors
are appropriate.
The Company's disclosures on the applied "Accounting
policies, assumptions, judgments and estimations" are
contained in the notes to the consolidated financial
statements under note 4 and on "Other provisions"
are contained under note 33.
Measurement and recognition of YOUR NOW
equity investments
In the BMW Group's consolidated financial state-
ments as at December 31, 2019, the line item “Invest-
ments accounted for using the equity method" the
YOUR NOW equity investments with a carrying
amount of EUR 987 million (approximately 0.4%
of total assets) is reported. The BMW Group and a
competitor have bundled mobility services within
YOUR NOW. As a result of the combination with
the competitor, the BMW Group contributed its
investment in DriveNow GmbH & Co. KG, Munich,
Parkmobile Group Holding B.V., Amsterdam, Digital
Charging Solutions GmbH, Berlin and Reach Now
LLC, Seattle. In the course of the transaction, disposal
proceeds amounting to EUR 232 million were realized
and a reversal of impairment losses amounting to
EUR 97 million was recognized. YOUR NOW gen-
erated negative operating earnings amounting to
EUR 662 million in the past financial year, which were
recognized in the consolidated financial statements.
Furthermore, there was a triggering event at the level
of the BMW Group and a EUR 240 million impair-
ment loss was recognized. The Company has defined
a triggering event to be in particular a significant
deviation from target figures.
The determination of the reversal of impairment
losses, the purchase price allocation as well as the
impairment loss is based on the exercise of judg-
ment by the executive directors, which is subject
to significant estimation uncertainties. Against this
background, this matter was of particular significance
during our audit.
250
In preparing the consolidated financial statements,
the executive directors are responsible for assessing
the Group's ability to continue as a going concern.
They also have the responsibility for disclosing, as
applicable, matters related to going concern. In
addition, they are responsible for financial report-
ing based on the going concern basis of accounting
unless there is an intention to liquidate the Group or
to cease operations, or there is no realistic alternative
but to do so.
21.2
2,538,367 2,483,292
175,162 165,566
Capital expenditure ratio (capital expenditure/revenues)
Equity
Equity ratio
Non-current provisions and liabilities
Current provisions and liabilities
Balance sheet total
€ million
137,404
121,964
121,671
Capital expenditure (excluding capitalised development costs)
€ million
84,736
73,542
66,864
€ million
5,650
5,029
4,688
3,731
%
5.4
90,630
5.2
Current assets
BALANCE SHEET
TEN-YEAR COMPARISON
DELIVERIES
Automobiles²
Motorcycles³
PRODUCTION VOLUME
Automobiles
Motorcycles³
2019
20181
2017
Non-current assets
2016
30.1
26.3
18.7
28.5
Net profit for the year
€ million
5,022
7,064
8,675
6,910
%
BMW GROUP
4.8
€ million
€ million
12,036
10,979
9,039
7,880
Free cash flow Automotive segment
€ million
2,567
2,713
4,459
Cash and cash equivalents at balance sheet date
5,792
Workforce at year-end
Personnel cost per employee
€
133,778
98,901
134,682
101,178
129,932
100,760
124,729
99,575
DIVIDEND
Dividend total
€ million
PERSONNEL
4.0
CASH FLOW STATEMENT
195,506
59,907
57,829
54,107
47,363
%
26.3
27.7
27.7
25.1
€ million
188,535
85,502
69,634
73,183
€ million
82,625
71,411
71,765
67,989
€ million
228,034
208,938
79,698
1,646
Comparison
→ BMW Group
20.3
19.9
Earnings before financial result
€ million
7,411
Furthermore, the executive directors are responsible
for the preparation of the group management report
that, as a whole, provides an appropriate view of
the Group's position and is, in all material respects,
consistent with the consolidated financial statements,
complies with German legal requirements, and appro-
priately presents the opportunities and risks of future
development. In addition, the executive directors
are responsible for such arrangements and measures
(systems) as they have considered necessary to enable
the preparation of a group management report that
is in accordance with the applicable German legal
requirements, and to be able to provide sufficient
appropriate evidence for the assertions in the group
management report.
The supervisory board is responsible for overseeing
the Group's financial reporting process for the prepa-
ration of the consolidated financial statements and of
the group management report.
Auditor's Responsibilities for the Audit of the
Consolidated Financial Statements and of the
Group Management Report
Our objectives are to obtain reasonable assurance
about whether the consolidated financial statements
as a whole are free from material misstatement,
whether due to fraud or error, and whether the group
management report as a whole provides an appropri-
ate view of the Group's position and, in all material
respects, is consistent with the consolidated financial
statements and the knowledge obtained in the audit,
complies with the German legal requirements and
appropriately presents the opportunities and risks
of future development, as well as to issue an audi-
tor's report that includes our audit opinions on the
consolidated financial statements and on the group
management report.
Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accor-
dance with $317 HGB and the EU Audit Regulation
and in compliance with German Generally Accepted
Standards for Financial Statement Audits promulgated
by the Institut der Wirtschaftsprüfer (IDW) will always
detect a material misstatement. Misstatements can
arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of
users taken on the basis of these consolidated financial
statements and this group management report.
19.0
We exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
Obtain an understanding of internal control rele-
vant to the audit of the consolidated financial
statements and of arrangements and measures
(systems) relevant to the audit of the group man-
agement report in order to design audit proce-
dures that are appropriate in the circumstances,
but not for the purpose of expressing an audit
opinion on the effectiveness of these systems.
― Evaluate the appropriateness of accounting poli-
cies used by the executive directors and the
reasonableness of estimates made by the execu-
tive directors and related disclosures.
- Conclude on the appropriateness of the execu-
tive directors' use of the going concern basis of
accounting and, based on the audit evidence
obtained, whether a material uncertainty exists
related to events or conditions that may cast
significant doubt on the Group's ability to con-
tinue as a going concern. If we conclude that
a material uncertainty exists, we are required to
draw attention in the auditor's report to the
related disclosures in the consolidated financial
statements and in the group management report
or, if such disclosures are inadequate, to mod-
ify our respective audit opinions. Our conclusions
are based on the audit evidence obtained up
to the date of our auditor's report. However, fu-
ture events or conditions may cause the Group
to cease to be able to continue as a going concern.
-
Evaluate the overall presentation, structure and
content of the consolidated financial statements,
including the disclosures, and whether the con-
solidated financial statements present the un-
derlying transactions and events in a manner that
the consolidated financial statements give a
true and fair view of the assets, liabilities, finan-
cial position and financial performance of the
Group in compliance with IFRS as adopted by
the EU and the additional requirements of
German commercial law pursuant to § 315 e
Abs. 1 HGB.
8,933
9,899
9,386
Earnings before tax
€ million
• Identify and assess the risks of material misstate-
ment of the consolidated financial statements
and of the group management report, whether
due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropri-
ate to provide a basis for our audit opinions. The
risk of not detecting a material misstatement
resulting from fraud is higher than for one result-
ing from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresenta-
tions, or the override of internal controls.
7,118
17.3
Gross profit margin
2,468,658 2,352,440
164,153 145,032
units
units
2,564,025
187,116
2,541,534 2,505,741
162,687 185,682
2,359,756
145,555
FINANCIAL SERVICES
Contract portfolio
contracts
Business volume (based on balance sheet carrying amounts)
€ million
%
5,973,682
142,834
5,380,785
124,719
5,114,906
123,394
INCOME STATEMENT
Revenues
€ million
104,210
96,855
98,282
94,163
5,235,207
133,147
Ten-year
9,627
9,665
German Public Auditor Responsible
for the Engagement
Further Information pursuant to Article 10 of the
EU Audit Regulation
We were elected as group auditor by the annual gen-
eral meeting on May 16, 2019. We were engaged by
the supervisory board on May 17, 2019. We have been
the group auditor of the Bayerische Motoren Werke
Aktiengesellschaft, Munich, without interruption
since the financial
year 2019.
We declare that the audit opinions expressed in this
auditor's report are consistent with the additional
report to the audit committee pursuant to Article 11
of the EU Audit Regulation (long-form audit report).
The German Public Auditor responsible for the
engagement is Andreas Fell.
Munich, 11 March 2020/limited to the amendment
referred to in the Information on the Supplementary
Audit: 16 March 2020
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
Petra Justenhoven
Wirtschaftsprüferin
[German Public Auditor]
Andreas Fell
Wirtschaftsprüfer
Other Legal and Regulatory
Requirements
[German Public Auditor]
We issue this auditor's report on the amended con-
solidated financial statements and amended group
management report on the basis of our statutory audit
completed on March 11, 2020 and our supplementary
audit completed on March 16, 2020, which concerned
the amendments to disclosures in the notes to the con-
solidated financial statements and the group manage-
ment report due to the updated reporting on expected
developments and on risks and opportunities taking
into account new information on the effects of the
spread of coronavirus. Please refer to the presentation
of the amendments by the executive directors in the
sections entitled "Basis of preparation" and "Report on
post-balance sheet date events" in the amended notes
to the consolidated financial statements, and in the
sections entitled “Organization and business model",
"Report on economic position”, “Report on expected
developments” and “Report on risks and opportunities”
in the amended group management report.
OTHER
INFORMATION
→ Page 256 BMW Group Ten-year Comparison
5
Other
Information
Ten-year
Comparison
256
Other
Information
Information on the
Supplementary Audit
10,675
Auditor's Report
Corporate
Governance
Return on sales (earnings before tax/revenues)
%
6.8
9.9
10.9
10.3
Income taxes
€ million
2,140
2,530
→ Independent
2,000
Effective tax rate
units
units
Obtain sufficient appropriate audit evidence
regarding the financial information of the enti-
ties or business activities within the Group to
express audit opinions on the consolidated finan-
cial statements and on the group management
report. We are responsible for the direction, su-
pervision and performance of the group audit.
We remain solely responsible for our audit
opinions.
― Evaluate the consistency of the group manage-
ment report with the consolidated financial
statements, its conformity with German law, and
the view of the Group's position it provides.
Perform audit procedures on the prospective in-
formation presented by the executive directors
in the group management report. On the basis
of sufficient appropriate audit evidence we eval-
uate, in particular, the significant assumptions
used by the executive directors as a basis for
the prospective information, and evaluate the
proper derivation of the prospective informa-
tion from these assumptions. We do not express
a separate audit opinion on the prospective
information and on the assumptions used as a
basis. There is a substantial unavoidable risk
that future events will differ materially from the
prospective information.
We communicate with those charged with governance
regarding, among other matters, the planned scope
and timing of the audit and significant audit findings,
including any significant deficiencies in internal con-
trol that we identify during our audit.
We also provide those charged with governance with
a statement that we have complied with the relevant
independence requirements, and communicate with
them all relationships and other matters that may
reasonably be thought to bear on our independence,
and where applicable, the related safeguards.
From the matters communicated with those charged
with governance, we determine those matters that
were of most significance in the audit of the consoli-
dated financial statements of the current period and
are therefore the key audit matters. We describe these
matters in our auditor's report unless law or regulation
precludes public disclosure about the matter.
253
254
2,755
Dividend per share of common stock/preferred stock
124,202
2.505/2.525
25.7
24.2
24.8
23,930
27,103
30,606
35,600
37,437
€
20.1
23.2
20.2
18.1
9,593
9,118
7,978
8,275
8,018
5,111
9,224
8,707
7,893
21.1
7,803
22.0
63,819
7,432
7,776
8,370
7,671
7,688
6,122
110,164
123,429
131,835
138,377
21.7
154,803
40,134
47,213
48,395
51,134
59,078
65,591
46,100
49,113
52,834
51,643
172,174
5,404
7,383
10.0
50,530
52,184
56,844
61,831
67,013
74,425
81,305
30.7
33.2
32.5
49,004
86,193
110,343
3,243
4,907
5,111
5,329
5,817
6,396
33.1
33.5
34.5
97,959
4,853
43,151
4,601
10.8
10.4
10.2
10.7
8.0
2,828
2,890
2,564
2,692
2,476
3,826
1,610
3.8
4.0
5.4
6.5
5.7
4.2
2,312
2,720
4,151
4,967
42,764
3,481
58,288
3,809
3,846,364
4,130,002
CASH FLOW STATEMENT
4,359,572
4,718,970
FINANCIAL SERVICES
Motorcycles³
Automobiles
PRODUCTION VOLUME
Motorcycles³
Automobiles2
DELIVERIES
1,481,253
99,236
1,738,160
110,360
1,861,826
113,811
2,165,566 2,006,366
133,615 110,127
2,279,503
151,004
1,668,982 1,461,166
104,286
98,047
60,477
3,592,093
3,190,353
Contract portfolio
111,191
This version of the Annual Report is a translation
from the German version. Only the original German
version is binding.
258
257
Dividend per share of common stock/preferred stock
DIVIDEND
Dividend total
Personnel cost per employee
Workforce at year-end4
PERSONNEL
Cash and cash equivalents at balance sheet date
Free cash flow Automotive segment
2,257,851
136,963
76,848
80,401
92,175
Business volume (based on balance sheet carrying amounts)
66,233
75,245
80,974
3,003
84,347
96,390
76,059
2010
2,117,965 1,963,798 1,845,186
123,495 115,215 106,358
1.30/1.32
Revenues
INCOME STATEMENT
2011
852
1,508
2.30/2.32
1,640
2.50/2.52
1,707
2.60/2.62
1,904
2.90/2.92
2,102
3.20/3.22
83,141
84,887
89,161
89,869
95,453
100,306
105,876
110,351
116,324
92,337
122,244
97,136
4,471
3,166
Gross profit margin
Earnings before financial result
68,821
Earnings before tax
2012
2013
2014
2015
4 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time working arrangements and low wage earners.
5 Proposal by management.
2,303
3.50/3.52
² Delivery figures have been adjusted retrospectively going back to 2015. The basis for the adjustments is a review of sales data in prior periods for the BMW Group's
most important markets (China, USA, Germany, UK, Italy and Japan). The retrospective adjustment enables better comparability. Additional information can be found
in the section "Comparison of Forecasts for 2019 with Actual Results in 2019".
1 Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
2,300
3.50/3.52
2,630
4.00/4.02
3 Excluding Husqvarna, deliveries up to 2013: 59,776 units; production up to 2013: 59,426 units.
Current provisions and liabilities
Balance sheet total
Income taxes
Effective tax rate
Net profit for the year
BALANCE SHEET
Non-current assets
Current assets
Return on sales (earnings before tax/revenues)
Capital expenditure ratio (capital expenditure/revenues)
Equity
Equity ratio
Non-current provisions and liabilities
Capital expenditure (excluding capitalised development costs)
ATHON ULTRA
PUBLISHED BY
Bayerische Motoren Werke
Aktiengesellschaft
80788 Munich
Germany
Telephone +49 89 382-0
#BlackBadge
Our team is proud to work for the BMW Group.
I would also like to thank our high-performing retail organisation, as well as the suppliers we
work with as partners. The dedication and ideas of our more than 133,000 associates worldwide
drive the Company forwards.
To Our
The BMW Group strategy is dynamic.
Climate protection achieves the biggest impact through implementation, not announcements.
Our understanding of responsibility has always encompassed the entire value chain. Last year
alone, we reduced CO2 emissions from production by 25 percent from the previous year. The
“footprint” of every new plug-in hybrid is certified: from raw material procurement, through the
supply chain, production and use phase, all the way to recycling. E-mobility requires cobalt and
lithium. Starting this year, we will be sourcing both raw materials ourselves and making them
available to our suppliers. This creates transparency. You will find more details on this in our
Sustainable Value Report 2019. We will no longer be printing our Annual Report, which will
now be exclusively available on our website as part of our expanded digital offering.
Reliability even in difficult times.
-
The latest developments regarding the coronavirus pose major challenges for us all – including
the BMW Group. In close cooperation with our business partners, we are working on targeted
measures to avoid supply bottlenecks where possible. As a Company, we have initiated measures
worldwide to protect the health and safety of our employees, in consultation with our works
council representatives. At the same time I have been witnessing a remarkable solidarity:
employees are supporting each other. That is what sets your Company apart - taking on
responsibility as a key member of society.
Optimism secures success - and success secures the future.
Dear Shareholders,
We firmly believe that the far-reaching technological transformation will strengthen our business
model.
We are systematically further developing our highly complex and digitally connected vehicles
in the interests of our customers and society. We have the capability, the ambition and the
determination to be a pioneer in the age of new mobility - and, at the same time, to remain
an attractive and safe investment for you, our shareholders.
I invite
you to accompany the BMW Group on our continued path towards the future.
Yours
V.fium
Oliver Zipse
Chairman of the Board of Management
22
22
To Our
Shareholders
→BMWAG Stock and
Capital Markets
In 2019 we reached a new record level of vehicles delivered to customers for the ninth con-
secutive year. Personally, and on behalf of my Board of Management team, I would like to
thank our more than two-and-a-half million BMW, MINI and Rolls-Royce customers - and
over 175,000 BMW Motorrad customers.
Offering effective solutions. Creating a real impact. Ensuring sustainability.
That's what we stand for.
This was confirmed by our most recent employee survey. - even at a time when the role of the
automotive industry is the subject of intense debate. The BMW Group is considered one of the
world's most attractive employers and is the number one automobile manufacturer in various
renowned rankings. Our associates value that you, our shareholders, support the Company's
long-term course. This gives us the backing and internal stability we need to continue to chart
our own course and differentiate ourselves from the competition.
We plan to meet the EU's new CO2 standards.
We geared up for sustainable mobility early. This year alone, we plan to lower the CO2 emissions
of our European new vehicle fleet by another 20 percent. This would allow us to meet the
European Union's new CO2 targets for 2020 and 2021. To achieve this, we are forging ahead
with our electric offensive and, at the same time, continuing to make our conventional engines
more efficient. Too little attention is paid to these efforts and their effects - even though they
have a rapid and noticeable impact.
24
Our business environment is shaped by uncertain developments, which we need to respond
to quickly and appropriately, but it is also shaped by stable trends. That is why enhancing
our strategy is an ongoing task.
Our corporate spirit is rooted in the values of responsibility, appreciation, transparency, trust
and openness. In the Board of Management, we have geared the BMW Group's strategy towards
the relevant areas of future activity and adjusted core elements: what does the BMW Group
stand for? What drives us? What are we working towards? And how can we achieve our goals?
It is imperative that we focus on business, environmental and social challenges equally.
Everything today is interconnected. There are no simple solutions to long-term success.
People still want to be mobile.
This forms the basis of our business model and our confidence. Demand for premium mobility
worldwide is expected to grow until 2030. Our goal is to gain or regain market share – but not
at any price. Rising sales must also generate the necessary earnings.
19
20
Shareholders
→ Statement of the
Chairman
of the Board of
Management
We aim to improve our profitability.
The financial year 2019 was impacted by a variety of headwinds. As previously announced, our
Group earnings before tax were significantly lower than the previous year.
The EBIT margin in the Automotive Segment was within our adjusted target range of 4.5 to 6.5 per-
cent. The Board of Management and the Supervisory Board will propose a dividend of €2.50 per
share of common stock and €2.52 per share of preferred stock to the Annual General Meeting.
We are working intensively to bring the EBIT margin in the Automotive Segment back within
our target range of 8 to 10 percent. This is the standard we hold ourselves to - and what you
expect as shareholders. We will realise over 12 billion euros in efficiency potential through our
Performance > NEXT programme by the end of 2022 – for example, through current measures
aimed at digitalising our processes. We will continue to make significant investments in our
future. In 2019 alone, we invested 6.4 billion euros in research and development.
The biggest model offensive in our history continues.
Nearly all model series have been updated over the past two years. They will be joined this
year by new models like the BMW 2 Series Gran Coupé, highly profitable BMW M models,
new plug-in hybrids and electric models. Our portfolio is younger, more attractive and more
technologically diverse than ever before. This allows us to meet every customer's needs and
desires – no matter where they are in the world. As a result we are challenging the competition
in every segment.
We offer our customers the Power of Choice.
Customers choose the vehicle segment that best suits their living environment - we provide
the right drivetrain to go with it. The popular BMW X3 is a good example of this. Starting this
year, four different drivetrain variants will be offered: efficient diesel and petrol, plug-in hybrid
and pure electric. Mobility needs will continue to vary around the world and from region to
region - in some cases, significantly. Our plants have the flexibility to produce all types of
drivetrains. In this way, we are able to inspire our customers and win them over to sustainable
drivetrains. Our online Annual Report features customers from the Netherlands, South Africa
and Japan and shows how they use different drivetrains in their everyday lives.
More than one million electrified vehicles by the end of 2021.
Our experience with e-mobility is delivering results. By the end of 2019, the BMW Group had
more than 500,000 electrified vehicles on roads across the world. This, in itself, is already a
significant contribution to climate protection. In Germany, BMW clearly leads the market for
electrified vehicles, with a share of 21 percent. In 2019, the average share of battery-electric
vehicles and plug-in hybrids in the European Union was three percent.
in 2019
The BMW Group figure was nearly double that. We will continue in this direction: the goal is
for a quarter of our European new vehicle fleet to be electrified in 2021; a third in 2025 and
half in 2030. The next fully-electric models are already in the starting blocks: the MINI SE and
BMW iX3 this year, followed by the BMW i4 and iNEXT from 2021.
We provide maximum vertical integration for e-mobility.
The iX3, 14 and iNEXT use our entirely newly developed fifth-generation electric drivetrain. The
electric motor is designed in such a way that no rare earths are needed. Long-term contracts
will secure our supply of battery cells.
21
Our customers are the key to our success.
3.22
Dear Shareholders,
9.72
10.47
13.09
10.625
7.49
9.70
10.45
13.07
10.605
7.47
3.52
4.02
3.52
2.522
3.20
3.50
4.00
3.90
3.50
4.12
8.81
BMW AG STOCK
AND CAPITAL
MARKETS
IN 2019
CONTACTS
FINANCIAL CALENDAR
Contacts
↑↑
→Financial Calendar
Shareholders
To Our
24
24
5 Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
65.11
72.08
82.30
87.875
90.92
8.23
6.78
2.502
23
23
72.70
74.64
62.10
55.05
Low
High
Year-end closing price
Stock exchange price in €¹
54,809
55,114
55,605
56,127
56,867
Number of shares in 1,000
PREFERRED STOCK
75.68
65.10
77.41
67.85
82.50
78.89
4 Stock weighted according to dividend entitlements.
³ Weighted average number of shares for the year.
2 Proposed by management.
1 Xetra closing prices.
Free cash flow Automotive segment
Equity
Earnings per share of preferred stock4
Earnings per share of common stock³
Preferred stock
At the BMW Group, the customer always takes centre stage. That is what makes your Company
strong. But we also know that success doesn't happen by itself - and certainly not in times of
technological transformation. We seek to offer our customers the best products and services
so they can be mobile in a way that suits their personal needs. Together, we are leading "sheer
driving pleasure” into a sustainable future – as intended by the Paris Climate Agreement. To
achieve this, we are systematically directing our focus towards new technologies and connectivity.
Because we want your Company to emerge as a winner of this transformation.
Common stock
KEY DATA PER SHARE IN €
58.96
56.53
67.29
60.70
47.54
92.19
74.15
Dividend
Top ratings unchanged
Fax
E-mail
→ www.bmwgroup.com/ir
→Page 48 General and Sector-specific Environment
→Page 52 Overall Assessment by Management
2
Combined
Management
Report
General Information
and Group Profile
Economic Position
Outlook, Risks and
Opportunities
→Page 53
→ Page 64
Comparison of Forecasts for 2019 with Actual Results in 2019
Review of Operations
→ Page 64
Automotive Segment
→ Page 71
Motorcycles Segment
→ Page 73
Financial Services Segment
→ Page 76 Comments on Financial Statements of BMW AG
→ Page 82 Report on Outlook, Risks and Opportunities
Page 82 Outlook
→Page 88 Risks and Opportunities
→ Page 101 Internal Control System Relevant for Accounting
and Financial Reporting Processes
→Page 48 Report on Economic Position
→ Page 102 Disclosures Relevant for Takeovers and Explanatory Comments
→Page 44 Management System
→Page 41 Sustainability
2021
17 March 2021
Annual Report 2020
17 March 2021
Annual Accounts Press Conference
18 March 2021
Analyst and Investor Conference
7 May 2021
Quarterly Statement to 31 March 2021
12 May 2021
Annual General Meeting
3 August 2021
Quarterly Report to 30 June 2021
3 November 2021
Quarterly Statement to 30 September 2021
COMBINED MANAGEMENT
REPORT
→Page 26 General Information and Group Profile
→Page 26 Organisation and Business Model
→Page 28 Research and Development
→Page 31 Production Network
Page 39 Workforce
→ Page 43 Cooperation Agreements and Partnerships
→ www.rolls-roycemotorcars.com and → www.bmw-motorrad.com.
26
Management
Report
The Motorcycles business is also clearly focused on
the premium segment. The model range currently
comprises motorcycles for the Sport, Tour, Roadster,
Heritage and Adventure segments as well as scooter
models for the Urban Mobility segment. BMW Motor-
rad also offers a broad range of equipment options to
enhance rider safety and comfort. The Motorcycles
business sales network is organised similarly to that
of the automobiles business. Currently, BMW motor-
cycles are sold by more than 1,200 dealerships and
importers in over 90 countries.
Financial Services segment
The BMW Group is a leading provider of financial
services in the automobile sector. These services are
offered in almost 60 countries worldwide via com-
panies and cooperation arrangements in place with
local financial service providers and importers. The
segment's main business comprises credit financ-
ing and the leasing of BMW Group brand cars and
motorcycles to retail customers. Customers can also
choose from an attractive array of insurance and
banking products. Operating under the brand name
Alphabet and working together with Alphabet coop-
eration partners, the BMW Group's international
multi-brand fleet business provides financing and
comprehensive management services for corporate
car fleets in 20 countries. The segment also supports
the BMW Group's dealership organisation by financ-
ing dealership vehicle inventories.
28
Combined
Management
Report
General Information
and Group Profile
Organisation and
Business Model
→ Research and
Development
Research and Development
→ www.bmwgroup.com/innovation
A major factor in the enduring success of the
BMW Group is its consistent focus on the future. Inno-
vation is an integral part of its corporate philosophy.
Shaping individual mobility and finding innovative
solutions today for the needs of tomorrow is a key
driving force. Research and development (R&D) are
therefore of major importance for the BMW Group
in ensuring its long-term commercial success as a
premium manufacturer.
In its development of new technologies, the BMW Group
focuses on the topics of emissions-reducing drivetrain
systems, digitalisation and autonomous driving with
the aim of creating completely new experiences and
future ways of travelling. A key prerequisite for success
both now and in the future is the ability to anticipate
customer needs and wishes in all fields of technol-
ogy and implement developments in a way that adds
value for the customer. However, as a premium manu-
facturer, the BMW Group is driven by the aspiration
to exceed customer expectations in every respect.
With this approach, the BMW Group strives to find
outstanding solutions for the overall (mobility) needs
of its customers.
The BMW Group addresses the key trends shaping
tomorrow's individual mobility via the central topics
of Design, Autonomous, Connectivity, Electrified and
Services.
1. Design
The BMW Group sees design as the characteristic
combination of aesthetics and technology. Out-
standing design involves focusing keenly on peo-
ple and their needs. Ground-breaking design
underlines the inimitable character of each new
vehicle, thereby strengthening all of the Group's
brands.
2. Autonomous
Since 2018, the BMW Group has been pooling its
expertise with the aim of developing state-of-
the-art driver assistance systems in its own devel-
opment centre. The goal is to create an open
platform for highly and fully automated driving
that will serve as an industry standard going
forward. Today, the latest generation of driver as-
sistance systems already supports customers in
a variety of driving situations. However, “safety
first" always has the foremost priority in all
development work performed.
In July 2019, the BMW Group and Daimler AG
signed an agreement on long-term strategic coop-
eration in the field of automated driving. The
two companies intend to jointly develop the next
generation of technology for driver assistance
systems and automated driving on motorways as
well as automated parking features. The cooper-
ation is open for further OEM and technology
partners and the results of this collaboration
will also be offered to other OEMs for licensing.
3. Connectivity
The demands and needs of customers for mod-
ern, digital mobility are the top priority for the
BMW Group. One of the most important effects
of digitalisation in the automotive industry is
that the vehicle itself has become focal point of
the digital customer experience. The BMW Group
prepared itself at an early stage in this area.
With BMW Connected and the growing digital
offerings, the Company is prepared for the ex-
pectations and wishes of its customers. In this
regard, the focus is not just on the develop-
ment and integration of new technologies and
services for the vehicle, but on customers and
their contemporary demands. Digital services,
which customers are used to, should be avail-
able seamlessly and without restrictions even out-
side of the vehicle.
The ability to use services from the BMW Group
nearly everywhere at all times is the prerequi-
site for a digital services offering that is solely fo-
cused on the customers and their individual
needs. This includes, for example, personalised
and context-based information in the vehicle.
For customers of the BMW Group it is very easy
to keep the vehicle digitally up-to-date and to
tailor the vehicle to customers' individual wishes
over the entire life cycle. With the Remote Soft-
ware Update, the vehicle can always be updated
with the latest software, functions are continu-
ously expanded and digital services can be booked
at any time. In this way, the security and quality
of the vehicle is continually improved. BMW drivers
can therefore keep their vehicles up to date as they
are accustomed to from the smartphone world.
Motorcycles segment
Combined
The global sales network of the BMW Group's automo-
bile business currently comprises around 3,500 BMW,
1,600 MINI and 150 Rolls-Royce dealerships. Within
Germany, sales are conducted through branches of
the BMW Group and independent authorised dealer-
ships. Sales outside Germany are handled primarily
by subsidiary companies and by independent import
companies in some markets.
The BMW brand caters to a wide variety of customer
requirements. Its portfolio encompasses a broad range
of models, starting with the premium compact class
and extending - via the premium mid-class - through
to the ultra-luxury class. Alongside all-electric mod-
els such as the BMW i3, it also offers its customers
state-of-the-art plug-in hybrids and a whole array
of vehicles driven by highly efficient combustion
engines. Together with its extremely popular X-model
family and high-performance BMW M range, the
BMW Group meets the varying needs and wishes of
its customers worldwide.
General Information
and Group Profile
→ Organisation and
Business Model
GENERAL
INFORMATION
AND GROUP
PROFILE
Substantial upfront expenditure for
future-oriented projects
Production running at full swing
ORGANISATION AND
BUSINESS MODEL
→ www.bmwgroup.com/company
This Combined Management Report incorporates the
management reports of Bayerische Motoren Werke
Aktiengesellschaft (BMW AG) and the BMW Group.
On 10 March 2020, the Financial Statements of
BMW AG were drawn up by the Board of Manage-
ment and the Board of Management granted approval
for publication of the Group Financial Statements.
Based on current developments regarding the spread
of the coronavirus, the Board of Management on
16 March 2020 adjusted the original outlook for the
BMW Group, the assumptions regarding the devel-
opment of the global economy and the economic
risks and opportunities for the financial year 2020
in the Combined Management Report, as well as
the statement regarding the Events after the end of
the reporting period. On the same day, the Board of
Management again drew up the Financial Statements
of BMW AG and once again gave approval for the
publication of the Group Financial Statements.
General information on the BMW Group is provided
below. There have been no significant changes to the
Group's structure compared to the previous year.
Based in Munich, Germany, Bayerische Motoren Werke
Aktiengesellschaft (BMW AG) is the parent Company
of the BMW Group, which is the most successful maker
of automobiles and motorcycles in the premium seg-
ment worldwide. With BMW, MINI and Rolls-Royce,
the BMW Group owns three of the best-known pre-
mium brands in the automotive industry. In addition
to a strong market position in the premium segment
of the global motorcycles sector, the BMW Group is
also well-positioned in the financial services business.
The BMW Group comprises BMW AG itself and all
subsidiaries over which BMW AG has either direct
or indirect control. BMW AG is also responsible
for managing the Group, which is sub-divided into
the Automotive, Motorcycles and Financial Services
operating segments. The Other Entities segment
primarily comprises holding companies and Group
financing companies.
The BMW Group sets itself clear targets in terms of sus-
tainable, individual mobility, resource-efficient value
creation, the continued development of its workforce
potential and its own social commitment. Sustain-
ability is therefore an integral part of the Group's
business model and plays a vital role in ensuring its
viability going forward.
27
27
The BMW Group operates on a global scale and
employed a workforce of 133,778 people worldwide
at the end of the year. In 2019, the BMW Group
strengthened its position as one of the world's most
attractive employers. Its leading role in terms of
sustainability contributes to employee loyalty within
the BMW Group and is one of the reasons for the low
staff attrition rate.
The BMW Group's underlying principle in all aspects
of corporate strategy is its customer-oriented approach.
In its ongoing efforts to develop its products, brands
and services, the BMW Group is currently focusing
on new technologies such as alternative drivetrains,
digitalisation, connectivity and autonomous driving.
Presentation of segments
In order to provide a better insight into the Group as a
whole, this report also contains separate presentations
of the operating segments Automotive, Motorcycles
and Financial Services.
Automotive segment
The MINI brand promises outstanding driving pleasure
in the premium small car segment and, apart from its
highly efficient combustion-engine-driven models,
also offers plug-in hybrid and all-electric drivetrains.
Rolls-Royce is the ultimate marque in the ultra-luxury
segment, boasting a tradition that stretches back over
more than 100 years. Rolls-Royce Motor Cars spe-
cialises in bespoke customer specifications and offers
the very highest level of both quality and service.
is available at www.bmw.com, www.mini.com,
Information about the various BMW Group brands
at www.bmwgroup.com/ir.
COMMON STOCK
Number of shares in 1,000
601,995
601,995
601,995
601,995
601,995
Stock exchange price in €¹
Year-end closing price
High
Low
73.14
70.70
86.83
88.75
97.63
77.75
96.26
90.83
92.25
122.60
2015
58.70
2016
2018
Ratings remain at top level
The BMW Group continues to be the best-rated auto-
mobile manufacturer in Europe.
Moody's has given BMW AG a long-term rating of A1
(stable outlook) since January 2017. The short-term
rating is P-1. The overall positive assessment reflects
the launch of attractive products in conjunction with
the current model offensive, the excellent positioning
of the BMW Group with respect to the challenges
faced by the automobile industry and its consistently
strong operating performance and robust financial and
capital structure. The rating agency Standard & Poor's
has given BMW AG a long-term rating of A+ (negative
outlook) and a short-term rating of A-1.
These rating assessments are underpinned by the
BMW Group's dependable financial profile and excel-
lent creditworthiness. Consequently, the Company not
only has good access to international capital markets,
but also benefits from attractive refinancing conditions.
Company rating
Moody's
Standard &
Poor's
Non-current financial liabilities
A1
A+
Current financial liabilities
P-1
A-1
Outlook
stable
negative
Dividend and payout ratio
In view of the Group's good earnings performance,
the Board of Management and the Supervisory Board
will propose to the Annual General Meeting that
BMW AG's unappropriated profit of €1,646 million 7
(2018: €2,303 million) be used to pay a dividend of
€2.50 per share of common stock (2018: €3.50) and
a dividend of €2.52 for each share of preferred stock
(2018: €3.52). The payout ratio for 2019 therefore
stands at 32.8% (2018: 32.0%).
BMW AG stock
→ 09
2019
2017
69.86
77.71
18 March 2020
19 March 2020
Analyst and Investor Conference
6 May 2020
Quarterly Statement to 31 March 2020
14 May 2020
Annual General Meeting
5 August 2020
Quarterly Report to 30 June 2020
4 November 2020
Quarterly Statement to 30 September 2020
Business and Finance Press
Telephone +49 89 382-2 45 44
Fax
E-mail
+49 89 382-2 41 18
+49 89 382-2 44 18
presse@bmwgroup.com
Investor Relations
Telephone +49 89 382-2 53 87
+49 89 382-1 46 61
ir@bmwgroup.com
The BMW Group on the Internet
Further information about the BMW Group is
available online at → www.bmwgroup.com.
Investor Relations information is available directly
Annual Accounts Press Conference
Dividend payout ratio increases
→Page 38 Purchasing and Supplier Network
2020
The Netherlands
Bulgaria¹
Romania¹
Hungary¹
Slovakia¹
Germany
Austria
Poland
Czech
Republic
Denmark
Finland¹
Sweden
Slovenia¹
Italy
Portugal
Spain
Switzerland
France
Belgium
☐
Ireland
UK
Malta
Greece
Malaysia
Example: cobalt
Sales subsidiaries
and Financial Services
locations
Rolls-Royce Motor Cars Ltd.,
Goodwood, UK
BMW France, S. A. S.,
Montigny, France
Porto, Portugal
Critical TechWorks S.A.,
BMW Group Diesel Competence
Centre, Steyr, Austria
Construction and Technology Center,
Landshut, Germany
BMW Group Lightweight
■ Production in Europe
BMW Group plant Berlin
BMW Group plant Dingolfing
BMW Group plant Eisenach
BMW Group plant Landshut
BMW Group plant Leipzig
BMW Group plant Munich
BMW Group plant Regensburg
BMW Group plant Wackersdorf
BMW Group plant Steyr, Austria
BMW Group plant Hams Hall, UK
BMW Group plant Oxford, UK
BMW Group plant Swindon, UK
Rolls-Royce Manufacturing Plant,
Goodwood, UK
Partner plants
in Europe
Partner plant, Born,
the Netherlands
Partner plant, Graz,
Austria
Partner plant,
Kaliningrad, Russia
▲ Research and development
network in Europe
Norway
37
Since cobalt is a key component for producing
electrified vehicles, the BMW Group is working to
achieve the greatest possible level of transparency in
the supply chain. The Group is in continuous contact
with battery cell manufacturers and demands disclo-
sure of the origin of this critical raw material. The
BMW Group has also made its information on the
subject of cobalt, such as the smelters and countries
of origin, publicly available and updates it regularly.
The next step will be to restructure the supply chains
used to acquire cobalt. From 2020 onwards, the Group
plans to purchase cobalt for fifth-generation battery
cells directly from mines in Morocco and Australia
and make it available to its supply chain partners. The
strategy increases transparency regarding the origin
of the raw material.
32
38
22.0 Eastern Europe
North America
19.0
33.4
Germany
2.3 Other
Rest of Western
Europe 16.8
Asia/Australia 6.5
in %, basis: production material
→ 14
Regional mix of BMW Group
purchase volumes 2019
The BMW Group remains committed to its strategy
of maintaining a regional balance with regard to
sales volume, production and purchasing volumes,
thereby making an important contribution to natural
hedging against currency fluctuations. In particular,
the proportion of purchase volumes attributable to the
Americas region grew in 2019, mainly due to the sig-
nificant increase in vehicle production in Spartanburg,
USA, and the start-up of the vehicle plant in San Luis
Potosí, Mexico. Growth in the region will continue in
future with the ramping up of production in Mexico.
Connecting procurement markets
Further information is available in the Sustainable
Value Report 2019 online at www.bmwgroup.com/svr.
The BMW Group is also involved in initiatives aimed at
standardising sustainability requirements and estab-
lishing verification mechanisms for supply chains in
connection with critical raw materials.
For these reasons, sustainability criteria based on
the BMW Group Sustainability Standard are firmly
embedded in its purchasing processes. These criteria
also play an essential role in the selection and assess-
ment of suppliers and apply across the entire supply
chain. Sustainability management therefore creates
greater transparency for both the BMW Group and
its suppliers.
The BMW Group attaches great importance to compli-
ance with environmental and social standards as well
as to the efficient use of resources along the entire
value chain.
Sustainability and resource efficiency
along the value chain
The international orientation of the Purchasing and
Supplier Network provides the BMW Group with good
access to global procurement markets. It is responsible
for the worldwide procurement and quality assurance
of production materials, raw materials, capital goods
and services as well as the manufacturing of vehicle
components produced in-house. External suppliers
are selected systematically on the basis of competitive-
ness according to the criteria of operating excellence,
quality, innovation, flexibility, cost and sustainability.
Ensuring access to resources in a volatile
environment
Purchasing and Supplier Network
→ Workforce
→ Purchasing and
Supplier Network
Organisation and
Business Model
General Information
and Group Profile
Combined
Management
Report
88
→ 13
9.8
Australia
15,612
51.8
0.9
8,976
10,956
-18.1
0.3
8,208
23,700
7,752
0.3
Goodwood
San Luis Potosí
Tiexi (BBA)²
Dadong (BBA)²
Born (VDL Nedcar)³
Graz (Magna Steyr)³
5,455
5.9
2.7
38.3
50,224
-13.4
11.1
255,804
319,592
-20.0
10.0
230,284
244,248
-5.7
9.0
222,340
234,501
-5.2
8.7
221,077
157,799
40.1
8.6
69,463
4,353
25.3
0.2
25,538
Group
2,564,025
2,541,534
0.9
100.0
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2019: 536,509 units, 2018: 491,872 units).
2 Joint Venture BMW Brilliance Automotive Ltd., Shenyang.
3 Contract production.
31
32
32
Combined
Management
Report
General Information
and Group Profile
Organisation and
Business Model
→ Production Network
Production of electrified automobiles in the
existing production system
The BMW Group is integrating the production of
fully and partially electrified vehicles in its existing
production system, enabling it to ensure the long-
term capacity utilisation of the production network,
while at the same time being able to respond swiftly
and flexibly to customer requirements. In 2019, the
Group produced electrified models at 11 different
locations worldwide.
The BMW Group plants in Germany play a leading
role in integrating e-mobility throughout the Group's
production network. The technologies used to produce
electric powertrain components and high-voltage
batteries are developed at the Group's prototype con-
struction centre in Munich. As a competence centre
for electric powertrain systems, the Dingolfing site
acts as lead production plant, and the e-motors for
the BMW Group's electrified vehicles are manufac-
tured there. The corresponding battery modules and
high-voltage batteries are produced at the Group's
three battery factories in Dingolfing (Germany),
Spartanburg (USA) and Shenyang (China). In Thailand,
the BMW Group works closely with a partner that
manufactures batteries for electrified vehicles pro-
duced locally.
Its ability to produce electric powertrain systems,
batteries and prototypes for battery cells in-house
gives the BMW Group a competitive edge that enables
it to secure valuable knowledge of new technologies,
gain important system expertise and leverage cost
advantages.
1.3
328,862
-20.7
33,816
308
1.0
250,241
299,939
-16.6
BMW Group Research and Innovation
Centre (FIZ), Munich, Germany
BMW Group Autonomous Driving
Campus, Unterschleißheim, Germany
BMW Group Designworks, Munich,
Germany
286,268
191,888
49.2
11.2
174,097
211,660
-17.7
6.8
52,231
64,431
-18.9
2.0
Partner plants
42,660
284,907
Araquari
Chennai
Sustainability is also a key factor for the expansion of
electric mobility. For the BMW Group, responsible raw
material extraction and processing starts at the very
beginning of the value chain. Supply chains for the
upcoming fifth generation of high-voltage electrical
storage systems have also been restructured, including
the plan to purchase cobalt and lithium for battery
cells directly with effect from 2020. The strategy will
provide complete transparency regarding the origin
of these two essential raw materials for manufactur-
ing batteries. Further information is available in the
Sustainable Value Report at → www.bmwgroup.com/svr.
With the opening of the competence centre, the
BMW Group is not only setting the future strategic
course in technological terms, it is also securing jobs
and key qualifications in the long term.
BMW i Hydrogen NEXT presented
The BMW Group assumes that various alternative
drivetrain systems will coexist in future years, as the
mobility requirements of customers worldwide cannot
be met by one solution alone. Hydrogen-powered vehi-
cles could become an important alternative to, as well
as a supplement for, battery-electric powered vehicles.
This diversity in the field of electrified drivetrain tech-
nologies, which also includes plug-in hybrids alongside
highly efficient combustion engines, underlines the
BMW Group's commitment to offering its customers
tailor-made solutions that satisfy their own individual
mobility needs. In 2019, the BMW Group presented a
further milestone in this strategy at the IAA with its fuel
cell-powered development vehicle BMWi Hydrogen
NEXT. This innovative vehicle provides an initial
preview of a small series of hydrogen fuel cell electric
drivetrains based on the current BMW X5.
The BMW Group has already demonstrated the
practical viability of the technology. Since 2013, the
BMW Group and the Toyota Motor Corporation have
been collaborating on the joint development of a
powertrain system based on hydrogen fuel cell tech-
nology. Since summer 2015, BMW Group researchers
have been testing a small fleet of BMW 5 Series GT
hydrogen fuel cell prototypes with a jointly developed
powertrain system.
Global research and innovation network expanded
At 31 December 2019, more than 15,700 people in
12 countries were working in the BMW Group's global
research and innovation network. The following tables
summarise the key financial figures for research and
development:
BMW Group performance indicators relating
to research and development expenses
→ 10
in € million
2019
2018
Research and development expenses
Amortisation
5,952
5,320
-1,667
-1,414
New expenditure for capitalised
development costs
2,134
The further development of battery cell technology
is a key success factor in the BMW Group's electric
offensive strategy, enabling it to have a direct impact
on both the performance and the cost of the battery.
This holistic approach ensures that the BMW Group
is always at the cutting edge of technology while
simultaneously covering the entire value chain,
including research and development, assembly and
design of battery cells. Swift decision-making and
comprehensive collaboration are making it possible
to develop battery cells in a complete, transparent
and sustainable manner. Moreover, it is crucial to
take recycling into account from the very beginning.
2,984
The BMW Group has combined its wealth of experi-
ence in the field of e-mobility with its wide-ranging
knowledge of battery cells to form a new competence
centre in Munich. It is tasked with continuing to
develop battery cell technology and master the
processes required for cell production. Based on
current technology, the aim is to significantly increase
the energy density of battery cells and thus also the
range for customers.
→ Production Network
29
29
With digital services such as on-street parking or
digital charging services, which are available to
book over the BMW ConnectedDrive Store, it has
been possible since 2014 to constantly customise
the vehicle toward individual preferences. The next
step for more flexibility involves offering addi-
tional vehicle functions after purchase, such as a
high-beam assistant or driver assistant system,
Active Cruise Control (ACC). The expanded, cus-
tomer-oriented and digital offerings of the
BMW Group make it possible to update the vehi-
cle for many years with the newest functions.
Therefore, customers do not need to decide about
specific optional equipment at purchase, but
they can regularly customise their vehicle based
on individual needs.
Together with automated driving, the systematic
expansion of connectivity on the path towards a
digital and emissions-free future is one of the cen-
tral areas of action, with which the BMW Group
is shaping the transformation of the mobility in-
dustry in line with its corporate strategy.
4. Electrified
During the 2019 reporting period, the BMW Group
reached a further milestone with the delivery
of its 500,000th electrified automobile. With 11
electrified models in its range (as of 2019), the
BMW Group is among the world's leading providers
of electric mobility. Since 2016, the Company
has been the market leader for electrified vehicles
in Germany and also occupies a top position
not only in Europe, but worldwide.
Its many years of experience have given the
BMW Group a broad and sound base of knowl-
edge in the field of electric mobility. On this
basis, the Company develops the drivetrain tech-
nology such as the motor, the power electronics
and also the battery, including the battery cell it-
self, guaranteeing the typical driving charac-
teristics for its electrified vehicles that customers
associate with the brand.
In 2020, the BMW X3 will be the first BMW Group
model to be available in four different drive-
train versions: with an efficient diesel or petrol
engine, as a plug-in hybrid, and with an all-electric
powertrain system in the form of the BMW iX3*.
The BMW iX3 is the first model to benefit from a
new generation of highly efficient BMW electric
drivetrains, which enables a new balance between
range and battery size.
* Fuel
consumption
and CO₂ emis-
sions informa-
tion are available
on page 70.
Due to its role as a technology carrier and its en-
during sales success, the BMW i3 is also being
developed to the next level. Launched at the end of
2019, the MINI Cooper SE* is a further all-electric
vehicle that complements the BMW Group's range
of electrified models. Over 90,000 registered
prospective customers (as of 2019) reflect the avid
interest of consumers in this first all-electric
MINI model. Rolls-Royce Motor Cars is also work-
ing hard on developing an electric vehicle. In line
with the expectations of its customers, the brand
will immediately focus on manufacturing all-
electric models.
The BMW Group's range of models includes highly
efficient combustion engines as well as state-of-
the-art plug-in hybrids and all-electric drivetrains.
This broad array of options enables the Group to
meet the varying requirements and wishes of its
customers in different regions of the world while
at the same time making an effective contribution
to cutting CO2 emissions. Regardless of the type
of drivetrain the customer chooses, all current and
future models, each with their own specific
characteristics, will feature the driving pleasure
typical of the brand.
5. Services
The BMW Group aims to be one of the leading
providers of premium mobility services going
forward. In order to do so, it is essential to have a
clear understanding of the needs of customers
worldwide. This knowledge is the basis for offer-
ing customers an attractive, comprehensive range
of services in this field, too. These include easy-
to-use, digitally supported mobility services
that also feature bring-and-collect services or help
customers find open parking spaces in urban
environments. In order to reinforce this strategic
field, the BMW Group founded the joint venture
YOUR NOW together with Daimler AG during the
period under report. Further information is pro-
vided in the section Cooperation Agreements
and Partnerships.
30
Combined
Management
Report
General Information
and Group Profile
Organisation and
Business Model
→ Research and
Development
Battery cell competence centre opened
BMW Group locations in Europe
Research and development expenditure
6,890
High capacity utilisation throughout the entire
production network
The Group set a new production volume record in the
year under report, totalling 2,564,025¹ BMW, MINI
and Rolls-Royce brand vehicles (2018: 2,541,5341
units; +0.9%). The figure comprised 2,205,841¹ BMW
(2018: 2,168,496¹ units; +1.7%), 352,729 MINI (2018:
368,685 units; -4.3%) and 5,455 Rolls-Royce (2018:
4,353 units; +25.3%) brand vehicles.
in units
2019
2018
Change in %
Proportion of
production in %
Spartanburg
411,620
356,749
15.4
16.1
Dingolfing
Regensburg
Leipzig
Oxford
Munich
Rosslyn
Rayong
for many years. The Company has been continually
reducing the use of resources such as energy and water
and produces less waste and CO2 emissions. In 2019
the production of a vehicle required on average
only half the resources and CO2 as in 2006. From
2020 onwards all plants operated directly by the
BMW Group globally as well as those of the joint
venture BMW Brilliance Automotive in China will
obtain energy exclusively from renewable sources.
6,419
→ 11
Sustainability in production and along the value chain
has played a fundamental role for the BMW Group
Change in
2019
2018¹
%pts¹
Research and development
expenditure ratio²
Capitalisation rate³
6.2
33.2
7.1
-0.9
43.3
-10.1
1 Prior year's figures adjusted due to a change in accounting policy in connection with the
adoption of IFRS 16; see note 6 to the Group Financial Statements. In addition, figures for
the prior year have been adjusted due to changes in presentation of selected items, which
are not material overall.
2 Research and development expenditure as a percentage of Group revenues.
3 Capitalised development costs as a percentage of research and development expenditure.
Further information on research and development
→ see expenditure is provided in → note 8 to the Group
Financial Statements.
note 8
Production Network
The BMW Group's production system is characterised
by its high flexibility and efficiency, enabling it to
respond rapidly to changing market situations and fluc-
tuating regional demand. The BMW Group's production
expertise also makes a contribution to its profitability.
Its production network leverages innovative technolo-
gies from the fields of digitalisation and Industry 4.0,
including applications from the worlds of virtual reality,
artificial intelligence and 3D printing. Standardised
processes and structures ensure consistent premium
quality throughout the production system. At the
same time, the BMW Group offers its customers a high
degree of individualisation.
Vehicle production of the BMW Group by plant
Expansion of the international production network
In its efforts to remain successful going forward,
the BMW Group continues to invest in expanding
existing and establishing new production capacities,
thereby increasing its manufacturing capability and
enhancing the flexibility of its production network.
The BMW Group endeavours to achieve an even dis-
tribution of production and deliveries in the various
regions of the world.
The BMW Group combines its wealth of experience
and broad knowledge of battery cell technologies in
its own new competence centre, which was opened
in Munich in 2019.
The BMW Brilliance Automotive Ltd, Shenyang (BBA)
joint venture in China is currently building a new facil-
ity on the premises of the Tiexi plant and carrying out
major extensions to its automobile plant in Dadong.
BMW X1
Motorcycles
BMW 5 Series
BMW Z4
Motorcycles
35
35
36
MINI Convertible, MINI Countryman
Combined
General Information
and Group Profile
→ Organisation and
Business Model
BMW Group locations worldwide
→ 12
43
7 Sales subsidiaries and
Financial Services
locations worldwide
Management
Report
Products
In 2019, a total of 187,116 motorcycles rolled off produc-
tion lines at five different locations worldwide (2018:
162,687 units; +15.0%). The significant increase was
primarily due to the fact that the production of BMW
scooters at the Chinese partner Loncin Motor Co., Ltd
in Chongqing now covers the full product range. In
September 2019, BMW Motorrad celebrated 50 years
of motorcycle production at the Berlin plant together
with over 10,000 visitors.
Motorcycle production up sharply
BMW 3 Series, BMW 5 Series, BMW 7 Series,
BMW X1, BMW X3, BMW X5
MINI Countryman
BMW 5 Series, BMW 7 Series
BMW X1, BMW X3, BMW X4, BMW X5, BMW X6, BMW X7
BMW 5 Series, BMW 7 Series
BMW X1, BMW X3, BMW X4, BMW X5, BMW X6, BMW X7
BMW 3 Series, BMW 5 Series, BMW 6 Series, BMW 7 Series
BMW X1, BMW X3, BMW X4, BMW X5
MINI Countryman
The BMW Group also awards contracts to external
partners for the production of specific types of
vehicle as well as motorcycles. During the period
under report, Magna Steyr Fahrzeugtechnik pro-
duced the BMW 5 Series Sedan and the BMW Z4 in
Graz (Austria).
7
Moreover, various MINI models and the BMW X1 were
assembled at VDL Nedcar in Born (the Netherlands).
BMW motorcycles were also manufactured by the
TVS Motor Company in Hosur (India) and the Loncin
Motor Company in Chongqing (China).
Locations
Country
CONTRACT PRODUCTION
The Netherlands
Born
China
Chongqing
Austria
Graz
Hosur
India
31
Production and
assembly plants
12
7 Countries with
BMW Group Technology Office,
Shanghai, China
BMW Group Engineering China,
Beijing, China
BMW Group Engineering Japan,
Tokyo, Japan
BMW Group Engineering USA,
Woodcliff Lake, USA
BMW Technology, Chicago, USA
BMW Group IT Technology Office,
Greenville, USA
BMW Group IT DevOps Hub,
Rosslyn, South Africa
BMW do Brasil, Araquari,
Brazil
BMW Group Technology Office Tel Aviv,
Tel Aviv, Israel
BMW Group R&D Center Seoul,
Seoul, South Korea
1 Sales locations only.
Russia
India
China
South Korea
Japan
Hong Kong
Thailand
Singapore¹
Indonesia¹
BMW Group ConnectedDrive Lab
China, Shanghai, China, and
BMW Group Designworks Studio
Shanghai, China
Products
BMW Group Engineering and
Emission Test Center,
Oxnard, USA
▲ Research and development
network outside Europe
BMW Group Designworks, Newbury
Park, USA
research and development
locations
Headquarters
Canada
USA
Mexico
United Arab
Emirates
Brazil
Argentina¹
South Africa
New Zealand
☐
Production
outside Europe
■BMW Group plant Araquari, Brazil
BMW Group plant Chennai, India
BMW Group plant Manaus, Brazil
BMW Group plant Rayong, Thailand
BMW Group plant Rosslyn, South Africa
BMW Group plant San Luis Potosí,
Mexico
BMW Group plant Spartanburg, USA
BMW Brilliance Automotive, China
(joint venture-3 plants)
Partner plants
outside Europe
Partner plant, Chongqing, China
Partner plant, Hosur, India
Partner plant, Jakarta, Indonesia
Partner plant, Cairo, Egypt
Partner plant, Kulim, Malaysia
BMW Group Technology Office USA,
Mountain View, USA
In 2019, the BMW Group opened a new plant in
San Luis Potosí (Mexico). The new facility, which
has the capacity to manufacture up to 175,000 units
per year, produces the BMW 3 Series Sedan, thus sig-
nificantly boosting production flexibility within the
network. The BMW 3 Series Sedan is also produced
in Germany and China.
Malaysia
Russia
Germany
Germany
Brazil
Germany
Lightweight construction components, electric drivetrain systems and special engines
BMW 1 Series, BMW 2 Series, BMW i, BMW M
Motorcycles
Oxford
Rayong
Regensburg
Rosslyn
San Luis Potosí
Spartanburg
Steyr
United Kingdom
Thailand
Germany
South Africa
Mexico
USA
Austria
BMW 3 Series, BMW 4 Series, BMW M
Petrol and diesel engines, high-performance engines for M models
Core engine parts
United Kingdom
Germany
Toolmaking, outer body parts for Rolls-Royce, aluminium tanks for BMW Motorrad
Petrol engines for BMW, BMW i, MINI
Core engine parts
BMW 3 Series, BMW 4 Series, BMW 5 Series, BMW 6 Series,
BMW 7 Series, BMW 8 Series, BMW M
Chassis and drivetrain components
Components for electric mobility
Rolls-Royce bodywork, pressed parts
International production network
The production network comprises 31 locations in
15 countries, 20 of which are BMW Group plants.
Three of these locations belong to the BMW Brilliance
Automotive joint venture in Shenyang, China. ¬
A further eight production sites are operated either
by partners or contract manufacturers. The same
standards of quality, safety and sustainability apply
at all locations within the BMW Group's production
network worldwide.
Locations
BMW GROUP PLANTS
Araquari
Berlin
Chennai
Dingolfing
Eisenach
MINI, MINI Clubman
Hams Hall
Leipzig
Manaus
Munich
Country
Products
Brazil
Germany
India
Germany
BMW 3 Series, BMW X1, BMW X3, BMW X4, BMW X5
BMW motorcycles, Maxi-Scooters, car brake discs
BMW 3 Series, BMW 5 Series, BMW 6 Series, BMW 7 Series
BMW X1, BMW X3, BMW X4, BMW X5, BMW X7, MINI Countryman
Landshut
Kulim
BMW 3 Series, BMW 5 Series, BMW 7 Series
BMW X1, BMW X3, BMW X5, BMW X6
Motorcycles
BMW X3
Tiexi (Shenyang)
Country
China
China
China
and Tiexi automobile plants. Tiexi also has an engine
plant with an adjacent foundry and battery factory.
Products
BMW 5 Series
BMW X3
BMW 1 Series, BMW 2 Series, BMW 3 Series
BMW X1, BMW X2
Petrol engines, production of core engine parts
The BMW Group's four automobile partner plants in
Jakarta (Indonesia), Cairo (Egypt), Kaliningrad (Russia)
and Kulim (Malaysia) primarily serve their respective
regional markets.
Locations
PARTNER PLANTS
Jakarta
Country
Indonesia
Cairo
Egypt
Kaliningrad
Tiexi (Shenyang)
Dadong (Shenyang)
JOINT VENTURE BMW BRILLIANCE
AUTOMOTIVE HOLDINGS LTD.
Locations
BMW 3 Series
Swindon
Wackersdorf
United Kingdom
Germany
Rolls-Royce Manufacturing Plant Goodwood
United Kingdom
*Fuel consumption and CO₂ emissions information are available on page 70.
BMW 1 Series, BMW 2 Series, BMW 3 Series, BMW 4 Series
BMW X1, BMW X2, BMW M
BMW Car IT, Munich, Germany
High-performance engines for M models
Pressed parts and bodywork components
Distribution centre for parts and components
Cockpit assembly
Processing of carbon fibre components
Rolls-Royce Phantom, Ghost, Wraith, Dawn, Cullinan*
333
34
Combined
Management
Report
General Information
and Group Profile
Organisation and
Business Model
→ Production Network
The plants in Shenyang (China) are operated by the
BMW Brilliance Automotive (BBA) joint venture. The
Shenyang production location comprises the Dadong &
BMW X3, BMW X4, BMW X5, BMW X6, BMW X7, BMW M
Petrol and diesel engines for BMW and MINI
Core engine parts
The BMW Group has signed an agreement with the
Chinese manufacturer Great Wall Motor Company
Limited to produce MINI electric vehicles via a 50:50
joint venture based in China. In addition to MINI elec-
tric vehicles, the Spotlight Automotive Limited joint
venture (Spotlight) will also produce electric vehicles
for Great Wall Motor. Apart from production, the
joint venture model includes the joint development
of battery-electric vehicles. Spotlight was founded on
27 December 2019 following approval by the Chinese
authorities.
Economic performance in the United Kingdom (UK)
was dominated by ongoing uncertainty regarding the
terms of Brexit and hence the UK's future relationship
with the European Union (EU). Despite a further slight
drop in the unemployment rate, private consumer
sentiment failed to improve noticeably. Public-sector
spending was increased substantially with a view to
counteracting the slowing pace of the UK economy.
Nevertheless, economic growth dropped for the fifth
consecutive year to stand at 1.4%.
Alongside the planned increase in the stake in BBA,
the BMW Group is expanding its presence in China
on a significant scale, thereby underlining its com-
mitment to the region.
The 1.2% growth rate recorded in the eurozone was
also down on the previous year. Although major
economies in the region continued to expand, the
pace of growth in Germany (+0.6%), France (+1.3%),
Italy (+0.2%) and Spain (+ 2.0%) was significantly low-
er year-on-year, whereby exports, private consumption
and a slight increase in public-sector spending con-
tributed to the positive growth rates. Despite lower
industrial production output, the unemployment rate
continued to fall and is now at its lowest level since
2008. Against a backdrop of weaker economic per-
formance and easing inflationary pressures, towards
the end of the year the European Central Bank (ECB)
decided to resume its securities purchase programme
and reduce its deposit rate further.
→ 17
as a percentage of workforce
7.0
Diversity as a competitive factor
Diversity is a key factor in ensuring the BMW Group's
continued competitiveness. The aim is to ensure
equal opportunities for all employees and at the
same time utilise and promote the diversity of the
Group's workforce. In this context, emphasis is placed
on the three aspects of gender, cultural background
and age/experience. In 2019, the BMW Group again
implemented a broad array of measures in its efforts
to promote diversity. Further information on this topic
is also provided in the Sustainable Value Report 2019.
→ www.bmwgroup.com/svr
The percentage of women in the BMW Group work-
force as a whole was 19.8% (BMW AG: 16.3%), surpass-
ing the internal target range of between 15 and 17%.
The number of women in management functions rose
to 17.5% across the BMW Group (BMW AG: 15.8%).
During the
year under report, female representation
in the BMW Group's trainee and student development
programmes stood at approximately 39% and 28%
respectively.
Employee attrition rate at BMW AG*
At the same time, the workforce is becoming increas-
ingly international. Employees from over 120 countries
work together successfully for BMW AG. Moreover, a
balanced age structure in the workforce encourages
an exchange of ideas and knowledge between gen-
erations and plays a key role in reducing the loss of
know-how when valuable employees retire.
→ 18
18
17.2
16.0
15.3
17.5
15.8
15.1
Proportion of female employees in manage-
ment functions at BMW AG/BMW Group*
BMW Group 14.3
BMWAG 12.5
The BMW Group also came out on top again in
Trendence's "Young Professional Barometer Germany”.
It also received the "Most Attractive Employer of the
Last 20 Years" award for the most number one rank-
ings over this period. Moreover, the Group matched its
previous year's performance in the Universum study
"Young Professionals Germany", finishing first, second
and third in the categories Business, Engineering and
IT respectively. Based on the overall results of studies
across all sectors, the BMW Group continued to be
one of the world's highest-ranked companies in 2019.
BMW Group remains a highly attractive employer
Again in 2019, the BMW Group was ranked among
the world's most attractive employers. In the latest
"World's Most Attractive Employers" ranking pub-
lished by the agency Universum, the BMW Group
was once again named the most attractive automotive
company in the world.
119
Group
133,778
134,682
Realignment of vocational training
Started in 2018, the realignment of vocational training
continued to make good progress with the implemen-
tation of various strategic action packages, aimed in
particular at bringing about the digital transformation
of vocational training based on three pillars: modern
and mobile equipment, new digital collaboration and
learning platforms, and a broadly based system of
talent development specifically tailored to apprentices.
In addition to the basic range of skills still needed,
emphasis is also being placed on promoting the acqui-
sition of new technical and interdisciplinary expertise
across 30 vocations and 17 dual courses of study. The
latter were expanded to include the bachelor-degree
programmes Industry 4.0 Computer Science, Artificial
Intelligence and Production and Automation. The
total number of apprentices and participants in the
BMW Group's development programmes for young
talent remained at a high level during the year under
report at 4,801 (2018: 4,964; -3.3%).
High level of investment in employee qualification
Spending on employee training and development
totalled €370 million and therefore remained at a
similar level to the previous year (2018: €373 mil-
lion; -0.8%). The BMW Group consistently promotes
the principle of lifelong learning. The availability of
innovative, requirements-based learning opportuni-
ties enables employees to play an active role in shaping
the future of the BMW Group. During 2019, the range
of training courses on offer for key strategic areas such
as electric mobility, robotics and data analytics was
therefore expanded, new learning formats introduced
in conjunction with the digitalisation initiative, and
a greater emphasis placed on improving manager
skill sets, in particular those relevant for leadership
in the digital age.
In 2019, BMW Group China was also selected by busi-
ness students participating in the locally conducted
Universum student survey as the most attractive
employer in the automotive industry. The renowned
Zhaopin "Most Attractive Employer Award" named
the BMW Group the most attractive employer overall.
39
40
↑↑
Combined
Management
Report
General Information
and Group Profile
Organisation and
Business Model
Workforce
Sustainability
10
114
14.0
in %
In order to safeguard its viability going forward, the
BMW Group's business model is rigorously based
on the principle of sustainability. The Group works
continually on technical innovations that contribute
to solving global challenges such as climate change
and urbanisation. In this endeavour, the BMW Group
concentrates on three main topics:
The development of products and services for
sustainable individual mobility
The efficient use of resources along the entire
value chain
Responsibility towards employees and society
in general
Further information on sustainability within the
BMW Group is provided in the Sustainable Value Report
2019, which is published online at www.bmwgroup.com/svr.
The Sustainable Value Report is published together
with the Annual Report and drawn up in accordance
EU-28
The principles and importance of managing the
business on a sustainable basis are emphasised in
the BMW Group's corporate strategy, which includes
a clear commitment to preserving resources. The
BMW Group remains fully committed to ecological
and social sustainability along the entire value chain
as well as to comprehensive product responsibility.
Apart from the reduction of CO2 emissions, key
components of the Group's sustainability strategy
include industrial environmental protection, circular
economy, sustainability in the supply chain, employee
orientation and social commitment.
with the "Comprehensive" option of the standards
of the Global Reporting Initiative (GRI). This is the
highest level of transparency set out in the GRI stan-
dards, in which all relevant information and indicators
of the aspects identified as material are reported on.
The Sustainable Value Report is drawn up subject to
a limited assurance engagement in accordance with
ISAE 3000 (International Standard on Assurance
Engagements 3000 (Revised): "Assurance Engagements
other than Audits or Reviews of Historical Financial
Information").
The separate combined non-financial report is avail-
able online within the Sustainable Value Report 2019
at → www.bmwgroup.com/svr.
CO₂ fleet emissions
The development of sustainable products and services
is an integral part of the BMW Group's business model.
The early use of Efficient Dynamics technologies (since
2007) across the entire fleet and the electrification of
vehicles, which continued to make good progress in
2019, have enabled CO2 emissions to be continuously
reduced. Together, these two cornerstones are essen-
tial for future compliance with statutory CO2 and fuel
consumption limits going forward.
The BMW Group has reduced the CO2 emissions of its
newly sold vehicles in Europe by approximately 40%
between 1995 and 2019. In Europe*, average CO2 emis-
sions were 127 g CO2/km (2018: 128 g CO2/km; -0.8%)
in the year under report. Based on this figure, the
BMW Group's new vehicle fleet* in Europe in 2019
had an average fuel consumption of 5.0 litres of diesel
per 100 km or 6.0 litres of petrol per 100 km.
With effect from September 2018, all vehicles in the
EU were required to be approved in accordance with
the new WLTP testing cycle. However, the calculation
of CO2 fleet emissions by the EU Commission will
not be converted to WLTP until 2021. Therefore, for
reporting purposes up to and including 2020, WLTP
fleet emissions must be translated back to the previ-
ously applicable values calculated in accordance with
the outgoing New European Driving Cycle (NEDC).
Due to the changed test conditions used for WLTP
purposes, emission values are higher when translated
back to an NEDC basis (NEDC-correlated).
41
42
Based on the requirements of the German CSR Direc-
tive Implementation Act, since the financial year 2017
BMW AG has been required to publish a non-financial
declaration at both Company and Group level. The
declaration is published jointly for BMW AG and the
BMW Group as a separate combined non-financial
report within the Sustainable Value Report.
13.3
The BMW Group sees itself as a pioneer of sustain-
ability, not only within the automotive industry, but
across other sectors, too. Long-term thinking and
responsible action have long been the cornerstones of
the BMW Group's distinct identity and its economic
success. As early as 1973, the BMW Group was the
first company in the automotive sector to appoint an
environment officer. Since 2001, the BMW Group has
been committed to the United Nations Environment
Programme, the UN Global Compact and the Cleaner
Production Declaration. Through its sustainability
policy, the BMW Group is supporting the implemen-
tation of the UN's Sustainable Development Goals
(SDG), which were adopted in September 2015, and
is committed to complying with the Paris Climate
Convention.
Sustainability
3.39
3.5
2.70 2.64 2.78
2.08
2015
2016
2017
→ www.bmwgroup.com/responsibility
2018
* Number of employees on unlimited employment contracts leaving the Company.
2015
2016
2017
2018
2019
*Since 2017 including maternity leave.
2019
Other
-0.7
8,860
ON ECONOMIC
POSITION
REPORT
specific Environment
→ General and Sector-
Economic Position
Report on
Report
Automobile markets down
Management
48
47
For all project decisions, the project criteria and
long-term periodic results impact are measured and
incorporated in the long-term Group forecast. This
approach enables an analysis of the impact of project
decisions on periodic earnings and rates of return for
each year during the term of the project. The overall
result is a cohesive management model.
The net present value of a project indicates the extent
to which a project will be able to generate a positive
contribution to earnings over and above the cost of
capital. A project with a positive net present value
enhances value added and therefore results in an
increase in enterprise value. The internal rate of return
of the project corresponds to the average return on
capital employed in the project. It is equivalent to the
multi-year average RoCE for an individual project. It is
therefore consistent with one of the most important
of the key performance indicators.
Project decisions are based on calculations derived
from expected cash flows of the individual project.
Calculations are made for the full term of a project,
incorporating future years in which the project is
expected to generate cash flows. Project decisions
are taken on the basis of net present value and the
internal rate of return calculated for the project.
Operational business in the Automotive and Motor-
cycles segments is largely shaped by its life-cycle-
dependent project character. Projects have a substantial
influence on future business performance. Project
decisions are therefore a crucial component of financial
management in the BMW Group.
Value-based project management
Combined
Capital employed comprises the average amount of
Group equity employed during the year as a whole,
the financial liabilities of the Automotive and Motor-
cycles segments, and pension provisions. The earn-
ings amount corresponds to Group profit before tax,
adjusted for interest expense incurred in conjunction
with the pension provision and on the financial lia-
bilities of the Automotive and Motorcycles segments
(earnings before interest expense and taxes). The cost
of capital is the minimum rate of return expected by
capital providers in return for the capital employed.
Since capital employed comprises an equity capital
(e.g. share capital) and a debt capital element (e.g.
bonds), the overall cost of capital rate is determined
on the basis of the weighted average rates for equity
and debt capital, measured using standard market
procedures. The pre-tax average weighted cost of capi-
tal for the BMW Group in 2019 was 12%, unchanged
from the previous year.
on previous year
Financial Services segment posts
record results
2018
2019
2018
Value added Group
9,898
7,369
2018
BMW Group automobile deliveries
nonetheless at new high level
2019
BMW Group
in € million
→ 23
The global economy was impacted by a variety of
adverse factors during 2019, and the resulting 2.9%
growth rate was the slowest recorded for
The
years.
economic slowdown was broadly based. Amongst
the G7 countries, Japan was the only one to record
an increase in economic output. The BRIC countries
were also unable to escape the consequences of the
slowdown, resulting in lower growth rates across
the board.
General economic environment
ENVIRONMENT
GENERAL AND
SECTOR-SPECIFIC
Earnings amount
2,619
-443
7,279
2019
BMW Group employees
→ 15
31.12.2019
31.12.2018
Change in %
Automotive
2018
121,208
-0.6
Motorcycles
3,658
3,709
-1.4
Financial Services
8,798
121,994
2017
2016
2015
* Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
7,812
2019
Cost of capital (equity + debt capital)
Workforce
→ www.bmwgroup.com/en/responsibility/employees
Workforce at previous year's level
At 31 December 2019, the BMW Group employed a
workforce of 133,778 people worldwide. The number
of employees was thus at a similar level to the end of
the previous year (2018: 134,682 employees; −0.7%).
During 2019, natural fluctuation was used to lever-
age competencies to focus even more keenly on the
major topics of the future. Specialists and IT experts
were hired in future-oriented fields such as artificial
intelligence and autonomous driving, electric mobility,
smart production and logistics as well as data analysis,
software architecture, agile software development and
innovative drivetrain systems. The global production
network was also further expanded.
BMW Group apprentices at 31 December
→ 16
4,964
4,700
5,000
4,613
4,750
4,801
2,500
个个
Combined
Management
Report
-4.2
-0.7
Organisation and
Business Model
29.0
12,420
15,513
6,182
4,499
2018
2019
49.8
2018
2018
Return on capital employed in %
capital employed in € million
Profit before financial result in € million
Average
Automotive
Average capital
employed
2019
=
Capital employed corresponds to the sum of all cur-
rent and non-current operational assets, less liabilities
that generally do not incur interest (e.g. trade payables
and other provisions).
as the key performance indicator for segment prof-
itability. The management system also takes into
account average CO2 emissions for the fleet, which,
through their influence on ongoing development
costs and due to regulatory requirements, can have a
significant long-term impact on Group performance.
Fleet emissions correspond to average CO2 emissions
of new cars sold in the EU-28 countries.
Profit before financial result in € million
Average capital
employed
7
ROCE
Motorcycles
Profit before
financial result
Motorcycles
→ 21
Due to its key importance for the Group as a whole,
the Automotive segment is managed on the basis
of additional performance indicators which have a
significant impact on RoCE and hence on segment
performance. These value drivers are the number of
vehicle deliveries and the operating return on sales
(EBIT margin: segment-related profit/loss before
financial result as a percentage of segment revenues)
Return on capital employed
Motorcycles segment
→Management System
General Information
and Group Profile
Report
Combined
Management
46
By managing the business on the basis of key value
drivers, it is possible to gain a better understanding
of the causes of changes in the RoCE and to define
suitable measures to influence it.
As with the Automotive segment, the Motorcycles
segment is managed on the basis of RoCE. Capital
employed is determined on the same basis as in the
Automotive segment. The strategic RoCE target for
the Motorcycles segment is 26%.
ROCE Automotive
Profit before
financial result
The most comprehensive key performance indica-
tor used for the Automotive segment is RoCE. This
indicator provides information on the profitability of
capital employed and the operational business. ROCE
is measured on the basis of segment profit before
financial result and the average capital employed in
the segment. The strategic target for the Automotive
segment's RoCE is 26%.
BMW Group - value drivers
The BMW Group's internal management system is
based on a multilayered structure. Operating manage-
ment occurs primarily at segment level. In order to
manage long-term corporate performance and assess
strategic issues, additional performance indicators are
taken into account within the management system at
Group level. In this context, the value added serves
as one of several indicators for the contribution made
to enterprise value during the financial year. This
approach is made operational at both Group and
segment level through key financial and non-finan-
cial performance indicators (value drivers). The link
between value added and the relevant value drivers
is shown in a simplified form below.
7
General Information
and Group Profile
HERE
Since the acquisition of the HERE mapping service
by BMW AG, Daimler AG and AUDI AG in 2015, the
partners have been working on high-precision digi-
tal maps that can be linked to real-time vehicle data.
These digital maps are key for the next generation
of mobility and location-based services, including
providing the basis for new assistance systems. As
an independent platform, HERE has ensured at all
stages that it remains accessible to other partners in
the automotive sector and beyond. In December 2019,
HERE announced the intention of Mitsubishi Corpo-
ration (MC) and Nippon Telegraph and Telephone
Corporation of Japan (NTT) to jointly acquire a 30%
ownership stake in the business. Subject to regulatory
approvals, the transaction is expected to be closed
during the first half of 2020.
33
→ 19
43
Combined
Management
Report
General Information
and Group Profile
→ Management System
MANAGEMENT SYSTEM
The business management system applied by the
BMW Group follows a value-based approach that
focuses on profitability, consistent growth, value
enhancement for capital providers and job security.
Capital is considered to be employed profitably when
the amount of profit generated sustainably exceeds
the cost of equity and debt capital. In this way,
desired degree of corporate autonomy is also secured
in the long term.
the
44
Value added
Return on capital
(ROCE or RoE)
×
Automotive segment
segments and return on equity (ROE) for the Financial
Services segment. These indicators combine a wide
range of relevant economic information, such as
profitability (return on sales) and capital efficiency
(capital turnover) to provide a measurement of segment
performance and the development of enterprise value.
→ 20
Return on capital employed
Operating performance at segment level is managed at
an aggregated level on the basis of returns on capital.
Depending on the business model, the segments are
measured on the basis of return on total capital or return
on equity. Specifically, return on capital employed
(ROCE) is used for the Automotive and Motorcycles
Management of operating performance
at segment level
Due to the high level of aggregation, it is impractical
to manage the business on the basis of value added.
This key indicator therefore only serves for reporting
purposes. Relevant value drivers having a significant
impact on business performance and therefore on
enterprise value are defined for each controlling
level. The financial and non-financial value drivers
are reflected in the key performance indicators used
to manage the business. In the case of project-re-
lated decisions, the system follows a project-oriented
management logic that is based on value added and
profitability performance indicators, thereby provid-
ing a fundamental basis for decision-making.
45
45
Revenues
Expenses
Average weighted
cost of capital rate
Capital employed
Profit
Cost of capital
Capital turnover
Return on sales
2019
2018
2019
Return on capital employed in %
In order to ensure the success of the business in the
long term, the BMW Group enters into specific coop-
eration agreements and partnerships with companies
in the automotive industry as well as technology lead-
ers in other sectors. Against a background of rapid
technological change, the aim of collaborating with
external partners is to combine expertise in order to
bring innovations to market within the shortest time
possible.
BMW Brilliance Automotive
The BMW Group intends to increase its stake in
BMW Brilliance Automotive (BBA) from 50 to 75%.
An agreement to this effect was signed in 2018 with
the BMW Group's venture partner, Brilliance China
Automotive Holdings Ltd. (CBA). The contractual term
of the joint venture, which was due to expire in 2028,
is to be extended up to 2040. Following approval by the
Annual General Meeting of CBA on 18 January 2019,
the closing of the agreement continues to be subject
to regulatory approvals.
YOUR NOW
On 28 March 2018, the BMW Group signed an agree-
ment with Daimler AG regarding the merger of certain
business units that provide mobility services. Follow-
ing approval by the relevant antitrust authorities, the
transaction was closed on 31 January 2019. The two
companies are now pressing ahead as planned to
realise their joint vision of fully electric and autono-
mous on-demand mobility. The new range of mobility
services will be easy to access, intuitive to use, and cater
to customers' needs. The cooperation comprises the
joint ventures REACH NOW (on-demand mobility and
multimodal services), CHARGE NOW (battery charg-
ing), FREE NOW (ride-hailing), PARK NOW (parking)
and SHARE NOW (car-sharing). The YOUR NOW
companies were contributed into a holding company
with effect from 31 December 2019. Based on this, the
BMW Group and the Daimler Group each have an
equal share in the holding company.
Under the YOUR NOW umbrella, BMW and Daimler
offer innovative solutions for cities and municipalities
seeking to make mobility more efficient and sustain-
able. Further information is provided in → note 2 to
the Group Financial Statements.
→ see
Cooperation Agreements and
Partnerships
note 2
Value added Group*
earnings amount
(cost of capital rate ×
capital employed)
-
=
= earnings amount
cost of capital
Value added
Group
7
Spotlight
The BMW Group again achieved outstanding results
in prestigious sustainability ratings in 2019, thereby
confirming the Company's view of its leading posi-
tion as a sustainable enterprise. In the Dow Jones
Sustainability Indices (DJSI) rating, the BMW Group
is the only German automobile manufacturer to have
been included once again in the two indices "Europe"
and "World" and the only company in the sector to
have been continuously represented since the indices
were established. In the CDP rating (formerly the
Carbon Disclosure Project), the Group achieved the
category Leadership with a rating of A- in the year
under report. Furthermore, the Group was again
listed in the British FTSE4Good Index in 2019. The
BMW Group is also listed in the MSCI, Sustainalytics
and ISS-oekom rankings, holding a leading position
in each within the industry.
Top rankings in sustainability ratings
In the course of regular materiality analysis, social
challenges are continually monitored and analysed
in order to gauge their significance from the point
of view of both external and internal stakeholders.
Sustainability
→ Cooperation
Agreements and
Partnerships
Production
In its efforts to reduce CO2 emissions generated by
production and thus contribute to climate protection,
the BMW Group uses energy-efficient equipment pow-
ered by renewable energy. In 2019, 87% (2018: 79%) of
the BMW Group's electricity worldwide was generated
from renewable sources or were compensated through
appropriate certificates of origin. As from 2020, all the
Group's locations worldwide are scheduled to obtain
their electricity exclusively from renewable sources.
In 2019, at 2.04 MWh per vehicle* produced, the
BMW Group further reduced the amount of energy
consumed in the production process compared with
the previous year (2018: 2.12 MWh; -3.8%).
Through the use of measures to boost energy efficiency
and the purchase and in-house generation of electricity
from renewable sources at BMW Group manufactur-
ing sites, production-related CO2 emissions fell by
25.0% to 0.30 tonnes per vehicle* produced in the
year under report compared with the previous year
(2018: 0.40 tonnes).
Social engagement
Social engagement is also an integral part of the
BMW Group's corporate identity. For many years now,
the BMW Group has firmly supported intercultural
exchange. In partnership with the UN Alliance of Civi-
lizations, the BMW Group presents the Intercultural
Innovation Award for projects the Company views as
exemplary in this field. Since 2011, each year it has
presented the "BMW Group Award for Social Com-
mitment” to employees who have made an exceptional
contribution through their outstanding volunteer work.
The Group addresses current social challenges,
primarily in areas where its expertise enables it to
make the greatest impact. The main focus here is on
problem-solving approaches that are internationally
applicable and have a tangible long-term impact by
helping people to help themselves. With this aim in
mind, the BMW Group works together with the BMW
Foundation Herbert Quandt.
BMW Foundation Herbert Quandt
The BMW Foundation Herbert Quandt is an inde-
pendent corporate foundation whose activities
contribute to the BMW Group's social responsibility
and mission goals. The foundation endeavours to
inspire leaders worldwide to assume and continually
develop their social responsibility and political com-
mitment. Leaders are also encouraged to work for a
peaceful, just and sustainable future. With its Respon-
sible Leadership programmes, a global network and
*Efficiency indicator calculated from Scope 1 and Scope 2 CO₂ emissions (market-based
method in accordance with GHG Protocol Scope 2 Guidance) of vehicle production, exclud-
ing motorcycles (adjusted for CHP losses), divided by the total amount of produced vehi-
cles, including from the joint venture BMW Brilliance Automotive Ltd., Shenyang (China),
but excluding vehicles from contract production at Magna Steyr and Nedcar.
Average
capital employed in € million
2019
In 1959, Herbert Quandt secured the independence of
BMW AG, thus laying the foundation for the successful
development of the BMW Group. In recognition of his
entrepreneurial achievements, in 1970 BMW AG estab-
lished the "BMW Stiftung Herbert Quandt", which
has meanwhile been renamed the "BMW Foundation
Herbert Quandt" with expanded endowment capital.
Further information on the topics of sustainability
and human resources within the BMW Group is avail-
able in the Sustainable Value Report 2019, which is
published online at www.bmwgroup.com/svr.
Stakeholder dialogues and materiality analysis as
basis for sustainability management
The BMW Group is in continual dialogue with its
numerous stakeholders, both in Germany and abroad.
Stakeholder feedback provides the BMW Group with
a clear picture of how current trends are changing
the business environment and provides key input for
the strategic decision-making process. In 2019, a total
of four dialogue events (BMW Group Dialogues) on
corporate responsibility and sustainability were held
in Tel Aviv, San Luis Potosí, Seoul and Munich. The
events addressed various topics, including product
and production responsibility, responsibility for
resources, and responsibility for future mobility.
The information provided by these two key perfor-
mance indicators is further complemented by pre-tax
return on sales and value added. Value added, as a
highly aggregated performance indicator, also provides
an insight into capital efficiency and the (opportunity)
cost of capital required to generate Group profit. A
positive value added means that a company is gener-
ating more value than the cost of capital.
Group profit before tax provides a comprehensive
measure of the Group's overall performance after
consolidation effects and a transparent basis for com-
paring performance, particularly over time. The size of
the Group's workforce is monitored as an additional
key non-financial performance indicator.
impact-oriented investments, the BMW Foundation
Herbert Quandt supports the sustainability targets of
the United Nations' Agenda 2030 → www.bmw-foundation.org.
Strategic management at Group level
Average equity capital
=
RoE Financial
Services
29.4
of return on equity. RoE is defined as segment profit
before tax, divided by the average amount of equity
capital in the Financial Services segment. The target
is a long-term return on capital of at least 14%.
As is common practice in the banking sector, the
Financial Services segment is managed on the basis 7
Strategic management and quantification of finan-
cial implications for long-term corporate planning
are performed primarily at Group level. The key
performance indicators are Group profit before tax
and the size of the Group's workforce at the year-end.
Return on equity
Financial Services segment
2019
2018
194
175
The principal value drivers are the number of motor-
cycle deliveries and the operating return on sales
(EBIT margin: segment-related profit/loss before
financial result as a percentage of segment revenues)
as the performance indicator for segment profitability.
660
616
2018
→ 22
Profit before tax
Profit before tax in € million
* Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
14.8
15.0
14,522
2018
2019
2018*
Return on equity in %
15,146
Financial Services
28.4
2019
2018*
2,272
2,143
Average equity capital in € million
2019
7,118
-2,140
-2,530
Income taxes
Financial result
-26.1
Profit before tax
9,627
694
Profit from continuing operations
Profit/loss from discontinued operations
Net profit
-293
-9,568
-17.0
8,933
7,411
123
-1,285
2.1
15.4
-9,367
-1.7
18,378
18,063
-9.8
-78,477
99
4,978
7.49
-29.9
9.9
-3.1
4.8
7.3
-2.5
17.3
19.0
6.8
-1.7
30.1
26.3
3.8
* Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
55
55
-86,147
Effective tax rate
7,097
Gross profit margin
Pre-tax return on sales
44
-33
5,022
7,064
-28.9
Earnings per share of common stock in €
Earnings per share of preferred stock in €
Post-tax return on sales
7.47
-29.5
10.62
-29.5
in %
2019
2018*
Change in %pts
10.60
7.6
slight increase
104,210
between 8 and 10
solid increase
in line with last year's level
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2019: 538,612 units).
2 EU-28.
units
175,162 (+5.8%)
solid increase
solid increase
%
29.4 (+1.0%pts)
90
%
slight increase
%
15.0 (+0.2%pts)
in line with last
year's level
In an ad hoc announcement dated 5 April 2019,
the BMW Group reported that the EU Commission
had informed it of a "Statement of Objections" in
conjunction with ongoing antitrust proceedings. The
EU Commission is investigating whether German
automobile manufacturers cooperated in techni-
cal working groups to restrict competition in the
8.2 (+0.1%pts)
development and rollout of emissions-reduction
technologies. The Statement of Objections leads the
BMW Group to conclude that it is probable ("more
likely than not") that the EU Commission will issue
a significant fine. If necessary, the BMW Group will
contest the EU Commission's allegations with all the
legal means at its disposal.
29.0 (-20.8%pts)
significant decrease
4.9 (-2.3%pts)
56
€ million
Actual outcome
in 2019
7,118 (-26.1%)
significant decrease
133,778 (-0.7%)
in line with last
year's level
slight decrease
%
units
2,538,367 (+2.2%)
slight increase
127 (-0.8%)
in line with last
year's level
between 6 and 8
significant decrease
Q1: between 4.5 and 6.5
%
g CO2/km
53
54
Combined
While BMW Group believes the retail vehicle delivery
data presented in this annual report to be materially
correct in accordance with BMW Group's definition
of deliveries, challenges and further revisions of such
data cannot be ruled out.
Results of operations of the BMW Group
The BMW Group recorded a solid year-on-year
increase in revenues for the financial year 2019.
Alongside product mix effects, higher revenues from
leasing and the sale of products previously leased to
customers also had a positive influence in the year
under report. Moreover, revenues were positively
impacted by currency factors, mainly relating to the 7
BMW Group condensed income statement
→ 31
exchange rates of the US dollar, Chinese renminbi,
Japanese yen and Thai baht. In the previous year,
revenues were also negatively impacted by the high
level of competition due to the reaction of competitors
to the early implementation of WLTP regulations as
well as by the unfavourable effect of trade conflicts
on selling prices.
in € million
Specifically, the retail vehicle delivery data presented
in this annual report (years 2015 through 2019) have
been revised by adjusting the data for BMW Group's
six most significant markets to reflect the above. In
the years 2015 through 2019, these six markets (China,
USA, Germany, UK, Italy and Japan) represented on
average 68.3% of BMW Group's total vehicle deliv-
eries. For each of the years 2015 through 2019, these
revisions amounted to less than 1% of BMW Group's
total retail vehicle deliveries. The retail vehicle deliv-
ery data for BMW Group's other markets have not
been adjusted, as BMW Group believes the impact
to be immaterial.
2019
Change in %
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
Other operating income and expenses
Profit before financial result
2018*
In connection with reviewing its sales practices
and related reporting practices, BMW Group also
reviewed prior period retail vehicle delivery data and
separately determined that certain vehicle deliveries
were not reported in the correct periods. BMW Group
has revised the data on those vehicle deliveries that
had not been reported in the correct periods as
further described below, and is making, and will
continue to make in the future, certain adjustments
to its policies and procedures in order to improve the
reliability and validity of its retail vehicle delivery
data, in particular with respect to the timing of the
recognition of deliveries.
Retail vehicle deliveries during a given reporting
period do not correlate directly to the revenue that
BMW Group recognises in respect of such report-
ing period.
See Glossary - Explanation of Key Figures - Deliveries
for the definition of deliveries.
Management
Report
Report on
Economic Position
→ Comparison of
Forecasts for 2019
with Actual Results
in 2019
Irrespective thereof, the fact that a fine is "more
likely than not" triggers a requirement to recognise
a provision in accordance with International Financial
Reporting Standards. Based on information currently
available and in accordance with International Finan-
cial Reporting Standards, a provision of approximately
€1.4 billion was recognised in the first quarter of 2019
to take account of financial impacts that cannot yet
be definitively assessed. Group and Automotive seg-
ment earnings for the first quarter as well as for the
full financial year were impacted accordingly. The
BMW Group has examined the objections and gained
access to the documents in the EU Commission's
investigation file. In December 2019, the BMW Group
submitted a detailed response to the EU Commission,
which the latter will now examine before determining
the next steps in the proceedings. Consequently, it
is not yet possible to assess the ultimate financial
impact definitively.
Detailed information on the key performance indica-
tors for the Group is presented as part of the following
review of the BMW Group's results of operations,
financial position and net assets. The development
of the key performance indicators for the Automo-
tive, Motorcycles and Financial Services segments is
described in the relevant sections on each segment.
In December 2019, BMW Group was informed by
the U.S. Securities and Exchange Commission
(the SEC) that the SEC had commenced an inquiry
into BMW Group's vehicle sales* practices and
reporting. On January 22, 2020, the SEC formally
opened an investigation into potential violations of
U.S. securities laws by BMW Group relating to dis-
closures regarding BMW Group's unit sales of new
vehicles. BMW Group is reviewing the matter and
cooperating with the SEC's investigation. Information
on contingent liabilities is provided in → note 38 to
the Group Financial Statements.
The preparation of BMW Group's retail vehicle deliv-
ery data involves estimates and judgments and is
subject to other uncertainties, including:
The vast majority of deliveries of vehicles are
carried out by independent dealerships or other
third parties, and BMW Group is reliant on
such third parties to correctly report relevant
data to BMW Group.
*see Glossary
for the definition
of deliveries
→ see
note 38
-
In addition, the definition of deliveries includes
any vehicles delivered in the United States or
Canada if:
the relevant dealers designate such vehicles as
service loaner vehicles or demonstrator vehi-
cles (BMW Group provides financial incentives
in this regard to such dealers); or
such vehicles are company vehicles purchased
by dealers or other third parties at auctions
or by dealers directly from BMW Group,
each of which may not correlate to a sale to a
consumer or other end user in the relevant
reporting period.
96,855
Combined
Management
Report
22.7
Economic Position
52
57
Depreciation and amortisation on property, plant
and equipment and intangible assets recorded in cost
of sales and in selling and administrative expenses
totalled €6,017 million (2018: €5,113 million).
Selling and administrative expenses amounted to
€9,367 million and were therefore slightly down on
the previous year (2018: €9,568 million), helped by a
decrease in personnel costs that was partially attrib-
utable to amendments to pension plans in the USA.
The net amount of other operating income and ex-
penses decreased significantly from a positive amount
of €123 million to negative €1,285 million, mainly due
to the recognition of a provision of approximately
€1.4 billion in connection with the EU Commission
antitrust proceedings. Further information is provided
in → note 10 to the Group Financial Statements.
As a result, profit before financial result (EBIT) de-
creased by €1,522 million to €7,411 million (2018:
€8,933 million).
* Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
The financial result deteriorated significantly year-on-
year by €987 million to a net expense of €293 million.
The main negative factor here was a €496 million drop
in the result from equity accounted investments,
whereby a €179 million increase in the Group's share
of earnings of BMW Brilliance Automotive Ltd. was
more than offset by the negative at-equity result of
€662 million attributable to the YOUR NOW compa-
nies. In addition to operating losses, the YOUR NOW
at-equity result also included write-downs recorded
at separate entity level amounting to €277 million
arising in conjunction with the reorientation of the
YOUR NOW Group. Further information is provided
in → note 2 to the Group Financial Statements.
→ see
note 10
→ see
note 2
In addition, the higher interest expense arising in
connection with the recognition of lease liabilities in
accordance with IFRS 16 as well as the higher amount
of interest unwound on non-current provisions for
statutory and non-statutory warranty obligations had
a negative impact on the net interest result.
At a net negative amount of €109 million, other finan-
cial result was significantly down on the previous year
(2018: net positive amount of €51 million). The one-
off revaluation gain of €329 million arising from the
pooling of mobility services with the Daimler Group
was partially offset by impairment losses totalling
€240 million. In the previous year, other financial
result also included a revaluation gain of €209 million
arising on the takeover of DriveNow. Other financial
result was also adversely affected by revaluation losses
recognised on interest rate hedges in connection with
the refinancing of the Financial Services business.
As forecast most recently in the Quarterly Statement
to 30 September 2019, Group profit before tax for
the full financial year was significantly down on the
previous year and, at €7,118 million (2018: €9,627 mil-
lion), was therefore in line with revised expectations.
The income tax expense for the year amounted to
€2,140 million (2018: €2,530 million). The effective
tax rate increased to 30.1% (2018: 26.3%), mainly due
to the non-deductibility of the expense recorded for
the provision relating to EU Commission anti-trust
proceedings as well as the non-deductibility of impair-
ment losses relating to the YOUR NOW Group, recog-
nised in other financial result. Tax income received for
prior years - mainly due to the successful conclusion
of intergovernmental tax treaties covering the topic
of transfer pricing – had an offsetting effect.
The net interest result deteriorated by €331 million,
mainly due to the reversal of provisions recorded in
2018 following the conclusion of mutual
agreement
procedures relating to taxes and customs.
-10.1
43.3
33.2
2,984
6,419
6,890
In addition to the higher level of cost of sales incurred
for the Financial Services business, there was a year-
on-year increase in the area of research and develop-
ment, where expenses rose to €5,952 million (2018:
€5,320 million), mainly in relation to the electrification
of vehicles (including the iNEXT), ongoing develop-
ment work on autonomous driving and digitalisation.
In the previous year, capitalised development costs
related mainly to investments in new model series such
as the X5, the BMW 3 Series and the BMW 8 Series,
while in 2019 they related mainly to amounts invested
in autonomous driving, the BMW 1 Series and a new
generation of electrified vehicles. Furthermore, the
higher level of costs capitalised in the previous years
referred to above also resulted in increased amortisa-
tion on capitalised development costs in 2019.
2019
2018*
Change in %pts
BMW Group performance indicators relating to research and development expenses
→ 34
in %
Research and development expenditure ratio
Capitalisation rate
6.2
7.1
-0.9
In the year under report, the workforce size, based
on a total of 133,778 employees, remained at a simi-
lar level year-on-year and was therefore in line with
expectations (2018: 134,682 employees; -0.7%).
58
Combined
Management
Report
→ Report on
4,790
4,296
494
Effects of exchange rate and changes in composition of Group
-111
-44
-67
Change in cash and cash equivalents
1,057
1,940
-883
The decrease in cash inflow from the Group's operat-
ing activities was attributable in particular to higher
tax payments, mainly relating to the tax reform in the
USA. The decrease was exacerbated by the increase
in working capital over the twelve-month period,
primarily reflecting the slight increase in inventories
held by the Automotive, Motorcycles and Financial
Services segments.
Total cash outflow from the Group's investing activ-
ities was slightly down on the previous year. Lower
cash outflows for investments in property, plant
and equipment and intangible assets (€875 million
decrease) contrasted with higher net cash outflows for
investments in financial assets (€761 million increase),
the latter relating primarily to the acquisition of the
YOUR NOW companies (cash outflow of €890 million).
The higher dividend received from BMW Brilliance
Automotive Ltd., Shenyang (€259 million increase),
also had a positive impact.
The amount of cash inflow from the Group's financing
activities resulted mainly from the higher volume of
asset-backed securities financing, while the repay-
ment of loans had an offsetting effect.
in line with last year's level
Cash inflow (+)/outflow (-) from financing activities
2,134
79
-7,284
Economic Position
Financial position of the BMW Group
The consolidated cash flow statements for the Group
and the Automotive and Financial Services segments
show the sources and applications of cash flows for the
financial years 2019 and 2018, classified according to
operating, investing and financing activities. Cash and
cash equivalents in the cash flow statements corre-
spond to the amounts disclosed in the balance sheet.
Cash flows from operating activities are determined
indirectly, starting with Group and segment net profit.
By contrast, cash flows from investing and financing
activities are based on actual payments and receipts.
BMW Group cash flows
→ 35
in € million
2019
2018
Change
Cash inflow (+)/outflow (-) from operating activities
3,662
5,051
-1,389
Cash inflow (+)/outflow (-) from investing activities
-7,363
→ Report on
-1,414
5,320
2.3
2.7
100.0
100.0
2019
2018*
20.2
Change in %
48,690
44,558
9.3
Cost of sales relating to financial services business
23,623
22,042
Manufacturing costs
30.9
30.6
46.2
Group revenues by region were as follows:
BMW Group revenues by region
→ 32
in %
Europe
Asia
Americas
Other regions
Group
BMW Group cost of sales
→ 33
in € million
2019
2018*
44.4
7.2
thereof interest expense relating to financial services business
2,288
2,035
2,996
22.7
Cost of sales
86,147
78,477
9.8
* Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
Group cost of sales increased compared to the pre-
vious year. Higher manufacturing costs due to stricter
regulatory requirements (especially in connection
with the reduction of fleet emissions), negative
currency effects, higher raw material prices (espe-
cially for palladium and rhodium) as well as higher
warranty expenses all had a negative impact on
cost of sales.
in € million
Research and development expenses
Amortisation
New expenditure for capitalised development costs
Total research and development expenditure
2019
2018
5,952
3,675
-1,667
Other cost of sales
1,717
12.4
Research and development expenses
5,952
5,320
11.9
thereof amortisation of capitalised development costs
1,667
1,414
17.9
Service contracts, telematics and roadside assistance
1,641
1,844
-11.0
Warranty expenses
2,566
49.4
significant decrease
International automobile markets
in 2018 Annual Report
Lithium carbonate
200
300
50
100
Palladium
2015
Source: Reuters.
100
200
300
Index: December 2014=100
→ 26
Metals price trend
2020
2019
2018
2017
2016
Gold
2015
Cobalt
Platinum
→ 28
A downward trend was observable on most automo-
bile markets in 2019. Accordingly, registration figures
for
passenger cars and light commercial vehicles fell
worldwide by 2.0% to a total of 83.5 million vehicles.
International automobile markets
100
150
Index: January 2015=100
→ 27
Steel price trend
Despite some risks, oil markets were relatively calm
in 2019. The drone attack on oil production facilities
in Saudi Arabia caused prices to rise significantly in
the short term, but had little impact on price levels
in the medium term. Whereas prices in the region of
53 US dollars per barrel were still seen on the market
at the beginning of the year, the price of Brent crude
oil rose to a peak of 75 US dollars due to prevailing
concerns. Overall, the average price per barrel fell
sharply from 72 US dollars to 64 US dollars year-on-
year. WTI, the benchmark for crude oil in the USA,
followed a similar trend, with an average price of
around 57 US dollars per barrel for the year as a whole.
Prices for lithium and cobalt, which are used as raw
materials in batteries, were well down in 2019 com-
pared with the high levels of the recent past. Increased
supply capacity and significantly lower-than-expected
demand for these materials meant that prices remained
at a lower level than in previous years.
Against this backdrop, prices for precious and non-fer-
rous metals rose only slightly. Palladium and rhodium,
which are mainly used in catalytic converters, were
the exception to the general trend and became signifi-
cantly more expensive during the reporting period.
Increasing uncertainty regarding the global economy
also put pressure on commodity markets in 2019.
After substantial rises for steel in the previous year,
prices consolidated at a lower level in 2019.
Energy and raw materials prices
2020
2019
2018
2017
2016
0
100
Europe
Price in US dollars
Price in euros
50
100
Chinese Renminbi
British Pound
150
100
150
Index: December 2014=100
The Chinese renminbi stabilised year-on-year with an
average exchange rate of 7.73 renminbi to the euro
over the year. The Japanese yen also appreciated in
value with an average exchange rate of 122 yen to the
euro during the year under report.
The development of the British pound's exchange
rate over the year reflected the uncertainty of capital
markets regarding their expectations of an orderly
Brexit. As a consequence, the value of the British
currency dropped to 0.93 pounds to the euro at one
stage, compared to a high of 0.83, ultimately resulting
in an average rate of 0.88 pounds to the euro in 2019,
nearly unchanged from the previous year.
The US dollar/euro exchange rate fluctuated between
1.09 and 1.15 US dollars to the euro during 2019, fin-
ishing at an average rate of 1.12 US dollars to the euro
for the year.
Currency markets
and China.
Although the drop in consumer demand due to the
value added tax hike was slightly greater than expect-
ed, this effect was more than offset by the even more
pronounced growth in consumer demand that had
occurred prior to the hike. Government spending was
increased on a significantly greater scale than one
year earlier, thereby boosting the domestic economy.
By contrast, exports fell year-on-year in 2019 as a
consequence of the trade disputes between the USA
→ 24
Exchange rates compared to the euro
In Japan, GDP grew by 0.7%, mainly attributable to a
moderate year-on-year increase in private consumption. 7
Growth in China came in at 6.1% in 2019, slightly
down on the previous year. Private consumer spending
decreased year-on-year. The trade conflict with the USA
caused import prices to increase, thereby triggering a
rise in the inflation rate, the effect of which was felt
most noticeably by private households. Similarly, there
was no improvement in the willingness of companies
to invest, with volumes even lower than one year
earlier. During 2019, however, numerous protective
tariffs imposed by the USA on Chinese products
exacerbated the factors slowing down the Chinese
economy, causing the government to undertake fiscal
and monetary measures to prevent the economy from
cooling too quickly.
Gross domestic product (GDP) in the USA was up by
2.3% in 2019, marking the country's tenth successive
year of economic growth. Once again, domestic demand
provided the momentum for growth. In addition to
higher spending by private households, public-sector
spending also rose significantly. Consumer sentiment
within private households was underpinned by a his-
torically low unemployment rate and rising wages. By
contrast, the level of investment by companies and
private households fell noticeably. Moreover, exports
stagnated and industrial production contracted on a
massive scale. Weak economic growth combined with
a moderate inflation rate of 1.8% were the decisive
factors behind the US Reserve's decision to cut interest
rates sharply during the period under report.
Forecast revision
during the year
Russian Rouble
Source: Reuters.
US Dollar
50
100
Price per barrel of Brent Crude
→ 25
Oil price trend
→ General and Sector-
specific Environment
Economic Position
Report on
Report
Management
Combined
49
Source: Reuters.
2020
2019
2018
2017
2016
2015
50
Japanese Yen
Change in %
50
thereof Germany
Moderate economic growth, the increase of the value
added tax and an inflation rate that continues to
be significantly under the 2% target prompted the
Japanese central bank to maintain its highly expansive
monetary policies.
In August, the Bank of China (PBOC) announced a
reform of its lending rate mechanism, replacing the
traditional benchmark interest rate with the market-
oriented Loan Prime Rate (LPR). On introduction of
the new system, the LPR stood at 4.25 %, 0.10% lower
than the former traditional benchmark rate. During
the remainder of the year, the PBOC reduced the LPR
to 4.15% in two steps.
During the period under report, the US Federal
Reserve (Fed) cut interest rates for the first time since
the financial crisis. After three reductions of 0.25%
in each case, at 31 December 2019 the benchmark
interest rate was within a range of 1.50 to 1.75%. After
its meeting in October, the Fed signalled that it would
not reduce interest rates further in the near future.
With the outcome of the UK's EU exit negotiations
being uncertain, the Bank of England (BOE) followed
a “wait-and-see” approach and left the key interest
rate unchanged at 0.75% in 2019.
In September, the European Central Bank decided to
cut the deposit rate by 0.10% to -0.50% and resume
its bond purchase programme. Since November 2019,
it has been buying securities at a monthly rate of
€20 billion; an end to the purchase programme has
not been set.
The trade dispute between the USA and China,
increasing trade barriers and growing uncertainty as a
result of geopolitical risks all had a negative impact on
the global economy in 2019. The major central banks
responded to these developments with expansionary
monetary policies.
International interest rate environment
Forecasts for 2019
with Actual Results
in 2019
Comparison of
→ Overall Assessment
by Management
↑ ↑ ↑
→ General and Sector-
specific Environment
Economic Position
Report on
Combined
Management
Report
51
Source: Working Group for the Iron and Metal Processing Industry.
2020
2019
OVERALL ASSESSMENT
BY MANAGEMENT
Overall assessment of business performance
Despite challenging conditions and volatility on inter-
national markets, the BMW Group can look back on
an overall satisfactory business performance in 2019.
Despite some downward trends in figures in the past
financial
year,
the BMW Group's results of operations,
financial position and net assets are all indicative
of its solid financial condition. Overall, in view of
the various economic challenges arising during the
year, business developed in line with management's
revised expectations, taking into account the provision
recognised in connection with the EU Commission's
antitrust proceedings. This assessment also takes
into account events after the end of the reporting
period. The impact expected from the spread of the
coronavirus has been taken into account in the out-
look for 2020.
52
Forecast for 2019
+1.1
FINANCIAL SERVICES SEGMENT
Return on equity
Return on capital employed
EBIT margin
Deliveries to customers
MOTORCYCLES SEGMENT
Return on capital employed
EBIT margin
2018
Fleet emissions²
AUTOMOTIVE SEGMENT
Workforce at year-end
Profit before tax
GROUP
→ 30
BMW Group comparison of 2019 forecasts with actual outcomes 2019
Key figures presented in the report have been rounded
in accordance with standard commercial practice. In
certain cases, this may mean that values do not add up
exactly to the stated total and that percentages cannot
be derived exactly from the values shown.
COMPARISON OF
FORECASTS FOR 2019
WITH ACTUAL RESULTS
IN 2019
52
Deliveries to customers¹
2017
The following table shows the development of key per-
formance indicators for the BMW Group as a whole as
well as for the Automotive, Motorcycles and Financial
Services segments in the financial year 2019 compared
to the forecasts made in the Annual Report 2018. ¬
2015
Motorcycle markets in the 250 cc plus class generally
performed well during 2019. The number of new reg-
istrations worldwide increased by 3.1%
International motorcycle markets
Total
Japan
China
-2.0
-0.8
-3.9
USA
+4.0
thereof UK
-4.6
thereof Spain
+0.1
thereof Italy
+1.6
2016
thereof France
+4.9
International motorcycle markets
→ 29
-1.2
thereof Germany
Total
3.1
Europe
13.2
thereof Brazil
-4.8
thereof USA
America
14.5
thereof Spain
-3.3
5.5
thereof Italy
year-on-year.
12.0
thereof France
7.5
50
Change in %
8.2
Trade receivables
3,403
3,016
12.8
Other assets
1.5
12,939
Inventories
Deferred and current tax
10,596
9.8
3.2
6.2
-4.7
7,685
7,325
Financial assets
40.5
4.0
87,013
92,437
Receivables from sales financing
22.1
-4.9
0.3
-7.0
-5.0
20.7
0.0
15,891
100.0
739
7.6
EQUITY AND LIABILITIES
9.1
208,938
228,034
0.0
5.3
11
461
9.1
9.6
10,979
12,036
Total assets
Assets held for sale
Cash and cash equivalents
1.1
-1.8
−1.1
2,546
2,518
7.0
10.2
11.5
14,248
5.7
703
42,609
1.4
The overall objective of Group financing is to ensure
the solvency of the BMW Group at all times, focusing
on three areas:
A broad range of instruments on international money
and capital markets is used to refinance Group oper-
ations worldwide. The funds raised are used almost
exclusively to finance the BMW Group's Financial
Services business.
Refinancing
59
59
3,199
Investments accounted for using the equity method
18.7
9.9
11.4
38,259
Leased products
10.2
16.5
17.4
19,801
23,245
Property, plant and equipment
5.1
6.8
6.9
10,971
11,729
Intangible assets
total in %
2019
Equity
balance sheet
1. The ability to act through permanent access
to strategically important capital markets
Other investments
2. Autonomy through the diversification of refi-
nancing instruments and investors
Financing measures undertaken at corporate level
ensure access to liquidity for the Group's operating
subsidiaries at standard market conditions and con-
sistent credit terms. Funds are acquired in line with
a target liability structure, comprising a balanced
mix of financing instruments. The use of longer-term
instruments to fund the Group's Financial Services
business and the maintenance of a sufficiently high
liquidity reserve serves to avoid the liquidity risk in
the portfolio. This conservative financial approach
also helps the Group's rating. Further information
is provided in the section Liquidity risks within the
"Report on Outlook, Risks and Opportunities".
22.0
21.9
2,624
1,031
1.0
774
0.8
33.2
105,219
100.0
98,617
100.0
6.7
57,358
Amount
utilised*
Programme
framework
programmes:
Australian Medium Term Notes
Commercial Paper
Euro Medium Term Notes
in € billion
Programme
The following table provides an overview of amounts
utilised at 31 December 2019 in connection with the
BMW Group's money and capital market
A total of 13 public ABS transactions were executed in
2019, including five in China, two each in Japan, the
USA and Germany, and one each in Canada and South
Africa with a total volume equivalent to €7.7 billion.
Further funds were also raised via new and prolonged
ABS conduit transactions in Japan, UK, Germany and
Australia with a total volume equivalent to €5.6 bil-
lion. Other transactions remain in place in Germany,
Switzerland and South Africa, amongst others.
In 2019, the BMW Group issued three euro bench-
mark bonds on the European capital market with a
total issue volume of €6.8 billion, as well as bonds
on the US capital market with a total issue volume
of USD 5.0 billion. Bonds were also issued in British
pounds, Canadian dollars, Swiss francs and Norwe-
gian krone for a total amount of €2.0 billion. Private
placements totalling €4.4 billion were also issued,
including, for the first time, so-called "Panda bonds"
for an amount of 9.5 billion Chinese renminbi.
notes 31, 35
and 39
→ see
On account of its good ratings and the high level
of acceptance it enjoys on capital markets, the
BMW Group was again able to refinance operations at
favourable conditions on debt capital markets during
the financial year 2019. In addition to bonds, loan
notes and private placements, the Group also issued
commercial paper. As in previous years, all issues were
in high demand, not only from private investors but
also from institutional investors in particular. In addi-
tion, retail customer and dealership financing receiv-
ables as well as rights and obligations from leasing
contracts are securitised in the form of asset-backed
securities (ABS) financing arrangements. Specific
banking instruments, such as customer deposits held
by the Group's own banks in Germany and the USA,
are also deployed for financing purposes. In addition,
loans are also taken from international banks.
3. Focus on value through the optimisation of
financing costs
59,907
21,119
3.6
9.2
7.5
10.1
Liabilities in conjunction with assets held for sale
62
0.0
0.0
Total equity and liabilities
228,034
208,938
9.1
7.6
23,066
100.0
The balance sheet total of the BMW Group was signifi-
cantly higher than at the end of the previous financial
year. Currency impacts from the British pound, the
US dollar, the Canadian dollar and the Thai baht
contributed to this increase.
The sharp rise in property, plant and equipment com-
pared to one year earlier was mainly attributable to
the recognition of right-of-use assets in accordance
with IFRS 16, as a result of which property, plant
and equipment increased by €2.8 billion. In addition,
substantial amounts were invested to develop the
product portfolio.
Leased products went up significantly year-on-year
on the back of leasing portfolio growth in various
countries, including Germany and the USA.
Inventories also increased significantly compared to
the previous year due to the build-up of inventories
of higher-value vehicles such as the BMW X5 and
X7 models. Higher inventories of raw materials and
supplies also contributed to the rise, partly reflecting
the higher purchase price of some precious metals,
especially palladium.
Receivables from sales financing increased solidly
over the twelve-month period, mainly due to larger
credit financing volumes in the UK and China. A
total of 1,320,656 new credit financing contracts with
retail customers were signed during the financial
year 2019. Compared to the end of the previous
financial year, the contract portfolio with dealers
and retail customers under management grew by
4.5% to 4,064,561 contracts.
7
Group equity rose slightly by €2,078 million to
€59,907 million, increased primarily by the profit
of €4,915 million attributable to shareholders of
BMW AG and decreased by the dividend payment
of €2,303 million. The reduction in the equity ratio
reflected the fact that - due to the effects described
above the balance sheet total rose at a faster rate
than equity. The adoption of IFRS 16 therefore only
had a limited impact on the equity ratio.
BMW Group equity ratio
→ 37
in %
Group
Automotive segment
1 Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
² The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year figures.
Other liabilities
4.5
4.5
Proportion of
2,330
43.1
42.4
1.5
Other provisions
13,209
11,401
15.9
15.0
5.7
Deferred and current tax
1,595
2,931
-45.6
-47.5
0.7
Financial liabilities
116,740
103,597
12.7
11.5
51.2
Trade payables
10,182
9,669
5.3
Financial Services segment
31.12.2019
31.12.2018*
Change in %pts
Other income
Total output
Cost of materials²
Other expenses
2019
2019
2018¹
2018¹
Change
in € million
in %
in € million
in %
in %
104,210
99.0
96,855
98.2
7.6
-22
0.0
988
1.0
3,335
Pension provisions
26.3
1.4
Financial income
57,829
Revenues
→ 38
* Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
26.3
27.7
-1.4
35.5
41.0
-5.5
9.9
10.1
-0.2
Pension provisions increased significantly compared
to the end of the financial year 2018, with lower
discount rates in Germany and the UK in particular
contributing to the rise.
Other provisions increased markedly year-on-year
due to the provision recognised in conjunction with
ongoing EU Commission antitrust proceedings. Fur-
ther information is provided in → note 10 to the Group → see
Financial Statements.
Financial liabilities were significantly higher than at
the end of the previous financial year, mainly as a
result of new bonds issued. This also includes the 144A
bond in the USA and the first Panda bond placed on
the Chinese capital market.
Overall, the results of operations, financial position
and net assets position of the BMW Group remained
stable during the year under report.
note 10
Value added statement
The value added statement shows the value of work
performed by the BMW Group during the financial
year, less the value of work bought in. Deprecia-
tion and amortisation, cost of materials, and other
expenses are treated as bought-in costs in the value
added calculation. The allocation statement applies
value added to each of the participants involved in
the value added process. The bulk of the net value
added benefits employees. The remaining proportion
in the Group is retained to finance future operations.
The gross value added amount treats depreciation as
a component of value added which, in the allocation
statement, would be treated as internal financing.
Net valued added by the BMW Group remained at a
high level in the financial year 2019.
61
19
62
62
Combined
Management
Report
→ Report on
Economic Position
BMW Group value added statement
WORK PERFORMED
change² in %
→ 42
20181
296.5
298.5
287.4
233.8
236.8
242.4
252.4
232.3
472.9
457.1
456.1
453.4
503.9
375.8
355.4
358.8
359.5
413.8
930.1
871.2
847.5
739.4
685.5
724.7
635.8
595.0
508.8
465.8
51.7
2,538.4
310.6
57.9
330.5
1,091.9
as a percentage of deliveries
3 EU-28
Other 29.2
Japan 2.4
Italy 2.9
UK 9.2
28.6 China
14.7 USA
13.0 Germany
² Delivery figures have been adjusted retrospectively going back to 2015. The basis for the adjust-
ments is a review of sales data in prior periods for the BMW Group's most important markets
(China, USA, Germany, UK, Italy and Japan). The retrospective adjustment enables better com-
parability. Additional information can be found in the section “Comparison of Forecasts for
2019 with Actual Results in 2019".
BMW Group deliveries of vehicles by region and market¹
→ 44
in 1,000 units
Europe
thereof Germany
thereof UK
Americas
thereof USA
Asia²
thereof China²
Other markets
Total²
2019
2018
2017
2016
2015
1,083.7
1,097.1
1,103.2
1,003.1
61.9
67.8
65.3
115,184
153,073
-24.8
5.3
BMW 3 Series
359,211
364,347
-1.4
16.4
BMW 4 Series
74,238
108,376
-31.5
3.4
BMW 5 Series
353,268
381,749
-7.5
16.2
BMW 6 Series
25,181
26,244
-4.1
1.2
BMW 7 Series
50,552
56,208
-10.1
2.3
BMW 2 Series
8.0
-12.4
198,548
100.0
2,468.7
2,352.4
2,257.9
1 Delivery figures have been adjusted retrospectively going back to 2015. The basis for the adjustments is a review of sales data in prior periods for the BMW Group's most important markets (China, USA, Germany,
UK, Italy and Japan). The retrospective adjustment enables better comparability. Additional information can be found in the section "Comparison of Forecasts for 2019 with Actual Results in 2019".
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2019: 538,612 units, 2018: 455,581 units, 2017: 385,705 units, 2016: 311,473 units, 2015: 281,357 units).
BMW² brand achieves new volume record
BMW brand deliveries rose by 3.3% to 2,185,793 units
in 2019, reaching a new record level for the ninth year
in succession (2018: 2,114,963¹ units). The models of
the BMW X family, the BMW i3, the new BMW Z4 and
the new BMW 8 Series all made positive contributions
to the overall growth. Moreover, the X1 and X5 (both
from the BMW X family) as well as the BMW Z4 were
all global market leaders in their own segments. The
BMW i3 continues to perform well as a highly success-
ful model for mobility in metropolitan areas.
At 359,211 units, sales of the BMW 3 Series were slightly
down on the previous year (2018: 364,347¹ units; -1.4%),
partially influenced by model changes to the Sedan
in March and the Touring in September. Moreover,
the new extended-wheelbase version has only been
available in China since June 2019. The launch of
the new models helped boost deliveries, particularly
during the final quarter, resulting in double-digit
volume growth. Between October and Decem-
ber 2019, the BMW Group delivered 106,155 units
of the BMW 3 Series worldwide, 20.6% more than
in the previous year (2018: 87,9871 units). Worldwide
deliveries of the BMW 5 Series fell to 353,268 units
(2018: 381,749¹ units; -7.5%). The new BMW Z4,
which has been available since March 2019, enjoyed
strong demand during the period under report (2019:
15,827 units). Sales figures for the new BMW 8 Series
also developed very encouragingly and had totalled
12,219 units (2018: 923 units) by the end of the report-
ing period.
The BMW X family again benefited from strong
demand in 2019. Worldwide deliveries of X family
vehicles rose to 963,994 units, a significant 22.3%
year-on-year increase (2018: 788,063¹ units). A signif-
icant contribution to this growth was made by the
highly successful BMW X3 model, deliveries of which
rose by more than one-half to 316,883 units (2018:
200,151¹ units; +58.3%) due to the full availability
of the model produced in China. Deliveries of the
BMW X2 (91,812 units; 2018: 66,792¹ units; +37.5%)
and the X4 (61,598 units; 2018: 46,894¹ units; +31.4%)
increased by around one-third. At 165,537 units, deliv-
eries of the BMW X5 once again exceeded the previous
year's very high level (2018: 155,134¹ units; +6.7%).
The positive resonance identified around the market
launch of the new X7, which has been available since
March 2019, was also reflected in its subsequent sales
performance (2019: 39,924 units; 2018: 15 units).
69
65
99
66
Combined
→ 43
Management
Report on
Economic Position
Review of Operations
Deliveries of BMW vehicles by model variant 1,2
→ 45
in units
→ Automotive Segment
Proportion of
BMW sales volume
2019
2018
Change in %
2019 in %
BMW 1 Series
173,870
Report
BMW Group - key automobile markets 2019
On the American continent, business conditions
were characterised by growing competition within a
declining market. With 472,904 units delivered, the
BMW Group nevertheless exceeded the previous year's
figure (2018: 457,095² units; +3.5%). Sales figures
for the Group's three brands in the USA were solidly
up year-on-year, with 375,751 units delivered (2018:
355,3732 units; +5.7%). The BMW Group also ended
2019 as the leading premium automobile manufacturer
in the USA.
The BMW Group's performance in Europe was held
down by a number of factors, in particular due to the
Automotive Ltd., prevalence of political uncertainty in a number of
countries. At 1,083,669 units, deliveries of the Group's
three brands decreased marginally year-on-year (2018:
1,097,117² units; -1.2%). Contrary to this broader
trend, business in Germany developed positively,
with a total of 330,507 units delivered, 6.4% up on
the previous year (2018: 310,576² units). In the UK,
volumes fell slightly year-on-year to 233,780 units (2018:
236,752² units; -1.3%), not least due to uncertainty
regarding Brexit.
² Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
1 Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
-9.6
Automotive
Gross profit margin
EBIT margin
2019
2018¹
Change in %
Currency adjusted
change² in %
91,682
85,846
6.8
5.2
2,368
2,173
9.0
8.1
29,598
27,705
6.8
4.6
5
6
-16.7
-18.0
-19,443
-18,875
-3.0
BMW Group value added 2019
→ 39
in %
Depreciation and amortisation 10.2
BMW Group margins by segment
Group
Eliminations
Other Entities
Financial Services
Motorcycles
Automotive
in € million
→ 41
BMW Group profit/loss before tax by segment
Group
Eliminations
Other Entities
Financial Services
0.1
Motorcycles
in € million
→ 40
BMW Group revenues by segment
Results of operations by segment
-0.5% Minority interest
14.7% Group
7.4% Shareholders
10.1% Government/public sector
11.1 % Providers of finance
56.1% Employees
21.1 Net value added
C
Cost of materials 54.5
14.2 Other expenses
Automotive
BMW 8 Series
104,210
7.6
-0.7
EBIT margin
8.2
8.1
0.1
1 Prior year's figures adjusted due to a change in accounting policy in connection with the adoption of IFRS 16; see note 6 to the Group Financial Statements.
In addition, figures for the prior year have been adjusted due to changes in presentation of selected items, which are not material overall.
² The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior year figures.
63
63
64
Combined
Management
Report
Report on
Economic Position
→ Review of Operations
→ Automotive Segment
REVIEW OF OPERATIONS
Automotive Segment
Automobile deliveries at record level
joint venture
BMW Brilliance
The BMW Group delivered a total of 2,538,367¹ BMW, 'Including the
MINI and Rolls-Royce brand automobiles in 2019,
thereby setting a new record for the total number of
deliveries to customers (2018: 2,483,292¹² units; +2.2%).
Volumes also developed well for each of the Group's
brands. The BMW brand achieved a new high to date,
with 2,185,793¹ units (2018: 2,114,963¹² units; +3.3%)
delivered to customers. MINI remained slightly below
the previous year's figure, with 347,474 units delivered
worldwide (2018: 364,1352 units; -4.6%). Rolls-Royce
Motor Cars exceeded the 5,000-unit threshold for
the first time, with 5,100 vehicles handed over to
customers (2018: 4,194² units; +21.6%). This signifi-
cant increase also represents a new record for the
ultra-luxury marque.
As foreseen in the outlook for the financial year 2019,
Automotive segment deliveries increased slightly and
were therefore in line with expectations.
The ongoing electrification of the product range is
also having a significant impact. As targeted, the
BMW Group finished the year with half a million
electrified vehicles on roads across the globe. The
broad range of electrified vehicles on offer is ideally
suited to meeting customer needs and constitutes an
important aspect of the BMW Group's contribution
to effective climate protection.
Fleet carbon dioxide (CO2) emissions³
at previous year's level
CO2 emissions from fleet vehicles delivered in
Europe in 2019 amounted to 127 g CO2/km (2018:
128 g CO2/km; -0.8%) and were therefore at the
previous year's level. The original forecast predicted
a slight decrease. The lower proportion of diesel-
powered vehicles delivered in 2019 meant that no
further reduction in fleet CO2 emissions was achieved
compared to the previous year.
Shenyang
(2019:
538,612 units,
2018:
455,581 units).
Deliveries up in Asia and in the Americas,
slightly down in Europe
Deliveries of BMW Group automobiles in Asia rose
by a solid 6.8% in 2019. In total, 930,085¹ BMW, MINI
and Rolls-Royce brand vehicles (2018: 871,181¹² units)
were delivered to customers in this region. Figures for
China developed very positively, rising to 724,7331
units (2018: 635,813¹² units; +14.0%).
20.0
19.3
Gross profit margin
Motorcycles
6.1
2019
2018¹
Change in %
4,467
6,977
-36.0
187
169
10.7
2,272
2,143
6.0
-96
96,855
-45
383
-24.8
7,118
9,627
-26.1
2019
2018¹
Change in %pts
14.9
16.2
-1.3
4.9
7.2
-2.3
288
12,219
923
0.6
in %
18.9
0.4
90
0.5
107
-30.0
19.0
4,671
14.7
3,269
-28.5
9.4
2,303
7.4
1,646
-17.7
11.2
2,733
10.1
2,250
8.8
9.2
2,266
11.1
2,466
-0.2
50.8
12,479
22,189
100.0
Segment cost of sales increased moderately compared
to the previous year. This was mainly due to higher
manufacturing costs driven by stricter regulatory
requirements (especially in relation to the reduction of
fleet emissions), negative currency effects and higher
raw material prices (particularly for palladium and
rhodium). The increase in research and development
expenses described above also had a negative impact.
Warranty expenses increased mainly as a result of
allocations to provisions in light of local changes to
legislation as well as additional allocations to provi-
sions in individual markets.
The Automotive segment recorded a solid year-on-
year increase in revenues. Alongside positive currency
effects, the main influencing factor was the product
mix effect generated by increased deliveries of the
X7 and the BMW 8 Series, which were launched in
2019, the X4, the X5, and the Rolls-Royce Cullinan,
all of which were available for the full twelve-month
period in 2019. Growth in after-sales business due to
the increased size of the global vehicle fleet also had a
positive impact on revenues. In the previous year, rev-
enues were also negatively impacted by the high level
of competition caused by the reaction of competitors
to the early implementation of WLTP regulations as
well as the tougher market situation triggered by trade
conflicts. The rejuvenation of the product portfolio
has also helped the segment to achieve higher prices.
Economic Position
Review of Operations
→ Automotive Segment
Deliveries of electrified automobiles up on
previous year
At the end of the year under report, the BMW Group's
vehicle portfolio included 11 all-electric or electri-
fied models in various segments. These models are
sold on more than 70 markets around the world,
underlining the BMW Group's leading position world-
wide in terms of combined deliveries of all-electric
and plug-in hybrid vehicles as well as being market
leader in Germany.
Worldwide deliveries of electrified BMW and MINI
brand vehicles in 2019 totalled 146,160 units (2018:
142,385¹ units; +2.7%). The number of BMW plug-in
hybrid vehicles delivered was influenced by the
3 Series and X5 model changes as well as by the
launch of the X3 in autumn 2019. The total of 86,947
BMW hybrid drive vehicles delivered to customers
during the period under report was down on the
very high figure achieved one year earlier (2018:
91,759¹ units; -5.2%). The new models helped gener-
ate a positive trend in the fourth quarter of 2019, as
sales of hybrid-drive BMW vehicles during the final
three months of the year increased significantly by
16.1% to 33,250 units (2018: 28,649¹ units). Over the
twelve-month period, the BMW i3 recorded a 14.1%
increase in worldwide deliveries to 39,501 units (2018:
34,623¹ units). The electrified MINI Countryman² also
benefited from strong demand, with 16,964 units
delivered to customers during the period under report
(2018: 13,279¹ units; +27.8%).
Deliveries of electrified models¹
→ 48
in units
BMWi
BMW e
MINI Electric
Total
2019
2018 Change in %
42,249
56.1
37,347
86,947
91,759
-5.2
16,964
146,160
13,279
27.8
142,385
2.7
1 Delivery figures have been adjusted retrospectively going back to 2015. The basis for the
adjustments is a review of sales data in prior periods for the BMW Group's most important
markets (China, USA, Germany, UK, Italy and Japan). The retrospective adjustment en-
ables better comparability. Additional information can be found in the section "Comparison
of Forecasts for 2019 with Actual Results in 2019".
2 Fuel consumption and CO₂ emissions information are available on page 70.
Greater choice of electrified vehicles²
During the current financial year, BMW will launch three
further models featuring hybrid technology, namely
the BMW X1, the X2 and the BMW 3 Series Touring.
Two additional all-electric models will be added with the
MINI Cooper SE and the BMW iX3. The BMW Group is
consciously focusing on battery electric vehicles (BEV)
and plug-in hybrid technologies (PHEV). Flexible
platforms are being used to cover varying regional
customer requirements, enabling buyers to select
the drivetrain system best suited to their mobility
requirements.
The BMW Vision iNEXT was showcased in 2019 with
the aim of providing a preview of tomorrow's mobil-
ity. The vehicle embodies the fusion of electric and
autonomous driving as well as next-level connectivity.
Segment revenues at record level, earnings
negatively impacted by provision
13.1
Report on
12,451
Minority interest
14.2
14,923
8.0
53.9
53,132
54.5
* Measured at exchange rates at the relevant transaction dates.
50.0
40.4
1.6
13.4
2.6
At 31 December 2019, liquidity remained at a solid
level of €17.4 billion.
The BMW Group also has access to a syndicated credit
line, which was newly agreed upon in July 2017. The
syndicated credit line of €8 billion has a term up to
July 2024 and is being made available by a consortium
of 44 international banks. The credit line was not
being utilised at 31 December 2019.
Further information with respect to financial liabilities
is provided in → notes 31, 35 and 39 to the Group
Financial Statements.
60
60
Combined
Management
Report
→ Report on
Net assets of the BMW Group
BMW Group condensed balance sheet at 31 December
Economic Position
→ 36
in € million
ASSETS
Group
Currency-adjusted
2019
12,342
12.5
20.9
72,281
Group
Shareholders
Government/public sector
Providers of finance
Employees
ALLOCATION
-9.6
24.9
24,542
21.1
22,189
Net value added
25.0
8.7
Net value added
8,601
10,749
intangible and investment assets
Depreciation and amortisation of total tangible,
-0.6
33.6
33,143
31.3
32,938
Gross value added
Bought-in costs
10.4
66.4
65,474
68.7
10.2
Change in %
Report
Combined
BMW X7
39,924
15
1.8
BMW i
42,249
37,347
13.1
1.9
BMW total
2,185,793
2,114,963
3.3
100.0
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2019: 538,612 units, 2018: 455,581 units).
² Delivery figures have been adjusted retrospectively going back to 2015. The basis for the adjustments is a review of sales data in prior periods for the BMW Group's most important markets (China, USA, Germany,
UK, Italy and Japan). The retrospective adjustment enables better comparability. Additional information can be found in the section "Comparison of Forecasts for 2019 with Actual Results in 2019".
BMW model range significantly expanded
A total of 12 new BMW models, including four
M models, were launched during 2019. Two model
revisions were also brought to market during the same
period. March saw the launch of the seventh-gener-
ation BMW 3 Series Sedan, the new BMW 8 Series
Convertible, the BMW Z4 Roadster and the BMW X7.
In the same month, the BMW 7 Series became
available across the dealer organisation following an
extensive model revision. In summer, the extended-
wheelbase version of the 3 Series Sedan went on sale
in China. In autumn, BMW launched successor models
for the 3 Series Touring and the 1 Series. The new
BMW 8 Series Gran Coupé also became available in
autumn 2019.
3 Fuel
consumption
and CO₂ emis-
tion are available
on page 70.
BMW M achieves record result³
With 136,173 units delivered during the twelve-month
sions informa- period, BMW M GmbH achieved the best result to date in
its almost 50-year history (2018: 103,580² units; +31.5%),
ensuring it a leading market position among the pro-
viders in its competitive field.
The addition of the new X3 M and X4 M as well as the
first two M8 models significantly extends the range
of vehicles offered by the BMW Group subsidiary. All
new models are now immediately available at market
launch as competition models with more powerful
engines. In addition to the X models (X3 M, X4 M,
X5 M and X6 M), the BMW M2 CS and - within the
luxury class - the M8 Coupé, M8 Convertible and
M8 Gran Coupé all made their débuts during the year
under report. 2019 thus saw the launch of the largest
number of BMW M models to date.
MINI down on previous year
In 2019, due to external factors, the MINI brand was
not quite able to match the high level of deliveries
achieved one year earlier. In particular, Brexit-driven
uncertainty and intense competition in the small and
compact car segment played a significant role. Never-
theless, thanks to its underlying strength in numerous
markets, the MINI brand managed to grow its overall
share in the highly competitive premium segment.
At 347,474 units, MINI brand deliveries worldwide were
slightly down year-on-year (2018: 364,135¹ units; -4.6%).
The MINI Countryman nearly reached the 100,000 unit
Deliveries of MINI vehicles by model variant¹
→ 46
mark again (98,845 units; 2018: 99,594¹ units; -0.8%).
However, partly due to the decisive contribution made
by the popular plug-in hybrid model, it nevertheless
remained a cornerstone for the MINI brand. The
MINI Hatch (3- and 5-door) achieved a volume of
177,560 units (2018: 184,008¹ units; -3.5%).
1.0
-37.5
35,368
22,116
BMW Z4
15,827
85
0.7
BMW X1
266,124
283,709
-6.2
12.2
BMW X2
91,812
66,792
37.5
4.2
The revised model of the MINI Clubman was also
launched during the year under report. The MINI
Convertible remains the world's best-selling vehicle of
its kind. The John Cooper Works brand also continues
to enjoy strong demand.
BMW X3
200,151
58.3
14.5
BMW X4
61,598
46,894
31.4
2.8
BMW X5
165,537
155,134
6.7
7.6
BMW X6
316,883
Management
in units
MINI Convertible
Deliveries of Rolls-Royce vehicles
by model variant¹
→ 47
in units
Ghost
Wraith/Dawn
2019
2018
Change in %
Phantom²
604
831
-27.3
662
1,003
-34.0
1,326
1,816
-27.0
2,508
544
5,100
4,194
21.6
Cullinan²
Rolls-Royce total
1 Delivery figures have been adjusted retrospectively going back to 2015. The basis for the
adjustments is a review of sales data in prior periods for the BMW Group's most important
markets (China, USA, Germany, UK, Italy and Japan). The retrospective adjustment en-
ables better comparability. Additional information can be found in the section "Comparison
of Forecasts for 2019 with Actual Results in 2019".
2 Fuel consumption and CO2 emissions information are available on page 70.
68
98
The product range also includes Black Badge variants
of the Dawn, Ghost, Wraith and Cullinan models.
In addition to bespoke equipment options, the
Black Badge vehicles also offer more powerful engine
performance.
One of the key factors for the success of Rolls-Royce
Motor Cars is its bespoke range. At Rolls-Royce, the
term bespoke refers to equipment configurations
with which the vehicles are highly individualised
in accordance with customer requirements. The
result is the creation of unique vehicles that secure
Rolls-Royce Motor Cars an outstanding position in
the luxury segment.
In 2019, Rolls-Royce Motor Cars surpassed the 5,000
threshold for the first time in over 100
years of cor-
porate history, also setting a new record with 5,100
deliveries worldwide (2018: 4,194¹ units; +21.6%).
The new Rolls-Royce Cullinan², which has been
available to customers since the end of 2018, made a
major contribution to this performance (2,508 units;
2018: 544¹ units).
Rolls-Royce looks back on successful year
MINI Clubman
MINI Countryman
MINI total
Proportion of
MINI sales volume
2019
2018
Change in %
2019 in %
67
62
177,560
184,008
-3.5
51.2
MINI Hatch (3- and 5-door)
30,384
-7.2
8.7
40,685
47,795
-14.9
11.7
98,845
24,542
-0.8
28.4
347,474
364,135
-4.6
100.0
32,738
2,483.3
99,594
BMW X2 xDrive25e
242
10.8
246
10.7
244
10.4-9.6
238-219
14.5
330-328
Motorcycles Segment
Solid increase in motorcycle deliveries
With the delivery of 175,162 units in 2019, the Motor-
cycles segment exceeded the previous year's figure by
5.8%, marking a new record for the ninth consecutive
year (2018: 165,566 units).
As anticipated in the outlook for the financial year
2019, the Motorcycles segment achieved a solid
increase in deliveries and was therefore in line with
expectations.
Deliveries up in nearly all markets
The number of motorcycles sold in Europe rose by
7.0% to 104,994 units (2018: 98,144 units). Deliveries
in Germany increased by 10.4% to 26,292 units (2018:
23,824 units). Growth rates in Italy (15,580 units,
2018: 14,110 units; +10.4%) and Spain (12,607 units,
2018: 11,124 units; +13.3%) were also up on a dou-
ble-digit scale year-on-year. In France, motorcycle
deliveries grew slightly by 4.1% to 17,300 units
(2018: 16,615 units). The only year-on-year decline
occurred in the USA, where - within a declining
market - BMW Motorrad saw deliveries fall slightly to
13,379 units (2018: 13,842 units; -3.3%). A particularly
sharp rise of 36.7% was recorded for Brazil, where,
for the first time, more than 10,000 BMW motor-
cycles were sold in a single year (10,064 units; 2018:
7,361 units).
Numerous other new models and concept studies
were also presented during the year under report.
The Concept R18 was unveiled at the Concorso
d'Eleganza Villa d'Este - a new interpretation of
BMW Motorrad classics. The special limited edition
of the R nine T/5 model was presented during the
BMW Motorrad Days event. At the International
Motorcycle Fair in Milan (EICMA), customers had
the opportunity to familiarise themselves with the
new models F 900 R (Roadster segment), F 900 XR
and S 1000 XR (Adventure segment) and the Concept
Study R18/2, a modern interpretation of a dynamic,
high-performance cruiser.
BMW Group deliveries of motorcycles
→ 52
in 1,000 units
180
The EBIT margin came in at 4.9% (2018: 7.2%; -2.3 per-
centage points). As forecast in the Quarterly Statement
to 30 September 2019 the EBIT margin was within the
target range of 4.5 to 6.5% and therefore in line with
revised expectations. In the Annual Report 2018, the
segment EBIT margin was forecast to be within the
target range of 6 to 8%.
10.6
90
289
296
<201
43
2.1-1.9
47-43
2.1-1.7
48-39
13.8
14.2-13.72
19.4-15.72
2.5-2.0
56-46
22.3-17.82
2.1-1.9
47-43
13.9-13.5
0
0
16.8-14.8
10.5
239
10.6-10.5
240-239
13
12.7
0
175.2
145.0
Profit before tax recorded for the Other Entities
segment and eliminations fell by €146 million. The
significant drop was due in particular to revaluation
losses (included in other financial result) arising
on interest rate and currency hedges in connection
with the refinancing of the Financial Services busi-
ness. In addition, a sharp rise in the number of new
operating lease contracts had a negative impact due
to the elimination of margins relating to the leased
products concerned.
Combined
Management
Report
Report on
Economic Position
→ Comments on
Financial Statements
of BMW AG
COMMENTS ON FINANCIAL
STATEMENTS OF BMW AG
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
based in Munich, Germany, is the parent Company of
the BMW Group. The comments on the BMW Group
and Automotive segment provided in earlier sections
apply to BMW AG, unless presented differently in the
following section. The Financial Statements of BMW AG
are drawn up in accordance with the provisions of the
German Commercial Code (HGB) and the relevant
supplementary provisions contained in the German
Stock Corporation Act (AktG).
On 10 March 2020, the Financial Statements of BMW AG
were drawn up by the Board of Management. Based on
current developments regarding the spread of corona-
virus, the Board of Management on 16 March 2020
adjusted the original outlook for the BMW Group, the
assumptions regarding the development of the global
economy and the economic risks and opportunities for
the financial year 2020 in the Combined Management
Report, as well as the statement regarding the Events
after the end of the reporting period. On the same day,
the Financial Statements of BMW AG were drawn up
anew by the Board of Management.
The key financial performance indicator for BMW AG
is the dividend payout ratio (unappropriated profit of
BMW AG in accordance with HGB in relation to the net
profit for the year of BMW Group in accordance with
IFRS). The key non-financial performance indicators
are essentially identical and concurrent with those of
the BMW Group. These are described in detail in the
Report on Economic Position section of the Combined
Management Report.
Differences in accounting treatments based on HGB
(used for the Company Financial Statements) and
IFRS (used for the Group Financial Statements) are
mainly to be found in connection with the capitali-
sation of intangible assets, the creation of valuation
units, the recognition and measurement of financial
instruments and provisions as well as the recognition
of deferred tax assets. Differences also arise in the
presentation of assets and liabilities and of items in
the income statement.
Business environment and review of operations
The general and sector-specific environment of BMW AG
is essentially the same as that of the BMW Group and
is described in the Report on Economic Position sec-
tion of the Combined Management Report.
BMW AG develops, manufactures and sells auto-
mobiles and motorcycles as well as spare parts
and accessories manufactured in-house, by foreign
subsidiaries and by external suppliers, and performs
services related to these products. Sales activities are
carried out primarily through branches, subsidiaries,
independent dealerships and importers. In the
financial year 2019, BMW AG increased automobile
deliveries by 35,898 units to 2,555,795 units. This
figure includes 534,638 units relating to series sets
supplied to the joint venture BMW Brilliance Auto-
motive Ltd., Shenyang, an increase of 44,056 units
over the previous year.
At 31 December 2019, BMW AG employed a workforce
of 88,303 people (31 December 2018: 89,842 people).
66
76
Results of operations
BMW AG Income Statement
→ 59
in € million
Other Entities Segment/Eliminations
164.2 165.6
Report on
Combined
137.0
2015
2016
2017
2018
2019
71
Model range further rejuvenated
BMW Motorrad introduced four new and two revised
models during the period under report. In Febru-
ary 2019, it launched three new models - the F 850 GS
Adventure (Adventure segment) and the C 400 X and
the C 400 GT (Urban Mobility segment). These were
followed by the revised R 1250 R (Roadster segment) in
April and the new S 1000 RR (Sport segment) in July.
The revised version of the R 1250 RS (Sport segment)
has been available to customers since September.
BMW Group - key motorcycle markets 2019
→ 53
as a percentage of sales volume
15.0 Germany
9.9 France
Other 45.7
8.9 Italy
7.6 USA
7.2 Spain
Brazil 5.7
22
72
Management
Report
2019
0
1.9
Electric power
consumption
2,713
-146
69
69
70
Combined
Management
Report
Report on
Economic Position
Review of Operations
→ Automotive Segment
→ Motorcycles
Segment
In the Automotive segment, net financial assets com-
prised the following:
Net financial assets Automotive segment
→ 50
in € million
Cash and cash equivalents
Marketable securities and investment funds
Intragroup net financial assets
Financial assets
Less: external financial liabilities*
Net financial assets Automotive segment
*Excluding derivative financial instruments.
2,567
The increase in external financial liabilities was main-
ly attributable to the recognition of lease liabilities
according to IFRS 16 amounting to €2.8 billion. Fur-
ther information is provided in → note 6 to the Group → see
Financial Statements.
-88
42
The Automotive segment's financial result finished
at a net negative amount of €32 million, significantly
down on the previous year (2018: net positive amount
€795 million). The deterioration mainly reflected the
negative impact of the result from equity-accounted
investments on the one hand and other financial result
note 10
on the other (the latter excluding the revaluation
losses recognised on interest rate hedges), in both
cases described above in the analysis of the Group's
results of operations. Profit before tax for the year was
significantly lower than one year earlier.
The Automotive segment's RoCE in 2019 fell signifi-
cantly to 29.0% (2018: 49.8%; -20.8 percentage points),
mainly due to the lower EBIT. Other factors with a
negative impact on ROCE were the increase in capital
employed due to the first-time recognition of right-of-
use assets in accordance with IFRS 16 and the higher
level of capital expenditure, particularly in conjunction
with the development of the product portfolio.
The long-term target RoCE of at least 26% for the Auto-
motive segment was slightly exceeded. As forecast in
the outlook for the financial year 2019, ROCE decreased
significantly and was therefore in line with expectations.
Free cash flow for the Automotive segment was as
follows:
Free cash flow Automotive segment
→ 49
in € million
Cash inflow (+)/outflow (-) from operating activities
Cash inflow (+)/outflow (-) from investing activities
Adjustment for net investment in marketable securities and investment funds
Free cash flow Automotive segment
The change in working capital included in the cash
inflow from operating activities resulted mainly from
the higher level of inventories and was offset by a
decrease in trade payables. Following the adoption
of IFRS 16, lease payments are included in cash flows
from financing activities, giving rise to a positive
effect of €470 million. The increase in cash outflow
from investing activities mainly reflected the changes
described in the Group Cash Flow Statement with
respect to investments in property, plant and equip-
ment and intangible assets, financial assets and divi-
dends received. The liquidation of a Group company
in the previous financial year also had a negative effect.
2019
2018
Change
9,690
9,352
338
-7,165
-6,769
-396
130
in kWh/100 km
(combined)
note 6
→ 51
8,631
446
4,470
4,321
149
7,784
7,694
90
21,331
20,646
685
-3,754
-1,158
-2,596
17,577
19,488
-1,911
Fuel consumption
CO2 emissions
in l/100 km
(combined)
in g/km
(combined)
9,077
BMW Group fuel consumption and CO2 emissions information
Change
2019
Model
BMW GROUP ELECTRIFIED MODELS
BMW iX3
BMW X1 xDrive25e
BMW 330e Touring
BMW 330e xDrive Touring
MINI Cooper SE Countryman ALL4
MINI Cooper SE
BMW
BMW X3 M
BMW X4 M
BMW X5 M
BMW X6 M Competition
BMW M8 Competition Coupé
BMW M8 Competition Convertible
BMW M8 Competition Gran Coupé
BMW M2 CS
ROLLS-ROYCE
Cullinan
Provisionary data based on WLTP.
² Provisionary data.
2018
2018
The net amount of other operating income and expenses
deteriorated from a positive amount of €134 million
to negative €1,359 million year-on-year, mainly due
to the provision recognised for the EU Commission's
antitrust proceedings referred to above. Further infor-
mation is provided in → note 10 to the Group Financial see
Statements.
Cost of sales
46.7
46.1
50.1
49.9
52.2
60
→ 55
BMW Group new vehicles financed or
leased by Financial Services segment¹²
Segment
→Financial Services
Review of Operations
in %
Economic Position
Report on
Report
Management
Combined
74
73
3 With effect from the beginning of the fourth quarter of 2019, the EU Bank comprises
BMW Bank GmbH and its branches in Italy, Spain and Portugal. The former subsidiary in
France was transferred for organisational purposes to the Europe/Middle East/Africa
region in conjunction with strategic realignments.
2 The calculation only includes automobile markets in which the Financial Services segment
is represented by a consolidated entity.
22.3
In addition, figures for the prior year have been adjusted due to changes in presentation of
selected items, which are not material overall.
22.4
Leasing 22.0
EU Bank3 18.5
China 12.2
in % per region
Contract portfolio retail customer financing
of Financial Services segment 2019
→ 56
2 Delivery figures have been adjusted retrospectively going back to 2015, as described in
the section "Comparison of forecasts for 2019 with actual outcomes in 2019".
1 Until 2015 excluding Rolls-Royce.
2019
2018
2017
2016
2015
0
29.9
28.9
26.0
27.5
Financing 24.1
The BMW Group is one of Europe's foremost leasing
and full-service providers. Under the brand name
Alphabet, the Financial Services segment's fleet
management business offers leasing and financing
arrangements as well as specific services to commer-
cial customers. The number of fleet contracts rose by
2.5% during the financial year 2019. Included in the
total contract portfolio with retail customers referred
to above, the segment was thus managing a portfolio
of 717,353 fleet contracts at the end of the reporting
period (2018: 700,080 contracts).
Slight growth in fleet business
30
20.7
21.2
35.5 Europe/
1 Prior year's figures adjusted due to a change in accounting policy in connection with the
adoption of IFRS 16; see note 6 to the Group Financial Statements.
2018
The Motorcycles segment also recorded solid year-on-
year revenue growth. In addition to the higher number
of units delivered, product mix and currency effects
also had a positive impact on the performance in 2019.
Strong segment performance
→Financial Services
Segment
Review of Operations
→ Motorcycles
Segment
Revenues
Economic Position
Subject to the shareholders' approval of the appro-
priation of results at the Annual General Meeting,
the unappropriated profit available for distribution
amounts to €1,646 million (2018: €2,303 million).
As a percentage of Group net profit, the dividend
corresponds to a payout ratio of 32.8% (2018: 32.0%).
After deducting the expense for taxes, the Company
reports a net profit of €2,107 million, compared to
€2,801 million in the previous year.
The expense for income taxes relates primarily to
current tax for the financial 2019.
year
Income from profit transfer agreements with Group
companies, reported in the line item Result on invest-
ments, decreased year-on-year. By contrast, financial
result improved by €1,491 million, mainly due to
higher income from designated plan assets offset
against pension obligations. The lower impairment
loss of €30 million (2018: €119 million) recognised on
the investment in SGL Carbon SE, Wiesbaden, also
had the effect of keeping down the deterioration in
earnings for the year.
Other operating expenses totalling €2,526 million
(2018: €1,158 million) were impacted mainly by the
recognition of the provision recognised in connection
with ongoing EU Commission antitrust proceedings.
Other operating income fell to €1,295 million (2018:
€2,184 million), whereby the change was mainly
attributable to a positive prior-year effect resulting
from the change in method for measuring provisions
for statutory and non-statutory warranties and prod-
uct guarantees.
Research and development expenses related mainly to
new vehicle models (including the new 1 Series, the
2 Series Gran Coupé and the X6), expenditure on the
development of reference architectures, powertrain
systems and automated driving, as well as higher
expenditure on vehicle electrification. Compared to
the previous year, research and development expenses
decreased by 5.6%.
Financial Statements
of BMW AG
→ Comments on
Economic Position
Report on
Report
Management
Combined
78
The segment EBIT margin edged up to 8.2% (2018:
8.1%; +0.1 percentage points) and therefore within the
range of 8 to 10% forecast in the Annual Report 2018.
2019
Profit before tax for the twelve-month period was
significantly higher than one year earlier.
Financial Services Segment
2017
2016
2015
4,719
5,115
5,381
5,708
5,974
3,000
6,000
in 1,000 units
→ 54
Contract portfolio of
Financial Services segment
The total portfolio of financing and leasing contracts
with retail customers again developed positively in
2019, growing 4.8% year-on-year. In total, 5,486,319
contracts were in place with retail customers at
31 December 2019 (2018: 5,235,207 contracts). The
China region continued to record the fastest growth
rate of all regions, significantly enlarging its contract
portfolio by 19.8% compared to one year earlier. The
Europe/Middle East/Africa region (+5.6%) and the
EU Bank³ (+4.0%) grew year-on-year, while the total
contract portfolio in the Americas region (+0.7%) hov-
ered around the previous year's level. The Asia/Pacific
region saw a slight decrease in the volume of its con-
tract portfolio (-2.5%).
The proportion of new BMW Group vehicles either
leased or financed by the Financial Services segment
in the financial year 2019 amounted to 52.2%², 2.1 per-
centage points up on the previous year (2018: 50.1%),
mainly due to growth in China and the USA.
The total volume of new credit financing and leasing
contracts concluded with retail customers amounted
to €61,353 million, representing a solid year-on-year
increase (2018: €55,817 million; +9.9%). Adjusted for
currency factors, the increase was 7.9%.
In the pre-owned financing and leasing business for
BMW and MINI brand vehicles, 398,144 new contracts
were signed during the twelve-month period (2018:
396,610 contracts; +0.4%).
More than two million new contracts concluded
Thanks to its strong performance, the Financial Ser-
vices segment surpassed the threshold of two million
new customer contracts in a single year for the first
time. In total, 2,003,782 credit financing and leasing
contracts were concluded with retail customers dur-
ing the period under report, a solid 5.0% year-on-
year increase (2018: 1,908,640 contracts). The biggest
growth markets were China and the USA. While the
number of new contracts grew slightly by 3.4% in
the credit financing line of business, the correspond-
ing increase for leasing business was 8.2%. Overall,
leasing accounted for 34.1% and credit financing for
65.9% of new business.
In balance sheet terms, business volume grew by 7.3%
to stand at €142,834 million (2018¹: €133,147 mil-
lion). The contract portfolio under management at
31 December 2019 comprised 5,973,682 contracts,
therefore growing slightly by 4.7% year-on-year (2018:
5,708,032 contracts).
The Financial Services segment performed strongly
in 2019 within a challenging, volatile environment.
Segment profit before tax rose by 6.0% to a record
level of €2,272 million (2018¹: €2,143 million).
Successful financial year for the
Financial Services segment
The return on capital employed (ROCE) for the Motor-
cycles segment in 2019 increased slightly to 29.4%
(2018: 28.4%; +1.0 percentage points), mainly due to
the higher level of EBIT. In the most recent outlook
provided in the Quarterly Statement to 30 Septem-
ber 2019, a solid increase was still being forecast.
The deviation in this case was due to the higher
amount of capital employed. The long-term target
ROCE of 26% for the Motorcycles segment continued
to be surpassed.
Middle East/
Africa
Asia/Pacific 8.1
3 With effect from the beginning of the fourth quarter of 2019, the EU Bank comprises
BMW Bank GmbH and its branches in Italy, Spain and Portugal. The former subsidiary in
France was transferred for organisational purposes to the Europe/Middle East/Africa
region in conjunction with strategic realignments.
Profit after income tax
Other taxes
Net profit
1,858
2,344
39
-1,452
-767
-872
2,129
2,820
Transfer to revenue reserves
Unappropriated profit available for distribution
-22
-19
2,107
2,801
-461
-498
25.7 America
2,303
Income taxes
* Separate presentation of other operating income and expenses from the financial year 2019. Prior year's figures will be presented analogously.
Financial result
-1,158
84,691
78,355
-70,178
-63,841
Gross profit
14,513
14,514
Selling expenses
-3,979
-4,078
Administrative expenses
-2,776
-2,803
Research and development expenses
-5,528
-5,859
Other operating income*
1,295
2,184
Other operating expenses*
-2,526
Result on investments
Revenues increased by €6,336 million year-on-year,
primarily reflecting growth in the volume of deliveries
to customers. In geographical terms, the increase re-
lated mainly to China and the USA. Revenues totalled
€84,691 million (2018: €78,355 million), of which
Group internal revenues accounted for €57,412 million
(2018: €58,707 million) or 67.8% (2018: 74.9%).
1,646
Selling and administrative expenses were slightly
lower than in the previous year.
-1,493
6,793
Cost of sales increased by 9.9% to €70,178 million,
mostly due to the higher number of deliveries and
the rise in cost of materials. Gross profit decreased
by €1 million to €14,513 million.
-1
1,445
77
-6,790
130
-5,345
129
Change
2018
2019
Cash inflow (+)/outflow (-) from operating activities
Cash inflow (+)/outflow (-) from investing activities
Cash inflow (+)/outflow (-) from financing activities
Net
in € million
→ 57
Net cash flows for the Financial Services segment
Net cash inflows and outflows for the Financial Ser-
vices segment were as follows:
As predicted in the Annual Report 2018, the 15.0%
return on equity generated by the Financial Services
segment in 2019 was at a similar level to the previ-
ous year (2018: 14.8%; +0.2 percentage points) and
exceeded the RoE target of at least 14%.
Profit before tax in the Financial Services segment rose
by 6.0%, representing a solid year-on-year increase.
Cost of sales relating to Financial Services business
increased by €1,849 million (2018: €24,089 million).
Consistent with the development of revenues, the
main factors for the increase were expenses associated
with the sale of returned leasing vehicles as well as
risk provisioning expenses driven by portfolio growth.
Financial Services segment posts record earnings
The Financial Services segment achieved a solid
increase in revenues during the period under report
on the back of portfolio growth, higher revenues from
the sale of returned leasing vehicles, and favourable
currency factors.
Dealership financing slightly up on previous year
The total volume of dealership financing continued
growing during the financial year 2019 to stand at
€21,227 million at the end of the reporting period
(2018: €20,438 million; +3.9%).
84
133
5,300
15
2019
2018
2017
2016
2015
0
-49
0.32
0.34
0.37
0.25 0.26
0.5
75
0.25
Risk profile
Despite ongoing political and economic uncertainties,
such as Brexit and trade disputes, the risk profile
across the Financial Services segment's total portfolio
remained stable at a low level.
The decrease in cash outflow from the Financial Ser-
vices segment's operating activities was mainly due
to the higher profit before tax and the lower increase
in receivables from sales financing compared to the
previous year. Cash inflow from financing activities
was mainly driven by the increase in asset-backed
securities financing and the repayment of loans.
Further information on the risk situation is provided
in the section Risks and Opportunities.
Development of credit loss ratio
→ 58
in %
The risk profile of the segment's credit financing port-
folio also remained stable at a low level. The credit
loss ratio on the total credit portfolio amounted to
0.26% at 31 December 2019 and was therefore nearly
unchanged compared to one year earlier (2018: 0.25%).
This figure comprises a credit loss ratio for leasing
business of 0.15% (2018: 0.14%) and a credit loss ratio
for financing business with retail customers of 0.41%
(2018: 0.38%).
Internal Control System
Group
Audit
Board of
Management
Supervisory
Board
Risk
Management
Steering
Committee
Controlling
Measures
Analysis and
Measurement
risk management
15.0
Identification
85
95
Apart from the consequences of the spread of corona-
virus and other global developments, the progress of
negotiations on a trade agreement between the EU
and the UK are likely to have a considerable impact on
the UK economy. The Bank of England is also expected
to adopt measures to counter the negative economic
impact of coronavirus and to stabilise the economy.
Further central banks are expected to take measures
to mitigate the negative impact on the global economy
and to ensure liquidity on the markets.
In view of the developments regarding coronavirus,
the US Federal Reserve lowered its benchmark interest
rates by 0.5 percentage points on 3 March 2020 and by
1 percentage point on 15 March 2020. In connection
with the latest developments, further reductions
appear to be likely over the course of the year.
Protectionism and the ongoing trade dispute between
the USA and China are casting a shadow over global
growth prospects for 2020. The new coronavirus,
which is spreading worldwide, poses an additional
risk for the global economy. Various central banks
and governments have already taken action to coun-
teract the economic impact of the virus with a raft of
monetary policy measures.
International interest rate environment
Prior to the outbreak of coronavirus, the BMW Group
had predicted that the global motorcycle markets in
the 250 cc plus class would grow slightly in 2020. For
instance, the upward trend seen on major European
markets such as France and Spain was expected to con-
tinue. In Germany and Italy, the markets were forecast
to remain stable. By contrast, the USA was predicted to
see a further slight decline in motorcycle registrations
in 2020, whereas Brazil was expected to see a slight
increase. However, due to the spread of coronavirus,
global motorcycle markets in the 250 cc plus class are
now expected to decline slightly year-on-year.
International motorcycle markets
According to the original forecasts, new registrations
worldwide were expected to decrease slightly in 2020
(83.1 million units; -0.5%). However, due to the
worldwide spread of coronavirus, new registrations
are now expected to drop significantly.
International automobile markets
The currencies of numerous emerging economies
could come under further downward pressure against
the US dollar and the euro, particularly in countries
such as Russia, Brazil and India.
The Japanese central bank's highly expansionary
monetary policy is unlikely to change in 2020. The
euro/yen exchange rate is therefore likely to follow a
sideways trend.
The value of the British pound is currently being
largely determined by the progress of the Brexit
negotiations. Accordingly, the most likely scenario
is a volatile sideways movement of the pound against
the euro.
In the case of the Chinese renminbi, the close eco-
nomic links between the USA and China suggest that
the currencies of these two countries will develop
relatively synchronously. The renminbi is likely to
depreciate marginally against the euro in 2020.
The economic consequences of the coronavirus and
the trade war with the USA are likely to continue
having an adverse impact on the Chinese economy in
2020. A mixture of reforms as well as monetary and
fiscal policy measures is intended to counteract any
sharp slowdown in economic growth.
Despite the government's economic measures against
the negative effects of the tax increase, the economy
in Japan is likely to be impacted negatively by the
coronavirus. It is expected that the Japanese central
bank will continue its extremely low interest rate poli-
cies, in order to reach the target of 2% price stability.
Expected consequences for the BMW Group
Future developments on international automobile
markets also have a direct impact on the BMW Group.
Challenges in the competitive environment will have a
significant effect on sales volumes in some countries.
Due to its global business model, the BMW Group is
well placed at all times to capitalise on any opportu-
nities that present themselves, even at short notice.
Coordination between the Group's sales and produc-
tion networks also enables it to balance out the impact
of unforeseeable developments in the various regions.
Investments in markets important for the future also
form a basis for further growth, while simultaneously
strengthening the global presence of the BMW Group.
In view of the increasingly unpredictable consequences
of economic and political conditions around the
world, actual economic growth in some regions may
deviate from expected trends and outcomes. Areas
affected in this context include trade and customs
policies, security and potential additional international
trade conflicts.
Outlook for the BMW Group
→ Outlook
Opportunities
Risks and
Report on Outlook,
Combined
Management
Report
86
The US dollar could benefit from its function as a
"safe haven" in 2020 due to the spread of coronavirus.
Overall, therefore, the US dollar is more likely to move
sideways against the euro.
98
Furthermore, risks also exist for upstream processes,
including possible bottlenecks due to supply shortages.
Taking into account the effects described above, Group
profit before tax is expected to be significantly lower
than in 2019.
In the Financial Services segment, the number of new
contracts is expected to decrease and the risk provi-
sioning expense to increase. As a result, the return on
equity is forecast to drop slightly year-on-year.
Due to the lower volume of deliveries in China com-
pared to the original forecast, the necessary contain-
ment measures and a similar trend already emerging
in other regions of the world, including Europe and
North America, earnings of the Automotive segment
are likely to be negatively impacted, particularly in
the first half of the year. The negative effect on the
EBIT margin of the Automotive segment over the full
twelve-month period is currently expected to be in
the region of four percentage points. Based on the
latest forecast, the EBIT margin for the Automotive
segment is therefore expected to be within the range
of 2 and 4%.
The spread of coronavirus has slowed down the
growth of the BMW Group's deliveries in China. In
light of the sharp increase in corona infections in other
regions of the world, currently particularly in Europe
and North America, the BMW Group now expects
worldwide deliveries to customers to be significantly
down on the previous year.
Prior to the outbreak of coronavirus, the BMW Group's
original forecast for the Automotive segment envis-
aged a slight increase in deliveries to customers and
an EBIT margin of between 6 and 8%. Group profit
before tax was expected to increase significantly.
Direct effects of coronavirus on the BMW Group
The BMW Group continues to observe developments
closely and is ready to take all necessary measures.
Overall assessment by Group management
Within a volatile environment, now overshadowed
by the global spread of coronavirus, business is ex-
pected to develop negatively during the financial year
2020. While numerous new automobile and motor-
cycle models as well as individual mobility-related
services will generate additional momentum, the
various factors described above are likely to have a
major offsetting impact. Research and development
expenses will remain at a high level in connection
with future-oriented projects. In light of the impact
of the global spread of coronavirus, profit before tax
during the period covered by the outlook is likely to
decrease significantly.
Currencies of particular importance for the interna-
tional operations of the BMW Group are the Chinese
renminbi, the British pound, the Japanese yen and
the US dollar. All of these major currencies are again
expected to be subject to a high degree of fluctuation
in 2020.
→ Outlook
82
Its continuous forecasting process ensures the
BMW Group's ability to exploit opportunities quickly
and systematically as they arise and react in a similar
way to unexpected risks. The principal risks and
opportunities are described in detail in the section
Risks and Opportunities. The matters discussed
therein are relevant for all of the BMW Group's key
performance indicators and could result in variances
between the outlook and actual outcomes.
The report on outlook, risks and opportunities con-
tains forward-looking statements that are based on
the BMW Group's expectations and assessments and
which can be influenced by unforeseeable events. As
a result, actual outcomes can deviate either positively
or negatively from the expectations described below -
for example on account of political and economic
developments. Further information is provided in
the section Risks and Opportunities.
The report on outlook, risks and opportunities describes
the expected development of the BMW Group in 2020,
including the significant risks and opportunities, from
a Group management perspective. In line with the
Group's internal management system, the outlook
covers a period of one year. Risks and opportunities
are managed on the basis of a two-year assessment.
The report on risks and opportunities therefore
addresses a period of two years.
OUTLOOK
BMW Group outlook for 2020 signifi-
cantly impacted by coronavirus
Automobile markets in decline
as consequence worldwide
Economic development significantly
slowed by spread of coronavirus
REPORT ON OUT-
LOOK, RISKS AND
OPPORTUNITIES
→ Outlook
Risks and
Opportunities
Report on Outlook,
Management
Report
Combined
81
62
Assumptions used in the outlook
The following outlook relates to a forecast period of one
year and is based on the composition of the BMW Group
during that time. The outlook takes account of all
information available at the time of reporting and
any which could have an effect on the overall perfor-
mance of the Group. The expectations contained in
the outlook are based on the BMW Group's forecasts
for 2020 and reflect its most recent status. The basis
for the preparation of and the principal assumptions
used in the forecasts - which consider the consensual
opinions of leading organisations, such as economic
research institutes and banks - are set out below. The
BMW Group's outlook is drawn up on the basis of
these assumptions.
The high degree of uncertainty surrounding the global
spread and resulting consequences of coronavirus
makes it difficult to provide an accurate forecast of
the BMW Group's business performance for the finan-
cial year 2020. Based on the latest developments, the
BMW Group expects the spread of coronavirus and
the required containment measures to have a negative
impact on delivery volumes in all major markets over
the year 2020 as a whole. This assessment is based on
the assumption that deliveries across all markets will
return to normal after a few weeks. Any potential
longer-term effects on deliveries due to the spread of
coronavirus and the associated volatility on financial
markets cannot be assessed at present and are there-
fore not included in the outlook.
Opportunities
Risks and
Report on Outlook,
Management
Report
Combined
83
83
Currency markets
Rather than growing slightly, the Japanese economy
is likely to contract due to coronavirus, particularly
in view of the fact that the value added tax hike in
October 2019 is bound to exert downward pressure
on private consumption for some time to come. As an
export-oriented country, Japan is likely to be hit harder
by a decline in world trade than China, for example.
In the USA, growth is expected to continue slowing
down in 2020. The spread of coronavirus and the
resulting containment measures are likely to reduce
economic momentum to a level considerably lower than
the most recently predicted 1.7%, despite developments
on the labour and property markets remaining positive.
The US Federal Reserve has already responded to the
spread of coronavirus with interest rate cuts and will
likely adopt further measures to support the economy.
In the UK, apart from the impact of coronavirus, eco-
nomic performance in 2020 will also depend on the
progress of negotiations with the EU regarding a free
trade agreement. Overall, GDP growth in 2020 is likely
to be significantly below the most recently predicted
level of 1.0%.
GDP in the eurozone is likely to grow significantly
more sluggishly in 2020 than the predicted rate of 1.0%.
The growth rate in Germany is likely to be even slower.
Similarly, prospects for the economies of other member
states in the eurozone are also on the gloomy side.
France and Spain will grow only marginally at most,
while Italy, the first country in Europe to be affected
by coronavirus, is likely to go in recession.
The global economy will be significantly impacted by
the knock-on consequences of coronavirus. Despite
the fact that wide-ranging monetary and fiscal policy
measures have already been initiated in many coun-
tries, global growth is likely to be significantly lower
than in the previous year. Although the provisional
agreement in the trade dispute between the USA and
China as well as the reduced level of concern regarding
a potentially disorderly withdrawal of the UK from the
EU gave rise to some optimism at the beginning of the
year, the positive impact in these two areas is likely to
be far outweighed by the knock-on consequences of
coronavirus. At present, it is not possible to provide an
exact assessment of the situation. Further information
on political and global economic risks is also provided
in the section Risks and Opportunities.
Economic outlook
From the beginning of the financial year 2020, the key
performance indicator for the workforce size will be
based solely on the number of core and temporary
employees. This change is in line with the reorgan-
isation of internal management, which focuses on
these employee groups. Employee groups such as
apprentices, students gaining work experience and
doctoral candidates primarily serve to secure the next
generation of employees and promote the training of
young people, and are therefore excluded from an
internal management perspective. For this reason,
they will no longer be included in the key performance
indicator for the workforce size.
In the UK, in addition to the consequences of corona-
virus, uncertainties relating to EU exit negotiations on
a trade agreement are having the effect of impairing
the reliability of forecasts drawn up by businesses.
Irrespective of these matters, the BMW Group is
working on the basis that an agreement between the
EU and UK will be finalised by 31 December 2020.
Furthermore, the BMW Group anticipates that trade
tensions between the USA and China will continue
to be a source of uncertainty, but that the current
tariffs will not see a further increase. The Group also
assumes that trade between the EU and the USA will
not be subject to additional tariffs.
Even without the impact of coronavirus, the ongoing
normalisation of the Chinese economy would have
caused the country's growth rate to continue falling in
2020. However, the extent of the slowdown will now be
much greater and certainly be below the most recently
predicted rate of 5.6%.
Group-wide
For the same reason, Automotive segment deliv-
eries to customers are likely to be well down on
the previous year. At the same time, fleet carbon
dioxide emissions are forecast to drop considerably.
Influenced by the negative factors described above,
the Automotive segment's EBIT margin in 2020 is
expected to lie within a target range of 2 and 4%. The
latest prediction is that the RoCE in this segment is
likely to be significantly lower than one year earlier.
The RoE in the Financial Services segment is expected
to decrease slightly, mainly due to the higher risk
provisioning expense.
_
88
87
slight decrease
%
slight decrease
29.4
%
slight decrease
between 6 and 8
8.2
%
175,162
units
between 2 and 4
significant decrease
29.0
%
88
Combined
Management
Report
Report on Outlook,
Risks and
Opportunities
Completeness
Reporting/
Monitoring
Compliance
Committee
Practicability
Effectiveness
The risk management system is organised formally as
a decentralised, Company-wide network and is steered
by a centralised risk management function. Every
BMW Group division is represented within the risk
management organisation by Network Representatives.
The objective of the risk management system, and the
main function of risk reporting, is to identify, mea-
sure and, where possible, actively manage internal or
external risks that could threaten the attainment of the
Group's corporate targets. According to Group-wide
rules, every employee and manager has a duty to report
risks through the relevant reporting channels. The key
elements of a good risk culture are rooted in the core
values of the BMW Group, its risk management manual
and in the principles of its risk management strategy.
4.9
Risk management system
7
→ 62
Risk management in the BMW Group
Management of opportunities and risks is essential
for the Group to react appropriately to changes in
political, economic, technical or legal conditions.
Opportunities and risks which are likely to materialise
are taken into account in the Outlook Report. The
following sections focus on potential future devel-
opments or events, which could result in a positive
(opportunity) or a negative (risk) deviation from the
BMW Group's outlook. The earnings impact of risks
and opportunities is assessed separately without
offsetting. Opportunities and risks are assessed with
respect to a medium-term period of two years.
As a worldwide-leading provider of premium cars,
motorcycles and mobility services, as well as related
financial services, the BMW Group is exposed to
numerous uncertainties and change. Making full
use of the opportunities arising out of change is a
fundamental basis of the Group's corporate success.
In order to achieve growth, profitability, efficiency
and continued sustainable activities going forward,
the BMW Group must consciously assume risks.
RISKS AND
OPPORTUNITIES
→ Risks and
Opportunities
As part of the risk management process, all individual
and cumulative risks that represent a threat to the suc-
cess of the business are monitored and managed. Any
risks capable of posing a threat to the going-concern
status of the BMW Group are strictly avoided. Where
no specific reference is made, opportunities and risks
relate to the Automotive segment. The scope of entities
consolidated in the Report on Risks and Opportuni-
ties corresponds to the scope of consolidated entities
included in the BMW Group Financial Statements.
The Motorcycles segment is now expected to record a
slight decrease of deliveries to customers, down on the
previous forecast of a solid increase. The EBIT margin
is expected to lie within a target range of 6 and 8%,
while the ROCE is likely to be slightly under the pre-
vious year's level.
%
127
MOTORCYCLES SEGMENT
Return on capital employed
EBIT margin
Fleet emissions³
Deliveries to customers²
AUTOMOTIVE SEGMENT
Workforce at year-end
Profit before tax
GROUP
→ 61
BMW Group key performance indicators
Furthermore, the actual business performance of the
BMW Group may also differ from current expectations
as a result of the risks and opportunities described
below in the Report on Risks and Opportunities.
The prevailing high level of uncertainty – particularly
in connection with the further spread of corona-
virus, economic and political developments such as
the negotiations between the EU and the UK on a
trade agreement by 31 December 2020, as well as
international trade and customs policies - may cause
economic developments in many regions to deviate
markedly from expected trends and outcomes. Any
such deviations could have a significant impact on
the business performance of the BMW Group.
-
The targets are to be achieved with a workforce size
which based on the new method of calculation
described above - will be at a similar level to the
previous year (workforce size at the end of 2019
based on the new definition: 126,016 employees;
workforce size based on the previous definition:
133,778 employees).
Deliveries to customers
EBIT margin
Return on capital employed
FINANCIAL SERVICES SEGMENT
g CO2/km
significant decrease
2,538,367
units
in line with last
year's level
126,016
133,778
significant decrease
significant decrease
€ million
2020
Outlook¹
2019
adjusted
2019
reported
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2019: 538,612 units).
3 EU-28.
1 Based on adjusted figures.
Return on equity
7,118
84
BMW AG Balance Sheet at 31 December
→ 60
BMW AG is integrated in the Group-wide risk man-
agement system and internal control system of the
BMW Group. Further information is provided in the
section Internal Control System Relevant for Account-
ing and Financial Reporting Processes within the
Combined Management Report.
The carrying amount of investments rose to €3,762 mil-
lion (2018: €3,559 million), mainly due to additions to
investments in subsidiaries amounting to €257 million.
The impairment loss recognised on the investment in
SGL Carbon SE, Wiesbaden, amounting to €30 million
(2018: €119 million) had an offsetting effect.
Capital expenditure on intangible assets and prop-
erty, plant and equipment in the year under report
totalled €3,233 million (2018: €2,975 million), up by
8.7% compared to the previous year. Depreciation
and amortisation amounted to €2,573 million (2018:
€2,470 million).
3,168
45,535
3,497
55,819
79
19
28,226
285
187
12,670
21,777
5,560
5,751
545
511
8,038
8,989
7,824
8,784
214
205
28
28
15,241
15,079
2,303
1,646
10,103
10,564
Combined
2,177
Management
Report
Economic Position
Financial and net assets position
PricewaterhouseCoopers GmbH Wirtschaftsprüfungs-
gesellschaft, Frankfurt am Main, Munich branch, has
issued an unqualified audit opinion on the financial
statements of BMW AG, of which the balance sheet
and the income statement are presented here. The
BMW AG financial statements for the financial year
2019 will be submitted to the operator of the electronic
version of the German Federal Gazette and can be
obtained via the Company Register website. These
financial statements are available on the homepage
of the BMW Group under → www.bmwgroup.com/ir.
of BMW AG.
No other events have occurred since the end of the
financial year that could have a major impact on the
results of operations, financial position and net assets
year.
Current assessments and assumptions for the financial
year 2020, to the extent already known to BMW AG,
have been taken into account and described in the
outlook report. Apart from these assessments, no
further significant negative effects are known or can
be estimated at the present time. However, further
negative effects could arise in the course of the
The continuing spread of the coronavirus and the
impact on the business development of BMW AG is
being continually monitored. Based on current devel-
opments, BMW AG expects that the increasing spread
of the coronavirus and the necessary containment
measures will have a negative impact on BMW AG
vehicle deliveries in all key sales markets. Risks
also exist for upstream and downstream processes,
for example, through possible bottlenecks due to
supply shortages.
On 30 January 2020, the World Health Organisation
(WHO) declared an international health emergency
due to the outbreak of coronavirus. Since 11 March
the WHO has characterised the spread of the corona-
virus as a pandemic.
Events after the end of the reporting period
Due to its significance in the Group and its close ties
with Group companies, expectations for BMW AG
with respect to its non-financial performance indica-
tors correspond largely to the BMW Group's outlook.
This is described in detail in the Report on Outlook,
Risks and Opportunities section of the Combined
Management Report.
For the financial year 2020, BMW AG forecasts a divi-
dend payout ratio (unappropriated profit of BMW AG
in accordance with HGB in relation to the BMW Group
net profit for the year in accordance with IFRS) within
a range of between 30 and 40% (2019: 32.8%).
Outlook
BMW AG's performance is essentially dependent on
the same set of risks and opportunities that affect the
BMW Group and which are described in detail in the
Report on Outlook, Risks and Opportunities section
of the Combined Management Report. As a general
rule, BMW AG participates in the risks entered into
by Group companies in proportion to the respective
shareholding percentage. At the same time, the result
in investments has a significant impact on the earn-
ings of BMW AG.
Risks and opportunities
80
60
Cash and cash equivalents increased by €215 million
to €6,757 million, mainly as a result of net positive
cash inflows from operating activities. Investments
in long-lived assets and the payment of the dividend
for the previous financial year had an offsetting effect.
Liquidity within the BMW Group is ensured by means
of a liquidity concept applied uniformly across the
Group. This involves concentrating a significant part
of the Group's liquidity at the level of BMW AG. An
important instrument in this context is the cash pool
based at BMW AG. The liquidity position reported
by BMW AG therefore reflects the global activities of
BMW AG and other Group companies.
Deferred income increased by €329 million to
€3,497 million and included mainly amounts for
services still to be performed relating to service and
maintenance contracts.
Liabilities to subsidiaries amounting to €21,777 mil-
lion (2018: €12,670 million) comprised mainly
financial liabilities. In addition to higher intragroup
financing liabilities, the increase was primarily due
to the change in the exercise of the option to offset
receivables from and payables to subsidiaries with
effect from the financial year 2019.
Liabilities to banks decreased by €34 million, mainly
as a result of the repayment of project-related loans.
Other provisions increased year-on-year, mainly due
to the provision recognised in connection with
EU Commission antitrust proceedings.
Provisions for pensions went down from €214 million
to €205 million, after offsetting pension plan assets
against pension obligations.
In order to secure pension obligations, cash funds to-
talling €497 million were transferred to BMW Trust e. V.,
Munich, in conjunction with a Contractual Trust
Arrangement (CTA), to be invested in plan assets.
Plan assets are offset against the related guaranteed
obligations. The resulting surplus of assets over liabil-
ities is reported in the BMW AG balance sheet on the
line item Surplus of pension and similar plan assets
over liabilities.
As a result of the lower unappropriated profit com-
pared with the dividend paid for the previous financial
year, equity decreased by €162 million to €15,079 mil-
lion. The equity ratio fell from 33.5% to 27.0%, mainly
due to the higher balance sheet total.
The decrease in other receivables and other assets
to €3,513 million (2018: €3,595 million) was mainly
attributable to lower receivables from companies with
which an investment relationship exists. The increase
in tax receivables had an offsetting effect.
Receivables from subsidiaries, most of which relate
to intragroup financing receivables, increased to
€16,698 million (2018: €8,570 million), primarily due
to the change in the exercise of the option to offset
receivables from and payables to subsidiaries with
effect from the financial
year 2019.
Inventories increased to €5,994 million (2018:
€4,811 million), mainly due to the build-up of raw
materials, supplies and goods for resale and the
first-time inclusion in inventories of prepayments
on orders.
→ Comments on
Financial Statements
of BMW AG
Report on
2,210
19,060
659
3,595
3,513
8,570
16,698
947
964
Cash and cash equivalents
Marketable securities
Other receivables and other assets
Receivables from subsidiaries
Trade receivables
4,811
5,994
Inventories
4,109
15,787
Tangible, intangible and investment assets
3,559
3,762
Investments
11,976
12,473
658
252
405
Intangible assets
ASSETS
2018
2019
in € million
16,640
4,080
Property, plant and equipment
6,542
6,757
Total equity and liabilities
Deferred income
Liabilities
Other liabilities
Trade payables
Liabilities to banks
Provisions
Other provisions
Pension provisions
Registered profit-sharing certificates
Equity
Unappropriated profit available for distribution
Revenue reserves
Capital reserves
Liabilities to subsidiaries
EQUITY AND LIABILITIES
Subscribed capital
38,035
28,545
58
535
Surplus of pension and similar plan assets over liabilities
Prepaid expenses
668
45,535
1,086
55,819
Current assets
Total assets
8,013
Group income taxes²
Profit/loss from continuing operations²
Other Entities
Financial Services²
7,112
Motorcycles
Automotive
Group profit/loss before tax (EBT)²
Eliminations²
Eliminations²
Eliminations²
Financial Services²
Motorcycles
Automotive
Group profit/loss before financial result (EBIT)²
Other Entities
Financial Services²
Motorcycles
Automotive
7,784
Free cash flow Automotive segment
Group revenues²
Other Entities
6,222
96,855
20.8
Depreciation and amortisation
18.1
95,476
80,853
91,682
85,846
85,742
12.4
111,239
98,990
104,210
7,518
98,282
6,354
3,395
2,567
2,713
4,459
5.7
6,495
6,143
6,017
5,113
4,822
87.2
Total capital expenditure¹
143 Internal Control System
2021
11.2
15.0
14.8
18.1
14.8
194,261
169,272
175,162
165,566
164,153
35.9
22.6
15.0
28.4
34.0
84.4
8.3
4.5
8.2
8.1
9.1
- 5.7
0.33
2,272
29.4
Change in %
1 The 2018 figures were adjusted due to the change in accounting policy in conjunction with the adoption of IFRS 16 ( Annual Report 2019, Note 6 to the Group Financial Statements).
2 The term "employee" has been redefined with effect from the reporting year 2020 (for definition, see Glossary and explanation of key figures). The figure for 2019 was restated accordingly for comparison purposes (2019 before adjustment: 133,778 employees). For the period 2018 and earlier, the percentage of employees no
longer covered by the new definition is between 7.5 and 8.0 %.
4 Deliveries including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 385,705 units, 2018: 455,581 units, 2019: 538,612 units, 2020: 602,247 units, 2021: 651,236 units).
2020
2019
2018
2017
in € million
FURTHER FINANCIAL PERFORMANCE FIGURES
BMW Group in Figures
← = Q
Other Information
Remuneration Report
Corporate Governance
3 The new definition of the term "employee" (see footnote 1) also has an impact on disclosures relating to the percentage of female employees. The 2019 figure was adjusted accordingly for comparison purposes (2019 before adjustment: 17.5 %).
Group Financial Statements
To Our Stakeholders
BMW Group Report 2021
10
10
"From 2021, this indicator will include the carbon emissions of all other BMW Group locations in addition to the carbon emissions generated by production. The figures for 2019 (base year) and 2020 have been adjusted accordingly for comparison purposes (2019 before adjustment: 0.30 tons, 2020 before adjustment: 0.23 tons).
12 Figures from 2017 and 2018 are audited with limited assurance.
10 Efficiency ratio calculated on the basis of Scope 1 and Scope 2 CO₂ emissions (i.e. a market-based method according to GHG Protocol Scope 2 guidance; mainly the use of the VDA emissions factors as well as isolated use of local emissions factors; but excluding climate-changing gases other than carbon dioxide) from vehicle pro-
duction (BMW Group manufacturing sites incl. joint venture BMW Brilliance Automotive Ltd. and motorcycles, excluding contract manufacturers), as well as BMW Group non-manufacturing sites (e.g. research centre, sales centre, offices) divided by the number of vehicles (excluding motorcycles) produced (BMW Group manufacturing
sites incl. joint venture BMW Brilliance Automotive Ltd., excluding contract manufacturers).
9 Flexibilities as defined in the regulatory requirements for 2021 are as follows: eco-innovation with 1.7 g CO2/km (WLTP).
8 To improve year-on-year comparability, the 2020 NEDC figures were converted to WLTP after adjusting for permissible flexibilities - specifically from 99 g CO₂ / km according to NEDC (including 5 g CO2/km phase-in, 7.5 g CO2/km supercredits and 2.4 g CO2/km eco-innovations) to 135 g CO2/km according to WLTP
(excluding flexibilities). In 2020, a phase-in regulation was accepted, as was the recognition of supercredits. As of 2021, these two simplifications no longer apply for the BMW Group.
7 This is a preliminary internal calculation with a potential variation of +/- 0.5 g CO2/km, as official registration figures from the authorities are not available from all EU states. The EU Commission is not expected to publish official figures until November the following year.
6 EU-27 countries including Norway and Iceland; with effect from 2021, values are calculated on a converted basis in line with WLTP (Worldwide Harmonised Light Vehicles Test Procedure). Values from 2017 to 2020 according to New European Driving Cycle (NEDC).
5 Retail vehicle delivery data for 2020 and 2021 are not directly comparable to the data presented for previous years. See Retail vehicle delivery data in the section Comparison of Forecasts with Actual Outcomes for further information.
Combined Management Report
2,173
-390
2,284
227
2,194
2,172
2,312
1,721
3,701
14
-27
29
36
-8
- 404
431
377
808
- 14.1
10,675
9,627
7,118
5,222
16,060
8,717
6,977
103
32,867
9.4
7
194
175
207
9,870
2,162
4,499
6,182
7,888
13,400
4,830
7,411
4,467
8,933
39.9
-19,857
- 14,194
- 19,443
- 18,875
- 17,306
66.7
5
3
5
6
9,899
2,722
11,805
205
7,064
Earnings in € per share of common stock / preferred stock²
Pre-tax return on sales 2,3 in %
1 Expenditure for capitalised development costs, other intangible assets and property, plant and equipment.
² The figures for 2018 were adjusted due to the change in accounting policy in conjunction with the adoption of IFRS 16 ( Annual Report 2019, Note 6 to the Group Financial Statements).
3 Group profit/loss before tax as a percentage of Group revenues.
13.07/13.09
10.60/10.62
4,978
44
5,022
7.47/7.49
3,857
12,463
8,675
3,857
5.73/5.75
10.9
9.9
6.8
5.3
14.4
30,044
29,598
27,705
27,567
20.3
2,748
12,463
18.77/18.79
2,368
Group net profit/loss²
Profit/loss from discontinued operations
169
187
100
228
2,207
2,143
2,272
1,725
3,753
80
-45
7,097
-33
-96
531
-534
383
288
910
-257
- 2,000
8,675
144 Disclosures Relevant for Takeovers and Explanatory Comments
- 2,140
-1,365
- 3,597
-235
115.99
-2,530
0.40
end of year
GROUP EMPLOYEES
Significant increase to prior year
Significant increase to prior year
Significant increase to prior year
↑
22.6
8.3
DELIVERIES AUTOMOTIVE SEGMENT
10.3
16,060
in %
ROE FINANCIAL SERVICES SEGMENT
EBIT MARGIN MOTORCYCLES SEGMENT in %
in %
EBIT MARGIN AUTOMOTIVE SEGMENT
in € million
PROFIT / LOSS BEFORE TAX
Significant increase compared to
prior year
KEY PERFORMANCE INDICATORS
in units
in units
BMW Group Report 2021
3
->
BMW Group in figures
TO THE CHAPTER
Significant increase to prior year
13.0
The diagram provides a simplified overview. Detailed explanations of the KPIs as well as an indication of the scope of the audit can be found in the respective
chapters of the report.
DELIVERIES MOTORCYCLES SEGMENT
↑
71
Solid increase to prior year
194,261
2,521,514
Slight decrease to prior year
118,909
in %
SHARE OF ELECTRIFIED
VEHICLES IN DELIVERIES
Significant increase to prior year
To Our Stakeholders
In 2021, the BMW Group demonstrated how profitability and transformation can go hand in glove, des-
pite tough market conditions. Electric mobility is gathering pace, with delivery figures on a steep up-
ward trajectory. At the same time, the BMW Group is working on digital solutions that make life more
convenient for customers and provide access to a broad range of services. The BMW Group's vision of
a circular economy is gradually taking shape, the ultimate goal being fully sustainable mobility.
Further information is provided in the following report.
← = Q
BMW
GROUP
4
CORPORATE GOVERNANCE
248 Fundamental Aspects of Corporate Governance
(Part of the Combined Management Report)
258 Responsibility Statement by the Company's Legal
Representatives
259 Independent Auditor's Report
267 Independent Practitioner's Report
5
M
REMUNERATION REPORT
5
6 OTHER INFORMATION
321 Further GRI Information
332 SASB-Index
337 TCFD-Index
341 NFS-Index
342 Consumption and Carbon Disclosures
344 BMW Group Ten-year Comparison
271 Remuneration Report
BMW GROUP REPORT 2021
THE FUTURE IS
DIGITAL AND
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
2
ELECTRIC,
7 Link to the Online-Report
on the BMW Group's economic performance and
On the way to an electric and digitalised mobility
in a sustainable and circular economy. Report
BMW GROUP REPORT 2021
MOTOR CARS LTD
ROLLS-ROYCE
MINI
W
CIRCULAR
its ecological and social contributions.
346 Glossary and Explanation of Key Figures
Combined Management Report
Corporate Governance
67
TO OUR STAKEHOLDERS
1
Balance Sheet for Group and Segments at 31 December 2021
151
Products and Mobility Solutions
51
150 Statement of Comprehensive Income for Group
Production, Purchasing and Supplier Network
99.1 (135.0)8
0.35
BMW Group Integrated Strategy
38
Overview of the BMW Group
34
About this Report (Part of the Combined Management Report)
5
COMBINED MANAGEMENT REPORT
2
3 GROUP FINANCIAL STATEMENTS
CONTENTS
153 Cash Flow Statement for Group and Segments
BMW Group in Figures
124 Outlook, Risk and Opportunity Management
121 EU Taxonomy
BMW Group and Capital Markets
31
Dialogue with Stakeholders
28
The Board of Management
27
9
Statement of the Chairman of the Board of Management
157 Notes to the Group Financial Statements
155 Statement of Changes in Equity for Group
Financial Performance
91
Report of the Supervisory Board
12
Employees and Society
80
21
Group Financial Statements
Contents
Other Information
total deliveries
Share of fully electrified cars in
↑
22%
TARGET ACHIEVEMENT BY 2030
>30%
Share of women in management
positions
Share of electrified cars in total
deliveries
> 50%
8-10%
> 10%
EBIT margin Automotive segment
EBT margin Group
FINANCIAL TARGETS
STRATEGIC TARGETS OF THE BMW GROUP
← = Q
Other Information
Remuneration Report
TARGET ACHIEVEMENT BY 2025
← = Q
Reduction of CO2 emissions per
vehicle produced
The diagram provides a simplified overview of the key performance indicators (KPIs) disclosed in the report. Detailed explanations of the KPIs as well as an
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
4
->
80%
BMW Group Integrated Strategy
> 20%
supply chain
Reduction of CO₂ emissions in the
> 50%
Reduction of CO2 emissions in the
use phase of the vehicle
≥ 18%
Return on capital employed
Automotive segment
indication of the scope of the audit can be found in the respective chapters of the report.
TO THE CHAPTER
351 Financial Calendar
149 Income Statement for Group and Segments
6
Other Information
← = Q
BMW Group in Figures
BMW GROUP IN FIGURES
KEY PERFORMANCE INDICATORS
GROUP
Profit/loss before tax in € million
Workforce at year-end²
Remuneration Report
Share of women in management positions in the BMW Group³
EBIT margin in %
RoCE in %
Deliveries 4,5
Share of electrified vehicles in deliveries (in %)
CO2 emissions EU new vehicle fleet (in g/km) 6,7
CO₂ emissions per vehicle produced (in tons) 10, 11, 12
MOTORCYCLES SEGMENT
EBIT margin in %
AUTOMOTIVE SEGMENT
RoCE in %
Corporate Governance
Combined Management Report
← = Q
9
BMW Group in Figures
12
Report of the Supervisory Board
21
Statement of the Chairman of the Board of Management
27
Group Financial Statements
The Board of Management
Dialogue with Stakeholders
31
BMW Group and Capital Markets
TO OUR
STAKEHOLDERS
9
BMW Group Report 2021
To Our Stakeholders
28
Other Information
Deliveries
RoE in %
59.9
2,465,021
2,537,504
2,325,179
2,521,514
8.4
4.2
5.7
12.7
5.8
13.0
56.6
128.0
127.5
127.0
0.41
0.40
352 Contacts
8.3
FINANCIAL SERVICES SEGMENT
29.0
10.3
2017
2018¹
2019
2020
2021
Change in %
10,675
129,932
16.0
9,627
49.8
7,118
126,016
17.2
5,222
120,726
17.8
16,060
118,909
18.8
- 1.5
5.6
9.2
77.7
7.2
4.9
2.7
134,682
17.2
Remuneration Report
2,486,149
Group Financial Statements
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
About This Report
Changes in reporting and outlook for reporting
requirements
In light of recent and prospective changes in non-financial
disclosure requirements, including the revision of the Non-Fi-
nancial Reporting Directive at EU level (Corporate Sustain-
ability Reporting Directive), the related development of EU
reporting standards and the establishment of the Inter-
national Sustainability Standards Board (ISSB) under the
umbrella of the IFRS Foundation, the pace of change within the
reporting environment will continue to gather momentum
and increase the extent to which non-financial and financial
disclosures need to be presented on an integrated basis.
The BMW Group is preparing itself for these new trends by
developing its internal control system to ensure that non-fi-
nancial performance indicators are monitored to the same
degree as financial performance indicators. In the year under
report, we also complied with the disclosure requirements of
the (EU Taxonomy] Regulation and expanded our reporting in
line with the requirements of the Sustainability Accounting
Standards Board.
7 GRI 102-48, 102-49
SASB-Index
FRAMEWORKS APPLIED
The BMW Group Report 2021 is based on the following re-
porting and accounting standards:
Combined Management Report
The Combined Management Report is based on the follow-
ing legal frameworks:
German Commercial Code (HGB) (among other relevant
legislation)
Combined Non-Financial Statement (NFS) at Group
and Company level in accordance with § 289 b and
§ 315 b HGB. 7 NFS-Index
German Accounting Standards (GASS) underpinning
HGB requirements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
6
5
Corporate Governance
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
German Stock Corporation Act (AktG)
Other Information
ABOUT THIS REPORT
(PART OF THE COMBINED MANAGEMENT REPORT)
REPORTING CONCEPT
Integrated reporting and corporate strategy
In the BMW Group's view, a key prerequisite for a company's
profitability is that its activities are compatible with external
economic, ecological and social interests. Conversely, profit-
ability is the prerequisite for a company's ability to develop
sustainable and innovative technologies, ensure job security,
and cooperate with all its business partners along a value
chain that is striving to become increasingly sustainable.
For this reason, since the financial year 2020, the BMW Group
has kept stakeholders informed of its business performance
by reporting on an integrated basis. With the Integrated
Group Report 2021, we aim to provide a clear and compre-
hensive insight into the BMW Group and explain our activities
in a transparent, comprehensible and measurable manner.
We are well aware that integrated reporting is among the
subjects of an ongoing discussion currently taking place be-
tween stakeholders, regulators and reporting entities. The
status achieved to date is therefore still subject to constant
review and continuous improvement.
The BMW Group is keen to demonstrate to its shareholders
how economic, ecological and social issues complement
one another and are often mutually dependent, and which
general external conditions influence the company and de-
fine our potential to boost sustainability. For these reasons,
we explain the BMW Group's corporate strategy as well as the
latest developments and the way in which the business is
managed on the basis of key financial and non-financial tar-
gets. KPI Dashboard
On 8 March 2022, the Financial Statements of BMW AG
were authorised for issue by the Board of Management and
the Group Financial Statements approved for publication.
The BMW Group Report combines the management reports
of Bayerische Motoren Werke Aktiengesellschaft (BMW AG)
and the BMW Group in a Combined Management Report.
About This Report
Taxonomy Regulation (Regulation (EU) 2020/852 of the
European Council and of the European Parliament on the
Establishment of a Framework to Facilitate Sustainable
Investment, and amending Regulation (EU) 2019/2088)
The Combined Management Report is also based on:
← = Q
Furthermore, the following reporting standards and trans-
parency requirements have, for the most part, been integrat-
ed in the Combined Management Report:
PwC has audited the Group Financial Statements and the
Combined Management Report for the year ended 31 De-
cember 2021 and issued an unqualified audit opinion there-
upon. Further information is provided in the Independent Audi-
tor's Report and the Independent Practitioner's Report on
Non-financial Disclosures.
The contents of the NFS, in accordance with § 289 b and
315 b HGB, were subjected to an audit to obtain limited
assurance and is denoted with the symbol [...]]. The chapter
7 Dialogue with stakeholders and the additional information pro-
vided in the section Additional GRI Information were also sub-
jected to a limited assurance engagement. Certain individual
parts of the NFS as well as the remainder of the Combined
Management Report were subjected to a reasonable assur-
ance engagement. Information provided in the SASB-Index is
subjected to a limited assurance review on a voluntary basis.
The TCFD-Index refers to the corresponding chapter, in which
the respective test levels are denoted.
Material topics addressed in the NFS
The material topics addressed in the NFS to ensure compli-
ance with § 289 c and § 315 c HGB were determined partly
on the basis of the results of the materiality analysis updated
in 2018, in line with the requirements of the Global Reporting
Initiative (GRI), and partly on the basis of the BMW Group's
own long-term targets. For these purposes, consideration
was given to the BMW Group's own business operations,
products and services on the one hand and its business re-
lationships (for example in the supply chain) on the other. In
accordance with statutory materiality requirements, infor-
mation has been aggregated in each case with a view to pro-
viding an understanding of the BMW Group's course of busi-
ness, results of operations and financial position, while also
showing the impact of its activities on the non-financial as-
pects specified in the legislation. A stakeholder survey con-
ducted during the period under report with selected repre-
sentatives from capital markets and academia confirmed our
selection of material topics.
7 GRI 102-46, 102-49
Connection to figures in the Group Financial Statements
For each topic, an assessment was carried out to identify
figures reported in the financial statements that enable a
better understanding of the NFS, and which therefore need
to be disclosed and explained.
Forward-looking statements
← = Q
The BMW Group Report 2021 contains various forward-look-
ing statements concerning future developments that are
based on the current status of the BMW Group's assumptions
and forecasts. These statements are therefore subject to a va-
riety of predictable and unpredictable risks, uncertainties and
other factors, which means that the actual outcome, including
Editorial comments
The BMW Group Report uses also the simplified term "car-
bon" or the abbreviation CO₂ instead of CO₂e. Since not only
carbon dioxide, but also other gases such as methane (CH4)
and nitrous oxide (N₂O) contribute to climate warming to a
varying extent, the impact is converted into so-called CO₂
equivalents (CO₂e).
Summarised disclosures of fuel consumption, carbon emis-
sions and electricity consumption are provided in the section
Consumption and carbon emissions data.
8
BMW Group Report 2021
Combined Management Report
Guidelines on Alternative Performance Measures issued
by the European Securities and Markets Authority (ESMA)
German Corporate Governance Code
To Our Stakeholders
that of the BMW Group's net assets, financial position and re-
sults of operations, its development or performance, could
differ considerably to those statements.
Other Information
The key figures presented in this report have been rounded
in accordance with standard commercial practise. In certain
cases, this may mean that figures do not add up exactly to
the stated total and that percentages cannot be derived from
the figures shown.
Corporate Governance
Task Force on Climate-related Financial Disclosures
(TCFD) (TCFD-Index)
UN Global Compact Progress Report: see references in
GRI Content Index (GRI-Index)
Global Reporting Initiative (GRI) ( GRI-Index), option
"comprehensive"
Group Financial Statements
-
The Group Financial Statements of Bayerische Motoren
Werke Aktiengesellschaft for the year ended 31 December
2021 have been prepared in accordance with International
Financial Reporting Standards (IFRS) as endorsed by the
European Union (EU) and the supplementary requirements
of § 315 e HGB.
ADDITIONAL INFORMATION
ON THE REPORT
Sustainability Accounting Standards Board (SASB)
(7 SASB-Index)
Publication and scope
Remuneration Report
7 GRI 102-45, 102-48, GRI-Index 102-52
External audit
The entire report of BMW AG, comprising the Combined
Management Report, the Group Financial Statements, the
disclosures on corporate governance and the additional GRI
information, has been subject to an annual independent au-
dit by PricewaterhouseCoopers GmbH Wirtschaftsprüfungs-
gesellschaft ("PwC" or "Auditor"). The external audit serves
to underpin the reliability and trustworthiness of the infor-
mation contained therein for external users. The external au-
dit supports the Supervisory Board of BMW AG in fulfilling its
auditing duties. Any links and/or disclosures that refer to
additional information outside the BMW Group Report and
the GRI Content Index are not part of the audit. The Remuner-
ation Report 2021 was prepared in accordance with the require-
ments of § 162 of the German Stock Corporation Act (AktG)
and its content audited by PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft.
7
BMW Group Report 2021
About This Report
To Our Stakeholders
Combined Management Report
Group Financial Statements
The BMW Group Report is published annually to coincide
with the BMW Group Annual Conference most recently
held on 17 March 2021 - and is subsequently available in
both German and English on the BMW Group website. The
7 GRI Content Index is also available on the website as a sepa-
rate document. The reporting period covers the financial
year from 1 January to 31 December 2021. The statements
made in the report relate to the BMW Group reporting entity.
Any deviations are marked accordingly. Nothing significant
has changed in the reporting period with regard to the or-
ganisational structure of the BMW Group. The BMW Group
Report 2022 will be published on 15 March 2023.
BMW GROUP CONDENSED INCOME STATEMENT
in € million
Revenues
Cost of sales
Group revenues by region were as follows:
in %
2021
111,239
2020
98,990
Change in %
12.4
BMW GROUP REVENUES BY REGION
2021
2020
Gross profit
EARNINGS PERFORMANCE OF THE BMW GROUP
Combined Management Report
← = Q
The vast majority of deliveries of vehicles are carried out
by independent dealerships or other third parties, and
BMW Group is reliant on such third parties to correctly re-
port relevant data to BMW Group.
The definition of deliveries includes vehicles delivered in
the United States and Canada if the relevant dealers des-
ignate such vehicles as service loaner vehicles or demon-
strator vehicles.
-89,253
The preparation of BMW Group's retail vehicle delivery data
involves a variety of estimates and judgments, some of
which are complex and all of which are inherently subjective,
and is subject to other uncertainties. In addition, as
BMW Group continues to enhance its policies and proce-
dures regarding retail vehicle delivery data, it may not always
be practicable for BMW Group to adjust prior-period data
(and any such adjustments would be of a de minimis nature
without any material impact on the comparability of periods).
Examples of the foregoing include:
Retail vehicle delivery data for periods prior to 2020 in-
clude an immaterial number of pre-series vehicles that
were never intended to be sold to end users (such as ve-
hicles for use by government agencies in connection with
safety evaluations (e.g., crash tests) or for other tests).
Retail vehicle deliveries during a given reporting period do
not correlate directly to the revenue that BMW Group recog-
nizes in respect of such reporting period.
Financial Performance
* See Glossary for the definition of deliveries.
BMW Group Report 2021
To Our Stakeholders
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
98
- 85,408
43
Europe
2.2
Profit before financial result
13,400
4,830
Group
100.0
2.3
100.0
Profit/loss before tax
Income taxes
2,660
The retail vehicle delivery data for automobiles for
BMW Group's other markets have not been adjusted for any
period prior to 2020, nor have any retail vehicle delivery data
for motorcycles been adjusted for any period prior to 2020.
BMW Group believes the impact on BMW Group's retail ve-
hicle delivery data presented in this report of such data not
having been adjusted to reflect the Revised Reporting Pro-
cess to be immaterial.
392
16,060
Financial result
Other regions
647
Other operating income and expenses
42.4
44.3
21,986
13,582
61.9
Asia
32.5
32.1
Selling and administrative expenses
-9,233
- 8,795
- 5.0
Americas
22.8
21.4
- 4.5
When presenting total retail vehicle delivery data for auto-
mobiles other than model-by-model data, data relating to
the years 2016 through 2019 for BMW Group's 16 most sig-
nificant markets were adjusted to reflect the Revised Report-
ing Process. In the years 2016 through 2019, these 16 mar-
kets represented on average approximately 87% of
BMW Group's total retail deliveries of automobiles. For each
of the years 2016 through 2019, these revisions amounted to
less than 1% of BMW Group's total retail deliveries of
automobiles.
%
Retail vehicle delivery data*
between 6 and 8
Q2: between 7 and 9
Q3: between 9.5 and 10.5
significant increase
€ million
16,060 (+207.5 %)
significant increase
Return on capital employed (ROCE]6
FINANCIAL SERVICES SEGMENT
Return on equity (ROE)
118,909 (-1.5%)
%
18.8 (+ 5.6%)
solid increase
units
in g/km
in tons
slight decrease
2,521,514 (+8.4%)
EBIT margin
Return on capital employed (RoCE) 6
AUTOMOTIVE SEGMENT
5,222
Deliveries to customers'
significant increase
slight decrease
slight increase
MOTORCYCLES SEGMENT
Deliveries to customers
solid increase
significant increase
Emissions new vehicle fleet²
significant decrease
CO2 emissions per vehicle produced³
moderate decrease
EBIT margin
Share of electrified vehicles in deliveries
solid increase
13.0 (+ 56.6%)
significant increase
115.9 (-14.1 %)4
significant decrease
0.33 (-5.7%) 5
moderate decrease
1 Including automobiles from the joint venture BMW Brilliance Automotive Ltd. Shenyang (2021: 651,236 units).
2 EU-27 countries including Norway and Iceland; with effect from 2021, values are calculated on a converted basis in line with WLTP (Worldwide Harmonised Light Vehicles Test Procedure).
3 Efficiency indicator calculated on the basis of Scope 1 and Scope 2 emissions (i. e. a market-based method according to GHG Protocol Scope 2 guidance; mainly use of VDA emission factors as well as occasional use of local emis-
sions factors). This excludes climate-changing gases (other than carbon dioxide) that are emitted in conjunction with vehicle production (BMW Group plants incl. BMW Brilliance Automotive Ltd. joint venture and Motorrad, excluding
partner plant and contract manufacturing) as well as other BMW Group locations not assigned to manufacturing (e.g. research centres, sales centres, office buildings) divided by the number of vehicles generated in automobile
production (BMW Group plants including the BMW Brilliance Automotive Ltd. joint venture and partner plants, excluding contract manufacturing).
"For better comparability of the previous year's values with the current year under report, the 2020 NEDC figures were converted to WLTP, making adjustments for applicable flexibilities specifically from
99 g CO2/km according to NEDC (including 5 g CO2/km phase-in, 7.5 g CO2/km supercredits and 2.4 g CO2/km eco-innovations) to 135 g CO2/km according to WLTP (excluding flexibilities). In 2020, a phase-in
scheme and the awarding of supercredits were possible. In 2021, these two exemptions were no longer available for the BMW Group.
5 Due to the expansion of the reporting scope during the year under report, the comparative figure (in 2020 before the adjustment: 0.31 tonnes) was revised to 0.35 tonnes.
6 Unlike the other key performance indicators, the RoCE forecast for the Automotive and Motorcycles segments is based on the change in percentage points. Glossary
97
BMW Group Report 2021
22.6 (+11.4%-points)
To Our Stakeholders
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Financial Performance
Combined Management Report
%
Q2: between 17 and 20
Q3: between 20 and 23
between 12 and 15
%
10.3 (+7.6 %-points)
%
59.9 (+47.2 %-points)
significant increase
solid increase
Q2: significant increase
units
194,261 (+14.8%]
significant increase
%
8.3 (+3.8 %-points)
%
35.9 (+20.9 %-points)
significant increase
between 8 and 10
significant increase
In 2020, BMW Group reviewed and revised its policies and
procedures for the reporting of retail vehicle delivery data for
automobiles in order to further improve the reliability and
validity of its retail vehicle delivery data, in particular with re-
spect to the timing of the recognition of retail vehicle deliver-
ies (the Revised Reporting Process). BMW Group has ap-
plied the Revised Reporting Process to all markets with
effect from the year 2020. While BMW Group revised retail
vehicle delivery data for certain of its most significant mar-
kets for the years 2016 through 2019 presented in this report,
such data were not revised for BMW Group's other markets.
As a result, retail vehicle delivery data presented in this re-
port for the years 2016 through 2019 is not directly compar-
able to such data presented for the years 2020 and 2021.
Specifically, the retail vehicle delivery data for automobiles
presented in this report have been revised as follows:
-3,597
Group revenues were significantly higher in the financial year
2021, reflecting the impact of coronavirus-related dealership
closures in the previous 12-month period (2021: € 111,239 mil-
lion; 2020: € 98,990 million; + 12.4%). Sales volume was
Net profit
= Q
100
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
↑
Corporate Governance
Other Information
← = Q
Financial Performance
A substantial part of research and development expenditure
in 2021 related to new vehicle models (including the all-elec-
tric BMW iX and BMW i4 models and the new BMW 2 Series
Active Tourer) as well as the development of digital products,
automated driving and new architectures. The year-on-year
rise in research and development expenses clearly reflects
the increase in vehicle and module production start-up activ-
ities as the BMW Group continues its electric offensive.
The net amount of other operating income and expenses im-
proved significantly, primarily due to the income arising on
the partial reversal of the provision relating to the antitrust
proceedings of the EU Commission, which was recorded in
the second quarter 2021.
BMW GROUP RESEARCH AND DEVELOPMENT EXPENSES
Remuneration Report
in € million
Further information is provided in note 32 to the Group Financial Statements.
In the previous year, warranty expenses were impacted by
the recognition of provisions in connection with the exhaust
gas recirculation cooler and other warranty-related items.
2,971
-26.2
1,401
1,345
4.2
89,253
The reduced workforce size and changeover effects resulting
from the modernisation of the pension plan model in Germa-
ny amounting to € 562 million had a positive impact on cost
of sales and selling and administrative expenses, while higher
expenses for performance-related remuneration components
had an offsetting effect. Depreciation and amortisation on
property, plant and equipment and intangible assets recorded
in cost of sales and in selling and administrative expenses to-
talled € 6,495 million (2020: € 6,143 million).
85,408
Antitrust investigation concluded
In the Half-Year Report to 30 June 2021, information was
provided on the conclusion of the EU Commission's antitrust
proceedings in connection with allegations of colluding to
restrict competition for innovation with regard to certain ex-
haust treatment systems. In accordance with the updated
Statement of Objections received on 20 May 2021, the EU
Commission dropped most of the original charges. Remeas-
urement of the provision originally recognised in the financial
year 2019 gave rise to a positive impact on earnings of
around one billion euros in the second quarter 2021. The pro-
ceedings were concluded by settlement on 8 July 2021 and
resulted in a fine of approximately € 373 million, which was
paid in July 2021. Further information, in particular relating to
further antitrust proceedings and civil lawsuits, is provided in
note 38 to the Group Financial Statements 2021.
Increase in Group net profit in 2021
also higher in 2021, whereby the increase was held down by
production shortfalls due to supply bottlenecks for semicon-
ductor components. However, this unfavourable impact was
more than offset by improved pricing, due to both the grow-
ing desire for individual mobility on the one hand and the
reduced worldwide availability of products triggered by those
same semiconductor component shortages on the other. In
addition, revenues were also boosted by favourable product
mix effects due to increased sales of high-revenue models.
The semiconductor scarcity was also reflected in higher sell-
ing prices on pre-owned vehicle markets, which in turn gave
rise to higher revenues from the sale of lease returns.
Group cost of sales rose to € 89,253 million (2020: € 85,408 mil-
lion; +4.5%), mainly due to sales volume growth.
Other factors influencing the increase were volume-related
cost of sales for lease returns, rising raw materials and energy
prices, and the higher proportion of electrified vehicles sold.
Furthermore, reversals of and lower additions to credit risk al-
lowances as well as the remarketing result arising on the sale
of lease returns had a positive impact on cost of sales.
4.5
Research and development expenditure
New expenditure for capitalised development costs
Amortisation
BMW GROUP PERFORMANCE INDICATORS RELATING TO RESEARCH AND DEVELOPMENT EXPENSES
in %
Research and development expenditure ratio¹
Capitalisation rate²
1 Research and development expenditure as a percentage of Group revenues.
² Capitalised development costs as a percentage of research and development expenditure.
2021
The size of the workforce decreased slightly to 118,909 em-
ployees year-on-year and was therefore in line with expect-
ations (2020: 120,726 employees; -1.5%).
2020
6.3
Change in
%-pts.
-0.1
36.5
36.6
-0.1
Share of women in management
positions in the BMW Group
6.2
Income tax expense for the year increased to € 3,597 million
(2020: € 1,365 million), mainly due to the significant year-
on-year improvement in Group profit before tax. The effec-
tive tax rate for the 12-month period was 22.4% (2020:
26.1%), reflecting the partial reversal in 2021 of the risk pro-
vision in connection with the antitrust proceedings of the EU
Commission as well as the impact of fair value measurement
gains within other financial result.
As forecast most recently in the Quarterly Statement to
30 September 2021, Group profit before tax of € 16,060 mil-
lion was significantly higher than one year earlier (2020:
€ 5,222 million) and therefore in line with expectations.
The increased at-equity result from the Chinese joint venture
BMW Brilliance Automotive Ltd., Shenyang, amounting to
€ 1,727 million (2020: € 1,212 million) was another key driver
of the improved financial result.
Research and development expenses
As a result of the various factors described above, profit
before financial result jumped to € 13,400 million (2020:
€ 4,830 million).
The financial result improved significantly to a net positive
amount of € 2,660 million (2020: net positive amount of
€ 392 million), influenced in particular by improvements in
the line items "Other financial result” and “Result from equity
accounted investments".
Other financial result benefited in 2021 from the continued
favourable fair value development of interest rate hedges re-
sulting from the rise in yield curves in the USA, whereas in
the previous year the downward trend in interest rates gave
2021
2020
6,870
6,279
-2,506
-2,300
1,935
1,710
6,299
5,689
rise to fair value measurement losses on interest rate hedges.
Other financial result was additionally impacted by positive
valuation effects, primarily arising on investments held by
the BMW i Ventures fund and on the investment in SGL
Carbon shares.
2,192
- 1,365
Cost of sales
Warranty expenses
14.4
5.3
9.1
Post-tax return on sales²
11.2
3.9
Pre-tax return on sales¹
7.3
22.4
26.1
- 3.7
1 Group profit before tax as a percentage of Group revenues.
² Group net profit as a percentage of Group revenues.
3 Gross profit as a percentage of Group revenues.
Effective tax rate4
"Income taxes as a percentage of Group revenues.
6.1
19.8
12,463
3,857
Earnings per share of common stock in €
18.77
5.73
Earnings per share of preferred stock in €
13.7
18.79
Change in
in %
2021
2020
%-points
Gross profit margin³
5.75
BMW GROUP COST OF SALES
99
BMW Group Report 2021
1,643
1,960
- 16.2
Research and development expenses
6,299
5,689
thereof interest expense relating to financial services business
10.7
1,935
1,710
13.2
1,591
1,411
12.8
thereof amortisation of capitalised development costs
Service contracts, telematics and roadside assistance
-2.6
27,114
26,409
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
Financial Performance
in € million
Manufacturing costs
2021
2020
51,361
46,878
Change in %
9.6
Cost of sales relating to financial services business
Other cost of sales
Workforce at year-end
+14
GROUP
2022
Source: Reuters
Chinese renminbi
- British pound
Japanese yen
Russian rouble --- US dollar
2021
2020
2019
2018
2017
50
50
60
70
60
80
140
130
30
120
110
00
Source: Reuters
100
90
The bandwidth of fluctuation in the US dollar/euro exchange
rate was slightly narrower in 2021 than in the previous year.
The US currency fluctuated between 1.23 and 1.12 US dollars
to the euro and weakened somewhat compared to the previ-
ous year with an average rate of 1.18 US dollars to the euro in
2021. Both the European Central Bank (ECB) and the US
Federal Reserve (Fed) left their benchmark interest rates
unchanged. Towards the end of the year, however, they
announced that bond purchases would be curtailed.
Post-Brexit, the British pound remains fairly close to the
lower value it fell to after the 2016 referendum. However, at
an average rate of 0.86 pounds to the euro, the British cur-
rency was slightly stronger than in previous years. In re-
sponse to the high inflation rate, the Bank of England (BoE)
raised the official bank rate by 15 basis points to 25 basis
points in December 2021.
In China, the rapid recovery of the domestic economy and
the sharp growth in exports in 2021 led to a continuous ap-
preciation of the Chinese renminbi. On average over the year,
the Chinese currency traded at 7.63 renminbi to the euro.
Bucking the international trend, the Chinese central bank
lowered the reserve requirement ratio for most banks by 50
basis points at the end of 2021, thereby easing its monetary
policy in order to shore up the economy.
The average exchange rate of the Japanese yen was 130 to
the euro during the year under report.
As in the previous year, the currencies of major emerging
markets weakened again in 2021 due to the impact of the
coronavirus pandemic. While the average value of the Indian
rupee fell by around 3% against the euro, the Russian rou-
ble depreciated by 5% and the Brazilian real by as much as
8% on average against the euro.
06
150
93
To Our Stakeholders
2020
2019
2018
2017
0
45
90
90
135
135
180
225
270
315
360
405
450
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
BMW Group Report 2021
Financial Performance
The year 2021 was marked by a pronounced shortage of raw
materials, with demand outstripping supply for nearly all
commodities. Average prices for steel and aluminium rough-
ly doubled year-on-year, but fell again slightly towards the
end of the 12-month period.
Prices for precious and non-ferrous metals also followed a
similar trend. After rising sharply through to mid-2021, prices
fell again during the second half of the year, particularly for
rhodium and palladium. Lower demand from the automotive
industry also had a dampening effect on prices.
Prices of raw materials for batteries, however, rose signifi-
cantly, mainly due to the growing demand for electric ve-
hicles. Quoted prices for cobalt, for example, were up almost
twofold compared to the low for the year recorded one year
earlier. Similarly, the average price of lithium almost doubled
year-on-year.
DEVELOPMENT OF METALS PRICES
Index: December 2016 = 100
Energy and raw materials prices
2021
Index: December 2016 = 100
Supply chain bottlenecks, capacity constraints and higher
energy prices caused inflation to rise in the world's major
economies in 2021. Towards the end of the year, a number of
central banks announced their intention to modify their pre-
vious highly expansionary monetary policies.
117
Course of Business
109
Value Added Statement
107
Net Assets Position of the BMW Group
105
103
Financial Position of the BMW Group
101
Earnings Performance of the BMW Group
98
Outcomes
Comparison of Forecasts with Actual
96
Overall Assessment by Management of the
Financial Year
95
Profit before tax
91
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Comments on the
Corporate Governance
Other Information
← = Q
Financial Performance
91
FINANCIAL PERFORMANCE
General and Sector-Specific Environment
Remuneration Report
EXCHANGE RATES COMPARED TO THE EURO
Financial Statements of BMW AG
16,060 million
Currency markets and international interest rate
environment
Financial Performance
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
92
92
M
ECONOMIC GROWTH
DECENT WORK AND
After contracting significantly in 2020, Japan's economy re-
covered slightly during the first half of 2021. Despite exten-
sive stimulus packages, however, the second half of the year
saw a drop in economic output, with the year-on-year growth
rate finishing at 1.8%.
China's economic growth rate rose to 8.1% in 2021, well up
on the previous year, boosted in particular by a renewed
sharp rise in exports. However, the pace of growth slowed
somewhat towards the end of the year due to weaker con-
sumer demand.
Group profit before tax (up 207.5 % on the previous year)
Direct link to section
€ 9,870 million
Profit before financial result: Automotive segment
(up 356.5 % on the previous year)
7 Direct link to section
€3,753 million
Profit before tax: Financial Services segment
AT A GLANCE
(up 117.6% on the previous year)
FINANCIAL PERFORMANCE
GENERAL AND
SECTOR-SPECIFIC
ENVIRONMENT
Following the pandemic-related slump in 2020, the global
economy experienced an upswing in the year under report.
According to the provisional calculations of the International
Monetary Fund (IMF), global gross domestic product (GDP)
grew by 5.9% year-on-year in 2021. All three major regions -
Europe, the USA and China - saw an economic recovery.
The coronavirus crisis hit countries in the eurozone harder
than in other major regions. For this very reason, however,
the subsequent recovery in the worst affected European
countries was more pronounced. Overall, the economies of
the eurozone countries grew by 5.1% year-on-year. At 2.7%,
Germany's economy recorded a lower growth rate than other
European countries, mainly reflecting the impact of supply
shortfalls, particularly for semiconductor components. By
contrast, the economies of France (+6.7%), Italy (+6.3%)
and Spain (+5.0%) all grew strongly, influenced in particular
by good progress made on the vaccination front, the easing
of pandemic restrictions and the catch-up effects driven by
pent-up demand.
Despite its exit from the European Union (EU) and the im-
pact of supply bottlenecks, the economy of the United King-
dom (UK), which had experienced a particularly severe
slump in the previous year, recovered in 2021, with GDP up
by 7.0%.
The US economy grew by 5.7% year-on-year. The US labour
market also staged a recovery in 2021. Although the USA's
employment figures have not yet returned to pre-crisis levels,
some sectors are already seeing labour shortages.
7 Direct link to section
2022
Refinancing
Silver
thereof Brazil
thereof USA
Americas
thereof Spain
thereof Italy
thereof France
+10
- 12
+7
Change compared to
previous year in %
thereof Germany
Europe
+1
-3
+22
+3
Total
Japan
China
USA
COOPER
Registration figures on international motorcycle markets
developed as follows in the year under report:
The trend on international motorcycle markets in the 250 CC
plus class was predominantly positive in 2021. Worldwide,
motorcycle registrations were 14% up on one year earlier,
when pandemic-related factors had caused the markets to
contract. Markets in Europe also showed an upward trend,
with registrations up by 7% year-on-year. Among the major
motorcycle markets, positive contributions to the region's re-
covery came from Italy (+22%), Spain (+11%) and France
(+10%). By contrast, registration figures in Germany fell
sharply (-12%). Registrations in the USA rose by 15% year-
on-year. The Brazilian market also performed extremely well,
with registrations up by 32% after a decline one year earlier.
China recorded the biggest increase with growth of 44%.
International motorcycle markets
+1
+1
+6
+1
-10
Change compared to
previous year in %
-2
+3 INTERNATIONAL MOTORCYCLE MARKETS
+ 11
+19
+ 15
-Lithium hydroxide ---Lithium carbonate
Detailed information on the BMW Group's key performance
indicators is provided below in conjunction with the analysis
of the Group's results of operations, financial position and
net assets. Changes in the key performance indicators used
for the Automotive, Motorcycles and Financial Services
segments are explained in the respective sections on the
segments.
The following table shows the development of key per-
formance indicators for the BMW Group as a whole as well as
for the Automotive, Motorcycles and Financial Services seg-
ments in the financial year 2021 compared to the forecasts
made in the BMW Group Report 2020. Favourable selling
price trends for new and pre-owned vehicles as well as the
partial reversal of the provision for the EU antitrust proceed-
ings resulted in the EBIT margin forecast for the Automotive
segment being adjusted during the year. Due to lower risk
provisioning expense recognised for expected residual value
and credit risks, higher profits on the resale of lease returns
and the reversal of credit risk allowances, the BMW Group
also adjusted its forecast for the return on equity (ROE) range.
The changes are shown below.
COMPARISON OF FORE-
CASTS WITH ACTUAL
OUTCOMES
outcome in 2021
Actual
during the year
in 2020 Group Report
Forecast revision
Forecast for 2021
BMW GROUP: COMPARISON OF THE FORECASTS FOR 2021 WITH ACTUAL OUTCOMES IN 2021
The BMW Group's results of operations, financial position
and net assets are indicative of its solid financial condition.
Business developed in line with management expectations.
This assessment also takes into account events after the
end of the reporting period.
Financial Performance
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
+32
Asia
+31
thereof China
+44
Total
thereof United Kingdom (UK)
OVERALL ASSESSMENT
FINANCIAL YEAR
Despite the global challenges driven by semiconductor com-
ponent supply shortages and the impact of the coronavirus
pandemic, the BMW Group can be satisfied with the course
of business in the financial year 2021.
96
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
BY MANAGEMENT OF THE
thereof Spain
← = Q
thereof France
90
100
Price per barrel of Brent Crude
OIL PRICE TREND
Whereas in the previous year, oil markets had seen negative
prices for a brief period in the wake of the coronavirus pan-
demic, crude oil prices rose massively in 2021. WTI-grade oil
was temporarily quoted at over 84 US dollars per barrel and
Brent crude at over 86 US dollars per barrel, both reaching
their highest level in seven years. Prices fell again slightly
towards the end of 2021, but were still well above prior-year
levels.
Financial Performance
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
94
Source: Working Group for the Iron and Metal Processing Industry.
2022
― Palladium
thereof Italy
Cobalt
STEEL PRICE TREND
Index: January 2016 = 100
200
90
150
100
2017
2018
2019
2020
2021
50
80
50
70
95
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Source: Reuters
Remuneration Report
Financial Performance
International automobile markets
International automobile markets recovered slightly overall
in 2021, despite the continuing supply bottlenecks reported
in many markets. Registration figures for passenger cars and
light commercial vehicles worldwide edged up by 1% to 73.4
million units.
thereof Germany
INTERNATIONAL AUTOMOBILE MARKETS
10
Europe
← = Q
Price in euros
Other Information
2022
- Price in US dollars
50
40
30
20
10
60
60
2017
2018
2019
2021
0
2020
229,527
4.8
Other liabilities
22,420
21,187
5.8
1.3
24.4
Total equity and liabilities
216,658
9.8
-6.0
8,644
10,932
Trade payables
45.1
-2.7
106,376
103,463
1,256
5.9
89.4
Financial liabilities
86.0
26.5
2.6
The earnings-related higher cash holdings of Group com-
panies contributed to the increase in cash and cash
equivalents.
1 The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior-year figures.
28.4
32.7
Change in
%-points
2,379
31. 12. 2020
31.12.2021
Automotive segment
Group
in %
BMW GROUP EQUITY RATIO1
Despite the volatile situation with respect to the further
course of the coronavirus pandemic and the limited avail-
ability of semiconductor components, the BMW Group's re-
sults of operations, financial position and net assets all im-
proved during the financial year 2021.
Financial liabilities decreased over the 12-month period due
to the repayment of bonds (adjusted for currency effects).
100.0
Adjusted for currency effects, pension obligations decreased
significantly to € 1,247 million, mainly due to actuarial gains
and the positive effects arising from the modernisation of the
pension model in Germany².
with retail customers during the financial year 2021. The
number of contracts in place with dealerships and retail cus-
tomers fell by 2.6% to 3,929,583 contracts.
Financial Performance
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
106
2 Further information is provided in note 4 to the Group Financial Statements.
Group equity rose to € 75,132 million, driven primarily by the
profit of € 12,382 million attributable to shareholders of
BMW AG and reduced by the dividend payout of € 1,253 million.
Deferred and current tax
16.2
-2.5
Total assets
18.3
13,537
16,009
Cash and cash equivalents
1.0
- 4.5
- 1.6
2,298
2,261
Trade receivables
6.9
4.0
6.9
14,896
15,928
Inventories
4.4
-3.0
-0.8
10,326
10,243
4.3
Other assets
1.6
229,527
6.1
216,658
2.6
-0.2
13,982
13,954
Other provisions
0.5
- 66.5
-66.2
3,693
1,247
Pension provisions
32.7
18.3
22.1
61,520
75,132
Equity
EQUITY AND LIABILITIES
Receivables from sales financing (adjusted for currency ef-
fects] went down slightly compared to 31 December 2020,
primarily due to the decrease in dealership financing, mainly
in the USA, Germany, the UK and France. The currency-ad-
justed decrease in dealership financing receivables was par-
tially offset by rising retail customer financing. Overall, how-
ever, receivables from sales financing grew slightly. A total of
1,334,853 new credit financing contracts were concluded
Investments accounted for using the equity method (adjust-
ed for currency effects) increased significantly over the
12-month period under report, mainly driven by the rise in the
BMW Group's at-equity valuation of the Chinese joint ven-
ture BMW Brilliance Automotive Ltd., Shenyang, in light of
that entity's higher earnings and the fact that it did not pay
out a dividend during the financial year 2021.
Based on constant currencies, leased products were slightly
highly than one year earlier. Although the contract portfolio
under management was at a similar level compared to the
previous year, leased products in the balance sheet grew as
a consequence of volume growth as well as the higher aver-
age financing volume per vehicle, the latter brought about by
an improved product mix.
Adjusted for currency effects, property, plant and equipment
and intangible assets all went up year-on-year, driven by higher
capital expenditure, particularly in connection with the electrifi-
cation of the vehicle fleet as well as new model revisions.
Adjusted for currency effects, the BMW Group's balance
sheet total was slightly higher than at 31 December 2020.
Including currency effects from the US dollar, the British
pound and the Chinese Renminbi, amongst others, the bal-
ance sheet total grew solidly compared to the previous year².
1.0
Proportion of
balance sheet
total in % 2021
7.0
100.0
5.9
41.5
69,121
4.5
26.2
30,315
Net value added
- 1.8
11.9
11,976
10.1
11,758
intangible and investment assets
Depreciation and amortisation of total tangible,
33.8
31.3
31,435
36.3
42,073
Gross value added
6.7
68.8
63.7
73,772
- 18.9
16.7
16,766
11.8
13,599
19,459
Other expenses
Bought-in costs
19.3
ALLOCATION
28.2
16.6
8,555
Group
6.4
1,253
3,827
Shareholders
6.3
1,229
12.4
3,758
Government / public sector
- 15.1
10.9
2,129
6.0
1,808
Providers of finance
0.3
63.0
12,244
40.5
12,286
Employees
55.8
37.0
14.9
52,355
Total output
Other income
Financial income
Revenues
WORK PERFORMED
BMW GROUP VALUE ADDED STATEMENT
Net value added by the BMW Group rose sharply in 2021 due
to the year-on-year improvement in earnings.
The value added statement shows the value of work per-
formed by the BMW Group during the financial year, less the
value of work bought in. Depreciation and amortisation, cost
of materials, and other expenses are treated as bought-in
costs in the value added calculation. The allocation state-
ment applies value added to each of the participants in-
volved in the value added process. The bulk of the net value
added benefits the employees. The remaining proportion in
the Group is retained to finance future operations. The gross
value added amount treats depreciation and amortisation as
a component of value added which, in the allocation state-
ment, would be treated as internal financing.
VALUE ADDED STATEMENT
Financial Performance
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
107
2 Further information is provided in note 32 to the Group Financial Statements.
1 Equity capital as a percentage of the balance sheet total, respectively.
0.8
10.5
11.3
Financial Services segment
Cost of materials *
52.1
2021
2021
in %
51.9
60,173
15.2
100.0
100,556
100.0
115,845
85.8
0.9
916
1.5
1,702
0.6
650
2.5
2,904
12.4
98.4
98,990
96.0
111,239
Change in %
in %
2020
2020
in € million
in € million
21.7
290
3,731
Intragroup net financing
8
3,759
3,767
Marketable securities and investment funds
2,487
9,522
12,009
Cash and cash equivalents
Change
31.12.2020
31.12.2021
in € million
NET FINANCIAL ASSETS AUTOMOTIVE SEGMENT
In the Automotive segment, net financial assets comprised
the following:
was partially offset by the increase in inventories resulting
from production adjustments caused by semiconductor sup-
ply bottlenecks. The increase in the net cash outflow from
investing activities was mainly attributable to the changes
described in the Group Cash Flow Statement.
The Automotive segment generated free cash flow amount-
ing to € 6,354 million in 2021. The main factor influencing the
increase in the net cash inflow from operating activities was
the year-on-year improvement in profit before tax. Within
working capital, the positive impact of higher trade payables
2,959
3,395
829
- 850
-21
6,354
Change
4,405
-2,275
- 3,933
-6,208
9,111
8,178
7,996
Financial assets
in € million
CASH FLOWS FINANCIAL SERVICES SEGMENT
Cash and cash equivalents held by the Financial Services
segment changed as follows:
Financial Performance
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
103
*Excluding derivative financial instruments.
3,900
18,462
22,362
Net financial assets Automotive segment
2,522
-2,815
-2,525
Less: external financial liabilities*
3,610
21,277
24,887
1,115
12,583
2020
2021
-6,389
2,652
13,251
15,903
Change
2020
2021
Cash inflow (+)/ outflow (-) from operating activities
Cash inflow (+)/outflow (-) from investing activities
in € million
BMW GROUP CASH FLOWS
The change in the net cash outflow from financing activities
mainly reflected the higher level of financial liabilities pay-
able to BMW Group companies in which an investment is
held as well as the lower dividend paid out for the 2020 pan-
demic year.
Substantial investments in property, plant and equipment
and intangible assets, in particular for the launch of new ve-
hicle models, resulted in a higher net cash outflow from in-
vesting activities. In the previous year, proceeds from the
sale of marketable securities and the receipt of a dividend
from BMW Brilliance Automotive Ltd., Shenyang, also had a
positive effect on the net cash flow from investing activities.
The main factors driving the higher net cash inflow from op-
erating activities were the Group's improved profit before tax
on the one hand and the overall change in working capital on
the other. Within working capital, the rise in trade payables
due to higher production volumes had a favourable effect,
while the increase in inventories in the Automotive segment
- partially compensated by a decrease in inventories in the
Financial Services segment - had an offsetting effect. Within
receivables from sales financing, amounts due from retail
customers went up on the back of higher business volumes.
On the other hand, receivables from dealership financing fell
in light of brisk demand and short standing times for ve-
hicles, and therefore had an offsetting effect. The decrease
in provisions mainly reflected the partial reversal in 2021 of
the risk provision in connection with the antitrust proceed-
ings of the EU Commission.
Cash flows from operating activities are determined indirect-
ly, starting with Group/segment profit before tax. By con-
trast, cash flows from investing and financing activities are
based on actual payments and receipts.
The consolidated cash flow statements for the Group and
the Automotive and Financial Services segments show the
sources and applications of cash flows for the financial years
2021 and 2020, classified according to operating, investing
and financing activities. Cash and cash equivalents in the
cash flow statements correspond to the amounts disclosed
in the balance sheet.
FINANCIAL POSITION OF
THE BMW GROUP
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
Financial Performance
To Our Stakeholders
BMW Group Report 2021
101
-3,636
- 2,753
Cash inflow (+)/ outflow (-) from financing activities
-6,735
Adjustment for net investment in marketable securities and investment funds
Free cash flow Automotive segment
Cash inflow (+)/ outflow (-) from investing activities
Cash inflow (+)/outflow (-) from operating activities
in € million
FREE CASH FLOW AUTOMOTIVE SEGMENT
Free cash flow for the Automotive segment was as follows:
Financial Performance
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Cash inflow (+)/outflow (-) from operating activities
Combined Management Report
BMW Group Report 2021
102
971
1,501
2,472
Change in cash and cash equivalents
-447
140
-307
Effects of exchange rate and changes in composition of Group
1,519
- 8,254
To Our Stakeholders
3,065
Cash inflow (+)/ outflow (-) from investing activities
Effects of exchange rate and changes in composition of segment
Change in cash and cash equivalents
44,700
Leased products
0.7
2.5
21,850
22,390
Property, plant and equipment
4.9
5.2
12,342
12,980
Intangible assets
ASSETS
Currency-adjusted
change in %1
Change in %
2020
2021
in € million
BMW GROUP CONDENSED BALANCE SHEET AT 31 DECEMBER
NET ASSETS POSITION OF THE BMW GROUP
Financial Performance
← = Q
Other Information
Remuneration Report
Corporate Governance
41,995
Group Financial Statements
6.4
5.7
9.8
19.5
Deferred and current tax
3.3
-4.6
-3.1
7,752
7,515
Financial assets
38.1
- 1.0
3.7
84,277
87,417
Receivables from sales financing
0.5
61.9
68.8
735
1,241
Other investments
2.2
42.6
42.6
3,585
5,112
Investments accounted for using the equity
method
2.9
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
Focused capital market management, good ratings and the
high level of acceptance enjoyed by the BMW Group on
those markets enabled it to refinance itself on the world's
debt capital markets at favourable conditions during the
period under report. In addition to bonds, the BMW Group
also issued commercial paper in 2021. As in previous years,
all issues were in high demand, not only from institutional
investors, but also from private investors in selected transac-
tions. Moreover, retail customer and dealership financing
receivables as well as rights and obligations from leasing
contracts are securitised in the form of asset-backed secur-
ities (ABS) financing arrangements. Specific banking instru-
ments, such as the customer deposits used by the Group's
own banks in Germany and the USA, are also deployed for
financing purposes. In addition, loans are taken from inter-
national banks.
Financing measures undertaken at corporate level ensure
access to liquidity for the Group's operating subsidiaries at
standard market conditions and consistent credit terms.
Funds are acquired in line with a target liability structure,
comprising a balanced mix of financing instruments. The use
of longer-term instruments to refinance the Group's Finan-
cial Services business and the maintenance of a sufficiently
high liquidity reserve serves to rule out any imminent liqui-
dity risk for the portfolio. This conservative financial ap-
proach also has a favourable effect on the Group's rating.
Further information is provided in the section "Liquidity
risks" within the chapter 7 Outlook, Risk and Opportunity Management.
3. Focus on value through the optimisation of financing
costs
2. Autonomy through the diversification of refinancing in-
struments and investors
1. The ability to act through permanent access to stra-
tegically important capital markets
A broad range of instruments on international money and
capital markets is used to refinance worldwide operations.
Funds raised are used almost exclusively to refinance the
BMW Group's Financial Services business. The overall ob-
jective of Group financing is to ensure the solvency of the
BMW Group at all times, focusing on three areas:
REFINANCING
The main factor driving up net cash inflow from operating
activities was the increase in segment profit before tax. Fur-
thermore, a reduction in dealership inventories and the as-
sociated reduction in receivables from sales financing, pri-
marily dealership financing, had a positive effect, while the
increase in retail customer financing had an offsetting im-
pact. The decrease in inventories as a consequence of strong
demand for lease returns also had a positive impact. The
change in the net cash inflow from investing activities was
attributable to the combined effect of higher outflows for in-
vestments in and lower inflows from sales of marketable
securities.
- 206
- 180
788
608
110
-96
-121
- 2,508
-2,629
- 350
424
74
497
2,762
3,259
Change
2020
2021
In 2021, the BMW Group issued bonds totalling approxi-
mately € 6.9 billion. The BMW Group refinanced itself by
means of 144A transactions with a total volume of 4.5 billion
US dollar on the US capital market and by means so-called
Panda bonds with a volume of 9.5 billion Chinese renminbi
on the Chinese capital market. Activities on international
capital markets were rounded off by one euro benchmark
104
BMW Group Report 2021
To Our Stakeholders
105
The BMW Group continued to deploy robust liquidity-related
measures throughout 2021 to ensure its ability to act flexibly
and independently at all times. Thanks to the combination of
financing measures taken and the high free cash flow gener-
ated during the year, liquidity on hand totalled € 20.2 billion
at 31 December 2021 and was therefore significantly higher
than the previous year's corresponding figure of € 17.8 bil-
lion.
* Measured at the exchange rate on the trade date of the respective transaction.
1.4
13.0
Commercial Paper
1.6
Australian Medium Term Notes
30.7
50.0
Euro Medium Term Notes
Amount utilised*
Cash inflow (+)/ outflow (-) from financing activities
Programme volume
Programmes
The credit line was not being utilised at 31 December 2021.
Further information with respect to financial liabilities is
provided in notes 31, 35 and 39 to the Group Financial
Statements.
The BMW Group also has access to a syndicated credit line,
which was renegotiated in July 2017. The syndicated credit
line of € 8 billion has a term ending in July 2024 and is being
made available by a consortium of 44 international banks.
The following table provides an overview of amounts utilised
at 31 December 2021 in connection with the BMW Group's
money and capital market programmes:
bond amounting to € 1.5 billion and a bond denominated in
Canadian dollars with a total value of 0.5 billion Canadian
dollar. ABS transactions with a total financing volume equiv-
alent to € 15.1 billion were executed in 2021, including both
new and rolled-over ABS transactions. During the year under
report, the BMW Group was party to ABS transactions in the
following markets: Australia, Canada, China, France, Germa-
ny, Japan, South Africa, South Korea, Switzerland, the USA
and the UK.
Financial Performance
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
in € billion
13.0
12.6
81
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
110
4
ix
Group Financial Statements
47 Consumption and carbon emissions.
² See 7 Glossary for definition of deliveries.
(2021: 651,236 units; 2020: 602,247 units).
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
in units
lutants.
With a total of 328,3143 units, deliveries jumped sharply by
70.4% in the year under report (2020: 192,662³ units). De-
mand was particularly strong for the Group's all-electric
models and delivery figures more than doubled year-on-year
to 103,8543 units (2020: 44,5413 units; +133.2%). Their
share of total delveries was 4.1% (2020: 1.9%) in the year
under report. Two additional all-electric models, the BMW iX4
and the BMW i44, went on sale towards the end of 2021, both
of which have been highly acclaimed in the trade press. By
the end of the period under report, the BMW Group had a
total of 14 electrified models on the roads. In 2022, the prod-
uct range will be expanded to include the all-electric BMW i7
luxury sedan and the BMW iX1. The increased share of deliv-
eries accounted for by electrified vehicles and the rigorous
use of Efficient Dynamics technologies enabled further pro-
gress to be made in decarbonising fleet emissions. Further
information is provided in the chapter 7 Carbon emissions and pol-
3 Includes the joint venture BMW Brilliance Automotive Ltd., Shenyang.
Corporate Governance
Remuneration Report
Other Information
2.8
China
33.6
Italy
Other
25.8
as a percentage of sales volume
BMW GROUP
MARKETS 2021
LARGEST AUTOMOBILE
-
Sales also recovered well in the Americas region during the
year under report, with delivery numbers rising to 451,747
units (2020:379,714 units; +19.0%). A total of 368,032 units
were delivered in the USA (2020: 307,876 units; +19.5%).
In the UK, sales of all three brands totalled 164,344 units
(2020: 163,174 units; +0.7%), marginally up on the previous
year's figure. France and Italy, however, both recorded
double-digit growth rates. Sales in France, for example, rose
to 76,845 units (2020: 69,880 units; +10.0%), while in Italy
the BMW Group delivered a total of 70,224 units (2020:
62,538 units; +12.3%).
Europe saw a slight increase in the number of deliveries to
949,124 units (2020: 913,642 units; +3.9%). In Germany,
however, the impact of the coronavirus pandemic became
even more pronounced at the beginning of 2021, a fact re-
flected in weak sales figures during the early stages of the
year. Over the year as a whole, a total of 266,818 units were
delivered, well down on the previous year (2020: 285,019
units; -6.4%).
Deliveries of BMW, MINI and Rolls-Royce brand vehicles in
Asia rose solidly to a new high of 1,067,9141 units (2020:
986,464 units; +8.3%). The sales figure for China grew by
8.9%, also resulting in a new record level of 847,9351 units
(2020: 778,412¹ units).
Sales volume situation in main markets:
new record set in China
Financial Performance
← = Q
Deliveries of electrified vehicles at record level
Electric mobility continues to gain in significance for the en-
tire sector and is a key driver of sales volume growth for the
BMW Group. The trend is reflected in the sharp rise in the
sale of electrified models offered by the BMW and MINI
brands.
France
Deliveries² of BMW brand vehicles grew by 9.1% to 2,213,7901
units (2020: 2,028,8411 units). MINI also recorded an in-
crease, with deliveries rising to 302,138 units (2020: 292,582
units; +3.3%). Rolls-Royce Motor Cars delivered a total of
5,586 units (2020: 3,756 units; +48.7%), the highest figure
recorded for the luxury marque to date.
Automotive segment
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
109
Remuneration Report
Minority interest
0.3%
Shareholders
Providers of finance
6.0%
Group
28.2%
12.4 %
sector
Government/public
12.6 %
Other Information
← = Q
Financial Performance
COURSE OF BUSINESS
70.4
192,662
328,314
133.2
44,541
103,854
51.5
148,121
224,460
BMW Group PHEV
BMW Group BEV
Total
Change in %
2020
2021
DELIVERIES OF ELECTRIFIED MODELS
BMW Group retains leadership in premium segment
Despite global challenges such as semiconductor component
supply issues and the impact of the coronavirus pandemic,
the BMW Group can be satisfied with the positive course of
business in the financial year 2021. Driven by brisk demand
and an attractive product range, automobile deliveries grew
by a solid 8.4% to a total of 2,521,514¹ BMW, MINI and Rolls-
Royce brand vehicles (2020: 2,325,1791 units), enabling the
BMW Group to extend its lead in the premium segment.
Employees
40.5 %
3.0
USA
778.4
847.9
thereof China¹
847.7
871.8
930.8
724.7
986.5
Asia¹
358.8
355.4
375.7
307.9
368.0
1,067.9
635.8
595.0
Other markets
Minority interest
37 Consumption and carbon emissions.
2 Retail vehicle delivery data presented for 2020 and 2021 is not directly comparable to such data presented for previous years. For further information on retail vehicle delivery data, please see Comparison of
Forecasts with Actual Outcomes.
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2019: 538,612 units; 2018: 455,581 units; 2017: 385,705 units).
2,465.0
2,486.1
2,537.5
2,325.2
2,521.5
Total1
59.3
59.9
52.2
45.4
52.8
thereof USA
Korea
456.1
472.9
Europe
The BMW brand set a new record in 2021, delivering a total
of 2,213,7901 units (2020: 2,028,8411 units; +9.1%). The core
brand's growth was mainly attributable to its youthful, at-
tractive range of models. The BMW X family in particular re-
mained extremely popular. The BMW X3 and BMW X4 model
revisions launched in 2021 made a significant contribution to
the brand's strong overall sales performance. The figure in-
cluded 37,938 units of the new BMW iX33, which means ap-
proximately every tenth BMW X3 vehicle delivered worldwide
was all-electric.
BMW brand sets new record
2017
2018
2020
thereof Germany
2021
BMW GROUP DELIVERIES OF VEHICLES BY REGION AND MARKET 2
Germany
10.6
6.5
UK
14.6
3.1
in 1,000 units
thereof UK
Americas
949.1
379.7
451.7
242.4
236.8
233.8
163.2
164.3
1,101.9
296.5
310.6
330.5
285.0
266.8
1,097.4
1,081.6
913.6
457.1
26.2%
2019
Net
30,315
100.0
19,459
100.0
55.8
* Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
108
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
0.3
Remuneration Report
Other Information
← = Q
Financial Performance
BMW GROUP VALUE ADDED 2021
in %
Other expenses
11.8 %
Depreciation and
amortisation
10.1%
Cost of materials
51.9 %
Net value added
- 1.2
Corporate Governance
82
value added
0.4
- 1,460
2,199
Other operating income
- 6,451
Research and development expenses
-3,243
Administrative expenses
- 3,858
Selling expenses
2021
88,526
-72,283
16,243
1,237
Financial Performance
Results of operations
-2,747
-4,030
11,314
- 63,726
75,040
2020
Gross profit
Cost of sales
Revenues
in € million
BMW AG INCOME STATEMENT
- 1,250
-5,394
At € 1,935 million, the Automotive segment's financial result
was significantly up on the previous year (2020: € 560 mil-
lion). As described above, the main driving factors in this re-
spect were the improved result from the at-equity accounted
Chinese joint venture BMW Brilliance Automotive Ltd., Shen-
yang, positive valuation effects recognised in other financial
result arising on investments held by the BMW i Ventures
fund and on the investment in SGL Carbon shares.
A large proportion of the research and development ex-
penses incurred in 2021 are related to new vehicle models
(including the all-electric BMW iX and BMW 14 models and
the new BMW 2 Series Active Tourer) as well as to the devel-
opment of digital products, automated driving and new ar-
- 280
- 1,068
4,927
-214
1,720
-17
4,910
Due to its significance in the Group and its close ties with
Group companies, expectations for BMW AG with respect to
its non-financial performance indicators correspond largely
to the BMW Group's outlook. This is described in detail in the
7 Outlook, Risk and Opportunity Management section of the Combined
Management Report.
1,702
- 1,083
3,827
-449
1,253
Other operating expenses
-426
Result on investments
Income taxes
Profit after income tax
Other taxes
Net profit
Transfer to revenue reserves
Unappropriated profit available for distribution
Revenues increased by € 13,486 million in 2021, primarily re-
flecting year-on-year sales volume growth. In geographical
terms, the greater part of the increase was generated
in the USA, China and Rest of Europe. Revenues totalled
€ 88,526 million (2020: € 75,040 million), of which Group
internal revenues accounted for € 60,373 million (2020:
€ 49,348 million) or 68.2% (2020: 65.8%).
Cost of sales went up by 13.4% to € 72,283 million, mostly
due to sales volume growth.
Gross profit rose by € 4,929 million to € 16,243 million.
3,084
Overall, selling expenses decreased slightly and general ad-
ministrative expenses increased significantly.
Financial result
← = Q
Other Information
Remuneration Report
29.9
28.4
29.7
26.0
0
2017
2018
2019
28.9
2020
CONTRACT PORTFOLIO RETAIL CUSTOMER FINAN-
CING OF FINANCIAL SERVICES SEGMENT 2021
in % per region
Asia/Pacific
7.8
China
14.2
EU Bank²
18.3
2021
Europe/
FINANCING
20.8
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Financial Performance
LEASING 20.7
BMW GROUP NEW VEHICLES FINANCED OR
LEASED BY FINANCIAL SERVICES SEGMENT1
52.2
50.1
49.8
50.5
46.7
|
22.3
21.2
21.4
in %
chitectures. Research and development expenses rose by
19.6% year-on-year, reflecting the increase in vehicle and
module production start-up activities as the BMW Group
continues its electric offensive.
Middle East/Africa
35.2
Due to adjustments in delivery figures, numbers have been adjusted retroactively,
7 Glossary.
← = Q
Financial Performance
COMMENTS ON THE
FINANCIAL STATEMENTS
OF BMW AG
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
based in Munich, Germany, is the parent company of the
BMW Group. The comments on the BMW Group and the Au-
tomotive segment provided in earlier sections apply to
BMW AG, unless presented differently in the following sec-
tion. The Financial Statements of BMW AG are drawn up in
accordance with the provisions of the German Commercial
Code (HGB) and the relevant supplementary provisions con-
tained in the German Stock Corporation Act (AktG).
The key financial performance indicator for BMW AG is the
dividend payout ratio (unappropriated profit of BMW AG in
accordance with HGB in relation to net profit for the year of
the BMW Group in accordance with IFRS). The key non-fi-
nancial performance indicators are essentially identical and
concurrent with those of the BMW Group. These are de-
scribed in detail in the Financial Performance section of the
Combined Management Report.
Differences in accounting treatments based on HGB (used
for the Company Financial Statements) and IFRS (used for
the Group Financial Statements) are mainly to be found in
connection with the capitalisation of intangible assets, the
creation of valuation units, the recognition and measure-
ment of financial instruments and provisions as well as the
recognition of deferred tax assets. Differences also arise in
the presentation of assets and liabilities and of items in the
income statement.
Business environment and review of operations
The general and sector-specific environment of BMW AG is
essentially the same as that of the BMW Group and is de-
scribed in the ▾ Financial Performance section of the Combined
Management Report.
Other Information
BMW AG develops, manufactures and sells automobiles and
motorcycles as well as spare parts and accessories manu-
factured in-house, by foreign subsidiaries and by external
suppliers, and performs services related to these products.
Sales activities are conducted primarily through branches,
subsidiaries, independent dealerships and importers. Bene-
fiting mainly from the diminishing impact of the coronavirus
pandemic, automobile deliveries increased by 187,648 units
to 2,437,591 units in the financial year 2021. This figure in-
cludes 674,995 units relating to series sets supplied to the
joint venture BMW Brilliance Automotive Ltd., Shenyang, an
increase of 76,142 units over the previous year.
Despite the global challenges driven by semiconductor sup-
ply shortages and the impact of the coronavirus pandemic,
BMW AG can be satisfied with the course of business in the
financial year 2021.
The BMW Group's results of operations, financial position
and net assets of the financial year 2021 are indicative of its
solid financial condition. Business developed in line with
management expectations. This assessment also takes into
account events after the end of the reporting period.
118
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
At 31 December 2021, BMW AG employed a workforce of
83,308 people (31 December 2020: 84,668 people).
Americas
24.5
Remuneration Report
Group Financial Statements
2 With effect from the fourth quarter 2019, the EU Bank comprises BMW Bank
GmbH and its branches in Italy, Spain and Portugal. The former subsidiary in
France was transferred for organisational purposes to the Europe / Middle East/
Africa region in conjunction with strategic realignments.
Under the brand name Alphabet, the Financial Services seg-
ment's fleet management business primarily offers leasing
and financing arrangements as well as specialist services to
commercial customers. At 31 December 2021, the contract
portfolio stood at 696,393 contracts (2020: 704,977 con-
tracts; -1.2%).
Dealership financing significantly lower
The dealership financing line of business was impacted by a
significant reduction in vehicle inventories held by dealer-
ships at the end of the year, mainly due to constraints on
new vehicle production caused by semiconductor shortages
on the one hand and the high demand for new and pre-
owned vehicles on the other. As a result, the volume of deal-
ership financing decreased significantly by 19.0% to € 13,149
million at 31 December 2021 (2020: € 16,241 million).
Results of operations of the Financial Services segment
Financial Services segment revenues increased to
€ 32,867 million (2020: € 30,044 million; +9.4%), driven in
particular by the higher level of revenues generated with
end-of-contract business on the back of ongoing favourable
conditions on pre-owned vehicle markets. Segment cost of
sales went up by € 791 million (2020: € 26,958 million;
+2.9%), mainly due to increased costs associated with the
sale of returned lease vehicles.
At the same time, the remarketing values of those vehicles
also surged, with a corresponding positive impact on earn-
ings. Moreover, segment earnings benefited from the un-
changed low level of allowances required to be recognised
for credit risks. This contrasts with the situation one year ear-
lier, when earnings were impacted by additional risk provi-
sioning expenses for credit and residual value risks in light of
the coronavirus pandemic.
The Financial Services segment's profit before tax rose sig-
nificantly to € 3,753 million (2020: € 1,725 million).
Return on equity (ROE) finished at 22.6%, significantly high-
er than the level recorded one year earlier (2020: 11.2%;
+11.4 percentage points). The main reason for the increase
was the improved risk profile throughout the year
in par-
ticular thanks to better remarketing outcomes and lower ex-
penses for credit risk allowances.
Corporate Governance
-
Other Entities segment/Eliminations
The Other Entities segment recorded a profit before tax of
€ 531 million in the financial year under report (2020: loss
before tax of € 235 million). The turnaround was primarily
attributable to the improvement in other financial result,
which benefited from the recognition of fair value measure-
ment gains on interest rate hedges entered into with match-
ing maturities in conjunction with the refinancing of Financial
Services business in a period of rising rather than falling in-
terest rates.
Eliminations gave rise to a loss before tax of € 257 million
(2020: profit before tax of € 910 million). The deterioration
here reflected the higher volume of leasing-business-related
eliminations required, primarily due to the year-on-year in-
crease in new leasing business, both in terms of sales vol-
ume and contract values.
17
117
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
The RoE in 2021 was therefore in line with the revised fore-
cast of between 20 and 23%. Originally, an RoE within a
range of 12 to 15% was predicted for 2021 in the BMW Group
Report 2020.
Other operating income increased to € 2,199 million (2020:
€ 1,237 million), primarily due to income arising on the partial
reversal of the provision relating to EU Commission antitrust
proceedings.
Remuneration Report
Income from profit transfer agreements with Group com-
panies, reported in the line item Result on investments, was
similar to one year earlier.
3,077
Prepaid expenses
Current assets
Cash and cash equivalents
Marketable securities
10,093
3,336
9,995
3,849
4,071
229
422
Pension provisions
18,939
Other provisions
21,019
Provisions
10,322
24,462
Liabilities to subsidiaries
73
72
4,785
6,531
10,417
Trade payables
45,036
101
1
Liabilities to banks
6,822
8,824
39,472
Other receivables and other assets
Receivables from subsidiaries
27
Investments
11,013
12,096
Revenue reserves
12,520
12,740
5,067
Property, plant and equipment
2,342
Capital reserves
488
704
660
662
2,239
3,826
Unappropriated profit available for distribution
3,827
26
Registered profit-sharing certificates
778
758
Trade receivables
5,748
7,287
Inventories
15,165
18,927
Equity
16,834
18,511
Tangible, intangible and investment assets
1,253
23,404
Other operating expenses increased slightly to € 1,460 mil-
lion (2020: € 1,250 million) and, as in the previous year, com-
prised mainly expenses from financing transactions and ad-
ditions to other provisions.
Surplus of pension and similar plan assets over liabilities
Total assets
1,261
Intangible assets
2021
2020
in € million
2021
2020
ASSETS
EQUITY AND LIABILITIES
IFRS) within a range of between 30% and 40%. Up to the
financial year 2021, the payout ratio was defined as the un-
appropriated profit of BMW AG in accordance with HGB in
relation to the Group net profit in accordance with IFRS
(2021: 30.7%).
For the financial year 2022, BMW AG expects an unchanged
dividend payout ratio (unappropriated profit of BMW AG in
accordance with HGB in relation to the Group net profit at-
tributable to shareholders of BMW AG in accordance with
Outlook
BMW AG is integrated in the Group-wide risk management
system and internal control system of the BMW Group. Fur-
ther information is provided in the Internal Control System chap-
ter of the Combined Management Report.
BMW AG's performance is essentially dependent on the
same set of risks and opportunities that affect the
BMW Group and which are described in detail in the 7 Outlook,
Risk and Opportunity Management chapter of the Combined Man-
agement Report. As a general rule, BMW AG participates in
the risks entered into by Group companies in proportion to
the respective shareholding percentage. At the same time,
the result on investments has a significant impact on the
earnings of BMW AG.
Risks and opportunities
Subscribed capital
Cash and cash equivalents increased by € 2,002 million to
€ 8,824 million, mainly due to surpluses from operating ac-
tivities. Cash outflows for investments in fixed assets had an
offsetting effect.
in € million
← = Q
The financial result deteriorated by € 146 million, mainly due
to lower income from designated plan assets offset against
pension obligations.
The expense for income taxes related primarily to current tax
for the financial year 2021.
After deducting the expense for taxes, the Company reports
a net profit of € 4,910 million, compared to € 1,702 million in
the previous year.
Subject to the shareholders' approval of the appropriation of
results at the Annual General Meeting, the unappropriated
profit available for distribution amounts to € 3,827 million
(2020: € 1,253 million). As a percentage of Group net profit,
the dividend corresponds to a payout ratio of 30.7% (2020:
32.5%), which is therefore within the forecasted target range
of 30% to 40%.
119
119
Financial Performance
Financial and net assets position
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Other Information
BMW AG BALANCE SHEET AT 31 DECEMBER
Liquidity within the BMW Group is ensured by means of a li-
quidity concept applied uniformly across the Group. This in-
volves concentrating a significant part of the Group's liquid-
ity at the level of BMW AG. An important instrument in this
context is the cash pool based at BMW AG. The liquidity pos-
ition reported by BMW AG therefore reflects the global activ-
ities of BMW AG and other Group companies.
Deferred income increased by € 264 million to € 3,879 mil-
lion and included primarily amounts for services still to be
performed relating to service and maintenance contracts.
Liabilities to subsidiaries increased to € 24,462 million
(2020: € 23,404 million), mainly in connection with intra-
group refinancing.
57,640
3,615
BMW Group Report 2021
3,879
64,705
Total equity and liabilities
Deferred income
Capital expenditure on intangible assets and property, plant
and equipment in the year under report totalled € 3,304 mil-
lion (2020: € 2,790 million), up by 18.4% compared to the
previous year. Depreciation and amortisation amounted to
€ 2,846 million (2020: € 2,646 million).
28,511
Liabilities
57,640
64,705
221
462
Other liabilities
31,456
Investment assets increased to € 5,067 million (2020:
€ 3,826 million) mainly due to a non-cash contribution re-
corded in capital reserves in the amount of € 957 million at
the level of BMW INTEC Beteiligungs GmbH, Munich.
Inventories rose to € 7,287 million (2020: € 5,748 million),
primarily due to higher levels of bought-in goods for resale,
work in progress and finished goods.
Receivables from subsidiaries increased to € 21,019 million
(2020: € 18,939 million), mainly reflecting the higher level of
intragroup trade receivables.
Other provisions decreased slightly from € 10,093 million to
€ 9,995 million due to the utilisation and partial reversal of
the provision relating to EU Commission antitrust proceed-
ings. This was mainly offset by additions to personnel-relat-
ed provisions and provisions for statutory and non-statutory
warranty and product guarantee obligations.
Provisions for pensions increased from € 229 million to
€ 422 million, after offsetting of pension plan assets against
pension obligations.
In order to secure pension obligations, cash funds totalling
€ 1,081 million were transferred to BMW Trust e. V., Munich,
in conjunction with a Contractual Trust Arrangement (CTA),
to be invested in plan assets. Plan assets are offset against
the related guaranteed obligations. The resulting surplus of
assets over liabilities is reported in the BMW AG balance
sheet on the line item Surplus of pension and similar plan
assets over liabilities.
Equity increased by € 3,762 million to € 18,927 million due to
the higher level of unappropriated profit reported, which
was, in turn, attributable to the combined effect of the previ-
ous year's lower dividend payout and the higher transfer to
other revenue reserves as well as the issue of shares of pre-
ferred stock in conjunction with the Employee Share Pro-
gramme in 2021. The equity ratio changed from 26.3% to
29.3%.
The increase in other receivables and other assets to
€ 4,071 million (2020: € 3,849 million) was mainly attributa-
ble to higher tax receivables. The decrease in financial mar-
ket receivables had an offsetting effect.
Financial Performance
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
120
1,086
116
Group Financial Statements
1 The calculation only includes automobile markets in which the Financial Services
segment is represented by a consolidated entity.
4.5
8.3
EBIT margin²
2.8
15.0
17.8
3.8
7.6
10.3
6.0
11.6
17.6
Change
in %-points
2020
2.7
2021
1 Gross profit as a percentage of segment revenues.
114
Figures for the USA were also significantly higher than in
the previous year, with deliveries rising at a double-digit
rate to 16,030 units (2020: 12,135 units; +32.1%). The pic-
ture was similar in China, where deliveries climbed by 21.4%
to 14,309 units (2020: 11,788 units). Brazil also saw a slight
increase, with deliveries rising to 11,150 units (2020: 10,707
units; +4.1%).
In Europe, sales volume grew solidly by 8.9% to 111,126 units
in 2021 (2020: 102,026 units). Excellent sales performances
were recorded for France with 19,887 units (2020: 17,539
units; +13.4%), Italy with 16,034 units (2020: 13,918 units;
+15.2%) and Spain with 12,616 units (2020: 11,030 units;
+14.4%). Within a generally contracting market, deliveries in
Germany fell moderately to 25,972 units (2020: 27,516 units;
-5.6%).
Sales volume growth in nearly all markets
BMW Motorrad reports best sales performance to date
The Motorcycles segment had the most successful year in its
history with a total of 194,261 units delivered during the year
under report (2020: 169,272 units), 14.8% up on the previ-
ous year. Despite the ongoing impact of semiconductor
shortages and pandemic-related issues, the revised outlook
for the full year, as communicated in the quarterly statement
to 30 September 2021, was achieved within a generally fa-
vourable market environment.
Motorcycles segment
Financial Performance
2 Profit before financial result as percentage of segment revenues.
← = Q
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
Other Information
New models launched in the year under report
In line with expectations, the Automotive segment's RoCE
for 2021 rose sharply to 59.9% (2020: 12.7%; +47.2 percent-
age points), mainly due to the considerable year-on-year rise
in EBIT on the one hand and the lower volume of capital em-
ployed on the other, the latter attributable primarily to lower
average inventories during the financial year under report.
Gross profit margin¹
New milestone in BMW M success story
The BMW Group marked a new milestone in the success
story of its BMW M brand in 2021, delivering a total of
163,541 units of its high-performance models (2020:
144,231 units), 13.4% up on the previous year. The new
BMW M31 and BMW M41 as well as the BMW X5 M1 and
BMW X6 M¹ Sports Activity Vehicles all contributed signifi-
cantly to the sales growth recorded in 2021.
DELIVERIES OF BMW VEHICLES BY MODEL VARIANT 1,2
in units
2021
2020
↑
The BMW brand brought a variety of new vehicles to market in
2021. For example, at the beginning of the year, the all-electric
BMW iX31 was launched in Europe, followed in March 2021 by
the BMW 320e¹ and BMW 520e¹. These two new entry-level
models with plug-in hybrid drive systems are part of the BMW
3 Series and BMW 5 Series respectively. The BMW X3 and
BMW X4 model revisions were launched during the summer.
The second generation of the BMW 4 Series Gran Coupé
celebrated its market début in the autumn. The all-new BMW
iX and BMW i4 models were added to the all-electric vehicle
product range in November 2021. The BMW 2 Series Coupé
was launched on the North American market towards the
end of the year under report, with other markets following in
early 2022.
= Q
12.0
To mark its 50th anniversary in 2022, the BMW M brand will
continue its market offensive with the addition of new
all-electric models, starting with the BMW iX M601, which
celebrated its world première on the North American market
at the beginning of 2022. Together with the BMW 14 M501,
the BMW Group is also focusing on electric mobility in the
high-performance class.
BMW 1 Series / BMW 2 Series
265,964
268,915
-1.1
Share of BMW
Change in % deliveries 2021 in %
Profit before tax for the year amounted to € 11,805 million
and was therefore significantly higher than one year earlier
(2020: € 2,722 million).
Numerous new BMW brand products
Other Information
MOTORCYCLES
EBIT margin²
Gross profit margin¹
AUTOMOTIVE
in %
BMW GROUP MARGINS BY SEGMENT
Financial Performance
111
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
1=1
-
The BMW Group brought five new motorcycle models and
three model revisions onto the market in 2021. The first of
these was the M 1000 RR the first M model from BMW
Motorrad to be powered by a high-performance in-line
four-cylinder engine - which was launched in February 2021
in the Sports segment. The same month saw the launch of
the R 18 Classic in the Heritage segment, based on the
high-capacity 1,800 cc R18 boxer engine. The launch was
followed in March 2021 by the model revisions of the G 310 R
(Roadster segment), the G 310 GS (Adventure segment) and
the R 1250 RT (Tour segment). The S 1000 R was also added
to the model range in the Roadster segment in May. Last but
not least, in September, BMW Motorrad launched the R 18 B
and the R 18 Transcontinental models in the Heritage seg-
ment – two further derivatives of the 1,800 cc boxer family.
Financial Services segment
Record segment profit before tax
The ROCE for the Motorcycles segment in 2021 was 35.9%
and therefore significantly higher than one year earlier (2020:
15.0%; +20.9 percentage points), mainly due to the im-
proved EBIT performance, and was therefore in line with the
revised outlook communicated in the quarterly statement to
30 September 2021.
Profit before tax for the year was significantly higher at
€ 228 million (2020: € 100 million), mostly driven by favour-
able product mix effects and year-on-year sales volume
growth, the latter also partially reflecting the adverse impact
of coronavirus-related dealership closures in the previous
year.
The Motorcycles segment EBIT margin (profit before finan-
cial result as a percentage of revenues) came in at 8.3%
(2020: 4.5%; +3.8 percentage points) and thus within the
forecast target range of between 8 and 10%.
Results of operations of the Motorcycles segment
Financial Performance
The financial year 2021 was a successful one for the Finan-
cial Services segment, with profit before tax up by 117.6% to
€ 3,753 million (2020: € 1,725 million). In the previous year,
additional risk provisioning expenses for credit and residual
value risks had had a negative impact on earnings. The year
under report, however, was influenced by the exceptionally
positive trend on pre-owned vehicle markets, particularly in
the USA and the UK. The upturn on the pre-owned market
caused the remarketing values of lease returns to increase
sharply. Alongside this favourable development, segment
earnings also benefited from the unchanged low level of al-
lowances that needed to be recognised for credit risks. The
credit loss ratio on the total credit portfolio fell to a historical-
ly low level of 0.18% at 31 December 2021 (2020: 0.21%),
comprising 0.11% (2020: 0.16%) for leasing business and
0.28% (2020: 0.31%) for credit financing business with re-
tail customers. Further information on risks and opportun-
← = Q
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
Other Information
115
ities in the Financial Services segment is provided in the
chapter Risk and opportunity management.
New business with retail customers moderately up on previous
year
2018
2017
|
4,926
5,577
5,486 5,592
In balance sheet terms, business volume grew slightly by 4.8%
to stand at € 139,530 million at the end of the reporting period
(2020: € 133,093 million).
5,235
CONTRACT PORTFOLIO OF FINANCIAL
SERVICES SEGMENT WITH RETAIL CUSTOMERS
At 31 December 2021, the contract portfolio with retail cus-
tomers comprised 5,577,011 contracts and was therefore at a
similar level to one year earlier (2020: 5,591,799 contracts;
-0.3%). In regional terms, China grew at the fastest rate,
registering a 9.0% year-on-year increase. The Asia/Pacific
region finished at a similar level to the previous year (+0.3%).
By contrast, the Americas (-2.2%), the EU Bank² (-1.7%)
and the Europe/Middle East/Africa regions (-1.7%) all reg-
istered slight contract portfolio decreases.
The share of new BMW Group vehicles either leased or fi-
nanced by the Financial Services segment stood at 50.5%¹
(2020: 49.8%; +0.7 percentage points).
The total volume of new credit financing and leasing con-
tracts concluded with retail customers during the 12-month
period amounted to € 63,414 million, significantly up on the
previous year (2020: € 57,200 million; +10.9%).
Business with pre-owned vehicles also developed positively,
with the number of new contracts signed up by 1.4%. In
total, 411,520 new credit financing and leasing contracts for
pre-owned BMW and MINI brand vehicles were signed dur-
ing the year under report (2020: 405,713 contracts).
A total of 1,956,514 new credit financing and leasing contracts
were signed with retail customers during 2021 (2020:
1,845,271 contracts; +6.0%). The improved performance in
2021 reflected growth in both new credit financing business
(+7.8%) and new leasing business (+2.4%). The biggest in-
creases were registered in China and the USA. Overall, leas-
ing accounted for 31.8% and credit financing for 68.2% of
new business.
in 1,000 units
15
In addition, a number of series production models were pre-
sented to the public during the year under report, including the
C 400 GT and C 400 X Scooter models in March and the
K1600 GT, K1600 GTL and K1600 B Tourer models in October.
BMW Motorrad systematically continued to pursue its elec-
tric mobility strategy throughout the year under report, in-
cluding the unveiling of the CE 04 Electric Scooter (Urban
Mobility segment) in July 2021. The launch of this new prod-
uct is scheduled for the first half of 2022.
-
2021
2020
2019
2018
2017
BMW GROUP
MARKETS 2021
0
194.3
169.3
165.6
164.2
175.2
BMW GROUP DELIVERIES OF MOTORCYCLES
in 1,000 units
|||||
LARGEST MOTORCYCLE
as a percentage of sales volume
Germany
13.4
New products unveiled: systematically embracing electrification
The BMW Group unveiled the BMW Motorrad Vision Amby at
the IAA Mobility in 2021. This completely new concept motor-
cycle has been designed as an electrified vehicle that com-
bines the typical elements of a bicycle and a motorcycle. To-
gether with the all-electric CE 02 concept vehicle, which was
presented to the public online in September, these models
provide a revealing glimpse of how the future of urban mobil-
ity could look.
7.4
China
8.3
6.5
Spain
5.7
USA
Brazil
8.3
40.2
Italy
Other
10.2
France
BMW 3 Series / BMW 4 Series
2 EU Bank comprises BMW Bank GmbH with its branches in Italy, Spain and
Portugal.
490,969
16.8
2,199
10.1
Rolls-Royce total
5,586
3,756
48.7
2,422
2021
Change in %
Share of MINI
deliveries 2021 in %
164,270
157,040
4.6
54.4
2020
25,120
Cullinan
873
DELIVERIES OF ROLLS-ROYCE VEHICLES BY MODEL
VARIANT *
in units
2021
2020
Change in %
Phantom
-5.2
Ghost
360
18.6
1,909
324
Wraith/Dawn
828
427
MINI total
24,875
8.3
Corporate Governance
Remuneration Report
Other Information
← = Q
Financial Performance
Results of operations of the Automotive segment
Automotive segment revenues amounted to € 95,476 mil-
lion (2020: € 80,853 million; +18.1%, currency-adjusted:
+18.3%) and were therefore significantly higher than one
year earlier.
Group Financial Statements
Sales volume was also higher in 2021, whereby the increase
was held down by production shortfalls due to supply bottle-
necks for semiconductor components. However, this un-
favourable impact was more than offset by improved pricing
due to both the growing desire for individual mobility on the
one hand and the reduced worldwide availability of products
triggered by those same semiconductor component short-
ages on the other. Other factors with a positive impact on
segment revenues were the increased volume of high-re-
venue vehicles sold, the exceptionally strong performance of
pre-owned vehicle markets and hence better residual values
and growth in spare parts and accessories business.
As described in the section above on the results of opera-
tions for the BMW Group as a whole, the changeover effects
arising from the modernisation of the pension model in Ger-
many had a total positive impact of € 542 million on Auto-
motive segment cost of sales and selling and administrative
expenses, while higher expenses for performance-related
remuneration components had an offsetting effect.
The net amount of other operating income and expenses im-
proved significantly, largely due to the partial reversal of the
provision for EU antitrust proceedings in the second quarter
2021, as described above.
The Automotive segment EBIT margin (profit before finan-
cial result as a percentage of revenues) came in at 10.3%
(2020: 2.7%; +7.6 percentage points). As forecast in the
quarterly statement to 30 September 2021, the EBIT margin
was within the target range of between 9.5 and 10.5% and
therefore in line with revised expectations. In the 2020 An-
nual Report, a segment EBIT margin within a target range of
between 6 and 8% was forecast.
2019
2020
2021
Segment cost of sales rose significantly to € 78,637 million
(2020: € 71,456 million; +10.0%), whereby the year-on-year
increase was primarily attributable to sales volume growth.
Further negative factors included rises in raw materials and
energy prices, higher expenses due to the increasing propor-
tion of electrified vehicles, larger allocations to provisions for
performance-related remuneration components and higher
research and development expenses. In the previous year,
warranty expenses were impacted by the recognition of pro-
visions in connection with the exhaust gas recirculation cool-
er and other warranty-related items.
1.0
Combined Management Report
BMW Group Report 2021
30,385
32,958
-7.8
10.0
82,363
77,709
To Our Stakeholders
6.0
302,138
292,582
3.3
100.0
⚫ 7 Consumption and carbon emissions
113
27.3
MINI Countryman
MINI Clubman
MINI Convertible
304,270
2.5
14.1
BMW X3/X4
414,671
347,565
311,928
19.3
BMW X5/X6
240,504
206,774
16.3
10.9
BMW X7
18.7
54,957
BMW X1/X2
- 1.4
22.2
BMW 5 Series / BMW 6 Series
326,212
322,457
1.2
14.7
0.7
BMW 7 Series / BMW 8 Series
66,728
- 6.1
2.8
BMW Z4
14,778
14,982
62,628
48,693
12.9
2.5
Remuneration Report
Other Information
← = Q
Financial Performance
LNC 3136
UCC 991
Corporate Governance
Sales growth for MINI
Revised models of the MINI 3-door, MINI 5-door and MINI
Convertible were also launched during the year under report.
Demand for the John Cooper Works Performance models re-
mained high.
New record for Rolls-Royce
Rolls-Royce Motor Cars can also look back on a highly suc-
cessful year, in which a record number of 5,586 ultra-luxury
vehicles were delivered to customers (2020: 3,756 units;
+48.7%). High demand for the marque worldwide was driv-
en in particular by the popularity of the Ghost* and the Cull-
inan*. The Black Badge variants, with their exclusive fea-
tures and more powerful engines, also remained extremely
sought-after.
DELIVERIES OF MINI VEHICLES BY MODEL VARIANT
in units
MINI Hatch (3- and 5-door)
MINI also recorded higher sales volumes, with a total of
302,138 units delivered worldwide (2020: 292,582; +3.3%).
A key factor driving the growth was the number of electrified
vehicles sold. The all-electric MINI Cooper SE* was the
best-selling model in the MINI family, with sales almost
doubling to 34,851 units year-on-year (2020: 17,580 units;
+98.2%). Together with the MINI Countryman Plug-in Hy-
brid, it accounted for 18% of the brand's total deliveries
worldwide in 2021.
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
BMW i (iX, i3 and 18)
BMW total
31,179
28,162
10.7
1.4
2,213,790
2,028,841
9.1
100.0
17 Consumption and carbon emissions data
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2021: 651,236 units, 2020: 602,247 units).
1
12
112
420,295
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesell-
schaft, Frankfurt am Main, Munich branch, has issued an
unqualified audit opinion on the financial statements of
BMW AG, of which the balance sheet and the income state-
ment are presented here. The BMW AG financial statements
for the financial year 2021 will be submitted to the operator of
the electronic version of the German Federal Gazette and
can be obtained via the Company Register website. These
financial statements are available on the BMW Group's web-
site at www.bmwgroup.com/ir.
-18
2,991
An escalation of the conflict outside Ukraine
To our Stakeholders
BMW Group Report 2021
124
Operational expenditure comprises only non-capitalised
development costs, maintenance and refurbishment costs
for buildings, repairs to property, plant and equipment, rele-
vant IT costs in the Financial Services segment, non-capital-
ised expenses relating to short-term lease contracts with
expenditure for low value assets, and contracts with purely
variable remuneration. The KPI figure calculated for taxono-
my-purposes is not used by the BMW Group for financial re-
porting purposes. ]]
parties or the delivery of parts to cooperation partners (in-
cluding BBA) are not taken into account.
In the case of the disclosures for capital expenditure, ref-
erence is made to 7 note 21 and 7 note 22 to the Group Finan-
cial Statements. Capital expenditure is calculated in accord-
ance with IAS 16.73 (e) (i) and (iii) (Property, Plant and
Equipment), IAS 38.118 (e) (i) (Intangible Assets) and IFRS
16.53 (h) (Leases). In accordance with the definition of cap-
ital expenditure provided in Annex I of the Delegated Regu-
lation (EU) 2021/2178, the KPI figure used for taxonomy
purposes comprises additions to intangible assets, in par-
ticular capitalised development costs, additions to property,
plant and equipment as well as right-of-use assets in ac-
cordance with IFRS 16, and leased-out products. Capital
expenditure relating to the sale of parts to external third
Regulation (EC) No. 1126/2008. Revenues relating to the
sale of parts and components (e.g. after-sales business ex-
cluding the provision of repair services) and the supply of
production components to BBA and third parties, insurance
premiums, and interest income on deposit-taking and credit
business were not included, as these economic activities are
not classified as taxonomy-eligible.
A significant tightening of sanctions against Russia or a
change in the interpretation of existing sanctions
]]
0
Proportion (in %)
100.0
4,478
Total (in € million)
Further information on revenues is provided in note 7 to the
Group Financial Statements. Revenues are calculated in ac-
cordance with Article 2(5) of Directive 2013/34/EU. Re-
venues comprise revenue and income items recognised in
accordance with IAS 1.82(a), as amended by Commission
The proportion of total revenues, capital expenditure and op-
erational expenditure relating to eligible and non-eligible ac-
tivities are shown in each case as an aggregate percentage
for the BMW Group. Only taxonomy-eligible revenues, cap-
ital expenditure, and operational expenditure as listed for
Environmental Objective 1 ("Climate change mitigation") are
disclosed, given that taxonomy-eligible revenues, capital ex-
penditure and operational expenditure for Environmental
Objective 2 ("Climate change adaptation") are a subset of
the values for Environmental Objective 1 ("Climate change
mitigation"). This approach avoids double counting of rev-
enues, capital expenditure and operational expenditure
when determining the KPI in the numerator across multiple
economic activities.
Non-eligible activities
Eligible activities
0.0
The outlook does not factor in the following:
Moreover, the war in Ukraine is having a substantial effect on
that country's automotive supply industry, with supply restric-
tions resulting in production schedule adjustments and/or
interruptions at a number of BMW Group plants.
The dual impact of an economic upturn and supply bottle-
necks caused raw materials prices to rise sharply in 2021.
The BMW Group expects the overall situation on raw mate-
rials and energy markets to remain tense in the foreseeable
future and has already taken the initial impact of the pre-
vailing situation into account in its outlook for the financial
year 2022.
Expected consequences for the BMW Group
Future developments on international automobile markets
have a direct impact on the BMW Group. The challenging
market environment, the supply situation for vehicle compo-
nents, the coronavirus pandemic and further developments
in the Ukraine conflict are currently the factors most likely to
have a significant impact on business performance. Flexible
coordination between the Group's sales and production net-
works will also help cushion the impact of unforeseeable de-
velopments in individual regions. Risk and Opportunity Management
Assumptions used in the outlook
Both the Outlook and the Risk and Opportunity Manage-
ment sections of this report contain forward-looking state-
ments based on the BMW Group's expectations and assess-
ments and may be influenced by unforeseeable events. As a
result, actual outcomes can deviate either positively or neg-
atively from the expectations described below, due to chang-
es in the political and economic environment as well as other
factors. Risk and Opportunity Management
The following outlook covers a forecast period of one year
and is based on the composition of the BMW Group during
that time. For this reason, the outlook also includes the im-
pact of fully consolidating BMW Brilliance Automotive Ltd.,
Shenyang, (BMW Brilliance). On 11 February 2022, the
BMW Group increased its shareholding in the BMW Bril-
liance joint venture from 50% to 75%*. The full consolida-
tion of BMW Brilliance with effect from that date has a signif-
icant impact on some of the BMW Group's key performance
indicators.
* See note [3] to the Group Financial Statements
126
BMW Group Report 2021
To our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Outlook, Risk and Opportunity Management
The outlook takes account of all information available at the
time of reporting and which could have an impact on the
overall course of business of the Group. The expectations
contained in the outlook are based on the BMW Group's
forecast for 2022 and reflect its most recent status. The ba-
sis for the preparation of and the principal assumptions used
in the forecasts – which consider the consensual opinions of
leading organisations, such as economic research institutes
and banks are set out below. The BMW Group's outlook
takes account of these assumptions.
-
The coronavirus pandemic is no longer currently expected to
have a significant impact on the results of operations, finan-
cial and net assets position of BMW AG and the Group as a
whole.
However, international demand for semiconductors is still
predicted to remain high, causing the supply situation to re-
main tight. As in the financial year 2021, the risk of supply
bottlenecks affecting the availability of the semiconductor
components required for production persists and the situa-
tion is not expected to ease before the second half of 2022.
OPERATIONAL EXPENDITURE
Proportion (in %)
99.7
0.3
67
25,917
Economic
activity is
]]
for occupational and
human rights
+
safeguard criteria
Ensuring the minimum
objectives
to other environmental
not cause significant harm
Economic activity does
+
environmental objectives
substantial contribution
to at least one of the
screening criteria:
Fulfillment of technical
+
Taxonomy eligibility
Act on environmental
objectives 1 and 2
described in the Delegated
taxonomy-
aligned
The impact of the war in Ukraine, the limited availability of
vehicle components, the further course of the coronavirus
pandemic, and macroeconomic factors will continue to influ-
ence the performance of motorcycles markets in 2022.
* It should be noted that the relevant Delegated Regulation describes the economic
activity "Manufacture of low-carbon technologies for transport" differently for
Environmental Objective 1 (Climate change mitigation) and Environmental Objec-
tive 2 (Climate change adaptation). For the purposes of consistent reporting on the
taxonomy-eligibility of vehicle production, the BMW Group follows the description
given for Environmental Objective 1, given that taxonomy-eligible vehicle produc-
tion as listed for Environmental Objective 2 is a subset of taxonomy-eligible vehicle
production for Environmental Objective 1.
BMW Group Report 2021
Total (in € million)
Proportion (in %)
82.9
17.1
92,262
18,977
Total (in € million)
Non-eligible activities
Eligible activities
CAPITAL EXPENDITURE
Non-eligible activities
Eligible activities
REVENUES
[ MANDATORY EU TAXONOMY DISCLOSURES
EU Taxonomy
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
123
The BMW Group expects, subject to the further development
in Ukraine, the world's motorcycle markets in the 250 cc plus
class to remain stable in 2022, with volumes generally re-
maining at the previous year's level.
+4
+2
← = Q
Other Information
Remuneration Report
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Outlook, Risk and Opportunity Management
OUTLOOK,
RISK AND OPPORTUNITY MANAGEMENT
OUTLOOK
Both the Outlook and the Risk and Opportunity Management
sections of this report present the expected development in
2022, including the main risks and opportunities from the
perspective of the BMW Group's management. In line with
the Group's performance management, the outlook covers a
period of one year. Risks and opportunities are managed
on the basis of a two-year assessment period. Disclosures
relating to risk and opportunity management therefore ad-
dress a period of two years.
The continuous forecasting process applied within the
BMW Group ensures that it is constantly ready to take ad-
vantage of opportunities as they arise, but also to react ap-
propriately to any unexpected risks. The principal risks and
opportunities are described in detail in the Risk and Oppor-
tunity Management section. Actual outcomes may deviate
from the outlook due to unexpected events.
It is not yet possible to accurately assess the full impact of
the war in Ukraine, as the situation remains highly volatile,
making it extremely difficult to forecast macroeconomic de-
velopments and the likely performance of international auto-
mobile markets in the financial year 2022 Forecast assumptions.
Economic outlook
According to IMF projections in January, the global economy
will continue to grow in 2022, less strongly than in the previ-
ous year, and reach a level of around 4.0%. Risks definitely
persist, however, first and foremost due to the further course
of the war in Ukraine, the estimated impact of which has
been taken into account in the current economic forecasts
only rudimentarily. High inflation is likely to lead to interest
rate increases in some countries and weaken demand to
some extent. New virus variants, pandemic-related restric-
tions or prolonged supply bottlenecks could slow the pace of
economic growth. Further information on political and global
economic risks is also available in the section Risk and Oppor-
tunity Management.
In the Eurozone, GDP growth is projected to be around 3.0 %
in 2022. At 2.1%, the growth rate in Germany is expected to
be slightly lower than one year earlier and similar figures are
predicted for France (+2.8%), Italy (+3.1%) and Spain
(+4.6%).
Organisation of Risk Management
The UK economy is projected to grow by 3.5% in 2022 de-
spite labour shortages and continued supply bottlenecks.
Risk management is organised as a decentralised, Group-
wide network and steered by a centralised risk management
function. The various BMW Group divisions are represented
by Network Representatives. The responsibilities and tasks
of the centralised risk management function and the Net-
work Representatives are clearly documented and accepted.
Risks pertaining to BMW Brilliance are incorporated in this
Risk Report on the basis of the assessment made by the
centralised risk management function. In future, BMW Bril-
liance will also be integrated in the risk management net-
work. Significant risks reported from within the network are
firstly presented for review to the Risk Management Steering
Committee, which is chaired by Group Controlling. After they
have been reviewed, any significant risks are reported to
Other functions such as Compliance and Human Rights and
the Internal Control System serve as key interfaces to the risk
management system. In its capacity as an independent con-
trol body, Corporate Audit reviews the risk management sys-
tem established by the Board of Management on an annual
basis.
Group Audit
Internal Control System
Measures
Board of
Management
Completeness
Supervisory
Board
Risk Manage-
ment Steering
Committee
Controlling
Reporting/
Monitoring
Group
Compliance
Council
Practicability
Effectiveness
Analysis and
Measurement
Identifi-
cation
Group-wide risk management
RISK MANAGEMENT IN THE BMW GROUP
The risk management process is applicable across the entire
Group and comprises the early identification, analysis and
measurement of risks, the coordinated use of appropriate
risk management tools and the monitoring and assessment
of the measures taken.
ment Guidelines as well as in the Group's overall risk strat-
egy. New information and requirements are continuously in-
corporated in the BMW Group's risk management system,
thereby ensuring its ongoing development. Training pro-
grammes and informational events are regularly conducted
throughout the BMW Group, particularly within the risk man-
agement network.
According to Group-wide guidelines, every employee and
manager has a duty to report risks via the relevant reporting
channels. The key elements of an appropriate risk culture are
embedded in the BMW Group's core values, the BMW Group
Risk Management Policy and the BMW Group Risk Manage-
both the Board of Management and the Supervisory Board's
Audit Committee.
Economic activities are
A growth rate of 3.2% is projected for the USA in 2022,
which is still positive, although not as strong as in the previ-
ous year. The stimulus and infrastructure packages adopted
by the US Administration are likely to provide support for the
After strong growth in the previous year, momentum in China
is expected to drop slightly in 2022. A growth rate of 5.1% is
therefore projected for the 12-month period.
The Japanese automobile market is currently predicted to
expand slightly in 2022 (4.4 million units; +2%).
Registration figures on international automobile markets are
expected to develop as follows in 2022:
INTERNATIONAL AUTOMOBILE MARKETS
Europe
thereof Germany
thereof France
thereof Italy
thereof Spain
thereof UK
USA
China
Japan
Total
International motorcycle markets
Change
in Registrations %
+6
+6
+4
+4
+6
+12
+6
+1
economic momentum. After the slight recovery in 2021, pas-
senger vehicle registrations are therefore expected to be in
the region of 21.2 million units in 2022, just 1% up on the
previous year.
economy.
In China, on the other hand, the automobile market as a
whole is expected to remain flat, reflecting the slowdown in
Europe's automobile markets are expected to grow moder-
ately in 2022 (12.5 million units; +6%).
After a slight recovery in the year under report, the pace of
growth in Japan is projected to increase moderately in 2022
(+2.3%).
Currency markets and international interest rate
environment
Currencies of particular importance for the international op-
erations of the BMW Group are the Chinese renminbi, the
British pound, the US dollar and the Japanese yen.
Whereas the ECB is likely to keep persevering with its expan-
sionary monetary policy in 2022, the US Federal Reserve
has announced its intention to tighten its policy in light of
high inflation and the USA's strong economic recovery and
to raise interest rates during the first half of 2022. Compared
with the previous year, the US dollar is therefore likely to ap-
preciate against the euro.
Following the gain in value of the British pound against the
euro in 2021 and the tighter monetary policy predicted in the
UK over the 12-month period, combined with moderate inter-
est rate hikes, a further slight appreciation of the currency is
expected in 2022.
125
BMW Group Report 2021
To our Stakeholders
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Combined Management Report
Outlook, Risk and Opportunity Management
The central bank in Japan is unlikely to change its highly ex-
pansionary monetary policy in 2022. The yen is therefore
likely to depreciate slightly against the euro.
After appreciating against the euro in 2021, the Chinese ren-
minbi is expected to lose in value slightly in the course of
2022, due to the Chinese central bank's recent decision to
ease monetary policy with a view to ensuring that the greater
demand for financing can be met.
The Russian rouble has depreciated significantly, especially
since the beginning of the military conflict with Ukraine. The
currencies of emerging market countries such as Brazil and
India are likely to remain under pressure against the US dol-
lar and the euro in 2022, mainly due to the ongoing impact of
the coronavirus pandemic.
International automobile markets
Supply bottlenecks are likely to continue having a dampen-
ing impact on automobile markets in 2022. The war in
Ukraine will significantly exacerbate the current supply bot-
tlenecks. The forecasts are generally based on the assump-
tion that the supply bottlenecks will be overcome in the sec-
ond half of 2022. Registration figures worldwide are expected
to grow at a slightly faster rate than in the previous year (ap-
proximately 77 million units; +4%). However, due to the
marked weakness of recent years, absolute registration fig-
ures remain well below normal levels.
The trend is similar in the USA, with the market expected to
grow by 6% to 15.9 million units in 2022. However, this is still
below the pre-coronavirus crisis level.
By 2025 the share of electrified automobiles in total Group
deliveries is expected to rise to at least 30%. Over the next
decade, we expect that some ten million of our all-electric
vehicles will be on the roads. Therefore, by 2030, at least
every second automobile delivered by the BMW Group will
be an all-electric model. ]]
[Technical information
Accordingly, for 2021, 82.9% of revenues, 99.7% of capital
expenditure, and 100.0% of operational expenditure are
taxonomy-eligible.
Significant increase
2022
Outlook
Return of Equity (RoE)
FINANCIAL SERVICES SEGMENT
Return on capital employed (ROCE)4
EBIT margin
Deliveries to customers
MOTORCYCLES SEGMENT
24.0
59.9
%
Return on capital employed (ROCE)"
10.3
%
0.33
tons
CO₂ emissions per vehicle produced³
EBIT margin
115.9
g/km
Significant increase
CO₂ emissions EU New Vehicle Fleet²
Slight increase
Significant increase
129
4 New method of calculation applied with effect from 2022. Performance Management
1 Deliveries including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2021: 651,236 units).
² EU-27 countries including Norway and Iceland; with effect from 2021, values are calculated on a converted basis in line with WLTP (Worldwide Harmonised Light Vehicles Test Procedure).
3 Efficiency ratio calculated on the basis of Scope 1 and Scope 2 CO₂ emissions (i.e. a market-based method according to GHG Protocol Scope 2 guidance; but excluding climate-changing gases other than carbon
dioxide from vehicle production (BMW Group manufacturing sites incl. joint venture BMW Brilliance Automotive Ltd. and motorcycles, but excluding contract manufacturers), as well as BMW Group non-manufac-
turing sites, (e.g. Research centre, Sales centre, offices) divided by the number of vehicles (excluding motorcycles) produced (BMW Group manufacturing sites incl. joint venture BMW Brilliance Automotive Ltd.,
excluding contract manufacturers).
between 14 and 17
22.6
%
between 19 and 24
21.9
35.9
%
between 8 and 10
8.3
%
Slight increase
194,261
units
between 7 and 9
between 14 and 19
Slight decrease
Slight decrease
in line with last
year's level
BMW Group Report 2021
13.0
Share of electrified vehicles in deliveries
To our Stakeholders
BMW Group Report 2021
128
The BMW Group's actual business performance may also
deviate from current expectations due to the risks and op-
portunities discussed below in the section on Risk and Oppor-
tunity Management.
Without taking the full consolidation of BMW Brilliance into
account, the targets described above would have been
achieved with only a slight rise in the overall number of em-
ployees. However, the increase in the stake in BMW Bril-
liance and the full consolidation of that entity will cause the
number of employees to rise significantly.
The share of women in management functions within the
BMW Group is expected to rise slightly, irrespective of the
Group's increased stake in BMW Brilliance.
tax is set to increase significantly over the forecast period,
mainly reflecting BMW Brilliance's additional contribution to
the Automotive segment's operating profit as well as the
remeasurement of the at-equity investment previously re-
corded, with a positive effect of approximately € 7 to € 8 bil-
lion to be recognised within the financial result. These ef-
fects would more than compensate for the elimination of the
previous at-equity result of BMW Brilliance in the financial
result and the negative impact of consolidated adjustments
arising on full consolidation. Even taking into account the
negative impact of production schedule adjustments and in-
terruptions triggered by the war in Ukraine, Group profit is
expected to increase significantly.
Excluding the impact of the full consolidation of BMW Bril-
liance, Group profit before tax would have decreased signifi-
cantly. Without the impact of the war in Ukraine, sales vol-
umes would have been expected to develop positively over
the forecast period. However, this volume growth would not
have been sufficient to compensate for the previous year's
effects, such as the partial reversal of the provision relating
to the concluded antitrust proceedings, the remeasurement
gains arising on the modernisation of the pension plan, and
the highly favourable risk situation within the credit and leas-
ing lines of business. Nonetheless, including the impact of
the full consolidation of BMW Brilliance, Group profit before
The RoE in the Financial Services segment is predicted to
finish within a range of between 14 and 17%. Compared with
the financial year 2021, it has been assumed that the highly
favourable results from remarketing lease returns, combined
with an easing of the supply situation for semiconductors
during the second half of the year, will return to a normal lev-
el. The full consolidation of BMW Brilliance will not impact
the Financial Services segment, as the companies held
jointly with BMW Brilliance that are attributable to this seg-
ment have already been reported on a fully consolidated ba-
sis due to the segment's majority shareholdings in the enti-
ties concerned. Likewise, no significant impact is currently
expected from the war in Ukraine.
Motorcycles segment deliveries are forecast to increase
slightly. The EBIT margin is predicted to finish within a range
of between 8 and 10% and, based on the revised methodol-
ogy, the segment ROCE within a range of 19 and 24%. Key
performance indicators for the Motorcycles segment will only
be marginally affected by the full consolidation of BMW Bril-
liance and are not currently expected to be substantially im-
pacted by the war in Ukraine.
ments and interruptions triggered by the war in Ukraine, a
ROCE in a range between 14 and 19% is now considered
more likely.
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
Outlook, Risk and Opportunity Management
To our Stakeholders
BMW Group Report 2021
Combined Management Report
%
Group Financial Statements
Remuneration Report
2,521,514
units
The taxonomy-aligned proportions that will need to be re-
ported in the coming years will initially be significantly lower
than these values. They will subsequently increase due to
the growing share of zero-emissions vehicles, the develop-
ment and production methods used, and potentially contri-
butions made to other environmental objectives as yet to be
defined. Due to the high level of investment in the trans-
formation of our business activities, for example in the elec-
trification of our vehicles and research into alternative drive
systems, these economic activities have the potential to be-
come taxonomy-aligned over time. Overall, we anticipate
that the proportion of taxonomy-aligned economic activities
will steadily rise as a result of the increasing electrification of
our product portfolio.
18.8
%
16,060
118,909
€ million
2021
adjusted
2021
reported
AUTOMOTIVE SEGMENT
in the BMW Group
Share of women in management positions
Workforce at year-end
Profit before tax
GROUP
BMW GROUP KEY PERFORMANCE INDICATORS
Outlook, Risk and Opportunity Management
← = Q
Other Information
Corporate Governance
To our Stakeholders
Deliveries to customers'
Group Financial Statements
⚫ Commission Delegated Regulation (EU) 2021/2139 dated 4 June 2021 and
Commission Delegated Regulation (EU) 2021/2178 dated 6 July 2021.
In the coming years, the significant growth in electric mobility
will mean that - depending on the energy mix - the majority of
carbon emissions will be generated in particular within the up-
stream value chain rather than in the use phase. Without the
anticipated set of measures, emissions generated within the
BMW Group supply chain would already exceed direct carbon
emissions in the use phase prior to 2030. Strategy/Supplier net-
work/Carbon emissions Accordingly, the BMW Group is taking a ho-
listic approach to achieving its sustainability-related targets
and is committed to considering carbon emissions over the
entire life cycle of the vehicles it produces. Carbon Emissions and
Pollutants Currently, however, for the purpose of assessing car-
bon emissions, the EU taxonomy focuses exclusively on reduc-
ing emissions in the use phase that are attributable to locally
emissions-free drive systems, an approach which also ignores
the emissions indirectly attributable to the supply of energy.
Moreover, the taxonomy only reflects the impact of decarbon-
isation measures in production to the extent that they serve to
manufacture taxonomy-aligned products. However, increasing
the energy efficiency of paint shop processes also reduces
carbon emissions when a conventionally powered vehicle is
painted. 1]
across its entire value chain by 2050, we welcome initiatives
that serve this objective. For this reason, we have set our-
selves specific targets and report systematically each year
on the actual levels achieved.
The BMW Group supports the overarching aim of the EU
Taxonomy Regulation to promote the private financing of
sustainable economic activities in order to make Europe the
world's first climate-neutral continent by 2050. As a com-
pany aspiring to establish a climate-neutral business model
Our understanding of sustainability
The EU Taxonomy Regulation was published in July 2020.
The Delegated Act on the first two environmental objectives,
climate change mitigation and climate change adaptation,
and the delegated regulation on reporting requirements
(Article 8 of the EU Taxonomy Regulation) came into force at
the end of December 2021*. In addition, the EU Commission
published an initial FAQ document in December 2021 and a
second FAQ document in early February 2022 to explain ap-
plication issues relevant for the first year of reporting. On the
basis of the phased introduction of the EU taxonomy in the
Delegated Acts, in 2021 companies such as the BMW Group
are required to report the taxonomy-eligible proportion of
revenues, capital expenditures and operational expenditures
for the first two environmental objectives. From the reporting
years 2022 and 2023 onwards, the reporting requirements
are to be successively expanded to include the taxono-
my-aligned proportion of revenues, capital and operational
expenditures and to all environmental objectives.
significantly harmed, and minimum protection criteria for oc-
cupational safety and human rights must also be met.
Substantial contribution depends on the extent to which the
economic activity in question fulfils so-called technical
screening criteria. No other environmental objective may be
6) The protection and restoration of biodiversity and
ecosystems
4) The transition to a circular economy
5) Pollution prevention and control
3) The sustainable use and protection of water and
marine resources
2) Climate change adaptation
1) Climate change mitigation
Essentially, an economic activity can only be classified as
sustainable if it makes a substantial contribution to one of
the following six environmental objectives:
The EU taxonomy is a classification system that defines
economic activities as environmentally sustainable based on
predetermined criteria. Environmental sustainability is as-
certained in three steps.
[Within the framework of the EU Green Deal and the Action
Plan "Financing Sustainable Growth", the EU taxonomy is a
cornerstone of the EU's aspiration to become climate-neu-
tral by 2050. Its key objectives are to create transparency for
capital market participants and to channel capital flows to-
wards sustainable economic activities.
EU TAXONOMY
EU Taxonomy
← = Q
122
Other Information
BMW Group Report 2021
Group Financial Statements
Combined Management Report
Financial Services segment, are not described as economic
activities in the Delegated Regulation and are therefore not
taxonomy-eligible.
Reporting from 2022 onwards
Reporting in 2021
[EXPLANATORY COMMENTS ON REPORTING PROCEDURES
Only the sale of parts and components, such as aftersales
business excluding the provision of repair services and the
supply of production components to BMW Brilliance Auto-
motive Ltd. (BBA) as well as other third parties, and non-au-
tomotive banking and insurance services performed by the
Based on the descriptions of the two economic activities list-
ed for Environmental Objective 1 (Climate change mitiga-
tion), a large part of the BMW Group's business model falls
within the scope of the EU taxonomy*.
7 Overview of the BMW Group
Economic activity 6.5 Transport by motorbikes, passen-
ger cars and light commercial vehicles including the pur-
chase, financing, renting, leasing and operation of pas-
senger cars and motorcycles.
7 Overview of the BMW Group
Economic activity 3.3 Manufacture of low carbon technol-
ogies for transport including the production of passenger
vehicles and motorcycles.
An economic activity is taxonomy-eligible if it is described in
the Delegated Acts relating to the six environmental objec-
tives, regardless of whether that economic activity meets all
of the technical screening criteria stipulated in those Dele-
gated Acts. The BMW Group's business activities can cur-
rently be allocated to two economic activities that are de-
scribed in the Delegated Act relating to the first two
environmental objectives:
[Explanatory comments on reporting procedures
For the reporting year 2021, the currently applicable simplifi-
cation rules only require reporting on taxonomy eligibility in
relation to the environmental objections of climate change
mitigation and climate change adaptation. Taxonomy eligi-
bility is an indicator of the environmental sustainability po-
tential of an economic activity based on the selective re-
quirements of the EU taxonomy. It does not, however, say
anything about the actual sustainability of a company's eco-
nomic activities at the present point in time. Our aspiration is
to successively make all of the BMW Group's economic ac-
tivities more sustainable.
= Q
↑
EU Taxonomy
Other Information
Remuneration Report
Corporate Governance
Combined Management Report
Remuneration Report
To Our Stakeholders
Group Financial Statements
130
BMW
In addition to the risks described below, unforeseen events
could have a negative impact on business operations and
hence on the BMW Group's results of operations, financial
position and net assets as well as on its reputation.
The Management and the Supervisory Board do not see any
threat to the BMW Group's status as a going concern. Simi-
lar to one year earlier, the current set of risks to the
BMW Group are considered to be manageable. If these risks
- or opportunities - were to materialise, they could have an
impact on underlying key performance indicators, thus caus-
ing deviations from the outlook. Regardless of the full con-
solidation of BMW Brilliance, the BMW Group's financial re-
sources are stable and liquidity requirements are currently
covered by existing liquidity as well as the various financing
instruments available.
Overall Risk and Opportunity Situation
The assessment of the overall risk situation is based on a
consolidated view of all significant individual risks to which
the BMW Group is exposed. The BMW Group's overall expo-
sure to risk, including the impact of integrating BMW Bril-
liance, has increased moderately compared with the previ-
ous year. A prolonged military conflict between Russia and
Ukraine and a worsening of the coronavirus pandemic could
I have a further negative impact on the global economy and
hold down sales volume. At the same time, considerable un-
certainties remain in the form of potential bottlenecks along
the entire supply chain, particularly for semiconductors.
However, if the effect of these issues were to prove less se-
vere in 2022 than currently expected, opportunities could
arise that could benefit both revenues and earnings.
With effect from 11 February 2022, the BMW Brilliance Auto-
motive Ltd. (BMW Brilliance) joint venture is fully consolidat-
ed in the Group Financial Statements. If the full consolida-
tion of BMW Brilliance from that date is expected to result in
a different classification of individual risk categories, such
changes are indicated separately in this Risk Report.
Medium to long-term risks in connection with the climate
change are described in the section Climate-related opportunities
and risks.
All opportunities and risks that are expected to materialise
have already been addressed in the Outlook Report. The fol-
lowing sections focus on potential future developments or
events that could result in a positive (opportunity) or a nega-
tive (risk) deviation from the outlook for the BMW Group.
The aim of the risk management system is to identify, as-
sess and proactively manage any risks that could threaten
the attainment of the Group's corporate targets. As part of
that process, any individual or cumulative risks capable of
posing a threat to the profitability of the business are both
monitored and managed.
31-9 457 423-16° X MT 5.00 H2 MIC
The management of risks and opportunities is essential in
order to respond appropriately to any changes that occur in
political, economic, ecological, social, technological or legal
conditions. The BMW Group has put a comprehensive risk
management system in place to effectively manage these
risks as they arise.
The BMW Group's business is exposed to a variety of uncer-
tainties and changes. Against this backdrop, it consciously
takes well-calculated risks and makes full use of any oppor-
tunities that present themselves.
RISK AND OPPORTUNITY
MANAGEMENT
Outlook, Risk and Opportunity Management
← = Q
Other Information
Remuneration Report
Corporate Governance
Corporate Governance
BMW Group Report 2021
To our Stakeholders
As a general rule, the time horizon considered covers the
current and the following financial year. Potential short-term
effects of climate change are taken into account.
Outlook for the BMW Group
indicators
Combined Management Report
Outlook, Risk and Opportunity Management
BMW Group Report 2021
Combined Management Report
121
Additional major price hikes for energy and raw materi-
als, including rises triggered by the war in Ukraine and/or
the related sanctions
Regardless of these uncertainties, however, the situation re-
mains highly volatile, making it very difficult to accurately
forecast outcomes for the financial year 2022. Other possible
longer-term effects of the war in Ukraine cannot be estimat-
ed at the present time and are therefore not taken into ac-
count in the outlook.
-
- key performance
To Our Stakeholders
The BMW Group expects to achieve its target of slightly cut-
ting the carbon emissions generated by its EU new vehicle
fleet, driven in particular by the significantly growing share of
electrified automobiles in total deliveries.
Prior to the outbreak of war in Ukraine, the BMW Group was
set to forecast slight year-on-year growth in deliveries of
BMW, MINI and Rolls-Royce brand vehicles for the Automo-
tive segment. However, due to the production schedule ad-
justments and interruptions described above that have been
triggered by the war in Ukraine, it now predicts deliveries to
remain at previous year's level.
Without the impact of the war in Ukraine, carbon emissions
per vehicle produced would have been predicted to decline
moderately². However, in light of the likely adverse impact of
production schedule adjustments and interruptions trig-
gered by the war in Ukraine, the scale of reduction is now
only expected to be slight.
Excluding the impact of the full consolidation of BMW Bril-
liance and the war in Ukraine, the Automotive segment EBIT
margin had been expected to finish within a target range of
between 8 and 10%.
Although, as described above, the BMW Group had been set
to forecast sales volume growth, the EBIT margin had never-
theless been expected to be lower year-on-year due to the
absence of various positive effects that had benefited the fi-
nancial year 2021, such as the partial reversal of the provi-
sion relating to the concluded antitrust proceedings, the
remeasurement gains arising on the modernisation of the
pension plan, and the highly favourable risk situation in the
leasing line of business. The full consolidation of BMW Bril-
liance would have increased segment revenues and EBIT
sharply, but due to consolidation effects, no significant im-
pact on the EBIT margin in the Automotive segment was ex-
pected for the financial year 2022 and the figure would have
been likely to remain between 8 and 10%. However, in light
of the probable adverse impact of production schedule ad-
justments and interruptions triggered by the war in Ukraine,
an EBIT margin of between 7 and 9% is now thought to be
more realistic.
Based on the newly adopted methodology, RoCE for the Au-
tomotive segment would have been forecast at between 19
and 24%, reflecting the lower level of earnings otherwise
expected without the increase in the stake in BMW Brilliance
and the impact of the war in Ukraine. However, the addition-
al net assets identified in conjunction with the increased
stake in BMW Brilliance plus fair value adjustments arising
on the purchase price allocation have the twin effect of in-
creasing capital employed. In combination with elimination
effects on earnings in 2022, the targeted range for ROCE
would therefore have been between 15 and 20%. However,
in light of the adverse impact of production schedule adjust-
1 Delivery figures already include vehicles produced by BMW Brilliance.
2 Carbon emissions per vehicle produced already take BMW Brilliance into account.
127
Corporate Governance
Group Financial Statements
Stable
Insignificant
Insignificant
Stable
Risks
Stable
Insignificant
Stable
Decreased
Stable
Medium
Medium
Change compared
to prior year 2
Decreased
Change compared
to prior year
Opportunities
Insignificant
Stable
Medium
Classification
Classification
of the risk amount¹
Sales network
High
High
Stable
Low
Stable
Medium
Purchasing
Medium
Medium
High
Stable
Significant
Decreased
Low
Other financial risks
Pension obligations
Legal risks
Insignificant
Liquidity
Foreign currencies
Stable
Insignificant
Increased
High
Information security, data protection and IT
Financial risks and opportunities
Stable
Insignificant
Stable
Low
Raw materials
Risks and opportunities relating to operations
Production and technology
Remuneration Report
Due to the medium- to long-term horizon involved, risks as-
sociated with climate change are presented in the section
7 Climate-related opportunities and risks.
> € 50-400 million
Medium
€0 50 million
Previous risk amount range
Class
Low
€0 200 million
New risk amount range
The following ranges apply for the purpose of classifying the
risk amount:
In light of the continued growth of the business and the as-
sociated risks, the value limits used in the Annual Report
since 2013 have been revised.
Risks are classified according to the risk amount (average
earnings impact, taking into account the probability of occur-
rence). The earnings impact may be significantly higher if the
risk actually materialises (worst-case scenario).
> € 200 1,000 million
Risks are measured net of any risk mitigation measures that
are already taking effect (net basis).
Risk Measurement
← = Q
Other Information
Corporate Governance
Group Financial Statements
Combined Management Report
Outlook, Risk and Opportunity Management
To our Stakeholders
BMW Group Report 2021
131
Increased
Stable
Stable
Decreased
Stable
The BMW Group utilises standardised methods to assess
risks. All significant risks are measured using value-at-risk
models and assessed on the basis of uniform loss distribu-
tion metrics, thereby enabling better comparability of risks
for both internal and external reporting purposes. The overall
impact of the risks on the results of operations, financial and
net assets position is referred to in the following sections
uniformly as "earnings impact”.
High
> € 400 million
> € 1,000 million
Due to the particular features of the business model applied
for Financial Services business, risks and opportunities re-
lating to that segment are presented separately in the sec-
tion Risk management system in the Financial Services
segment.
The following table provides an overview of significant risks
and opportunities for the years 2022 and 2023 and indicates
their level of importance for the BMW Group. Overall, no risks
capable of threatening the continued existence of the
BMW Group were identified either at the balance sheet date
or at the date on which the Group Financial Statements were
drawn up.
Risks and Opportunities
The importance of opportunities for the BMW Group is clas-
sified on a qualitative basis in the categories "significant"
and "insignificant". Probable measures aimed at increasing
profitability are already incorporated in the outlook.
The continuous monitoring of key business processes and
strict cost controls are also essential factors for ensuring
high levels of profitability and return on capital employed.
A dynamic market environment also gives rise to opportun-
ities. Identifying these opportunities is an integral part of the
BMW Group's strategic planning process. The Group's range
of products and services is continually reviewed on the basis
of these analyses.
Opportunity Management
Outlook, Risk and Opportunity Management
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
BMW Group Report 2021
132
In accordance with § 289c of the German Commercial Code
(HGB) risks that could have an impact on the non-financial
aspects referred to in the relevant legislation are reviewed as
part of the reporting process. Significant risks in this context
are defined as those stemming from business activities,
business relationships and products and services provided
by the BMW Group that are highly likely to have a seriously
adverse impact. No significant non-financial risks were iden-
tified during the year under report.
Managing Non-Financial Risks as Reported in the NFS
Alongside the maintenance of a comprehensive system of
risk management, sustainability constitutes a core strategic
principle of the BMW Group. Risks resulting from sustain-
ability issues are generally identified via the Group-wide risk
management network.
Quite apart from the financial consequences, risks can also
have an impact on the BMW Group's reputation. For these
purposes, the BMW Group assesses all risks with regard to
their impact on its reputation using a scoring model. More-
over, other overarching topics are monitored by means of
regular media analysis. Any significant reputational reper-
cussions are described in the following sections.
Managing Reputational Risks
Group-wide effects and trends can be identified by aggre-
gating all significant risks at Group level using value-at-risk
models. For this purpose, the potential earnings impact of
the risks (confidence level: 99%) is aggregated, taking cor-
relation effects into account. In order to assess the risk-bear-
ing capacity of the BMW Group, the aggregated amount of
risks is compared with the risk cover amount (i. e. the equity
capital of the BMW Group recognised for accounting pur-
poses). A limit system for various risks helps monitor the
risk-bearing capacity.
Monitoring Risk-Bearing Capacity
The impact of risks and opportunities is presented separate-
ly without offsetting. If no specific reference is made, oppor-
tunities and risks relate to the Automotive segment. The
scope of entities consolidated for risk reporting purposes
corresponds to the scope of consolidated entities included in
the BMW Group Financial Statements.
Macroeconomic risks and opportunities
Strategic and sector-specific risks and opportunities
Changes in legislation and regulatory requirements
Market developments
Significant
To our Stakeholders
Insignificant
Significant
Low
Stable
Significant
Stable
Stable
Insignificant
Stable
Stable
High
Medium
Classification
Change compared
to prior year 2
of the risk amount¹
Risks
to prior year
Change compared
Opportunities
Classification
Initial and continuous creditworthiness testing is an import-
ant aspect of the BMW Group's credit risk management sys-
tem. For this reason, every borrower's creditworthiness is
tested for all credit financing and leasing contracts entered
into by the BMW Group. Opportunities may arise if the man-
aged portfolio performs better over time than estimated
when the credits were granted. Changes in the creditworthi-
ness of customers arising during the credit term are covered
by risk provisioning procedures. The credit risk of individual
customers is quantified on a monthly basis and, depending
on the outcome, taken into account within the risk provision-
ing system. Macroeconomic developments are currently
subject to a higher degree of volatility. If developments are
more favourable than assumed in the outlook, credit losses
may be lower than expected, leading to a positive earnings
impact.
In the financial year 2021, the Financial Services segment
benefited among other things from a favourable risk situ-
ation and the resulting lower level of impairment allowances
required. Credit losses were at an historically low level.
Operational risks
Interest rate changes
Residual value
Credit risk
137
BMW Group Report 2021
Stable
Significant
Stable
Medium
Transitory risks, on the other hand, arise from the transition
to a low-carbon economy. This category of risks includes for
example new and additional legal requirements relating to
climate protection. We also see the changes resulting from
the transition to a low-carbon future as an opportunity. In-
novative products and services enable us to develop new
fields of business, help decarbonise the mobility sector and
thus boost our competitiveness at the same time.
When considering climate-related risks, the BMW Group dis-
tinguishes between physical and transitory risks. Physical
risks refer to the actual impact of climate change. Physical
risks attributable to fundamental changes in climatic condi-
tions, such as rising temperatures or changing precipitation
patterns, are referred to as chronic and generally have a
longer-term effect. We therefore monitor these risks over a
period of up to 30 years. However, extreme weather events
such as storms, floods and heatwaves are already becoming
more frequent.
[[ Numerous developments of relevance for the BMW Group
are either directly or indirectly linked to climate-related is-
sues. The BMW Group is taking action to mitigate the impact
of climate change and to adapt to changing climatic condi-
tions. It is therefore imperative to identify climate-related
risks and opportunities and to take appropriate account of
them in determining the strategic direction to be followed,
managing the business and organising a Group-wide risk
management system. Since 2019, the BMW Group has been
acting on the recommendations of the Task Force on Cli-
mate-related Financial Disclosures (TCFD) and is continu-
ously developing its reporting on the management of cli-
mate-related risks and opportunities.
Climate-Related Opportunities and Risks
Due to closer interconnection with other risk categories, such
as outsourcing risks or information security risks, the level of
the risk amount has been raised slightly from low to medium
compared to the previous year. The classification of the risk
amount has changed to medium as the pertinent threshold
of €200 million was exceeded for the first time.
Operational risks relating to the Financial Services segment
In the Financial Services segment, operational risks are de-
fined as the risk of losses arising due to the unsuitability or
failure of internal procedures (process risks), people (per-
sonnel-related risks), systems (infrastructure and IT risks)
and external events (external risks). The recording and
measurement of risk scenarios, loss events and counter-
measures in the operational risk management system pro-
vide the basis for the systematic analysis and management
of potential or materialised operational risks. Annual self-as-
sessments are also carried out.
Interest rate risks in the Financial Services segment relate to
potential losses caused by changes in market interest rates.
These can arise when fixed interest rate periods do not
match for assets and liabilities recognised in the balance
sheet. The risk amount attached to interest rate risks is clas-
sified as low. Favourable interest rate developments com-
pared to the outlook represent opportunities that the
BMW Group classifies as significant. Interest rate risks in the
Financial Services business are managed by ensuring that
fixed interest rate periods match to a large extent and
through the use of interest-rate derivatives. If the relevant
recognition criteria are fulfilled, derivatives used by the
BMW Group are accounted for as hedging relationships. Fur-
ther information on risks in conjunction with financial instru-
ments is provided in 7 note 39 to the Group Financial
Statements.
Interest rate risks and opportunities relating to the Financial
Services segment
The exceptional upturn in the pre-owned vehicle market,
particularly in the USA and the UK, combined with high lev-
els of revenue generated on lease returns sold, had a cor-
respondingly positive effect on the residual value situation
across the Financial Services segment during the financial
year 2021. This development was reflected in the lower level
of residual value risk provisioning required.
Market developments are observed throughout the contrac-
tual period and the risk assessment updated accordingly.
Residual value risk management essentially follows the
same established process, regardless of the drive system
variant.
Each vehicle's estimated residual value is calculated at the
beginning of the contract on the basis of historical external
and internal data. Developments on pre-owned car markets
are an important factor for the BMW Group. The BMW Group
has developed and implemented specialised methods and
processes that enable the sustainability aspects of residual
value risks to be appropriately assessed and managed.
Risks and opportunities arise in conjunction with leasing
contracts if the market value of a leased vehicle at the end of
the contractual term of a lease differs from the residual value
estimated at the commencement date of the lease. A re-
sidual value risk exists if the expected market value of the
vehicle at the end of the contractual term is lower than its
estimated residual value at the date the contract was entered
into. The risk amount attached to the occurrence of unex-
pected residual value risks over the two-year assessment
period is classified as high. Opportunities can arise out of a
positive deviation between the actual market value and the
original residual value forecast. The BMW Group classifies
potential residual value opportunities as significant.
To our Stakeholders
Residual value risks and opportunities relating to the Financial
Services segment
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BMW Group Report 2021
140
2 As shown in the section "Risk measurement", the risk amount ranges used for risk classification purposes have been revised. The change shown here relates to the classification of prior-year risks using the
revised risk amount ranges.
1 The classified risk amount does not change as a result of the full consolidation of BMW Brilliance.
Increased
Outlook, Risk and Opportunity Management
Organisation and processes for managing climate-related risks
Within the BMW Group, the Board of Management is directly
responsible for all matters relating to climate change includ-
ing dealing with the consequences of climate change. Ac-
Combined Management Report
Outlook, Risk and Opportunity Management
Corporate Governance
Legal Risks
Due to the global nature of its operations, the BMW Group
is exposed to various legal risks. Legal risks may result
from non-compliance with laws or other legal require-
ments, or from legal disputes with business partners or
other market participants. If legal risks were to materialise,
they could have a high earnings impact over the two-year
assessment period. The risk amounts attached to signifi-
cant identified legal risks are classified as medium.
The growing globalisation of the BMW Group's operations
as well as of business interdependencies in general, com-
bined with the variety and complexity of legal provisions -
increasingly including import and export regulations - give
rise to a greater risk of non-compliance with applicable
legislation. A Compliance Management System is in place
across the BMW Group to ensure that its representative
bodies, executives and staff members worldwide consist-
ently act in a lawful manner. Further information on com-
pliance within the BMW Group as well as on the Compli-
ance Management System is provided in the chapter
7 Compliance and human rights.
Like all entities with international operations, the
BMW Group is confronted with legal disputes and alleged
claims relating in particular to warranty and product liabil-
ity, infringements of protected rights and proceedings initi-
ated by government agencies. Any of these could, amongst
other consequences, have an adverse impact on the
Group's reputation. Proceedings of this nature are essen-
tially typical for the sector, may result as a consequence of
realigning product or purchasing strategies to changed
market conditions, or are antitrust-related. Particularly in
the US market, class action lawsuits and product liability
risks can have substantial financial consequences and
cause damage to the BMW Group's reputation. More rigor-
ous application, interpretation of, or changes to, existing
regulations could result in a greater number of recalls.
For several years, lawsuits have been filed against BMW
Bank GmbH (BMW Bank) in which consumers claim the
withdrawal of their loan and leasing contracts on the basis
of allegedly incorrect and insufficient pre-contractual infor-
mation. The focus is on loan contracts. Since 2017, BMW
Bank has won the vast majority of these lawsuits. In No-
vember 2019, the Federal Court of Justice (BGH) adopted a
decision of principle in favour of BMW Bank, confirming the
accuracy of consumer-relevant information in loan con-
tracts. In addition, in October 2020 the BGH decided in a
case in which BMW Bank was not involved that consumers
are generally obliged to pay a compensation after a suc-
cessful withdrawal. Since the beginning of 2020, several
references for a preliminary ruling on the scope of informa-
tion obligations have been filed with the European Court of
Justice (ECJ). On September 9, 2021, the ECJ decided on
the requests for preliminary ruling concerning the require-
ments on the terms and conditions in consumer credit
agreements in particular with regard to default interest and
prepayment penalty. Based on this ruling the BGH re-
quests the ECJ for another preliminary ruling whether the
concept of abuse of rights in connection with consumer
credit agreements is still applicable under certain circum-
stances. Although this is technically not a final decision,
the BGH mentioned in the reasoning part of its decision
that it does not consider BMW Bank's terms and conditions
in consumer credit agreements to completely fulfill the re-
quirements as set by the ECJ ruling. Therefore, there is a
legal risk that borrowers might withdraw consumer credit
agreements of BMW Bank with reference to the proceeding
submitted to the ECJ and the ECJ decision as of September
9, 2021. However, the right to compensation of BMW Bank
due to the car use period of the borrower is still applicable.
The possible financial impact cannot be definitively as-
sessed at this stage.
International movements of goods require compliance with
extensive export control regulations. In addition to
goods-related restrictions, international trading may also
involve personal, country-specific and end-use-related re-
strictions. In particular, non-compliance with applicable
EU and US export control regulations could result in signif-
icant legal consequences for the BMW Group. In light of its
strong presence in the USA and China, any intensification
of the trade dispute between the two countries could be a
potential source of additional risk exposure.
The BMW Group is subject to tax and customs audits in
every country in which it operates, potentially resulting in
back taxes, retrospective customs duties, interest, penal-
ties and similar payments. Payments of this nature may,
for instance, result from the full or the partial non-recogni-
tion of intercompany transfer prices in the countries con-
cerned. Further substantive legal risks may also arise as a
result of changes in tax or customs legislation or due to the
way that legislation is interpreted by tax and customs au-
thorities or courts. In many cases, such changes can also
have a retrospective impact on calendar years that were
not yet subject to definitive audits. In order to minimise
procedural tax and customs risks, the BMW Group recently
set up a comprehensive Tax and Customs Control Frame-
work that is already being applied in Germany and will be
rolled out successively in other countries.
The BMW Group recognises appropriate levels of provision
for lawsuits and risks. In addition, a part of these risks is
insured to an economically reasonable extent. Neverthe-
less, it cannot be ruled out that damages may occur in ex-
cess of the insured amounts. In accordance with Interna-
tional Financial Reporting Standards (IFRS), the required
information is not provided if the BMW Group concludes
that disclosure of the information could seriously prejudice
the outcome of the relevant legal proceedings. Further in-
formation on contingent liabilities is provided in 7 note 38 to
the Group Financial Statements.
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BMW Group Report 2021
To our Stakeholders
Combined Management Report
Outlook, Risk and Opportunity Management
Group Financial Statements
Corporate Governance
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Other Information
← = Q
Alleged or actual non-compliance with the law could also
have a negative impact on the BMW Group's reputation.
Risk Management System in fhe Financial Services
Segment
Risk management within the Financial Services business is
built on the prevailing risk culture, the defined risk strategy,
the internal capital adequacy assessment process frame-
work and a set of rules comprising principles and guidelines.
The main tool used to manage risk within the Financial Ser-
vices segment is to ensure its risk-bearing capacity.
All risks - in the sense of unexpected losses – must be cov-
ered at all times. Based on the segment's risk appetite, this
is achieved by ensuring specified levels of risk-covering as-
sets (asset cushions) in the form of equity capital. Unexpect-
ed losses are measured using various value-at-risk models,
which are validated at regular intervals. Risks are aggregat-
ed after taking account of correlation effects. In addition to
assessing the Group's ability to bear risk, stress scenarios
are also examined. The segment's risk-bearing capacity is
regularly controlled by means of an integrated limit system
for the various risk categories.
Due to the close interrelationships within the Group, devel-
opments that affect the BMW Group's industrial business in
the first step are also relevant for the Financial Services seg-
ment in the second step. In addition, banking supervisory
agencies around the world require sustainability risks to be
adequately addressed. Sustainability risks, such as natural
events or a change in carbon pricing, affect existing risk cat-
egories and can also have an impact in the short term.
The following overview provides a summary of the main risks
and opportunities in the Financial Services segment:
Risks and opportunities relating to the Financial Services segment
The main categories of risk relevant for financial services
business are credit and counterparty risk, residual value risk,
interest rate risk, operational risk and liquidity risk. The
evaluation of liquidity risk for the Financial Services segment
is included in the liquidity risk category for the Group as a
whole.
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Liquidity risks
The major part of the Financial Services segment's credit fi-
nancing and leasing business is refinanced on capital mar-
kets. Liquidity risks can arise in the form of rising refinancing
costs or from restricted access to funds due to the general
market situation. The risk amount associated with liquidity
risks is classified as low.
Based on the experience gained during the global financial
crisis, a liquidity concept has been drawn up, which is rigor-
ously adhered to and continuously developed. In the Finan-
cial Services segment, the use of the "matched funding prin-
ciple" ensures that liquidity risks are generally avoided.
Solvency is assured at all times throughout the BMW Group
by adhering to liquidity ratios and using a broadly diversified
range of refinancing sources. Regular measurement and
monitoring ensure that cash inflows and outflows for the
various maturities and currencies offset one another. This
approach is an integral part of the BMW Group's liquidity
concept.
The liquidity position is monitored continuously and man-
aged through the Group-wide planning of financial require-
ments and funding. At present, opportunities relating to li-
quidity are not expected to have any significant earnings
impact. Further information on risks in conjunction with fi-
nancial instruments is provided in 7 note 39 to the Group Fi-
nancial Statements.
Other financial risks
Other financial risks worth mentioning include counterparty
risks as well as those arising in connection with investments
in other entities.
The BMW Group works together with banks to ensure that
the available liquidity is optimally invested in order to hedge
against financial market risks (particularly currency, com-
modity and interest rate risks) using derivative financial in-
struments and to protect payments made in advance. Coun-
terparty risk denotes the risk that the BMW Group will not
receive, or not receive in full, the payments due to it in con-
nection with the investment and hedging transactions re-
ferred to above. An enhanced value-at-risk model is em-
ployed to measure counterparty risk, taking into account the
creditworthiness (rating) of the banks and the business vol-
umes involved. Risk is managed using a limit system, which
includes daily monitoring of the extent to which limits are
being utilised at the level of the individual counterparties.
Group Financial Statements
The BMW Group holds equity investments of varying
amounts in numerous entities, which could give rise to risks
requiring the recognition of impairment losses.
Risks and opportunities relating to pension obligations
Future pension obligations are financed largely via external
pension funds or trust constructs that are legally separate
from the BMW Group. Externally managed funds are invest-
ed on capital markets in a broadly diversified portfolio with a
view to enabling future pension payments to be disbursed
out of pension assets. These arrangements greatly reduce
the need to fund pension payments out of ongoing
operations.
Risks can arise from fluctuations in pension obligations on
the one hand and the related pension assets on the other.
Opportunities can arise if the value of pension assets on
capital markets develops favourably or if pension obligations
decrease at a more pronounced rate than the related assets.
Pension obligations are primarily measured using a discount
rate based on market yields from high-quality corporate
bonds. These yields are subject to market fluctuations and
therefore influence the level of pension obligations. Changes
in other parameters, such as rising inflation rates and longer
life expectancy, also impact the amount as well as the dura-
tion of future pension payments. Regulatory requirements or
changes may also affect the amount of pension obligations.
The fluctuation of pension assets reflects the volatility of in-
dividual asset classes on capital markets. The broadly diver-
sified portfolio comprises investments in interest-bearing
securities, equities, real estate and other asset classes.
The risk relating to pension obligations was substantially re-
duced by the restructuring of pension commitments in Ger-
many in 2021. Under the new arrangements, employees
were given the option to switch to the Company's defined
contribution pension plan. While the latter entails the risk as-
sociated with guaranteeing a minimum rate of return, the
overall risk is lower than that arising in connection with the
defined benefit pension plan.
The risk amount attached to pension obligations is classified
as medium.
Remeasurements on the liabilities and assets sides are rec-
ognised net of deferred taxes through other comprehensive
income and hence directly in equity of the BMW Group (with-
in revenue reserves). Further information on risks in conjunc-
tion with pension provisions is provided in 7 note 32 to the
Group Financial Statements.
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BMW Group Report 2021
To our Stakeholders
Combined Management Report
Outlook, Risk and Opportunity Management
Group Financial Statements
The risk amount associated with other financial risks is clas-
sified as medium. Generally speaking revaluations of invest-
ments could give rise to opportunities with a significant
earnings impact.
Credit and counterparty risks and opportunities relating to the
Financial Services segment
Credit and counterparty default risk arises within the Finan-
cial Services segment if a contractual partner (e.g. a cus-
tomer or dealership) becomes either unable or only partially
able to fulfil its contractual obligations, so that less income is
generated or losses are incurred. Among other consequenc-
es, the military conflict between Russia and Ukraine could
also result in credit losses. The risk amount attached to the
occurrence of unexpected credit or counterparty default risks
over the two-year assessment period is classified as medi-
um. The BMW Group classifies potential opportunities in this
area as insignificant.
BMW Group has already experienced temporary bottlenecks
in the supply of electronic components.
As in other areas, the BMW Group is shaping the future of its
sales organisation with a clear focus on placing the custom-
er experience at the centre of its activities. Our declared aim
is to deliver the best premium brand and customer experi-
ence in the industry. A key building block in this endeavour is
the digitalisation of the customer journey. In conjunction with
the dealership organisation, new opportunities are arising in
this context, which the BMW Group, however, classifies as
insignificant.
In order to sell its products and services, the BMW Group op-
erates a global sales network - mainly comprising inde-
pendent dealerships, branches, subsidiaries and importers.
Any threat to the continued activities of parts of the sales
network, for example due to the impending insolvency of
large-scale dealerships, would entail risks for the
BMW Group. The risk amount attached to sales and market-
ing risks over the two-year assessment period is classified
as low.
Risks and opportunities relating to the sales network
Opportunities arising over the assessment period are classi-
fied as insignificant.
tures to new and existing BMW Group production plants as
well as the introduction of innovative production technol-
ogies, could lead to lower cost of materials for the
BMW Group.
Within the Purchasing and Supplier Network, opportunities
arise primarily in the context of global sourcing and associ-
ated efficiency improvements. Making optimal use of any
innovations developed by suppliers is a key prerequisite for
developing future-oriented mobility products and services.
Similarly, favourable location-related cost factors, particular-
ly those arising due to the close proximity of supplier struc-
The risks associated with the supply of raw materials are
mitigated either by reducing the use of the raw materials in
question or substituting them with alternative products.
When selecting its suppliers, the BMW Group not only takes
into account external requirements, such as those contained
in the German Supply Chain Due Diligence Act (Lieferketten-
sorgfaltspflichtengesetz), but also ensures that the sustain-
ability standards set internally by the Group are met.
The increased threat of cyberattacks along the entire value
chain also affects supply security as well as the ability to
protect know-how relevant to the BMW Group. In order to
ensure a uniform level of IT security for all those involved
along the value and supply chain, the BMW Group impresses
on suppliers the importance of obtaining appropriate IT se-
curity certification.
The ongoing tight supply situation along the entire supply
chain particularly due to bottlenecks affecting the supply of
semiconductors could continue to result in adjustments to
the production schedule. Reporting on such eventualities
could also have a negative impact on the Company's reputa-
tion. The BMW Group is monitoring the situation very closely,
assessing developments on a continual basis and ensuring
that supply chains and production plants are working to-
gether as closely as possible.
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To our Stakeholders
135
The growing complexity of the supplier network, particularly
in the case of sub-suppliers whose operations can only be
indirectly monitored by the BMW Group, is a further potential
cause of downtimes at supplier locations. Due to the high
level of demand on international semiconductor markets, the
Among other challenges, the military conflict between Rus-
sia and Ukraine is causing disruptions in the supply of com-
ponents produced in Ukraine. Any further escalation could
potentially affect both direct suppliers and upstream
sub-suppliers from neighbouring countries, thereby aggra-
vating the supply situation still further and curtailing the
availability of raw materials from Russia.
Potential reasons for the failure of individual suppliers to de-
liver include IT-related risks, non-compliance with sustain-
ability or quality standards, the lack of availability of raw ma-
terials and other input materials, and the occurrence of
natural hazards and/or fires. Insufficient financial capacity
on the part of individual suppliers can also jeopardise sup-
plies to production plants. In this context, the BMW Group
ensures financial support for suppliers that are of critical im-
portance for maintaining production. Moreover, any major
deterioration of a particular country's security situation is
incorporated in the risk measurement process as a potential
reason for the failure of a value or supply chain.
Information security, data protection and IT
Digitalisation and automation across all areas of the busi-
ness and all BMW Group products offer excellent opportu-
nities that are helping move the organisation forward on its
strategic path towards sustainability. At the same time, re-
quirements regarding the confidentiality, integrity and avail-
ability of information are becoming increasingly strict, with a
corresponding impact on the related use of information tech-
nology (IT). The level of threat has continuously risen in re-
cent years and the impact of the military conflict between
Russia and Ukraine could lead to a further increase in the
number of cyberattacks. Moreover, legal and regulatory re-
quirements are becoming ever stricter worldwide. Examples
include the Second Act to Increase the Security of Informa-
tion Technology Systems (German IT Security Act 2.0) and
new data protection laws in China.
In view of the higher incidence of observed attacks on
BMW Group applications and systems, the risk amount
despite extensive security measures - is classified as high.
In addition to threats in the form of cyberattacks and phys-
ical interventions, information and data can also be compro-
mised by a lack of risk awareness and inappropriate behav-
iour. The main direct consequences would be negative
effects on revenues, disruption in the production of compo-
nents and vehicles, or reputational damage.
Due to high demand, the prices of many raw materials have
been, and continue to be, subject to a high degree of fluctu-
ations on commodity markets. Accordingly, the risk amount
associated with raw materials prices is classified as high.
Significant opportunities could arise if raw materials prices,
contrary to current expectations, develop favourably for the
BMW Group.
The analysis of raw materials price risks is based on planned
purchases of raw materials and components containing
those products. Cash-flow-at-risk models and scenario
analyses are deployed to measure risks and opportunities
relating to raw materials prices. Price fluctuations for pre-
cious metals (platinum, palladium, rhodium), non-ferrous
metals (aluminium, copper), raw materials for batteries
(lead, nickel, cobalt) and, to some extent, for steel and its
basic ingredients (iron ore, coking coal) as well as energy
(gas, electricity) are hedged using financial derivatives and
supply contracts with fixed pricing arrangements.
Risks and opportunities relating to raw materials prices
As a manufacturing company, the BMW Group is exposed to
purchase price risks, particularly in relation to the raw mate-
rials used in vehicle production. Changes in prices are moni-
tored via a well-defined management process, the primary
objective of which is to improve planning reliability for the
BMW Group as a whole.
foreign currency regions, i. e. natural hedging. Currency risks
are managed in the short to medium term and for operation-
al purposes by means of hedging on financial markets. The
principal objective is to increase planning reliability for the
BMW Group. Hedging transactions are entered into only with
financial partners of good credit standing. Depending on ex-
change rate developments, significant opportunities may
arise.
Operational currency management is based on the results of
currency risk analyses. The BMW Group manages currency
risks at both strategic (medium to long term) and operational
level (short to medium term). Medium- to long-term meas-
ures include increasing production and purchase volumes in
As an internationally operating enterprise, the BMW Group
conducts business in a variety of currencies, thus giving rise
to currency risks and opportunities. A substantial portion of
Group revenues, production, other purchases and funding
occur outside the eurozone, particularly in China and the
USA. Regularly updated cash-flow-at-risk models and scen-
ario analyses are used to measure currency risks and oppor-
tunities. The risk amount associated with currency risks is
classified as low. The risk situation is more favourable than
in the previous year, as exchange rates have developed posi-
tively compared with those assumed in earlier forecasts.
Currency risks and opportunities
Financial Risks and Risks relating to the use of Financial
Instruments
The loss or theft of sensitive business information could also
have a negative impact on the Company's reputation.
With regard to cooperations and business partnerships, the
BMW Group protects its intellectual property as well as its
customer and employee data by issuing clearly defined in-
structions on information security and data protection. Trade
secrets and sensitive personal data are subject to particular-
ly stringent security measures.
Risks and opportunities relating to purchasing
Purchasing risks relate primarily to supply risks caused by
the failure of a supplier as well as to threats to BMW Group-rel-
evant know-how within the supplier network. Production
problems at supplier level could lead to consequences
caused by increased expenditure for the BMW Group due to
production interruptions and a corresponding reduction in
vehicle sales. The BMW Group deploys an extensive set of
checks and proactive management measures to tackle the
challenges currently facing the automotive supply industry.
The risk amount attached to purchasing risks over the two-
year assessment period is classified as high.
documented in a comprehensive set of rules and guidelines.
A consistently applied policy of updating such rules and reg-
ulations to current situations, coupled with regular commu-
nication, awareness-raising and training measures, form the
basis for a high level of security and risk awareness in
general.
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BMW Group Report 2021
136
However, despite continuous testing and preventive security
measures, it is impossible to completely eliminate risks in
this area. All authorised persons are required to treat infor-
mation such as confidential business, customer and em-
ployee data with great care, use information systems
securely and handle risks in a transparent manner. Uniform
requirements that apply throughout the Group are
The BMW Group places great emphasis on protecting busi-
ness information, for instance against unauthorised access
and/or misuse. Data security is an integral part of all Group
business processes and practised in accordance with the
ISO/IEC 27001 international standard. In conjunction with
risk management requirements, risks relating to information
security, data protection and IT are systematically docu-
mented, allocated appropriate measures by the departments
concerned and continuously monitored with regard to threat
level and risk mitigation. Regular analyses and controls as
well as tight security management policies ensure an appro-
priate level of security.
Combined Management Report
Outlook, Risk and Opportunity Management
The BMW Group sees opportunities relating to production
processes and fields of technology primarily in the competi-
tive edge gained from mastering new and complex technol-
ogies. Given the long lead times involved in developing new
products and processes, additional opportunities are not
expected to have a significant earnings impact on the
BMW Group during the assessment period.
BMW Group Report 2021
The BMW Group recognises appropriate provisions for stat-
utory and non-statutory warranty obligations. It cannot be
ruled out, however, that additional costs could arise in con-
junction with vehicle recalls that are either not covered or not
fully covered by provisions. Despitely, deploying thorough
quality assurance processes, such risks can always arise if
the materials and/or processing procedures used prove in-
sufficient, in some cases years after a product has been
launched. A high number of recalls could also have a nega-
tive impact on the BMW Group's reputation. Further infor-
mation on risks in conjunction with provisions for statutory
and non-statutory warranty obligations is provided in
note 33 to the Group Financial Statements.
The introduction of more stringent legislation and regula-
tions, particularly regarding emissions, safety and consumer
protection as well as regional vehicle-related purchase and
usage taxes, poses a significant risk for the automobile in-
dustry. Country- and sector-specific trade barriers can also
be subject to change at short notice. Any sudden tightening
of regulations in these areas could necessitate significantly
higher investments and ongoing expenses or exert influence
on customer behaviour. The risk amount attached to the oc-
currence of the risk of disruption in product availability due to
unforeseeable short-term changes in legislation and regula-
tions is classified as high.
Strategic and Sector-Specific Risks and Opportunities
Changes in legislation and regulatory requirements
The development and testing of new technologies inherently
give rise to a certain level of risk. An accident - for example
involving a vehicle in automated driving mode could have
a negative impact on the Company's reputation, regardless
of cause. Avoiding these risks is a top priority for the
BMW Group.
A further risk is seen in the very high rate of inflation current-
ly being observed in many regions. If inflation were to remain
high over an extended period, rising prices would curb de-
mand. The expected interest rate hikes by central banks will
also have a dampening effect on business.
ing from simple tariff increases to further import and export
restrictions on specific technologies. This could also lead to
less favourable import and export conditions for the
BMW Group.
The conflict between the USA and China is also set to re-
main a major topic of discussion. The focus is currently shift-
Mutation could result in the emergence of a highly conta-
gious coronavirus variant that could, in tum, cause severe
disease. In this case, strict containment measures could
slow down the economic recovery. The BMW Group is moni-
toring the situation on a continuous basis and taking appro-
priate measures as required.
Global supply shortfalls - particularly for semiconductors
continue to dampen the prospects of economic growth.
These bottlenecks could persist throughout the whole of
2022, with the resulting shortage of (upstream) products
causing the hitherto strong recovery of the global economy
to lose pace.
There is a risk of a further escalation of the conflict and
therefore of the sanctions imposed by Western countries on
Russia as well as possible retaliatory measures by Russia.
Any additional sanctions relating to the capital market and
the import and export of goods and raw materials will have
distinct consequences that are also likely to have a negative
impact on economies outside Russia.
The invasion of Ukraine by Russian troops has, among other
factors, triggered supply restrictions affecting components
from Ukraine which have already led to production schedule
adjustments and interruptions at a number of BMW Group
plants. If the military conflict continues for a prolonged peri-
od, it will also have a perceptible impact on sales.
Macroeconomic Risks and Opportunities
Economic conditions have an impact on business perform-
ance and hence on the level of earnings generated by the
BMW Group. Unforeseen disruptions in global economic re-
lations can have highly unpredictable effects. The risk
amount over the two-year assessment period is classified as
medium.
Combined Management Report
Outlook, Risk and Opportunity Management
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
To our Stakeholders
BMW Group Report 2021
133
1 The classified risk amount does not change as a result of the full consolidation of BMW Brilliance.
2 As shown in the section "Risk measurement", the risk amount ranges used for risk classification purposes have been updated. The change shown here relates to the classification of prior-year risks using the
updated risk amount ranges.
Stable
Decreased
At present, the BMW Group is seeing a continuous trend to-
wards increasingly stringent vehicle emissions regulations,
particularly for conventional drive systems, with the aim of
improving air quality, above all in conurbations. A legislative
proposal for the new Euro 7 emissions standard is being dis-
cussed within the European Union. As the technical require-
ments and the implementation timetable for the new stand-
ard are still subject to consultation, a certain element of risk
is involved. A discussion about fuel consumption and carbon
emissions could affect the Company's reputation.
Macroeconomic opportunities that could have a sustained
positive impact on the BMW Group's results of operation are
classified as insignificant.
Changes in trade policies could also have a positive impact
on the BMW Group's earnings in the short to medium term.
Any reduction in tariff barriers, import restrictions or direct
excise duties could result in lower manufacturing costs or
enable products and services to be offered to customers at
more attractive prices. Additional opportunities potentially
arising from changes in legislation and regulations are clas-
sified as insignificant.
Vehicles could be damaged or destroyed by natural hazards
or other threats during transport from the Group's production
plants to its various sales regions. Premiums and deductibles
for transport insurance policies currently remain at a persis-
tently high level. Any further increase could make it econom-
ically unviable to take out insurance, as a result of which the
BMW Group would be required to bear the losses itself.
and possibly result in long downtimes and substantial
losses.
Appropriate measures have been put in place to counter the
threat of targeted cyberattacks, reflecting the fact that any
such attacks could cause damage to production facilities
Technical fire protection, transparency with regard to poten-
tial natural hazards relevant for site selection and ongoing
operations, underpinned by other appropriate (e.g. struc-
tural) measures, a rapid response by on-site fire services
and employee training are the key strategies for preventing
or reducing any potential damage from fires and/or natural
hazards. Furthermore, policies are in place with insurance
companies of high credit standing to mitigate the impact of
any property damage caused by fire and/or natural events
that lead to significant business interruptions at either the
Group's or suppliers' premises.
All production units have a variety of measures in place to
deal with potential production interruptions and downtimes,
some of which are already integrated in the planning process
and also applied at operational level with a high degree of
flexibility. These measures have an effect on both the amount
of damage and the probability of the risks occurring.
Additional risks could result from the tightening of existing
import and export regulations, which could, in turn, lead pri-
marily to additional expenses, but also complicate the im-
port and export of vehicles and parts.
Risks and Opportunities Relating to Operations
Risks and opportunities relating to production and technologies
Risks relating to production processes and fields of technol-
ogy can lead to unplanned production interruptions or add-
itional costs due to vehicle recall actions. The risk amount
attached to the occurrence of such risks over the two-year
assessment period is classified as medium.
Outlook, Risk and Opportunity Management
← = Q
Other Information
Remuneration Report
Potential causes of production downtimes include fires, nat-
ural hazards and infrastructural damage as well as machine
and tooling breakdowns. Equally significantly, however, pro-
duction could also be impaired by bottlenecks in the supply
of production materials or components, utility or media sup-
ply failures or disruptions to transportation, logistics or IT
systems, all of which could be caused by cyberattacks,
among other factors.
Market developments
Group Financial Statements
Combined Management Report
To our Stakeholders
BMW Group Report 2021
134
Sales markets are continuously monitored in order to opti-
mally meet customer requirements and, at the same time,
capitalise on opportunities in terms of sales growth and pri-
cing. Opportunities arising over the assessment period are
classified as insignificant.
Any toughening of market competition could ramp up pres-
sure on sales volume and selling prices. For instance, the
BMW Group could be confronted with short-term supply and
demand distortions in the transition from conventionally
powered vehicles to alternative drive concepts. Customer
behaviour can also change, such as in the event of changing
social values and norms or as a consequence of governmen-
tal policies relating to vehicle usage.
Increasingly fierce competition among established manufac-
turers and the emergence of new competitors can have re-
percussions that are difficult to predict. Unforeseen con-
sumer preferences and changes in brand perceptions could
also give rise to both opportunities and risks. The risk amount
attached to the occurrence of market risks over the two-year
assessment period is classified as medium.
Corporate Governance
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
owned equity capital which confers the power to elect a
majority of the Supervisory Board of a contractual party
or any other ownership interest that enables the acquirer
to exercise control over a contractual party or which con-
stitutes a merger or a transfer of net assets.
BMW Group Report 2021
147
Several supply and development contracts between
BMW AG and various industrial customers, all relating to
the sale of components for drivetrain systems, grant an
extraordinary right of termination to the relevant indus-
trial customer in specified cases of a change in control at
BMW AG (for example BMW AG merges with a third party
or is taken over by a third party; an automobile manufac-
turer acquires more than 50% of the voting rights or
share capital of BMW AG).
Disclosures Relevant for Takeovers
and Explanatory Comments
BMW AG and Mercedes-Benz Group AG have entered
into a Joint Venture Agreement relating to mobility ser-
vices, which includes the areas of car sharing, ride hailing
and charging, and entitles both Mercedes-Benz Group
AG and BMW AG (hereafter referred to as "principals") to
initiate a bidding procedure in the event that (i) the other
principal receives notice in accordance with § 33 of the
German Securities Trading Act (WpHG) that - including
shares attributed pursuant to § 34 WpHG - a sharehold-
ing of more than 50% has been attained or, in accord-
ance with § 20 AktG of the German Stock Corporation Act
(AktG) that a shareholding of more than 50% has been
attained or (ii) a shareholder or a third party - including
shares attributed pursuant to § 30 WPHG - holds more
than 50% of the voting rights or shares in the other prin-
cipal, or (iii) the other principal has concluded a control
agreement as a dependent company. The outcome of
such a bidding procedure is that the joint venture will go
to the principal making the highest bid.
To Our Stakeholders
BMW AG is party to the shareholder agreement relating
to There Holding B. V., which is the majority shareholder
of the HERE Group. In accordance with the shareholder
agreement, each contractual party is required to offer its
directly or indirectly held shares in There Holding B. V. for
sale to the other shareholders in the event of a change in
control. A change in control of BMW AG arises if a person
takes over or loses control of BMW AG, with control de-
fined as (i) holding or having control over more than 50%
of the voting rights, (ii) the possibility to control more than
50% of voting rights exercisable at Annual General
Meetings on all or nearly all matters, or (iii) the right to
determine the majority of members of the Board of Man-
agement or the Supervisory Board. Furthermore, a
change in control occurs if competitors of the HERE
Group, or certain potential competitors of the HERE
Group from the technology sector, acquire at least 25%
of BMW AG. If none of the other shareholders acquire
these shares, the other shareholders are entitled to re-
solve that There Holding B. V. be dissolved.
Climate change is likely to cause natural disasters to oc-
cur more frequently at our locations, for example heavy
rains and heat waves, with the risk of damage to both
inventories and products. To avoid production stoppages,
we have already taken preventive measures at our pro-
duction sites and other premises, such as the installation
of sluice gates at the plant in Chennai, India.
In the Adaptation to Climate Change project, we identified
and assessed physical risks comprehensively for the first
time on the basis of two different time horizons (2030 and
2050) as well as various climate change scenarios. Three
warming pathways developed by the Intergovernmental
Panel on Climate Change (IPCC) were applied and, in ac-
cordance with the TCFD recommendation, the impact of
physical risks on the various stages of the value chain (in-
cluding real estate, logistics and suppliers) was examined.
The BMW Group focuses on both mitigating and adapting to
the consequences of climate change.
Scenario analyses for identifying climate-related opportunities
and risks
As part of the environmental analysis as part of the strategy
process, the BMW Group analyses and takes account of
transitory risks from a regulatory perspective on a continu-
ous basis. During the financial year under report, the
BMW Group successfully completed its "Adaptation to Cli-
mate Change" project with the involvement of top manage-
ment. The physical climate risks were analysed and as-
sessed using an external assessment tool.
cordingly, the individual members of the Board of Manage-
ment are each charged with the task of ensuring that their
portfolios are strategically aligned with the stated objectives.
Moreover, each proposal presented to the Board of Manage-
ment is required to be assessed from a sustainability per-
spective and thus also with regard to climate-related as-
pects. Internal management within strategy
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
Outlook, Risk and Opportunity Management
To our Stakeholders
BMW Group Report 2021
Framework agreements are in place with financial insti-
tutions and banks (ISDA Master Agreements) with re-
spect to trading activities with derivative financial instru-
ments. These agreements include an extraordinary right
of termination that triggers actions in the event that the
creditworthiness of the party involved is materially weak-
er following a direct or indirect acquisition of beneficially
The so-called RCP* scenarios range from a low-emissions
scenario in line with the 2°C target (RCP 2.6), a medium
scenario with global warming of 2.4-2.7°C by the year 2100
(RCP 4.5) through to a 5°C scenario (RCP 8.5). On the one
BMW AG acts as guarantor for all obligations arising from
the joint venture agreement relating to BMW Brilliance
Automotive Ltd. in China. This agreement grants an ex-
traordinary right of termination to either joint venture
partner in the event of a change in control at either one of
the parties, or if more than 25% of the shares of the oth-
er party are acquired by a third party - either directly or
indirectly or if the other party is merged with another
legal entity. Termination of the joint venture agreement
may lead to the dissolution of the joint venture, with an
optional purchase right for BMW (or the partner) to ac-
quire the shares of the other partner or to the liquidation
of the joint venture company.
A cooperation agreement concluded with Peugeot SA re-
lating to small (1- to 1.6-litre) petrol engines entitles each
of the cooperation partners to give extraordinary notifica-
tion of termination in the event of a competitor acquiring
control over the other contractual party and if any con-
cerns of the other contractual party regarding the impact
of the change of control on the cooperation arrange-
ments are not resolved during the subsequent discussion
process.
one or more parties jointly acquire direct or indirect con-
trol of BMW AG. The term "control" is defined as the ac-
quisition of more than 50% of the share capital of
BMW AG, the right to receive more than 50% of the divi-
dend, or the right to direct the affairs of the Company or
appoint the majority of members of the Supervisory
Board.
Corporate Governance
Remuneration Report
Other Information
← = Q
INTERNAL CONTROL SYSTEM
The Internal Control System* (ICS) is part of the BMW Group's
overall system of internal governance, and is based on a set
of measures and control activities that are integrated in pro-
cesses and organisational structures with a view to ensuring
the accuracy of external financial and non-financial report-
ing. The requirements for the design and structure of ICS
procedures incorporated in accounting and financial report-
ing processes as well as those used to generate selected
non-financial information included in the BMW Group Report
are defined on a Group-wide basis.
The ICS for financial reporting has the task of ensuring that
the BMW Group's accounting and financial reporting pro-
cesses are both accurate and reliable. The ICS for non-finan-
cial reporting focuses primarily on the further development
of the processes used to gather data as the basis for
reporting non-financial performance indicators within the
BMW Group Report.
The BMW Group's ICS is based on the "Three Lines of De-
fence" model, including a clear definition of how the various
functions are required to interact with one another to man-
age risks. As an essential component of the second line of
defence, the ICS serves as a link between the operating units
(first line), internal audit (third line) and the external auditor.
Internationally acknowledged standards for internal control
systems were taken into account when designing the various
elements of the ICS deployed by the BMW Group. The sys-
tem comprises:
* Disclosures pursuant to § 289 and § 315 HGB.
Group-wide mandatory accounting guidelines
Controls integrated in processes and IT systems
Organisational measures incorporating the principles of
the risk-oriented segregation of duties
Process-independent monitoring measures
Basically, the aim of any internal control system is to prevent,
or reduce the probability of, potential risks from occurring.
Both the system itself and the methods applied are subject
to continuous improvement, with system effectiveness as-
sessed regularly on the basis of centralised and decentral-
ised process analyses, data analyses within the various fi-
nancial systems, and audit-related procedures.
The principal features of the BMW Group's ICS are described
below.
Guidelines for recognising, measuring and allocating items
to accounts, along with the definitions of non-financial per-
formance indicators are available to all employees via the
BMW Group's intranet system. New financial reporting
standards are assessed at an early stage for their impact on
the BMW Group's accounting and financial reporting sys-
tems. Pertinent requirements are reviewed continuously and
revised at least once a year, or more frequently if required.
Preventive controls serve to identify and eliminate weak-
nesses and omissions in processes. Detective controls on
the other hand are deployed to detect and correct any errors
in the results of those processes and are generally based on
the principle of the segregation of duties. All key relevant IT
systems incorporate controls that are designed, among other
things, to prevent business transactions from being recorded
incorrectly, ensure the complete recognition and accurate of
business transactions in accordance with the applicable re-
quirements, and provide the basis for checking the accuracy
of consolidation procedures.
Whenever changes are made to IT systems relating to ac-
counting and financial reporting processes, the aforemen-
tioned controls are adapted to take account of new require-
ments and/or any opportunities that have arisen due to
technical advances in information technology. Moreover, the
BMW Group deploys data analysis tools to identify and
subsequently eliminate weaknesses in its processes and/or
control systems.
Responsibilities for ensuring the effectiveness of ICS proce-
dures for accounting and financial reporting processes as
well as the further development of the reporting of non-fi-
nancial performance indicators are clearly defined in a role-
based model and allocated to the relevant line and process
managers. Once a year, the managers responsible report on
their assessment of the ICS in place for accounting and fi-
nancial reporting processes, based on the results of both
internal and external audits as well as continual monitoring.
The results of the assessment are gathered and document-
ed in a centralised IT system. Any weaknesses found in the
ICS are eliminated, taking into account their potential im-
pact. Both the Board of Management and the Audit Commit-
tee are informed about the effectiveness of the ICS on an
annual basis. The Board of Management and, where appro-
priate, the Supervisory Board, are promptly informed in the
event of any significant changes to the ICS.
144
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Disclosures Relevant for Takeovers
and Explanatory Comments
DISCLOSURES RELEVANT FOR TAKEOVERS*
AND EXPLANATORY COMMENTS
Group Financial Statements
Combined Management Report
Internal Control System
To Our Stakeholders
BMW Group Report 2021
Extreme weather events at suppliers' locations world-
wide can impact component deliveries and consequently
supplies to production plants. Under these circum-
stances, key transport routes could be blocked - with im-
plications for both the supply of components and the dis-
tribution of new vehicles.
Physical climate risks could have a negative impact on
economic growth in the regions affected, with noticeable
unfavourable macroeconomic consequences, including a
loss of income and the threat of unemployment for con-
sumers. These factors, in turn, could reduce purchasing
power in certain regions and have a negative impact on
the BMW Group's sales volumes and operating result.
Transitory climate risks
A significant tightening of laws and regulations in the
BMW Group's main markets (the EU, the USA and China),
particularly in terms of carbon emissions regulations
which may also result from possible legal proceedings or
court decisions and regional vehicle purchase and usage
taxes, could have an impact on the BMW Group's range
of products and services and result in higher costs
and/or lower sales volumes. Changes in legislation and regula-
tory requirements ]]
[Any serious failure to comply with sustainability or qual-
ity standards could cause disruptions in the supply chain
or the inability of individual suppliers to deliver.
The aim is to reduce carbon emissions across all relevant
supply chains on the basis of constructive cooperation
with suppliers. It is important to point out, however, that
the BMW Group depends on receiving accurate informa-
tion from suppliers in this regard.
However, if the carbon price were to rise to unexpected
levels without sufficient time to plan accordingly, produc-
tion costs will be driven up, with a correspondingly nega-
tive impact on the BMW Group's sales volumes and prof-
itability. Furthermore, setting a price for carbon emissions
could result in reduced purchasing power and thus hold
down economic growth in the regions concerned.
The global spread of electric mobility may give rise to
bottlenecks in the availability of raw materials, particular-
ly those needed to manufacture battery cells. As a result,
higher raw materials prices could also have an impact on
the BMW Group's earnings situation.
* Representative Concentration Pathways.
142
BMW Group Report 2021
To our Stakeholders
Combined Management Report
Outlook, Risk and Opportunity Management
Group Financial Statements
Composition of subscribed capital
Corporate Governance
Other Information
Stricter requirements for carbon emitters due to regula-
tory tightening could affect the reputation of the
BMW Group and make it less attractive as a sustainable
investment.
The transformation to a lower-emissions economy is fun-
damentally changing certain industries. Due to the po-
tential macroeconomic consequences, the related sus-
tainability risks are seen as a threat to the stability of
financial markets. They could also have a negative im-
pact on job security as well as the financial position of
selected industries and their employees.
Climate-related opportunities
With its flexible vehicle architectures and production sys-
tems,
the BMW Group strives to take account of fluctuat-
ing customer demand as well as regulatory and infra-
structural differences in its markets in a swift and
adaptable manner. Production network
The BMW Group sees the growing demand for electrified
vehicles as a major opportunity. We are leveraging this
opportunity by continuously expanding our range of elec-
trified products, while at the same time pressing ahead
with the in-house development and production of electric
drive systems, batteries and battery cell prototypes. This
approach enables us to secure key know-how in new
technologies at an early stage, gain crucial systems ex-
pertise and exploit cost advantages, which could also
provide a decisive competitive edge. 7 Production network
The BMW Group's strategic planning assumptions will
endeavour to anticipate the consequences of rising car-
bon prices in the form of taxes and levies as well as po-
tential shortfalls in emissions credits under emissions
trading schemes, taking into account the assumptions
applied in its own decision-making process and its coop-
eration with suppliers. Circular economy, resource efficiency and
renewable efficiency
-
The BMW Group can exert its influence across its global
supplier network to cut carbon emissions and work to-
wards implementing decarbonisation measures. For in-
stance, it has already entered into a contractual agree-
ment with its cell manufacturers that only green
electricity will be used to produce the fifth generation of
battery cells. Supplier network and purchases and Decarbo-
nisation
By switching to lower-carbon processes and technol-
ogies at its own production plants, the BMW Group is not
only boosting efficiency, but also cutting its costs. For ex-
ample, generating its own electricity from renewable en-
ergy sources reduces the carbon footprint and minimises
dependence on external electricity sources as well as its
exposure to price fluctuations on the energy market.
7 Renewable energy
In the best interest of a circular economy, the BMW Group
intends to gradually increase its use of secondary mater-
ials and hence reduce carbon emissions at the same
time. With this strategy, we are not only contributing to-
wards achieving our decarbonisation target in the supply
chain, but also reducing our dependence on primary ma-
terials in terms of their availability and cost. 7 Circular econ-
omy and resource efficiency
By reporting comprehensively and transparently in a
manner that meets potential legal requirements at an
early stage, we are better able to ensure our access to
capital markets and obtain attractive financing condi-
tions on a long-term basis. 7 BMW Group and Capital Markets
By rigorously aligning its corporate strategy to meet specific
sustainability targets, the BMW Group takes appropriate ac-
count of risks and opportunities in all its investments, in-
novations and corporate decisions. ]]
143
Remuneration Report
Physical climate risks
The subscribed capital (share capital) of BMW AG amoun-
ted to € 661,399,500 at 31 December 2021 (2020:
€ 659,684,500) and, in accordance with Article 4 no. 1 of the
Articles of Incorporation is sub-divided into 601,995,196
shares of common stock (91.02 %) (2020: 601,995,196;
91.26%) and 59,404,304 shares of non-voting preferred
stock (8.98 %) (2020: 57,689,304; 8.74%), each with a par
value of € 1. The Company's shares are issued to bearer.
The Company's shares of preferred stock are shares as de-
fined in §§ 139 et seqq. AktG, which carry a cumulative pref-
erential right in terms of the allocation of profit and for which
voting rights are excluded. These shares confer voting rights
only in exceptional cases stipulated by law, in particular if the
preference amount has either not been paid or not been paid
5 Controlled entities, of which 3% or more are attributed: Susanne Klatten Beteiligungs GmbH.
Indirect share of
voting rights
25.62
16.63
Direct share of
voting rights
0.2
9.0
16.64
16.6
0.2
20.75
20.7
Shares with special rights that confer control rights
There are no shares with special rights that confer control
rights.
Control of voting rights when employees participate in
capital and do not directly exercise their control rights
Like all other shareholders, employees exercise their control
rights pertaining to shares they have acquired in conjunction
with the Employee Share Programme and/or the share-
based remuneration programme directly on the basis of rele-
vant legal provisions and the Company's Articles of
Incorporation.
Statutory regulations and provisions contained in the
Articles of Incorporation governing the appointment and
removal of members of the Board of Management and
changes to the Articles of Incorporation
The appointment or removal of members of the Board of
Management is based on the rules contained in §§ 84 et
seq. AktG in conjunction with § 31 of the German Co-Deter-
mination Act (MitbestG).
Amendments to the Articles of Incorporation must comply
with §§ 179 et seqq. AktG. Amendments must be decided
upon by the shareholders at the Annual General Meeting
(§ 119 (1) no. 6, § 179 (1) AktG). The Supervisory Board is au-
thorised to approve amendments to the Articles of Incorpor-
ation that only affect its wording (Article 14 no. 3 of the Ar-
ticles of Incorporation). Resolutions are passed at the
Annual General Meeting by a simple majority of votes cast
unless otherwise explicitly required by binding provisions of
law or, if a majority of share capital is required, by a simple
majority of share capital represented in the vote (Article 20
no. 1 of the Articles of Incorporation).
146
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Disclosures Relevant for Takeovers
and Explanatory Comments
Authorisations of the Board of Management, in particu-
lar with respect to the issuing or buying back of shares
The Board of Management is authorised to buy back shares
and sell repurchased shares in situations specified in § 71
AktG, for example to avert serious and imminent damage to
the Company and/or to offer shares to persons either cur-
rently or previously employed by BMW AG or one of its affili-
ated companies.
In accordance with Article 4 no. 5 of the Articles of Incorpor-
ation, the Board of Management is authorised, with the ap-
proval of the Supervisory Board, to increase by means of
cash contributions BMW AG's share capital during the period
up to and including 15 May 2024 by up to € 1,722,600 for the
purposes of an Employee Share Programme by issuing new
non-voting shares of preferred stock, which carry the same
rights as existing non-voting shares of preferred stock (Au-
thorised Capital 2019). The subscription rights of existing
shareholders are excluded. No conditional capital was in
place at the reporting date.
Significant agreements of the Company taking effect in
the event of a change in control following a takeover bid
BMW AG is party to the following major agreements, which
contain provisions that would apply in the event of a change
in control or the acquisition of control as a result of a take-
over bid:
An agreement concluded with an international consor-
tium of banks relating to a syndicated credit line, which
was not being utilised at the balance sheet date, entitles
the lending banks to give extraordinary notice to termin-
ate the credit line, such that all outstanding amounts, in-
cluding interest, would fall due with immediate effect if
4 Controlled entities, of which 3% or more are attributed: AQTON GmbH & Co. KG für Automobilwerte.
3 Controlled entities, of which 3% or more are attributed: AQTON Verwaltung GmbH, AQTON GmbH & Co. KG für Automobilwerte.
² Controlled entities, of which 3% or more are attributed: AQTON SE, AQTON Verwaltung GmbH, AQTON GmbH & Co. KG für Automobilwerte.
1 Based on voluntary notifications provided by the listed shareholders as at 31 December 2021.
in full within one year and the arrears are not paid in the sub-
sequent year alongside the full preference amount due for
that year. With the exception of voting rights, holders of
shares of preferred stock are entitled to the same rights as
holders of shares of common stock. In addition, Article 24 of
the Articles of Incorporation confers preferential treatment to
the non-voting shares of preferred stock with regard to the
appropriation of the Company's unappropriated profit. Ac-
cordingly, the unappropriated profit is required to be appro-
priated in the following order:
(a) Subsequent payment of any arrears on dividends on
non-voting shares of preferred stock in the order of
accruement
(b) Payment of an advance dividend of € 0.02 per € 1 par
value on non-voting shares of preferred stock
(c) Uniform payment of any other dividends on shares of
common and preferred stock, provided the shareholders
do not resolve otherwise at the Annual General Meeting
Restrictions affecting voting rights or the transfer of
shares
hand, the RCP 2.6 scenario entails high transitory risks for
the BMW Group due to stricter regulatory requirements gov-
erning carbon emissions. On the other hand, fewer physical
risks would be likely to arise given the more ambitious cli-
mate protection measures. In the RCP 8.5 scenario, how-
ever, the physical risks dominate due to insufficient climate
protection measures. Based on the BMW Group's assess-
ment, the RCP 4.5 scenario is currently seen as the most
likely and roughly corresponds to the contributions currently
committed to by each country at national level.
When the Company issues non-voting shares of preferred
stock to employees in conjunction with its Employee Share
Programme, these shares are generally subject to a Com-
pany-imposed blocking period of four years, calculated from
the beginning of the calendar year in which the shares were
issued.
Contractual holding period arrangements also apply to
shares of common stock acquired by Board of Management
members and certain senior department heads in conjunc-
tion with share-based remuneration programmes. Remuner-
ation Report
* Disclosures pursuant to § 289 a, § 315 a HGB.
145
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
The rights and duties of shareholders derive from the Ger-
man Stock Corporation Act (AktG) in conjunction with the
Company's Articles of Incorporation, the full text of which is
available at ≈ www.bmwgroup.com. The right of shareholders to
have their shares evidenced is excluded in accordance with
the Articles of Incorporation. The voting power attached to
each share corresponds to its par value. Each €1 of par value
of share capital represented in a vote entitles the holder to
one vote (Article 18 no. 1 of the Articles of Incorporation).
Corporate Governance
Other Information
Disclosures Relevant for Takeovers
and Explanatory Comments
↑
= Q
Direct or indirect investments in capital exceeding 10%
of voting rights
Based on the information available to the Company, the fol-
lowing direct or indirect holdings exceeding 10% of the vot-
ing rights at the end of the reporting period were held at the
stated reporting date:¹
in %
Stefan Quandt, Germany
AQTON SE, Bad Homburg v. d. Höhe, Germany
AQTON Verwaltung GmbH, Bad Homburg v. d. Höhe, Germany
AQTON GmbH & Co. KG für Automobilwerte, Bad Homburg v. d. Höhe, Germany
Susanne Klatten, Germany
Susanne Klatten Beteiligungs GmbH, Bad Homburg v. d. Höhe, Germany
The voting percentages disclosed above may have changed
subsequent to the stated date if these changes were not re-
quired to be reported to the Company. As the Company's
shares are issued to bearer, the Company is generally only
aware of changes in shareholdings if such changes are sub-
ject to mandatory notification rules.
Remuneration Report
In addition to shares of common stock, the Company has
also issued non-voting shares of preferred stock. Further in-
formation can be found in the section "Composition of sub-
scribed capital".
53
11,805
80,853
- 71,456
- 78,637
- 85,408
- 89,253
8
95,476
98,990
111,239
7
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
Note
Selling and administrative expenses
2,748
-2,259
2,284
32,867
- 1,941
-7,580
- 8,795
-9,233
9
753
-465
3
5
3,086
5,118
343
Gross profit
489
16,839
13,582
21,986
14,947
19,392
- 14,194
-19,857
3
5
30,044
-26,958
-27,749
9,397
-7,237
Cost of sales
in € million
176 Notes to the Statement of Comprehensive Income
169 Notes to the Income Statement
157 Accounting Principles and Policies
157 Notes to the Group Financial Statements
155 Statement of Changes in Equity for Group
153 Cash Flow Statement for Group and Segments
Balance Sheet for Group and Segments at 31 December 2021
151
150 Statement of Comprehensive Income for Group
149 Income Statement for Group and Segments
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
148
The BMW Group has not concluded any compensation
agreements with members of the Board of Management or
with employees for situations involving a takeover offer.
Compensation agreements with members of the Board
of Management or with employees in the event of a
takeover bid
-
BMW AG has entered into an agreement with Great Wall
Motor Company Limited to establish the joint venture
Spotlight Automotive Ltd. in China. The agreement
grants an extraordinary right of termination to either joint
venture partner in the event that - either directly or indi-
rectly more than 25% of the shares of the other party
are acquired by a third party or the other party is merged
with another legal entity. The termination of the joint ven-
ture agreement may result in the sale of the shares to the
other joint venture partner or in the liquidation of the joint
venture entity.
The development collaboration agreement between
BMW AG, FCA US LLC and FCA Italy S.p.A. relating to
the development of technologies used in conjunction
with automated vehicles, may be terminated by any of
the contractual parties if certain competitors in the tech-
nology sector acquire and subsequently hold at least
30% of the voting shares of one of the other contractual
parties.
The development collaboration agreement between
BMW AG, Intel Corporation and Mobileye Vision Technol-
ogies Ltd., relating to the development of technologies
used in automated vehicles, may be terminated by any of
the contractual parties if a competitor of one of the par-
ties acquires and subsequently holds at least 30% of the
voting shares of one of the contractual parties.
141
178 Notes to the Balance Sheet
201 Other Disclosures
228 Segment Information
231 List of investments at 31 December 2021
supplementary information) supplementary information)
Eliminations (unaudited
Other Entities (unaudited
Financial Services (unaudited
supplementary information)
Motorcycles (unaudited
Group supplementary information) supplementary information)
Automotive (unaudited
FOR GROUP AND SEGMENTS
INCOME STATEMENT
for Group and Segments
← = Q
Other Information
Revenues
Remuneration Report
Group Financial Statements
Income Statement
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
149
FINANCIAL
STATEMENTS
3
GROUP -
←三〇
Other Information
Remuneration Report
Corporate Governance
2,722
-264
-1,385
1,394
1,122
-1,232
-974
-4
-3
- 3
-613
-310
-458
-165
11
Interest and similar expenses
- 1,292
-989
1,169
875
3
2
236
246
116
135
Other financial result
Financial result
Profit/loss before tax
Income taxes
5,222
16,060
102
133
-271
539
4
52
-3
1
560
11
1,935
2,660
- 208
638
5
17
479
- 186
1,170
12
Attributable to minority interest
Net profit / loss
392
- 240
Interest and similar income
920
-873
- 1,055
10
Other operating expenses
-176
15
125
34
34
36
2
3
931
1,614
916
1,702
10
Other operating income
34
37
-26
-41
- 1,326
- 1,003
-929
-1
-2
1,520
920
1,520
24
Result from equity accounted investments
808
-390
36
- 8
1,721
3,701
I
103
2,162
9,870
4,830
13,400
Profit/loss before financial result
197
23
-66
-6
-73
- 68
227
141
← = Q
-3,597
82
10
17
71
-2
Attributable to shareholders of the BMW AG
31
12,382
3,775
9,150
1,992
177
74
2,844
1,202
412
- 171
- 201
678
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
14
18.77
5.73
14
18.79
5.75
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
14
18.77
81
5.73
678
- 173
228
100
3,753
1,725
531
-235
-257
910
13
-1,365
-2,645
-713
-51
-26
- 838
-456
-119
62
56
-232
12,463
3,857
9,160
2,009
177
74
2,915
1,269
412
-201
14
67
5.75
-354
-224
139
1,019
-215
-45
7
14
991
72
201
-50
106
163
-423
1,228
- 1,283
1,382
- 401
19
2,401
- 616
14,864
18.79
81
82
31
14,783
3,159
1,243
32
3,241
12,463
3,857
150
BMW Group Report 2021
To Our Stakeholders
Group Financial Statements Corporate Governance
Statement of Comprehensive
Income for Group
Remuneration Report
Other Information
← = Q
STATEMENT OF COMPREHENSIVE INCOME
FOR GROUP
in € million
Net profit/loss
Remeasurement of the net liability for defined benefit pension plans
Deferred taxes
Items not expected to be reclassified to the income statement in the future
Marketable securities (at fair value through other comprehensive income)
Combined Management Report
Costs of hedging
Derivative financial instruments
2021
Note
Total comprehensive income attributable to shareholders of BMW AG
Total comprehensive income attributable to minority interests
Total comprehensive income
* Prior year's figure adjusted.
2020
Items that can be reclassified to the income statement in the future
Currency translation foreign operations
Deferred taxes *
Other comprehensive income from equity accounted investments
Other comprehensive income for the period after tax
Equity
attributable to
shareholders
of BMW AG
Costs of
hedging
Derivative
financial
instruments
Marketable
securities
reserves
59,550
660
Minority
31
Revenue
reserves
Translation
differences
-2,156
2,199
60,891
Total
34
868
-264
629
61,520
12,382
12,382
81
Capital
1,019
12,463
interest
Subscribed
capital
IN EQUITY FOR GROUP
Accumulated other equity
1,718
1 With the exception of interest for lease liabilities, interest relating to financial services business is classified as revenues/cost of sales.
2 Includes dividends received from investment assets amounting to € - million (2020: € 1.020 million).
The reconciliation of liabilities from financing activities is presented in 7 Note [35].
155
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Statement of Changes
in Equity for Group
Corporate Governance
Remuneration Report
Other Information
← = Q
STATEMENT OF CHANGES
in € million
1 January 2021
Net profit
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2021
Dividend payments
Subscribed share capital increase out of
Authorised Capital
Premium arising on capital increase relating to
preferred stock
Other changes
31 December 2021
Note
-32
- 1,671
13
- 438
2
362
-251
74,366
766
75,132
156
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Statement of Changes
in Equity for Group
Corporate Governance
Remuneration Report
Other Information
← = Q
STATEMENT OF CHANGES
IN EQUITY FOR GROUP
in € million
1 January 2020
Net profit
Other comprehensive income for the period after tax
Comprehensive income at 31 December 2020
Dividend payments
2,863
71,705
-317
2,325
31
2,401
2,401
13,401
1,718
-32
-317
13
14,783
81
14,864
-1,253
-1,253
-24
-1,277
1
1
1
126
126
126
7
- 189
-182
80
- 102
661
3,471
22
12,009
5,112
24
24
Investments accounted for using the equity method
-6,764
-7,317
48,759
52,017
41,995
44,700
23
78
67
401
438
21,371
21,885
21,850
22,390
Subscribed share capital increase out of
1
377
374
155
167
3,585
11,809
5,112
Other investments
I
559
577
2,644
1,715
26
Financial assets
- 10,934
-57
-96
48,082
51,808
I
48,025
51,712
25
-11,740
6,938
6,899
20
21
4,711
6,061
735
1,241
Receivables from sales financing
3,585
9,522
12,438
12,980
AND SEGMENTS AT 31 DECEMBER 2021
BALANCE SHEET FOR GROUP
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Balance Sheet for Group and Segments
at 31 December 2021
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
151
1,501
2,487
445
608
788
13,537
12,036
9,522
9,077
2,863
2,075
Cash and cash equivalents as at 31 December
16,009
13,537
in € million
12,342
Group
Motorcycles
21
22
Leased products
Property, plant and equipment
Intangible assets
ASSETS
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
Note
information)
information)
information)
Eliminations
(unaudited supplementary (unaudited supplementary (unaudited supplementary (unaudited supplementary (unaudited supplementary
information)
information)
Other Entities
Financial Services
Automotive
Authorised Capital
31
preferred stock
In this context, the Group's 50% shareholding in BMW Bril-
liance at the acquisition date will be measured at fair value,
159
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
which has been provisionally calculated at € 11 to 12 billion.
The expected remeasurement gain of € 7 to 8 billion will be
recognised in the financial year 2022 on the line item "Result
on investments" within the financial result.
As the BMW Group already held 50% of the shares in BMW
Brilliance prior to the acquisition, the transaction constitutes
a business combination achieved in stages (step acquisi-
tion).
The fair values of the assets acquired and liabilities assumed
at the acquisition date are currently in the process of being
measured. The balance sheet values at 31 December 2021
are included in 7 note 24. The remeasurement of acquired
assets and liabilities will give rise primarily to the recognition
of reacquired rights and dealership relationships as intangi-
ble assets. Other fair value adjustments will also be recog-
nised, mainly for property, plant and equipment and invento-
ries. Due to the proximity of the acquisition date and the date
on which these financial statements were authorised for
issue, further information is not yet available for disclosure
and will be provided in the BMW Group's next quarterly
statement. Adjustments to the fair value may also arise over
the course of the financial year 2022 as the fair value meas-
urement process is finalised.
04 Foreign currency translation and measurement
The financial statements of consolidated companies which
are presented in a foreign currency are translated using the
modified closing rate method. Under this method, assets
and liabilities are translated at the closing exchange rate,
whilst income and expenses are translated at the average
exchange rate. Differences arising on foreign currency trans-
lation are presented in "Accumulated other equity".
In the single entity accounts of BMW AG and its subsidiaries,
foreign currency receivables and payables are measured on
initial recognition using the exchange rate prevailing at the
date of first-time recognition. Advance payments to suppli-
ers or from customers in a foreign currency that result in the
addition of non-monetary assets or liabilities are recorded at
1 Euro =
US Dollar
British Pound
Chinese Renminbi
Russian Rouble
Korean Won
the exchange rate prevailing at the date of payment. At the
end of the reporting period, foreign currency receivables and
payables are measured using the closing exchange rate. The
resulting unrealised gains and losses, as well as realised
gains and losses arising on settlement, are recognised in the
income statement, in line with the underlying substance of
the transaction. Non-monetary balance sheet items denom-
inated in foreign currencies are rolled forward on the basis of
historical exchange rates.
The exchange rates of currencies which have a material
impact on the Group Financial Statements were as follows:
Closing rate
Following the business combination, minority interests in the
equity capital of BMW Automotive Finance (China) Co. Ltd.
and in Herald International Financial Leasing Co., Ltd. will
change to 10.5% in each case. As the two entities are
already included in the Group Financial Statements as sub-
sidiaries, the change will be recognised through Group equity
without any impact on profit or loss.
Cash and cash equivalents acquired totalled approximately
€ 8.7 billion.
The consideration paid for the additional 25% stake totals
€ 3.7 billion, including hedging effects, and has been settled
entirely in cash.
Since the acquisition took place prior to the date on which
the financial statements were approved for publication, this
report contains disclosures relating to the business combi-
nation, even though BMW Brilliance will not be fully consoli-
dated until the financial year 2022.
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
(joint) control, the BMW Group undertakes a new assess-
ment.
An entity is deemed to be controlled if BMW AG - either
directly or indirectly has power over it, is exposed or has
rights to variable returns from it and has the ability to influ-
ence those returns.
-
An entity is classified as an associated company if BMW AG
either directly or indirectly – has the ability to exercise sig-
nificant influence over the entity's operating and financial
policies. As a general rule, the Group is assumed to have
significant influence if it holds 20% or more of the entity's
voting power.
Joint operations and joint ventures are forms of joint arrange-
ments. Such an arrangement exists when a BMW Group
entity jointly carries out activities with a third party on the
basis of a contractual agreement.
In the case of a joint operation, the parties that have joint
control of the arrangement have rights to the assets, and
obligations for the liabilities, relating to the arrangement.
Assets, liabilities, revenues and expenses of a joint opera-
tion are recognised proportionately in the Group Financial
Statements on the basis of the BMW Group entity's rights
and obligations (proportionate consolidation). The impact of
joint operations on the Group Financial Statements are of
minor significance.
The BMW Group's largest joint operation is Spotlight Auto-
motive Limited (Spotlight), which has been operated jointly
with the Chinese automobile manufacturer Great Wall Motor
Company Limited (Great Wall) since 2019, jointly developing
and manufacturing electric vehicles in China. The BMW Group
and Great Wall each hold 50% of the joint operation's equity.
In addition to electric MINI vehicles, Spotlight will in future
also develop and produce electric vehicles for Great Wall.
In the case of a joint venture, the parties which have joint
control only have rights to the net assets of the arrangement.
Associated companies and joint ventures are accounted for
using the equity method, with measurement on initial recog-
nition based on acquisition cost.
On 30. September 2021, the BMW Group signed an agree-
ment with the Huachen Group to acquire all of the shares of
Brilliance Automobile Manufacturing Co, Ltd., a Huachen
Group subsidiary. The acquisition includes land usage rights
as well as buildings and production facilities of a Huachen
Group vehicle plant at the Shenyang site. The transaction is
expected to be completed in the first half of 2022 after all the
necessary regulatory approvals have been obtained.
The other changes to the Group reporting entity do not have
a material impact on the results of operations, financial posi-
tion and net assets of the Group.
03 Increased shareholding in BMW Brilliance
Automotive Ltd.
On 11 February 2022, via the Group company BMW Holding
B. V., the BMW Group increased its shareholding in the joint
venture BMW Brilliance Automotive Ltd. (BMW Brilliance)
from 50% to 75% with the acquisition of a further 25% of
BMW Brilliance's shares. On 11 October 2018, the BMW Group
signed an agreement with its joint venture partner, a wholly
owned subsidiary of Brilliance China Automotive Holdings
Ltd. (CBA), to acquire these shares. The agreement was
approved at the CBA shareholders' meeting on 18 January
2019.
The previous joint venture requirement came to an end with
effect from 1 January 2022. The amended joint venture
agreement came into force and the formal transfer of shares
was completed on 11 February 2022, following the issuance
of an amended "business license". Since that date, the
BMW Group has held a 75% majority of the voting rights, as
a result of which it now has control over BMW Brilliance.
BMW Brilliance will therefore be fully consolidated as a sub-
sidiary in the BMW Group Financial Statements with effect
from 11 February 2022. The contractual term of the joint ven-
ture, which previously ran until 2028, has been extended to
2040.
BMW Brilliance manufactures BMW brand models primarily
for the Chinese market at its two vehicle production plants as
well as petrol engines and high-voltage batteries at a sepa-
rate facility.
The strategic objective of the acquisition is to further
strengthen the BMW Group's long-term collaboration with a
partner in China, to expand production capacities at the
existing locations in Shenyang and to systematically increase
the local production of further models including New Energy
Vehicles.
Average rate
31.12.2021
31.12.2020
2021
← = Q
Argentina has fulfilled the definition of a hyperinflationary
economy since 1 July 2018. Since that date, IAS 29 (Financial
Reporting in Hyperinflationary Economies) has therefore
been applied for the BMW subsidiary in Argentina. The price
indices published by the Federación Argentina de Consejos
Profesionales de Ciencias Económicas (FACPCE) are used
to adjust non-monetary assets and liabilities and items in
the income statement. The resulting effects are not material
for the BMW Group.
05 Financial reporting rules
a Financial reporting standards applied for the first time in the
financial year 2021:
Standard/Interpretation
Amendments to IFRS 9, IAS 39,
IFRS 7, IFRS 4 and IFRS 16
Interest Rate Benchmark
Reform Phase 2
-
In August 2020, the IASB published the Amendment Stand-
ard Interest Rate Benchmark Reform (IBOR) – Phase 2. The
amendments contain a number of reliefs to mitigate the
impact on the accounting treatment of hedge relationships,
financial instruments and lease liabilities resulting from the
reform of interest rate benchmarks.
The BMW Group is impacted by the reform of interest rate
benchmarks primarily in the area of financial liabilities and
related interest rate hedges. For a significant proportion of
these instruments, the previous benchmark interest rate was
replaced by an alternative interest rate in 2021.
The adoption of the rules contained in the amended Stand-
ard means that the existing hedging relationships can be
continued and the contractual changes arising due to the
interest rate benchmark reform do not therefore have any
direct impact on profit or loss.
Further explanatory comments on the impact of the interest
rate benchmark reform are provided in 7 note 39.
The adoption of other financial reporting Standards or
Revised Standards in the financial year 2021 did not have
any significant impact on the BMW Group Financial State-
ments.
Date of issue by IASB Mandatory application IASB Mandatory application EU
27.08.2020
01.01.2021
01.01.2021
b Financial reporting pronouncements issued by the IASB, but
not yet applied
In May 2017, the IASB published IFRS 17 Insurance Con-
tracts. The Standard replaces IFRS 4 and contains new rules
relating to recognition, measurement, presentation and dis-
closure requirements for insurance contracts. The new rules
are mandatory for financial years beginning on or after 1 Jan-
uary 2023. In a Group-wide project, the BMW Group is cur-
rently examining the impact of adopting IFRS 17 for existing
agreements and, where applicable, the impact on financial
reporting.
Based on current assessments, the application of the new
rules is not expected to have a material impact on the Group
Financial Statements of the BMW Group. Early adoption of
IFRS 17 is not planned.
Similarly, other financial reporting standards issued by the
IASB and not yet applied are not expected to have any sig-
nificant impact on the BMW Group Financial Statements.
06 Accounting policies, assumptions, judgements and
estimations
Revenues from customer contracts include in particular rev-
enues from the sale of products (primarily new and pre-
owned vehicles and related products) as well as revenues
from services. Revenue is recognised when control is trans-
ferred to the dealership or retail customer. In the case of
sales of products, this is usually at the point in time when the
risks and rewards of ownership are transferred. Revenues
are stated net of settlement discount, bonuses and rebates
as well as interest and residual value subsidies. The consid-
eration arising from these sales usually falls due for payment
immediately or within 30 days. In exceptional cases, a longer
payment may also be agreed. In the case of services, control
is transferred over time. Consideration for the rendering of
services to customers usually falls due for payment at the
beginning of a contract and is therefore deferred as a con-
tract liability. The deferred amount is released over the ser-
vice period and recognised as revenue in the income state-
ment. As a rule, amounts are released on the basis of the
expected expense trend, as this best reflects the perfor-
mance of the service. If the sale of products includes a deter-
minable amount for services (multiple-component con-
tracts), the related revenues are deferred and recognised as
income in the same way. Variable consideration compo-
nents, such as bonuses, are measured at the expected
value, and in the case of multi-component contracts, allo-
cated to all performance obligations unless directly attribut-
able to the sale of a vehicle.
Other Information
158
Remuneration Report
Group Financial Statements
Notes to the Group
Financial Statements
2020
1.14
1.23
1.18
1.14
0.84
0.90
0.86
0.89
7.22
8.00
7.63
7.87
85.23
90.54
87.18
82.71
1,351.64
1,329.79
1,353.58
1,345.42
160
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Corporate Governance
When assessing whether an investment gives rise to a con-
trolled entity, an associated company, a joint operation or a
joint venture, the BMW Group considers contractual arrange-
ments and other circumstances, as well as the structure and
legal form of the entity. Discretionary decisions may also be
required. If indications exist of a change in the judgement of
All consolidated subsidiaries have the same year-end as
BMW AG with the exception of BMW India Private Ltd. and
BMW India Financial Services Private Ltd., whose year-ends
are 31 March in accordance with local legal requirements.
Interim financial statements are prepared as at 31 December
for the two companies with divergent reporting dates.
205
82
3,857
-215
- 1,396
5
803
187
-616
-616
3,560
- 1,396
5
803
187
3,159
82
3,241
- 1,646
- 1,646
- 25
- 1,671
1
1
1
38
3,775
38
3,775
583
Other changes *
31 December 2020
* Prior year's figures adjusted.
Accumulated other equity
Note
Subscribed
capital
Capital
reserves
Revenue
reserves
Translation
differences
Marketable
securities
Derivative
financial
instruments
Costs of
hedging
Equity
attributable to
shareholders
of BMW AG
Minority
interest
Total
31
659
2,161
57,667
- 760
29
15
-447
59,324
59,907
Premium arising on capital increase relating to
38
50
Key figures presented in the report have been rounded in
accordance with standard commercial practise. In certain
cases, this may mean that values do not add up exactly to
the stated total and that percentages cannot be derived from
the values shown.
The income statement for the BMW Group and segments is
presented using the cost of sales method.
In order to provide a better insight into the results of opera-
tions, financial position and net assets of the BMW Group,
and going beyond the requirements of IFRS 8 (Operating
Segments), the Group Financial Statements also include an
income statement and a balance sheet for the Automotive,
Motorcycles, Financial Services and Other Entities seg-
ments. The Group Cash Flow Statement is supplemented by
a statement of cash flows for the Automotive and Financial
Services segments. Inter-segment transactions relate pri-
marily to internal sales of products, the provision of funds for
Group companies and the related interest. A description of
the nature of the business and the major operating activities
of the BMW Group's segments is provided in note 45
("Explanatory notes to segment information").
Approval for the publication of the Group Financial State-
ments was granted by the Board of Management on 8 March
2022.
02 Group reporting entity and consolidation principles
The BMW Group Financial Statements include BMW AG and
all material subsidiaries over which BMW AG - either directly
or indirectly exercises control. This also includes 59 struc-
tured entities, consisting of asset-backed financing arrange-
ments and special purpose funds.
-
In relation to fully consolidated companies, the following
changes took place in the Group reporting entity in the finan-
cial year 2021:
Included at
31 December 2020
Germany
Foreign
Total
21
185
206
Included for the first time in 2021
No longer included in 2021
16
16
1
16
17
Included at
31 December 2021
20
185
The Group currency is the euro. All amounts are disclosed in
millions of euros (£ million) unless stated otherwise.
- 31
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (BMW Group Financial
Statements or Group Financial Statements) at 31 December
2021 were drawn up in accordance with International Finan-
cial Reporting Standards (IFRS), as endorsed by the Euro-
pean Union (EU), and the supplementary requirements of
§ 315 e (1) of the German Commercial Code (HGB). The
Group Financial Statements and Combined Management
Report will be submitted electronically to the operator of the
Federal Gazette and are accessible via the website of the
Company Register. Bayerische Motoren Werke Aktienge-
sellschaft (BMW AG), which has its seat in Germany, Munich,
Petuelring 130, is registered in the Commercial Register of
the District Court of Munich under the number HRB 42243.
BMW AG manufactures automobiles and motorcycles in the
premium segment.
ACCOUNTING PRINCIPLES AND POLICIES
-4
15
-11
4
159
660
2,199
59,550
- 2,156
34
868
-264
60,891
629
61,520
157
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
NOTES TO THE GROUP FINANCIAL STATEMENTS
01 Basis of preparation
161
997
1,939
163
220
283
2
3
78
130
104
152
1
1
6,495
6,139
6,341
115
- 1,513
- 1,423
-382
Financial Services
Group (unaudited supplementary information) (unaudited supplementary information)
2021
16,060
2020
5,222
2021
2020
2021
2020
11,805
2,722
3,753
1,725
-3,217
- 1,605
- 1,805
5,974
Automotive
35
-713
-841
433
-76
-563
370
- 1,032
762
422
-43
119
160
-16
191
6
438
- 996
1,355
4,184
99
-470
94
6
- 1,520
- 920
- 1,520
- 920
-1,282
- 1,016
- 1,602
-311
965
4,192
926
46
1
Change in provisions
Change in trade receivables
71,963
52,504
50,589
727
797
73,588
76,466
892
42,169
68,819
12,959
9
-187
-48
Total equity and liabilities
229,527
216,658
10
Current provisions and liabilities
47,666
319
37
10,932
8,644
9,650
7,365
378
378
894
Other liabilities
36
16,744
16,092
34,517
34,830
240
121,318
Change in trade payables
111,225
1,502
CASH FLOW STATEMENT
FOR GROUP AND SEGMENTS
in € million
Profit/loss before tax
Income taxes paid
Interest received¹
← = Q
Other interest and similar income/expenses¹
Other non-cash income and expense items
Result from equity accounted investments
Change in leased products
Change in receivables from sales financing
Changes in working capital
Change in inventories
Depreciation and amortisation of tangible and intangible assets
Other Information
Remuneration Report
Corporate Governance
153,437
147,617
22,943
38,456
105,593
21,797
34,829
105,233
-88,622
- 83,023
- 88,809
- 83,071
-152,215
.148,919
153
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Cash Flow Statement for Group
and Segments
1,394
Trade payables
1,799
1,810
260
521
- 6,389
-3,636
- 6,208
Cash and cash equivalents as at 1 January
1,679
Change in cash and cash equivalents
- 40
Effect of changes in composition of Group on cash and cash equivalents
110
-96
130
- 143
43
37
2,472
302
-158
- 176
- 132
- 199
-1
263
1,328
260
1,327
-271
-925
-16
- 829
- 185
- 91
180
1
-307
-2,629
-217
224,916
-2,438
-2,511
-901
-3,933
74
-275
164,478
424
28
103
28
- 1,277
- 1,671
- 1,277
103
-367
-447
-27
-3,973
-3,745
- 8,254
2,782
1,049
718
1,829
-6,735
-156,657
-219,488
-982
-659
- 171,532
-232,089
- 18
153,823
218,348
-2,508
- 1,526
34
34
Change in other operating assets and liabilities
Cash inflow/outflow from operating activities
- 1,192
15,903
154
BMW Group Report 2021
2,762
To Our Stakeholders
Group Financial Statements
Cash Flow Statement for Group
and Segments
Corporate Governance
Remuneration Report
Other Information
← = Q
CASH FLOW STATEMENT
Combined Management Report
3,259
8,178
12,583
-1,454
-11
-34
- 1,256
1,115
- 1,440
1,122
87
129
754
- 1,425
-26
1,047
- 1,432
13,251
FOR GROUP AND SEGMENTS
39
Automotive
Group (unaudited supplementary information) (unaudited supplementary information)
- 6,150
2021
-6,439
2020
- 5,990
2021
-12
2020
2020
-14
53
43
45
11
8
40
54
- 6,619
2021
Effect of exchange rate on cash and cash equivalents
in € million
Total investment in intangible assets and property, plant and equipment
Proceeds from subsidies for intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investment assets
Proceeds from the disposal of investment assets and other business units²
Investments in marketable securities and investment funds
Proceeds from the sale of marketable securities and investment funds
Cash inflow/outflow from investing activities
Payments into equity
Payment of dividends for the previous year
Intragroup financing and equity transactions
Interest paid¹
Proceeds from issue of non-current financial liabilities
Repayment of non-current financial liabilities
Change in other financial liabilities
Cash inflow/outflow from financing activities
Financial Services
15,418
25,178
24,428
5,952
56,589
Cash and cash equivalents
16,009
13,537
12,009
5,425
9,522
5
3,471
2,863
Current assets
86,173
81,807
9
2
1,146
64
Current tax
27
1,529
606
300
342
Other assets
28
8,941
9,110
35,592
33,747
3
N│I
83
69,770
520
63,133
913
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Balance Sheet for Group and Segments
at 31 December 2021
Corporate Governance
Remuneration Report
152
Other Information
BALANCE SHEET FOR GROUP
AND SEGMENTS AT 31 DECEMBER 2021
Group
Automotive
Motorcycles
Financial Services
← = Q
- 88,855 - 83,264
-152,215 - 148,919
-83,216
-88,668
45,724
46,661
520
58,775
Total assets
229,527 216,658
121,318
111,225
1,394
1,502
153,437
147,617
105,593
392
200
52,625
1,147
54,364
105,233
-187
-48
759
Other Entities
612
4,152
2,649
2,929
38,882
Non-current assets
143,354
134,851
33
51,548
635
589
107,713
100,956
46,818
131
41,860
50,869
48,092
30
2,861
2,057
-18
- 15
Deferred tax
13
2,202
2,459
3,418
3,196
618
550
39
Other assets
28
1,302
1,216
- 1,873
542
-1,418
-46,467
219
94
100
Receivables from sales financing
25
35,705
91
36,252
36,252
Financial assets
26
5,800
5,108
4,925
35,705
1,979
2,076
2,298
-63,360
- 65,655
Inventories
29
15,928
14,896
14,868
13,391
656
687
404
818
Trade receivables
30
2,261
-42,316
Eliminations
(unaudited supplementary (unaudited supplementary (unaudited supplementary (unaudited supplementary (unaudited supplementary
information)
information)
information)
information)
6,739
7,270
524
522
40,003
42,506
5,095
475
77,929
83,175
18,518
19,519
667
705
Non-current provisions and liabilities
5,676
36
Other liabilities
1,515
697
3,426
2,812
88
Financial liabilities
35
62,342
67,390
2,247
2,087
2
18,909
17,730
41,202
62,525
509
63,243
78
47,588
1,011
49,015
921
747
700
537
140
192
34
81
Financial liabilities
35
41,121
38,986
1,462
897
18
Current tax
46
4
-3,571
-18
-42,065
-45,654
- 3,078
-15
- 46,214
- 49,307
Other provisions
33
6,748
7,494
6,175
6,960
109
100
460
388
41,873
1,458
13
Deferred tax
660
Capital reserves
31
2,325
2,199
Revenue reserves
661
31
59,550
Accumulated other equity
31
-325
- 1,518
Equity attributable to shareholders of BMW AG
71,705
31
Subscribed capital
EQUITY AND LIABILITIES
information)
in € million
Note
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
31
74,366
60,891
Minority interest
49
108
21,389
338
-17,752
- 16,541
Other provisions
33
7,206
6,488
6,944
6,268
110
74
152
146
35
- 1,545
109
3,197
766
629
Equity
75,132
61,520
50,296
41,117
17,324
15,555
25,264
Pension provisions
32
1,247
3,693
1,073
31
2,200
Group Financial Statements Corporate Governance
Notes to the Group
Financial Statements
Group Financial Statements
Notes to the Group
Financial Statements
Revenues from the sale of products, for which repurchase
arrangements are in place, are not recognised immediately
in full. Instead, revenues are either recognised proportion-
ately or the difference between the sales and repurchase
price is recognised in instalments over the term of the con-
tract depending on the nature of the agreement. In the case
of vehicles sold to a dealership that are expected to be repur-
chased in a subsequent period as part of leasing operations,
revenues are not recognised at Group level at the time of the
sale of the vehicle. Instead, assets and liabilities relating to
the right of return vehicles are recognised.
Revenues from leases of own-manufactured vehicles are
recognised at Group level in accordance with the require-
ments for manufacturer or dealer leases. In the case of oper-
ating leases, revenues from lease payments are recognised
on a straight-line basis over the lease term.
Finance leases, on the other hand, are accounted for as a
sale. At the lease commencement date, revenues are recog-
nised at the amount of the fair value of the leased asset and
reduced by any unguaranteed residual value of vehicles that
are expected to be returned to the Group at the end of the
lease term. In addition, initial direct costs are recognised as
cost of sales at the lease commencement date.
Revenues also include interest income from financial ser-
vices. Interest income arising on finance leases as well as on
retail customer and dealership financing is recognised using
the effective interest method and reported as interest income
on credit financing within revenues.
Public sector grants are not recognised until there is rea-
sonable assurance that the conditions attaching to them
have been complied with and the grants will be received. The
resulting income is recognised in cost of sales over the peri-
ods in which the costs occur that they are intended to com-
pensate.
Earnings per share are calculated as follows: Basic earn-
ings per share are calculated for common and preferred
stock by dividing the net profit for the year after minority
interests and attributable to each category of stock, by the
average number of outstanding shares. Net profit for the
year is accordingly allocated to the different categories of
stock. The portion of the net profit that is not being distrib-
uted is allocated to each category of stock based on the
number of outstanding shares. Profits available for distribu-
tion are determined directly on the basis of the dividend pro-
posals or resolutions for common and preferred stock.
Diluted earnings per share are calculated and separately
disclosed in accordance with IAS 33.
Intangible assets are measured on initial recognition at
acquisition or manufacturing cost. Subsequently, intangible
assets with finite useful lives are amortised on a straight-line
basis over their useful lives of between three and 20 years.
Impairment losses are recognised where necessary. Intangi-
ble assets with indefinite useful lives are tested annually for
impairment. Internally generated intangible assets mainly
comprise development costs for vehicle, module and archi-
tecture projects.
Development costs are capitalised if all of the criteria spec-
ified by IAS 38 are met. They are measured on the basis of
direct costs and directly attributable overhead costs. Pro-
ject-related capitalised development costs are amortised on
a straight-line basis following the start of production over the
estimated product life (usually five to twelve years).
← = Q
Goodwill arises when the cost of acquiring a business
exceeds the Group's share of the net fair value of the assets,
liabilities and contingent liabilities identified during the
acquisition.
carbon or other climate-damaging emissions (for example
in conjunction with the EU Emissions Trading System or
vehicle-related emissions regulations in the USA or China).
These allowances and rights are carried at cost and, in the
event that they are allocated free of charge, recorded at a
value of zero. Amounts are derecognised at the date of the
return, sale or expiry of the allowances or rights. In parallel to
the recognition of these allowances and rights as assets,
provisions are recognised in accordance with IAS 37 corre-
sponding to the amount of obligations expected to arise in
conjunction with the related emission regulations. Provisions
are measured on the basis of the expected value of the
allowances or rights that are to be returned.
If there is any indication of impairment of intangible assets,
or if an annual impairment test is required (i. e. intangible
assets with an indefinite useful life, intangible assets during
the development phase and goodwill), an impairment test is
performed. Each individual asset is tested separately unless
the cash flows generated by the asset are not sufficiently
independent from the cash flows generated by other assets
or other groups of assets. In these cases, impairment is
tested at the level of a cash-generating unit, which is the
norm for the BMW Group.
For the purpose of the impairment test, the carrying amount
of an asset (or a cash-generating unit) is compared with the
recoverable amount. The first step of the impairment test is
to determine the value in use. If the value in use is lower than
the carrying amount, the next step is to determine the fair
value less costs to sell and compare the amount so deter-
mined with the asset's carrying amount. If the fair value is
lower than the carrying amount, an impairment loss is rec-
ognised, reducing the carrying amount to the higher of the
asset's value in use or fair value less costs to sell.
If the reason for a previously recognised impairment loss no
longer exists, the impairment loss is reversed up to the level
162
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Intangible assets also include emission allowances and
similar rights arising from programmes aimed at reducing
Corporate Governance
Other Information
Group Financial Statements Corporate Governance
Notes to the Group
Financial Statements
85,408
89,253
1,345
1,401
2,971
2,192
1,411
1,591
Remuneration Report
Expenses for service contracts,
telematics and roadside assistance
Warranty expenditure
Other cost of sales
Cost of sales
6,299
1,960
1,643
to financial services business
Research and development expenses
161
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
5,689
Cost of sales is reduced by public-sector subsidies in the
form of reduced taxes on assets and reduced consump-
tion-based taxes amounting to € 118 million (2020:
€ 105 million).
Remuneration Report
← = Q
-
163
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
The cost of internally constructed plant and equipment com-
prises all costs which are directly attributable to the manu-
facturing process as well as an appropriate proportion of
production-related overheads. This includes production-re-
lated depreciation and amortisation as well as an appropri-
ate proportion of administrative and social costs. Financing
costs are not included in acquisition or manufacturing cost
unless they are directly attributable to the asset. The carry-
ing amount of items of depreciable property, plant and
equipment is written down according to scheduled usage-
based depreciation as a general rule on a straight-line
basis over the useful lives of the assets. Depreciation is
recorded as an expense in the income statement.
Other Information
The following useful lives are applied throughout the
BMW Group:
in years
Factory and office buildings, residential buildings, fixed
installations in buildings and outside facilities
Plant and machinery
Other facilities, factory and office equipment
8 to 50
3 to 21
2 to 25
The useful life of the plant and equipment is reviewed regu-
larly and extended or shortened as necessary, based on the
assumptions used for long-term corporate planning pur-
poses and product-related decisions, as described above.
For machinery used in multiple-shift operations, deprecia-
tion rates are increased to account for the additional utilisa-
tion. If there is any indication of impairment of property, plant
and equipment, an impairment test is performed as
described above for intangible assets.
← = Q
Other Information
All items of property, plant and equipment are measured at
acquisition or manufacturing cost less accumulated depreci-
ation and accumulated impairment losses.
13.2
Financial Statements
of the recoverable amount, but no higher than the amortised
acquisition or manufacturing cost. Impairment losses on
goodwill are not reversed.
-
As part of the process of assessing recoverability, it is gener-
ally necessary to apply estimations and assumptions in
particular regarding future cash inflows and outflows and the
length of the forecast period - which could differ from actual
amounts. Actual amounts may differ from the assumptions
and estimations used if business conditions develop differ-
ently to expectations.
The BMW Group determines the value in use on the basis of
a present value computation. Cash flows used for this calcu-
lation are derived from long-term forecasts approved by
management. These long-term forecasts are based on
detailed forecasts drawn up at an operational level, covering
a planning period of six years. For the purposes of calculat-
ing cash flows beyond the planning period, a perpetual
annuity return is assumed which does not take growth into
account. Forecasting assumptions are continually adjusted
to current information and regularly compared with external
sources. The assumptions used take account in particular of
expectations of the profitability of the product portfolio,
future market share development, macroeconomic develop-
ments (such as currency, interest rate and raw materials
prices) as well as the legal environment and past experi-
ence. Assumptions also take into account the impact of cli-
mate change and the influence of other sustainability factors
on business performance and the product portfolio, for
example as a result of changes in demand patterns, regula-
tory requirements or changes in production conditions.
Amounts are discounted on the basis of a market-related
cost of capital rate. Impairment tests are performed for
accounting and financial reporting purposes for the Automo-
tive and Motorcycles cash-generating units using a risk-ad-
justed pre-tax cost of capital (WACC). In the case of the
Financial Services cash-generating unit, a pre-tax cost of
equity capital is used, as is customary in the sector. The fol-
lowing discount factors were applied:
in %
The risk-adjusted discount rate, calculated using a CAPM
model, also takes into account specific peer-group informa-
tion relating to beta-factors, capital structure data and bor-
rowing costs. In conjunction with the impairment tests for
cash-generating units, sensitivity analyses are performed for
the main assumptions in order to rule out that possible
changes to the assumptions used to determine the recover-
able amount would result in the requirement to recognise an
impairment loss. Even in the case of a 10% deterioration in
the individual measurement assumptions, the need to rec-
ognise an impairment loss did not arise.
Automotive
Financial Services
2021
2020
10.1
10.2
10.1
10.2
13.0
Motorcycles
Impairment losses recognised in the income statement 2021
in connection with receivables from sales financing
amounted to € 103 million (2020: € 646 million). In view of
the fact that the impairment losses are of minor importance
170
BMW Group Report 2021
5,324
Selling expenses
-98
Loss on the disposal of assets
2020
2021
in € million
-7
5,300
Expense for impairment losses and
write-downs
-474
Expense for additions to provisions
- 286
-204
Exchange losses
916
1,702
Other operating income
- 157
Selling and administrative expenses relate mainly to expenses
for marketing and communication, personnel and IT.
Sundry operating expenses
Administrative expenses
In the opinion of the EU Commission, the carmakers con-
cerned within the framework of what was actually legiti-
mate technical cooperation in the development of SCR tech-
nology (SCR: selective catalytic reduction) created an
undue degree of transparency with regard to the sizes of
their AdBlue tanks, the range that can be achieved with a full
tank and the assumed average AdBlue consumption,
thereby violating EU competition law. The amount of the pro-
vision exceeding the fine was reversed with income state-
ment effect in the year under report. The fine was paid in July
2021, thereby concluding the EU Commission's proceedings.
-
In 2019, a provision of approximately € 1.4 billion was recog-
nised in connection with EU Commission anti-trust proceed-
ings which resulted in an increase in other operating
expenses in the financial year 2019 (see also note 10 to the
BMW Group Financial Statements for the financial year
2019). In this antitrust investigation, the EU Commission had
alleged that five German car manufacturers colluded with
the aim of restricting competition for innovation with regards
to certain exhaust treatment systems for petrol- and die-
sel-driven passenger vehicles. The investigation was solely
concerned with possible infringements of competition law.
There were no allegations that the BMW Group conducted a
deliberate and unlawful manipulation of the emissions con-
trol system. On the basis of BMW AG's detailed submissions,
the EU Commission dropped most of its charges. The pro-
ceedings were settled on 8 July 2021, and a fine amounting
to approximately € 373 million was issued.
The expense for additions to provisions includes litigation
and other legal risks. Income from the reversal of provisions
includes income arising on the reassessment of risks from
legal disputes.
Impairment losses recognised on receivables from contracts
with customers amounted to € 7 million (2020: € 47 million).
Income from the reversal of and expenses for the recognition
of impairment allowances and write-downs relate mainly to
impairment allowances on receivables.
8,795
9,233
-272
expenses
647
Other operating income and expenses
Total selling and administrative
-47
- 117
- 266
- 873
-1,055
Other operating expenses
3,495
3,909
43
09 Selling and administrative expenses
282
285
326
232
Exchange gains
2020
2021
in € million
2020
2021
Research and development expenditure
in € million
Research and development expenses are as follows:
compared to total Group cost of sales, they have not been
disclosed separately in the income statement.
← = Q
Other Information
Remuneration Report
Corporate Governance
Combined Management Report
To Our Stakeholders
10 Other operating income and expenses
Other operating income and expenses comprise the follow-
ing items:
6,870
6,279
Income from the reversal of provisions
Sundry operating income
5,689
6,299
Research and development expenses
30
13
Gains on the disposal of assets
1,710
1,935
Amortisation
164
10
Income from the reversal of impairment
losses and write-downs
-2,300
-2,506
ment costs
New expenditure for capitalised develop-
114
1,162
In the case of leased items of property, plant and equip-
ment, a right-of-use asset and a liability for the outstanding
lease payments are recognised with effect from the date on
which the leased asset becomes available for use by the
BMW Group. The cost of the right-of-use asset is the sum of
the amount at which lease liability is initially measured, any
lease payments made at or before the lease commence-
ment date, any initial direct costs incurred by the lessee and
the estimated costs of dismantling, removing or restoring the
leased asset. Lease incentives granted by the lessor are
deducted. Right-of-use assets are depreciated on a straight-
line basis over the shorter of the useful life of the leased
asset and the expected lease term. If ownership of the
leased asset is automatically transferred at the end of the
lease term or the exercise of a purchase option is reflected in
the lease payments, the right-of-use asset is depreciated on
a straight-line basis over the expected useful life of the
leased asset. Right-of-use assets are reported in the bal-
ance sheet within the relevant line items for property, plant
and equipment. The depreciation expense on right-of-use
assets is reported in the income statement in cost of sales
as well as in selling and administrative expenses.
Group Financial Statements
Notes to the Group
The lease payments to be taken into account to measure the
right-of-use asset and the lease liability comprise fixed pay-
ments, variable lease payments that depend on an index or
an interest rate as well as amounts expected to be payable
under residual value guarantees. If it is reasonably certain
that a purchase or lease extension option will be exercised,
the relevant payments are also included. Payments for peri-
ods for which the lessee has an option to terminate a lease
unilaterally are only included in the lease payments if it is
reasonably certain that the termination option will not be
exercised. For the purposes of assessing options, the
BMW Group takes account of all facts and circumstances
that create an economic incentive to exercise or not to exer-
cise the option.
Inventories of raw materials, supplies and goods for resale
are stated at the lower of average acquisition cost and net
realisable value.
As a general rule, each income tax treatment is considered
independently when accounting for uncertainties in income
taxes. If it is not considered probable that an income tax
treatment will be accepted by the local tax authorities, the
BMW Group uses the most likely amount of the tax treatment
when determining taxable profit and the tax base.
Current income taxes are calculated within the BMW Group
on the basis of tax legislation applicable in the relevant coun-
tries. To the extent that judgement was necessary to deter-
mine the treatment and amount of tax items presented in the
financial statements, there is in principle a possibility that
local tax authorities may take a different position.
Deferred tax liabilities on taxable temporary differences aris-
ing from investments in subsidiaries, branches and associ-
ated companies as well as interests in joint arrangements are
not recognised if the Group is able to control the timing of the
reversal and it is probable that the temporary difference will
not reverse in the foreseeable future. This is particularly the
case if it is intended that profits will not be distributed, but
rather will be used to maintain the substance and expand the
volume of business of the entities concerned.
These assumptions take account of forecast operating results,
future legislative changes in connection with climate change
and the impact on earnings of the reversal of taxable tempo-
rary differences. Since future business developments cannot
be predicted with certainty and to some extent cannot be
influenced by the BMW Group, the measurement of deferred
tax assets is subject to uncertainty.
The recoverability of deferred tax assets is assessed at each
balance sheet date on the basis of planned taxable income in
future financial years. If with a probability of more than 50 per-
cent future tax benefits will not be realised, either in part or in
total, a valuation allowance is recognised on the deferred tax
assets. The calculation of deferred tax assets requires assump-
tions to be made with regard to the level of future taxable
income and the timing of recovery of deferred tax assets.
Deferred income taxes are recognised for all temporary differ-
ences between the tax and accounting bases of assets and
liabilities, including differences arising on consolidation proce-
dures, as well as on unused tax losses and unused tax credits,
when it is probable that they can be utilised. Deferred tax assets
and liabilities are measured at the tax rates that are expected to
apply to the period when the asset is realised or the liability
settled, based on tax rates and tax laws that have been enacted
or substantively enacted at the balance sheet date.
Ineffectiveness arising on cash flow hedges is recognised
directly in cost of sales, whereas the impact of prematurely ter-
minated hedging relationships is recognised in other operating
income and expenses.
Work in progress and finished goods are stated at the lower
of manufacturing cost and net realisable value. Manufactur-
ing cost comprises all costs which are directly attributable to
the manufacturing process as well as an appropriate propor-
tion of production-related overheads. This includes produc-
tion-related depreciation and amortisation and an appropri-
ate proportion of administrative and social costs. Financing
costs are not included in the acquisition or manufacturing
cost of inventories.
hedging relationship. Changes in the fair value of this compo-
nent are recorded as costs of hedging on a separate line
within accumulated other equity. Amounts recorded in accu-
mulated other equity are included in the carrying amount of
inventories on initial recognition.
Other Information
Remuneration Report
Group Financial Statements Corporate Governance
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
166
In the case of raw materials hedges that are accounted for as
cash flow hedges, the hedging instruments are designated in
full as part of the hedging relationship. As an exception to this
general rule, the interest component of raw materials deriva-
tive instruments redesignated in conjunction with the first-
time application IFRS 9 was not designated as part of the
← = Q
The time values of option transactions and the interest com-
ponent including the currency basis of forward currency
contracts are not designated as part of the hedging relation-
ship in the case of currency hedges accounted for as cash
flow hedges. Changes in the fair value of such components
are recorded as costs of hedging on a separate line within
accumulated other equity. Amounts recorded in accumulated
other equity from currency hedges are reclassified to cost of
sales when the related hedged item is recognised in profit or
loss.
Inventories also include vehicles held for sale in the financial
services business, measured at their amortised cost or lower
net realisable value.
Financial liabilities, with the exception of lease liabilities,
are measured on first-time recognition at their fair value. For
these purposes, transaction costs are taken into account
except in the case of financial liabilities allocated to the cat-
egory "measured at fair value through profit or loss". Subse-
quent to initial recognition, liabilities are - with the exception
of derivative financial instruments - measured at amortised
cost using the effective interest method.
Similarly, gains and losses arising on the settlement of a
defined benefit plan are recognised immediately in the
income statement.
Past service cost arises where a BMW Group company intro-
duces a defined benefit plan or changes the benefits paya-
ble under an existing plan. This cost is recognised immedi-
ately in the income statement.
All other costs relating to allocations to pension provisions
are allocated to costs by function in the income statement.
Net interest expense on the net defined benefit liability or
net interest income on the net defined benefit assets are
presented separately within the financial result.
In the financial year 2021, as part of a modernisation of the
pension plan model in Germany, the previous pension enti-
tlement trend (Festbetragstrend) was converted - with the
exception of one remaining component – into a career trend.
The calculation of the amount of the provision requires
assumptions to be made with regard to discount rates, pen-
sion trends, employee fluctuation and the life expectancy of
employees, among other things. Discount rates are deter-
mined by reference to market yields at the end of the report-
ing period on high quality fixed-interest corporate bonds.
← = Q
Other Information
Cash and cash equivalents comprise mainly cash on hand
and cash at bank with an original term of up to three months.
With the exception of money market funds, cash and cash
equivalents are measured at amortised cost.
Remuneration Report
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
167
In the event that the BMW Group has a right of reimburse-
ment or a right to reduce future contributions, it reports an
asset (within Other financial assets), measured on the basis
of the present value of the future economic benefits attached
to the plan assets. For funded plans, in cases where the obli-
gation exceeds plan assets, a liability is recognised under
pension provisions.
In the case of funded plans, the pension obligation is offset
against plan assets measured at their fair value. If the plan
assets exceed the pension obligation, the surplus is tested
for recoverability.
Provisions for pensions are measured using the projected
unit credit method. Under this method, not only obligations
relating to known vested benefits at the reporting date are
recognised, but also the effect of future expected increases
in pensions and salaries. The calculation is based on inde-
pendent actuarial valuations which take into account the rel-
evant biometric factors.
Corporate Governance
-
The lease liability is measured on initial recognition at the
present value of the future lease payments. Subsequent to
initial recognition, the carrying amount of the lease liability is
increased to reflect interest on the lease liability and reduced,
without income statement impact, by the lease payments
made. Lease liabilities are reported within financial liabili-
ties, while interest expense is reported as part of net interest
result. In the cash flow statement, both the repayment por-
tion and the interest portion of lease payments are shown as
cash outflows from financing activities.
Fair value hedge ineffectiveness is generally recognised in
other financial result.
-
The BMW Group applies the simplified approach described
in IFRS 9 to operating lease and trade receivables, whereby
the amount of the loss allowance is measured subsequent to
the initial recognition of the receivable on the basis of life-
time expected credit losses (stage 2 – simplified approach).
For the purposes of allocating at item to stage 2, it is irrele-
vant whether the credit risk of the assets concerned has
increased significantly since initial recognition.
general approach). The measurement of the change in
default risk is based on a comparison of the default risk at
the date of initial recognition and at the end of the reporting
period. The default risk at the end of each reporting period is
determined on the basis of credit checks, current key perfor-
mance indicators and any overdue payments.
With the exception of receivables from operating leases and
trade receivables, the BMW Group applies the general
approach described in IFRS 9 to determine impairment of
financial assets. Under the general approach, loss allow-
ances are measured on initial recognition on the basis of the
expected 12-month credit loss (stage 1). If the credit loss risk
at the end of the reporting period has increased significantly
since initial recognition, the impairment allowance is meas-
ured on the basis of lifetime expected credit losses (stage 2
investment in the lease. This balance sheet line item also
includes operating lease receivables due at the end of the
reporting period, while the related vehicles are reported as
leased products.
Receivables from sales financing also include finance lease
receivables which are measured at the amount of the net
Receivables from sales financing are measured as a gen-
eral rule at amortised cost using the effective interest rate
method.
Items reported under other investments within the scope of
IFRS 9 are measured at fair value through profit or loss.
Investments in subsidiaries, joint arrangements and associ-
ated companies that are not material to the BMW Group are
also included in other investments.
As a general rule, the BMW Group assumes that a receivable
is in default if it is more than 90 days overdue or if there are
objective indications of insolvency, such as the opening of
insolvency proceedings. Credit-impaired assets are identi-
fied as such on the basis of this definition of default. In the
case of credit-impaired assets which had not been credit-im-
paired at the time they were acquired or originated, an
impairment allowance is recognised at an amount equal to
lifetime expected credit losses (stage 3). This is the case
The market values of financial instruments measured at fair
value are determined on the basis of market information
available at the balance sheet date, such as quoted prices or
using appropriate measurement methods, in particular the
discounted cash flow method.
Depending on the business model and the structure of con-
tractual cash flows, financial assets are classified as meas-
ured at amortised cost, at fair value through comprehensive
income or at fair value through profit or loss. The category
"measured at fair value through comprehensive income" at
the BMW Group comprises mainly marketable securities and
investment funds used for liquidity management purposes.
Selected marketable securities and investment funds, money
market funds within cash and cash equivalents as well as
convertible bonds are recognised at fair value through profit
or loss, as their contractual cash flows do not solely repre-
sent payments of principal and interest.
non-derivative financial assets, initial recognition takes
place at the settlement date.
With the exception of lease receivables, financial assets are
measured on initial recognition at their fair value. Financial
assets include in particular other investments, receivables
from sales financing, marketable securities and investment
funds, derivative financial assets, trade receivables and cash
and cash equivalents. As a general rule, initial recognition
takes place as soon as the BMW Group becomes a party to
a contract; in the case of standard purchases or sales of
Investments accounted for using the equity method are
measured provided no impairment has been recognised -
at cost of investment adjusted for the Group's share of earn-
ings and changes in equity capital. If there is any indication
that an investment is impaired, an impairment test is per-
formed on the basis of the discounted cash flow method. An
indicator exists, for example, in the event of a serious short-
fall compared to budget, the loss of an active market or if
funds are required to avoid insolvency.
Assumptions and estimations are required regarding future
residual values, since these represent a significant part of
future cash inflows. Relevant factors to be considered include
the trend in market prices and demand on the pre-owned
automobile market. The expected change in the drive-sys-
tem mix going forward, which is subject to continuous anal-
ysis, is also taken into account. The BMW Group has devel-
oped and implemented methods and processes that enable
the sustainability aspects of residual value risks, particularly
climate-related factors, to be appropriately assessed and
managed. Potential regulatory changes are also taken into
account. For example, upward or downward adjustments
can be made to residual values on the basis of a range of
scenario analyses. The assumptions are based on internally
available historical data and current market data as well as
on forecasts of external institutions. Furthermore, assump-
tions are regularly validated by comparison with external
data. Certain types of contracts require a high degree of
judgement when deciding whether they give rise to operat-
ing leases or finance receivables.
← = Q
Other Information
Remuneration Report
The BMW Group does not make use of the option to meas-
ure equity instruments at fair value through other compre-
hensive income or debt instruments at fair value through
profit or loss.
165
BMW Group Report 2021
To Our Stakeholders
In addition, for selected fixed-interest assets, a portion of the
interest rate risk is hedged on a portfolio basis in accordance
with IAS 39. The designated hedged items (underlying
transactions) are reported in the balance sheet as receiva-
bles from sales financing or financial liabilities. Interest rate
risks are hedged on the basis of the present value of net
cash flows relating to fixed-income assets (on the asset
side) less cash flows relating to variable-rate financing (on
the liabilities side). The net cash flow determined in this way
is hedged by purchasing corresponding interest rate swaps
that have the effect of reducing the interest rate risk. Hedge
relationships are terminated and redesignated on a monthly
basis at the end of each reporting period, thereby taking
account of the constantly changing content of each portfolio.
accumulated other equity. Amounts accumulated in equity
are reclassified to other financial result within the income
statement over the term of the hedging relationship.
Fair value hedges are mainly used to hedge interest rate
risks relating to financial liabilities. The currency basis is not
designated as part of the hedging relationship in the case of
cross currency interest rate hedges accounted for as fair
value hedges. Accordingly, changes in the market value of
such components are recorded as costs of hedging within
Where hedge accounting is applied, changes in fair value of
derivative financial instruments are presented as part of
other financial result in the income statement or within other
comprehensive income as a component of accumulated
other equity, depending on whether the hedging relationship
is classified as a fair value hedge or a cash flow hedge.
The BMW Group applies the option to recognise the credit
risks arising from the fair values of a group of derivative
financial assets and liabilities on the basis of their total net
amount. Portfolio-based valuation adjustments (credit valu-
ation adjustments and debit valuation adjustments) to the
individual derivative financial assets and financial liabilities
are allocated using the relative fair value approach (net
method).
Fair values are determined on the basis of valuation models.
Observable market price, tenor and currency basis spreads
are taken into account in the measurement of derivative
financial instruments. Furthermore, the Group's own credit
risk and that of counterparties is taken into account on the
basis of credit default swap values for market contracts with
matching terms.
Derivative financial instruments are used within the
BMW Group for hedging purposes in order to reduce cur-
rency, interest rate, fair value and market price risks. Deriva-
tive financial instruments are recognised as of the trade
date, measured at their fair value. Depending on their market
value at measurement date, these financial instruments are
reported in the balance sheet as financial assets or financial
liabilities.
Input factors available on the market, such as ratings and
probabilities of default, are used to calculate valuation allow-
ances for cash and cash equivalents, financial receivables,
receivables from subsidiaries and receivables from compa-
nies in which an investment is held. In the case of marketa-
ble securities and investment funds, the BMW Group usually
applies the option not to allocate financial assets with a low
default risk to different stages. Accordingly, assets with an
investment grade rating are always allocated to stage 1.
Loss allowances on trade receivables are determined pri-
marily on the basis of information relating to overdue
amounts. Furthermore, both positive and negative economic
scenarios are used alongside the latest forecasts of key per-
formance indicators when determining the level of valuation
allowances. These scenarios are based on local analyses
and take into account, for example, anticipated political and
economic developments as well as sustainability risks in the
markets concerned.
Forward-looking information (for instance forecasts of key
performance indicators) is also taken into account if, based
on past experience, such indicators show a substantive cor-
relation to actual credit losses.
Loss allowances relating to the balance sheet item "Receiv-
ables from sales financing" are determined primarily on the
basis of past experience with credit losses, current data on
overdue receivables, rating classes and scoring information.
The BMW Group derecognises financial assets when it has
no reasonable expectation of recovery. This may be the case,
for instance, if the debtor is deemed not to have sufficient
assets or other sources of income to service the debt.
regardless of whether the general or simplified approach is
applied. In the case of stage 3 assets, interest income is cal-
culated on the asset's carrying amount less any impairment
loss.
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
Remeasurement of the net liability can result from changes
in the present value of the defined benefit obligation, the fair
value of the plan assets or the asset ceiling. Remeasure-
ment can result, amongst others, from changes in financial
and demographic parameters, as well as changes following
the portfolio development. Remeasurements are recognised
immediately through other comprehensive income and ulti-
mately in equity (within revenue reserves).
Other provisions are recognised when the BMW Group has
a present legal or factual obligation towards a third party
arising from past events, the settlement of which is proba-
ble, and when the amount of the obligation can be reliably
estimated. Provisions with a remaining period of more than
one year are measured at their net present value.
-
Provisions for statutory and non-statutory warranties are
recognised at the point in time when control over the goods
is transferred to the dealership or retail customer or when it
is decided to introduce new warranty measures. With respect
to the level of the provision, estimations are made in particu-
lar based on past experience of damage claims and pro-
cesses. Future potential repair costs and price increases per
product and market are also taken into account. Provisions
for warranties for all companies of the BMW Group are
adjusted regularly to take account of new information, with
the impact of any changes recognised in the income state-
ment. Further information is provided in 7 note 33. Similar esti-
mates are also made in conjunction with the measurement
of expected reimbursement claims.
08 Cost of sales
Cost of sales comprises:
Interest income on loan financing and finance leases
includes interest calculated on the basis of the effective
interest method totalling € 3,379 million (2020: € 3,424 mil-
lion). This interest income is not reported separately in the
income statement as it is not significant compared to total
Group revenues.
The services included in vehicle sale contracts that will be
recognised as revenues in subsequent years represent only
an insignificant portion of expected revenues. Accordingly,
use has been made of the practical expedient contained in
IFRS 15, permitting an entity not to disclose information on a
quantitative basis due to the short-term nature of items and
the lack of informational value of such disclosures.
The major part of revenues expected to arise from the
Group's order book at the end of the reporting period relates
to the sale of vehicles. Revenues resulting from those sales
will be recognised in the next financial year.
Sundry other income relates mainly to the Automotive seg-
ment and the Financial Services segment.
from lease instalments and interest income on loan financ-
ing and finance leases are allocated to the Financial Ser-
vices segment.
Revenues from the sale of products and related goods are
generated primarily in the Automotive segment and, to a
lesser extent, in the Motorcycles segment. Revenues from
the sales of products previously leased to customers, income
An analysis of revenues by segment is shown in the explan-
atory comments on segment information provided in 7 note 45.
in € million
Revenues recognised from contracts with customers in
accordance with IFRS 15 totalled € 95,795 million (2020:
€ 83,814 million).
111,239
Revenues
2,424
Other income
2,766
telematics and roadside assistance
Revenues from service contracts,
3,677
2,763
2,335
98,990
2021
2020
Manufacturing costs
The measurement of provisions for statutory and non-stat-
utory warranty obligations (statutory, contractual and
voluntary) involves estimations. In addition to manufacturer
warranties prescribed by law, the BMW Group offers various
further standard (assurance-type) warranties depending on
the product and sales market. No provisions are recognised
for additionally offered service packages that are treated as
separate performance obligations.
IFRS 16 requires that lease payments are discounted as a
general rule using the interest rate implicit in the lease. How-
ever, since the interest rate in leases entered into by the
BMW Group cannot readily be determined, amounts are dis-
counted on the basis of the incremental borrowing rate,
comprising the risk-free interest rate in the relevant currency
for matching maturities plus a premium for the credit risk.
Specific risks attached to an asset are generally not taken
into account, given that collateral received in the context of
alternative financing arrangements is not relevant within the
BMW Group.
-
Determining which items are to be counted as lease pay-
ments including the issue of the lease term underlying
those payments and which discount rate to apply involves
using estimates and assumptions that may differ from actual
outcomes.
-
As lessee, the BMW Group makes use of the application
exemptions available for short-term leases and leases of
low-value assets.
The BMW Group has not applied the exemptions available to
lessees to account for COVID-19-related rent concessions
(amendments to IFRS 16 dated 28 May 2020 and 31 March
2021).
Group products recognised by BMW Group entities as
leased products under operating leases are measured at
manufacturing cost and all other leased products at acquisi-
tion cost, in each case including initial direct costs. All leased
products are depreciated over the period of the lease using
the straight-line method down to their expected residual
value.
Where the recoverable amount of a lease exceeds the
asset's carrying amount, changes in residual value expecta-
tions are recognised by adjusting scheduled depreciation
prospectively over the remaining term of the lease. If the
recoverable amount is lower than the asset's carrying
amount, an impairment loss is recognised for the shortfall. A
test is carried out at each balance sheet date to determine
whether an impairment loss recognised in prior years no
longer exists or has decreased. In such cases, the carrying
amount of the asset is increased to the recoverable amount,
at a maximum up to the amount of the asset's amortised
cost.
164
BMW Group Report 2021
To Our Stakeholders
thereof: interest expense relating
27,114
26,409
Cost of sales relating to financial
services business
46,878
51,361
3,701
and finance leases
Combined Management Report
11,345
11,322
169
The share-based remuneration programme for Board of
Management members and senior heads of department
entitles BMW AG to elect whether to settle its commitments
in cash or with shares of BMW AG common stock. Based on
the decision to settle in cash, the share-based remuneration
programmes for Board of Management members and senior
heads of department are accounted for as cash-settled,
share-based remuneration programmes. Further informa-
tion on share-based remuneration programmes is provided
in 7 note 41.
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
To Our Stakeholders
BMW Group Report 2021
BMW Group Report 2021
Share-based remuneration programmes expected to be set-
tled in cash are revalued to their fair value at each balance
sheet date between the grant date and the settlement date
and on the settlement date itself. The expense is recognised
as personnel expense in the income statement over the
vesting period and presented in the balance sheet as a pro-
vision.
Share-based remuneration programmes which are
expected to be settled in shares are measured at their fair
value at grant date. The related expense is recognised as
personnel expense in the income statement over the vesting
period and offset against capital reserves.
In the case of the BMW Group, this also applies to members
of the Board of Management and the Supervisory Board.
Details relating to these individuals and entities are pro-
vided in note 40 and in the list of investments disclosed in
7 note 46.
Related party disclosures comprise information on associ-
ated companies, joint ventures and non-consolidated sub-
sidiaries as well as individuals which have the ability to exer-
cise a controlling or significant influence over the financial
and operating policies of the BMW Group. This includes all
persons in key positions of the Company, as well as close
members of their families or intermediary entities.
If the recognition criteria relevant for provisions are not ful-
filled and the outflow of resources on fulfilment is not unlikely,
the potential obligation is disclosed as a contingent liability.
on assessments undertaken both by management and
external experts, such as lawyers. If new developments arise
in the future that result in a different assessment, provisions
are adjusted accordingly.
The recognition and measurements of provisions for litiga-
tion and liability risks necessitates making assumptions in
order to determine the probability of liability, the amount of
claim and the duration of the legal dispute. The assumptions
made, especially the assumption about the outcome of legal
proceedings, are subject to a high degree of uncertainty. The
appropriateness of assumptions is regularly reviewed, based
Interest income on loan financing
168
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
11,526
Combined Management Report
Income from lease instalments
13,780
to customers
Sales of products previously leased
77,042
Sales of products and related goods
2021
2020
67,548
Other Information
Revenues by activity comprise the following:
07 Revenues
Financial Statements
NOTES TO THE INCOME STATEMENT
← = Q
in € million
Remuneration Report
Corporate Governance
379
5
5
385
- 1
543
380
384
Other intangible assets
183
-52
271
2
545
1,751
1,169
-16
2
Goodwill
2,075
5,969 11,007 10,443
Analysis of changes in Group tangible, intangible and investment assets 2020
1,710
Remuneration Report
Other Information
← = Q
795
Translation
Acquisition and manufacturing cost
Reclassifi-
Depreciation, amortisation and impairment losses
Carrying amount
in € million
689
1.1.2020 differences Additions
15,391
2,300
cations Disposals 31.12.2020
715 16,976
Translation
1.1.2020 differences
Current
year
Reclassifi- Value ad-
cations justments¹
Disposals 31.12.2020 31.12.2020 31.12.2019
4,948
Development costs
956
621
Intangible assets
124
6,691
9,244
9,345
thereof right-of-use assets from leases
3,107
-72
280
12
219
3,108
426
-14
452
5
796
2,312
2,681
Corporate Governance
846
- 135
6,104
15,935
17,851
-53
2,571
2
1,260
19,111
6,122
-16
1,893
906
2
6,769
12,342
11,729
Land, titles to land, buildings, including
buildings on third party land
15,449
- 380
538
293
1,232
73
Current Reclassifi- Value ad-
year cations justments¹
1,935
Combined Management Report
Leased products
50,120
1,725
18,465
16,463
53,847
8,125
301
5,263
4,542
9,147
44,700 41,995
Investments accounted for using the
equity method
3,825
1,736
209
5,352
240
22,390 21,850
41,370
2,766
4,358
Plant and machinery
70
Advance payments made and construction
in progress
1,619
23
1,407
-1,160
5
1,884
240
1,8842
Property, plant and equipment
60,991
1,009
4,723
-2
2,961
63,760
39,141
637
1,619
5,112
3,585
Investments in non-consolidated
Non-current marketable securities
Other investments
1,264
39
122
55
65
1,360
529
519
-15
-39
119
1,241
735
1 Including € 434 million recognised through the income statement
2 Including assets under construction of € 1,354 million.
179
BMW Group Report 2021
To Our Stakeholders
-434
Group Financial Statements
Notes to the Group
Financial Statements
988
-39
subsidiaries
Participations
301
11
47
19
340
85
2
32
87
216
963
28
75
46
1,020
444
-17
-434
253
40,061
275
1,841
3,585
3,199
Non-current marketable securities
Other investments
1,292
-35
156
149
1,264
589
7
- 57
10
529
735
703
1 Including € 57 million recognised through the income statement
2 Including assets under construction of € 1,297 million.
180
240
499
519
444
240
292
-11
72
52
301
88
-3
85
BMW Group Report 2021
216
1,000
-24
84
97
963
501
10
.57
10
204
3,825
To Our Stakeholders
Group Financial Statements
Notes to the Group
Financial Statements
10,123
between one and two years
between two and three years
between three and four years
between four and five years
later than five years
Minimum lease payments
7,052
3,812
9,285
6,327
3,416
1,702
1,534
302
62
35
35
23,026
20,872
Impairment losses amounting to € 338 million (2020:
€ 312 million) were recognised on leased products in 2021 as
a consequence of changes in residual value expectations.
Income from the reversal of impairment losses amounted to
€ 111 million (2020: € 110 million).
24 Investments accounted for using the equity method
Investments accounted for using the equity method com-
prise the joint venture BMW Brilliance Automotive Ltd. (BMW
Brilliance), Shenyang, the joint venture YOUR NOW Holding
GmbH, Munich, the joint venture IONITY Holding GmbH &
Co. KG (IONITY), Munich, and interests in the associated
company THERE Holding B.V. (THERE), Rijswijk, and the
associated company Solid Power Inc., Wilmington, Delaware.
BMW Brilliance
BMW Brilliance produces BMW brand models primarily for
the Chinese market at its two vehicle production plants as
IONITY
In collaboration with Mercedes-Benz Group AG, the Ford
Motor Company, the Volkswagen Group, Kia Motors Corpo-
ration and Hyundai Motor Corporation, the BMW Group
operates the joint venture IONITY, whereby each of the par-
ties has an equal shareholding. IONITY's business model
envisages the construction and operation of high-perfor-
mance charging stations for battery-powered vehicles in
Europe. On 1 November 2021, IONITY Holding GmbH & Co.
KG signed a contract with GRP III HPC Lux S.à.r.l. (Black-
rock) for the provision of financing amounting to € 500 mil-
lion to expand the charging network. The existing share-
holders are also investing an additional € 200 million in the
business. The transaction is due to be completed in the first
half of 2022.
31.12.2021
The at-equity loss reported for YOUR NOW for 2021
amounted to € 171 million (2020: loss of € 349 million). On
29 March 2021 YOUR NOW Holding GmbH signed an agree-
ment with the bp Group for the latter to acquire a 33.3%
stake in Digital Charging Solutions GmbH (DCS) (Charge-
Now). The transaction was completed on 1 October 2021. In
addition, on 8 March 2021, YOUR NOW Holding GmbH
signed an agreement to sell PARK NOW Group to EasyPark
Group. Following receipt of regulatory approval, the transac-
tion was completed on 27 May 2021. The impact of the two
transactions is not material.
YOUR NOW
31.12.2020
Corporate Governance
Remuneration Report
Other Information
← = Q
21 Intangible assets
Intangible assets mainly comprise capitalised development
costs on vehicle, module and architecture projects as well as
subsidies for tool costs, licences, purchased development
projects, emission allowances, software and purchased cus-
tomer lists.
Other intangible assets include a brand-name right amount-
ing to € 43 million (2020: € 40 million) which is allocated to
the Automotive segment and is not subject to scheduled
amortisation since its useful life is deemed to be indefinite.
The asset is subject to a limited right of ownership. Intangi-
ble assets also include goodwill of € 33 million (2020:
€ 33 million) allocated to the Automotive cash-generating
unit (CGU) and goodwill of € 347 million (2020: € 346 mil-
lion) allocated to the Financial Services CGU. The changes in
these items compared to the previous year are exclusively
currency-related.
As in the previous year, there was no requirement to recog-
nise impairment losses or reversals of impairment losses on
intangible assets in 2021.
As in the previous year, no financing costs were recognised
as a cost component of intangible assets in 2021.
Combined Management Report
22 Property, plant and equipment (including right-of-
use assets arising from leasing)
As in the previous year, no financing costs were recognised
as a cost component of property, plant and equipment in
2021.
Right-of-use assets arising from leases of land and buildings
relate primarily to logistics and office premises and, to a
lesser extent, to selling and production premises. In order to
secure these premises and, in the interests of flexibility, the
property rental agreements concerned often contain exten-
sion and termination options.
23 Leased products
Minimum lease payments of non-cancellable operating
leases amounting to € 23,026 million (2020: € 20,872 mil-
lion) fall due as follows:
in € million
within one year
well as petrol engines and high-voltage batteries at a sepa-
rate facility.
The BMW Group acquired a further 25% of the shares in the
BMW Brilliance joint venture on 11 February 2022. The trans-
action is described in detail in note 3.
No impairment losses were recognised in 2021, as in the
previous year.
-765
1,440
subsidiaries
Other facilities, factory and office
equipment
3,172
- 100
248
44
226
3,138
2,147
-59
333
thereof right-of-use assets from leases
104
-4
41
20
121
31
- 1
34
76
40
18
2
710
1,548
40,299
29,177
-511
3,071
2
1,500
30,239
37
10,060
thereof right-of-use assets from leases
82
1
8
31
58
6
1
15
10,884
Participations
206
927
1,830
39,141
21,850 23,245
Leased products
49,942
- 1,930
17,820
15,712
50,120
7,333
- 300
5,833
4,741
8,125
41,995 42,609
Investments accounted for using the
equity method
3,439
Investments in non-consolidated
-2
4,250
- 705
37,428
1,025
16
51
70
73
Advance payments made and construction
in progress
1,991
- 19
941
2,211
- 1,294
1,6192
1,991
Property, plant and equipment
60,673
- 1,264
3,651
-2
2,067
60,991
1,619
190
69
36
720
2020
10,081
1,252
Social insurance expenses
968
911
2021
2020
Personnel expenses
Pension and welfare expenses
12,286
Average number of employees
118,626
122,874
thereof at proportionately-
consolidated entities
304
139
Most of the expenses for leases of low-value assets and
short-term leases relate to low-value assets.
12,244
10,598
2021
The average number of employees during the year was:
- 14
-13
Е
5.80*
1.90
Interest expense arising on the
Е
5.82*
1.92
measurement of lease liabilities
-48
-55
Earnings per share of preferred stock are computed on the
basis of the number of preferred stock shares entitled to
receive a dividend in each of the relevant financial years. As
in the previous year, diluted earnings per share correspond
to basic earnings per share.
15 Personnel expenses
The income statement includes personnel expenses as fol-
lows:
in € million
Wages and salaries
Personnel expenses include € 223 million (2020: 602 mil-
lion) of costs relating to workforce measures.
The decrease in pension and welfare expenses was mainly
attributable to positive changeover effects resulting from the
modernisation of the pension plan model in Germany
amounting to € 562 million. The total pension expense for
defined contribution plans of the BMW Group amounted to
€ 160 million (2020: € 150 million). Employer contributions
paid to state pension insurance schemes totalled € 654 mil-
lion (2020: € 634 million).
The BMW Group is party to leases at the end of the reporting
period which have not yet commenced. These leases could
give rise to future cash outflows amounting to € 530 million
(2020: € 225 million).
Total cash outflows for leases in 2021 amounted to
€ 600 million (2020: € 653 million).
Information on right-of-use assets, lease liabilities as well as
further explanatory comments are provided in 7 note 6
(Accounting policies, assumptions, judgements and estima-
tions), note 20 (Analysis of changes in Group tangible, intan-
gible and investment assets 2021), note 22 (Property, plant
and equipment (including right-of-use assets arising from
leasing) and note 35 (Financial liabilities).
175
1,557
1,167
Variable lease payments are based on distance driven. The
agreements have, in part, extension and purchase options.
17 Fee expense for the Group auditor
The fee expense pursuant to § 314 (1) no. 9 HGB recognised
in the financial year 2021 for the Group auditor and the PwC
network of audit firms amounted to € 19 million (2020:
€ 18 million) and consists of the following:
Services provided during the financial year 2021 by the Group
auditor PricewaterhouseCoopers GmbH Wirtschaftsprü-
fungsgesellschaft, Frankfurt am Main, Munich branch, on
behalf of BMW AG and subsidiaries under its control relate to
the audit of the financial statements, other attestation ser-
vices, tax advisory services and other services.
The audit of financial statements comprises mainly the audit
of the Group Financial Statements and the separate finan-
cial statements of BMW AG and its subsidiaries, and all work
related thereto, including the review of the Interim Group
Financial Statements.
Other attestation services include mainly project-related
audits, comfort letters and statutorily prescribed, contractu-
ally agreed or voluntarily commissioned attestation work.
Tax advisory services include primarily services related to
transfer pricing and tax compliance.
Other services mainly include consulting services relating to
production processes.
18 Government grants and government assistance
Income from asset-related and performance-related grants,
amounting to € 94 million (2020: € 67 million) and € 152 mil-
lion (2020: € 210 million) respectively, was recognised in the
income statement in 2021.
These amounts relate mainly to public sector grants aimed
at the promotion of regional structures as well as to subsi-
dies received for plant expansions.
in € million
Audit of financial statements
Other attestation services
Tax advisory services
Other services
Fee expense
PwC International
previously leased to retail customers under
finance leases
of lease liabilities
Selling profit on the sale of vehicles
964
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
As lessor
in € million
2021
2020
Income from variable lease payments for
operating leases
109
148
Income from variable lease payments for
finance leases
13
17
Financial income on the net investment in
finance leases
890
thereof: PwC GmbH
5.75
Е
1,950
1,562
- 1,085
658
23
- 305
247
-443
2020
-250
26
-23
-144
744
35
1,950
The tax returns of BMW Group entities are checked regularly
by German and foreign tax authorities. Taking account of
numerous factors - including interpretations, commentaries
and legal decisions relating to the various tax jurisdictions as
well as past experience – adequate provision has been
made, to the extent identifiable and probable, for potential
future tax obligations.
174
BMW Group Report 2021
161
2021
Taxable temporary differences relating to investments in
subsidiaries, associated companies and joint ventures
amount to € 25,526 million (2020: € 22,174 million). No
deferred taxes are recognised on these taxable temporary
differences because the BMW Group is able to determine the
timing of the reversal of the temporary differences and it is
probable that the temporary differences will not reverse in
the foreseeable future, in particular in view of the fact that
there is no intention to distribute the profits, but rather to use
them to maintain their substance and reinvest in the compa-
nies concerned. No computation was made of the potential
impact of income taxes on the grounds of proportionality.
Deferred tax liabilities on expected dividends amount to
€ 79 million (2020: € 76 million) and relate primarily to divi-
dends from foreign subsidiaries and joint ventures.
Deferred taxes at 31 December (assets (+)/ liabilities (-))
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Tax loss carryforwards relating to Germany and foreign
operations amounted to € 4,138 million (2020: € 1,568 mil-
lion). This includes one tax-loss carryforward amounting to
€ 413 million (2020: € 406 million), on which a valuation
allowance of € 140 million (2020: € 138 million) was recog-
nised on the related deferred tax asset.
For entities with tax losses available for carryforward, a net
surplus of deferred tax assets over deferred tax liabilities is
reported amounting to € 2,487 million (2020: € 392 million).
The basis for the recognition of deferred taxes is the
BMW Group business model or management's assessment
that there is material evidence that the entities will generate
future taxable profit, against which deductible temporary dif-
ferences can be offset. The increase in tax loss carryfor-
wards was mainly attributable to the exercise of a tax option
by the BMW Group's US companies. Furthermore, it is
assumed that tax start-up losses relating to the San Luis
Potosí plant in Mexico, opened in 2019, can be utilised by
offset against planned future profits.
Loss carryforwards amounting to € 3,834 million (2020:
€ 1,129 million) can be used indefinitely, while € 304 million
(2020: € 439 million) expire after more than 3 years.
Capital losses available for carryforward in the United King-
dom which do not relate to ongoing operations increased to
€ 1,959 million (2020: € 1,832 million) due to currency fac-
tors. As in previous years, deferred tax assets recognised on
these tax losses - which increased to € 490 million due to a
tax rate change in the UK (2020: € 348 million) - were fully
written down since they can only be utilised against future
capital gains.
Deferred tax assets and deferred tax liabilities are netted for
each relevant tax entity if they relate to the same tax author-
ities.
Deferred taxes recognised directly in equity amounted to
€ 1,733 million (2020: € 1,710 million).
in € million
Deferred taxes at 1 January (assets (+)/ liabilities (-))
Deferred tax expense (-)/ income (+) recognised through income statement
Change in deferred taxes recognised directly in equity
thereof relating to fair value gains and losses on financial instruments and marketable securities recognised
directly in equity
thereof relating to the remeasurements of net liabilities for defined benefit pension plans
thereof from currency translation
Exchange rate impact and other changes
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
1,083.8
326.9
in € million
2021
2020
number
601,995,196
601,995,196
number
57,686,234
56,867,180
Expenses for leases of low-value assets
and short-term leases
-74
- 91
€
18.77
5.73
Expenses relating to variable lease
payments not included in the measurement
€ million
18.79
3,448.1
€ million
Remuneration Report
Other Information
← = Q
14 Earnings per share
Net profit attributable to the shareholders of BMW AG
Profit attributable to common stock
Profit attributable to preferred stock
Average number of common stock shares in circulation
Average number of preferred stock shares in circulation
Basic / diluted earnings per share of common stock
Basic / diluted earnings per share of preferred stock
Dividend per share of common stock
Dividend per share of preferred stock
* Proposal by the Board of Management
16 Leases
2021
€ million
12,382.2
2020
3,775.0
As lessee
In terms of accounting for leases as a lessee, the following
amounts are included in the income statement:
11,298.4
BMW Group Report 2021
2021
2021
-45
13
-32
7
-2
5
14
37
Marketable securities (at fair value through other comprehensive income)
Derivative financial instruments *
51
- 306
685
Costs of hedging *
72
-22
50
201
- 60
991
-215
After tax
Deferred taxes
139
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Deferred taxes on components of other comprehensive
income are as follows:
2021
2020
in € million
Remeasurement of the net liability for defined benefit pension plans
Before tax
Deferred taxes
After tax
Before tax
1,243
-224
1,019
- 354
141
Other comprehensive income from equity accounted investments
Currency translation foreign operations
-50
135
Corporate Governance
Remuneration Report
Other Information
← = Q
NOTES TO THE BALANCE SHEET
20 Analysis of changes in Group tangible, intangible and investment assets 2021
Translation
Acquisition and manufacturing cost
Reclassifi-
Depreciation, amortisation and impairment losses
Carrying amount
in € million
1.1.2021 differences Additions
cations Disposals 31.12.2021
Development costs
16,976
2,506
195
19,287
Translation
1.1.2021 differences
5,969
Group Financial Statements
Notes to the Group
Financial Statements
To Our Stakeholders
Combined Management Report
BMW Group Report 2021
85
106
-55
51
1,228
1,228
- 1,283
- 1,283
Other comprehensive income
* Prior year's figures adjusted.
2,462
- 61
2,401
-332
- 284
-616
Other comprehensive income relating to equity accounted
investments is reported in the Group Statement of Changes
in Equity within currency translation differences with a posi-
tive amount of € 490 million (2020: negative amount of
€ 113 million), within derivative financial instruments with a
negative amount of € 368 million (2020: positive amount of
€ 118 million) and within costs of hedging with a negative
amount of € 37 million (2020: positive amount of € 46 mil-
lion).
Gains or losses realised on derivative financial instruments
which have been reclassified to acquisition costs for invento-
ries are not recognised through other comprehensive income
after tax.
178
To Our Stakeholders
2020
BMW Group Report 2021
* Prior year's figure adjusted.
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
NOTES TO THE STATEMENT
BMW Group Report 2021
OF COMPREHENSIVE INCOME
Other comprehensive income for the period after tax com-
prises the following:
in € million
2021
2020
Remeasurement of the net liability for defined benefit pension plans
1,243
- 354
Deferred taxes
19 Disclosures relating to the statement of comprehen-
sive income
176
4
8
2020
16
14
5
4
2
1
2
0
0
0
0
0
1
3
1
0
19
18
-224
139
Items not expected to be reclassified to the income statement in the future
1,019
201
-287
-437
359
638
Other comprehensive income from equity accounted investments
Deferred taxes*
-50
106
163
-423
Currency translation foreign operations
1,228
-1,283
Items that can be reclassified to the income statement in the future
1,382
-401
Other comprehensive income for the period after tax
2,401
-616
72
177
-645
1,636
- 215
Marketable securities (at fair value through other comprehensive income)
-45
7
thereof gains/losses arising in the period under report
-38
20
thereof reclassifications to the income statement
Derivative financial instruments
thereof gains/losses arising in the period under report
thereof reclassifications to the income statement
Costs of hedging
thereof gains/losses arising in the period under report
thereof reclassifications to the income statement
-7
-13
14
991
25
-11
173
1,950
744
Disposals 31.12.2021 31.12.2021 31.12.2020
7,714 11,573 11,007
171
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Goodwill
Other Information
11
Net interest result
in € million
2021
2020
Other interest and similar income
135
116
← = Q
384
1
385
Intangible assets
956
1,027
948
61
202
12
795
1,975
112
2
289
45
1,751
Other intangible assets
379
380
5
5
thereof from subsidiaries:
12
8
Interest and similar income
Sundry other financial result comprises mainly income and
expenses arising on the measurement of stand-alone deriv-
atives and fair value hedge relationships, as well as income
and expenses from the measurement and sale of marketa-
ble securities and shares in investment funds.
Sundry other financial result benefited in 2021 from the favour-
able fair value development of interest rate hedges resulting
from the rise in yield curves in the USA, whereas in the previ-
ous year, the downward trend in interest rates gave rise to fair
value measurement losses on interest rate hedges.
13 Income taxes
Taxes on income of the BMW group comprise the following:
The tax expense was reduced by € 28 million (2020: € 4 mil-
lion) as a result of utilising tax loss carryforwards, for which
deferred assets had not previously been recognised and in
conjunction with previously unrecognised tax credits and
temporary differences.
The tax expense resulting from the change in the valuation
allowance on deferred tax assets relating to tax losses avail-
able for carryforward and temporary differences amounted
to € 3 million (2020: € 10 million).
Deferred taxes are determined on the basis of tax rates
which are currently applicable or expected to apply in the rel-
evant national jurisdictions when the amounts are recov-
ered. After taking account of an average municipal trade tax
multiplier rate (Hebesatz) of 428.0 (2020: 428.0), the under-
lying income tax rate for Germany was as follows:
Current tax expense
2,512
2,023
Deferred tax expense (+)/ deferred tax
income (-)
in %
2021
2020
1,085
- 658
12 Other financial result
Corporate tax rate
15.0
- 342
19,111
-30
2020
135
116
Net interest impact on other long-term
provisions
71
- 199
Net interest expense on the net defined
benefit liability for pension plans
-22
-34
Other interest and similar expenses
-214
- 225
thereof subsidiaries:
-1
Interest and similar expenses
-165
- 458
in € million
2021
Net interest result
15.0
46
2
Other facilities, factory and office
equipment
40
131
14
19
15
18
145
3,138
38
58
thereof right-of-use assets from leases
10,060
10,165
31,574
2,311
2
3,180
125
67
235
71
2
51
131
19
927
907
2,344
249
2
335
45
2,211
3,251
262
73
25
4
121
thereof right-of-use assets from leases
468
30,239
41,739
2,350
124
6,691
16,886
344
221
789
285
15,935
buildings on third party land
Land, titles to land, buildings, including
12,342
12,980
8,667
251
2,137
12
6,769
21,647
307
843
2,795
206
9,434
864
2,292
634
40,299
Plant and machinery
2,312
2,229
1,134
115
433
20
796
3,363
220
416
59
3,108
thereof right-of-use assets from leases
9,244
7,452
thereof relating to temporary
differences
1,668
Valuation allowances on capital losses
Netting
Deferred taxes
Net
The tax reductions due to tax-exempt income related pri-
Imarily to the partial release of the provision for the EU anti-
trust proceedings as well as to the tax-exempt impact of the
mark-to-market valuation of participations.
Tax benefits for prior years resulted primarily from adjust-
ments to income tax receivables and provisions for prior
years, among other things due to transfer pricing issues in
connection with unconcluded and ongoing transfer pricing
proceedings.
Deferred tax assets
Deferred tax liabilities
26.1 %
2021
2021
2020
4
17
3,494
3,354
74
49
2020
22.4%
Effective tax rate
Valuation allowances on tax loss carryforwards
Equity accounted
-370
-210
Provisions
Tax expense (+) / benefits (-) for prior
years
-54
61
Liabilities
Effects from tax rate changes
25
17
Eliminations
Other variances
-71
-15
Actual tax expense
3,597
1,365
665
673
300
282
3,721
1,826
1,766
17,129
16,284
15,755
13,848
- 140
- 138
-490
- 348
- 14,297
- 13,339
- 14,297
- 13,339
2,202
2,459
1,458
509
3,936
Capital Losses
852
3,717
4,493
3,203
5
6
1
1
886
1,013
4,646
3,966
1,061
476
490
348
6,070
6,655
29
33
4,303
601
398
314
Non-deductible expenses
15.0
15.0
thereof from subsidiaries:
14
12
German income tax rate
30.8
30.8
Expenses from investments in
subsidiaries and participations
-28
- 87
Result on investments
584
48
Income (+) and expenses (-) from finan-
cial instruments
586
-234
Municipal trade tax rate
Sundry other financial result
1,365
Income taxes
- 450
Solidarity surcharge
5.5
5.5
in € million
2021
2020
thereof relating to tax loss carryfor-
Corporate tax rate including solidarity
Income from investments in subsidiaries
wards and tax credits
-583
- 208
surcharge
15.8
15.8
and participations
612
135
3,597
20
586
Deferred taxes for non-German entities are calculated on the
basis of the relevant country-specific tax rates. These ranged
in the financial year 2021 between 9.0% and 40.0% (2020:
between 9.0% and 40.0%).
30.8%
30.8%
Intangible assets
Expected tax expense
4,946
1,608
Property, plant and equipment
Variances due to different tax rates
-596
-397
Leased products
Tax increases (+)/ tax reductions (-)
Other investments
due to:
Sundry other assets
Tax-exempt income
-597
- 97
Tax loss carryforwards
Tax rate applicable in Germany
-234
in € million
16,060
Other financial result
1,170
- 186
172
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Corporate Governance
Remuneration Report
Other Information
← = Q
Financial Statements
The difference between the expected tax expense based on
the underlying tax rate for Germany and actual tax expense
is explained in the following reconciliation:
The allocation of deferred tax assets and liabilities to bal-
ance sheet line items at 31 December is shown in the fol-
lowing table:
in € million
2021
2020
Profit before tax
5,222
1,054
-37
244
16
-20
- 36
Utilised
-4
-1
Exchange rate impact and other changes
Balance at 31 December
1
-4
32
47
Reversed
In the case of trade receivables, collateral is generally held in
the form of vehicle documents and bank guarantees so that
the risk of bad debt loss is very limited. Expenses for impair-
ment losses and income from the reversal of impairment
losses is not significant for the BMW Group and is therefore
not reported separately in the income statement.
187
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Corporate Governance
Remuneration Report
Other Information
← = Q
Financial Statements
8
72
47
2020
1,660
Allowances for impairment of stage 3
-14
-23
Vehicles held for sale in the financial
services business
404
818
Net carrying amount
2,261
2,298
31 Equity
Advance payments to suppliers
Inventories
503
15,928
14,896
Out of the total amount recognised for inventories at
31 December 2021, inventories measured at net realisable
value amounted to € 1,457 million (2020: € 899 million).
Write-downs to net realisable value in the financial year 2021
amounted to € 41 million (2020: € 59 million), while rever-
sals of write-downs amounted to € 5 million (2020: € 2 mil-
lion).
The expense recorded in conjunction with inventories during
the financial year 2021 amounted € 54,484 million (2020:
€ 48,128 million).
At 31 December 2021, the carrying amounts of inventories
expected to be realised after more than twelve months
amount to € 405 million (2020: € 359 million).
At 31 December 2021 work in progress included unfinished
vehicles still held in inventories due to production programme
changes necessitated by semiconductor component short-
ages.
Impairment allowances on trade receivables in accordance
with IFRS 9 developed as follows:
in € million
Balance at 1 January
Allocated
2021
389
2,277
Number of shares issued
Shares issued in conjunction with Employee Share Programme
Accumulated other equity comprises amounts recognised
directly in equity resulting from the translation of the finan-
cial statements of foreign subsidiaries, changes in the fair
value of derivative financial instruments and marketable
securities, costs of hedging recognised directly in equity as
well the related deferred taxes.
Capital management disclosures
The BMW Group's objectives with regard to capital manage-
ment are to safeguard over the long-term the Group's ability
to continue as a going concern and to provide an adequate
return to shareholders.
The capital structure is managed in order to meet needs
arising from changes in economic conditions and the risks of
the underlying assets.
The BMW Group is not subject to any unified external mini-
mum equity capital requirements. Within the Financial Ser-
vices segment, however, there are a number of individual
entities which are subject to equity capital requirements of
relevant regulatory banking authorities.
In order to manage its capital structure, the BMW Group
uses various instruments, including the amount of dividends
paid to shareholders and share buybacks. Moreover, the
BMW Group actively manages debt capital, carrying out
funding activities with a target debt structure in mind. A key
aspect in the selection of financial instruments is the objec-
tive to achieve matching maturities for the Group's financing
requirements. In order to reduce non-systematic risk, the
BMW Group uses a variety of financial instruments available
on the world's capital markets to achieve diversification.
188
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
The capital structure at the end of the reporting period was
as follows:
in € million
Equity attributable to shareholders of
BMW AG
31.12.2021 31.12.2020
The assumptions stated below, which depend on the eco-
nomic situation in the relevant country, are used to measure
the defined benefit obligation of each pension plan. The fol-
lowing weighted average values have been used for Ger-
many, the UK and other countries:
74,366
60,891
Germany
Accumulated other equity
The proposed distribution was not recognised as a liability in
the Group Financial Statements.
Distribution of a dividend of € 5.80 per share of common
stock (€ 3,491 million)
Distribution of a dividend of € 5.82 per share of preferred
stock (€ 336 million)
Less: shares repurchased and re-issued
Shares issued / in circulation at 31 December
All Company stock is issued to bearer and each share has a
par value of € 1.00. Preferred stock, to which no voting rights
are attached, bear an additional dividend of € 0.02 per
share.
In 2021, a total of 1,718,070 shares of preferred stock was
sold to employees at a reduced price of € 60.78 per share in
conjunction with an Employee Share Programme. These
shares are entitled to receive dividends for the first time with
effect from the financial year 2022.
Issued share capital increased by € 1.7 million as a result of
the issue to employees of 1,715,000 new shares of non-vot-
ing preferred stock. BMW AG is authorised up to 15 May 2024
to issue 5 million shares of non-voting preferred stock
amounting to nominal € 5.0 million. At the end of the report-
ing period, 1.7 million of these amounting to nominal
€ 1.7 million remained available for issue.
In addition, 3.070 previously issued shares of preferred stock
were acquired and re-issued to employees.
Preferred stock
2020
2021
56,867,304 601,995,196
2021
57,689,304
Shares issued in circulation at 1 January
1,718,070
3,070
59,404,304
124
Capital reserves
Common stock
2020
601,995,196
57,689,304 601,995,196 601,995,196
Capital reserves include premiums arising from the issue of
shares and totalled € 2,325 million (2020: € 2,199 million).
The change amounting to € 126 million related to the share
capital increase in conjunction with the issue of shares of
preferred stock to employees.
Revenue reserves
Revenue reserves comprise the non-distributed earnings of
companies consolidated in the Group Financial Statements.
In addition, remeasurements of the net defined benefit obli-
gation for pension plans are also presented in revenue
reserves.
It is proposed that the unappropriated profit of BMW AG for
the financial year 2021 amounting to € 3,827 million be uti-
lised as follows:
―
822,124
United Kingdom
Raw materials and supplies
-18
thereof current
5,800
5,108
Collateral assets
364
Prepaid expenses
295
454
due between one and two years
6,001
5,809
Sundry other assets
1,200
1,246
due between two and three years
5,158
4,770
due between three and four years
4,080
3,395
due between four and five years
604
503
6,426
6,625
due within one year
2,644
199
Other taxes
1,950
1,581
due between four and five years
669
558
Financial assets
7,515
7,752
Expected reimbursement claims
due later than five years
1,112
due later than five years
44
48
Gross investment in finance leases
24,413
22,754
thereof non-current
1,715
Receivables from subsidiaries
694
546
1,046
-24
42
Net investment in finance leases without
loss allowances
Other Information
← = Q
29 Inventories
Inventories comprise the following:
Financial Statements
30 Trade receivables
Trade receivables comprise the following:
in € million
31.12.2021
31.12.2020
in € million
31.12.2021
31.12.2020
Finished goods and goods for resale
9,683
10,542
Gross carrying amount
2,293
2,345
Work in progress, unbilled contracts
3,175
1,373
Allowances for impairment of stage 2 -
simplified approach
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Combined Management Report
22,510
Unrealised interest income
1,903
Loss allowances
351
20,948
1,806
255
27 Income tax assets
Income tax assets totalling € 1,529 million (2020: € 606 mil-
lion) include claims amounting to € 19 million (2020:
€ 43 million), which are expected to be settled after more
than one year. Claims may be settled earlier than this
depending on the timing of the underlying proceedings. The
increase in income tax assets was mainly attributable to the
exercise of a tax option by the BMW Group's US companies.
thereof non-current
thereof current
Collateral assets comprise mainly customary collateral
(banking deposits) arising on the sale of asset-backed
financing instruments.
45
Other assets
10,326
1,302
1,216
8,941
9,110
Net investment in finance leases
22,159
20,693
186
BMW Group Report 2021
To Our Stakeholders
10,243
Other
Proportion of total capital
41.8%
Remuneration Report
Other Information
← = Q
The change in the net defined benefit liability for pension
plans can be derived as follows:
in € million
1 January 2021
EXPENSE / INCOME
Current service cost
Defined
benefit obligation
Plan assets
26,587
-22,910
Total
3,677
Effect of limitation
of the net defined
benefit asset to the
asset ceiling
Net defined
benefit liability
3
3,680
Interest expense (+)/income (-)
Past service cost
411
411
257
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
106
355
194
254
1,247
3,693
-7
-46
-29
-13
- 82
- 235
- 13
Germany
Both employer- and employee-funded benefit plans exist in
Germany. Benefits paid in conjunction with these plans
comprise old-age retirement pensions as well as invalidity
and surviving dependants' benefits. The level of ongoing
pension payments is adjusted in accordance with §16 of the
Company Pensions Act (Betriebsrentengesetz).
The defined benefit plans have been closed to new entrants
since 2014. Defined contribution plans with a minimum rate
of return, comprising employer- and employee-funded com-
ponents, continue to exist. The fact that the plan involves a
minimum rate of return means that the defined contribution
entitlements are classified in accordance with IAS 19 as
defined benefit plans. In the financial year 2021, employees
in the defined benefit plan were given the option to switch to
the defined contribution plan.
In the case of defined benefit plans involving the payment of
a pension, the amount of benefits to be paid is determined
by multiplying a fixed amount by the number of years of ser-
vice.
The assets of the German pension plans are invested by
BMW Trust e. V., Munich, in accordance with a CTA. The rep-
resentative bodies of this entity are the Board of Directors
and the Members' General Meeting. BMW Trust e. V., Munich,
currently has seven members and three members of the
Board of Directors elected by the Members' General Meet-
ing. The Board of Directors is responsible for investments,
drawing up and deciding on investment guidelines as well as
monitoring compliance with those guidelines. The members
of the association can be employees, employee representa-
tives, senior executives and members of the Board of Man-
agement of BMW AG. An ordinary Members' General Meet-
ing takes place once every calendar year, and deals with a
range of matters, including receiving and approving the
association's annual report, ratifying the activities of the
Board of Directors and adopting changes to the associa-
tion's statutes.
United Kingdom
Defined benefit plans exist in the United Kingdom which are
closed for all plan participants. Vested benefits remain in
place. New benefits are covered by contributions made to a
defined contribution plan.
The defined benefit pension plans are administered by BMW
Pension Trustees Limited, Farnborough, and BMW (UK)
Trustees Limited, Farnborough, both trustee companies
which act independently of the BMW Group. BMW (UK) Trus-
tees Limited, Farnborough, is represented by ten trustees
and BMW Pension Trustees Limited, Farnborough, by five
trustees. A minimum of one third of the trustees must be
elected by plan participants. The trustees represent the
interests of plan participants and decide on investment
strategies. Funding contributions to the funds are deter-
mined in agreement with the BMW Group.
190
BMW Group Report 2021
The most significant of the BMW Group's pension plans are
described below.
3,084
22
-527
Translation differences and other changes
31 December 2021
thereof pension provisions
thereof assets
90
-90
- 680
675
5
- 5
711
-717
-6
27
21
24,989
-25,011
-22
1,187
1,165
1,247
-82
-
Pensions and other benefits paid
Employee contributions
- 1,082
- 1,082
411
22
-527
Gains (-) or losses (+) arising from settlements
REMEASUREMENTS
Gains (-) or losses (+) on plan assets, excluding amounts included in interest income
-652
-652
Gains (-) or losses (+) arising from changes in financial assumptions
-1,341
Gains (-) or losses (+) arising from changes in demographic assumptions
-527
-616
97
-1,341
-616
97
-652
-1,341
-616
97
Changes in the limitation of the net defined benefit asset to the asset ceiling
1,157
1,157
Transfers to fund
- 1,082
Gains (-) or losses (+) arising from experience adjustments
947
thereof pension provisions
thereof assets
3,680
2.19
Proportion of total capital
58.2%
63.6%
Weighted duration of all pension obligations in years
17.5
21.6
17.8
19.8
15.4
15.9
Total capital
177,829
167,267
Mortality Table 2018 G issued by Prof. K. Heubeck (with invalidity rates reduced by 70%)
S3PA Tables and CMI_2020 model with improvement factor of 1.25%
Equity attributable to shareholders of BMW AG increased
during the financial year by 22.1%, primarily reflecting the
increase in revenue reserves.
32 Pension provisions
In the case of defined benefit plans, the BMW Group is
required to pay the benefits it has granted to present and
past employees. Defined benefit plans may be covered by
provisions or pension assets. In Germany, pension obliga-
tions of the BMW Group are mostly covered by assets trans-
ferred to BMW Trust e. V., Munich, in conjunction with a Con-
tractual Trust Arrangement (CTA) (funded plan). Funded
plans also exist in the UK, the USA, Switzerland, Belgium
and Japan. In the meantime, most of the defined benefit
plans have been closed to new entrants.
The following mortality tables are applied in countries, in
which the BMW Group has significant defined benefit plans:
Germany
United Kingdom
In addition, the career trend component, which is plan-de-
pendent and lies within a range of 0.25% to 0.50%, is now
part of the measurement of pension obligations in Germany
(2020: pension entitlement trend of 2.0%).
189
2.36
1.33
2.10
Pension level trend
36.4%
Non-current financial liabilities
62,342
67,390
in %
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
31.12.2020
BMW Group Report 2021
Current financial liabilities
38,986
Discount rate
1.04
0.55
1.83
1.19
2.27
1.88
Total financial liabilities
103,463
106,376
41,121
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
26,587
Fair value of plan assets
14,105
12,451
9,968
9,589
938
870
25,011
22,910
Effect of limiting net defined benefit asset to asset ceiling
24,989
1,184
3
1,187
3
Carrying amounts
940
3,084
60
355
165
241
1,165
3
216
1,108
9,944
Corporate Governance
Remuneration Report
Other Information
← = Q
Financial Statements
Based on the measurement principles contained in IAS 19,
the following balance sheet carrying amounts apply to the
Group's pension plans:
Germany
United Kingdom
Other
Total
1,100
in € million
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2021
31.12.2020
15,045
15,535
8,844
Present value of defined benefit obligations
Other
397
4,435
336
1,712
1,194
1,214
1,177
17,151
24,012
Assets
RECONCILIATION OF AGGREGATED FINANCIAL INFORMATION
42
111
373
213
8,217
10,809
Current financial liabilities, provisions and liabilities
13
16
113
84
87
1,546
2,027
299
Provisions and liabilities
12,836
9,763
42
591
424
335
298
3,694
5,588
244
209
1,226
897
Non-current financial liabilities, provisions and liabilities
1,214
7,388
11,176
Carrying amount
Eliminations
Group's interest in net assets
Net assets
55
127
486
297
87
1,090
199
209
1,226
8,950
31.12.2020
31.12.2020 31.12.2021
31.12.2021
31.12.2020
31.12.2020 31.12.2021
31.12.2021
Equity
thereof cash and cash equivalents
Current assets
Non-current assets
7,292
DISCLOSURES RELATING TO THE BALANCE SHEET
IONITY
YOUR NOW
THERE
BMW Brilliance
Financial information relating to equity accounted invest-
ments is summarised in the following tables (from a 100%
perspective):
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
in € million
49
1,175
666
897
1,214
1,090
7,388
11,176
17
19
341
444
24
2
1,190
5,137
55
49
767
528
24
2
3,695
15,062
244
287
945
8,493
To Our Stakeholders
- 1,283
4,305
9
80
185
-43
-39
- 693
- 309
-1
-1
3,174
4,457
19
26
127
263
707
729
8
30
234
248
23,913
28,001
4
38
5
2
-35
-701
-536
206
- 108
2,560
3,596
-37
-35
- 749
-337
2020
206
2,560
3,596
- 8
-6
6
8
822
1,150
1
2
3
-108
2021
2020
2021
Income taxes
Interest expense
Interest income
Profit/loss before financial result
Scheduled depreciation
Revenues
DISCLOSURES RELATING TO THE INCOME STATEMENT
in € million
← = Q
Other Information
Remuneration Report
Profit/loss after tax
Corporate Governance
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
183
49
42
591
424
335
298
2,610
Group Financial Statements
Notes to the Group
Financial Statements
- 1,084
thereof from continuing operations
Other comprehensive income
2020
2021
2020
2021
IONITY
YOUR NOW
THERE
BMW Brilliance
* Figure includes operating leases
84,277
87,417
thereof from discontinued operations
Receivables from sales financing
22,159
Finance lease receivables
63,584
65,258
Credit financing for retail customers and
dealerships*
31.12.2021 31.12.2020
in € million
Receivables from sales financing comprise the following:
25 Receivables from sales financing
Group dividend income
Total comprehensive income
20,693
BMW Group Report 2021
9,859
-26
21
1
-33
1
Write-off of receivables
182
-14
-1
-90
- 106
Changes in risk parameters
60
66
1
49
176
Other changes
69
75
27
24
195
Impairment allowances at 31 December 2020
12
Derecognition and origination of receivables
160
195
in € million
General
Simplified
Total
Impairment allowances at 1 January 2020
361
209
12
517
1,099
Reclassification to Stage 1
483
1
- 4
-9
Reclassification to Stage 2
- 15
153
-15
123
Reclassification to Stage 3
-4
-30
-1
-6
Stage 3
474
643
Marketable securities and investment funds
4,243
4,226
Return right assets for future leased
due between one and two years
6,528
6,293
products
2,405
3,041
Derivative instruments
2,998
3,256
due between two and three years
5,590
5,190
Loans to third parties
58
71
Receivables from companies in which an
investment is held
2,190
2,048
due between three and four years
6,970
7,147
due within one year
31.12.2020
1,639
185
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Corporate Governance
Remuneration Report
Other Information
← = Q
Finance leases are analysed as follows:
39
Financial Statements
Financial assets comprise:
28 Other assets
Other assets comprise:
in € million
31.12.2021
31.12.2020
in € million
31.12.2021
31.12.2020
in € million
31.12.2021
26 Financial assets
Stage 2
-1
567
-81
3,770
2,729
- 125
216
- 337
- 830
-35
-37
379
184
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Impairment allowances on receivables from sales financing
in accordance with IFRS 9, which only arise within the Finan-
cial Services segment, developed as follows:
Total
-67
-35
10
-17
169
174
-26
-26
2020
2021
Total comprehensive income
Other comprehensive income
thereof from discontinued operations
thereof from continuing operations
Disclosures relating to the Income Statement
Profit/loss after tax
in € million
In May 2021, the BMW Group, together with the Ford Motor
Company and Volta Energy Technologies, participated in an
investment round relating to Solid Power, an industry-lead-
ing producer of solid-state batteries for electric vehicles. In
this context, some existing joint development partnerships
with Solid Power have also been expanded with a view to
securing the supply of solid-state batteries for future gener-
ations of electric vehicles. The investment meets the criteria
of an associated company and is accounted for using the
equity method.
1,599
Solid Power
THERE
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Stage 1
To Our Stakeholders
BMW Group Report 2021
181
-48
Together with AUDI AG, Mercedes-Benz Group AG and other
companies, the BMW Group holds shares in THERE. HERE
International B.V. (HERE) is an associated company of
THERE. HERE's digital maps are laying the foundations for
the next generation of mobility and location-based services,
providing the basis for new assistance systems and, ulti-
mately, fully automated driving.
In connection with the coronavirus pandemic, allowances for
expected credit losses were increased in 2020 to take
account of the negative impact on retail customer and deal-
ership business, to the extent not covered by the
BMW Group's standard loss provisioning models (post-
model adjustments) and their level reviewed on a regular
basis. Although the level of expected credit losses decreased
significantly during 2021, a large proportion of the additional
allowance recorded one year earlier was retained due to
ongoing uncertainty about the further course of the pan-
demic.
Combined Management Report
The estimated fair value of vehicles held as collateral for
credit-impaired receivables at the end of the reporting period
totalled € 569 million (2020: € 517 million). The carrying
amount of assets held as collateral and taken back as a
result of payment default amounted to € 21 million (2020:
€ 33 million).
129
Derecognition and origination of receivables
34
11
-55
-9
Write-off of receivables
-1
-11
-131
- 143
170
Changes in risk parameters
-31
Other changes
-65
31
-4
3
Impairment allowances at 31 December 2021
447
550
35
Impairment allowances include € 102 million (2020:
€ 95 million) on credit-impaired receivables relating to
finance leases.
10
-1
-46
-3
Stage 1
-37
Stage 2
Stage 3
in € million
General
Simplified
483
474
39
643
1,639
Impairment allowances at 1 January 2021
4
Reclassification to Stage 1
Reclassification to Stage 3
-25
159
119
-15
Reclassification to Stage 2
-34
-7
-31
5
100
Dr. Vishal Sikka
Dr. Thomas Wittig
5
5
5
100
5
100
2 Member of the Supervisory Board since 12 May 2021.
1 Member of the Supervisory Board until 12 May 2021.
100
Werner Zierer
5
4
5
Prof. Dr. Christoph Schmidt²
1
1
3 Member of the Supervisory Board since 14 May 2021.
100
Dr. Dominique Mohabeer
5
100
Brigitte Rödig
4
3
75
Anke Schäferkordt
5
5
100
4
4 Member of the Supervisory Board until 16 July 2021.
Expression of appreciation by the Supervisory Board
6 Member of the Supervisory Board until 1 October 2021.
Based on a thorough examination conducted by the Audit Committee and the Super-
visory Board, we concurred with the results of the external audit. In accordance with
the final result of this examination, no objections were raised. The Group and Com-
pany Financial Statements of Bayerische Motoren Werke Aktiengesellschaft for the
financial year 2021 drawn by the Board of Management were subsequently approved
at our meeting held on 10 March 2022. The Company Financial Statements for the
year ended 31 December 2021 have therefore been adopted.
We also examined the proposal of the Board of Management to use the unappro-
priated profit to pay a dividend of € 5.80 per share of common stock and € 5.82 per
share of non-voting preferred stock, in each case on shares entitled to receive a divi-
dend. We consider the proposal appropriate and have therefore given it our approval.
For the financial year 2021, the Supervisory Board and the Board of Management
have prepared the Remuneration Report for the first time in accordance with §162
AktG (ARUG II / Act Implementing the Second EU Shareholder Rights Directive). At
the request of the Audit Committee, PwC reviewed the content of the Remuneration
Report, reported to both the Audit Committee and the Supervisory Board on the
results of the review, and confirmed that the Remuneration Report complies in all
material respects with the financial reporting provisions contained in §162 AktG.
The Audit Committee and the Supervisory Board also considered at length the com-
bined Non-financial (Group) Statement for the year ended 31 December 2021, which
was drawn up by the Board of Management as part of the integrated BMW Group
Report. Following an in-depth explanation of the statement by the Board of Man-
agement, representatives of the external auditor presented key findings of their audit
and answered additional questions posed by the members of the Supervisory Board.
Based on the "limited assurance" audit performed by PwC on those parts of the
Management Report that were not subject to a reasonable assurance engagement,
PWC issued an unqualified opinion, signed for the sixth time by Andreas Fell and for
the second time by Nicolette Behncke. The Supervisory Board acknowledged and
approved the combined Non-financial (Group) Statement drawn up by the Board of
Management.
We would like to express our thanks and appreciation to the members of the Board
of Management and all employees of the BMW Group worldwide for their outstand-
ing performance in the financial year 2021. With their unbending commitment, even
under adverse conditions, and a fine collective performance, they have taken the
BMW Group to the top of the global premium segment over the past 12-month period
and additionally enhanced the Group's profile as a guarantor of first-class individual
and sustainable mobility.
We are confident that the Board of Management and the Group's entire workforce,
with their courage and confidence, will write the next chapter of the BMW Group's
unique success story in 2022.
Report of the Supervisory Board
Munich, March 2022
Yours
ла
Norbert Reithofer
Chairman of the Supervisory Board
11
Simone Menne¹
On behalf of the Supervisory Board
← = Q
Other Information
Remuneration Report
7 Member of the Supervisory Board since 8 October 2021.
8 Member of the Supervisory Board until 31 December 2021.
(Wirtschaftsprüfer) as independent auditor responsible for the performance of the
engagement.
At its meeting held on 24 February 2022, the Audit Committee initially considered in
detail the preliminary version of the Company and Group Financial Statements, the
Combined Management Report (including the Combined Non-financial (Group) State-
ment), the Statement of Corporate Governance, the draft versions of the auditor's
reports and the Board of Management's proposal for the appropriation of profit.
Immediately after authorising their issue, the Board of Management submitted the
Company and Group Financial Statements for the financial year 2021 and the Com-
bined Management Report (including the Combined Non-financial (Group) State-
ment), the Statement of Corporate Governance and the proposal for the appropri-
ation of profit to the Supervisory Board. The auditor's long-form audit reports were
also made available to the Supervisory Board in a prompt manner.
At its meeting on 9 March 2022, the Audit Committee diligently examined and de-
liberated on these documents before they were considered in detail at the plenary
session of the Supervisory Board on 10 March 2022.
At the two respective meetings, the Board of Management provided the Audit Com-
mittee and the Supervisory Board with detailed explanations of the financial reports
presented. The representatives of the external auditor present at the meetings
reported on the main findings of their audit and answered additional questions put
by members of the Audit Committee and the Supervisory Board. The focus of these
meetings was on key audit matters as well as the related audit procedures, which
were discussed at length by the Audit Committee and the Supervisory Board.
The representatives of the external auditor confirmed that the risk management
system established by the Board of Management is capable of identifying at an early
stage any developments that might threaten the Company's going-concern status.
They also confirmed that that no material weaknesses in the internal control system
and risk management system were identified with regard to the financial reporting
process. Similarly, in the course of their audit work they did not identify any facts
inconsistent with the contents of the Declaration of Compliance pursuant to § 161 of
the German Stock Corporation Act (AktG) issued by the Board of Management and
the Supervisory Board.
20
20
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
5 Member of the Supervisory Board since 3 August 2021.
100
BMW Group Report 2021
3
← = Q
Report of the Supervisory Board
REPORT OF THE
SUPERVISORY BOARD
DEAR SHAREHOLDERS,
The year 2021 was a particularly challenging one for the BMW Group, with semicon-
ductor supply issues and the ongoing coronavirus pandemic making the business
environment more volatile and calling for even greater flexibility from company and
workforce alike. However, the prudent leadership of the Board of Management and
the tremendous hard work of our employees helped make 2021 a highly successful
financial year for the BMW Group. With a new record of over 2.5 million BMW brand
vehicles delivered, we are now the leading manufacturer in the premium segment
worldwide. With great resolve, the Board of Management continued to develop the
key strategies that will shape the future of the BMW Group and create the ideal
conditions for an attractive product portfolio precisely tailored to meet the needs
of our customers as we move forward. The fact that we are on the right track with
our strategy was amply borne out by the enthusiastic media response to the BMW i
Vision Circular at the IAA Mobility in Munich and the presentation of the BMW iX and
BMW 14 models. Even in these uncertain times we therefore look to 2022 with confi-
dence and will remain firmly focused on our mission of moving people with products
that evoke emotions.
Norbert Reithofer
Chairman of the
Supervisory Board
13
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
Other Information
← = Q
Remuneration Report
Group Financial Statements
FINANCIAL SERVICES SEGMENT
New contracts with retail customer
1,828,604
1,908,640
2,003,782
1,845,271
1,956,514
6.0
1 Training for BMW Group employees and temporary staff at consolidated companies worldwide. Data are collated on the basis of direct inputs of participants and, to a small extent, by extrapolation. Data also include e-learning formats.
² Delivery figures presented for 2020 and 2021 are not directly comparable to those of previous years. See sales figures for deliveries in the section Comparison of Forecasts with Actual Outcomes for further information.
3 Deliveries including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 385,705 units, 2018: 455,581 units, 2019: 538,612 units, 2020: 602,247 units, 2021: 651,236 units).
"Production volume including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2017: 396,749 units, 2018: 491,872 units, 2019: 536,509 units, 2020: 602,935 units, 2021: 700,777 units).
5 Efficiency ratio calculated on the basis of energy consumption, adjusted for CHP losses, of vehicle production (BMW Group manufacturing sites incl. joint venture BMW Brilliance Automotive Ltd., excluding motorcycles and contract manufacturers) divided by the total number of vehicles produced (BMW Group
manufacturing sites incl. joint venture BMW Brilliance Automotive Ltd., excluding motorcycles and contract manufacturing).
6 Figures from 2017 and 2018 are audited with limited assurance.
12
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Corporate Governance
Report of the Supervisory Board
Focus of Supervisory Board activities during the past financial year
The Supervisory Board performed the duties incumbent upon it with the utmost dili-
gence in the financial year 2021.
We also addressed the topic of compliance within the BMW Group in depth, including
the current status and ongoing developments. The Chief Compliance Officer pre-
sented the annual report on compliance, including compliance targets and a number
of other selected topics, focusing in particular on measures and processes aimed at
improving the Group's compliance management system on a continuous basis.
In light of the coronavirus pandemic and the accompanying restrictions on events
involving large numbers of people, in March 2021 we agreed on a plan to hold the
Annual General Meeting 2021 on a virtual basis. For the same reason, in December
2021, we approved the plan to hold the Annual General Meeting 2022 again in a
virtual format.
Strategic cooperations were again a key topic at Supervisory Board meetings in 2021,
including in particular the positioning of the BMW Group in the vital Chinese market
going forward and the future structure of the BMW Brilliance Automotive joint ven-
ture. We also deliberated on the intended acquisition of shares in Brilliance Automo-
tive Manufacturing. The Board of Management updated us regularly on the strategic
positioning and status at the various YOUR NOW companies.
The new remuneration system resolved by the Supervisory Board for the members
of the Board of Management during the previous financial year came into effect on
1 January 2021 and was approved by shareholders at the Annual General Meeting
2021 with a majority of 91.6% of valid votes. The Supervisory Board reviewed both
the targeted and the expected level of Board of Management remuneration for the
financial year 2021 in light of the BMW Group's business performance and also the
multi-year remuneration trend of its senior executives and employees in Germany.
Based on a comparative study conducted by an external remuneration consultant
and subsequent oral advice, we concluded that the remuneration of Board of Man-
agement members is appropriate. In December 2021, following thorough preparation
by the Personnel Committee, we adopted the variable remuneration component tar-
gets applicable to Board of Management members for the financial year 2022, taking
into account the budget for the financial year 2022, the long-term business plan and
15
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Report of the Supervisory Board
the corporate strategy. Detailed information on Board of Management remuneration
is provided in the Remuneration Report.
The Board of Management reported on the current status of the diversity concepts
developed by the Group and the extent to which targets have been achieved regard-
ing the proportion of women employed at various levels.
The Board of Management familiarised us with the NEUE KLASSE, which will herald
the third phase of the BMW Group's transformation to electric mobility from 2025
onwards and set new standards in terms of digitalisation, electrification and sus-
tainability in vehicles. We took a detailed look at the key features of the New Cluster
Vehicle Architecture (NCVA), which is specifically geared towards all-electric vehicles.
Furthermore, the Board of Management elucidated potential applications of artificial
intelligence (AI) in production planning processes. The Financial Services segment
was also included in our deliberations, particularly in light of positive developments in
terms of its risk profile and the pre-owned vehicle market. Key topics relating to the
Group's corporate finance system were also discussed. Regarding sales markets we
focused in particular on Asia as a whole.
The Supervisory Board also deliberated at length on key issues arising within the
Board of Management's various key areas of responsibility. We were given an insight
into working methods and working environments at the BMW Group currently being
developed in conjunction with the "Connected Works" project.
We also spent considerable time deliberating on the antitrust proceedings instigated
by the EU Commission in connection with the former working groups of several Ger-
man automobile manufacturers. In this context, we consulted with external attorneys
and an antitrust advisor engaged directly by the Supervisory Board. We were kept
well informed about the latest status of the proceedings at all times. In May 2021, af-
ter the EU Commission significantly scaled down its charges in terms of content and
timing, the BMW Group was able to reverse approximately € 1 billion of the € 1.4 bil-
lion provision recognised in 2019. After the proceedings were concluded in July 2021
with the payment of a fine amounting to around € 373 million, the Supervisory Board
carefully considered the question of potential personal responsibility on the part
of former Board of Management members and any duty of the Supervisory Board
to act. The Supervisory Board also obtained advice on this issue from an attorney,
whose written findings were also explained to us personally at the relevant meeting.
Based on this report and taking into account the supplementary explanations pro-
vided by the antitrust advisor, also regarding the legal particularities of the antitrust
proceedings, the Supervisory Board decided - after thorough discussion and on the
recommendation of the Audit Committee – not to assert any claims against former
members of the Board of Management of BMW AG in this context.
Based on in-depth reports presented by the Board of Management, we continuously
and diligently monitored the quality of management in the BMW Group and advised
the Board of Management on matters relating to the strategic development and
leadership of the BMW Group. We focused in particular on the technological trans-
formation of the BMW Group's drive system technology. At each of its five meetings
(including two two-day meetings), the Supervisory Board held detailed discussions
with the Board of Management on the BMW Group's current position. The Board of
Management also kept the Supervisory Board informed of any matters of significance
outside the framework of formal meetings whenever necessary. I also discussed key
current matters personally with the Chairman of the Board of Management between
meetings on an ongoing basis, as did the Chairman of the Audit Committee with the
Board of Management member responsible for Finance.
Within the Supervisory Board and its committees, dialogues were always conduct-
ed in an open and constructive spirit, both internally and together with members of
the Board of Management. Members of the Supervisory Board and its committees
had adequate opportunity to prepare in advance for the topics to be discussed at
meetings with the aid of well-documented information provided to them. Moreover,
shareholder representatives and employee representatives generally prepared for
meetings in separate preliminary discussions.
In its regular reports on the BMW Group's position, the Board of Management kept
us well informed regarding current developments and performance, including an
in-depth presentation of current sales trends based on figures analysed by market,
model and drive system for both the BMW Group and its competitors, with a sharp fo-
cus on electrified models and developments on the Chinese market. The reports also
contained regular updates on the performance and risk profile of the Financial Ser-
vices segment as well as the development of key performance indicators and liquidity
for the BMW Group as a whole, highlighting deviations from the original forecast and
presenting a range of scenarios for future potential developments. Updates on the
current status of semiconductor supply issues were also provided at every meeting.
The monitoring of corporate strategy remained high on the Supervisory Board's
agenda. The Board of Management provided a comprehensive account of its
strategy with a particular focus on sustainability, including detailed key objectives,
regionally differentiated approaches and specific strategies for each of the Group's
divisions. It also briefed us on the state of progress in terms of electrification, digital-
isation, sustainability and circularity and explained the customer-centric, future-ori-
ented strategy adopted for the BMW brand. Against the backdrop of stricter carbon
emissions regulations across all major markets, the Board of Management provided
us with details of the BMW Group's ambitious decarbonisation targets up to the
year 2030. The latest aspects of vehicle digitalisation, ranging from digital operating
systems and driver assistance technologies to personalised digital experiences, were
also thoroughly explained to us in a presentation, which also focused on differing
customer expectations in various markets as well as the importance of digital fea-
tures as a key purchasing criterion, particularly in the strategically important market
of China. We also held a detailed discussion on the technological challenges posed
for vehicle, environment and drivers when developing automated driving beyond Lev-
el 3. A Supervisory Board member with in-depth expertise in this field provided us
with additional insight into the future of automated driving as well as the importance
of agile software integration in BMW Group vehicles. At each meeting, the Board of
Management reported on its strategy-related work as well as on the current status of
implementation.
It also kept us well informed about current topics of significance, including the
establishing of QUATAC, a consortium promoting the use of quantum computing in
industrial settings, the successful presentation of the BMW Group at the IAA Mobility
in Munich, the highly encouraging results of the employee survey, the BMW Group's
participation in the start-up company Solid Power, which specialises in solid-state
battery cells, and the expansion of the IONITY network for premium charging sta-
tions using 100% green power.
On the basis of a thorough examination, we considered the impact of changes in
legislation and regulations on the BMW Group, in particular the Act on Corporate
Due Diligence in Supply Chains, the Act on Strengthening Financial Market Integrity
(FISG) and the new European exhaust emissions standard (Euro 7).
14
11.5
BMW Group Report 2021
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Report of the Supervisory Board
To Our Stakeholders
The new remuneration system, which gives the Supervisory Board greater influence
on corporate strategy implementation was also the focus of one-on-one discussions
with investor representatives ahead of the Annual General Meeting 2021. Other
topics discussed on these occasions included corporate-governance-related issues,
such as succession planning for future appointments to the Supervisory Board.
187,500
187,116
2017
2018
2019
2020
2021
Change in %
349
373
370
279
389
39.4
2,089,854
371,729
3,438
2,465,021
2,117,854
364,101
4,194
2,486,149
BMW4
2,184,939
347,465
5,100
2,537,504
Production by brand
Rolls-Royce
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
BMW Group in Figures
OTHER NON-FINANCIAL PERFORMANCE FIGURES
GROUP
Spending on employee training and development (in million €)1
AUTOMOTIVE SEGMENT
Deliveries by brand²
BMW3
MINI
Total 3
2,028,841
292,582
3,756
2,325,179
2,213,790
9.1
56.6
2,461,269
9.1
Energy consumption per vehicle produced (in MWh] 5,6
2.17
2.12
2.04
2.12
2.10
- 0.9
MOTORCYCLES SEGMENT
Production volume
BMW
185,682
162,687
5,912
6.5
288,713
9.4
302,138
3.3
5,586
48.7
2,521,514
8.4
2,123,947
168,104
2,168,496
Rolls-Royce
378,486
3,308
Total 4
2,505,741
368,685
4,353
2,541,534
2,205,841
352,729
5,455
2,564,025
1,980,740
271,121
3,776
2,255,637
MINI
The Supervisory Board exhaustively examined the long-term business plan for the
period up to 2027, the framework for which and the ambitious long-term targets con-
tained therein were presented by the Board of Management. Despite the prevailing
volatile and uncertain conditions, the Board of Management reaffirmed the key target
of achieving continuous growth, with a clear focus on the Group's planned sales of
all-electric models. The long-term business plan also included financial planning
and various potential scenarios, each involving their own opportunities and risks.
Following this thorough examination, the Supervisory Board approved the long-term
business plan for the BMW Group.
2,166,644
We reviewed our contribution to ensuring good corporate governance within the
BMW Group and implemented changes concerning individual aspects. For example,
in order to ensure compliance with the Act on Strengthening Financial Market Integ-
rity, a number of changes were made to the Supervisory Board's rules of procedure,
a copy of which is published on the BMW website. Based on a self-assessment, we
concluded that the composition of the Supervisory Board at 31 December 2021 was
in line with the targets stipulated in the diversity concept, the competency profile and
other composition targets. An overview showing each individual Supervisory Board
member's areas of expertise is provided in the Statement of Corporate Governance
on the BMW Group website.
Dr. Karl-Ludwig Kley¹
4
4
100
Dr. Kurt Bock
20
20
100
Christiane Benner
5
5
100
Dr. Marc Bitzer²
4
4
100
100
21
Stefan Schmid
Meetings
Attendance
Attendance in %
Dr.-Ing. Norbert Reithofer
23
23
100
Manfred Schoch
21
21
100
Stefan Quandt
23
23
100
21
Verena zu Dohna³
5
5
Susanne Klatten
7
7
100
Jens Köhler5
2
2
100
Horst Lischka¹
1
1
100
3
Willibald Löw4
In December, the Board of Management presented the budget for the financial year
2022, including HR planning. After detailed deliberations with the Board of Manage-
ment on this subject, the Supervisory Board also gave its approval to this document.
100
1
1
Prof. Dr. Reinhard Hüttl¹
100
Bernhard Ebner
1
1
100
Rachel Empey²
4
Member of the Supervisory Board
100
5
5
100
Johann Horn³
3
3
100
Dr.-Ing. Heinrich Hiesinger
Report of the Supervisory Board
4
Other Information
The meetings held in February and March 2021 focused on preparing the Superviso-
ry Board meeting at which the financial statements for the financial year 2020 were
discussed and examined. After obtaining the auditor's Declaration of Independence,
the Audit Committee recommended to the Supervisory Board that Pricewaterhouse-
Coopers GmbH Wirtschaftsprüfungsgesellschaft ("PwC") be proposed for election as
auditor at the 2021 Annual General Meeting. There were no indications of conflicts of
interest, grounds for exclusion or lack of independence on the part of the auditor.
After thorough deliberation, the Audit Committee concluded that PwC's fee proposal
for the audit of the Company and Group Financial Statements and the integrated
BMW Group Report 2021 as well as for the review of the Half-Year Report 2021 was
appropriate in light of the growing scope of tasks and issued the corresponding
contracts to PwC following their election at the Annual General Meeting in May 2021.
The Audit Committee also specified supplementary audit focus areas and approved
the scope of non-audit services to be provided by PwC and subsequently received
regular reports on the relevant matters. The Audit Committee discussed the quality of
the audit in detail on several occasions at its meetings. In particular, it requested the
relevant department to report on the Group's perception of the audits of the financial
statements for the financial year 2020 as well as on the results of the survey con-
ducted within the Group in this context. Based on this report, the auditor's description
of the quality assurance measures undertaken and the Audit Committee's own expe-
rience with the auditor, the audit was found to be of good quality.
The Board of Management presented the combined Non-financial Statement of
BMW AG and the BMW Group for the financial year 2020 to us. Subsequently, the
representatives of PwC reported to us orally on the results of their "limited assur-
ance" audit. We have engaged PwC again to conduct a "limited assurance" audit of
the Non-financial (Group) Statement for the financial year 2021, to the extent that
it relates to parts of the management report that are not subject to a “reasonable
assurance" audit. Going beyond the formal review required by law, the Audit Commit-
tee also engaged PwC to perform additional review procedures on the content of the
Remuneration Report for the financial year 2021.
17
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Report of the Supervisory Board
The Quarterly Statements were presented by the Board of Management and dis-
cussed with the Audit Committee prior to their publication. Representatives of the
external auditors were present when the Half-Year Financial Report was discussed
at the beginning of August 2021. In conjunction with the implementation of the
requirements of the Act on Strengthening Financial Market Integrity, an executive
session was also held with the external auditor without the members of the Board of
Management being present.
The Audit Committee again dealt extensively with the topic of compliance within
the BMW Group during the year under report. The Chief Compliance Officer of the
BMW Group presented the annual report on compliance, including compliance targets
and a number of other selected topics, focusing in particular on measures and pro-
cesses aimed at improving the Group's compliance management system on a contin-
uous basis. The Head of Corporate Quality also reported on the subject of technical
compliance. We also received a report on the status of tax and customs compliance
management from the relevant head of department.
The Audit Committee held five meetings and three conference calls during the year
under report.
The Presiding Board held four meetings during the financial year 2021. Together
with the Board of Management and senior heads of department, we prepared the
detailed agenda of Supervisory Board meetings (unless a committee was responsible
for doing so) and made suggestions for topics to be reported on at Supervisory Board
meetings.
The Supervisory Board has established a Presiding Board and four committees. In
our capacity as chairmen, the Chairman of the Audit Committee, Dr. Bock, and myself
reported in detail on the work of the Presiding Committee and the committees at each
of the subsequent Supervisory Board meetings. You can read more about the duties,
the composition and the working methods of the Presiding Board and various other
Supervisory Board committees in the Statement of Corporate Governance on the
BMW website.
Description of Presiding Board activities and committee work
In December, the Board of Management and the Supervisory Board issued their Dec-
laration of Compliance with the German Corporate Governance Code. We will comply
with the recommendations of the Code as amended on 16 December 2019, again
without exception.
← = Q
The members of the Supervisory Board jointly attended various training events in
2021. In July, for instance, we took the opportunity to familiarise ourselves thoroughly
with battery cell technology. After an introductory presentation by the Board of Man-
agement covering various related topics, we visited the BMW Group Battery Cell Com-
petence Centre in Munich, where we had the opportunity to listen to an internationally
renowned researcher giving a talk on lithium-ion batteries, followed by a discussion of
the future of battery cell technology. In the newly constructed part of the Research and
Innovation Centre in Munich, we were given a guided tour to gain an insight into the
various new working environments. Partly with the Wirecard case in mind, coopera-
tion between supervisory boards, audit committees and auditors was the subject of a
workshop conducted by representatives of the BMW Group's auditors PwC.
The Board of Management and the Supervisory Board also visited the BMW and
MINI Driving Academy in Maisach together, in order to take an in-depth look at how
the Group's product portfolio can be best aligned to meet differing customer needs.
The members of the Supervisory Board were given the opportunity to test-drive the
full range of vehicle types, comprising all-electric, plug-in hybrid and conventionally
powered vehicles as well as the BMW iX5 Hydrogen, which is powered by hydrogen
fuel cell technology. A particular highlight was the unveiling of the new BMW 7 Series,
the only model in its segment to offer customers a choice between an internal com-
bustion engine and an all-electric drive system in the form of the BMW i7. Apart from
BMW, MINI and Rolls-Royce brand vehicles and a joint venture product, we also took
test drives in various competitor vehicles. Design presentations covering the BMW,
MINI, Rolls-Royce and BMW Motorrad brands as well as the BMW i Vision Circular
allowed us to take a fascinating look into the future.
New members of the Supervisory Board were given the opportunity to participate in
an onboarding programme comprising several modules, during which senior execu-
tives provided useful insights into key business areas and planning processes used
at the BMW Group as well as on key topics currently relevant for Supervisory Board
work.
16
BMW Group Report 2021
The Audit Committee was kept informed of major legal disputes and proceedings.
During the first two quarters of 2021, the Committee spent considerable time dealing
with the antitrust proceedings instigated by the EU Commission in connection with
the former working groups of several German automobile manufacturers, carefully
monitoring the progress of proceedings based on various inputs, including direct
reports drawn up by a lawyer appointed to represent the BMW Group. After the pro-
ceedings were concluded, with the assistance of the consultant attorney and based
on his detailed report, the Audit Committee drew up a recommendation to the Super-
visory Board on the question of whether to assert claims against former members of
the Board of Management.
To Our Stakeholders
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Report of the Supervisory Board
Throughout the entire year, personal conversations with members of the Supervisory
Board enabled me to gather feedback concerning the work of the Supervisory Board.
At the end of 2021, we also assessed the effectiveness of our work at both Supervis-
ory Board and committee level by means of a questionnaire and concluded that there
was a high level of satisfaction with the work of the Supervisory Board. The feedback
we received on the organisation of our meetings as well as the topics covered in
meetings, training sessions and onboarding events was unanimously favourable. The
constructive and trusting cooperation prevailing both within the Supervisory Board
itself and in its work with the Board of Management was also commended. Proposals
put forward for improving individual aspects of Supervisory Board work and dealing
with certain topics in greater depth will be followed up in the coming financial year.
Combined Management Report
The Audit Committee also received reports on the further development of the internal
control system and the main findings of the internal audits performed by Corporate
Audit, as well as details of advance audit planning. The BMW Group's risk profile and
risk management system were discussed on a number of occasions.
The Supervisory Board is careful to avoid potential conflicts of interest in its delib-
erations and decisions. Therefore, as a precautionary measure, I did not take part in
the Supervisory Board's deliberations and resolution and the preparation of the Audit
Committee's recommendation to the Supervisory Board on whether claims should be
asserted against former members of the Board of Management in connection with
the EU Commission's antitrust proceedings against German automakers. I left the
room whenever these matters came up for discussion. No other potential conflicts of
interest were identified or reported.
The Audit Committee concurred with the decision of the Board of Management to
raise the Company's share capital in accordance with Article 4 (5) of the Articles of
Incorporation (Authorised Capital 2019) by € 1,715,000 and issue a corresponding
number of new non-voting bearer shares of preferred stock in conjunction with the
Employee Share Programme.
The shareholder representatives Dr. Karl-Ludwig Kley, Prof. Reinhard Hüttl and
Simone Menne left the Supervisory Board with effect from the end of the Annual
General Meeting 2021. We would like to thank them for their constructive input and
faithful cooperation during their periods of office, which stretched over many years in
some cases. Our special thanks go to Dr. Kley: as a member of the Presiding Board
and various committees, but especially as Chairman of the Audit Committee, he drew
on his many years of broad business experience to make valuable contributions and
provided invaluable impetus for the BMW Group in corporate discussions.
The Annual General Meeting elected Dr. Marc Bitzer, Rachel Empey and Prof. Dr. Dr.
h.c. Christoph M. Schmidt as new members. Ms. Empey and Dr. Bitzer both have
extensive experience and expertise in capital markets and customer requirements.
Ms. Empey also has specialised knowledge in financial services and IT, Dr. Bitzer in
the fields of technologies and supply chains. Prof. Schmidt has extensive expertise in
the areas of science, sustainability and resources. With their broad range of exper-
tise, the three newly elected members complement the composition of the Supervi-
sory Board in an excellent manner.
The employee representatives Horst Lischka, Willibald Löw, Brigitte Rödig and
Verena zu Dohna left the Supervisory Board at their own request during the financial
year 2021. We wish to thank them for their constructive work and faithful cooperation
during their periods of office, in some cases stretching over many years. Our spe-
cial thanks go to Mr. Löw, who has been loyally connected with the BMW Group for
decades as an employee, Chairman of the Works Council at the Landshut site, and
member of the Supervisory Board. By court order, and to replace members of the Su-
pervisory Board for their respective remaining terms of office, Johann Horn, District
Manager of IG Metall Bavaria, was appointed in May 2021, Jens Köhler, Chairman
of the Works Council at the Leipzig site, in August 2021, Bernhard Ebner, Chairman
of the Works Council at the Landshut site, in October 2021 and Sibylle Wankel, First
Authorized Representative of IG Metall Munich, in January 2022.
Dr. Kurt Bock, member of the Supervisory Board since 2018 and Chairman of the
Audit Committee since 2020, was elected to succeed Dr. Kley as a member of the
Presiding Committee and the Personnel and Nomination Committees. An overview of
the composition of the Supervisory Board and its committees is provided both in this
report (Corporate Governance) and in the separate Statement on Corporate Governance,
which is available on the BMW Group website together with the curricula vitae of
Supervisory Board members.
Disclosure of attendance at meetings by individual members
Examination of financial statements and the profit distribution proposal
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft ("PwC") was ap-
pointed as external auditor for the financial year 2021. PwC conducted a review of the
condensed interim Group Financial Statements and the Interim Group Management
Report for the six-month period ended 30 June 2021 and presented its findings to
both the Audit Committee and the Supervisory Board in separate executive sessions.
No issues were identified that might indicate that the condensed Interim Group Fi-
nancial Statements and Interim Group Management Report had not been prepared in
accordance with the applicable provisions in all material respects.
PwC audited the Company and Group Financial Statements for the financial year
2021 authorised for issue by the Board of Management on 8 March 2022 and is-
sued an unqualified audit opinion, signed for the third consecutive financial year by
Petra Justenhoven as independent auditor (Wirtschaftsprüferin) and Andreas Fell
19
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
In its report on the audit of over-the-counter derivatives entered into by BMW AG
during the financial year 2020, the external auditor confirmed to the Audit Committee
the effectiveness of the system in place at BMW AG in complying with the regulatory
requirements of the European Market Infrastructure Regulation.
Corporate Governance
Composition of the Supervisory Board, the Presiding Board and the Supervisory
Board's committees
The Supervisory Board extended the mandates of four Board of Management mem-
bers during the year under report.
The attendance rate at Supervisory Board meetings was around 99%, and 100% for
the meetings and conference calls held by the various committees and the Presid-
ing Board. The meetings were all held on a face-to-face basis. In individual cases,
however, members participated virtually due to the coronavirus pandemic. The table
below shows attendance by individual members:
Remuneration Report
The Nomination Committee convened twice during the financial year 2021. Taking
into account the German Corporate Governance Code (GCGC) and the composition
requirements adopted by the Supervisory Board, the Nomination Committee ad-
dressed the issue of the composition of the Supervisory Board regarding shareholder
representatives.
The Supervisory Board appointed Dr.-Ing. Joachim Post as his successor with effect
from 1 January 2022. Dr. Post has worked for the BMW Group since 2002, most
recently as head of the "Product Line Midsize Class BMW" unit. He was previously
the manager responsible for the BMW Group's vehicle strategy and, as the head of
various BMW model lines, was responsible for promoting the electrification of the
vehicle fleet.
The Mediation Committee, which is prescribed by law, did not need to convene
during the financial year 2021.
Composition of the Board of Management
Dr.-Ing. Andreas Wendt, Board of Management member for the Purchasing and
Supplier Network, retired on 31 December 2021. We would like to thank Dr. Wendt for
his many years of loyal and dedicated work for BMW AG, most recently for guiding the
BMW Group successfully through the ongoing semiconductor shortage.
18
To Our Stakeholders
BMW Group Report 2021
At its four meetings, the Personnel Committee focused primarily on succession
planning for the Board of Management, preparing personnel-related decisions and
dealing with Board of Management remuneration issues. The Committee reviewed
the appropriateness of Board of Management remuneration for the financial years
2020 and 2021 and considered all relevant developments during that period, includ-
ing the impact of the coronavirus pandemic, when determining the corporate earn-
ings and performance factors applicable for Board of Management remuneration in
2020 and 2021. In addition, the Committee deliberated on targets for the financial
year 2022. The Personnel Committee also prepared reappointments, performed the
groundwork for the Supervisory Board to appoint a Board of Management member
responsible for the Purchasing and Supplier Network, and granted approval for one
member of the Board of Management to assume a mandate outside the Group. A
resolution to approve loans granted by and transactions concluded by BMW Bank
GmbH with members of the representative bodies of BMW AG was renewed, and
updated contracts of Board of Management members were prepared.
Group Financial Statements
Report of the Supervisory Board
Corporate Governance
Remuneration Report
Other Information
← = Q
Combined Management Report
6,891
56,665
12,022
10,417
32,001
12,471
51,498
28,675
12,642
3,709
6,863
11,956
18,819
Liabilities from customer deposits (banking)
13,175
20
16,702
22
12,406
12,735
19,362
3,507
Financial Statements
than five years
Remuneration Report
Corporate Governance
16,466
Other Information
← = Q
Notes to the Group
35 Financial liabilities
Financial liabilities of the BMW Group comprise the follow-
ing:
31.12.2021
31.12.2020
in € million
Bonds
Asset-backed financing transactions
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
Total
Maturity within
one year
Maturity between
one and five years
Maturity later
Total
Liabilities to banks
533
3,186
1,148
1,374
1,374
550
550
736
75
342
1,153
248
399
1,180
Financial liabilities
41,121
49,626
12,716
103,463
38,986
52,771
Group Financial Statements
14,619
38
4,918
517
1,875
975
9,079
4,578
3,159
1,300
9,037
Lease liabilities
475
1,131
814
2,420
492
1,181
838
2,511
Derivative instruments
Commercial paper
Other
1,146
581
148
593
Combined Management Report
1,111
BMW Group Report 2021
1,448
1,333
13,982
352
7,127
-86
- 5,621
- 1,800
13,954
6,748
in € million
Statutory and voluntary warranty obligations, product guarantees
Obligations for personnel and social expenses
Other obligations
Other obligations for ongoing operational expenses
Other provisions
1.1.2020
Translation
differences
Additions
Reversal of
discounting
thereof due
-214
Utilised
- 1,108
1,603
106,376
2,582
14
2,083
-23
- 1,299
-40
3,317
2,196
Other obligations
3,666
41
1,219
-9
-994
-1,334
2,589
1,421
Other obligations for ongoing operational expenses
Other provisions
* Prior year's figures adjusted.
56
To Our Stakeholders
Reversed
within one year
-94
1.288
- 1.399
- 171
1,516
1,486
13.209
-433
7.232
186
- 5.549
-663
13,982
7,494
Depending on when claims occur, it is possible that the
BMW Group may be called upon to fulfil the warranty or
guarantee obligations over the whole period of the warranty
or guarantee. Warranty provisions include amounts recog-
nised in connection with the exhaust gas recirculation cooler.
Expected reimbursement claims at 31 December 2021
amounted to € 1,112 million (2020: € 1,046 million) and are
disclosed within other assets (see note 28].
Provisions for obligations for personnel and social expenses
comprise mainly obligations relating to performance-related
remuneration components, workforce measures as well as
pre-retirement part-time working arrangements and
long-service awards.
The provisions for other obligations cover numerous specific
risks and uncertain obligations, in particular for litigation and
liability risks. Further information on the reversal of the pro-
vision relating to EU Commission antitrust proceedings is
provided in note 10.
Other obligations for ongoing operational expenses include
in particular expected payments for bonuses and other price
deductions.
34 Income tax liabilities
Current income tax liabilities totalling € 921 million (2020:
€ 747 million) include € 44 million (2020: € 40 million) which
are expected to be settled after more than twelve months.
Liabilities may be settled earlier than this depending on the
timing of the underlying proceedings.
197
1.892
31.12.2020
2,794
-337
5.550
-277
3.178
158
- 2.354
- 124
6,131
1,731
2.496
- 19
1.405
19
- 1.288
-31
2,582
1,483
3.271
-43
1.361
9
- 508
3,753
Planned future cash outflows from variable lease payments,
which are not taken into account in the measurement of
lease liabilities, are expected to amount to € 48 million
(2020: € 57 million).
Issuer
198
-34
752
Liabilities relating to financing activities
114,477
- 6,336
- 3,573
787
185
105,540
199
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Corporate Governance
Remuneration Report
Other Information
← = Q
Bonds comprise:
Financial Statements
The following details apply to commercial paper:
-78
Issue volume
864
740
Liabilities to banks
11,436
-2,172
- 248
21
9,037
Lease liabilities
2,895
- 494
-63
173
2,511
Commercial paper
2,615
-2,025
-40
550
Financial liabilities towards companies in which an investment is held
296
492
-48
Other (excluding interest payable)
16,466
Weighted average
Issue volume
2.3
BMW Finance N. V.
EUR 300 million
26
-0.6
variable
SEK 1,500 million
4.0
0.5
variable
USD 500 million
3.0
0.9
fixed
EUR 22,900 million
6.9
0.8
fixed
CNY 17,000 million
2.6
3.4
3.0
Weighted average
NOK 1,730 million
0.1
Obligations for personnel and social expenses
Interest
in relevant currency
(ISO Code)
maturity period
(in years)
nominal interest rate
in relevant
Weighted
average
Weighted
average
(in %)
Issuer
currency
(ISO Code)
maturity period nominal interest
(in days)
rate (in %)
BMW Finance N. V.
variable
EUR 2,000 million
2.2
0.0
BMW US Capital, LLC USD 1,220 million
16
variable
Similarly, potential future cash outflows amounting to
€ 1,262 million (2020: € 1,252 million) (undiscounted) have
not been taken into account in the measurement of lease
liabilities as it is not reasonably certain that the leases will be
renewed (or not terminated). These cash outflows relate to
periods of up to 62 years (2020: up to 74 years). The decrease
in the period under report was due to a contractual adjust-
ment.
- 520
14,657
Other changes
31.12.2021
-6
51,498
18,819
-331
874
19,362
Liabilities from customer deposits (banking)
16,466
-229
465
16,702
Liabilities to banks
9,037
-357
458
-59
9,079
Lease liabilities
2,511
in fair values
-787
-464
1,647
56,665
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Liabilities related to financing activities can be reconciled as
follows:
Changes due to
the acquisition or
Cash inflows /
disposal
Changes due to
Changes
in € million
Bonds
Asset-backed financing transactions
1.1.2021
outflows
of companies exchange rate factors
- 6,021
2,329
42
2,420
Asset-backed financing transactions
1. 1. 2020
Cash inflows/
outflows
disposal
Changes due to
Changes
of companies exchange rate factors
in fair values
Other changes
31.12.2020
62,165
- 4,306
- 1,972
766
12
56,665
19,549
-82
-648
18,819
Liabilities from customer deposits (banking)
Bonds
331
in € million
Changes due to
Commercial paper
550
781
43
1,374
Financial liabilities towards companies in which an investment is held
740
1,295
153
2,188
Other (excluding interest payable)
752
Liabilities relating to financing activities
105,540
- 18
- 5,344
-10
724
3,672
- 846
325
103,347
the acquisition or
1,798
12,451
-212
632
2,588
15,483 14,898
thereof investment grade
5,302
5,041
6,377
6,316
653
625
660
12,332
thereof mixed funds (funds without a rating)
thereof non-investment grade
2,440
2,285
704
624
7
7
3,151
11,982
6,940
7,081
7,326
Other Information
← = Q
Depending on the cash flow profile and risk structure of the
pension obligations involved, plan assets relating to defined
benefit plans are invested in a diversified portfolio.
Plan assets in Germany, the UK and other countries com-
prised the following:
Germany
Financial Statements
United Kingdom
Other
Total
in € million
Equity instruments
31.12.2021 31.12.2020 31.12.2021 31.12.2020 31.12.2021 31.12.2020 31.12.2021 31.12.2020
2,875
2,166
342
348
85
74
3,302
Debt instruments
7,742
2,916
Real estate funds
20
19
19,226
17,726
Debt instruments
800
779
646
673
5
1
1,451
1,453
thereof investment grade
328
324
328
324
thereof mixed funds (funds without a rating)
472
455
646
673
733
Remuneration Report
806
7,580
20
19
Money market funds
157
85
37
2
194
87
Absolute return funds
Other
223
128
I
4
6
227
134
Total with quoted market price
10,840
9,620
7,373
Corporate Governance
Group Financial Statements
Notes to the Group
Combined Management Report
Corporate Governance
Remuneration Report
Other Information
← = Q
Defined
benefit obligation
Plan assets
24,652
-21,340
Total
3,312
488
337
- 303
34
-54
- 54
Effect of limitation
of the net defined
benefit asset to the
asset ceiling
Net defined
benefit liability
2
3,314
488
Group Financial Statements
Notes to the Group
Financial Statements
34
thereof assets
31 December 2020
191
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
in € million
1 January 2020
EXPENSE / INCOME
Current service cost
Interest expense (+)/income (-)
Past service cost
Gains (-) or losses (+) arising from settlements
REMEASUREMENTS
Gains (-) or losses (+) on plan assets, excluding amounts included in interest income
Gains (-) or losses (+) arising from changes in financial assumptions
Gains (-) or losses (+) arising from changes in demographic assumptions
Gains (-) or losses (+) arising from experience adjustments
Changes in the limitation of the net defined benefit asset to the asset ceiling
Transfers to fund
Employee contributions
Pensions and other benefits paid
Translation differences and other changes
thereof pension provisions
1,118
- 54
- 1,880
3,677
3
3,680
3,693
-13
192
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
In conjunction with a measure aimed at modernising the
pension model in Germany, employees were given the choice
of remaining in the previous defined benefit plan or switch-
ing to the defined contribution plan. The fixed amounts to
which employees were previously entitled in the defined
benefit plan remain unchanged going forward and therefore
this is one factor which results in a plan amendment in
accordance with IAS 19. The previous pension entitlement
trend (Festbetragstrend) was converted – with the exception
of one remaining component - into a career trend. Further-
more, an employee switching to the defined contribution
plan received an entitlement deemed to be equivalent in
legal terms to their previous rights.
This gave rise to an overall positive impact of € 562 million
on past service cost, which was recognised in the income
statement, primarily in the form of reductions to cost of sales
as well as to selling and administrative expenses.
Actuarial gains arising in the financial year 2021 resulted in a
surplus of plan assets over liabilities for one of the pension
plans in the United Kingdom. However, because there is no
right of reimbursement or right to reduce future contributions
to the fund, the amount of plan assets recognised has been
limited to the amount of the obligations.
In the previous financial year, employment contract termina-
tion agreements were agreed with employees, resulting in
the persons concerned leaving the BMW Group with vested
pension benefits. Past service cost resulted mainly from dif-
fering assumptions used to calculate statutory pension enti-
tlements on the one hand and for the ongoing accounting for
active employees on the other.
193
BMW Group Report 2021
To Our Stakeholders
-22,910
-1,880
-36
582
-1,880
2,726
2,726
2,726
- 239
- 144
- 239
- 239
-144
-144
1
1
-524
-524
- 524
84
- 84
-645
639
-6
-6
- 618
26,587
-36
1,128
thereof non-investment grade
5
in € million
in %
-3,514
-13.2
3,311
13.2
4,585
17.2
increase of 0.25 %
610
2.4
766
2.9
Pension level trend
decrease of 0.25 %
- 586
-2.3
- 721
- 2.7
increase of 1 year
896
in %
-10.6
3.6
-2,650
Discount rate
↑
= Q
195
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Corporate Governance
Remuneration Report
Other Information
← = Q
Financial Statements
-
The sensitivity analysis provided below shows the extent to
which changes in individual factors – independently of each
other could influence the defined benefit obligation at the
end of the reporting period.
-
It is only possible to aggregate sensitivities to a limited
extent. Since the change in obligation follows a non-linear
pattern, estimates made on the basis of the specified sensi-
tivities are only possible with this restriction. The calculation
of sensitivities using ranges other than those specified could
result in a disproportional change in the defined benefit obli-
gation.
In the UK, the sensitivity analysis for the pension level trend
also takes account of restrictions due to caps and floors.
Change in defined benefit obligation
31.12.2021
31.12.2020
in € million
increase of 0.75 %
decrease of 0.75 %
100.0
1,078
Average life expectancy
Remuneration Report
Other Information
← = Q
Financial Statements
33 Other provisions
Other provisions changed during the year as follows:
in € million
1.1.2021*
Translation
differences
Additions
Reversal of
discounting
thereof due
Statutory and voluntary warranty obligations, product guarantees
6,131
241
2,714
-54
Utilised
-2,220
Reversed
31.12.2021
within one year
Corporate Governance
4.1
Group Financial Statements
Notes to the Group
To Our Stakeholders
decrease of 1 year
-910
-3.6
- 1,081
- 4.1
increase of 0.25 %
3
218
0.8
Pension entitlement trend
decrease of 0.25 %
-3
-210
- 0.8
increase of 0.10 %
63
Career trend
decrease of 0.10 %
-62
196
BMW Group Report 2021
Combined Management Report
6,600
100.0
100.0
Other
1,207
820
214
244
116
113
1,537
1,177
Total without quoted market price
3,265
2,831
2,388
2,216
132
137
5,785
5,184
Total plan assets
14,105
fixed
1,311
9,968
1,461
10
1
5
1
Real estate
494
428
786
656
1,280
1,084
Cash and cash equivalents
55
159
1
56
159
Absolute return funds
709
645
742
643
23
100.0
9,589
870
66.2
-
59.9
62.9
Pensioners
30.6
27.4
50.4
42.2
32.2
29.9
Former employees with vested benefits
7.4
6.4
49.6
57.8
7.9
7.2
Defined benefit obligation
100.0
100.0
62.0
938
Current employees
31.12.2021
25,011
22,910
In the financial year 2021, disbursements out of the
plan assets are expected to exceed the employer's contribu-
tions to plan assets by € 225 million. Plan assets of the
BMW Group include own transferable financial instruments
amounting to € 2 million (2020: € 1 million).
194
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
The BMW Group is exposed to risks arising both from
defined benefit plans and defined contribution plans with a
minimum return guarantee. The discount rates used to cal-
culate pension obligations are subject to market fluctuations
and therefore influence the level of the obligations. Further-
more, changes in other actuarial parameters, such as
expected rates of inflation, also have an impact on pension
obligations. In order to reduce currency exposures, a sub-
stantial portion of plan assets is either invested in the same
currency as the underlying plan or hedged by means of cur-
rency derivatives. As part of the internal reporting proce-
dures and for internal management purposes, financial risks
relating to the pension plans are reported using a value-at-
risk approach by reference to the pension deficit. The invest-
ment strategy is also subject to regular review together with
external consultants, with the aim of ensuring that invest-
ments are structured to match the timing of pension pay-
ments and the expected development of pension obliga-
tions. In this way, fluctuations in pension funding shortfalls
are reduced.
The defined benefit obligation relates to current employees,
pensioners and former employees with vested benefits as
follows:
Germany
United Kingdom
Other
in %
31.12.2021
31.12.2020
31.12.2021
31.12.2020
31.12.2020
JPY 13,400 million
488
0.6
3,108
Refund liabilities for future leased products
2,911
3,123
3,546
3,820
5,485
5,955
31.12.2020
31.12.2021
Bonuses and sales aides
Deferred income
Contract liabilities
in € million
Other liabilities comprise the following items:
36 Other liabilities
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
200
3,926
1.4
Payables to other companies in which an investment is held
814
5.6
As in the previous year, trade payables are due within one
year.
37 Trade payables
Grants comprise mainly public sector funds to promote
regional structures and which have been invested in the pro-
duction plants in Brazil, China, Germany, Mexico, Austria
and South Africa amongst others. The grants are partly sub-
ject to holding periods for the assets concerned of up to five
years and/or minimum employment figures or minimum
production figures. Grant income is recognised in the income
statement over the useful lives of the assets to which it
relates.
Deferred income includes down payments received on
leases with customers as well as deferred grants.
Contract liabilities relate to obligations for service and repair
work as well as telematics services and roadside assistance
agreed to be part of the sale of a vehicle (in some cases mul-
ti-component arrangements). An amount of € 3,035 million
(2020: € 2,604 million) was released from contract liabilities
in the financial year and recognised as revenues from con-
tracts with customers.
21,187
1,550
1,546
22,420
133
123
139
160
180
180
Other liabilities
Sundry
Social security
Payables to subsidiaries
1,019
895
Deposits received
1,484
1,143
Other taxes
2,367
3.3
Other advance payments received for orders
fixed
0.4
3.4
USD 2,138 million
variable
BMW US Capital, LLC
3.2
10.0
AUD 273 million
fixed
0.9
6.0
GBP 600 million
fixed
2.3
4.0
fixed
2.5
5.6
USD 1,750 million
fixed
2.7
6.1
HKD 1,759 million
CAD 800 million
fixed
fixed
USD 15,400 million
NOK 750 million
3.0
0.2
3.0
6.7
JPY 10,000 million
fixed
Other
0.5
CHF 600 million
fixed
3.3
10.0
NOK 1,000 million
fixed
6.8
4.1
1.4
EUR 1,500 million
0.8
BMW International Investment B. V.
8.7
GBP 200 million
variable
2.0
0.0
fixed
GBP 1,550 million
fixed
At fair value through
other comprehensive
income
At fair value
through profit or loss
At amortised cost
Not allocated to an
IFRS 9 category
At fair value
through profit or loss
At fair value through
other comprehensive
income
Cash flow hedges
31.12.2021
Financial Statements
Fair value hedges
Derivative instruments
Financial assets
64,795
Other investments
Receivables from sales financing
At amortised cost
947
23
22,622
26
ASSETS
15,983
216
Trade receivables
Cash and cash equivalents
Other
35
Loans to third parties
985
3,238
Marketable securities and investment funds
390
Other derivative instruments
1,012
1,596
63,104
294
in € million
With respect to the Korean investigation, BMW AG recog-
nised a provision during the financial year. The Turkish anti-
trust authority issued its decision in January 2022, abstain-
ing from issuing a fine. Possible risks for the BMW Group in
connection with the antitrust proceedings in China cannot be
currently foreseen, either in terms of their outcome nor the
amounts involved. Further disclosures pursuant to IAS 37.86
cannot be provided at present.
The carrying amounts of financial instruments are assigned
Other financial commitments
On 22 January 2020, the U.S. Securities and Exchange Com-
mission (SEC) opened an investigation into possible viola-
tions of U.S. securities laws by the BMW Group relating to
disclosures regarding the BMW Group's unit sales of new
vehicles. This matter was settled with the SEC, without admit-
ting or denying the allegations, and the BMW Group con-
sented to the entry of an Order finding violations of the U.S.
Securities Act and agreed to pay a penalty of US $18 million.
Certain BMW Group entities and their officers are defendants
in private securities litigation following the SEC Order. Possi-
ble risks for the BMW Group cannot be quantified at present.
Further disclosures pursuant to IAS 37.86 cannot be provided
at present.
future recall actions going forward. Further disclosures pur-
suant to IAS 37.86 cannot be provided at the present time.
Regulatory authorities have ordered the BMW Group to recall
various vehicle models in conjunction with airbags supplied
by the Takata group of companies. Provision for the costs
involved has been recognised within warranty provisions. In
addition to the risks already covered by warranty provisions,
further BMW Group vehicles may possibly be affected by
In addition, the Chinese State Administration for Market
Regulation opened antitrust proceedings against BMW AG
in March 2019, followed by the Korea Fair Trade Commission
in May 2020 and the Turkish Competition Authority in July
2020.
The class action lawsuits in Canada and the private lawsuits
in South Korea remain at an early stage. Further civil law-
suits based on the allegations are possible going forward.
been brought in the USA and Canada as well as several pri-
vate lawsuits in South Korea. In the USA, the customer class
actions were withdrawn and the dealer class action was dis-
missed.
In addition to liabilities, provisions and contingent liabilities,
the following commitments exist for the BMW Group at the
end of the reporting period:
The EU Commission's antitrust proceedings (see note 10 for
additional information) was settled on 8 July 2021. In relation
to these allegations, numerous class action lawsuits have
Other contingent liabilities mainly comprise risks relating to
taxes and customs duties.
1,292
1,466
1,067
1,202
43
46
The BMW Group determines its best estimate of contingent
liabilities based on the information available at the date of
preparing the Group Financial Statements. This assessment
may change over time and is adjusted regularly on the basis
of new information and circumstances. A part of the risks is
covered by insurance.
to IFRS 9 categories in the following table:
in € million
Purchase commitments for
intangible assets
39 Financial instruments
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Combined Management Report
Purchase commitments for property,
plant and equipment
To Our Stakeholders
202
2,787
2,190
3,264
3,350
31.12.2020
31.12.2021
BMW Group Report 2021
2,261
At fair value through
other comprehensive
Receivables from subsidiaries
income
At amortised cost
77
31.12.2021
Financial Statements
Financial liabilities
LIABILITIES
At fair value
through profit or loss
in € million
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
← = Q
203
Not allocated to an
IFRS 9 category
Bonds
9,037
56,665
1,006
Other derivative instruments
Fair value hedges
Cash flow hedges
Derivative instruments
At amortised cost
19,362
1,374
Commercial paper
16,702
Liabilities from customer deposits (banking)
9,079
Liabilities to banks
51,498
Asset-backed financing transactions
30,048
2,693
3,245
12,622
199
22
49
866
3,245
115
915
413
851
21,173
258
477
Not allocated to an
IFRS 9 category
31.12.2020
694
1,992
2,298
546
Receivables from companies in which an
82,939
31,041
2,371
3,238
88,036
Total
5,774
1,504
5,517
1,547
Remaining other assets
454
295
Collateral assets
2,048
2,190
investment is held
Other assets
105
Other Information
77
Stage 1
Stage 2
Stage 3
Expected
General
Simplified
Total
Stage 3
credit loss
Simplified
Total
Expected
credit loss
79,639
1,071
374
81,084
General
377
Stage 2
31.12.2020
210
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Corporate Governance
Remuneration Report
Stage 1
Other Information
Receivables from sales financing are allocated to internally
defined rating categories based on credit risk.
The classification into creditworthiness levels is based on
default probabilities. The related gross carrying amounts in
accordance with IFRS 9 are allocated as follows:
in € million
Gross carrying amount of financial assets with good credit ratings
Gross carrying amount of financial assets with medium credit ratings
Gross carrying amount of financial assets with poor credit ratings
Total
Further disclosures relating to credit risk - in particular with
regard to the amounts of impairment losses recognised -
are provided in the explanatory notes to the relevant catego-
ries of receivables in notes 25 and 730.
Financial Statements
31.12.2021
← = Q
2,345
76,356
367
17
1,019
2,091
802
83,020
4,511
431
937
1,054
1,599
80,252
4,223
422
1,019
85,916
1,639
89,016
1,633
118
1,907
78,356
406
3,310
2,671
44
6,025
517
705
3,778
38
5,469
431
71
769
13
1,054
1,653
2,293
60
34
To Our Stakeholders
BMW Group Report 2021
201
31.12.2020
Reported on
equity and
liabilities side
358
Net gains and losses arising on financial instruments meas-
ured at fair value through other comprehensive income
mainly relate to changes in the fair value of marketable secu-
rities. Further details are provided in the disclosures relating
to the statement of comprehensive income ( note 19). Total
interest income arising on financial assets measured at fair
value through other comprehensive income amounted to
€ 31 million (2020: € 37 million) and total interest expense to
€ 18 million (2020: € 30 million).
Combined Management Report
Net gains and losses arising on financial instruments meas-
ured at fair value through profit and loss mainly include
results from the fair value measurement of stand-alone
derivatives, marketable securities and shares in investment
funds, as well as other financial assets.
Net gains and losses arising on financial liabilities measured
at amortised cost comprise mainly exchange rate gains/
losses as well as fair value gains/losses on hedged items in
designated hedging relationships that are recognised in the
income statement.
Total interest income arising on financial assets measured at
amortised cost relates mainly to the interest income earned
on credit financing and reported within revenues. Total inter-
est expenses arising on financial instruments measured at
amortised cost amounted to € 1.6 billion (2020: € 1.8 billion).
in € million
2021
2020
Financial instruments measured at fair value through other comprehensive income
-45
Net gains and losses arising on financial assets measured at
amortised cost comprise mainly exchange rate gains / losses
and impairment losses/reversals.
7
Group Financial Statements
Notes to the Group
Financial Statements
Remuneration Report
56
31.12.2020
31.12.2021
Contingent liabilities
Other
Guarantees
Litigation
Corporate Governance
Investment subsidies
The following contingent liabilities existed at the balance
sheet date:
Contingent liabilities
commitments
38 Contingent liabilities and other financial
OTHER DISCLOSURES
← = Q
Other Information
in € million
Financial instruments measured at fair value through profit or loss
-35
310
Within the financial services business, items financed for
retail customers and dealerships (such as vehicles, facilities
and property) serve as first-ranking collateral with a recover-
able value. Security is also put up by customers in the form
of collateral asset pledges, asset assignment and first-rank-
ing mortgages, supplemented where appropriate by warran-
ties and guarantees. Items previously held as collateral that
are subsequently acquired relate mainly to vehicles. As a
rule, these assets can be converted into cash at short notice
through the dealership organisation. Creditworthiness test-
ing is an important aspect of the BMW Group's credit risk
management. Every borrower's creditworthiness is tested
for all credit financing and lease contracts entered into by the
BMW Group. In the case of retail customer financing, credit-
worthiness is assessed using validated scoring systems
integrated in the purchasing process. In the area of dealer-
ship financing, creditworthiness is assessed by means of
ongoing credit monitoring and an internal rating system that
takes account not only of the material credit standing of the
borrower, but also of qualitative factors, such as past reliabil-
ity in business relations.
The credit risk on trade receivables is assessed mainly on
the basis of information relating to overdue amounts. The
gross carrying amounts of these receivables are allocated in
accordance with IFRS 9 to overdue ranges used for manage-
ment purposes as follows:
in € million
Not overdue
1-30 days overdue
31-60 days overdue
61-90 days overdue
More than 90 days overdue
Total
31.12.2021
The credit risk relating to cash deposits and derivative finan-
cial instruments is minimised by the fact that the Group only
enters into such contracts with parties of first-class credit
standing.
31.12.2020
2,002
120
229
12
31
14
23
2,113
In the case of trade receivables, customers are regularly
assessed with regard to their credit risk. Depending on con-
tractual status, necessary measures, such as dunning pro-
cedures, are initiated in good time.
In the case of all relationships underlying non-derivative
financial instruments, in order to minimise the credit risk and
depending on the nature and amount of exposure, collateral
is required, credit information and references obtained or
historical data based on the existing business relationship,
in particular payment behaviour, reviewed.
Notwithstanding the existence of collateral accepted, the
carrying amount of financial assets (with the exception of
derivative financial instruments) generally represents the
maximum credit risk. In addition, the credit risk is increased
by additional unutilised loan commitments in the dealership
financing line of business. Total dealership financing credit
risk at the end of the reporting period therefore amounted to
€ 31,508 million (2020: € 30,682 million).
Financial assets measured at amortised cost
803
- 1,050
Financial liabilities measured at amortised cost
818
-350
209
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
16,466
← = Q
Credit risk
The BMW Group is exposed to counterparty credit risks if
contractual partners, for example a retail customer or a deal-
ership, are unable or only partially able to meet their contrac-
tual obligations. Information on the management of credit
risk for receivables from financial services is provided in the
Combined Management Report (see section Outlook, Risk
and Opportunity Management).
131
550
20
Lease liabilities
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Corporate Governance
Remuneration Report
Other Information
208
← = Q
Offsetting of financial instruments
Derivative financial instruments of the BMW Group are sub-
ject to legally enforceable master netting agreements or
similar contracts. However, receivables and payables relat-
ing to derivative financial instruments are not netted due to
non-fulfilment of the stipulated criteria. Offsetting would
have the following impact on the carrying amounts of deriv-
atives:
in € million
Balance sheet amounts as reported
Gross amount of derivatives which can be offset in case of insolvency
Net amount after offsetting
Non-derivative financial assets and liabilities are only offset
if a legally enforceable right currently exists and it is actually
intended to offset the relevant amounts. No financial assets
and liabilities have been netted in the BMW Group due to the
fact that the necessary requirements for netting have not
been met.
Gains and losses on financial instruments
Financial Statements
The following table shows the net gains and losses arising
on financial instruments in accordance with IFRS 9:
Gains and losses recognised in the income statement are
reported within the line item "Other financial result". Gains
and losses recognised in the income statement in the finan-
cial year 2021 included an unrealised net positive amount of
€ 352 million (2020: € 84 million).
- 5
Since the pricing from the financing rounds is considered to
be the decisive input factor for the valuation, increases or
decreases in valuation give rise to a similar change in the
equity instrument that is recognised in the income state-
As part of the process of analysing valuations, the external
fund manager reviews the investment-specific milestones,
including an analysis of financial, technical and liquidity-spe-
cific performance indicators. Based on this analysis, it is
considered whether the price of the most recent financing
round is acceptable as a reasonable market valuation, in
particular for early-stage or growth-phase investments. Key
performance indicators used for the purpose of milestone
analysis are highly dependent on the business model under-
lying the investment. Typical technical key performance indi-
cators relate to licenses and patents held, the stage of tech-
nology development such as evidence of feasibility and
prototypes, market entries, customer and user growth and
appointments to key management positions. Key financial
performance indicators used are revenues, EBITDA and the
corresponding growth rate and/or development of specific
contribution margins. Key liquidity-specific performance
indicators are cash on hand, cash burn rates and prospects
for future financing rounds.
-
Financial instruments allocated to Level 3 relate mainly to
investments in a private-equity fund. The valuation of
unlisted equity instruments is determined primarily using the
market-based approach. In particular, the financing rounds
that take place within the private equity sector - usually on a
regular basis at intervals of approximately 12 to 24 months
represent a significant input factor for these purposes. In
addition, the investment advisor provides the external fund
manager with relevant, investment-specific information on
an ongoing basis (at least quarterly). The latter subsequently
assesses the underlying individual companies in accordance
with the guidelines for International Private Equity and Ven-
ture Capital Valuations (IPEV).
-7
Gains (+)/losses (-) recognised in the income
statement
Currency translation differences
417
31 December 2020
85
- 29
-2
- 31
397
22
3
85
31.12.2021
Reported on
Reported on
equity and
Unquoted equity instruments
31.12.2020
Fair value
31.12.2021
Fair value
in € million
Financial instruments measured at fair value using input fac-
tors not based on observable market prices are allocated to
Level 3. The fair values of these financial instruments are
shown in the following table:
← = Q
Other Information
724
Remuneration Report
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
206
6
52
171
Group Financial Statements Corporate Governance
Notes to the Group
Financial Statements
397
Convertible bonds
23
assets side liabilities side
Reported on
assets side
2,998
1,875
3,256
1,148
-1,118
1,880
-1,118
757
- 790
2,466
- 790
18,819
3
-5
Gains (+)/losses (-) recognised in accumulated
other equity
67
Options on unquoted equity instruments
Derivative instruments
22
ment.
919
In addition, equity instruments that are held outside the pri-
vate equity fund are measured using the income approach.
This involves discounting cash flows on the basis of current
business cases using the weighted average cost of capital to
determine the fair value of the financial instrument. Changes
in fair values determined in connection with adjustments to
significant input factors are not material for the BMW Group.
Mandatory conversions are usually structured in such a way
that the number of shares to be received depends on the
future share price. Due to the generally short maturities, the
instruments are subject to only insignificant fluctuations in
value. Irrespective of this fact, impairment tests are per-
formed at regular intervals.
in € million
unquoted equity
Unquoted equity
Options on
814
67
-49
instruments
34
1
75
75
-254
-4
100
417
491
Level 3
Convertible bonds
Derivative
instruments
-94
2
-2
-7
- 87
Disposals
90
instruments
17
Additions
374
5
14
355
1 January 2020
Financial
instruments
Level 3
73
Financial
instruments
23
724
Disposals
Additions
1 January 2021
in € million
The balance sheet carrying amount of Level 3 financial
instruments developed as follows:
← = Q
Other Information
Gains (+)/losses (-) recognised in accumulated
other equity
Remuneration Report
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
207
For selected derivatives, a complete set of data relevant for
valuation purposes is not available due to their limited mar-
ket maturity. In order to model forward curves, data are col-
lated and updated on the basis of regular bank and trader
inquiries. The valuation methodology applied is in line with
the general valuation principles for derivatives used within
the treasury management system of the BMW Group.
Changes in fair values resulting from shifts in forward curves
within a range of +/-10% are not material for the
BMW Group.
The exercise price for share options in such companies is
generally low, verging towards zero. Consequently, financing
rounds have a direct impact on the fair value of the options.
In this respect, the valuation of options and assessment of
their impact on sensitivity is similar to the approach taken to
unquoted equity instruments, as described above.
Corporate Governance
Gains (+)/losses (-) recognised in the income
statement
Currency translation differences
Level transfer
-49
52
32
488
-30
-220
24
76
-5
3
Derivative
instruments
instruments
Convertible bonds
22
397
Options on
unquoted equity
Unquoted equity
instruments
31 December 2021
The convertible bonds that have been classified to Level 3
are primarily used as instruments in advance of future
financing rounds relating to private equity investments. Val-
uations are therefore performed in accordance with the IPEV
guidelines.
3
-7
573
21,173
20
20
116
115
53,022
51,498
23,116
58,136
19,602
19,362
18,818
18,819
16,732
16,702
16,599
56,665
16,466
22,622
63,104
Financial assets - Marketable securities and investment funds
Financial liabilities
Bonds
Asset-backed financing transactions
Liabilities from customer deposits (banking)
Liabilities to banks
31.12.2021
24,675
31.12.2020
Fair value
amount
Fair value
Carrying
amount
67,158
64,795
65,326
Carrying
Receivables from sales financing - finance and operating leases
9,177
9,209
1
in € million
Level 1
Level 2
Level 3
Level 1
Level 2
Level hierarchy in accordance with IFRS 13
Cash equivalents
Marketable securities, investment funds and collateral
assets
80
724
223
Other investments
503
3,608
Level 3
9,079
Level hierarchy in accordance with IFRS 13
At 31 December 2021, equity instruments amounting to
€ 49 million were reclassified from Level 3 to Level 1, due to
the fact that quoted market prices became available for the
instruments concerned for the first time.
9,037
205
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
In the previous year, an amount of € 275 million relating to
marketable securities, investment funds and collateral was
reclassified from Level 1 to Level 2, in view of the fact that the
fair values of the marketable securities concerned were
derived on the basis of comparable instruments in the form
of a theoretical price. Furthermore, money market funds
amounting to € 915 million were reclassified from Level 2 to
Level 1 due to the fact that corresponding market or stock
exchange prices became available.
Remuneration Report
← = Q
Disclosures relating to financial instruments measured at fair
value
The carrying amounts of financial instruments measured at
fair value are allocated to the measurement levels pursuant
to IFRS 13 as described below:
31.12.2021
31.12.2020
397
As a general rule, any transfers between fair-value hierarchy
levels are made at the end of the relevant reporting period.
Other Information
548
-
in € million
23
Derivative instruments (assets)
Loans to third parties
Other
Trade payables
1,153
10,932
250
223
619
1,180
8,644
Other liabilities
Payables to subsidiaries
180
180
Payables to other companies in which an
investment is held
2,420
2,367
Interest rate risks
Raw material market price risks
335
2,344
101
Raw material market price risks
1,045
Currency risks
729
Currency risks
40
1,092
I
466
1,373
Interest rate risks
Derivative instruments (liabilities)
Other risks
67
814
Remaining other liabilities *
18,443
915
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
BMW Group Report 2021
← = Q
The following table shows the fair values and carrying
amounts of financial assets and liabilities that are measured
at amortised cost and whose carrying amounts differ from
their fair value.
The fair values are generally determined using the dis-
counted cash flow method, taking into account the relevant
risk of default. For the purposes of fair value measurement
using the discounted cash flow method, expected future
cash flows are discounted on the basis of up-to-date interest
curves observable on the market.
The fair values of receivables from sales financing are meas-
ured using the discounted cash flow method, taking into
account customer-specific credit risk. In view of the fact that
these allowances are calculated in part on the basis of inter-
nal information, receivables from sales financing are allo-
cated to Level 3 in the level hierarchy in accordance with
IFRS 13. The fair values of the financial assets shown in the
table exist with financial institutions and are also measured
using the discounted cash flow method, taking into account
the risk of default. Given that these financial institutions all
have excellent credit ratings, the risk of default is low and
can be observed on the market. The fair values of these
items are therefore allocated to Level 2.
In the case of financial liabilities, own credit risk is taken into
account based on credit default swaps available on the mar-
ket, so that the fair values of these items are also allocated
to Level 2.
26
For all other financial instruments not listed here that are
measured at amortised cost, the carrying amount corre-
sponds to the fair value. For this reason, they are not pre-
sented separately.
Disclosures relating to financial instruments measured at
amortised cost
204
3,675
788
4,856
Total
117,503
619
15,017
18,693
4,621
116,976
* Prior year's figures adjusted.
31.12.2020
At fair value through
other comprehensive
income
At fair value
through profit or loss
Not allocated to an
IFRS 9 category
112
248
788
2,511
15,572
Receivables from sales financing credit financing
11,939
Group Financial Statements
Notes to the Group
Cash Flow Hedges
Corporate Governance
Remuneration Report
Other Information
← = Q
Financial Statements
in € million
Cash Flow Hedges
Currency risks
Raw material price risks
Fair Value Hedges
Interest rate risks
The following table shows key information on hedged items
for each risk category as well as the balances of designated
components within accumulated other equity:
in € million
Cash Flow Hedges
Currency risks
Raw material price risks
Fair Value Hedges
Interest rate risks
The accumulated amount of hedge-related fair value adjust-
ments is a negative amount of € 9 million (2020: positive
amount of € 10 million) for assets and a positive amount of
€ 577 million (2020: positive amount of € 1,680 million) for
liabilities.
Carrying amounts
31.12.2021
Carrying amounts
Nominal
amounts
Assets
Liabilities
Change in
fair value of
designated
components
Nominal
amounts
Group Financial Statements
Notes to the Group
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
4,530
Palladium (EUR/oz)
Platinum (EUR/oz)
Interest rate risks
8,082
28,213
12,373
Raw material price risks
1,449
1,792
Nominal amounts of
hedging instruments
21,470
34,535
Assets
12,373
31.12.2020
1,730
1,573
5,389
4,568
14,475
11,188
1,822
1,350
676
701
Information on average interest hedge rates is not provided,
since interest rate derivatives designated as hedging instru-
ments are used exclusively to hedge items in fair value
hedges. The hedge rates therefore correspond in each case
to current market interest rate level. Most of the hedges used
216
31.12.2021
Currency risks
Liabilities
Change in
fair value of
designated
components
Assets
Change in
value of
Liabilities hedged items
Continuing
hedge
relationships
Terminated
hedge
relationships
795
-274
- 820
1,057
10,611
56,985
1,141
-1,169
-467
532
510
8,483
58,714
-720
217
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Corporate Governance
Remuneration Report
Other Information
← = Q
Hedge relationships give rise to following effects:
in € million
Terminated
hedge
relationships
Continuing
hedge
relationships
Change in
value of
Liabilities hedged items
Assets
33,666
437
905
5,111
1,159
101
-795
820
16,469
3,241
277
54
1,169
574
58
31.12.2020
466
1,012
250
-1,138
59,774
1,992
248
723
31.12.2021
31.12.2020
Carrying amounts
Balances in accumulated
other equity
Carrying amounts
Balances in accumulated
other equity
57,920
The following table provides information on the nominal
amounts, carrying amounts and fair value changes of con-
tracts designated as hedging instruments:
820
Fair Value Hedges
Supplies and services performed
Supplies and services received
Receivables at 31 December
Payables at 31 December
in € thousand
2021
2020
2021
Seen from the perspective of BMW Group entities, the vol-
ume of transactions with the above-mentioned entities was
as follows:
2020
2020
2021
2020
DELTON Health AG (formerly DELTON AG)
1,821
1,950
1
DELTON Logistics S.à r.l.
2021
1,090
← = Q
Remuneration Report
← = Q
40 Related party relationships
The following individuals and entities are related parties in
accordance with IAS 24:
Stefan Quandt and Susanne Klatten, as well as compa-
nies controlled by them
The Board of Management and the Supervisory Board of
the BMW Group
Associated companies, joint ventures, non-consolidated
subsidiaries, BMW Trust e. V. and BMW Foundation Her-
bert Quandt
Transactions of Group entities with related parties were car-
ried out, without exception, in the normal course of business
of each of the parties concerned and conducted at market
conditions, i. e. conditions that are also granted to other
third-party manufacturers.
During the year under report, members of the Board of Man-
agement and the Supervisory Board concluded vehicle pur-
chase contracts and related service contracts as well as
vehicle rental, vehicle leasing and vehicle financing contracts
with BMW Group entities at market conditions.
Other Information
Stefan Quandt, Germany, is a shareholder and Deputy Chair-
man of the Supervisory Board of BMW AG. He is also the
sole shareholder and Chairman of the Supervisory Boards of
DELTON Health AG, Bad Homburg v.d.H., and DELTON
Technology SE, Bad Homburg v.d.H., as well as the sole
shareholder of DELTON Logistics S.à.r.I., Grevenmacher,
which via its subsidiaries, performed logistic-related ser-
vices for the BMW Group during the financial year 2021. In
addition, the DELTON companies held by Stefan Quandt
acquired vehicles from the BMW Group by way of leasing.
Susanne Klatten, Germany, is a shareholder and member of
the Supervisory Board of BMW AG and also a shareholder
and Deputy Chairwoman of the Supervisory Board of
ALTANA AG, Wesel. In 2021, ALTANA AG, Wesel, acquired
vehicles from the BMW Group, mainly by way of leasing.
Susanne Klatten, Germany, is also the sole shareholder and
Chairwoman of the Supervisory Board of UnternehmerTUM
GmbH, Garching. In 2021, the BMW Group bought in services
from UnternehmerTUM GmbH, Garching, mainly in the form
of consultancy and workshop services.
219
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Stefan Quandt, Germany, is also the indirect majority share-
holder of SOLARWATT GmbH, Dresden. Cooperation
arrangements are in place between BMW Group and
SOLARWATT GmbH, Dresden, within the field of electric
mobility. The focus of this collaboration is on the provision of
complete photovoltaic solutions for rooftop systems and car-
ports to BMW i customers. In addition, SOLARWATT GmbH
purchases battery cells and related components for home
battery storage applications as part of a supply project. In
addition to the deliveries of goods described above, SOLAR-
WATT GmbH, Dresden, also purchased vehicles from the
BMW Group by way of leasing during the financial year 2021.
Other Information
1,235
19,068
510
A significant proportion of the BMW Group's transactions
with related parties relates to the joint venture BMW Bril-
liance Automotive Ltd.
in € million
BMW Brilliance Automotive Ltd.
For the most part, this involves the sale of vehicle compo-
nents to BMW Brilliance Automotive Ltd. for further process-
ing. BMW Brilliance Automotive Ltd. also provides services
and vehicles to BMW Group entities.
Supplies and services performed
Supplies and services received
Receivables at 31 December
337
Payables at 31 December
2020
2021
2020
2021
2020
2021
2020
Currency risks
2021
11,500
19,450
80
243
SOLARWATT GmbH
8,827
2,363
49
65
1,369
5
3,362
1,574
49
287
2,572
2,425
251
UnternehmerTUM GmbH
37
809
273
1,310
315
ALTANA AG
Raw material price risks
Remuneration Report
Group Financial Statements
Notes to the Group
Financial Statements
2021
2020
Currency risks Interest rate risk
Raw material price risk
Currency risks Interest rate risk
Raw material price risk
Designated
in € million
3
Opening balance at 1 January
532
- 299
-2
Designated
component Costs of hedging
510
Designated
-22
component Costs of hedging Costs of hedging
-497
Designated
component Costs of hedging
component Costs of hedging Costs of hedging
-4
2
198
Interest rate risks
Designated components and costs of hedging within accu-
mulated other equity changed as follows:
Financial Statements
Change of designated
components in other
comprehensive income
-806
547
Change in costs of
hedging in other
comprehensive income
- 5
55
Hedge ineffectiveness
recognised in income
statement
Change of designated
components in other
comprehensive income
17
3
2020
Change in costs of
hedging in other
comprehensive income
Hedge ineffectiveness
recognised in income
statement
554
509
2021
Corporate Governance
1
Change in fair value during the reporting period
Reclassification to acquisition costs for inventories
-273
72
6
Closing balance at 31 December
-274
-244
15
-29
1,057
- 299
- 2
510
The nominal amount of hedging instruments that continue
to be directly affected by the reform of the benchmark inter-
est rates and USD LIBOR totals € 7,257 million.
218
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
532
5
84
7
-795
-307
20
1,170
-443
5
466
1
- 104
Reclassification to profit or loss
-4
355
-3
-512
557
3
for terminated hedge relationships
-7
for continuing hedge relationships
Nickel (EUR/t)
22
one year and five years
Maturity between
one year one and five years
Total
Maturity within
Maturity later
than five years
one year one and five years
Maturity within Maturity between
31.12.2020
31.12.2021
Financial Statements
in € million
The following table shows the maturity structure of expected
contractual cash flows (undiscounted) for financial liabilities:
Liquidity risk
Notes to the Group
← = Q
Other Information
Maturity later
than five years
Remuneration Report
Total
Bonds
19,436
12,369
7,067
19,586
12,622
6,964
Asset-backed financing transactions
58,610
11,930
33,224
13,456
54,158
10,821
30,071
13,266
NON-DERIVATIVE FINANCIAL LIABILITIES
Liabilities to banks
Corporate Governance
Combined Management Report
13,256
118,643
49,264
54,598
14,767
118,629
The cash flows from non-derivative liabilities comprise prin-
cipal repayments and the related interest. The amounts dis-
closed for derivative instruments comprise only cash flows
relating to derivatives that have a negative fair value at the
balance sheet date. In the case of derivatives with a negative
fair value, an overall positive cash flow can arise due to the
various yield curves used. At 31 December 2021 credit com-
mitments available at short notice to dealerships which had
not been called upon at the end of the reporting period
amounted to € 18,334 million (2020: € 14,367 million).
Solvency is assured at all times by managing and monitoring
the liquidity situation on the basis of a rolling cash flow fore-
cast.
212
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
52,053
Group Financial Statements
53,334
28
To Our Stakeholders
BMW Group Report 2021
211
88
523
380
144
28
552
219
216
88
523
380
144
552
5,130
3,350
1,027
Cash inflows
Cash outflows
694
14
248
432
2,380
9
937
1,434
With gross settlement
DERIVATIVE FINANCIAL LIABILITIES
765
357
288
With net settlement
120
Cash outflows
29,300
-20,391
- 617
-5,296
- 14,478
-42,203
- 157
-14,180
-27,866
21,085
631
5,544
14,910
44,583
166
15,117
Total financial liabilities
738
301
116
Trade payables
16,611
9,701
3,781
12,808
16,805
20
3,574
13,211
Liabilities from customer deposits (banking)
10,000
1,388
3,317
5,295
9,507
10,932
10,932
8,644
8,644
321
Other financial liabilities
550
550
1,374
1,374
Commercial paper
Remuneration Report
2,767
1,227
512
2,640
990
1,167
483
Lease liabilities
1,028
Maturity
later than
five years
Other Information
The resulting funding requirements are covered by a variety
of instruments placed on the world's financial markets, with
the aim to minimise risk by matching maturities with financ-
ing requirements and in alignment with a dynamic target
debt structure.
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Disclosures on hedging measures
The following disclosures on hedging measures include
derivatives of fully consolidated companies that are desig-
nated as a hedging instrument. The amounts shown in the
table are stated before deferred taxes and take account of
additional effects arising from the application of the modified
closing rate method.
The nominal amounts of hedging instruments were as
follows:
The following table shows the most significant average
hedging rates of hedging transactions used by the
BMW Group:
Currency risks
EUR/CNY
EUR/USD
EUR/GBP
EUR/KRW
To Our Stakeholders
EUR/JPY
BMW Group Report 2021
310
The starting point for analysing raw materials price risk is to
identify planned purchases of raw materials or components
containing raw materials, the so-called "exposure". At each
reporting date, the exposure for the following financial year
amounted to:
in € million
Raw material price exposures
The following table shows the potential negative impact for
the BMW Group resulting from fluctuations in prices across
all categories of raw materials, measured on the basis of the
cash-flow-at-risk approach. The risk at each reporting date
for the following financial year was as follows:
31.12.2021
31.12.2020
in € million
6,872
4,204
Cash flow at risk
This exposure is compared to all hedges that are in place.
The net cash flow surplus represents an uncovered risk posi-
tion.
The cash-flow-at-risk approach involves showing the impact
of potential raw materials market price fluctuations on oper-
ating cash flows on the basis of probability distributions. Vol-
atilities and correlations serve as input factors to assess the
relevant probability distributions.
The potential negative impact on earnings is calculated at
the reporting date for each raw materials category for the
following financial year on the basis of current market prices
and exposure with a confidence level of 95%. The risk miti-
gating effect of correlations between the various categories
of raw materials is taken into account when the risks are
aggregated.
31.12.2021 31.12.2020
597
215
The economic relationship between the hedged item and
the hedging instrument is based essentially on the fact that
they have the same basis and term. The BMW Group desig-
nates only the commodity price index-linked raw material
surcharge, which is specified in the purchase contracts of
vehicle components, as a hedged item. The proportion of the
hedged risk component as a percentage of the total fair
value depends on the specific types of vehicle component
involved. Other price components contained in the contract
are not designated as being part of the hedge relationship
as no effective hedging instruments exist for these compo-
nents.
31.12.2021
Maturity Maturity
within between one
one year and five years
8.05
1.23
0.87
1,341.73
0.87
1,334.86
124.20
A cash-flow-at-risk approach to risk management involves
making use of portfolio effects. No JPY-denominated hedg-
ing transactions were in hedging relationships at the end of
the year under report (2020: no USD-denominated hedging
transactions).
in this context relate to variable yield curves relating to the
euro, US dollar and British pound currency areas.
Raw material price risks
Aluminium (EUR/t)
31.12.2020
Copper (EUR/t)
Maturity
within
Maturity
between one
in € million
7.99
in € million
31.12.2020
11,251
Maturity
later than
five years
Currency risks
21,670
11,996
Interest rate risks
9,474
25,145
11,251
Raw material price risks
2,669
2,442
Nominal amounts of
hedging instruments
33,813
39,583
31.12.2021
Causes of hedge ineffectiveness are seen potentially only for
counterparty credit risk. However, in view of the processes
that have been established for credit risk management, inef-
fectiveness is not expected to arise.
The BMW Group is exposed to market price risks on raw
materials. In order to hedge these risks, the Group mainly
uses forward commodity contracts. As part of the implemen-
tation of the risk management strategy, the extent to which
risk exposures should be hedged is decided at regular inter-
vals and the corresponding hedging ratio defined. Items are
hedged on the basis of a constant ratio of one to one
between hedging instrument and risk exposure.
Raw materials price risk
The following table shows the potential negative impact for
the BMW Group for the following year resulting from unfa-
vourable changes in exchange rates, measured on the basis
of the cash-flow-at-risk approach.
31.12.2021
31.12.2020
38,134
33,975
in € million
Cash flow at risk
31.12.2021
31.12.2020
564
531
213
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
The potential negative impact on earnings is calculated at
the reporting date for each currency for the following finan-
cial year on the basis of current market prices and exposures
with a confidence level of 95%. The risk mitigating effect of
correlations between the various currencies is taken into
account when the risks are aggregated.
Group Financial Statements
Notes to the Group
Financial Statements
This exposure is compared to all hedges that are in place.
The net cash flow surplus represents an uncovered risk posi-
tion. The cash-flow-at-risk approach involves showing the
impact of potential exchange rate fluctuations on operating
cash flows on the basis of probability distributions. Volatili-
ties and correlations serve as the main input factors to deter-
mine the relevant probability distributions.
Currency exposure
As a further reduction of risk, a syndicated credit line totalling
€ 8 billion (2020: € 8 billion) from a consortium of interna-
tional banks is available to the BMW Group. Intra-group
cash flow fluctuations are balanced out by the use of daily
cash pooling arrangements.
Further information is provided in the Combined Manage-
ment Report.
Market risks
The principal market risks to which the BMW Group is
exposed are currency risk, interest rate risk and raw materi-
als market price risk.
Protection against such risks is provided in the first instance
though natural hedging which arises when the values of
non-derivative financial instruments have matching maturi-
ties and amounts (netting). Derivative financial instruments
are used to reduce the risk remaining after netting.
Currency, interest rate and raw materials market price risks
of the BMW Group are managed at a corporate level.
Further information is provided in the "Outlook, Risk and
Opportunity Management" section of the Combined Man-
agement Report.
Currency risk
As an enterprise with worldwide operations, the BMW Group
conducts business in a variety of currencies, from which cur-
rency risks arise. In order to hedge currency risks, the
BMW Group holds, as at 31 December 2021, derivative finan-
cial instruments mostly in the form of forward currency con-
tracts and currency swaps.
As part of the implementation of the risk management strat-
egy, the extent to which risk exposures should be hedged is
decided at regular intervals.
The economic relationship between the hedged item and
the hedging instrument is based essentially on the fact that
they are denominated in the same currency and have the
same maturities. Items are hedged on the basis of a con-
stant ratio of one to one between hedging instrument and
risk exposure.
Causes of hedge ineffectiveness are seen potentially only for
counterparty credit risk. However, in view of the processes
that have been established for credit risk management, inef-
fectiveness is not expected to arise.
The BMW Group measures currency risk using a cash-flow-
at-risk model. The analysis of currency risk is based on fore-
cast foreign currency transactions which could result in
exposures to surpluses of foreign currency cash inflows and
cash outflows. At the end of the reporting period, the overall
currency exposure – in each case for the following year and
determined by aggregating the individual currency expo-
sures based on their absolute amount - was as follows:
in € million
Currency exposures include short positions amounting to
€ 2,715 million (2020: € 5,222 million). In addition, a cur-
rency risk exposure existed at the reporting date on the pur-
chase price payable arising in connection with the increase
in the BMW Group's stake in the BMW Brilliance joint ven-
ture for a euro-equivalent amount of € 3,857 million. The
transaction was completed in February 2022. Further infor-
mation is provided in a note 3 Increased shareholding in BMW
Brilliance Automotive Ltd.
Corporate Governance
Remuneration Report
Other Information
In the following table the potential volumes of fair value fluc-
tuations measured on the basis of the value-at-risk
approach are compared with the expected value for the
interest-rate-sensitive exposures of the BMW Group:
in € million
Value at risk
31.12.2021 31.12.2020
1,237
1,160
214
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
The BMW Group applies a value-at-risk approach through-
out the Group for internal reporting purposes and to manage
interest rate risk. This approach is based on a historical sim-
ulation in which the potential future fair value losses of the
interest rate portfolios are compared across the Group with
expected amounts on the basis of a holding period of 250
days and a confidence level of 99.98 %. The risk mitigating
effect of correlations between the various portfolios is taken
into account when the risks are aggregated.
In the case of USD LIBOR and CAD CDOR, uncertainty
remains as to the exact timing and nature of the changes.
The notional amount of financial derivatives not yet con-
verted to an alternative interest rate at 31 December 2021 is
€ 12,522 million (USD LIBOR € 12,522 million). The nominal
amount of non-derivative financial liabilities not yet con-
verted to an alternative interest rate is € 700 million (thereof
USD LIBOR € 387 million and CAD CDOR € 313 million).
that have been transferred with effect from 31 December
2021 to an alternative benchmark interest rate in accordance
with the IBOR Fallbacks Protocol totals € 6,890 million
(mainly GBP LIBOR € 4,229 million and JPY LIBOR
€ 2,279 million).
The BMW Group's fair value hedges affected by the reform
are mainly based on the benchmark interest rates relating to
the British pound (GBP), the US dollar (USD) and the Japan
yen (JPY). Fair value hedges for which GBP LIBOR and JPY
LIBOR were previously designated as the hedged risk were
converted during the financial year 2021, with GBP LIBOR
replaced by the SONIA benchmark interest rate and JPY
LIBOR replaced by the TONA benchmark interest rate. The
BMW Group continues to see the economic link and has
therefore continued to account the pertinent items as fair
value hedges. The notional amount of financial derivatives
← = Q
Interest rate risk
Interest rate risks arise when funds are borrowed and
invested with differing fixed-rate periods or differing terms.
At the BMW Group, all items subject to, or bearing, interest
are exposed to interest rate risk and can therefore affect
both the assets and liabilities side of the balance sheet.
The fair value of the Group's interest rate portfolios was as
follows at the end of the reporting period:
in € million
Fair values of interest rate portfolios
31.12.2021
← = Q
31.12.2020
58,545
Interest rate risk is managed through the use of interest rate
derivatives. As part of the implementation of the risk man-
agement strategy, interest rate risks are monitored and
managed at regular intervals. The interest rate contracts
used for hedging purposes comprise mainly swaps, which, if
hedge accounting is applied, are accounted for as fair value
hedges. The economic relationship between the hedged
item and the hedging instrument is based on the fact that
the main parameters of the hedged item and the related
hedging instrument, for example start date, term and cur-
rency, are the same. Items are hedged on the basis of a con-
stant ratio of one to one between hedging instrument and
risk exposure.
In view of the fact that own credit risk is excluded from the
hedging relationship, ineffectiveness is expected to be low.
For selected fixed-interest assets, part of the interest rate
risk is hedged on a portfolio basis.
In this case, swaps are used as the hedging instrument.
Hedge relationships are terminated and redesignated on a
monthly basis at the end of each reporting period, thereby
taking account of the constantly changing content of each
portfolio.
In light of the reform and replacement of certain benchmark
interest rates, some of the BMW Group's hedging relation-
ships have been redesignated to take account of alternative
benchmark interest rates.
The transition to the newly created or revised benchmark
interest rates is being managed, monitored and assessed
with regard to risk management implications as part of a
multidisciplinary project. The tasks of the conversion project
includes the continual monitoring of regulatory develop-
ments, the initiation of necessary changes to systems, pro-
cesses, risk and measurement models as well as the clarifi-
cation of the associated accounting and financial reporting
implications. The uncertainty triggered by the benchmark
interest rate reform, in the meantime relating primarily to the
USD and CAD, is expected to be eliminated during the finan-
cial
year 2022.
63,835
1,030
216
2,158
27
2020
2021
32
70
Receivables at 31 December
2020
2021
2021
64
Payables at 31 December
2020
2021
15
2020
9
219
155
5
Supplies and services received
8
For disclosures relating to key management personnel,
please see note 43 and the Remuneration Report.
Supplies and services performed
2,345
2,045
804
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
220
Other Information
← = Q
In total, the following amounts of goods and services were
supplied to or received from other joint ventures and associ-
ated companies:
in € million
Other joint ventures and associated companies
Business relationships with non-consolidated companies
are small in scale.
Remuneration Report
BMW Trust e. V., Munich, administers assets on a trustee
basis to secure obligations relating to pensions in Germany
and is therefore a related party of the BMW Group in accord-
ance with IAS 24. This entity has no assets of its own. It had
no income or expenses during the period under report.
BMW AG bears expenses on an immaterial scale and per-
forms services for BMW Trust e. V., Munich.
The BMW Foundation Herbert Quandt, Munich, is an inde-
pendent corporate foundation and due to the BMW Group's
significant influence, qualifies as a related party according to
IAS 24. The BMW Group made donations to the BMW Foun-
dation Herbert Quandt during the financial year 2021 total-
ling € 5.9 million (2020: € 6.4 million). No other significant
transactions arose.
― € 1.890 million (Chairman of the Board of Management)
― € 1.035 million (from second period of office or fourth year of mandate)
- € 0.855 million (first period of office)
- Maximum amount of performance component p. a.:
- Performance factor may not exceed 1.8
― Criteria for the cross-divisional targets with ESG criteria include in particular: innovation performance (environmental, e. g. reduction of carbon emissions), development of the
BMW Group's reputation based on ESG aspects (e. g. corporate culture, promotion of integrity and compliance), adaptability, attractiveness as an employer, leadership performance
- Criteria for the other cross-divisional targets include in particular: market position compared to competitors, innovation performance (economic), development of the BMW Group's
reputation based on non-ESG-related aspects (e. g. perception on capital markets, brand strength), customer orientation
-10% individual targets
-40% other cross-divisional targets
― Earnings component of bonus rewards attainment of financial targets and is beneficial for earnings-related aspects of business strategy
- 50% cross-divisional targets with ESG criteria
― Measurement parameters and target values are determined before the start of the financial year
― Performance component of bonus motivates the pursuit of non-financial strategic targets and is therefore beneficial for the long-term development of the BMW Group
↑
BMW Group Report 2021
- Composition of performance factor:
Strategic focus target component (at 100 %
target achievement corresponds to 50% of
target amount)
RoCE component (at 100 % target achievement
corresponds to 50% of target amount)
Basis of computation
Personal investment cash amount
SHARE-BASED REMUNERATION
(SHORT-TERM BENEFITS)
226
COMPONENT
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
= Q
― Additional trend analysis over at least three financial years
― € 0.575 million (from second period of office or fourth year of mandate)
― Primarily qualitative, non-financial criteria, expressed in terms of a performance factor aimed at measuring the Board member's contribution to sustainable and long-term performance
and corporate orientation
= Q
COMPONENT
VARIABLE REMUNERATION COMPONENTS
(SHORT-TERM BENEFITS)
Bonus
Earnings component
(at 100 % target achievement corresponds to
50% of target amount)
Performance component
(at 100% target achievement corresponds to
50% of target amount)
Remuneration linked to corporate strategy
Parameters/measurement base, applicable amounts
Assessment period one year
― Base amount p. a. (50% of target bonus amount):
- € 0.475 million (first period of office)
Remuneration linked to corporate strategy
― € 1.050 million (Chairman of the Board of Management)
- Formula: 50% of target amount x performance factor
― Earnings factor is derived from a predefined allocation based on the parameters
- Formula: 50% of target amount x performance factor
― € 1.050 million (Chairman of the Board of Management)
― € 0.575 million (from second period of office or fourth year of mandate)
- € 0.475 million (first period of office)
― Base amount p. a. (50% of target bonus amount):
- Assessment period one year
-Relevant period is the vesting year
― € 1.890 million (Chairman of the Board of Management)
- € 0.855 million (first period of office)
- Maximum amount of earnings component p.a.:
- Earnings factor may not exceed 1.8
― The earnings factor is 1.5 in case of a profit attributable to shareholders of BMW AG amounting to € 6.9 billion and a Group post-tax return on sales of 7.3%
―The earnings factor is 0 in case of a profit attributable to shareholders of BMW AG below € 3.0 billion or a Group post-tax return on sales of below 3.0%
― The earnings factor is 1.0 in case of a profit attributable to shareholders of BMW AG amounting to € 5.3 billion and a Group post-tax return on sales of 5.6%
-Profit attributable to shareholders of BMW AG and Group post-tax return on sales in grant year
― € 1.035 million (from second period of office or fourth year of mandate)
Parameters/measurement base, applicable amounts
― € 2.115 million (Chairman of the Board of Management)
― Assessment period of five years in total (one year for determining the personal investment cash amount, four years holding requirement)
-Commitment to purchase shares of BMW AG common stock and four-years holding requirement is beneficial for the long-term development of the BMW Group
227
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
COMPONENT
MALUS AND CLAWBACK RULES
Malus
Clawback
―The remaining 50% of the personal investment cash amount is beneficial for the attainment of strategic focus targets and therefore contributes to the BMW Group's operational suc-
cess in strategically important areas
Parameters/measurement base, applicable amounts
― Agreement entitling the BMW Group to reclaim variable remuneration already paid out in the event of specified incidences of non-compliance, incorrect calculation bases or incorrect
financial statements
― Amounts may also be clawed back in principle after a member has left the Board
44 Events after the end of the reporting period
On 11 February 2022, the BMW Group acquired a further 25%
of the shares in the previous joint venture BMW Brilliance
Automotive Ltd. Further information is provided in 7 note 3
Increased shareholding in BMW Brilliance Automotive Ltd.
The war in Ukraine had no impact on the Consolidated
Financial Statements for the year ended 31 December 2021.
Any potential effects on the BMW Group's business perfor-
mance are being monitored on an ongoing basis. Due to the
current situation, local production in Russia as well as the
export of automobiles and motorcycles to the Russian mar-
ket have been discontinued for the foreseeable future. The
war in Ukraine is having a substantial negative effect on the
country's automotive suppliers. The resulting supply restric-
tions have led to production schedule adjustments and
interruptions at a number of BMW Group plants, which in
turn is likely to have a negative impact on automobile sales
figures. For this reason, the corresponding key performance
indicators reported by the Automotive segment are now
forecast to be down on the previous year. The war in Ukraine
is not currently expected to have a significant impact on the
business performance of the Motorcycles and Financial Ser-
vices segments.
Current estimates and assumptions for the financial year
2022, to the extent already known, have been taken into
account and described in the outlook. However, the outlook
does not factor in a significant tightening of sanctions
against Russia and/or an escalation of the conflict outside
Ukraine. Similarly, additional major price hikes for energy
and raw materials, including rises triggered by the war in
Ukraine and/or the related sanctions, have not been taken
into account.
Apart from this, no other events have occurred since the end
of the financial year which could have a major impact on the
results of operations, financial position and net assets of
BMW AG and the BMW Group.
228
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Agreement to withhold variable remuneration in the event of specified serious compliance violations or (withholding amounts provisionally) in the event of reasonable suspicions of such
― Amounts may also be withheld in principle after a member has left the Board
― personal investment cash amount is 50 % dependent on key performance indicator RoCE and is therefore directly linked to a key measure of corporate strategy and reflects BMW AG's
aspiration to generate a significant premium on the cost of capital
― € 2.115 million (Chairman of the Board of Management)
― € 1.152 million (from second period of office or fourth year of mandate)
- Target amount p. a. (at 100 % target achievement):
- € 1.10 million (first period of office)
― € 1.28 million (from second period of office or fourth year of mandate)
― € 2.35 million (Chairman of the Board of Management)
-50% of target amount depends on ROCE achieved in the Automotive segment (ROCE component)
- 50% of the target amount depends on the achievement of predefined strategic focus targets (strategic focus target component)
- Capped at 180 % of target amount
― Payment after the Annual General Meeting at which the Company Financial Statements are presented for the relevant financial year
- Target amount RoCE component p. a. (50% of target amount of the personal investment cash amount):
- € 0.55 million (first period of office)
― € 0.264 million (from second period of office or fourth year of mandate)
― € 1.175 million (Chairman of the Board of Management)
― Formula: 50% of target amount x RoCE factor
- ROCE factor is derived from the ROCE achieved in the Automotive segment for the grant year
Minimum, target and maximum values for ROCE are defined before the start of the financial year
― ROCE factor may not exceed 1.8
- Maximum amount of RoCE component p. a.:
- € 0.990 million (first period of office)
- € 0.990 million (first period of office)
- Maximum amount of strategic focus target component p. a.:
- Factor for each strategic focus target may not exceed 1.8
― Minimum, target and maximum values are defined before the start of the financial year
25% of target amount for personal investment cash amount x factor for strategic focus target 1 + 25% of target amount for personal investment cash amount x factor for strategic
focus target 2
- Formula in event of two strategic focus targets with equal weighting p. a.:
Requirement for Board of Management members to invest an earmarked cash amount (personal investment cash amount), net of tax and deductions, in shares of BMW common stock
- Requirement for Board of Management members to hold the acquired shares of BMW common stock for at least four years (share ownership)
- Weighting of the strategic focus targets is decided before the start of the financial year
― € 1.175 million (Chairman of the Board of Management)
― € 0.64 million (from second period of office or fourth year of mandate)
- € 0.55 million (first period of office)
― Target amount strategic focus target component p. a. (50% of target amount of personal investment cash amount):
↑
· € 1.152 million (from second period of office or fourth year of mandate)
- At least two strategic focus targets derived from the strategic plan
Other Information
The Supervisory Board may award payments to compensate for loss of salary from a previous employment relationship and to cover relocation costs in the case of new entrants.
Defined contribution system with a guaranteed minimum return
Corporate Governance
35.3
16.9
Other long-term benefits
3.9
Benefits in conjunction with the termina-
tion of board activity
1.1
0.6
Share-based remuneration component
0.5
0.6
Compensation to members of the
Supervisory Board
Current compensation
Short-term benefits
Total expense
5.6
50.9
27.6
For the financial years 2018 up to and including the financial
year 2020, variable cash remuneration was supplemented
by a multi-year and future-oriented Performance Cash Plan
(PCP). The PCP assessment period comprises three years,
the grant year and the two subsequent years. The PCP is
paid out after the end of the three-year assessment period.
No further shares were granted to active current members of
the Board of Management during the financial year under
report (2020: 7,001 shares). In the previous year, the fair
value of the shares granted amounted to € 0.5 million.
The expense recognised for the current members of the
Board of Management for the share-based remuneration
arrangements in place up to and including 2020 amounted
to € 0.5 million (2020: € 0.6 million). At 31 December 2021,
the provision for the share-based remuneration component
amounted to € 1.6 million (2020: € 1.6 million).
The total remuneration of former members of the Board of
Management and their dependants amounted to € 14.2 mil-
lion (2020: € 13.1 million).
Pension obligations to current members of the Board of
Management are covered by provisions amounting to
€ 18.9 million (2020: € 14.7 million), determined in accord-
ance with IAS 19.
Pension obligations to former members of the Board of Man-
agement and their surviving dependants, also determined in
accordance with IAS 19, amounted to € 114.3 million (2020:
€ 118.8 million).
The remuneration arrangements applicable for members of
the Supervisory Board do not include any stock options,
value appreciation rights comparable to stock options or any
other share-based remuneration components.
In accordance with the Articles of Incorporation, each mem-
ber of the Supervisory Board of BMW AG who does not per-
form any additional remuneration-relevant functions receives
a fixed remuneration of € 200,000 p. a. plus an attendance
fee of € 2,000 per plenary meeting in addition to the reim-
bursement of reasonable expenses.
Supervisory Board members who perform remuneration-rel-
evant functions, such as the Chairman or Deputy Chairman
of the Supervisory Board, as well as chairs and members of
committees (provided the committee has met on at least
three days of the financial year) receive higher remuneration
due to the additional requirements.
REMUNERATION SUPERVISORY BOARD*
Factor Amount in € p. a.
5.5
Member of the Supervisory Board
Board of Management
2020
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
The share-based remuneration component is measured at
its fair value at each balance sheet date between grant and
settlement date, and on the settlement date. The amounts
are recognised as personnel expense on a straight-line basis
over the vesting period and reported in the balance sheet as
a provision.
The remuneration system for Board of Management mem-
bers no longer provides for a matching component for finan-
cial years from 2021 onwards.
The cash-settlement obligation for the share-based remu-
neration component is measured at its fair value at the bal-
ance sheet date (based on the closing price of BMW AG
common stock in Xetra trading at 31 December 2021).
The total carrying amount of the provision for the share-
based remuneration component of current and former Board
of Management members and senior heads of department
at 31 December 2021 was € 8,347,245 (2020: € 6,383,766).
The total expense recognised in 2021 for the share-based
remuneration component of current and former Board of
Management members and senior heads of department
was € 2,743,398 (2020: € 1,820,265).
The fair value of the programmes for senior heads of depart-
ment at the date of grant of the share-based remuneration
components was € 1,317,984 (2020: € 987,759), based on a
total of 18,341 shares (2020: 13,444 shares) of BMW AG
common stock or a corresponding cash-based settlement
measured at the relevant market share price prevailing on
the grant date.
Compensation to members of the
The previous year's value includes the fair value of the pro-
grammes at grant date as well as the shares granted to
members of the Board of Management.
The Board of Management and the Supervisory Board of
Bayerische Motoren Werke Aktiengesellschaft have issued
the prescribed Declaration of Compliance pursuant to § 161
of the German Stock Corporation Act. It is included in the
Corporate Governance Statement, which is on BMW Group
website at www.bmwgroup.com/entsprechenserklaerung.
223
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
43 Remuneration of members of the Board of
Management and Supervisory Board
The total remuneration of the current members of the Board
of Management and the Supervisory Board of BMW AG
expensed for the financial year 2021 in accordance with IFRS
comprised the following:
in € million
2021
42 Declaration with respect to the
Corporate Governance Code
1.00
200,000
Chairman of the Supervisory Board
Deputy Chairman of the Supervisory Board
Retirement benefits
(other long-term benefits)
Remuneration linked to corporate strategy
VARIABLE REMUNERATION COMPONENTS
(SHORT-TERM BENEFITS)
Bonus
Member of the Board of Management:
― € 0.90 million p. a. (first period of office)
― € 1.05 million p. a. (from second period of office or fourth year of mandate)
Chairman of the Board of Management:
- € 1.95 million p. a.
― Monthly payment on time-apportioned basis
Contractual agreement, main points: non-cash benefits from the use of company cars and the BMW chauffeur service, insurance premiums, contributions towards security systems, em-
ployee discounts
SEGMENT INFORMATION
Benefits based on amounts credited to individual savings accounts for contributions paid and interest earned, various forms of disbursement
Pension contribution p. a.:
Compensation payments
Member of the Board of Management: € 400,000
Base remuneration has the effect of discouraging unduly high levels of risk being taken to achieve short-term targets, thus contributing to the long-term development of the Company
- Fixed remuneration components are a prerequisite for competitive levels of remuneration to attract and retain Board of Management members with the right qualifications
Bonus
(sum of earnings component and performance
component)
— Target amount p. a. (at 100 % target achievement):
- € 0.95 million (first period of office)
- € 1.15 million (from second period of office or fourth year of mandate)
— € 2.10 million (Chairman of the Board of Management)
― Capped at 180% of target amount
― Payment after the Annual General Meeting at which the Company Financial Statements are presented for the relevant financial year
225
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Chairman of the Board of Management: € 700,000
Fringe benefits
Parameters/measurement base, applicable amounts
Base remuneration
3.00
600,000
2.00
400,000
Chairman of the Audit Committee
2.25
450,000
2.00
400,000
2.00
400,000
1.50
300,000
Chairman of another committee
Member of the Audit Committee
Member of another committee
* If a Supervisory Board member performs several additional remuneration-relevant functions, their re-
muneration is measured only on the basis of the function that is remunerated with the highest amount.
No loans or advances were granted to members of the Board
of Management and the Supervisory Board by BMW AG or
its subsidiaries in the financial year 2021, nor were any con-
tingent liabilities entered into in their favour. During the year
under report, members of the Board of Management and the
Supervisory Board concluded vehicle leasing contracts and
related service contracts (service and repair) with BMW Group
entities at market conditions.
224
(SHORT-TERM BENEFITS)
FIXED REMUNERATION COMPONENTS
REMUNERATION BOARD OF MANAGEMENT AND SUPERVISORY BOARD
COMPONENT
and the Supervisory Board is structured as follows:
The remuneration of members of the Board of Management
Financial Statements
Remuneration Report
← = Q
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
Other Information
45 Explanatory notes to segment information
Information on reportable segments
Other Information
The activities of the BMW Group are broken down into the
operating segments Automotive, Motorcycles, Financial Ser-
vices and Other Entities.
- 3
Liabilities of Automotive segment
not subject to interest
36,910
35,769
Elimination of inter-segment items
-257
910
Non-operating assets - Motorcycles
40
39
Group profit before tax
16,060
5,222
1
Liabilities of Motorcycles segment not
subject to interest
782
External revenues
Non-current assets
Reconciliation of capital expenditure on
non-current assets
Total liabilities - Financial Services
segment
Information by
136,113
132,062
Total for reportable segments
32,434
30,333
Non-operating assets - Other Entities
segment
region in E million
Germany
735
Financial result of Motorcycles segment
130,241
59,677
66,942
31.12.2020 31.12.2021 31.12.2020 31.12.2021 31.12.2020
86,417 229,527 216,658
5,112
3,585
230
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Corporate Governance
Remuneration Report
Other Information
← = Q
The Other Entities' segment result includes interest and sim-
ilar income amounting to € 875 million (2020: € 1,169 mil-
lion) and interest and similar expenses amounting to
€ 974 million (2020: € 1,232 million).
The information disclosed for capital expenditure and depre-
ciation and amortisation relates to non-current property,
plant and equipment, intangible assets and leased products.
The total of the segment figures can be reconciled to the cor-
responding Group figures as follows:
Financial Statements
The reconciliation of segment figures to the corresponding
total Group figures shows the inter-segment items. Reve-
nues with other segments result mainly from the sale of
vehicles, for which the Financial Services segment has con-
cluded a financing or lease contract. Eliminations of
inter-segment items in the reconciliation to the Group profit
before tax, capital expenditure and depreciation and amorti-
sation mainly result from the sale of vehicles in the Automo-
tive segment, which are subsequently accounted for as
leased products in the Financial Services segment. In the
reconciliation of segment assets to Group assets, elimina-
tions relate mainly to intragroup financing balances.
In the information by region, external revenues are based on
the location of the customer. The information disclosed for
non-current assets relates to property, plant and equipment,
intangible assets and leased products. Eliminations dis-
closed for non-current assets relate to leased products.
in € million
Non-operating assets - Automotive
560
1,935
Financial result of Automotive segment
133,326
Reconciliation of segment assets
Total for reportable segments
2021
3,755
Total for reportable segments
Reconciliation of segment result
31.12.2021 31.12.2020
in € million
2020
2021
14,381
Group
2020
13,638
tion on non-current assets
Rest of the Americas
3,821
3,379
3,222
3,192
Total for reportable segments
17,027
18,151
Other regions
2,562
2,130
328
354
1,821
Elimination of inter-segment items
- 6,175
Eliminations
-7,317
- 6,764
Total Group depreciation and amortisation
on non-current assets
11,758
11,976
Group
111,239
98,990
80,070
76,187
* Prior year's figures adjusted
-5,269
2,315
10,433
10,875
7,676
Elimination of inter-segment items
-6,451
- 6,291
Elimination of inter-segment items
-152,215
7,007
- 148,919
China
25,333
21,315
2021
41,202
308
2020*
40,254
213
Total Group capital expenditure on
USA
21,522
17,837
20,878
Rest of Asia
Reconciliation of depreciation and amortisa-
17,630
19,134
30,258
32,920
14,206
Rest of Europe
229,527
Total Group assets
24,042
25,983
non-current assets
19,487
216,658
For the purposes of presenting segment information, the
activities of the BMW Group are divided into operating seg-
ments in accordance with IFRS 8. The segmentation follows
the internal management and reporting system and takes
account of the organisational structure of the BMW Group
based on the various products and services of the reportable
segments.
to Group figures
98,226
2020
2021
2020
2021
2020
2021
2020
2021
2020
77,173
68,106
2,761
2,293
31,304
2021
28,590
1
111,239
98,990
Inter-segment revenues
18,303
12,747
-13
- 9
1,563
1,454
4
2
- 19,857
- 14,194
1
2020
2021
External revenues
Within the Automotive segment, the BMW Group develops,
manufactures, assembles and sells automobiles powered
with all-electric drive systems, plug-in hybrid systems and
highly efficient combustion engines, as well as spare parts,
accessories and mobility services under the BMW, MINI and
Rolls-Royce brands. BMW and MINI brand products are sold
in Germany through branches of BMW AG and by independ-
ent, authorised dealers. Sales outside Germany are handled
mainly by subsidiary companies and by independent import
companies in some markets. Rolls-Royce brand vehicles are
sold in selected markets via subsidiary companies and else-
where by independent, authorised dealers.
Activities relating to the development, manufacture, assem-
bly and sale of motorcycles as well as spare parts and acces-
sories are reported in the Motorcycles segment.
Automobile leasing, retail and dealership financing, mul-
ti-brand fleet business, customer deposit business and
insurance activities are the main activities allocated to the
Financial Services segment.
Holding and Group financing companies are reported in the
Other Entities segment. This segment also includes the
operating companies BMW (UK) Investments Ltd. and
Bavaria Lloyd Reisebüro GmbH, which are not allocated to
one of the other segments.
Internal management and reporting
Segment information is prepared as a general rule in con-
formity with the accounting policies adopted for preparing
and presenting the Group Financial Statements. Exceptions
to this general principle include the treatment of inter-seg-
ment warranties, the earnings impact of which is allocated to
the Automotive and Financial Services segments on the
basis used internally to manage the business. In addition,
intragroup repurchase agreements between the Automotive
and Financial Services segments pursuant to IFRS 15,
impairment allowances on intragroup receivables and
changes in the value of consolidated other investments pur-
suant to IFRS 9 are also excluded. Intragroup leasing
arrangements are not reflected in the internal management
and reporting system on an IFRS 16 basis and therefore, in
accordance with IFRS 8, do not give rise to any changes in
the presentation of segment information. Inter-segment
receivables and payables, provisions, income, expenses and
profits are eliminated upon consolidation. Inter-segment
revenues are based on market prices. Centralised cost com-
ponents are included in the respective segments, without
resulting in cash settlement.
The role of "chief operating decision maker" with respect to
resource allocation and performance assessment of the
reportable segment is embodied in the full Board of Man-
agement. For this purpose, different measures of segment
performance as well as segment assets are taken into
account in the operating segments.
The Automotive and Motorcycles segments are managed on
the basis of return on capital employed (ROCE). The relevant
measure of segment results used is therefore profit before
financial result. Capital employed is the corresponding meas-
ure of segment assets used to determine how to allocate
resources and comprises all current and non-current opera-
tional assets after deduction of liabilities used operationally
which are generally not subject to interest (e. g. trade payables).
With effect from the reporting year 2022, a simplified defini-
tion of capital employed will be applied to make the RoCE
calculation more comprehensible and transparent for users.
Further information is provided in the section "Managing
operational performance at segment level" within the Com-
bined Management Report.
229
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
in € million
Group
Reconciliation
to Group figures
Other Entities
Financial Services
Motorcycles
Total revenues
Automotive
Write-downs on inventories to their net realisable value
amounting to € 41 million (2020: € 59 million) were recog-
nised by the Automotive segment in the financial year 2021.
The reversal of impairment losses had a positive impact of
€ 5 million (2020: € 2 million) on the segment result of the
Automotive segment.
Segment information by operating segment is as follows:
The success of the Other Entities segment is assessed on
the basis of profit or loss before tax. The corresponding
measure of segment assets used to manage the Other Enti-
ties segment is total assets less asset-side income tax items
and intragroup investments.
The success of the Financial Services segment is measured
on the basis of return on equity (RoE). Profit before tax there-
fore represents the relevant measure of segment earnings.
The measure of segment assets in the Financial Services
segment corresponds to net assets, defined as total assets
less total liabilities.
← = Q
222
The result of the Financial Services segment was negatively
impacted by impairment losses totalling € 390 million (2020:
€ 362 million) recognised on leased products. Income from
the reversal of impairment losses on leased products
amounted to € 134 million (2020: € 126 million).
96,201
95,476
2,748
5,978
119
119
10,567
12,054
-6,451
-5,269
- 6,291
25,983
24,042
-6,175
11,758
11,976
in € million
Segment assets
6,341
Investments accounted for using the equity method
Automotive
Motorcycles
Financial Services
Other Entities
31.12.2021
31. 12. 2020 31.12.2021
31. 12. 2020 31.12.2021
17,466
5,112
15,779
3,585
619
681
17,324
31. 12. 2020 31.12.2021
15,555
97,917
Reconciliation
Depreciation and amortisation on non-current assets
24,146
24,936
2,284
32,867
30,044
5
3
- 19,857
-14,194 111,239
98,990
Segment result
9,870
2,162
227
103
3,753
1,725
531
- 235
146
169
6,041
7,329
Capital expenditure on non-current assets
920
80,853
1,520
1,520
Result from equity accounted investments
5,222
16,060
1,467
1,679
920
The members of the Board of Management in office at the
end of the reporting period hold 58,560 shares of BMW
common stock based on holding requirements arising from
share-based remuneration for the financial years 2017 to
2020 (2020: 44,037).
8.5
Up to and including 2020, the members of the Board of
Management received an earmarked cash amount (invest-
ment component) amounting to 45% of the gross amount of
the bonus, which, net of taxes and deductions, was required
to be invested in BMW common stock, also subject to a four-
year holding period, after which the member of the Board of
Management received, at BMW AG's discretion, one addi-
tional share of common stock for every three shares held or,
alternatively, the equivalent value in cash (matching compo-
nent).
In the event of death or invalidity, special rules apply for early
payment of share-based remuneration components based
on the target amounts. Insofar the service contract is prema-
turely terminated and the Company has an extraordinary
right of termination, or if the Board member resigns without
the Company's agreement, entitlements to amounts as yet
unpaid relating to share-based remuneration are forfeited.
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
221
The BMW Group provides three share-based programmes:
one for eligible employees, one for senior heads of depart-
ment and one for members of the Board of Management.
Employee Share Programme
In connection with the Employee Share Programme Share
Programme, non-voting shares of preferred stock in BMW AG
were granted in 2021 to qualifying employees at favourable
conditions (see note 31 Equity for the number and price of
issued shares). Participants in the programme were entitled
in 2021 to acquire packages of 10, 20, 30, 40 or 90 shares of
preferred stock (2020: 8, 18 or 28) with a discount in each
case of € 13.50 (2020: € 11.50) per share compared to the
market price (average closing price in Xetra trading in the
period from 28 October to 3 November 2021: € 74.28). The
programme was open to employees who have been in an
employment relationship with BMW AG or a wholly-owned
BMW AG subsidiary in Germany, provided that the manage-
ment of the subsidiary concerned has decided to participate
in the programme. At the date of the announcement of the
programme, there was a requirement for the employment
relationship to have existed without interruption for at least
one year and for it to continue until the transfer of the shares
of preferred stock. Shares of preferred stock acquired in con-
junction with the Employee Share Programme are subject to
a vesting period of four years, starting from 1 January of the
year in which the shares were acquired.
In the financial year under report, 1,718,070 (2020: 822,124)
shares of preferred stock were acquired by employees. This
figure includes 1,715,000 (2020: 822,000) shares out of
Authorised Capital 2019, with the remainder bought back via
the stock exchange. Every year the Board of Management of
BMW AG decides whether the scheme is to be continued.
In the financial year 2021, the BMW Group recorded a per-
sonnel expense of € 23 million (2020: € 9 million) for the
Employee Share Programme, corresponding to the differ-
ence between the market price and the reduced price of the
shares of preferred stock purchased by employees.
Programme for senior heads of department and members of the
Board of Management
The share-based remuneration programme in place in 2021
for qualifying departmental heads is aimed at rewarding a
long-term, entrepreneurial approach to running the business
on a sustainable basis. Under the terms of the programme,
participants give a commitment to invest an amount equiva-
lent to 26% of their performance-based bonus in BMW com-
mon stock and to hold the shares so acquired for a minimum
of four years. In return for the investment requirement,
BMW AG pays 100% of the investment amount as a net
subsidy. Once the four-year holding period requirement has
been fulfilled, the participants receive - for each three com-
mon stock shares held and at the Company's option - one
additional share of common stock or the cash equivalent, to
be decided at BMW AG's discretion.
With effect from the financial year 2021, the members of the
Board of Management receive an earmarked cash amount
(personal investment cash amount), net of taxes and deduc-
tions to be invested in BMW AG common stock. The personal
investment cash amount is paid after the end of the Annual
General Meeting, at which the separate financial statements
of BMW AG for the relevant financial year are presented. The
shares of common stock are purchased immediately after
the personal investment cash amount has been paid out,
and, with effect from the date of purchase, are subject to a
holding period of four years. The target amount for the per-
sonal investment cash amount comprises a ROCE compo-
nent (50%) and a strategic focus targets component (50%).
The RoCE component is determined on the basis of a RoCE
factor that depends on the RoCE achieved in the Automotive
segment in the grant year. The strategic focus targets com-
ponent is determined on the basis of at least two strategic
focus targets that are required to be defined before the start
of the financial year. Minimum, target and maximum values
are defined and factors stipulated for the Automotive seg-
ment's RoCE as well as for each strategic focus target. After
the end of the financial year, the relevant factors are deter-
mined on the basis of target achievement.
41 Share-based remuneration
Remuneration Report
Other Information
AFFILIATED COMPANIES (SUBSIDIARIES) OF BMW AG AT 31 DECEMBER 2021
Financial Statements
LIST OF INVESTMENTS
AT 31 DECEMBER 2021
← = Q
Corporate Governance
BMW Group Report 2021
Combined Management Report
To Our Stakeholders
100
100
100
100
Companies
Group Financial Statements
Notes to the Group
46 List of investments at 31 December 2021
The List of Investments of BMW AG pursuant to § 285 and
§ 313 HGB is presented below. Disclosures for equity and
earnings and for investments are not made if they are of "mi-
nor significance" for the results of operations, financial posi-
tion and net assets of BMW AG pursuant to § 286 (3) sen-
tence 1 no. 1 HGB and § 313 (3) sentence 4 HGB. It is also
shown in the list which subsidiaries apply the exemptions
available in § 264 (3) and § 264 b HGB with regard to the
publication of annual financial statements and the drawing
up of a management report and/or notes to the financial
statements (footnotes 5 and 6). The Group Financial State-
ments of BMW AG serve as exempting consolidated finan-
cial statements for these companies.
LARGUS Grundstücks-Verwaltungsgesellschaft mbH, Munich
BMW Beteiligungs GmbH & Co. KG, Munich 6
BMW INTEC Beteiligungs GmbH, Munich 3,6
BMW Bank GmbH,
4,515
100
1,494
8,390
Profit / loss in € million Capital investment in %
Equity in € million
BAVARIA-LLOYD Reisebüro GmbH, Munich
DOMESTIC 1, 10
Rolls-Royce Motor Cars GmbH, Munich 4,5,6
Bürohaus Petuelring GmbH, Munich
BMW Vermögensverwaltungs GmbH, Munich
BMW M GmbH Gesellschaft für individuelle Automobile, Munich 3,5,6
BMW High Power Charging Beteiligungs GmbH, Munich 4,6
BMW Hams Hall Motoren GmbH, Munich 4,5,6
BMW Finanz Verwaltungs GmbH, Munich
BMW Anlagen Verwaltungs GmbH, Munich 3,6
BMW Vertriebszentren Verwaltungs GmbH, Munich
Parkhaus Oberwiesenfeld GmbH, Munich
Alphabet Fuhrparkmanagement GmbH, Munich 4
Alphabet International GmbH, Munich 4,5,6
Bavaria Wirtschaftsagentur GmbH, Munich 3,5,6
BMW Fahrzeugtechnik GmbH, Eisenach 3,5,6
Munich 3
100
100
100
100
BMW (UK) Pensions Services Ltd., Hams Hall
BMW (GB) Ltd., Farnborough
Alphabet Insurance Services Polska Sp. z o. o., Warsaw
Europe
100
100
100
BMW Car Club Ltd., Farnborough
100
Profit / loss in € million Capital investment in %
Equity in € million
FOREIGN7
IDEALworks GmbH, Munich
BMW i Ventures GmbH, Munich
BMW Car IT GmbH, Munich'
Automag GmbH, Munich
100
100
BMW China Capital B. V., The Hague
BMW Financial Services Czech Republic s. r.o., Prague
100
100
100
100
100
100
100
BMW Drivers Club Ltd., Farnborough
100
100
000 BMW Leasing, Moscow
John Cooper Garages Ltd., Farnborough
John Cooper Works Ltd., Farnborough
BMW Russland Automotive 000, Kaliningrad
BMW Poland sp. z o. o., Warsaw
BMW Motorsport Ltd., Farnborough
BMW Financial Services Slovakia s. r.o., Bratislava
BMW Group Benefit Trust Ltd., Farnborough
BMW Manufacturing Hungary Kft., Debrecen
BMW Manufacturing Russland 000, Kaliningrad
BMW Mobility Development Center s. r.o., Prague
100
2,075
106
100
100
192
937
BMW Motoren GmbH, Steyr
100
488
1,116
BMW (Schweiz) AG, Dielsdorf
BMW Financial Services (GB) Ltd., Farnborough
1,167
3,286
BMW Österreich Holding GmbH, Steyr
100
2,185
4,055
BMW International Holding B. V., The Hague
100
100
879
100
316
BMW (UK) Holdings Ltd., Farnborough
100
100
19
231
417
8
Alphabet España Fleet Management S. A.U., Madrid
387
515
BMW i Ventures SCS SICAV-RAIF, Senningerberg
100
5
806
BMW Hellas Trade of Cars A. E., Kifissia
100
2,049
17,535
BMW Holding B. V., The Hague
100
100
100
100
100
100
27
100
Alphabet Fleetservices GmbH, Munich 4
4
173
100
179
100
3
213
100
100
100
100
Profit / loss in € million Capital investment in %
Equity in € million
Europe
FOREIGN²
Companies
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
232
51
100
100
251
DOMESTIC'
To Our Stakeholders
BMW AG'S NON-CONSOLIDATED COMPANIES AT 31 DECEMBER 2021
Group Financial Statements
Notes to the Group
Financial Statements
Corporate Governance
Remuneration Report
Other Information
Companies
BMW Canada Auto Trust 2021-1, Richmond Hill, Ontario 11
BMW Vehicle Lease Trust 2021-2, Wilmington, Delaware11
BMW Vehicle Lease Trust 2021-1, Wilmington, Delaware 11
BMW Vehicle Owner Trust 2019-A, Wilmington, Delaware¹¹
BMW Vehicle Owner Trust 2020-A, Wilmington, Delaware¹¹
↑
Combined Management Report
= Q
Profit / loss in € million Capital investment in %
0
0
0
0
0
Africa
Equity in € million
BMW Financial Services (South Africa) (Pty) Ltd., Midrand
BMW (South Africa) (Pty) Ltd., Pretoria
To Our Stakeholders
237
100
100
100
100
100
100
100
BMW Group Report 2021
100
100
0
0
| |
0
0
0
100
104
13
100
269
119
100
Herald International Financial Leasing Co. Ltd., Tianjin
210
51
58
BMW Korea Co. Ltd., Seoul
BMW Japan Corp., Tokyo
100
100
BMW Manufacturing (Thailand) Co. Ltd., Rayong
116
94
100
BMW (Thailand) Co. Ltd., Bangkok
128
100
71
279
100
SuperDrive Investments (RF) Ltd., Cape Town¹¹
0
Asia
BMW Automotive Finance (China) Co. Ltd., Beijing
2,561
306
58
BMW China Investment Ltd., Beijing⁹
559
559
100
BMW Japan Finance Corp., Tokyo
527
66
100
BMW Financial Services Korea Co. Ltd., Seoul
100
100
100
100
Equity in € million
BMW Australia Trust 2011-2, Mulgrave 11
Bavarian Sky Australia Trust A, Mulgrave 11
BMW Sydney Pty. Ltd., Sydney
BMW New Zealand Ltd., Auckland
BMW Melbourne Pty. Ltd., Melbourne
BMW Financial Services New Zealand Ltd., Auckland
Profit / loss in € million Capital investment in %
BMW Australia Ltd., Melbourne
Bavarian Sky Korea 2021-1, Seoul 11
11
Bavarian Sky China Leasing 2021-1, Tianjin
Companies
← = Q
Other Information
Remuneration Report
Oceania
0
0
100
Financial Statements
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Combined Management Report
BMW Asia Pacific Capital Pte Ltd., Singapore
BMW Group Report 2021
240
0
0
100
100
100
100
100
Corporate Governance
Companies
Group Financial Statements
Notes to the Group
Financial Statements
To Our Stakeholders
BMW Receivables Ltd. Partnership, Richmond Hill, Ontario
BMW SLP, S. A. de C. V., Villa de Reyes
BMW US Capital LLC, Wilmington, Delaware
Rolls-Royce Motor Cars NA LLC, Wilmington, Delaware
SB Acquisitions LLC, Wilmington, Delaware
BMW 2020- A Lease Conduit, Wilmington, Delaware 11
BMW 2021- A Lease Conduit, Wilmington, Delaware 11
BMW Canada 2018-A, Richmond Hill, Ontario 11
BMW Canada Auto Trust 2019-1, Richmond Hill, Ontario 11
BMW Canada Auto Trust 2020-1, Richmond Hill, Ontario¹
BMW Receivables 2 Inc., Richmond Hill, Ontario
Equity in € million
100
100
100
100
100
100
100
Profit / loss in € million Capital investment in %
BMW Receivables 1 Inc., Richmond Hill, Ontario
BMW of Manhattan Inc., Wilmington, Delaware
BMW Manufacturing LP, Woodcliff Lake, New Jersey
Remuneration Report
Other Information
← = Q
Financial Statements
Companies
BMW do Brasil Ltda., Araquari
BMW Extended Service Corporation, Wilmington, Delaware
BMW Facility Partners LLC, Wilmington, Delaware
BMW Financeira S. A. Credito, Financiamento e Investimento, São Paulo
BMW Financial Services de Mexico S. A. de C. V. SOFOM, Mexico City
BMW Financial Services NA LLC, Wilmington, Delaware
BMW FS Funding Corporation, Wilmington, Delaware
BMW FS Receivables Corporation, Wilmington, Delaware
BMW FS Securities LLC, Wilmington, Delaware
BMW Insurance Agency Inc., Wilmington, Delaware
BMW Leasing do Brasil S. A., São Paulo
BMW Manufacturing Indústria de Motos da Amazônia Ltda., Manaus
Combined Management Report
100
100
I
Equity in € million
Bavarian Sky Europe S. A. Compartment A, Luxembourg 11
Triumph Motor Company Ltd., Farnborough
The British Motor Corporation Ltd., Birmingham
Swindon Pressings Ltd., Farnborough
Riley Motors Ltd., Farnborough
Park Lane Ltd., Farnborough
Profit / loss in € million Capital investment in %
Oy BMW Suomi AB, Helsinki
BMW Slovenská republika s. r.o., Bratislava
BMW Slovenia distribucija motornih vozil d. o.o., Ljubljana
BMW Services Ltd., Farnborough
BMW Romeania S. R.L., Bucharest
BMW Renting (Portugal) Lda., Porto Salvo
BMW Portugal Lda., Porto Salvo
BMW Northern Europe AB, Stockholm
BMW Vertriebs GmbH, Salzburg
BMW Norge AS, Fornebu
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
BMW Nederland B. V., The Hague
BMW Malta Ltd., Floriana
BMW Madrid S. L., Madrid
100
100
100
100
100
100
100
100
100
100
☐
100
100
100
100
100
100
100
100
234
BMW Italia S. p.A., San Donato Milanese
BMW Italia Retail S. r.I., Rome
BMW International Investment B. V., The Hague
BMW Iberica S. A., Madrid
BMW Hungary Kft., Vecsés ⁹
BMW France S. A., Montigny-le-Bretonneux
BMW Financial Services Scandinavia AB, Sollentuna
Companies
Financial Statements
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
100
100
100
100
324
663
BMW Canada Inc., Richmond Hill, Ontario
100
405
698
Financial Services Vehicle Trust, Wilmington, Delaware
100
100
948
BMW of North America LLC, Wilmington, Delaware
100
202
1,473
100
389
549
2,042
BMW (US) Holding Corp., Wilmington, Delaware
BMW Acquisitions Ltda., São Paulo
Corporate Governance
Group Financial Statements
Notes to the Group
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
236
100
100
100
100
I
BMW de Mexico S. A. de C. V., Mexico City
BMW de Argentina S. A., Buenos Aires
BMW Consolidation Services Co. LLC, Wilmington, Delaware
BMW Auto Leasing LLC, Wilmington, Delaware
100
100
BMW Manufacturing Co. LLC, Wilmington, Delaware
BMW Bank of North America Inc., Salt Lake City, Utah
The Americas 10
0
Profit / loss in € million Capital investment in %
Equity in € million
Companies
= Q
↑
Other Information
Remuneration Report
Bavarian Sky FTC, Compartment French Auto Leases 4, Paris 11
Bavarian Sky S. A., Compartment A, Luxembourg 11
Corporate Governance
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
235
0
100
100
Group Financial Statements
Notes to the Group
Financial Statements
0
0
Bavarian Sky S. A., Compartment B, Luxembourg 11
0
0
0
Bavarian Sky UK D Ltd., London"
Bavarian Sky UK C Ltd., London 11
Bavarian Sky UK B Ltd., London 11
Bavarian Sky UK A Ltd., London 11
0
0
0
0
0
0
Bavarian Sky UK 4 plc, London 11
Bavarian Sky S. A., Compartment German Auto Leases 5, Luxembourg 11
Bavarian Sky S. A., Compartment German Auto Leases 6, Luxembourg
Bavarian Sky S. A., Compartment German Auto Loans 10, Luxembourg 11
Bavarian Sky S. A., Compartment German Auto Loans 9, Luxembourg 11
Bavarian Sky UK 3 plc, London 11
11
0
100
100
100
100
0
0
0
0
51
100
100
0
100
100
100
100
Profit / loss in € million Capital investment in %
Equity in € million
Bavarian Sky China Leasing 2020-1, Tianjin 11
Bavarian Sky China 2021-3, Beijing 11
100
Bavarian Sky China 2021-2, Beijing 11
0
0
315
BMW Russland Trading 000, Moscow
100
779
BMW Group Report 2021
239
0
0
0
0
0
0
0
0
0
0
0
11
Bavarian Sky China 2020-1, Beijing 11
Bavarian Sky China 2020-2, Beijing
Bavarian Sky China 2021-1, Beijing
Bavarian Sky China 2019-3, Beijing 11
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
← = Q
238
100
100
BMW China Services Ltd., Beijing
BMW China Automotive Trading Ltd., Beijing
100
BMW Asia Technology Centre Sdn Bhd, Kuala Lumpur
100
BMW Credit (Malaysia) Sdn Bhd, Kuala Lumpur
Financial Statements
Companies
BMW Holding Malaysia Sdn Bhd, Kuala Lumpur
Bavarian Sky China 2019-2, Beijing 11
2021-2 ABL, Tokyo 11
2021-1 ABL, Tokyo 11
2020-1 ABL, Tokyo 11
2019-3 ABL, Tokyo 11
2019-2 ABL, Tokyo 11
2019-1 ABL, Tokyo 11
2018-3 ABL, Tokyo 11
2018-2 ABL, Tokyo 11
2018-1 ABL, Tokyo 11
2017-3 ABL, Tokyo 11
BMW Malaysia Sdn Bhd, Kuala Lumpur
PT BMW Indonesia, Jakarta
BMW Tokyo Corp., Tokyo
BMW Leasing (Thailand) Co. Ltd., Bangkok
BMW Lease (Malaysia) Sdn Bhd, Kuala Lumpur
BMW India Financial Services Private Ltd., Gurgaon
BMW India Private Ltd., Gurgaon
313
100
BMW Finance N. V., The Hague
BMW Finance S. N.C., Guyancourt
BMW (UK) Investments Ltd., Farnborough
BMW (UK) Capital plc, Farnborough
BLMC Ltd., Farnborough
BiV Carry II SCS, Senningerberg⁹
BiV Carry ISCS, Senningerberg
Bavaria Reinsurance Malta Ltd., Floriana
Alphabet Polska Fleet Management Sp. z o. o., Warsaw
BMW (UK) Manufacturing Ltd., Farnborough
Alphabet Nederland B. V., Breda
Companies
Financial Statements
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Alphabet Luxembourg S. A., Leudelange
BMW Austria GmbH, Salzburg
BMW Austria Leasing GmbH, Salzburg
BMW Automotive (Ireland) Ltd., Dublin
100
100
100
100
Profit / loss in € million Capital investment in %
Equity in € million
BMW Financial Services Belgium S. A./ N. V., Bornem
BMW Financial Services Denmark A/S, Copenhagen
BMW Financial Services Polska Sp. z o. o., Warsaw
BMW Financial Services B. V., The Hague
BMW Financial Services (Ireland) DAC, Dublin
BMW España Finance S. L., Madrid
BMW Distribution S. A.S., Vélizy-Villacoublay
BMW Danmark A/S, Copenhagen
BMW Czech Republic s. r.o., Prague
BMW Central Medical Trustees Ltd., Farnborough
BMW Bulgaria EOOD, Sofia
BMW Belgium Luxembourg S. A./ N. V., Bornem
BMW Bank 000, Moscow
Combined Management Report
BMW Asia Pte. Ltd., Singapore
To Our Stakeholders
233
181
100
82
198
100
8
203
189
100
251
100
97
251
ALPHABET (GB) Ltd., Farnborough
BMW (UK) Ltd., Farnborough
BMW Austria Bank GmbH, Salzburg
46
100
Rolls-Royce Motor Cars Ltd., Farnborough
BMW Finanzdienstleistungen (Schweiz) AG, Dielsdorf
100
100
100
I
100
100
Alphabet Italia S. p.A., Trento
Alphabet Fuhrparkmanagement (Schweiz) AG, Dielsdorf
Alphabet France Fleet Management S. A.S., Saint-Quentin-en-Yvelines
Alphabet Belgium Long Term Rental NV, Aartselaar
Alphabet Austria Fuhrparkmanagement GmbH, Salzburg
100
19
118
100
92
132
BMW Group Report 2021
BMW Australia Finance Ltd., Mulgrave
3
Corporate Governance
Fundamental Aspects of
Corporate Governance
Ilka Horstmeier
Oliver Zipse
The Board of Management
Aktiengesellschaft
Bayerische Motoren Werke
Munich, 8 March 2022
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
246
Dr.-Ing. Milan Nedeljković
Pieter Nota
Dr. Nicolas Peter
Dr.-Ing. Joachim Post
251 Current Members of the Board of Management
250 Shareholders and Annual General Meeting
249 Supervisory Board
248 Board of Management
248 Information on the Company's Governing Constitution
248 Fundamental Aspects of Corporate Governance
(Part of the Combined Management Report)
← = Q
18
Other Information
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
247
Frank Weber
Remuneration Report
251 Outgoing Members of the Board of Management
9
6
Northvolt AB, Stockholm
FOREIGN
SGL Carbon SE, Wiesbaden
Racer Benchmark Group GmbH, Landsberg am Lech
Mobimeo GmbH, Berlin
Joblinge gemeinnützige AG Munich, Munich
Joblinge gemeinnützige AG Leipzig, Leipzig
Joblinge gemeinnützige AG Berlin, Berlin
IVM Industrie-Verband Motorrad GmbH & Co. Dienstleistungs KG, Essen
Hubject GmbH, Berlin
GSB Sonderabfall-Entsorgung Bayern GmbH, Baar-Ebenhausen
Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern
DOMESTIC
Companies
BMW AG'S PARTICIPATIONS AT 31 DECEMBER 2021
↑
= Q
Equity in € million Profit / loss in € million Capital investment in %
1 The amounts shown for the German affiliated companies correspond to the annual financial statements drawn up in accordance with German accounting rules (HGB).
17
10
22
16
3
5
11 Control on basis of economic dependence.
10
10 Deconsolidation in the financial year 2021: BMW Verwaltungs GmbH (merger), BMW Leasing de Mexico S. A. de C. V. (merger).
The amounts shown for entities accounted for using the equity method and for proportionately consolidated entities correspond to the annual financial statements drawn up in accordance with uniform IFRS rules.
Equity not denominated in euro is translated into euro using the closing exchange rate at the balance sheet date, earnings are translated using the average rate.
7 These entities are neither consolidated nor accounted for using the equity method due to their overall immateriality for the Group Financial Statements.
6 Exemption from publication of financial statements applied in accordance with § 264 (3) and § 264b HBG.
5 Exemption from drawing up a management report applied in accordance with § 264 (3) and § 264b HBG.
4 Profit and Loss Transfer Agreement with a subsidiary of BMW AG.
3 Profit and Loss Transfer Agreement with BMW AG.
2 The amounts shown for the foreign affiliated companies correspond to the annual IFRS statements drawn up in accordance with uniform IFRS rules. Equity and earnings not denominated in euro are translated in
euro using the closing exchange rate at the balance sheet date.
9 First-time consolidation.
Other Information
252 Current Members of the Supervisory Board
256 Overview of Supervisory Board Committees and their
Composition
7 GRI-Index: 102-23
More information about the composition of the Supervisory
Board, and how it operates and its individual committees, is
provided in the Statement on Corporate Governance at
7 www.bmwgroup.com/statement on corporate governance.
BMW AG ensures that the Supervisory Board and its com-
mittees are appropriately equipped to carry out their duties.
This includes providing a central Supervisory Board office to
support the chairpersons in their coordination work.
The composition of the Presiding Board and the committees
is based on legal requirements, the Articles of Incorporation,
the rules of procedure and corporate governance principles,
particularly taking into account the professional expertise of
their members.
Taking into account the specific circumstances of the
BMW Group and the number of Board members, the Super-
visory Board has set up a Presiding Board and four commit-
tees, namely the Personnel Committee, the Audit Commit-
tee, the Nomination Committee and the Mediation
Committee. These serve to raise the effectiveness of the Su-
pervisory Board's work and facilitate the handling of com-
plex issues.
The Supervisory Board has stated specific targets for its
composition, agreed to a diversity concept and determined a
competency profile. Members of the Supervisory Board are
responsible for undertaking any training required for the per-
formance of their duties, appropriately assisted by the
Company.
the Chairman. The findings and conclusions resulting from
this self-assessment process are subsequently discussed in
plenary.
The Supervisory Board regularly assesses the effectiveness
of its activities and the activities carried out by its commit-
tees by means of a questionnaire as well as discussions with
The members of the Supervisory Board are required to re-
port any conflicts of interest immediately to the Chairman of
the Supervisory Board. The Supervisory Board reports on
the handling of such conflicts of interest to the Annual Gen-
eral Meeting. Conflicts of interest requiring to be disclosed
include, in particular, conflicts of interest that may result from
a directorship function or advisory role with clients, suppli-
ers, lenders or other business partners. If a Supervisory
Board member has significant and non-temporary conflicts
of interest, this will lead to the termination of the mandate.
Members of the Supervisory Board of BMW AG are obliged
to act in the best interest of the enterprise as a whole. They
may not pursue personal interests in their decisions or take
advantage of business opportunities intended for the benefit
of the Company.
reasons.
BMW AG's Supervisory Board is composed of ten share-
holder representatives (elected by the Annual General Meet-
ing) and ten employee representatives (elected in accord-
ance with the Co-Determination Act). The ten Supervisory
Board members representing employees comprise seven
Company employees, including one executive staff repre-
sentative, and three members elected following nomination
by unions. The Supervisory Board is charged with the task of
advising and supervising the Board of Management in its
management of BMW AG. It is involved in decisions of fun-
damental importance for BMW AG. The Supervisory Board
appoints the members of the Board of Management and
decides upon the level of remuneration they receive. The
Supervisory Board can revoke appointments for important
SUPERVISORY BOARD
Governance).
More information about the composition of the Board of
Management, and how it operates and its individual commit-
tees is provided in the Statement on Corporate Governance
at www.bmwgroup.com/statement on corporate governance (Corporate
250
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Remuneration Report
Further information on corporate management and govern-
ance, including the Declaration of Compliance pursuant to
§161 of the German Stock Corporation Act, can be found in
the Statement on Corporate Governance (§ 289f and § 315d
HGB) at www.bmwgroup.com/statement on corporate governance.
DECLARATION OF
COMPLIANCE
The Board of Management and the Supervisory Board of
BMW AG issue an annual Declaration of Compliance pursu-
ant to §161 of the German Stock Corporation Act (AktG) with
regard to recommendations of the Government Commission
on the German Corporate Governance Code as officially pub-
lished and valid at the date of the declaration. The current
and previous Declarations of Compliance of BMW AG are
available online at www.bmwgroup.com/compliance declaration. In
the Declaration of Compliance issued in December 2021, the
Board of Management and the Supervisory Board declared
that BMW Group would continue to comply with all recom-
mendations of the German Corporate Governance Code
(version dated 16 December 2019) going forward.
structions to Company representatives or by postal vote
(both in writing and online).
Due to the Covid-19 pandemic, the 2021 Annual General
Meeting was held as a virtual meeting, i. e. without share-
holders and proxies being physically present with the excep-
tion of the Company representatives bound by instructions
issued by shareholders. The Company enabled shareholders
in this situation to exercise their voting rights by issuing in-
Shareholders may exercise their voting rights at the Annual
General Meeting either in person, by proxy, or via a repre-
sentative designated by BMW AG. Voting rights may also be
exercised via postal vote.
The Board of Management has issued terms of procedure for
itself. The allocation of areas of responsibility and business
segments among the members of the Board of Management
is set out in the Board's Schedule of Responsibilities.
Moreover, the remuneration systems for members of the
Board of Management and the Supervisory Board are pre-
sented to the Annual General Meeting for approval whenever
they undergo significant changes, but at least every four
years. They were last presented at the 2021 Annual General
Meeting. From the 2022 Annual General Meeting onwards,
the Annual General Meeting will also vote on whether to ap-
prove the Remuneration Report.
ANNUAL GENERAL
MEETING
SHAREHOLDERS AND
← = Q
Other Information
Remuneration Report
Corporate Governance
Fundamental Aspects of
Corporate Governance
Group Financial Statements
The shareholders of BMW AG exercise their rights at the An-
nual General Meeting. The Annual General Meeting decides
in particular on the utilisation of unappropriated profit, the
ratification of the activities of the members of the Board of
Management and of the Supervisory Board, the appoint-
ment of the external auditor, changes to the Articles of Incor-
poration and certain capital-related measures, as well as
electing the shareholders' representatives to the Supervis-
ory Board.
255 Outgoing Members of the Supervisory Board
Deliberations are held and decisions taken by the Board of
Management as a collegiate body at full. Board meetings as
well as at "Product and Customer Board Meetings". The
Board of Management also deliberates and makes decisions
at meetings of its three committees "Customer", "Oper-
ations" and "Senior Executives". The overall framework for
developing business strategies, the use of resources, the im-
plementation of strategies and matters of particular impor-
tance to BMW AG are decided upon at Board of Management
meetings.
all provisions of law and internal regulations are complied
with. You can find more details about compliance at
BMW Group in the section Compliance and human rights at
BMW Group. The Board of Management is responsible for
ensuring that appropriate risk management, risk controlling
and compliance management systems are in place through-
out the Company.
-
FUNDAMENTAL ASPECTS OF CORPORATE GOVERNANCE
(PART OF THE COMBINED MANAGEMENT REPORT)
← = Q
Group Financial Statements
Other Information
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
248
GOVERNANCE
CORPORATE
267 Independent Practitioner's Report
259 Independent Auditor's Report
Representatives
258 Responsibility Statement by the Company's Legal
Good corporate governance acting in accordance with
the principles of responsible management aimed at cre-
ation of value on a sustainable basis - is an essential re-
quirement for the BMW Group, embracing all areas of the
business. Transparent reporting and corporate communi-
cation, corporate governance that is aligned with the inter-
ests of all stakeholders, cooperation based on trust be-
tween the Board of Management, Supervisory Board and
employees, and compliance with applicable law are essen-
tial cornerstones of the corporate culture within the
BMW Group.
The Board of Management and the Supervisory Board re-
port below on the main features of corporate governance.
A detailed report on corporate governance can be found in
the Statement on Corporate Governance, available at
www.bmwgroup.com/statement on corporate governance (Corporate
Governance).
INFORMATION ON THE
← = Q
Other Information
Remuneration Report
Corporate Governance
Fundamental Aspects of
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
Members of the Board of Management are required to act in
the enterprise's best interests and may not pursue personal
interests in their decisions or take advantage of business op-
portunities intended for the benefit of the Company. Individual
members of the Board of Management of BMW AG are re-
quired to disclose any conflicts of interest to the Supervisory
Board without delay, and to inform the other members of the
Board of Management accordingly.
BMW Group Report 2021
In accordance with §7 of the Articles of Association, the
Board of Management of BMW AG comprises two or more
persons; other than that, the number of members of the
Board of Management is determined by the Supervisory
Board. At 31 December 2021, the Board of Management
comprised seven members. The Board of Management de-
cides on the principal guidelines for managing the enter-
prise, determines and agrees upon the strategic orientation
with the Supervisory Board, and ensures its implementation.
The Board of Management is responsible for ensuring that
The Board of Management manages the enterprise under its
own responsibility, acting in the best interests of the enter-
prise with the aim of achieving sustainable creation of value.
The interests of shareholders, employees and other stake-
holders are also taken into account in the pursuit of this aim.
7 GRI 102-43
BOARD OF MANAGEMENT
The close interaction between the Board of Management
and the Supervisory Board in the interests of the enterprise
as described above is also known as a "two-tier board
structure".
major proceedings. The Supervisory Board is not, however,
authorised to undertake management measures itself.
The designation BMW Group comprises Bayerische Motor-
en Werke Aktiengesellschaft (BMW AG) and its Group en-
tities. BMW AG is a stock corporation (Aktiengesellschaft)
within the meaning of the German Stock Corporation Act
(Aktiengesetz) and has its registered office in Munich, Ger-
many. It has three representative bodies, namely the Annual
General Meeting, the Supervisory Board and the Board of
Management. The duties and authorities of those bodies de-
rive from the Stock Corporation Act and the Articles of Incor-
poration of BMW AG. Shareholders, as the owners of the
business, exercise their rights at the Annual General Meet-
ing. The Board of Management is fully responsible for man-
aging the enterprise and is monitored and advised by the
Supervisory Board. The Supervisory Board appoints the
members of the Board of Management and can, at any time,
revoke an appointment for good cause. The Board of Man-
agement informs the Supervisory Board and reports to it
regularly, promptly and comprehensively, in line with the
principles of conscientious and faithful accountability and in
accordance with the law and the reporting duties determined
by the Supervisory Board. The Board of Management re-
quires the approval of the Supervisory Board for certain
COMPANY'S GOVERNING
CONSTITUTION
249
Remuneration Report
250 Declaration of Compliance
Group Financial Statements
Notes to the Group
Financial Statements
100
100
100
100
100
100
100
100
100
100
100
100
100
BMW Technology Office Israel Ltd., Tel Aviv
BMW Parts Manufacturing (Thailand) Co., Ltd., Rayong Province
242
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
70
100
100
Profit / loss in € million Capital investment in %
Equity in € million
BMW Financial Services Hong Kong Ltd., Hong Kong
BMW Philippines Corp., Manila
BMW Mobility Services Ltd., Sichuan Tianfu New Area (Chengdu Section)
THEPSATRI Co. Ltd., Bangkok
Financial Statements
Companies
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Herald Hezhong (Beijing) Automotive Trading Co. Ltd., Beijing
51
BMW Middle East Retail Competency Centre DWC-LLC, Dubai
BMW India Leasing Private Ltd., Gurgaon
BMW Experience Centre Inc., Richmond Hill, Ontario
217-07 Northern Boulevard Corporation, Wilmington, Delaware
The Americas
Profit / loss in € million Capital investment in %
Equity in € million
Companies
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
Financial Statements
Combined Management Report
To Our Stakeholders
Corporate Governance
241
BMW i Ventures Inc., Wilmington, Delaware
BMW i Ventures LLC, Wilmington, Delaware
BMW Mobility Services LLC, Wilmington, Delaware
BMW Operations Corp., Wilmington, Delaware
BMW Shared Services LLC, Wilmington, Delaware
BMW Technology Corp., Wilmington, Delaware
Designworks/USA Inc., Newbury Park, California
MINI Business Innovation LLC, Wilmington, Delaware
Toluca Planta de Automoviles S. A. de C. V., Mexico City
Urban X Accelerator SPV LLC, Wilmington, Delaware
100
100
BMW India Foundation, Gurgaon
BMW Hong Kong Services Ltd., Hong Kong
BMW Finance (United Arab Emirates) Ltd., Dubai
BMW Financial Services Singapore Pte Ltd., Singapore
Asia
BMW Automobile Distributors (Pty) Ltd., Midrand
BPF Midrand Property Holdings (Pty) Ltd., Midrand
Multisource Properties (Pty) Ltd., Midrand
Africa
100
BMW Insurance Services Korea Co. Ltd., Seoul
100
100
100
100
100
100
100
100
100
243
BMW Group Report 2021
To Our Stakeholders
BMW Group Report 2021
To Our Stakeholders
BMW Group Report 2021
244
40
20
20
50
50
50
7
30
- 108
1,090
BMW Albatha Finance PSC, Dubai
Group Financial Statements
Notes to the Group
Corporate Governance
Remuneration Report
Other Information
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
245
50
50
50
Bavarian & Co Co. Ltd., Incheon
40
Critical TechWorks S. A., Porto
BMW AVTOTOR Holding B. V., Amsterdam
BMW ArcherMind Information Technology Co. Ltd., Nanjing
BMW Albatha Leasing LLC, Dubai
Companies
Financial Statements
← = Q
Equity in € million Profit loss in € million Capital investment in %
FOREIGN
Combined Management Report
The Retail Performance Company GmbH, Munich
897
Equity in € million Profit / loss in € million Capital investment in %
IONITY Holding GmbH & Co. KG, Munich 8
YOUR NOW Holding GmbH, Munich 8
DOMESTIC
Companies
BMW AG'S ASSOCIATED COMPANIES, JOINT VENTURES AND JOINT OPERATIONS AT 31 DECEMBER 2021
Financial Statements
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Notes to the Group
PDB - Partnership for Dummy Technology and Biomechanics GbR, Gaimersheim
Combined Management Report
-337
50
Joint ventures - equity accounted
-35
Encory GmbH, Unterschleißheim
DOMESTIC
209
Not equity accounted or proportionately consolidated entities
Spotlight Automotive Ltd., Zhangjiagang 8
FOREIGN
Solid Power, Inc., Wilmington, Delaware
THERE Holding B. V., Amsterdam 8
Joint operations - proportionately consolidated entities
Associated companies - equity accounted
50
3,596
11,176
BMW Brilliance Automotive Ltd., Shenyang 8
FOREIGN
20
FOREIGN
Corporate Governance
Fundamental Aspects of
Corporate Governance
Member since 8 October 2021, appointed until the AGM
2024
Remuneration Report
Other Information
← = Q
BERNHARD EBNER¹ (b. 1978)
Chairman of the Works Council, Landshut
Mandates
Member since 14 May 2021, appointed until the AGM 2024
Head of Bavaria Region, IG Metall
Mandates
EDAG Engineering GmbH* (until 28 May 2021)
Siemens Healthcare GmbH*
ANKE SCHÄFERKORDT (b. 1962)
Member since 2020, elected until the AGM 2025
Member of supervisory boards
Group Financial Statements
JOHANN HORN² (b. 1958)
Combined Management Report
3 Executive employee of the enterprise.
BMW Group Report 2021
2 Union representative.
Not listed on the stock exchange.
"Group mandate.
- Memberships of other statutory supervisory boards.
- Memberships of comparable boards of business enterprises in Germany and abroad.
Mandates
Continental AG, Deputy Chairwoman
To Our Stakeholders
STEFAN SCHMID1 (b. 1965)
Deputy Chairman of the Supervisory Board
Chairman of the Works Council, Dingolfing
DR. MARC BITZER (b. 1965)
Member since 12 May 2021, elected until the AGM 2025
Chairman and Chief Executive Officer of Whirlpool
Corporation
Mandates
Whirlpool Corp. **, Chairman
Simex Trading AG*
253
Member since 2007, elected until the AGM 2024
BASF SE (until 29 April 2022)
"Group mandate.
RACHEL EMPEY (b. 1976)
(Chairman since 1 January 2022)
JENS KÖHLER¹ (b. 1964)
Member since 3 August 2021, appointed until the
AGM 2024
Chairman of the Works Council, Leipzig
DR. VISHAL SIKKA (b. 1967)
Member since 2019, elected until the AGM 2024
CEO & Founder, Vianai Systems, Inc.
DR. DOMINIQUE MOHABEER¹ (b. 1963)
Member since 2012, elected until the AGM 2024
Member of the Works Council, Munich
Mandates
Oracle Corporation
1 Employees of the enterprise.
2 Union representative.
3 Executive employee of the enterprise.
Not listed on the stock exchange.
1 Employees of the enterprise.
- Memberships of other statutory supervisory boards.
ZF Friedrichshafen AG*
Fresenius Management SE*
Deutsche Post AG
Mandates
Member since 12 May 2021, elected until the AGM 2025
Member of the Board of Management of Fresenius Man-
agement SE (finance division)
SUSANNE KLATTEN (b. 1962)
Member since 1997, elected until the AGM 2024
Entrepreneur
Mandates
Fresenius Kabi AG***, Deputy Chairwoman
Fresenius Medical Care Management AG****
DR.-ING. HEINRICH HIESINGER (b. 1960)
Member since 2017, elected until the AGM 2022
Chairman of the Supervisory Board of ZF
Friedrichshafen AG
Serviceplan Group Management SE*
Wayfair Inc.
Mandates
ALTANA AG ****, Deputy Chairwoman
SGL Carbon SE, Chairwoman
SprinD GmbH*
UnternehmerTUM GmbH*, Chairwoman
PROF. DR. DR. H. C. CHRISTOPH M. SCHMIDT (b. 1962)
Member since 12 May 2021, elected until the AGM 2025
President of the RWI - Leibniz Institute for Economic
Research, University Professor
Mandates
Basalt-Actien-Gesellschaft*
Thyssen Vermögensverwaltung GmbH*
-
Deputy Chair of IG Metall
General Counsel:
CHRISTIANE BENNER² (b. 1968)
Chairman (until 10 February 2022 Deputy Chairman)
DR.-ING. MILAN NEDELJKOVIĆ (b. 1969)
Production
DR.-ING. JOACHIM POST (b. 1971)
Purchasing and Supplier Network (since 1 January 2022)
Mandates
BMW (South Africa) (Pty) Ltd. ****, Chairman
BMW Motoren GmbH ***, Chairman
FRANK WEBER (b. 1966)
Development
PIETER NOTA (b. 1964)
Customer, Brands, Sales
Mandates
Rolls-Royce Motor Cars Limited ****, Chairman
Not listed on the stock exchange.
**Group mandate.
- Memberships of other statutory supervisory boards.
-Memberships of comparable boards of business enterprises in Germany and abroad.
BMW Brilliance Automotive Ltd. ****,
OUTGOING MEMBERS
―
DR. NICOLAS PETER (b. 1962)
Finance
-Memberships of comparable boards of business enterprises in Germany and abroad.
251
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Fundamental Aspects of
Corporate Governance
Remuneration Report
Other Information
← = Q
CURRENT MEMBERS
OF THE BOARD OF
MANAGEMENT
OLIVER ZIPSE (b. 1964)
Chairman
ILKA HORSTMEIER (b. 1969)
Human Resources, Labour Relations Director
Mandates
OF THE BOARD OF
MANAGEMENT
DR.-ING. ANDREAS WENDT (b. 1958)
Purchasing and Supplier Network
(until 31 December 2021)
Siemens Aktiengesellschaft
Henkel Management AG*
Henkel AG & Co. KGaA (Shareholders' Committee)
MANFRED SCHOCH (b. 1955)
Member since 1988, elected until the AGM 2024
Deputy Chairman of the Supervisory Board
Chairman of the European and General Works Council
Industrial Engineer
Mandates
DELTON Health AG ***, Chairman
DELTON Technology SE***, Chairman
Frankfurter Allgemeine Zeitung GmbH*
AQTON SE***, Chairman
SOLARWATT GmbH ***
-
Entrust Corp.*.**
** Note: Mr Quandt is the sole shareholder of DELTON Health AG, DELTON Technology SE and AQTON
SE. Mr Quandt holds majority interests in Entrust Corp. and SOLARWATT GmbH.
Mandates
FUCHS PETROLUB SE, Chairman (until 3 May 2022)
Mandates
Chairman of the Supervisory Board of BASF SE
Deputy Chairman of the Supervisory Board
(since 12 May 2021)
Member since 2018, elected until the AGM 2023
DR. ANDREAS LIEPE
252
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Fundamental Aspects of
Corporate Governance
Member since 2014, elected until the AGM 2024
Remuneration Report
← = Q
CURRENT MEMBERS OF
THE SUPERVISORY BOARD
DR.-ING. DR.-ING. E. H. NORBERT REITHOFER (b. 1956)
Member since 2015, elected until the AGM 2025
Chairman of the Supervisory Board
Former Chairman of the Board of Management of BMW AG
STEFAN QUANDT (b. 1966)
Member since 1997, elected until the AGM 2024
Deputy Chairman of the Supervisory Board
Entrepreneur
DR. RER. POL. KURT BOCK (b. 1958)
Other Information
254
1 Measurement of leased products
To Our Stakeholders
- Established as required by law
Norbert Reithofer, Manfred Schoch, Stefan Quandt, Stefan Schmid
(In accordance with statutory requirements, the Mediation Committee comprises the Chairman and Dep-
uty Chairman of the Supervisory Board and one member each selected by shareholder representatives
and employee representatives.)
⚫ Chair.
258
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Responsibility Statement by the
Company's Legal Representatives
― Submitting a proposal to the Supervisory Board if a resolution to appoint a member of the Board of Management has not been
carried by the necessary two-thirds majority of Supervisory Board members' votes
Remuneration Report
← = Q
RESPONSIBILITY STATEMENT BY THE
COMPANY'S LEGAL REPRESENTATIVES
Statement pursuant to § 117 No.1 of the 1, AktG Trading Act
(WpHG) in conjunction with § 297 (2) sentence 4 and § 315
(1) sentence 5 of the German Commercial Code (HGB)
"To the best of our knowledge, and in accordance with the
applicable reporting principles, the Group Financial State-
ments give a true and fair view of the assets, liabilities, finan-
cial position and results of operations of the Group, and the
Group Management Report includes a fair review of the
development and performance of the business and position
of the Group, together with a description of the principal
opportunities and risks associated with the expected devel-
opment of the Group."
Munich, 8 March 2022
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management
Oliver Zipse
Ilka Horstmeier
Dr.-Ing. Milan Nedeljković
Other Information
MEDIATION COMMITTEE
(In line with the recommendation of the German Corporate Governance Code, the Nomination Committee
comprises only shareholder representatives.)
Norbert Reithofer*, Kurt Bock (since 12 May 2021), Susanne Klatten, Karl-Ludwig Kley (until 12 May
2021), Stefan Quandt
- Supervising the effectiveness of the internal control system, the risk management system and the internal audit system as well as
the performance of Supervisory Board duties in connection with audits pursuant to § 32 of the German Securities Trading Act (WpHG)
― Supervising compliance as well as analysing and supervising any needs for action related to possible violations of duties by members
of the Board of Management in preparation of a resolution at the Supervisory Board
-― Making decisions on approval for utilisation of the Authorised Capital 2019 and determinations concerning the form of share
certificates and dividend coupons
- Amendments to Articles of Incorporation only affecting wording
― Established in accordance with recommendation in the German Corporate Governance Code, activities based on
rules of procedure
Kurt Bock 1,2, Norbert Reithofer 3³, Manfred Schoch, Stefan Quandt, Stefan Schmid
1 Chair.
2 Special knowledge and experience according to recommendation D.4 of the DCGK
and expertise in accounting and auditing within the meaning of § 100 (5) AktG.
3 Expertise in auditing within the meaning of § 100 (5) AktG.
257
BMW Group Report 2021
To Our Stakeholders
Group Financial Statements
Corporate Governance
Fundamental Aspects of
Corporate Governance
Remuneration Report
Other Information
← = Q
Principal duties, basis for activities
NOMINATION COMMITTEE
- Identifying suitable candidates as shareholder representatives on the Supervisory Board to be put forward for inclusion in the
Supervisory Board's proposals for election at the Annual General Meeting
― Established in accordance with recommendation in the German Corporate Governance Code, activities based on terms of proce-
dure
Members
Pieter Nota
Dr. Nicolas Peter
Dr.-Ing. Joachim Post
Frank Weber
Group Financial Statements
Corporate Governance
Independent Auditor's Report
Remuneration Report
Other Information
← = Q
and of the Group Management Report" section of our audi-
tor's report. We are independent of the group entities in ac-
cordance with the requirements of European law and Ger-
man commercial and professional law, and we have fulfilled
our other German professional responsibilities in accordance
with these requirements. In addition, in accordance with Arti-
cle 10 (2) point (f) of the EU Audit Regulation, we declare that
we have not provided non-audit services prohibited under
Article 5 (1) of the EU Audit Regulation. We believe that the
audit evidence we have obtained is sufficient and appropriate
to provide a basis for our audit opinions on the consolidated
financial statements and on the group management report.
Key Audit Matters in the Audit of the Consolidated Fi-
nancial Statements
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the con-
solidated financial statements for the financial year from Jan-
uary 1 to December 31, 2021. These matters were addressed
in the context of our audit of the consolidated financial state-
ments as a whole, and in forming our audit opinion thereon;
we do not provide a separate audit opinion on these matters.
In our view, the matters of most significance in our audit were
as follows:
1 Measurement of leased products
2 Valuation of receivables from sales financing
3 Valuation of provisions for statutory and
non-statutory warranty obligations and product
guarantees
4 Presentation of the acquisition of BMW Brilliance
Automotive Ltd., Shenyang, China, after the
balance sheet date in the notes
Our presentation of these key audit matters has been struc-
tured in each case as follows:
1 Matter and issue
2 Audit approach and findings
3 Reference to further information
Hereinafter we present the key audit matters:
The BMW Group leases vehicles to end customers under
operating leases (leased products). At the balance sheet
date, the figure reported under the "leased products" line
item for operating leases was EUR 44,700 million (ap-
proximately 19.5% of total assets). Leased products are
measured at cost, which is depreciated on a straight-line
basis over the lease term to the expected residual value
(recoverable amount). A key estimated value for subse-
quent measurement of leased products is the expected
residual value at the end of the lease term. The
BMW Group uses internally available data on historical
empirical values, current market data and market esti-
mates as well as forecasts by external market research
institutes. The estimation of future residual values is
subject to judgment due to the large number of assump-
tions to be made by the executive directors and the
amount of data included in the determination.
Against this background and due to the resulting signifi-
cant uncertainties with regard to estimates in the context
of measuring the residual values of the leased products,
this matter was of particular significance in the context of
our audit.
2 As part of our audit we obtained an understanding of the
development of operating leases, the underlying residu-
al value risks as well as the business processes for the
identification, management, monitoring and measure-
ment of residual value risks, among other things by in-
quiries and inspection of documents related to the inter-
nal calculation methods. Furthermore, we evaluated the
appropriateness and effectiveness of the internal control
system, particularly regarding the determination of ex-
pected residual values. This included the evaluation of
the propriety of the relevant IT systems as well as the
implemented interfaces therein by our IT-specialists. In
addition, we evaluated the appropriateness of the fore-
casting methods, the model assumptions as well as the
parameters used for the measurement of the residual
values based on the validations carried out by the
BMW Group. For this purpose, we inquired with the
BMW Group's experts responsible for the management
and monitoring of residual value risks and inspected the
internal analysis on residual value developments and re-
sidual value forecasts as well as the validation results.
We examined the mathematically correctness of the
forecast values using the key calculation steps.
Based on our audit procedures, we were able to satisfy
ourselves that the methods and processes for determin-
ing the expected residual values of leased products un-
derlying the valuation are appropriate and the assump-
tions and parameters included in the forecast model for
the residual value are appropriate as a whole.
3 The Company's disclosures on the applied "Accounting
policies, assumptions, judgments and estimations" are
contained in the notes to the consolidated financial
statements under note 6 and on leased products are
contained under note 23.
Combined Management Report
- Preparing the Supervisory Board's audit of the non-financial reporting, preparing the selection of the auditor for non-financial
reporting, and engaging the auditor
To Our Stakeholders
260
259
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
INDEPENDENT AUDITOR'S REPORT
Independent Auditor's Report
Remuneration Report
Other Information
← = Q
To Bayerische Motoren Werke
Aktiengesellschaft, Munich
Report on the Audit of the
Consolidated Financial Statements and
of the Group Management Report
Audit Opinions
We have audited the consolidated financial statements of
Bayerische Motoren Werke Aktiengesellschaft, Munich, and
its subsidiaries (the Group), which comprise the Balance
Sheet for Group at 31 December 2021, and the Income State-
ment for Group, Statement of Comprehensive Income for
Group, Cash Flow Statement for Group and Statement of
changes in Equity for Group for the financial year from 1 Jan-
uary to 31 December 2021, and Notes to the Group Financial
Statements, including a summary of significant accounting
policies. In addition, we have audited the combined man-
agement report of Bayerische Motoren Werke Aktienge-
sellschaft, which is combined with the Company's manage-
ment report, for the financial year from 1 January to 31
December 2021. In accordance with the German legal re-
quirements, we have not audited the content of those parts
of the group management report listed in the "Other Infor-
mation" section of our auditor's report.
In our opinion, on the basis of the knowledge obtained in the
audit,
the accompanying consolidated financial statements
comply, in all material respects, with the IFRSS as adopt-
ed by the EU, and the additional requirements of German
commercial law pursuant to § [Article] 315e Abs. [para-
graph] 1 HGB [Handelsgesetzbuch: German Commercial
Code] and, in compliance with these requirements, give a
true and fair view of the assets, liabilities, and financial
position of the Group as at December 31, 2021, and of its
financial performance for the financial year from Janu-
ary 1 to December 31, 2021, and
the accompanying group management report as a whole
provides an appropriate view of the Group's position. In
all material respects, this group management report is
consistent with the consolidated financial statements,
complies with German legal requirements and appropri-
ately presents the opportunities and risks of future devel-
opment. Our audit opinion on the group management
report does not cover the content of those parts of the
group management report listed in the "Other Informa-
tion" section of our auditor's report.
Pursuant to § 322 Abs. 3 Satz [sentence] 1 HGB, we declare
that our audit has not led to any reservations relating to the
legal compliance of the consolidated financial statements
and of the group management report.
Basis for the Audit Opinions
We conducted our audit of the consolidated financial state-
ments and of the group management report in accordance
with § 317 HGB and the EU Audit Regulation (No. 537/2014,
referred to subsequently as “EU Audit Regulation”) in compli-
ance with German Generally Accepted Standards for Finan-
cial Statement Audits promulgated by the Institut der
Wirtschaftsprüfer [Institute of Public Auditors in Germany]
(IDW). Our responsibilities under those requirements and
principles are further described in the "Auditor's Responsibil-
ities for the Audit of the Consolidated Financial Statements
BMW Group Report 2021
BMW Group Report 2021
― Engaging and signing the fee agreement with the external auditor as well as determining areas of audit emphasis
- Supervising the external audit, in particular selecting the auditor and ensuring the independence and quality of the external
audit and any additional work performed by the external auditor
Other Information
← = Q
255
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Fundamental Aspects of
Corporate Governance
Remuneration Report
Other Information
← = Q
OUTGOING MEMBERS
OF THE SUPERVISORY
BOARD
DR. JUR. KARL-LUDWIG KLEY (b. 1951)
Member from 2008 to 12 May 2021
Deputy Chairman of the Supervisory Board (until 12 May
2021)
Chairman of the Supervisory Boards of E.ON SE and
Deutsche Lufthansa Aktiengesellschaft
Mandates
E.ON SE, Chairman
Deutsche Lufthansa Aktiengesellschaft, Chairman
PROF. DR. DR. H. C. REINHARD HÜTTL (b. 1957)
Member from 2008 to 12 May 2021
Scientific Director and Managing Partner of EUREF Energy
Innovation GmbH
HORST LISCHKA² (b. 1963)
Member from 2009 to 12 May 2021
Remuneration Report
Former Secretary to the Executive Board of IG Metall
Corporate Governance
Fundamental Aspects of
Corporate Governance
- Memberships of other statutory supervisory boards.
Combined Management Report
Group Financial Statements
SIBYLLE WANKEL² (b. 1964)
Member since 4 January 2022, appointed until the
AGM 2024
1. Authorised Representative and Head of IG Metall's
Munich Office
Mandates
KraussMaffei Group GmbH*, Deputy Chairwoman (since
31 May 2021)
DR. THOMAS WITTIG³ (b. 1960)
Member since 2019, elected until the AGM 2024
Senior Vice President Financial Services
Mandates
BMW Bank GmbH ****, Chairman
BMW Automotive Finance (China) Co. Ltd.***,
Chairman
WERNER ZIERER¹ (b. 1959)
Member since 2001, elected until the AGM 2024
Member of the Works Council, Regensburg (Chairman until
31 October 2021)
1 Employees of the enterprise.
2 Union representative.
3 Executive employee of the enterprise.
Not listed on the stock exchange.
"Group mandate.
-Memberships of comparable boards of business enterprises in Germany and abroad.
- Preparing the proposal for the election of the external auditor at the Annual General Meeting,
Mandates
KraussMaffei Group GmbH *,
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Fundamental Aspects of
Corporate Governance
Remuneration Report
Other Information
← = Q
OVERVIEW OF SUPERVISORY BOARD COMMITTEES AND THEIR COMPOSITION
Principal duties, basis for activities
PRESIDING BOARD
– Preparing Supervisory Board meetings where the subject matter to be discussed does not fall within the remit of a committee
- Activities based on rules of procedure
PERSONNEL COMMITTEE
― Preparing decisions relating to the appointment (and revocation of appointment) of members of the Board of Management,
remuneration, and the regular review of the Board of Management's remuneration system
― Concluding, amending and revoking employment contracts (in conjunction with the resolutions taken by the Supervisory Board
regarding the remuneration of the Board of Management) and other contracts with members of the Board of Management
― Taking decisions relating to the approval of ancillary activities of Board of Management members, including the assumption of
non-BMW Group supervisory board mandates, as well as the approval of transactions requiring Supervisory Board approval by
law (e. g. loans to Board of Management or Supervisory Board members)
- Activities based on rules of procedure
Members
Norbert Reithofer¹, Manfred Schoch, Stefan Quandt, Stefan Schmid, Karl-Ludwig Kley (until 12 May
2021), Kurt Bock (since 12 May 2021)
Norbert Reithofer 1, Manfred Schoch, Stefan Quandt, Stefan Schmid, Karl-Ludwig Kley (until 12 May
2021), Kurt Bock (since 12 May 2021)
AUDIT COMMITTEE
― Auditing the accounts and supervising the financial reporting process
- Preparing the Supervisory Board's resolution on Company and Group Financial Statements and discussing interim reports and
notifications with the Board of Management prior to publication
BMW Group Report 2021
-
256
-Memberships of other statutory supervisory boards.
Deputy Chairman (until 10 May 2021)
MAN Truck & Bus SE*
SIMONE MENNE (b. 1960)
Member from 2015 to 12 May 2021
Member of supervisory boards
-
Mandates
Deutsche Post AG
Henkel AG & Co. KGaA
Johnson Controls International plc
Russell Reynolds Associates Inc.*
BRIGITTE RÖDIG¹ (b. 1963)
Member from 2013 to 1 October 2021
Member of the Works Council, Dingolfing
Memberships of comparable boards of business enterprises in Germany and abroad.
VERENA ZU DOHNA² (b. 1975)
Head of Industrial Relations Regulations and
Co-determination Policy at the Executive Board of
IG Metall (In-house) Counsel
Mandates
ABB AG
WILLIBALD LÖW¹ (b. 1956)
Member from 1999 to 16 July 2021
Member of the Works Council, Landshut (Chairman until 13
July 2021)
1 Employees of the enterprise.
2 Union representative.
3 Executive employee of the enterprise.
Not listed on the stock exchange.
"Group mandate.
Member from 2019 to 31 December 2021
Combined Management Report
5
REPORT
261
Evaluate the consistency of the group management re-
port with the consolidated financial statements, its con-
formity with German law, and the view of the Group's
position it provides.
Obtain sufficient appropriate audit evidence regarding
the financial information of the entities or business activ-
ities within the Group to express audit opinions on the
consolidated financial statements and on the group
management report. We are responsible for the direction,
supervision and performance of the group audit. We re-
main solely responsible for our audit opinions.
Evaluate the overall presentation, structure and content
of the consolidated financial statements, including the
disclosures, and whether the consolidated financial
statements present the underlying transactions and
events in a manner that the consolidated financial state-
ments give a true and fair view of the assets, liabilities,
financial position and financial performance of the Group
in compliance with IFRSS as adopted by the EU and the
additional requirements of German commercial law pur-
suant to § 315e Abs. 1 HGB.
the auditor's report to the related disclosures in the con-
solidated financial statements and in the group manage-
ment report or, if such disclosures are inadequate, to
modify our respective audit opinions. Our conclusions are
based on the audit evidence obtained up to the date of
our auditor's report. However, future events or conditions
may cause the Group to cease to be able to continue as
a going concern.
← = Q
BMW Group Report 2021
Other Information
Remuneration Report
Corporate Governance
Independent Auditor's Report
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
264
Conclude on the appropriateness of the executive direc-
tors' use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a materi-
al uncertainty exists related to events or conditions that
may cast significant doubt on the Group's ability to con-
tinue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in
Evaluate the appropriateness of accounting policies used
by the executive directors and the reasonableness of es-
timates made by the executive directors and related dis-
closures.
Obtain an understanding of internal control relevant to
the audit of the consolidated financial statements and of
arrangements and measures (systems) relevant to the
audit of the group management report in order to design
audit procedures that are appropriate in the circumstanc-
es, but not for the purpose of expressing an audit opinion
on the effectiveness of these systems.
Identify and assess the risks of material misstatement of
the consolidated financial statements and of the group
management report, whether due to fraud or error, design
and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropri-
ate to provide a basis for our audit opinions. The risk of
not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls.
We exercise professional judgment and maintain profession-
al skepticism throughout the audit. We also:
sidered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated
financial statements and this group management report.
Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with
§ 317 HGB and the EU Audit Regulation and in compliance
with German Generally Accepted Standards for Financial
Statement Audits promulgated by the Institut der Wirtschaft-
sprüfer (IDW) will always detect a material misstatement.
Misstatements can arise from fraud or error and are con-
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or
error, and whether the group management report as a whole
provides an appropriate view of the Group's position and, in
all material respects, is consistent with the consolidated fi-
nancial statements and the knowledge obtained in the audit,
complies with the German legal requirements and appropri-
ately presents the opportunities and risks of future develop-
ment, as well as to issue an auditor's report that includes our
audit opinions on the consolidated financial statements and
on the group management report.
Auditor's Responsibilities for the Audit of the Consoli-
dated Financial Statements and of the Group Manage-
ment Report
The supervisory board is responsible for overseeing the
Group's financial reporting process for the preparation of the
consolidated financial statements and of the group manage-
ment report.
and is, in all material respects, consistent with the consoli-
dated financial statements, complies with German legal re-
quirements, and appropriately presents the opportunities
and risks of future development. In addition, the executive
directors are responsible for such arrangements and meas-
ures (systems) as they have considered necessary to enable
the preparation of a group management report that is in ac-
cordance with the applicable German legal requirements,
and to be able to provide sufficient appropriate evidence for
the assertions in the group management report.
Furthermore, the executive directors are responsible for the
preparation of the group management report that, as a
whole, provides an appropriate view of the Group's position
In preparing the consolidated financial statements, the exec-
utive directors are responsible for assessing the Group's
ability to continue as a going concern. They also have the
responsibility for disclosing, as applicable, matters related to
going concern. In addition, they are responsible for financial
reporting based on the going concern basis of accounting
unless there is an intention to liquidate the Group or to cease
operations, or there is no realistic alternative but to do so.
Perform audit procedures on the prospective information
presented by the executive directors in the group man-
agement report. On the basis of sufficient appropriate
audit evidence we evaluate, in particular, the significant
assumptions used by the executive directors as a basis
for the prospective information and evaluate the proper
The executive directors are responsible for the preparation of
the consolidated financial statements that comply, in all ma-
terial respects,
with IFRSS as adopted by the EU and the ad-
ditional requirements of German commercial law pursuant to
§ 315e Abs. 1 HGB and that the consolidated financial state-
ments, in compliance with these requirements, give a true
and fair view of the assets, liabilities, financial position, and
financial performance of the Group. In addition the executive
directors are responsible for such internal control as they
have determined necessary to enable the preparation of
consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
derivation of the prospective information from these as-
sumptions. We do not express a separate audit opinion
on the prospective information and on the assumptions REGULATORY
Group Auditor's Responsibilities for the Assurance Work
on the ESEF Documents
The supervisory board is responsible for overseeing the pro-
cess for preparing the ESEF documents as part of the finan-
cial reporting process.
ments of § 328 Abs. 1 HGB for the electronic reporting for-
mat, whether due to fraud or error.
In addition, the executive directors of the Company are re-
sponsible for such internal control as they have considered
necessary to enable the preparation of ESEF documents
that are free from material non-compliance with the require-
The executive directors of the Company are responsible for
the preparation of the ESEF documents including the elec-
tronic renderings of the consolidated financial statements
and the group management report in accordance with § 328
Abs. 1 Satz 4 Nr. [number] 1 HGB and for the tagging of the
consolidated financial statements in accordance with § 328
Abs. 1 Satz 4 Nr. 2 HGB.
Responsibilities of the Executive Directors and the Su-
pervisory Board for the ESEF Documents
We conducted our assurance work on the rendering of the
consolidated financial statements and the group manage-
ment report contained in the electronic file identified above
in accordance with § 317 Abs. 3a HGB and the IDW Assur-
ance Standard: Assurance Work on the Electronic Render-
ing of Financial Statements and Management Reports,
Prepared for Publication Purposes in Accordance with
§ 317 Abs. 3a HGB (IDW ASS 410 (10.2021)) and the Inter-
national Standard on Assurance Engagements 3000 (Re-
vised). Our responsibility in accordance therewith is further
described in the "Group Auditor's Responsibilities for the
Assurance Work on the ESEF Documents" section. Our au-
dit firm applies the IDW Standard on Quality Management
1: Requirements for Quality Management in the Audit Firm
(IDW QS 1).
Basis for the Assurance Opinion
tained in the "Report on the Audit of the Consolidated
Financial Statements and on the Group Management Re-
port" above, we do not express any assurance opinion on
the information contained within these renderings or on the
other information contained in the electronic file identified
above.
← = Q
Other Information
Remuneration Report
Corporate Governance
Independent Auditor's Report
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
265
In our opinion, the rendering of the consolidated financial
statements and the group management report contained in
the electronic file identified above and prepared for publica-
tion purposes complies in all material respects with the re-
quirements of § 328 Abs. 1 HGB for the electronic reporting
format. Beyond this assurance opinion and our audit opin-
ion on the accompanying consolidated financial statements
and the accompanying group management report for the
financial year from January 1 to December 31, 2021 con-
We have performed assurance work in accordance with
§ 317 Abs. 3a HGB to obtain reasonable assurance as to
whether the rendering of the consolidated financial state-
ments and the group management report (hereinafter the
"ESEF documents") contained in the electronic file BMW_
AG_KA+KLB_ESEF-2021-12-31.zip and prepared for publi-
cation purposes complies in all material respects with the
requirements of § 328 Abs. 1 HGB for the electronic report-
ing format ("ESEF format"). In accordance with German
legal requirements, this assurance work extends only to
the conversion of the information contained in the consoli-
dated financial statements and the group management re-
port into the ESEF format and therefore relates neither to
the information contained within these renderings nor to
any other information contained in the electronic file identi-
fied above.
Assurance Opinion
Report on the Assurance on the Electronic Rendering of
the Consolidated Financial Statements and the Group
Management Report Prepared for Publication Purposes
in Accordance with § 317 Abs. 3a HGB
REQUIREMENTS
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the consolidated financial state-
ments of the current period and are therefore the key audit
matters. We describe these matters in our auditor's report
unless law or regulation precludes public disclosure about
the matter.
We also provide those charged with governance with a
statement that we have complied with the relevant inde-
pendence requirements, and communicate with them all re-
lationships and other matters that may reasonably be
thought to bear on our independence, and where applicable,
the related safeguards.
We communicate with those charged with governance re-
garding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any sig-
nificant deficiencies in internal control that we identify during
our audit.
used as a basis. There is a substantial unavoidable risk
that future events will differ materially from the prospec-
tive information.
OTHER LEGAL AND
Our objective is to obtain reasonable assurance about
whether the ESEF documents are free from material
non-compliance with the requirements of § 328 Abs. 1 HGB,
whether due to fraud or error. We exercise professional judg-
ment and maintain professional skepticism throughout the
assurance work. We also:
Responsibilities of the Executive Directors and the Su-
pervisory Board for the Consolidated Financial State-
ments and the Group Management Report
—
← = Q
Other Information
Remuneration Report
Corporate Governance
Independent Auditor's Report
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
262
In order to assess the appropriateness of the valuation
method used for the determination of the provisions for
statutory and non-statutory warranty obligations as well
as product guarantees including the assumptions and
parameters, we primarily obtained an understanding of
the process for determining the assumptions and pa-
rameters through discussions with the responsible em-
ployees of the BMW Group. We also evaluated the ap-
propriateness as well as effectiveness of controls for
determining the assumptions and parameters. With the
involvement of our IT specialists, we checked the IT sys-
tems used regarding their compliance. We compared the
expenses for claims and technical actions with actual
costs incurred in order to draw conclusions on the fore-
cast accuracy. Based on a targeted sample of vehicle
models, the mathematically correctness of the valuation
model used across the Group was examined. We exam-
ined and evaluated the assumptions used by the
BMW Group concerning the extent to which the past val-
ues were representative of the expected susceptibility of
damage, the expected value of damage per vehicle
The determination of provisions is associated with una-
voidable estimation uncertainties and is subject to a high
risk of change, depending on factors such as notification
of detected defects as well as claims made by vehicle
owners. Against this background, this matter was of par-
ticular significance during our audit.
antees for vehicles sold, information on the type and
volume of damages arising and on remedial measures
is recorded and analyzed at vehicle model level. The ex-
pected amount of obligations is extrapolated from costs
of the past and recognized as a provision in the corre-
sponding amount, if the criteria of IAS 37 have been
met. For specific or anticipated individual circumstanc-
es, for example recalls, additional provisions are recog-
nized provided they have not already been taken into
account.
3 Valuation of provisions for statutory and non-statu-
tory warranty obligations and product guarantees
Provisions for statutory and non-statutory warranty ob-
ligations as well as product guarantees are included in
the consolidated financial statements of BMW Group as
a material amount in other provisions. The obligations
amounted to EUR 6,600 million (approximately 2.9% of
total assets) as at December 31, 2021. BMW Group is re-
sponsible for the legally required warranty and product
guarantees in the respective sales market. In order to
estimate the liabilities arising from statutory and
non-statutory warranty obligations and product guar-
3 The Company's disclosures on the applied "Accounting
policies, assumptions, judgments and estimations" are
contained in the notes to the consolidated financial
statements under note 6 and on "receivables from sales
financing" are contained under note 25.
In our view, the assumptions and parameters used in the
measurement of receivables from sales financing were
appropriate overall.
sessment by our IT-specialists of the appropriateness
of the systems concerned and associated interfaces to
ensure the completeness of data as well as the audit of
automated controls for data processing. As part of our
audit we assessed in particular the appropriateness of
the risk classification procedures as well as the risk
provisioning parameters used. For this purpose, we
analyzed in particular the validations of parameters
that are regularly conducted by the Company. To as-
sess the default risk, we also used targeted sampling of
individual cases to examine whether the attributes for
assignment to the respective risk categories were suit-
ably available and the impairment losses had been cal-
culated using the parameters defined for these risk cat-
egories.
2 As part of our audit we obtained a comprehensive un-
derstanding of the development of receivables from
sales financing, the associated default-related risks as
well as the business processes for the identification,
management, monitoring and measurement of default
risks, among other things by inquiries and inspection of
documents on the internal calculation methods. Fur-
thermore, we evaluated the appropriateness and effec-
tiveness of the internal control system regarding the
determination of the impairment loss to recognize. In
this context, we also evaluated the relevant IT systems
and internal processes. The evaluation included an as-
The determination of the valuation allowances by the
executive directors is subject to a significant degree of
judgment due to several value-influencing factors such
as the estimation of creditworthiness, the determina-
tion of probabilities of default and loss ratios and was
therefore of particular significance in the context of our
audit.
1 The BMW Group offers end customers, dealerships and
importers various financing models for vehicles. In this
context, current and non-current receivables from sales
financing totaling EUR 87,417 million are reported in the
consolidated statement of financial position as at the
balance sheet date (approximately 38.1% of total as-
sets). Impairment losses amounting to EUR 1,599 mil-
lion were recognized on these receivables as at the bal-
ance sheet date. In order to determine the amount of the
necessary valuation allowances to be recognized with
respect to receivables from sales financing, the
BMW Group, among others, evaluates the creditworthi-
ness of the dealers, importers and end customers, as
well as any loss ratios, and risk provisioning parameters
are derived based on historical default probabilities and
loss ratios.
2 Valuation of receivables from sales financing
← = Q
Other Information
Remuneration Report
Corporate Governance
Independent Auditor's Report
Group Financial Statements
Combined Management Report
To Our Stakeholders
(comprising parts and labor input) as well as the expect-
ed assertion of claims from statutory and non-statutory
warranties.
is materially inconsistent with the consolidated financial
statements, with the group management report disclo-
sures audited in terms of content or with our knowledge
obtained in the audit, or
In our view, the method for the valuation of provisions for
statutory and non-statutory warranty obligations as well
as product guarantees is overall appropriate. Taking into
consideration the information available, we believe that,
overall, the measurement parameters and assumptions
used by the executive directors are appropriate.
4 Presentation of the acquisition of BMW Brilliance
Automotive Ltd., Shenyang, China, after the balance
sheet date in the notes
In connection with our audit, our responsibility is to read the
other information mentioned above and, in so doing, to con-
sider whether the other information
← = Q
Other Information
Remuneration Report
Corporate Governance
Independent Auditor's Report
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
263
Our audit opinions on the consolidated financial statements
and on the group management report do not cover the other
information, and consequently we do not express an audit
opinion or any other form of assurance conclusion thereon.
all remaining parts of the annual report excluding
cross-references to external information with the excep-
tion of the audited consolidated financial statements, the
audited group management report and our auditor's report
-
=
the remuneration report pursuant to § 162 AktG [Aktien-
gesetz: German Stock Corporation Act], for which the
supervisory board is also responsible
the statement on corporate governance pursuant to
§ 289f HGB and § 315d HGB
The other information comprises further
the disclosures marked with "[[ ... ]]" of the non-financial
statement pursuant to § 289b Abs. 1 HGB and § 315b
Abs. 1 HGB
the "Corporate Governance" section of the group man-
agement report
The executive directors are responsible for the other infor-
mation. The other information comprises the following
non-audited parts of the group management report:
Other Information
3 The Company's disclosures relating to the acquisition
are contained in the notes to the consolidated financial
statements under note 3 "Increase of share in BMW Bril-
liance Automotive Ltd.".
Overall, we were able to satisfy ourselves that, taking into
consideration the information available, the acquisition is
properly presented in the notes to the consolidated fi-
nancial statements and that the estimates and assump-
tions made by the executive directors are appropriate
overall for the presentation of the acquisition.
2 As part of our audit of the presentation of the acquisition
of BMW Brilliance Automotive Ltd. Shenyang, China, we
first inspected the contractual agreements and, based
on this, evaluated the acquisition date, with the involve-
ment of our specialists in international accounting. Fur-
thermore, we examined the determination of the appre-
ciation effect. In view of the special features of
determining the fair values in the context of the prelimi-
nary purchase price allocation, our valuation specialists
assisted us in the process. Together, we examined the
appreciation effect and, by using checklists, evaluated
the completeness and accuracy of the disclosures in the
notes to the consolidated financial statements required
under IFRS 3 and IAS 10.
Due to the estimates made by the executive directors in
determining the appreciation effect on the previously
held shares and the associated uncertainties as well as
the significance of this matter for an assessment of the
future net assets and liabilities, financial position and fi-
nancial performance of the Group, this matter was of par-
ticular significance during our audit.
lication of the consolidated financial statements for
financial year 2021, disclosures in the notes to the
financial statements are already required for the busi-
ness combination (a as is the case for acquisitions
during the reporting period) in accordance with IFRS 3
and IAS 10.
The BMW Group held so far 50% of shares in BMW Bril-
liance Automotive Ltd., Shenyang, China. On October 11,
2018, a purchase agreement was concluded for the ac-
quisition of a further 25% of the shares in BMW Brilliance
Automotive Ltd. Shenyang, China. The acquisition was
subject to the removal of the joint venture obligation for
automotive production in China, which occurred in Jan-
uary 2022. The closing of the transaction was on Feb-
ruary 11, 2022. The acquisition date therefore falls with-
in the preparation phase of the consolidated financial
statements for financial year 2021. The previously held
shares will be measured at fair value as at the acquisi-
tion date, which will result in an appreciation effect
amounting to EUR 7.0 billion to EUR 8.0 billion in the
financial year 2022. Due to the gain of control after the
balance sheet date but prior to the approval of the pub-
3 The Company's disclosures on the applied "Accounting
policies, assumptions, judgments and estimations" are
contained in the notes to the consolidated financial
statements under note 6 and on "Other provisions" are
contained under note 33.
Identify and assess the risks of material non-compliance
with the requirements of § 328 Abs. 1 HGB, whether due
to fraud or error, design and perform assurance proce-
dures responsive to those risks, and obtain assurance
evidence that is sufficient and appropriate to provide a
basis for our assurance opinion.
otherwise appears to be materially misstated.
Evaluate the technical validity of the ESEF documents,
i.e., whether the electronic file containing the ESEF doc-
uments meets the requirements of the Delegated Regu-
lation (EU) 2019/815 in the version in force at the date of
the consolidated financial statements on the technical
specification for this electronic file.
Restriction of Use
We do not express an assurance opinion on the external
sources of documentation or expert opinions mentioned in
the Disclosures on Non-financial Reporting denoted with the
symbol "[[ ]]" of the Company's Combined Non-financial
Statement.
the Sustainability Disclosures in the sections "Dialog
with stakeholders" and "Further GRI information" of the
Company's Integrated Group Report for the period from 1
January to 31 December 2021 have not been prepared, in
all material aspects, in accordance with the relevant
GRI-Criteria.
the Disclosures on Non-financial Reporting denoted with
the symbol "[[ ... ]]" of the Company's Combined Non-fi-
nancial Statement for the period from 1 January to 31
December 2021, which is integrated into the combined
management report contained in the Integrated Group
Report, have not been prepared, in all material aspects,
in accordance with the requirements of §§ 315c in con-
junction with 289c to 289e HGB relevant to these disclo-
sures and the EU Taxonomy Regulation and the Dele-
gated Acts issued thereunder as well as the interpretation
by the executive directors disclosed in section "EU-Tax-
onomy" of the Non-financial Statement, or
Based on the assurance procedures performed and evi-
dence obtained, nothing has come to our attention that
causes us to believe that
Assurance Opinion
← = Q
Other Information
Remuneration Report
Corporate Governance
Independent Practitioner's Report
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
269
In determining the disclosures in accordance with Article 8 of
the EU Taxonomy Regulation, the executive directors are
required to interpret undefined legal terms. Due to the imma-
nent risk that undefined legal terms may be interpreted dif-
ferently, the legal conformity of their interpretation and,
accordingly, our assurance engagement thereon are subject
to uncertainties.
Evaluation of the presentation of the disclosures
Inquiries on the relevance of climate-risks
Evaluation of the process to identify taxonomy-eligible
economic activities and the corresponding disclosures in
the Combined Non-financial Statement
Analytical evaluation of selected disclosures in the Inte-
grated Group Report
Testing of processes for the collection, control, analysis
and aggregation of selected data from various Group
sites on a sample basis
Identification of the likely risks of material misstatement
of the Integrated Group Report
- Inquiries of personnel involved in the preparation of the
Integrated Group Report regarding the preparation pro-
cess, the internal control system relating to this process
and selected disclosures in the Integrated Group Report
Obtaining an understanding of the structure of the sus-
tainability organization and of the stakeholder engage-
ment
In the course of our assurance engagement, we have,
amongst other things, performed the following assurance
procedures and other activities:
In a limited assurance engagement the procedures per-
formed are less extensive than in a reasonable assurance
engagement, and accordingly a substantially lower level of
assurance is obtained. The selection of the assurance proce-
dures is subject to the professional judgement of the assur-
ance practitioner.
the Sustainability Disclosures in the sections "Dialog
with stakeholders" and "Further GRI information" of the
Company's Integrated Group Report have not been pre-
pared, in all material aspects, in accordance with the rel-
evant GRI-Criteria.
Munich, 9 March 2022
the Disclosures on Non-financial Reporting denoted with
the symbol "[[ ... ]]" of the Company's Combined Non-fi-
nancial Statement, contained in the Integrated Group
Report, other than the external sources of documentation
or expert opinions mentioned in the disclosures denoted
with the symbol "[[ ... ]]" in the Combined Non-financial
Statement, are not prepared, in all material respects, in
accordance with §§ 315c in conjunction with 289c to
289e HGB and the EU Taxonomy Regulation and the
Delegated Acts issued thereunder as well as the inter-
pretation by the executive directors disclosed in section
"EU-Taxonomy" of the Combined Non-financial State-
ment, or
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
Wirtschaftsprüfer
Obtain an understanding of internal control relevant to
the assurance work on the ESEF documents in order to
design assurance procedures that are appropriate in the
circumstances, but not for the purpose of expressing an
assurance opinion on the effectiveness of these controls.
REMUNERATION
319 VII. Auditor's Report
Outlook for the 2022 financial year
318 VI.
318 V.
← = Q
Other Information
Remuneration Report
Other considerations
Comparison of change in remuneration and earnings
pursuant to § 162 (1) Sentence 2 No. 2 of the German
Stock Corporation Act (AktG)
314 IV.
Remuneration of the members of the Supervisory Board
310 III.
Remuneration of the members of the Board of
Management
272 II.
Review of the past financial year from a remuneration
perspective
271 I.
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
270
[German public auditor] [German public auditor]
Wirtschaftsprüferin
Nicolette Behncke
Andreas Fell
We conducted our assurance engagement in accordance
with International Standard on Assurance Engagements
(ISAE) 3000 (Revised): Assurance Engagements other than
Audits or Reviews of Historical Financial Information, issued
by the IAASB. This Standard requires that we plan and per-
form the assurance engagement to obtain limited assurance
about whether any matters have come to our attention that
cause us to believe that
We draw attention to the fact that the assurance engage-
ment was conducted for the Company's purposes and that
the report is intended solely to inform the Company about
the result of the assurance engagement. Consequently, it
may not be suitable for any other purpose than the afore-
mentioned. Accordingly, the report is not intended to be used
by third parties for making (financial) decisions based on it.
Our responsibility is to the Company. We do not accept any
responsibility to third parties. Our assurance opinion is not
modified in this respect.
← = Q
BMW Group Report 2021
267
(German Public Auditor)
(sgd. Andreas Fell)
Wirtschaftsprüfer
(sgd. Petra Justenhoven)
Wirtschaftsprüferin
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
Munich, March 9, 2022
The German Public Auditor responsible for the engagement
is Andreas Fell.
GERMAN PUBLIC AUDITOR RESPONSIBLE FOR THE
ENGAGEMENT
Management Report Prepared for Publication Purposes in
Accordance with § 317 Abs. 3a HGB" and our assurance
opinion contained therein are to be used solely together
with the assured ESEF documents made available in elec-
tronic form.
Independent Auditor's Report
Other Information
Remuneration Report
To Our Stakeholders
Corporate Governance
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
266
Our auditor's report must always be read together with the
audited consolidated financial statements and the audited
group management report as well as the assured ESEF
documents. The consolidated financial statements and the
group management report converted to the ESEF format -
including the versions to be published in the Federal Ga-
zette are merely electronic renderings of the audited con-
solidated financial statements and the audited group
management report and do not take their place. In particu-
lar, the "Report on the Assurance on the Electronic Render-
ing of the Consolidated Financial Statements and the Group
REFERENCE TO AN OTHER MATTER - USE OF THE
AUDITOR'S REPORT
We declare that the audit opinions expressed in this audi-
tor's report are consistent with the additional report to the
audit committee pursuant to Article 11 of the EU Audit Regu-
lation (long-form audit report).
We were elected as group auditor by the annual general
meeting on May 12, 2021. We were engaged by the supervi-
sory board on June 24, 2021. We have been the group auditor
of Bayerische Motoren Werke Aktiengesellschaft, Munich,
without interruption since the financial year 2019.
Further Information pursuant to Article 10 of the EU
Audit Regulation
Evaluate whether the tagging of the ESEF documents
with Inline XBRL technology (iXBRL) in accordance with
the requirements of Articles 4 and 6 of the Delegated
Regulation (EU) 2019/815, in the version in force at the
date of the consolidated financial statements, enables
an appropriate and complete machine-readable XBRL
copy of the XHTML rendering.
consolidated financial statements and to the audited
group management report.
Our responsibility is to express a conclusion with limited
assurance on the Disclosures on Non-financial Reporting
denoted with the symbol "[[ ... ]]" of the Combined Non-fi-
nancial Statement and the Sustainability Disclosures in the
sections "Dialog with stakeholders" and "Further GRI infor-
mation" of the Integrated Group Report based on the assur-
ance engagement we have performed.
Evaluate whether the ESEF documents provide an
XHTML rendering with content equivalent to the audited
Group Financial Statements
Combined Management Report
(German Public Auditor)
Group Financial Statements
Responsibility of the Assurance Practitioner
Our audit firm applies the national legal requirements and
professional standards in particular the Professional Code
for German Public Auditors and German Chartered Auditors
("Berufssatzung für Wirtschaftsprüfer und vereidigte Buch-
prüfer": "BS WP/vBP") as well as the Standard on Quality
Control 1 published by the Institut der Wirtschaftsprüfer
(Institute of Public Auditors in Germany; IDW): Requirements
to quality control for audit firms (IDW Qualitätssicherungs-
standard 1: Anforderungen an die Qualitätssicherung in der
Wirtschaftsprüferpraxis - IDW QS 1) - and accordingly main-
tains a comprehensive system of quality control including
documented policies and procedures regarding compliance
with ethical requirements, professional standards and appli-
cable legal and regulatory requirements.
We have complied with the German professional provisions
regarding independence as well as other ethical require-
ments.
Independence and Quality Control of the Audit Firm
← = Q
Other Information
Remuneration Report
Corporate Governance
Independent Practitioner's Report
Group Financial Statements
To Our Stakeholders
BMW Group Report 2021
268
1 PricewaterhouseCoopers GmbH has performed a limited assurance engagement on
the German version of the,,BMW Group Report 2021" and issued an independent
practitioner's report in German language, which is authoritative. The following text
is a translation of the independent practitioner's report
The EU Taxonomy Regulation and the Delegated Acts issued
thereunder contain wording and terms that are still subject
to considerable interpretation uncertainties and for which
clarifications have not yet been published in every case.
Therefore, the executive directors have disclosed their inter-
pretation of the EU Taxonomy Regulation and the Delegated
Acts adopted thereunder in section "EU-Taxonomy" of the
Combined Non-financial Statement. They are responsible for
the defensibility of this interpretation. Due to the immanent
risk that indeterminate legal terms may be interpreted differ-
ently, the legal conformity of the interpretation is subject to
uncertainties.
Combined Management Report
The executive directors of the Company are responsible for
the preparation of the Combined Non-financial Statement in
accordance with §§ (Articles) 315c in conjunction with 289c
to 289e HGB ("Handelsgesetzbuch": "German Commercial
Code") and Article 8 of REGULATION (EU) 2020/852 OF
THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of
18. June 2020 on establishing a framework to facilitate sus-
tainable investment and amending Regulation (EU)
2019/2088 (hereinafter the "EU Taxonomy Regulation") and
the Delegated Acts adopted thereunder, as well as for mak-
ing their own interpretation of the wording and terms con-
tained in the EU Taxonomy Regulation and the Delegated
Acts adopted thereunder, as set out in section "EU-Taxon-
omy" of the Combined Non-financial Statement and the
Sustainability Disclosures in accordance with the principles
stated in the Sustainability Reporting Standards of the
Global Reporting Initiative (hereinafter the "GRI-Criteria”).
Remuneration Report
This responsibility includes the selection and application of
appropriate methods of non-financial reporting and sustain-
ability reporting as well as making assumptions and esti-
mates related to individual non-financial disclosures and
sustainability disclosures of the Group that are reasonable in
the circumstances. Furthermore, the executive directors are
responsible for such internal control as the executive direc-
tors consider necessary to enable the preparation of an Inte-
grated Group Report that is free from material misstatement
whether due to fraud or error.
← = Q
Corporate Governance
Independent Practitioner's Report
INDEPENDENT PRACTITIONER'S REPORT
Independent Practitioner's Report on a Limited As-
surance Engagement on Disclosures on Non-financial
Reporting and Sustainability Discloures¹
Other Information
We have performed a limited assurance engagement on the
disclosures in the "BMW Group Report 2021" of BMW AG,
Munich, (hereinafter the "Company") for the period from 1
January to 31 December 2021 (hereinafter the “Integrated
Group Report") denoted with "[... ]]" of the Combined
Non-financial Statement, which is integrated into the com-
bined management report (hereinafter the "Disclosures on
Non-financial Reporting") contained in the Integrated Group
Report, as well as the sustainability disclosures contained in
the sections "Dialog with stakeholders" and "Further GRI
information" of the Integrated Group Report (hereinafter
referred to as "Sustainability Disclosures"). Our engagement
in this context relates solely to the disclosures denoted with
the symbol "[...]" and the disclosures in the sections "Dia-
log with stakeholders" and "Further GRI information".
"
Not subject to our assurance engagement are the external
sources of documentation or expert opinions mentioned in
the Integrated Group Report.
Responsibility of the Executive Directors
To BMW AG, Munich
62
2,145,290
65
3,313,698
100
3 Provisional monetary value calculated as of 2 January 2021 in accordance with German Accounting Standard 17, as amended. The final number of matching shares and/or the final cash
value will only be determined when the investment obligation is fulfilled in shares of common stock of the company.
280
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
68
Group Financial Statements
" Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
100
22,746
100
3,397,263
100
3,393,237
2,430,000
63
2,145,290
60
2,050,000
(-)
(-)
Corporate Governance
16
3,898,525
Remuneration Report
Fringe benefits (other remuneration)
← = Q
640,000
Fixed
remuneration
24
400,000
26
900,000
25
950,000
27
1,050,000
Fixed remuneration (basic remuneration)
in %
in €
Other Information
in %
in %
in €
in %
in €
FY 2020²
FY 20211
FY 2020²
FY 20211
since 1 July 2020
FRANK WEBER
Development
since 1 January 2017
NICOLAS PETER
Finance
TARGET REMUNERATION FOR THE FINANCIAL YEAR 2021 (2020)
in €
(-)
Earnings component of bonus 2021
16
SHARE-BASED PAYMENT
remuneration
26
850,000
Τ
25
850,000
(-)
PCP 2020-2022
Variable
PERFORMANCE CASH PLAN
15
575,000
Cash remuneration component
(-)
14
475,000
Performance component of bonus 2021
(-)
(-)
15
575,000
(-)
(-)
14
475,000
18
1
(-)
(-)
(investment component) 2020 for holding obligation 2021-2025
(matching component) 2020 for holding obligation 2021-20253
550,000
16
640,000
(-)
(-)
16
550,000
2
62,790
(-)
2
62,790
(-)
Share-based remuneration component
12
(-)
(-)
11
382,500
(-)
(-)
2 Remuneration system applicable until financial year 2020.
1 Remuneration system as of financial year 2021.
Target total remuneration
Total
Strategic focus target component
RoCE component
Personal cash investment amount 20214
382,500
24,231
271
97,833
640,000
2
31,360
(-)
11
191,250
25
425,000
I
I
2
68,802
(-)
16
(-)
450,000
に
25
950,000
(-)
2 Remuneration system applicable until financial year 2020.
1 Remuneration system as of financial year 2021.
Target total remuneration
Total
Strategic focus target component
RoCE component
Personal cash investment amount 20214
(matching component) 2020 for holding obligation 2021-20253
12
Share-based remuneration component
(-)
550,000
" Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
3 Provisional monetary value calculated as of 2 January 2021 in accordance with German Accounting Standard 17, as amended. The final number of matching shares and/or the final cash
value will only be determined when the investment obligation is fulfilled in shares of common stock of the company.
100
595,000
100
3,447,833
100
3,793,033
100
3,902,746
64
1,072,610
59
(-)
2,050,000
2,468,802
62
2,430,000
(-)
(-)
16
550,000
(-)
(-)
16
640,000
(-)
16
65
(-)
(investment component) 2020 for holding obligation 2021-2025
Cash remuneration component
(-)
8
300,000
(-)
(-)
Earnings component of bonus 2020
BONUS
36
603,593
41
1,397,833
35
1,324,231
Performance component of bonus 2020
38
Total
10
175,000
12
400,000
9
350,000
10
400,000
Contribution to the company pension scheme
2
28,593
3
1,472,746
(-)
700,000
18
SHARE-BASED PAYMENT
remuneration
PCP 2020-2022
Variable
PERFORMANCE CASH PLAN
(-)
(-)
14
475,000
(-)
(-)
15
575,000
Performance component of bonus 2021
(-)
(-)
14
475,000
(-)
(-)
15
575,000
Earnings component of bonus 2021
18
297,500
8
127,500
C C
(-)
1
1,676,203
(-)
18
― Primarily qualitative, non-financial criteria, expressed in terms of a performance factor aimed at measuring the Board members contribution to sustainable and long-term performance
and corporate orientation
- Relevant period is the vesting year
- Additional trend analysis over at least three financial years
- Composition of performance factor:1
-40% other cross-divisional targets
-10% individual targets
― Criteria for the cross-divisional targets with ESG criteria include in particular: innovation performance (environmental, e.g. reduction of carbon emissions), development of the BMW
Group's reputation based on ESG aspects (e.g. corporate culture, promotion of integrity and compliance), adaptability, attractiveness as an employer, leadership performance
― Criteria for the other cross-divisional targets include in particular: market position compared to competitors, innovation performance (economic), development of the BMW Group's
reputation based on non-ESG-related aspects (e.g. perception on capital markets, brand strength), customer orientation
― Measurement parameters and target values are determined before the start of the financial year
― Performance factor may not exceed 1.8
- Maximum amount of performance component p. a.:
- € 0.855 million (first period of office)
― € 1.035 million (from second period of office or fourth year of mandate)
― € 1.890 million (Chairman of the Board of Management)
― Earnings component of bonus rewards attainment of financial targets and is beneficial for earnings-related aspects of business strategy
- Performance component of bonus motivates the pursuit of non-financial strategic targets and is therefore beneficial for the long-term development of the BMW Group
- Requirement for Board of Management members to invest an earmarked cash amount (personal cash investment amount), net of tax and deductions, in shares of BMW common stock
― Requirement for Board of Management members to hold the acquired shares of common stock for at least four years (share ownership guideline)
― Assessment period of five years in total (one year for determining the personal cash investment amount, four years holding requirement)
— Target amount p. a. (at 100% target achievement):
- € 1.10 million (first period of office)
― € 1.28 million (from second period of office or fourth year of mandate)
― € 2.35 million (Chairman of the Board of Management)
- 50% of target amount depends on ROCE achieved in the Automotive segment (ROCE component)
- 50% of the target amount depends on the achievement of predefined strategic focus targets (strategic focus target component)
- Capped at 180% of target amount
― Payment after the Annual General Meeting at which the Company Financial Statements are presented for the relevant vesting year
1 See below for the set targets for the 2021 financial year (Variable remuneration for the 2021 financial year).
- Formula: 50% of target amount x performance factor
>
- € 1.050 million (Chairman of the Board of Management)
- € 0.475 million (first period of office)
―The earnings factor is 1.0 in case of a profit attributable to shareholders of BMW AG amounting to € 5.3 billion and a Group post-tax return on sales of 5.6%
— The earnings factor is 1.5 in case of a profit attributable to shareholders of BMW AG amounting to € 6.9 billion and a Group post-tax return on sales of 7.3%
― The earnings factor is 0 in case of a profit attributable to shareholders of BMW AG below € 3.0 billion or a Group post-tax return on sales of below 3.0%
-Earnings factor may not exceed 1.8
- Maximum amount of earnings component p. a.:
- € 0.855 million (first period of office)
― € 1.035 million (from second period of office or fourth year of mandate)
- € 1.890 million (Chairman of the Board of Management)
>
275
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
COMPONENT
VARIABLE REMUNERATION COMPONENTS
Bonus
Performance component
(at 100% target achievement corresponds to
50% of target amount)
Remuneration linked to corporate strategy
Share-based remuneration
Personal investment cash amount
Basis of computation
Parameters/measurement base, applicable amounts
Assessment period one year
- Base amount p. a. (50% of target bonus amount):
― € 0.575 million (from second period of office or fourth year of mandate)
276
BMW Group Report 2021
To Our Stakeholders
― Minimum, target and maximum values are defined before the start of the financial year
― Factor for each strategic focus target may not exceed 1.8
Maximum amount of strategic focus target component p. a.:
- € 0.990 million (first period of office)
― € 1.152 million (from second period of office or fourth year of mandate)
― € 2.115 million (Chairman of the Board of Management)
― personal investment cash amount is 50% dependent on key performance indicator RoCE and is therefore directly linked to a key measure of corporate strategy and reflects BMW AG's
aspiration to generate a significant premium on the cost of capital
―The remaining 50% of the personal investment cash amount is beneficial for the attainment of strategic focus targets and therefore contributes to the BMW Group's operational suc-
cess in strategically important areas
― Commitment to purchase shares of BMW AG common stock and four-years holding requirement is beneficial for the long-term development of the BMW Group
Malus and clawback rules
Malus
Clawback
- Agreement to withhold variable remuneration in the event of specified serious compliance violations or (withholding amounts provisionally) in the event of reasonable suspicions of such
― Amounts may also be withheld in principle after a member has left the Board
― Agreement entitling the BMW Group to reclaim variable remuneration already paid out in the event of specified incidences of serious non-compliance, incorrect calculation bases or
incorrect financial statements
― Amounts may also be clawed back in principle after a member has left the Board
277
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
3.
Determination and review of the remuneration system and
individual remuneration
Determining the system and structure of Board of Manage-
ment remuneration, and reviewing it regularly, is a task of the
full Supervisory Board, as is determining the individual level
of remuneration of members of the Board of Management.
The Personnel Committee of the Supervisory Board assumes
a preparatory function in the determination and review of the
remuneration system as a whole, and of the individual remu-
neration paid to members of the Board of Management.
The Supervisory Board reviews the remuneration system
annually to ensure it is appropriate in terms of structure, tar-
get and maximum remuneration, as well as actual remuner-
ation. The Supervisory Board also takes remuneration stud-
ies into account when assessing the market conformity of
the target and maximum remuneration, as well as when
assessing actual remuneration in horizontal terms. Due to
the size and structure of the BMW Group, DAX companies
are used as a comparison group and the remuneration data
from this group is compared with the remuneration paid to
members of the Board of Management at BMW AG. Verti-
cally, the Supervisory Board compares the remuneration of
members of the Board of Management with the remunera-
tion of senior executives and with the average remuneration
of employees employed by BMW AG in Germany in areas
inside and outside the scope of collective bargaining agree-
ments, including in terms of how they have changed over a
period of several years. Recommendations from independ-
ent external remuneration experts, as well as suggestions
from investor and analyst circles, may also be included in the
deliberations. For the 2021 financial year, the review has
shown that the target and maximum remuneration as well as
actual remuneration are appropriate.
-
25% of target amount for personal investment cash amount x factor for strategic focus target 1 + 25% of target amount for personal investment cash amount x factor for strategic
focus target 2
- Formula in event of two strategic focus targets with equal weighting p. a.:
― Weighting of the strategic focus targets is decided before the start of the financial year
- At least two strategic focus targets derived from the strategic plan
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
COMPONENT
VARIABLE REMUNERATION COMPONENTS
Share-based remuneration
RoCE component (at 100% target achievement
corresponds to 50% of target amount)
Strategic focus target component (at 100%
target achievement corresponds to 50% of
target amount]
Remuneration linked to corporate strategy
Parameters/measurement base, applicable amounts
- Target amount RoCE component p. a. (50% of target amount of the personal investment cash amount):
― Profit attributable to shareholders of BMW AG and Group post-tax return on sales in grant year
- € 0.55 million (first period of office)
― € 1.175 million (Chairman of the Board of Management)
- Formula: 50% of target amount x ROCE factor
― ROCE factor is derived from the RoCE achieved in the Automotive segment for the vesting year
― Minimum, target and maximum values for ROCE are defined before the start of the financial year
- ROCE factor may not exceed 1.8
- Maximum amount of RoCE component p. a.:
- € 0.990 million (first period of office)
― € 1.152 million (from second period of office or fourth year of mandate)
― € 2.115 million (Chairman of the Board of Management)
— Target amount strategic focus target component p. a. (50% of target amount of personal investment cash amount):
- € 0.55 million (first period of office)
€ 0.64 million (from second period of office or fourth year of mandate)
― € 1.175 million (Chairman of the Board of Management)
― € 0.264 million (from second period of office or fourth year of mandate)
― Earnings factor is derived from a predefined allocation based on the parameters
- Formula: 50% of target amount x performance factor
― € 1.050 million (Chairman of the Board of Management)
Despite the challenges posed by supply shortages and the
ongoing coronavirus pandemic, 2021 was a very successful
financial year for the BMW Group, with solid sales growth for
its BMW, MINI and Rolls-Royce brands. The BMW brand set
a new sales record and took over the top position in the
global premium segment. In 2021, the BMW Group also con-
sistently pushed ahead with the expansion of its range of
electrified models, increasing the share of electrified vehicles
sold by the BMW and MINI brands by more than 70 per cent
compared to 2020. The launch of the BMW iX and the BMW
14 also marked the entry of two products at the forefront of
innovation to the market.
Under the leadership of the Board of Management, the
BMW Group's management continued to steer the company
in a prudent fashion through the volatile and challenging
environment that characterised last year. For example, the
production, sales and purchasing networks successfully
managed the challenges associated with the coronavirus
pandemic and supply bottlenecks, demonstrating genuine
flexibility in the process. As a result, the impact of Covid-19
was limited over the past financial year.
1 Due to rounding, it is possible that individual figures in this report may not add up
exactly to the totals provided, and that the percentages presented here may not be
an exact reflection of the absolute values to which they relate.
272
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
At the same time, the Board of Management of the
BMW Group worked very constructively and intensively on
the core strategic course for the future, in order to create the
conditions for an attractive and future-oriented product port-
folio, and to achieve a significant improvement in profitabil-
ity. The strategic decisions taken in this regard focused in
particular on strategic issues related to electrification.
In December 2020, the Supervisory Board set ambitious tar-
gets linked to the variable remuneration of the members of
the Board of Management for the 2021 financial year. Of the
total variable target remuneration available, approximately
38% is linked to environmental, social or governance (ESG)
targets. It set targets for fleet carbon emissions in the EU
and sales targets for electrified vehicles in the 2021 financial
year as strategic focus targets for long-term variable remu-
neration (share-based remuneration). In doing so, it attached
particular significance to the strategic importance of acceler-
ating market penetration for electrified vehicles and sustain-
ability targets in determining remuneration.
Thanks to its strong overall performance, the Board of Man-
agement exceeded both the financial and non-financial tar-
gets for short-term variable remuneration (bonuses) 7 "Bonus
for the 2021 financial year". The financial target regarding long-
term variable remuneration (share-based remuneration)
was also exceeded with regard to the return on capital
employed (ROCE) in the Automotive segment. The Board of
Management achieved (or nearly achieved) the ambitious
non-financial strategic focus targets for long-term variable
remuneration. At 115.9 g/km, fleet carbon emissions came
in under the EU legal limit of 125.8 g/km "Share-based remuner-
ation for the 2021 financial year".
If necessary, and in the interest of the long-term success of
BMW AG, the Supervisory Board may temporarily deviate
from the remuneration system - as provided for in § 87a (2)
Sentence 2 AktG. In accordance with G.11 of the German Cor-
porate Governance Code dated 16 December 2019, the
Supervisory Board has also reserved the right to make
adjustments if extraordinary developments occur, such as
significant acquisitions and disposals, or changes in
accounting standards or tax regulations that have a signifi-
cant impact. After due examination, the Supervisory Board
did not make use of these options for the 2021 financial year.
The composition of the Board of Management did not
change during the year. For Dr. Wendt, the target remunera-
tion applicable to Members of the Board of Management
from the second mandate period onwards was applied at
the beginning of his second mandate period, from 1 October
2021 onwards.
The remuneration system for the members of the Supervi-
sory Board is set out in Article 15 of the Articles of Incorpora-
tion. It was confirmed by the Annual General Meeting on 12
May 2021 with a majority of 99.40% of the valid votes cast,
and implemented for the 2021 financial year in accordance
with the provisions of the Articles of Incorporation.
In the 2021 financial year, there were several changes to the
composition of the Supervisory Board, meaning that the
Supervisory Board remuneration for individual Supervisory
Board members had to be calculated pro rata temporis. With
effect from the end of the 2021 Annual General Meeting, Dr.
Kley resigned from the Supervisory Board and the Personnel
Committee, which, among other things, is responsible for
preparing decisions in connection with Board of Manage-
ment remuneration. The Supervisory Board elected Dr. Bock
as his successor on the Personnel Committee, with effect
from 12 May 2021.
II. Remuneration of the members of the Board of
Management
1.
Principles of the remuneration system and the contribution
of remuneration to the promotion of the company's business
strategy and its long-term development
The remuneration system in place since the 2021 financial
year is easy to understand and clearly structured. It complies
with the provisions of the German Stock Corporation Act
(AktG) and the recommendations and suggestions of the
German Corporate Governance Code. The Supervisory
Board has applied the following principles in designing the
remuneration system for the Board of Management:
The remuneration structure is geared towards the sus-
tainable and long-term development of the company.
Therefore, variable remuneration components are pre-
dominantly granted on the basis of a multi-year assess-
ment.
The total remuneration of the members of the Board of
Management is commensurate with their tasks and per-
formance as well as the company's situation.
The remuneration system ensures that both positive and
negative developments are appropriately reflected in the
remuneration ("pay for performance").
effect from 1 January 2021. The Annual General Meeting
approved it on 12 May 2021 with a majority of 91.60% of the
valid votes cast.
The Supervisory Board adopted the current remuneration
system for the members of the Board of Management with
Review of the past financial year from a remunera-
tion perspective
I.
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
REMUNERATION REPORT
271 I. Review of the past financial year from a
remuneration perspective
272 II. Remuneration of the members of the
Board of Management
272 1. Principles of the remuneration system
and the contribution of remuneration to
the promotion of the company's business
strategy and its long-term development
274 2. Overview of remuneration system from
the financial year 2021 onwards
277 3. Determination and review of the remuner-
ation system and individual remuneration
284 4. Remuneration for the 2021 financial year
294 5. Shareholding rules
The remuneration system takes into account both the
performance of the entire Board of Management and the
achievement of individual targets.
294 6. Retirement benefits
295 8. Regulations in the event of death, inva-
lidity and post-contractual non-competition
clause
295 9. Remuneration granted and owed to mem-
bers of the Board of Management pursuant
to § 162 of the German Stock Corporation
Act (AktG)
306 10. Remuneration granted and owed to
former members of the Board of Manage-
ment pursuant to § 162 of the German Stock
Corporation Act (AktG)
310 III. Remuneration of the members of the
Supervisory Board
310 1. Articles of Incorporation and procedure
310 2. Principles and elements of remuneration
310 3. Remuneration granted and owed to
members of the Supervisory Board pursuant
to § 162 of the German Stock Corporation
Act (AktG)
314 IV. Comparison of change in remuneration
and earnings pursuant to § 162 (1)
Sentence 2 No. 2 of the German Stock
Corporation Act (AktG)
318 V. Other considerations
318 VI. Outlook for the 2022 financial year
319 VII. Auditor's Report
REMUNERATION REPORT
The Board of Management and the Supervisory Board have
prepared this Remuneration Report in accordance with the
requirements of § 162 of the German Stock Corporation Act
(AktG). As a result of the implementation of the second EU
Shareholder Rights Directive via §162 AktG, the reporting
standard applicable to Bayerische Motoren Werke Aktienge-
sellschaft (BMW AG) has changed as of the reporting year
2021. The report shows and explains the remuneration
granted and owed to the individual current and former mem-
bers of the Board of Management and the Supervisory
Board of BMW AG in the financial year 2021.1
In order to facilitate understanding, the basic features of the
remuneration systems applicable to the members of the
Board of Management and the members of the Supervisory
Board, as applied in the 2021 financial year, are also set out
below. In view of the fact that individual members of the Board
of Management also received remuneration components from
earlier remuneration systems during the 2021 financial year
(specifically the remuneration systems for the 2016 financial
year and for 2019 financial year) elements of these systems
are also explained to the extent necessary for comprehension.
The auditing firm PricewaterhouseCoopers GmbH has
audited the remuneration report beyond the requirements of
§162 (3) Sentences 1 and 2 AktG.
295 7. Malus and clawback provisions
In accordance with the remuneration system, the Supervi-
sory Board acting on the proposal of the Personnel Com-
mittee sets specific target remuneration for each individual
member of the Board of Management for the upcoming
financial year, as well as the performance criteria associated
with the variable remuneration components provided for in
the remuneration system.
The remuneration system observes the principle of con-
sistency between the remuneration systems in the com-
pany: The remuneration systems for the Board of Man-
agement, executives and employees of BMW AG are all
designed in a similar way.
BMW Group Report 2021
Member of the Board of Management:
€ 0.90 million p.a. (first period of office)
― € 1.05 million p.a. (from second period of office or fourth year of mandate)
Chairman of the Board of Management:
- € 1.95 million p.a.
- Monthly payment on a pro rata basis
Contractual agreement, main points: non-cash benefits from the use of company cars and the BMW chauffeur service, insurance premiums, contributions towards security systems, employee discounts
The Supervisory Board may award payments to compensate for loss of salary from a previous employment relationship and to cover relocation costs in the case of new entrants.
Defined contribution system with a guaranteed minimum return
Benefits based on amounts credited to individual savings accounts for contributions paid and interest earned, various forms of disbursement
Pension contribution p. a.:
Member of the Board of Management: € 400,000
Chairman of the Board of Management: € 700,000
― Base remuneration has the effect of discouraging unduly high levels of risk being to achieve short-term targets, thus contributing to the long-term development of the Company
- Fixed remuneration components are a prerequisite for competitive levels of remuneration to attract and retain Board of Management members with the right qualifications
Bonus
Bonus
(sum of earnings component and performance
component)
Earnings component
(at 100% target achievement corresponds to
50% of target amount)
- Target amount p. a. (at 100% target achievement):
- € 0.95 million (first period of office)
― € 1.15 million (from second period of office or fourth year of mandate)
- € 2.10 million (Chairman of the Board of Management)
― Capped at 180% of target amount
― Payment after the Annual General Meeting at which the Company Financial Statements are presented for the relevant financial year
- Assessment period one year
― Base amount p. a. (50% of target bonus amount):
- € 0.475 million (first period of office)
€ 0.575 million (from second period of office or fourth year of mandate)
Parameters/measurement base, applicable amounts
VARIABLE REMUNERATION COMPONENTS
Remuneration linked to corporate strategy
Compensation payments
Retirement benefits
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
The total remuneration is in line with market practice
both in terms of amount and structure, and takes into
account the size, complexity and economic situation of
the company.
The BMW Group aims to be the most successful and sus-
tainable premium provider of individual mobility. The busi-
ness strategy focuses on the customer and the provision of
sustainable individual mobility in the premium segment, tak-
ing into account high profitability, in order to secure the com-
pany's independence in the future. The remuneration sys-
tem contributes to the implementation of the business
strategy and the sustainable and long-term development of
the company. It also takes into account the concerns of the
company's important stakeholders (in particular, sharehold-
ers, customers, and employees). The incentive effects of the
various remuneration components have a complementary
effect.
The fixed basic remuneration counteracts the temptation
to take disproportionately high risks in order to achieve
short-term goals, and thus contributes to the long-term
development of the company.
The variable bonus is divided into two parts, which influ-
ence behaviour in different ways. The earnings-related
component of the bonus rewards recipients for achieving
the company's financial targets in the vesting year, and
promotes the earnings-related parts of the business
strategy. In contrast, the performance component of the
bonus is based on non-financial performance criteria,
which are also derived from the business strategy. In this
respect, the performance component of the bonus also
offers particular incentives to encourage individuals con-
sistently to pursue the goals of the business strategy for
the long-term development of the company. These goals
do not have to be directly reflected in the key financial
indicators for a given vesting year.
The amount of the variable share-based remuneration
also depends on the fulfilment of financial and non-fi-
nancial objectives derived from the business strategy,
since 50% of the target cash amount earmarked for
share purchases is linked to a financial key indicator
(ROCE in the Automotive segment), and 50% is linked to
strategic focus targets. The obligation to use the net
amount to purchase shares of common stock in the com-
pany and to hold these shares for at least four years also
motivates the members of the Board of Management to
strive to ensure the long-term positive development of
the company, as this in turn promotes sustainable posi-
tive developments in the price of BMW shares.
273
274
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
2.
Overview of remuneration system from the financial year 2021 onwards
The table below shows an overview of the remuneration system applicable from the financial year 2021 onwards.
COMPONENT
FIXED REMUNERATION COMPONENTS
Base remuneration
Fringe benefits
BMW Group Report 2021
(-)
The total target remuneration is composed of the fixed remu-
neration and the variable remuneration. Within the variable
remuneration, the proportion of share-based remuneration
as long-term variable remuneration exceeds the share of the
bonus as short-term variable remuneration. The share of the
individual remuneration components is within the ranges
specified by the remuneration system.
OVERVIEW OF TOTAL TARGET
65
2,050,000
60
7,119,355
100
6,700,129
100
3,397,633
100
2,145,290
3,382,664
63
100
3 Provisional monetary value calculated as of 2 January 2021 in accordance with German Accounting Standard 17, as amended. The final number of matching shares and/or the final cash
value will only be determined when the investment obligation is fulfilled in shares of common stock of the company.
" Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
279
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
TARGET REMUNERATION FOR THE FINANCIAL YEAR 2021 (2020)
MILAN NEDELJKOVIĆ
Production
since 1 October 2019
PIETER NOTA
4,333,873
Customer, Brands, Sales
63
(-)
(-)
(-)
810,000
12
(-)
(-)
382,500
11
(-)
123,873
2
(-)
62,790
2
1,175,000
17
(-)
(-)
550,000
16
1,175,000
17
(-)
(-)
550,000
16
(-)
4,450,000
since 1 January 2018
FY 20211
FY 20202
10
400,000
10
350,000
11
Total
1,343,237
40
1,251,973
37
1,468,525
38
1,168,408
35
BONUS
Earnings component of bonus 2020
(-)
Performance component of bonus 2020
CC
(-)
255,000
8
(-)
255,000
8
(-)
595,000
350,000
12
400,000
Contribution to the company pension scheme
FY 20211
in €
in %
in €
in %
in €
in %
in €
FY 2020²
in %
Fixed remuneration (basic remuneration)
900,000
27
800,000
25
24
27
800,000
24
Fixed
remuneration
Fringe benefits (other remuneration)
43,237
1
101,973
3
18,525
0.5
18,408
1
1,050,000
850,000
Τ
24
in €
FY 20211
in %
Fixed
remuneration
Fixed remuneration (basic remuneration)
Fringe benefits (other remuneration)
1,950,000
27
1,800,000
27
900,000
26
in €
800,000
FY 20202
in %
24
19,355
0.3
66,256
1
47,633
1
87,374
3
Contribution to the company pension scheme
700,000
10
500,000
7
400,000
in %
in €
in %
in €
REMUNERATION FOR MEMBERS OF THE
BOARD OF MANAGEMENT
in %
Fringe benefits
1-4%
Contributions to
retirement
benefit plans
7-12%
Basic
remuneration
25-30%
Share-based
payment
31-36%
Variable
remuneration
58-66%
Bonus
27-30%
Excluding a possible payment to new members of the Board of Management to compensate for salary
losses from a previous employment relationship and/or to cover relocation costs.
278
BMW Group Report 2021
12
To Our Stakeholders
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
TARGET REMUNERATION FOR THE FINANCIAL YEAR 2021 (2020)
OLIVER ZIPSE
Chairman of the Board of Management since 16 August 2019
Member of the Board of Management since 13 May 2015
ILKA HORSTMEIER
Human Resources, Labour Relations Director
since 1 November 2019
FY 20211
FY 20202
Combined Management Report
a) Target remuneration for the 2021 financial year
The following tables show the individual target remuneration
of the members of the Board of Management and the rela-
tive share of the respective remuneration component in the
total target remuneration.
350,000
Total
(-)
Performance component of bonus 2021
1,050,000
15
(-)
(-)
475,000
14
CC
PERFORMANCE CASH PLAN
Variable
PCP 2020-2022
remuneration
SHARE-BASED PAYMENT
Cash remuneration component
(investment component) 2020 for holding obligation 2021-2025
Share-based remuneration component
(matching component) 2020 for holding obligation 2021-20253
Personal cash investment amount 20214
RoCE component
Strategic focus target component
Total
Target total remuneration
1 Remuneration system as of financial year 2021.
2 Remuneration system applicable until financial year 2020.
(-)
1,600,000
(-)
14
475,000
(-)
2,669,355
37
2,366,256
35
1,347,633
40
1,237,374
37
BONUS
Earnings component of bonus 2020
Performance component of bonus 2020
Earnings component of bonus 2021
(-)
(-)
540,000
10
8
(-)
1,260,000
19
(-)
CC
255,000
8
(-)
595,000
18
1,050,000
15
(-)
(-)
- 50% cross-divisional targets with ESG criteria
281
Group Financial Statements
475,000
575,000
1.800
575,000
Frank Weber
Andreas Wendt
500,000
Pieter Nota
475,000
Nicolas Peter
cated to the departmental targets. Departmental targets can
be department-specific targets or contributions to shared tar-
gets measured individually for each department. The remain-
der of the target amount for the performance bonus (amount-
ing to approximately 90%) should be associated with
interdepartmental, non-financial targets. In this regard,
around 50% of the target amount should be connected to the
achievement of non-financial targets relating to environmen-
tal, social and governance (i.e., ESG targets).
Targets set and extent of achievement - performance component
of the bonus for the financial year 2021
The targets set by the Supervisory Board for the 2021 vesting
year as part of the performance component of the bonus, the
weighting of the relevant criteria and the individual target
achievement are summarised in the tables below.
In order to determine the extent to which targets were
achieved in 2021, the Supervisory Board assessed the
departmental targets, on the one hand, and the interdepart-
mental targets, on the other hand, within a target achieve-
ment corridor with a partial performance factor between 0
(corresponding to a target being 0% achieved) and 1.80
(corresponding to a target being 180% achieved, the high-
est possible percentage). The performance factor for the
bonus was determined from the two partial performance
factors, with a weighting of 10% for the departmental tar-
gets and 90% for the interdepartmental targets. With regard
to the interdepartmental targets, 50% of the weighting is for
non-financial environmental, social and governance (ESG)
targets, and 40% is for other non-financial targets.
In order to determine the extent to which targets were
achieved, the Supervisory Board assessed the leadership
performance of the individual members of the Board of Man-
agement and the overall performance of the Board of Man-
agement as a whole. With regard to the departmental tar-
gets, the Supervisory Board assessed the individual
performance of each member of the Board of Management.
287
BMW Group Report 2021
To Our Stakeholders
1,890,000
855,000
855,000
1,035,000
1,035,000
855,000
900,000
1,050,000
Earnings factor
amount in €
3.0
5.3
11.0
12.4
180%
1,800
Group post-tax return on sales in %
3.0
5.6
9.0
11.2
OVERVIEW OF EARNINGS COMPONENT OF THE BONUS FOR THE FINANCIAL YEAR 2021
Member of the Board of Management
Oliver Zipse
Ilka Horstmeier
Milan Nedeljković
of bonus in €
Proportionate target bonus
Earnings component
Combined Management Report
Profit attributable to shareholders of BMW AG in € billion
Group Financial Statements
Remuneration Report
Interdepartmental ESG targets
Interdepartmental other
non-financial targets
Entire Board of Management¹
Joint departmental targets
All members of the Board
of Management²
Oliver Zipse
Target set
Innovation performance (environmental)
OVERVIEW OF DEPARTMENTAL TARGETS FOR THE PERFORMANCE COMPONENT OF THE BONUS FOR FINANCIAL YEAR 2021
Develop the Company's reputation e.g. (corporate culture, promoting integrity and ensuring compliance)
Transformability (investment in training and further education, sustainability)
Leadership performance (employee satisfaction)
Expand market position
Innovation performance (economic)
Customer orientation (product, customer service quality)
Development of reputation (e.g. awareness in the capital market, brand strength)
Contribution to meeting growth and profitability targets
Leadership performance in the department
Achievement of departmental diversity targets
Preventive activities in ensuring compliance
Employer attractiveness
← = Q
Other Information
Remuneration Report
Other Information
← = Q
With regard to the interdepartmental targets, the Supervi-
sory Board deliberately considered the Board of Manage-
ment as a team and assessed the performance of all the
members of the Board of Management as a whole. The
Supervisory Board's decision-making process is based on a
detailed, documented analysis of performance as measured
against all the agreed criteria, as well as in-depth discus-
sions at Personnel Committee and full Supervisory Board
level. As a basis for its assessment, the Supervisory Board
was guided, in particular, by the quantitative and qualitative
metrics defined in the corporate planning that had been
done before the beginning of the financial year. These met-
rics include, for example, key indicators such as vehicle
sales, segment shares and the share of sales for electrified
vehicles, as well as other metrics for assessing sustainability
performance, R&D rate, the quality of the customer experi-
ence compared to the competition, investments in training
and further education, targets for diversity in the workforce
and the results of employee surveys. The results of compar-
ative studies and calculations were also used to assess indi-
vidual metrics. In addition to a review of performance in
2021, the Supervisory Board carried out a trend review cov-
ering several financial years. In doing so, it assessed the
effects of decisions, measures and the overall course set in
previous financial years on the financial year 2021 and, by
way of a forecast, also estimated the significance of the per-
formance in 2021 for the future development of the company.
OVERVIEW OF TARGETS OF THE PERFORMANCE
COMPONENT OF THE BONUS FOR THE FINANCIAL
YEAR 2021
10%
Departmental
targets¹
40%
Other
interdepartmental
non-financial
targets²
1 Individual assessment for each member of the Board of Management.
2 Collective assessment of the Board of Management as a team.
50%
Interdepartmental
ESG targets²
288
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Corporate Governance
Earnings
factor
Actual achievement
value
in %
value
EARNINGS COMPONENT
Share-based
payment
Strategic
focus target
component²
PERFORMANCE COMPONENT
50% OF TARGET AMOUNT
EARNINGS FACTOR
50% OF TARGET AMOUNT
Share-based
payment
RoCE component²
PERFORMANCE FACTOR
x
-
Earnings factor is derived from an allocation matrix based on
the parameters "profit attributable to shareholders of BMW AG"
and "Group post-tax return on sales" in the vesting year.
- Earnings factor may not exceed 1.8.
- Performance factor consists of
-50% cross-divisional targets with ESG criteria,
-40% other cross-divisional targets,
-10% individual departmental targets.
- Performance factor may not exceed 1.8.
(1) Bonus for the 2021 financial year
Overview
BONUS
(MAX. 180% OF
TARGET AMOUNT)
² Each represents approx. 26-27% of variable target remuneration.
1 Each represents approx. 23-24% of variable target remuneration.
Earnings
component¹
60,303
997,803
The amount of the basic remuneration depends on the indi-
vidual's respective function on the Board of Management
and the duration of their tenure on the Board of Manage-
ment or their appointment period, as applicable.
The fringe benefits include, in particular, insurance benefits,
non-cash benefits from vehicle use and use of telephones
and computers, health care, employee discounts and subsi-
dies for safety equipment. In addition, the Supervisory Board
can approve payments to newly appointed members of the
Board of Management in order to compensate them for loss
of salary from a previous employment relationship and/or to
cover relocation costs. No such approvals were issued in the
2021 financial year.
b) Variable remuneration for the 2021 financial year
The variable remuneration for the 2021 financial year con-
sists of the bonus and the share-based remuneration. The
bonus consists of the earnings and performance compo-
nents, and the share-based remuneration (personal cash
investment amount) consists of the RoCE component and
the strategic focus targets component. The performance cri-
teria for the variable remuneration paid to members of the
Board of Management are based on the Group's key strate-
gic financial and non-financial targets and performance indi-
cators, and sustainably promote the Group's development.
When determining specific target values, the Supervisory
Board takes into account, in particular, long-term corporate
planning and business development planning for the follow-
ing year. These plans are prepared by the Board of Manage-
ment and submitted to the Supervisory Board for approval.
For details of the strategic relevance of the individual remu-
neration components, see also above Overview of remuneration
system.
285
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
OVERVIEW OF VARIABLE TARGET REMUNERATION
OVERVIEW OF THE COMPOSITION OF THE BONUS
Bonus
Performance
component¹
Bonus
The bonus consists of an earnings component and a perfor-
mance component. If 100% of the target is achieved, the
share of the bonus attached to each component is 50% of
the individual target amount of the bonus. The bonus amount
is capped at 180% of the individual target amount. The
bonus is paid following the Annual General Meeting at which
the annual financial statements for the vesting year are pre-
sented.
Earnings component of the bonus
The earnings component of the bonus rewards the perfor-
mance of the business in the vesting year, as measured by
the financial indicators "Profit attributable to shareholders of
BMW AG" and "Group post-tax return on sales". For this pur-
pose, the Supervisory Board adopts an allocation matrix
before the start of the vesting year, from which an earnings
factor is derived based on the values achieved.
For both indicators, the Supervisory Board defines a mini-
mum value, a target value and a maximum value before the
start of the vesting year. If one of the minimum values is not
reached, the earnings factor is zero (corresponding to a tar-
get achievement of 0%). If both target values are reached,
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Targets set and extent of achievement - earnings component of
the bonus for the 2021 financial year
The targets set and the extent to which they have been
achieved, as well as the specific amounts associated with
the earnings component of the bonus for the 2021 financial
year, are shown in the following tables. In the financial year
2021, BMW AG's share of profit attributable to shareholders
was € 12.4 billion, and the Group post-tax return on sales
was 11.2%. Both key indicators exceeded the maximum val-
ues defined for the assessment of the earnings component,
so the earnings factor has been capped at the maximum
value of 1.800 (corresponding to a target achievement of
180%, the highest possible percentage).
Performance component of the bonus
The performance component of the bonus rewards the
achievement of certain non-financial targets. Before the
beginning of the financial year, the Supervisory Board sets
these targets in the form of various non-financial perfor-
mance criteria and associated metrics. The performance cri-
teria are derived primarily from the corporate strategy, long-
term corporate planning and the business development
planning done for the following year. The targets are divided
into individual targets for the individual members of the Board
of Management (departmental targets) and collective targets
for the entire Board of Management (interdepartmental tar-
gets). The Supervisory Board has discretion in weighting the
performance criteria. Approximately 10% of the target
amount for the performance bonus is intended to be allo-
TARGETS SET AND ACHIEVED EARNINGS COMPONENT OF BONUS FOR THE FINANCIAL YEAR 2021
Target
Minimum
Performance criteria
value
Target
value
Maximum
286
Coordination of the work of the Board of Management
maximum value
Profit attributable to
shareholders in € billion
the earnings factor is 1.000 (corresponding to a target
achievement of 100 %). As of the achievement of both max-
imum values, the earnings factor is 1.800 (corresponding to
a target achievement of 180%, the highest possible per-
centage). For intermediate values, the earnings factor is
derived from the matrix.
EARNINGS COMPONENT OF THE BONUS: ALLOCATION MATRIX¹
Group post-tax return
on sales in %
9.0
maximum value
5.6
target value
1.000
0.135
3.0
minimum value
3.0
5.3
minimum value
target value
1 Simplified depiction
2 Earnings factor 2021
1.800²
11.0
Positioning with regard to proposed legislation
Continue to develop the Compliance Management System
Present and promote new products
Promote employer attractiveness
50%
107.0%
40%
102.5 %
1.06
500,000
530,000
10%
115.6%
115.6%
cash investment amounts (less taxes and duties) in BMW
shares of common stock, and to hold these shares for a
period of at least four years (Share Ownership Guideline).
The obligation to purchase BMW shares of common stock
and the multi-year holding period strengthens the entrepre-
neurial long-term orientation of the Board of Management.
Implementing the corporate strategy sustainably by taking
appropriate decisions also creates lasting value for the
shareholders, and thus regularly provides the basis for posi-
tive long-term capital market performance. Due to the sub-
stantial investment and the fixed holding period associated
with these shares, members of the Board of Management
participate in the long-term positive (and negative) develop-
ment of the company, as reflected in the share price, even
after their departure.
290
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Corporate Governance
Remuneration Report
(2) Share-based remuneration for the 2021 financial year
As part of the share-based remuneration as a variable long-
term component of remuneration, the members of the Board
of Management receive a cash payment earmarked for
investment in BMW shares of common stock (the "personal
cash investment amount"). This amount depends on the
achievement of certain financial and non-financial targets in
the past financial year (vesting year). The members of the
Board of Management are obliged to invest their personal
10%
503,500
475,000
Frank Weber
Andreas Wendt
Interdepartmental targets - ESG
Interdepartmental targets - Other
Departmental targets
Interdepartmental targets - ESG
Interdepartmental targets - Other
Departmental targets
Interdepartmental targets - ESG
Interdepartmental targets - Other
Departmental targets
50%
107.0%
40 %
102.5 %
1.06
575,000
609,500
10%
116.3%
50%
107.0%
40%
102.5 %
1.06
Other Information
← = Q
Personal cash investment amount
The personal cash investment amount is paid out after the
Annual General Meeting at which the annual financial state-
ments for the vesting year are presented. The size of this
amount depends on the target amount, the RoCE achieved
in the Automotive segment and the degree to which certain
strategic focus targets were achieved in the vesting year. The
personal cash investment amount is limited to a maximum
of 180% of the target amount and is calculated as follows:
FY
n+1
Acquisition of shares¹
(amounting to 100 % of the
payment amount)
Total performance period: 5 years
هلر
Share performance over 4 years
при
FY
FY
FY
FY
n+2
n+3
n+4
n+5
Performance period: 4 years
Freely available
shares
1 Simplified depiction. Payment, acquisition of shares and the start of the four-year holding period occur following the Annual General Meeting at which the annual financial statements for the
vesting year are presented.
Taxes
Nicolas Peter
Performance period: 1 year
Strategic Focus
targets
Personal cash investment amount =
RoCE component + strategic focus targets component
Target amount for the personal cash investment amount
The target amounts for the individual members of the Board
of Management for the 2021 financial year are presented in
the table "Overview of share-based remuneration for the
2021 financial year", below.
RoCE component of the personal cash investment amount
Before the beginning of the relevant vesting year, the Super-
visory Board sets minimum, target and maximum values for
the ROCE in the Automotive segment in the vesting year on
the basis of corporate planning, and assigns a RoCE factor
to each of these values. If the minimum value is not reached,
the RoCE factor is 0. If the target value is reached, the RoCE
factor is 1.00. As of the achievement of the maximum value,
the ROCE factor is 1.80. The RoCE component of the per-
sonal investment cash amount is determined by multiplying
the ROCE factor for the vesting year by 50% of the individual
target amount.
Strategic focus targets component of the personal cash invest-
ment amount
The Supervisory Board sets at least two strategic focus tar-
gets before the start of the vesting year. It derives these tar-
gets from the corporate strategy and corporate planning. It
then sets a minimum, target and maximum value for each
strategic focus target, and assigns a factor to each of these
values. If the minimum value is not reached, the factor for
that target is 0. If the target value is reached, the factor for
that target is 1.00. As of the achievement of the maximum
value, the factor for that target is 1.80. The strategic focus
targets component of the personal cash investment amount
is determined in a two-step process. In the first step, the fac-
tor for the vesting year achieved for the relevant strategic
focus target is multiplied by the share of the individual target
amount attributable to this target. In the second step, the
OVERVIEW OF SHARE-BASED REMUNERATION
Target amount
FY
values determined for the individual strategic focus targets
using this calculation are added together. If two strategic
focus targets are set, each strategic focus target accounts
for 25% of the individual target amount, unless the Supervi-
sory Board decides on a different weighting. If more than
two strategic focus targets are set, the Supervisory Board
determines the weighting of each target.
Personal cash investment
amount
(Cap: 180% of the target
amount)
Overall target achievement
Weighting
Target
50%
ROCE
50%
Payment amount
937,500
113.1%
609,500
Maintain an efficient and flexible supplier network during the Covid-19 pandemic
Meet quality requirements and cost targets in the supplier network
Establish a CO₂ management system in the supply chain
1 Collective assessment of the Board of Management as a team. 2 Individual assessment for each member of the Board of Management.
Weighting
50%
40%
10%
Ensure production flexibility for vehicle components
289
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OVERVIEW OF TARGET ACHIEVEMENT FOR THE PERFORMANCE COMPONENT OF THE BONUS FOR FINANCIAL YEAR 2021
BMW Group Report 2021
Continue to develop automated driving and hydrogen technology
Develop new vehicle architecture
Ensure planned new products are handed over to production on time
Staff restructuring and qualification
Ilka Horstmeier
Milan Nedeljković
Pieter Nota
Specific departmental targets
Nicolas Peter
Frank Weber
Andreas Wendt
Implement the diversity strategy
Promote the strategic development of real estate management
Ensure the production network is managed effectively
Deliver dynamic alignment of the production structure in line with strategic factors
Achieve quality targets in production
Reduce carbon emissions in production
Plan sales and prices, realise potential in our sales markets
Prepare and successfully deliver launches of new products
Expand the digital marketing and sales concepts
Expand the internal control system (ICS) with regard to sales management and reporting
Ensure reliable communication with capital markets
Prepare the first Integrated Annual Report and further develop the ICS for non-financial key indicators
Manage financial risk and secure Group financing during and after the Covid-19 pandemic
Coordinate the delivery of Performance NEXT financial targets
Develop attractive and exciting vehicle models
Oliver Zipse
Targets
Interdepartmental targets - ESG
Interdepartmental targets - Other
Departmental targets
Weighting
50%
Milan Nedeljković
Interdepartmental targets - ESG
Interdepartmental targets - Other
Departmental targets
50%
107.0%
40 %
102.5 %
1.06
475,000
503,500
10%
113.1%
Pieter Nota
Interdepartmental targets - ESG
Interdepartmental targets - Other
Departmental targets
50%
107.0%
40 %
102.5 %
1.06
575,000
113.8%
10%
10%
475,000
Average target
achievement
Performance factor
Proportionate target
bonus amount in €
Performance component
of bonus in €
107.0%
40 %
102.5 %
1.06
1,050,000
1,113,000
10%
118.1%
Ilka Horstmeier
Interdepartmental targets - ESG
Interdepartmental targets - Other
Departmental targets
50%
107.0%
40 %
102.5 %
1.06
503,500
997,833
475,000
900,000
MAXIMUM AND MINIMUM REMUNERATION FOR THE FINANCIAL YEAR 2021
OLIVER ZIPSE
Chairman of the Board of Management
since 16 August 2019
Member of the Board of Management
since 13 May 2015
in €
Fixed
Fixed remuneration (basic remuneration]
Fringe benefits
remuneration
Total
BONUS
In addition to the maximum limits for the individual compo-
nents of overall remuneration, the Supervisory Board also set
minimum thresholds that had to be exceeded in order for a tar-
get to be achieved. If these minimum thresholds are not
reached, the relevant component of the variable remuneration
is not paid.
ILKA HORSTMEIER
Human Resources,
Labour Relations Director
Member of the Board of Management
since 1 November 2019
PIETER NOTA
Customer, Brands, Sales
Member of the Board of Management
since 1 January 2018
Max
Min
1,950,000
1,950,000
Max
900,000
Min
MILAN NEDELJKOVIĆ
Production
Board of the Board of Management
since 1 October 2019
The total fixed maximum remuneration is less than the sum of
the maximum amounts for the individual components.
to cover relocation costs for new appointments are also cov-
ered by the maximum remuneration.
The maximum remuneration of the Members of the Board of
Management for the vesting year 2021, as determined in
accordance with § 87a (1) Sentence 2 No. 1 AktG includes, as
fixed components, the basic remuneration for 2021, other fixed
remuneration for 2021, the pension contribution, and any ser-
vice cost in excess of that contribution for 2021. The maximum
remuneration includes the bonus for the vesting year 2021 and
the share-based remuneration as variable components for the
vesting year 2021. Any special payments to compensate for
loss of salary from a previous employment relationship and/or
64
3,542,803
100
3,351,609
100
3 Provisional monetary value calculated as of 2 January 2021 in accordance with German Accounting Standard 17, as amended. The final number of matching shares and/or the final cash
value will only be determined when the investment obligation is fulfilled in shares of common stock of the company.
" Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
282
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To Our Stakeholders
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Corporate Governance
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Other Information
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b)
Maximum and minimum remuneration for the financial year
2021
The Supervisory Board has set upper limits on the remunera-
tion of Members of the Board of Management for the 2021
financial year (vesting year) in two ways: It has set maximum
limits in terms of the amount paid for all variable remuneration
components and, additionally, for the total remuneration of the
Board of Management members in each case. Both compo-
nents of the bonus and both components of the share-based
remuneration (the personal cash investment amount) are lim-
ited to a maximum of 180% of the respective target amount.
Max
Min
Max.
Min.
1,890,000
0
855,000
0
855,000
0
1,035,000
Variable
SHARE-BASED REMUNERATION
remuneration
(PERSONAL CASH INVESTMENT AMOUNT) 1
RoCE component
2,115,000
0
990,000
0
990,000
0
1,152,000
Performance component of bonus
2,145,290
0
0
900,000
19,355
19,355
47,633
47,633
1,969,355
1,969,355
947,633
947,633
900,000
43,237
943,237
900,000
43,237
943,237
1,050,000
18,525
1,068,525
1,050,000
18,525
1,068,525
Earnings component of bonus
1,890,000
0
855,000
0
855,000
1,035,000
0
61
(-)
24
60,303
2
56,319
2
Contribution to the company pension scheme
400,000
11
800,000
350,000
Total
1,397,803
39
1,206,319
36
BONUS
Earnings component of bonus 2020
(-)
10
26
937,500
Fixed remuneration (basic remuneration)
Fringe benefits (other remuneration)
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
TARGET REMUNERATION FOR THE FINANCIAL YEAR 2021 (2020)
ANDREAS WENDT
Purchasing and Supplier Network
from 1 October 2018 until 31 December 2021
FY 20211
FY 2020²
in €
in %
in €
in %
Fixed
remuneration
255,000
8
Performance component of bonus 2020
Earnings component of bonus 2021
(-)
11
Share-based remuneration component
(matching component) 2020 for holding obligation 2021-20253
(-)
62,790
2
Personal cash investment amount 20214
RoCE component
Strategic focus target component
Total
Target total remuneration
1 Remuneration system as of financial year 2021.
2 Remuneration system applicable until financial year 2020.
572,500
16
(-)
572,500
16
(-)
382,500
2,145,000
(-)
(investment component) 2020 for holding obligation 2021-2025
(-)
595,000
18
500,000
14
(-)
Performance component of bonus 2021
500,000
14
(-)
PERFORMANCE CASH PLAN
Variable
PCP 2020-2022
(-)
97,833
25
remuneration
SHARE-BASED PAYMENT
Cash remuneration component
(-)
Strategic focus target component
850,000
0
1,152,000
0
990,000
0
1,030,500
0
4,374,000
0
0
3,690,000
3,861,000
0
5,446,746
1,072,746
4,687,833
997,833
401,099
401,099
0
1,030,500
0
990,000
1,072,746
997,833
997,833
997,803
997,803
1,035,000
0
855,000
0
900,000
0
1,035,000
0
855,000
0
900,000
0
1,152,000
0
402,075
5,500,000
1,473,845
4,925,000
Pieter Nota
Nicolas Peter
Frank Weber
Andreas Wendt
remuneration) Total fixed remuneration
19,355
1,969,355
947,633
943,237
Fringe benefits (other
Base salary
1,950,000
900,000
47,633
900,000
43,237
1,050,000
18,525
1,068,525
1,050,000
22,746
1,072,746
2,115,000
Milan Nedeljković
60,303
Ilka Horstmeier
OVERVIEW OF FIXED REMUNERATION FOR THE 2021 FINANCIAL YEAR (IN €)
402,075
1,399,908
4,858,803
401,099
5,068,750
997,803
401,099
1,398,902
1 Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
2 The pension contribution and any service cost in excess of this contribution represent the cost to the Company. This amount is not paid out to the relevant member of the Board of Management.
3 Maximum remuneration within the meaning of § 87 a (1) Sentence 2 no. 1 German Stock Corporation Act (AktG). This total upper limit is lower than the sum of the maximum amounts from the individual components.
Any special payments to compensate for loss of salary from a previous employment relationship and/or to cover relocation costs for new appointments are also covered by the maximum remuneration.
284
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
← = Q
The maximum limits for each individual element of the varia-
ble remuneration in the 2021 vesting year and the stipulated
maximum remuneration limits were complied with in all
cases Remuneration granted and owed.
The remuneration granted and owed pursuant to § 162 Ger-
man Stock Corporation Act (AktG) for financial year 2021
7 Remuneration granted and owed includes a payout from the Per-
formance Cash Plan 2019-2021 for members of the Board of
Management who were in office back in the 2019 financial
year. This variable component of the remuneration system
applicable for the financial years 2018 to 2020 falls under
the overall caps set by the Supervisory Board for the vesting
year 2019. A final assessment of compliance with the overall
caps set for the 2019 vesting year will only be possible when
the matching component of the share-based remuneration
for the 2019 vesting year is paid out after the expiry of the
four-year shareholding period in the 2024 financial year.
The remuneration granted and owed for the 2021 financial
year pursuant to § 162 AktG Remuneration granted and owed also
includes the payment of the matching component of the
share-based remuneration for the 2016 vesting year to the
members of the Board of Management who were in office in
that financial year. This payment was made in May 2021,
after the expiry of the four-year shareholding period. This
component is subject to the overall cap set for the vesting
year 2016, which was complied with for the members of the
Board of Management in office at that time.
4.
Remuneration for the 2021 financial year
Following a proposal by the Personnel Committee, the
Supervisory Board determined in December 2020 the target
remuneration for the members of the Board of Management
for the 2021 financial year, as well as the performance crite-
ria for the variable remuneration components provided for in
the remuneration system. In March 2022, at the suggestion
of the Personnel Committee, the Supervisory Board set or
confirmed the amount of the variable remuneration compo-
nents due to the members of the Board of Management for
the 2021 financial year after reviewing and assessing the
extent to which the targets had been achieved.
a) Fixed remuneration for the 2021 financial year
Each member of the Board of Management receives a fixed
basic remuneration, which is paid monthly on a pro rata
basis. The fixed basic remuneration ensures a minimum
income appropriate to the tasks and responsibilities of a
member of the Board of Management. It counteracts the
temptation to take disproportionately high risks in order to
achieve short-term goals, and thus contributes to the com-
pany's long-term development.
Oliver Zipse
60,303
Other Information
97,833
702,274
9,850,000
702,274
401,765
401,765
401,466
2,671,629
4,925,000
1,349,398
4,925,000
943,237
401,466
1,344,703
5,442,525
402,852
5,500,000
1,068,525
402,852
1,471,377
1 Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
2 The pension contribution and any service cost in excess of this contribution represent the cost to the Company. This amount is not paid out to the relevant member of the Board of Management.
3 Maximum remuneration within the meaning of § 87 a (1) Sentence 2 no. 1 German Stock Corporation Act (AktG). This total upper limit is lower than the sum of the maximum amounts from the individual components.
Any special payments to compensate for loss of salary from a previous employment relationship and/or to cover relocation costs for new appointments are also covered by the maximum remuneration.
283
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Maximum remuneration ³ / Minimum remuneration
Corporate Governance
Pension expense²
947,633
990,000
97,833
0
990,000
0
1,152,000
0
Total
8,010,000
0
3,690,000
0
3,690,000
0
4,374,000
0
Total fixed and variable remuneration
1,969,355
4,637,633
4,633,237
Remuneration Report
9,979,355
← = Q
Member of the Board of Management
since 1 January 2017
FRANK WEBER
Development
Member of the Board of Management
since 1 July 2020
ANDREAS WENDT
Purchasing and Supplier Network
Member of the Board of Management
from 1 October 2018 to
31 December 2021
Max
Min
Max
Max
Min
1,050,000
1,050,000
900,000
900,000
937,500
937,500
Other Information
22,746
1,072,746
22,746
Finance
NICOLAS PETER
Min
Pension expense²
in €
Maximum remuneration ³ / Minimum remuneration
Fixed remuneration (basic remuneration)
Fixed
Fringe benefits
remuneration
BONUS
Earnings component of bonus
Performance component of bonus
Total
Variable
SHARE-BASED REMUNERATION
MAXIMUM AND MINIMUM REMUNERATION FOR THE FINANCIAL YEAR 2021
remuneration (PERSONAL CASH INVESTMENT AMOUNT) 1
RoCE component
Total fixed and variable remuneration
Strategic focus target component
Total
Your Company has around 10,000 IT and software specialists working on research
and development for vehicle digitalisation at ten locations in Europe, Asia and the
Americas. We are collaborating in the regions with major tech players, who are also
our competitors.
We already aim to at least double our sales of battery-electric vehicles this year com-
pared to 2021.
By 2025
the end of Phase II of our transformation - we aim to increase the total
share of our electrified vehicles, that means battery-electric and plug-in hybrids,
to more than 30%. By 2030 - the end of Phase III - more than 50% of our global
deliveries to customers should be fully electric. We are gearing up the Company and
our supply chains for this exponential growth in electromobility.
MINI and Rolls-Royce will be exclusively all-electric from the early 2030s onwards,
while all BMW Motorrad's urban models will be released with e-drives only from
2030. BMW M GmbH has also unveiled its first fully electric model, the BMW iX M60.
Over-the-air updates: BMW has the largest fleet.
The modern car is not only one of the most complex items we use as consumers; it is
also becoming a true digital device. It should therefore come as no surprise that digi-
tal business models will account for a growing share of value creation. This applies, in
particular, to the Chinese market, with its many young, technophile customers.
At the CES tech show in Las Vegas in January 2022, our BMW iX Flow, featuring E
Ink, received rave reviews from the media and on social media. This unique technol-
ogy allows the exterior to change colour.
Focused on the customer and their mobility experience.
Our new BMW iX and BMW i4 models are already winning over customers with their
innovations and an electric range of up to 600 kilometres. With the BMW iX, we are
also the first premium manufacturer to introduce the 5G mobile telecommunications
standard in a production vehicle that is available worldwide. Both models are among
the eight fully electric vehicle models we will have on the roads this year; by 2023,
there will be a dozen.
Merging the digital and the physical experience.
E-mobility shifts into sport mode.
Statement of the Chairman of
the Board of Management
New BMW 7 Series: the only luxury sedan to offer drivetrain variety.
All of us at BMW are looking forward to the market launch of the new BMW 7 Series
this year: progressive, digital and innovative, it is also the only luxury sedan to offer
customers a choice of drivetrain variants. By the way, the most powerful variant - the
BMW i7 - is fully electric. In April, we will present it in New York, Munich and Beijing,
representing the major regions of the world.
Our intelligent vehicle architectures enable us to offer different drivetrain variants
efficiently. This benefits customers and the climate alike. We serve markets according
to their individual circumstances and pace of change. In the mid-term, this will also
include hydrogen fuel cell technology - because hydrogen makes it possible to store
sustainably produced energy and release it just as quickly as conventional fuels.
To Our Stakeholders
Your Company is leveraging the opportunities and potential of global auto-
motive markets.
The NEUE KLASSE is our exclusively fully electric product range, which will usher
in Phase III of our transformation towards emissions-free mobility. It will be built on
our New Cluster Architecture (NCAR), with the three core forward-looking elements:
“electric”, “digital” and “circular”. This will be the next milestone in BMW history for
future products, technologies and new ways of working. The NEUE KLASSE makes a
significant contribution to sustainability, by relying on the concept of circularity.
NEUE KLASSE for a new age.
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Other Information
Remuneration Report
By 2025, a quarter of our sales will probably be conducted online. That is why our
Sales and Marketing is seamlessly integrating all customer touchpoints, online and
offline. We are implementing future-oriented sales structures in conjunction with our
retailers. That is our culture at BMW.
Combined Management Report
Group Financial Statements
Corporate Governance
_
26
V.fiume
BMW Group Report 2021
BMW
GROUP
To Our Stakeholders
The Board of Management
BMW Group Report 2021
BMW Group Report 2021
27
27
we will continue to
make a difference in
the future."
"We see transform-
ation as an oppor-
tunity. As a global
Impact Company,
Chairman of the Board of Management
Oliver Zipse
Yours
Together, we will continue to make a difference in the future, as a global Impact
Company that creates values and generates added value. We hope you will continue
to support us on our BMW way.
I would like to say a sincere thank you for the financial year 2021: to you, our share-
holders, all our customers, our retail organisation and suppliers - and, above all, to
our 118,909 associates. The feedback we received in our Employee Survey clear-
ly reflected back to us that the team stands behind the Company. Our associates
believe BMW has found the right balance between stability and disruption. We see
transformation as an opportunity.
Many people benefit from our success: you, our shareholders, our global team and
society. This year, we will be hiring new staff, both worldwide and at our home base
in Germany - something a company only does when it is full of confidence.
In February 2022, the BMW Group increased its share in the joint venture BMW
Brilliance Automotive Ltd. (BBA) to a 75% majority stake. With full consolidation of
BBA in the BMW Group Financial Statements, we are taking your Company into the
next dimension as a global company. The Chinese market is a driving force for digital
trends. This move will bring us even closer to customers there and enable us to keep
our finger on the pulse.
Your Company is financially and economically stronger than ever. This allows us to
operate independently and invest in our own future. This is certainly something we
can continue to build on.
Dear Shareholders,
the Board of Management
Statement of the Chairman of
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Group Financial Statements
Combined Management Report
To Our Stakeholders
26
25
Statement of the Chairman of
the Board of Management
Our main plant in Munich will be 100 years old this year. To mark the centenary, we
are smoothly transitioning to 100% electric during ongoing production. With its new
vehicle assembly, the plant will be capable of producing only fully electric models
from 2026 onwards in line with demand. In parallel, we are also working on emis-
sions-free transport logistics. That is what transformation looks like on the ground.
We deliver on our promises - and can back them up. In 2021, your Company once
again met the European Union's CO₂ targets – even clearly outperforming the legal
requirements by approximately 10 g/km. You can rest assured that we will also meet
our CO, requirements for 2030.
-
Building credibility by keeping promises.
Since most of our CO₂ emissions today are produced during the use phase, we have
raised the bar in this area: By 2030, we will reduce CO2 emissions by more than 50%
from 2019 levels. Our targets apply worldwide, including the extra 10% from the
SBTi framework added to fuel consumption figures and including CO₂ emissions from
fuel production and electricity generation. This will in turn also reduce our life cycle
carbon footprint – from the ore mine to kilometres driven on the road – by more than
40%.
We are the first German automotive manufacturer to join the "Business Ambition for
1.5° C" campaign launched by the Science-Based Targets initiative (SBTI).
This means our road to climate neutrality follows a scientifically validated and trans-
parent path.
_
We have announced clearly defined targets for 2030 that show how we will continue
to lower CO₂ emissions. As our shareholders, you know that your Company always
takes a holistic approach. We are therefore substantially reducing our environmen-
tal footprint in a measurable way throughout the entire value chain - during the use
phase, in production and in the upstream supply chain. Here, we are adopting a ten-
year perspective because this is a manageable time frame, in which we can take
responsibility for measures ourselves. We do not believe in empty promises. We are
able to report at any given time on how we are performing in all three sustainability
scopes.
Holistic sustainability based on concrete targets.
This is a complex task, and we will continue to learn. Our second Integrated Report
for the financial year 2021 reflects this learning process. The "Integrated Strategy of
the BMW Group" section provides a qualified insight into how strategy and our man-
agement of the Company are intertwined.
← = Q
Other Information
Remuneration Report
In production, well-designed individual steps ultimately contribute to overall sustain-
ability as well: as promised, production at all our locations has been carbon neutral
on balance since 2021. Our electric motors no longer require rare earths. We use
only green power to produce batteries for our electrified vehicles - as do our battery
cell suppliers. Our batteries are also almost fully recyclable. All of this is relevant for
ramping up electromobility. After all, this year, every one of our plants in Germany will
already be producing electric vehicles.
Corporate Governance
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
23
23
itself with the BMW i
Vision Circular."
future topic of
circularity for
"BMW has clearly
defined the next big
This is a new step for us - consistent and irreversible. Integrated reporting is a pro-
cess that involves and challenges the whole Company. It requires integrated thinking:
what is the impact of a decision as a whole – from both a business and an
environmental perspective, in the short term, mid-term and in the long term?
Milan Nedeljković
We lead the way in the German automotive industry with our integrated reporting of
the Company's financial and non-financial performance.
Your Company presents its second Integrated Report.
Group Financial Statements
Change makes us resilient.
We never stand still – because we are constantly refining our business model. This
strengthens our resilience, building on a solid foundation created by profitability and
sustainable action. We believe the two go hand in hand and are mutually dependent.
Confident even in uncertain times.
We have mastered both competence development from the ground up and how to
transform existing plants into cutting-edge locations for electromobility. Examples of
this are our two "bookends": our oldest plant, Munich, and our future plant in Hungary.
We are expanding our production network globally and in a targeted manner. For
instance in China: in Shenyang, we will be opening a new plant in Tiexi this year and
expanding the plant in Dadong.
Transformation takes place not just on greenfield sites or around the confe-
rence table - but on the ground at our plants.
We also responded extremely flexibly to semiconductor supply bottlenecks. This is a
stress test we have withstood together. All business units are working hand in hand
to minimise the impact and adjust production to the situation. Our stable and trust-
based relationships with suppliers have proved especially valuable in this respect. We
can expect, and are preparing for, the global supply situation for vehicle components
to remain difficult in 2022.
Dealing with the effects of the coronavirus pandemic demanded a lot of us in 2021.
In typical BMW tradition, and in the spirit of Herbert Quandt, the Company and its
employee representatives once again found flexible solutions. The vaccination cam-
paign we launched together is a good example of this. For our locations in Germany,
we have made the BMW pension scheme even more attractive and increased the
level of benefits. At the plant in Leipzig, work hours have been brought into line with
our Bavarian locations. This shows our sense of community at BMW in difficult times.
locations for
electromobility."
into cutting-edge
the ground up and
how to transform
existing plants
both competence
development from
"We have mastered
Statement of the Chairman of
the Board of Management
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
24
Your Company operates at the intersection of conflicting forces, where conditions are
not only demanding, but also highly complex. The situation is becoming more and
more differentiated from one region of the world to another, with a highly dynamic
rate of change. In this context, it is more important than ever to anticipate require-
ments in the early stages, plan for various scenarios and manage risks effectively.
-
Staying flexible and pivoting quickly.
success.
The BMW brand is back on top of the global premium segment - and we intend
to keep it that way. BMW and Rolls-Royce achieved new all-time highs, as well as
BMW Motorrad. Global market share is also an important currency in our industry. As
a premium manufacturer, we increased our share of the global market to 3.4% during
the coronavirus pandemic – and with a further increase in profitability. Sales in key
individual markets and regions – China, Europe and the US grew significantly in
some cases. Our Financial Services Segment also made a major contribution to our
-
Looking forward confidently even in uncertain times. This characterises your Com-
pany. Our products are in high demand: More than 2.52 million customers took
delivery of a BMW Group vehicle in 2021 - 8.4% more than the previous year. This
number includes almost 330,000 electrified vehicles – an increase of 70 %.
In 2022, as a sort of counterpart to our main plant in Munich, we will also be laying
the foundation stone for our newest plant in Hungary. The first vehicles for the NEUE
KLASSE will come off the production line in Debrecen in 2025.
Member of the Board of Management,
Dialogue with Stakeholders
Pieter Nota
STAKEHOLDER GROUPS AND FORMS OF DIALOGUE
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
30
The volume of non-liquid pension plan assets invested in our
various impact funds continues to grow according to sched-
ule. The investments made to date in this area relate not
only to climate protection, but also to other Sustainable De-
velopment Goals (SDGs) set by the UN. In 2021, the focus of
investment was on making cities more sustainable and ad-
dressing the consequences of climate change.
In addition, standard benchmarks for measuring the invest-
ment performance of liquid assets were revised again in
2021 with the aid of ESG-oriented indices.
Outlook
We currently record carbon emissions associated with all our
equity investments and a significant proportion of our
fixed-income assets. The relevant emissions data are includ-
ed in the TCFD Report relating to our UK pension plan, which
is required to be prepared annually in line with legislation that
came into force in 2021 for larger-scale UK pension schemes.
Against the background of the Paris Climate Agreement, pol-
icymakers in Europe are also increasingly addressing the is-
sues of climate protection and sustainability. For example,
the EU Action Plan for Sustainable Finance aims to direct
capital flows towards sustainable economic activities. A key
element of the EU Action Plan is the introduction of a stand-
ardised system to classify what is sustainable and what is
not.EU Taxonomy
cesses.
Financial market presence with sustainability credentials
Regular, in-depth communication with the capital market
has always been given a high priority within the BMW Group.
In the meantime, sustainability has become a decisive cri-
terion on financial markets. Furthermore, investors and fi-
nancial analysts alike are increasingly considering environ-
mental, social and governance (ESG) aspects in their
investment recommendations and decision-making pro-
In the interest of transparency, the BMW Group always dis-
closes the most important association memberships on its
website BMW Group List of Memberships.
At the beginning of 2021, the BMW Group assumed the
presidency of ACEA, the Association of European Automo-
bile Manufacturers (Association des Constructeurs Eu-
ropéens d'Automobiles). In December 2021, it was confirmed
that the BMW Group will continue to chair the association for
a further year (2022).
7 BMW Group Lobbying Policy
Apart from its own activities in the area of public policy de-
velopment, the BMW Group is a member of numerous asso-
ciations in various countries. Membership is voluntary in the
majority of cases, although there are some situations in
which it is necessary to join associations in order to comply
with legal requirements.
The BMW Group maintains an active, open and transparent
dialogue with representatives of politics, trade unions, asso-
ciations and non-governmental organisations (NGOs). The
aim is to play a constructive and transparent role in helping
shape the general political framework regarding the Group's
business activities.
Participation in public policy development and work in
associations
Dialogue with Stakeholders
← = Q
Other Information
Since 2019, sustainability criteria have also been a major
factor for the BMW Group's pension fund investment strate-
gy. The current focus is on measuring the carbon footprint of
significant parts of these assets on the one hand and the
risks attached to their future performance on the other. The
BMW Group aims to achieve carbon neutrality with respect
to its pension plan assets by 2050 at the latest.
The BMW Group will continue to interact closely with its
stakeholders in 2022.
The continual dialogue with investors and financial analysts
on sustainability-related topics will be continued. Apart from
direct dialogue, the BMW Group's participation in (virtual)
SRI/ESG roadshows and conferences is again planned.
Moreover, plans are in place for the coming year to expand
the scope of recording the carbon emissions associated with
our investments, with the primary aim of reliably assessing
and transparently documenting the compatibility of our in-
vestments with the climate goals enshrined in the Paris
Agreement. To the extent possible, our aim is to take account
of non-liquid investments in the Group's reporting on sus-
tainability, or at least for all such investments to be reviewed
from a sustainability perspective.
That is our internal compass. It guides us - even now, through the many changes we
must navigate as a BMW Group team - with focus and self-assurance. Transform-
ation is part of our DNA - and we all aspire to lead the way. We presented our most
recent example of this last year at the IAA Mobility in Munich: the BMW i Vision Cir-
cular, a car that moves body, heart and mind. With this extraordinary Vision Vehicle,
BMW has clearly defined the next big future topic of "circularity" for itself. Imagine
what we could achieve if we begin thinking consequently about circularity at both
business and macroeconomic levels - and across industries.
Civil society and NGOs
Local stakeholders
Media
Political
decision makers
and associations
Networks
Suppliers
Business partners
Employees
Capital market
Face-to-face meetings / dialogue, responding to enquiries
Discussions with local residents, plant tours, press engagements
Dialogue within the context of press trips, press releases, information events
on new products, test drives, trade fairs
Visiting universities and colleges, talks, discussions, dialogue events with students
Available to answer questions from policymakers and provide information to political
decision makers on relevant topics from the company's perspective
Participation of Company experts in committees and working groups, memberships
of initiatives and associations
Dialogue with sales organisations and coordinating units of importers
Dialogue in the context of industry initiatives, joint events, training courses,
presentations, supplier risk assessments
Dialogue, conferences and technology workshops with investors and analysts
Dialogue with employees and managers, employee surveys, idea management,
internal media
Customers
Surveys (including a corporate reputation study), social media, trade fairs, mass media
7 GRI 102-40, 102-43
dialogue
in
Group
BMW
The BMW Group will continue developing its own dialogue
options on an ongoing basis. We also intend to broaden the
scope of internal dialogue with employees in 2022 (Employ-
ees and society). In addition, we plan to participate in a variety
of public discussion formats going forward.
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
28
THE BOARD OF MANAGEMENT
Member of the Board of Management,
Customer, Brands, Sales
Human Resources, Labour Relations Director
Member of the Board of Management,
Member of the Board of Management,
Finance
Nicolas Peter
Ilka Horstmeier
Chairman of the Board of Management
Member of the Board of Management,
Purchasing and Supplier Network
Joachim Post
Oliver Zipse
Member of the Board of Management,
Development
Frank Weber
MOTOR CARS LTD
ROLLS-ROYCE
MINI
M
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
Group Financial Statements
Production
Corporate Governance
Other Information
To Our Stakeholders
BMW Group Report 2021
29
29
BMW Group Dialogues are usually held in the BMW Group's
key sales regions of North America, Europe and Asia on an
annual basis. The results of these stakeholder dialogues are
documented and incorporated in the Group's strategic
considerations GRI-Index: 102-21.
7 BMW Group Dialogues are one of the main formats for interact-
ing with stakeholders and have been held regularly since
2011. Major topics covered in recent years have included
electric mobility, corporate citizenship, urban mobility, envir-
onmental and social standards within the supply chain, and
circularity, i. e. the transformation from a linear to a circular
economy with increasingly closed material cycles Resource
efficiency, circular economy and renewable energy.
The BMW Group Xchange encompasses all the well-estab-
lished forms of events organised by the Group, such as the
BMW Group Dialogues, the rad°hub and the FUTURE
FORUM, providing the appropriate platforms to encourage
an intensive dialogue with a variety of target groups.
Ensuring a sufficient supply of critical raw materials
BMW Group Xchange
Consistency between supply-side and demand-side de-
carbonisation policies
Realistic relationship between emissions targets and
emissions measurement methods
· Support for new efficiency-enhancing technologies
Continued development of the regulatory framework for
automated driving and digital networks
Emissions limits without excluding individual drive tech-
nologies and vehicle concepts
Responsible leadership
Sustainable financing and the EU taxonomy
Environmental and social standards and respect for human
rights in the supply chain, particularly regarding the pro-
curement of raw materials for electric mobility applications
Social responsibility for employees
Circularity and circular design, the use of secondary ma-
terials, particularly in relation to battery recycling
The Paris Climate Agreement and climate neutrality of
the BMW Group by 2050
The BMW Group's interaction with stakeholders includes top-
ics brought to its attention by stakeholders as well as those in
which it proactively engages in dialogue. This combination
gives rise to a comprehensive range of interlinked topics:
7 GRI 102-44
Material topics in 2021
Our commitment to stakeholder engagement is set out in the
7 BMW Group Stakeholder Engagement Policy, which outlines both the
dialogue objectives and the criteria for identifying and priori-
tising stakeholders. A variety of suitable dialogue formats
and forms of communication are described in internal guide-
lines. Key topics and formats are summarised below
7 GRI 102-42, 102-43, 102-46.
The BMW Group operates on a global scale in a highly inter-
connected world. Its business activities have a major impact
on the environment in which it operates and can have both a
direct and an indirect bearing on the interests of a wide var-
iety of stakeholders. Conversely, societal trends and devel-
opments can influence many aspects of the Group's busi-
ness activities. Against this backdrop, the BMW Group
maintains a continuous dialogue with its stakeholders world-
wide.
Stakeholder engagement
DIALOGUE WITH STAKEHOLDERS
Dialogue with Stakeholders
← = Q
Remuneration Report
The BMW Group exists because we move body, heart and mind.
Academia
Your Company has held its own in the marketplace for over 100 years. Yet, far more
important than that is staying resolutely focused on the future – with the support and
backing of a motivated team, shareholders and stakeholders. All of you want to know
why the BMW Group should continue to exist 100 years from now.
We make a difference.
BMW Group: The Impact Company.
OF MANAGEMENT
STATEMENT OF THE
CHAIRMAN OF THE BOARD
the Board of Management
Statement of the Chairman of
←三〇
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
21
We want to make a difference. To create the values our customers ask for. To gener-
ate meaningful added value. That is part of our responsibility - because our society
depends on people's mobility and benefits from it.
Oliver Zipse
Chairman of the
Other Information
22
-
Board of Management
That is what enables it to stay the course, to rely on its own strengths, to withstand
the headwinds and to constantly reinvent itself. This applies in particular, and in its
own unique way, to the current transformation.
A company needs to know what it stands for.
LADIES AND GENTLEMEN:
the Board of Management
Statement of the Chairman of
← = Q
DEAR SHAREHOLDERS,
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
100%
target value
45
maximum value
ROCE in the Automotive segment in %
→ Target achievement: 180 %
Target achievement
minimum value
50%
→ Target achievement: 91 %
100
maximum value
Actual value 2021
115.9
114
target value
125
minimum value
CO₂g/km
1 According to the WLTP test procedure. With effect from September 2018, all vehicles in the EU must be approved in accordance with the new WLTP
testing cycle. However, the European Commission did not switch the calculation of fleet carbon emissions to WLTP until 2021. Therefore, up to and
including 2020, a recalculation of the WLTP fleet emissions to NEDC values was necessary for reporting purposes.
16
0%
10
Targets set and extent of achievement for the ROCE component
for the 2021 financial year
180%
Targets set and extent of achievement for the strategic focus
targets component for the 2021 financial year
12.7%/+47.2 percentage points). This was driven in large
part by increasing EBIT compared to the previous year. A
reduction in capital employed, and specifically the reduction
in average inventory during the financial year, was another
contributing factor. This was due, in particular, to the rapid
recovery of operational business from the consequences of
the coronavirus pandemic and the positive price effects for
new and pre-owned vehicles caused by the shortage of sup-
ply due to the tense supply situation for semiconductors.
ROCE in the Automotive segment for the financial year 2021
is defined as segment profit before financial result, divided
by the average capital employed in the segment. The Super-
visory Board has determined the following values for the
vesting year 2021: Minimum value: 10%, Target value: 16%,
Maximum value: 45%. The RoCE achieved for the 2021
financial year was 59.9%, meaning that the maximum value
set for the purposes of assessing the value of the RoCE com-
ponent was exceeded and the RoCE factor for the calculation
of the personal cash investment amount is 1.80 (its maxi-
mum value). The target was set by the Supervisory Board in
December 2020 on the basis of long-term corporate plan-
ning. RoCE for the Automotive segment increased signifi-
cantly in the 2021 financial year, to 59.9% (2020:
Target achievement
← = Q
Other Information
Remuneration Report
Corporate Governance
150%
Group Financial Statements
To Our Stakeholders
BMW Group Report 2021
291
Target achievement
0%
TARGETS SET AND EXTENT OF ACHIEVEMENT REDUCTION OF FLEET CARBON
EMISSIONS (EU)¹
200%
Actual value 2021
59.9
Combined Management Report
292
remuneration
To Our Stakeholders
14
Share-based remuneration component (matching component) 2015 for holding
obligation 2016-2020
(-)
(-)
(-)
(-)
33,423
1
(-)
Share-based remuneration component (matching component) 2016 for holding
obligation 2017-20214
1
Personal cash investment amount 20215
RoCE component
2,115,000
24
Strategic focus target component
1,089,813
12
76,941
BMW Group Report 2021
759,942
(-)
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
With regard to reducing fleet carbon emissions according to
WLTP, the Supervisory Board set the following values in CO₂
g/km under WLTP for fleet consumption in Europe as thresh-
old values relevant to remuneration for the vesting year 2021:
Minimum value: 125 CO₂ g/km, Target value: 114 CO₂ g/km,
Maximum value: 100 CO₂ g/km. The actual value for the 2021
financial year was 115.9 CO₂ g/km, so the target was 91%
achieved. The CO2 fleet value achieved (after setting an ambi-
tious original target), thus is below the legal limit of 125.8 CO₂
g/km by 9.9 CO₂ g/km in 2021.
For sales of all-electric vehicles (BEV), the Supervisory
Board set the following reference values in units for the vest-
ing year 2021: Minimum value: 75,000 units, Target value:
(-)
101,000 units, Maximum value: 170,000 units. The actual
value for the 2021 financial year was 103,854 units, so the
target was 103% achieved.
100%
(-)
712,9008
13
Variable
In December 2020, the Supervisory Board set the following
strategic focus targets for the vesting year 2021, in accord-
ance with the remuneration system:
Cash remuneration component (investment component) 2020 for holding
obligation 2021-2025
(-)
850,000
―
1,890,000
Sales of all-electric vehicles (Battery Electric Vehicles,
BEV); weighting in relation to personal cash investment
amount: 12.5%.
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021 (2020)
OLIVER ZIPSE
Chairman of the Board of Management since 16 August 2019
Member of the Board of Management since 13 May 2015
Fixed
remuneration
Fixed remuneration
Fringe benefits (other remuneration)
Total
BONUS
Earnings component of bonus 2020
Performance component of bonus 2020
Earnings component of bonus 2021
Performance component of bonus 2021
← = Q
PERFORMANCE CASH PLAN
PCP 2019-2021
SHARE-BASED PAYMENT
Vesting year 2021
Earlier vesting years
in €1
in €3
FY 2021
as a % of total
remuneration
Vesting year 2020
in €2
PCP 2018-2020
Earlier vesting years
Other Information
Corporate Governance
1.014
861,900
500,000
361,900
(-)
(-)
(-)
(-)
Remuneration Report
850,000
(-)
861,900
861,900
299
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
1.014
in €3
FY 2020
as a % of total
remuneration
1,950,000
(-)
27
(-)
(-)
22
(-)
1,113,000
13
1,449,000
(-)
277,584⁹
5
(-)
498,4498
6
200%
180%
TARGETS SET AND EXTENT OF ACHIEVEMENT ROCE
Sales of plug-in hybrid vehicles (PHEV); weighting in
relation to personal cash investment amount: 12.5%.
(-)
(-)
(-)
(-)
(-)
19,355
(-)
22
0.2
1,800,000
(-)
34
66,256
(-)
1
1,969,355
23
1,866,256
35
(-)
(-)
239,760
(-)
4
Reduce CO2 fleet emissions in the EU according to WLTP;
weighting in relation to personal cash investment
amount: 25%.
Total variable remuneration Vesting year 2021 or earlier vesting years
81 or 19
575,390
(-)
(-)
358,862
(-)
18
Share-based remuneration component (matching component) 2015 for holding
obligation 2016-2020
(-)
(-)
(-)
(-)
Т
Share-based remuneration component (matching component) 2016 for holding
obligation 2017-2021
(-)
(-)
(-)
I
Personal cash investment amount 20214
RoCE component
(-)
990,000
4
(-)
(-)
33
855,000
(-)
22
(-)
(-)
503,500
143,650
(-)
(-)
(-)
(-)
(-)
(-)
(-)
(-)
(-)
13
684,250
25
(-)
96 or 4
2,043,706
(-)
100
Remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost 5
Total amount received incl. service cost 6
3,949,908
401,765
4,351,673
143,650
100
100
>
3 Remuneration for prior vesting years if, as of the balance sheet date, the activity underlying the remuneration component has been fully performed, and all conditions for the entitlement are met.
" Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
5 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group; this amount was not paid out in the financial year.
6 Corresponds to the previous disclosure of amounts received in accordance with the model tables in the version of the German Corporate Governance Code dated 7 February 2017. For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the
vesting year are to be taken into account. The defined maximum remuneration for the vesting year 2021 is € 4,925,000; the remuneration for the vesting year 2021 including service cost is € 4,208,023, which is below the maximum remuneration.
1 Remuneration system from financial year 2021.
2 Remuneration system applicable until financial year 2020.
2,043,706
352,433
2,396,139
(-)
3,806,258
57
(-)
Strategic focus target component
510,125
Total variable remuneration Vesting year 2021 or earlier vesting years
2,858,625
(-)
143,650
13
(-)
Remuneration for vesting year 2021 or earlier vesting years
(-)
72 or 4
1,156,332
(-)
57
Total variable remuneration
3,002,275
76
1,156,332
(-)
6,207,813
(-)
(-)
1 Remuneration system from financial year 2021.
2 Remuneration system applicable until financial year 2020.
3 Remuneration for prior vesting years if, as of the balance sheet date, the activity underlying the remuneration component has been fully performed, and all conditions for the entitlement are met.
4 The number of shares purchased in 2017 with the 2016 cash remuneration component (investment component) amounted to 2,771 (purchased on 12 May 2017 at a price of €87.50). The 2016 matching component was paid out in cash in May 2021. The number of mathematical matching shares for calculating
the equivalent value in cash amounts to 923 (holding period expired on 11 May 2021). Reference price for calculating the equivalent value of the matching shares: € 83.36.
5 Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
6 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group; this amount is not paid out.
7 Corresponds to the previous disclosure of amounts received in accordance with the model tables in the version of the German Corporate Governance Code dated 7 February 2017. For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the
vesting year are to be taken into account. The defined maximum remuneration for the vesting year 2021 is € 9,850,000; the remuneration for the vesting year 2021 including service cost is € 8,879,442, which is below the maximum remuneration.
8 An advance payment in the amount of € 712,900 was paid out from the PCP 2019-2021 in 2020.
100
9 An advance payment in the amount of € 566,666 was paid out from the PCP 2018-2020 in 2019.
300
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
^
← = Q
5,338,865
502,626
5,841,491
8,752,558
702,274
9,454,832
71 or 7
2,448,702
1,023,907
(-)
46 or 19
Total variable remuneration
6,783,203
77
3,472,609
100
65
8,177,168
575,390
93 or 7
4,314,958
1,023,907
Remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost
Total amount received incl. service cost?
Remuneration for vesting year 2021 or earlier vesting years
(-)
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021 (2020)
Human Resources, Labour Relations Director
in €³
FY 2020
as a % of total
remuneration
(-)
39
47,633
(-)
1
87,374
Earlier vesting years
(-)
24
887,374
4
43
(-)
(-)
113,220
(-)
6
947,633
ILKA HORSTMEIER
Vesting year 2020
in €²
800,000
900,000
Member of the Board of Management since 1 November 2019
Fixed
remuneration
Fixed remuneration
Fringe benefits (other remuneration)
Total
BONUS
Earnings component of bonus 2020
Performance component of bonus 2020
Earnings component of bonus 2021
Performance component of bonus 2021
23
PERFORMANCE CASH PLAN
PCP 2019-2021
Variable
SHARE-BASED PAYMENT
remuneration Cash remuneration component (investment component) 2020 for holding
obligation 2021-2025
FY 2021
Vesting year 2021
in € 1
Earlier vesting years
in €3
as a % of total
remuneration
PCP 2018-2020
361,900
50%
861,900
(4,374)
(6,736)
13,614
(-)
2,504
11,110
(8,650)
(-)
(4,696)
(3,954)
10,935
(-)
2,285
8,650
(1,174)
(-)
(1,174)
(-)
3,459
(-)
(-)
(11,110)
1,142
(22,418)
(23,616)
58,560
2,771
17,294
44,037
(5,684)
(-)
(4,696)
(988)
7,969
(-)
2,285
5,684
(-)
(-)
(-)
(-)
1,142
0
2,285
1,174
(782)
5.
Milan Nedeljković
Retirement benefits
6.
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
BMW Group Report 2021
294
1,561,494
123,088
143,125
147,419
143,125
260,488
286,250
Shareholding rules
The members of the Board of Management in office as at 31
December 2021 hold a total of 58,560 BMW shares of com-
mon stock which they are required to hold in accordance with
the terms of the share-based remuneration programmes for
the financial years 2017-2020.
The share-based remuneration (investment component) for
the vesting year 2020 was paid out in 2021, immediately
after which the BMW shares of common stock were acquired.
SHARES OF BMW COMMON STOCK HELD BY INDIVIDUAL MEMBERS OF THE BOARD OF MANAGEMENT SUBJECT
TO HOLDING REQUIREMENTS IN CONNECTION WITH SHARE-BASED REMUNERATION FOR THE FINANCIAL YEARS
2017-20201
(-)
(782)
(-)
3,067
2,285
782
(16,637)
(1,997)
(6,696)
(1,997)
(11,938)
2,771
4,508
16,637
period in the Share portfolio as at
financial year
31 December 2021
Additions in the
financial year²
Share portfolio as at
1 January 2021
End of the holding
Ilka Horstmeier
Oliver Zipse
18,374
1,030,500
(59,341)³
As regards pension commitments, retired members of the
Board of Management are entitled to retirement benefits at
the age of 62 at the earliest. The amount of the benefits to
be paid is determined on the basis of the amount accrued in
each Board member's individual pension savings account.
This figure is in turn based on the annual contributions and
an annual interest rate depending on the form of investment.
The payment is made as a lump sum or in annual instal-
ments at the discretion of the member of the Board of Man-
agement. For entitlements arising before 2016, there is an
option to receive payment as a lifelong pension or in a com-
bined form. In the event of the death of a member of the
Board of Management entitled to benefits before the occur-
Andreas Wendt
(655,460)
(175,000)
1,100,507
402,075
Frank Weber
(3,134,163)
(351,746)
3,731,163
401,099
Nicolas Peter
(1,157,145)
(354,680)
1,632,365
402,852
Pieter Nota
(1,830,168)
(352,121)
2,441,046
401,099
401,466
3,379,883
(2,863,441)
Share-based remuneration (personal cash investment
amount) for the 2021 financial year (to be paid out in
2022)
Bonus for the 2021 financial year (to be paid out in 2022)
Thus, in addition to the fixed remuneration components, the
following variable remuneration components are reported as
remuneration granted for the 2021 financial year within the
meaning of $162 of the German Stock Corporation Act
(AktG):
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
296
accrual of entitlement (e.g. the expiry of assessment peri-
ods or the non-occurrence of forfeiture conditions) have
occurred.
1 Disclosures for the previous year include amounts relating to members of the Board of Management
who left office during the financial year 2020.
Total1
(18,289,989)
(2,615,352)
18,883,016
3,112,630
(351,746)
Milan Nedeljković
(1,391,936)
(352,433)
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
295
For members of the Board of Management in office in the
financial year 2021, expenses for post-employment benefits
of € 3.1 million (2020: € 2.6 million) were incurred. These
be in an equivalent position, are entitled to acquire vehicles
and other BMW Group products and services at conditions
that also apply to BMW pensioners and to lease BMW Group
vehicles in accordance with the guidelines applicable to sen-
ior heads of departments. Retired Chairmen of the Board of
Management also have the option of using the BMW car ser-
vice, subject to availability and at a charge.
Members of the Board of Management who retire immedi-
ately after their service on the Board, or who are deemed to
rence of the insured event, a surviving spouse or registered
partner is entitled to a survivor's benefit; otherwise, surviv-
ing children are entitled to a survivor's benefit depending on
their age and level of education. In the event of death or
invalidity, a minimum benefit in the amount of the potential
annual pension contributions that could have been made up
to the age of 60 is approved. This benefit cannot exceed ten
years of contributions.
1 Includes only shares of BMW common stock acquired using the cash remuneration component of the share-based remuneration programme for members of the Board of Management, for which the four-year holding
period has not yet expired.
2 Payment of the 2020 cash remuneration component (investment component) in May 2021 with subsequent acquisition of reported BMW shares of common stock, for which the four-year holding period until 2025 applies.
3 Disclosures for the previous year on the share portfolio as at 31 December include shares held by a member of the Board of Management who left office during the financial year 2020.
Total
Andreas Wendt
Frank Weber
Nicolas Peter
Pieter Nota
benefits correspond to allocations to pension provisions in
accordance with IAS 19.
7. Malus and clawback provisions
The remuneration system applied since 2021 provides for the
possibility of withholding variable remuneration (malus) and
reclaiming variable remuneration already paid out (claw-
back) under certain conditions. The rules allow the Supervi-
sory Board to withhold or reclaim variable remuneration in
the event of certain serious compliance-related violations
(compliance malus and/or compliance clawback). These
provisions can also be applied where variable remuneration
components linked to the achievement of certain targets
have been paid out on the basis of incorrect calculation
bases or incorrect financial statements. Remuneration can
also be withheld or reclaimed after an individual's departure
from the Board of Management.
The Supervisory Board has not identified any reason to with-
hold or reclaim variable remuneration components in the
2021 financial year.
1,953,670
401,765
(502,626)
702,274
4,644,382
(3,701,016)
Cash value of entitle-
ments to pension benefits
in accordance with IFRS
as at 31 December 2021
Service cost in
accordance with
IFRS for the
financial year 2021
Ilka Horstmeier
in €
Oliver Zipse
The retirement benefits system provides for annual contribu-
tions by the company with a guaranteed minimum interest
rate equal to the maximum interest rate specified in the
German actuarial reserve regulation (Deckungsrückstel-
lungsverordnung). Commitments to pay annual contribu-
tions to the company pension scheme are linked to the term
of appointment as a member of the Board of Management.
Pension entitlements become vested when the employment
relationship has existed for one year. If a mandate is termi-
nated, the defined contribution system provides, in the case
of death or invalidity, for amounts accumulated on individual
pension accounts to be paid out as a one-off amount or in
instalments.
PENSION ENTITLEMENTS
The tables include all amounts received by the individual
members of the Board of Management in the reporting
period (“remuneration granted”) and all remuneration legally
due but not yet received ("remuneration owed").
The following tables ("Presentation of remuneration granted and
owed") show the fixed and variable remuneration granted and
owed to the members of the Board of Management in the
reporting year in accordance with § 162 AktG.
Remuneration granted and owed to members of the Board of
Management pursuant to § 162 of the German Stock Corpora-
tion Act (AktG)
9.
Dr. Wendt left the Board of Management on 31 December
2021. For the period from 1 January 2022 to 31 December
2022, the waiting allowance contractually owed to him
amounts to approximately € 1.1 million. A provision was
made for this.
circumstances against payment of a remuneration
amount. Contracts of employment provide for the pay-
ment of a monthly waiting allowance in the amount of
the applicable monthly basic remuneration for the dura-
tion of the post-contractual non-competition clause. In
accordance with the recommendation of the German
Corporate Governance Code dated 16 December 2019,
any severance payment is offset against the non-com-
petition clause remuneration amount. The same applies
to other income from third parties, except remuneration
for Supervisory Board appointments approved during the
term of office. The company may unilaterally waive the
requirement to comply with the post-contractual
non-competition clause.
A one-year post-contractual non-competition clause has
been agreed with the Board members under specified
In the event of death or invalidity, special regulations apply
regarding the early maturity of Performance Cash Plans and
share-based remuneration components (matching compo-
nents) based on target amounts. Where the contract of
employment is terminated prematurely and the company
has an extraordinary right of termination, or if the Board
member resigns without the company's agreement, entitle-
ments to amounts as yet unpaid relating to performance
cash plans and share-based remuneration (matching com-
ponents) are forfeited. The other variable remuneration com-
ponents (bonus, personal cash investment amount) are set-
tled on the basis of the target amounts.
8. Regulations in the event of death, invalidity and post-con-
tractual non-competition clause
In addition to actual amounts received, "remuneration
granted" in the reporting year is also assumed if the activity
on which the remuneration component is based has been
fully performed by the member of the Board of Management
as of the balance sheet date, and if all conditions for the
572,500
Andreas Wendt
1,500,125
114
125
25%
1.80
180%
59.90
45.00
16.00
10.00
50%
segment (in %)
Reduction of fleet
CO2 emissions (in g/km)
Sales of all-electric vehicles
(BEV) in units
Sales of plug-in hybrid
vehicles (PHEV) in units
Strategic focus targets
Component-
RoCE component
RoCE in the Automotive
Factor
Target
achievement
Actual
Value
value
100
Maximum
115.9
0.91
Component Strategic focus target (PHEV)
Component Strategic focus target (BEV)
Component - Strategic focus target (CO2)
RoCE component
OVERVIEW OF SHARE-BASED REMUNERATION FOR THE 2021 FINANCIAL YEAR
0.86
86%
224,460
400,000
241,000
180,000
12.50%
1.03
103 %
103,854
170,000
101,000
75,000
12.50%
91%
Target
value
value
Weighting
200%
180%
TARGETS SET AND EXTENT OF ACHIEVEMENT PHEV SALES
Target achievement
→ Target achievement: 103 %
BEV sales in units
170,000
maximum value
101,000
target value
75,000
minimum value
0%
50%
Actual value 2021
103,854
100%
150%
200%
180%
TARGETS SET AND EXTENT OF ACHIEVEMENT BEV SALES
The personal investment cash amount for the vesting year
2021 will be paid out after the Annual General Meeting 2022,
at which the Financial Statements of BMW AG for the finan-
cial year 2021 will be presented.
For sales of plug-in hybrid vehicles (PHEV), the Supervisory
Board set the following reference values in units for the 2021
vesting year: Minimum value: 180,000 units, Target value:
241,000 units, Maximum value: 400,000 units. The actual
value for the 2021 financial year was 224,460 units, so the
target was 86% achieved.
150%
500,000
150%
100%
50%
0%
Performance criteria
Minimum
TARGETS SET AND TARGET ACHIEVEMENT OF SHARE-BASED REMUNERATION FOR FY 2021
The following tables provide an overview of the targets set
and extent of achievement of share-based remuneration for
the 2021 financial year.
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Total
Combined Management Report
BMW Group Report 2021
293
PHEV sales in units
→ Target achievement: 86%
maximum value
400,000
241,000
target value
180,000
minimum value
Actual value 2021
224,460
To Our Stakeholders
Proportionate
Member of the Board
target amount
1.03
160,000
291,200
320,000 0.91
1,152,000
1.80
640,000
Pieter Nota
1,500,125
118,250
137,500
141,625
137,500
250,250
275,000
990,000
550,000
Milan Nedeljković
1,500,125
164,800
160,000
0.86
137,600
118,250
137,500
141,625
137,500
250,250
275,000
990,000
550,000
Frank Weber
118,250
1,745,600
160,000
164,800
160,000
291,200
320,000
1,152,000
640,000
Nicolas Peter
1,745,600
137,600
Performance Cash Plan 2019-2021, due to the expiry of
the three-year assessment period in the 2021 financial
year (payments for the vesting year 2019 to be paid out in
2022)
137,500
137,500
Factor -
Strategic
Proportionate
target amount
focus target
focus targets
(BEV)
in €
CO₂ in €
(CO2)
Component
Strategic
Factor -
Strategic
Proportionate
target amount
focus target
focus targets
Component
Strategic
Factor -
Strategic
Proportionate
target amount
in €
RoCE -
component
in €
RoCE factor
in €
of Management
Component
Personal cash
Strategic
focus targets
250,250
275,000
3,204,813
252,625
293,750
302,563
293,750
534,625
587,500
141,625
2,115,000
990,000
Ilka Horstmeier
1,175,000
Oliver Zipse
investment
amount
in €
PHEV in €
(PHEV)
in €
BEV in €
focus target
550,000
Share-based remuneration component (matching com-
ponent) for the vesting year 2016, due to the expiry of the
four-year holding period in the financial year 2021(paid
out in 2021)
To Our Stakeholders
141,667
To Our Stakeholders
BMW Group Report 2021
298
1 The PCP factor for Mr Krüger is 1.081. This differs from the PCP factor mentioned above, since a value of
1.0 was agreed for the earnings factor of the 2019 financial year.
Forecast trend in business development
Value between 0.9 and 1.1
Individual contribution to profitability
Status of compliance in each Board member's
area of responsibility
Trend in business development
-
=
PCP FACTOR
MULTI-YEAR PERFORMANCE FACTOR
Measurement based on
multi-year performance factor:
_
- Capped at 180 % of target amount
- Cash payment at end of evaluation period
CASH PAYMENT
In determining the multi-year performance factor for the
members of the Board of Management in office for the 2019
financial year, the Supervisory Board assessed, in particular,
the trend in the development of the business over the assess-
ment period, the forecast trend in the development of the
business, the individual contribution made by each Board
member to earnings, and the status of compliance in the
individual Board member's area of responsibility. In assess-
ing the development of the business over the assessment
period and the forecast trend, the Supervisory Board
assessed, in particular, the development of certain key indi-
cators - such as the change in the number of deliveries, EBIT
mance factor for all members of the Board of Management
holding office for the 2019 financial year is 1.0, resulting in a
PCP factor of 1.014 for the 2019-2021 Performance Cash
Plan¹.
PCP FACTOR
-
MULTI-YEAR EARNINGS FACTOR
Average earnings factor
Based on Group net profit and
Group post-tax return on sales
Value between 0 and 1.8
Combined Management Report
PCP FACTOR OVERVIEW
Group Financial Statements
Remuneration Report
0.4443
0.7982
4.8
5.6
7.3
8.0
(Upper limit)
9.0
on sales in %
Group post-tax return
EARNINGS COMPONENTS: ALLOCATION TABLE FOR CALCULATING EARNINGS FACTOR FOR 2019-20211
Presentation of remuneration granted and owed
The following tables show the remuneration granted and
owed to the members of the Board of Management.
d)
acquired shares of common stock expired on 11 May 2021.
The company settled the matching component in cash, and
paid out the equivalent value of the matching shares.
The investment component for the 2016 financial year was
paid out immediately after the 2017 Annual General Meeting
on 11 May 2017, and the shares of common stock were
acquired on 12 May 2017. Therefore, the holding period for the
Under the share-based remuneration programme for the
financial year 2016, the members of the Board of Manage-
ment were each required to invest an amount equal to 20%
of the total bonuses they received from the company as
additional cash remuneration for the financial year 2016,
which were paid exclusive of taxes and social security contri-
butions (the investment component) in shares of the compa-
ny's common stock. In principle, the members of the Board
of Management must hold these shares of common stock for
at least four years. Under a matching plan, the member of
the Board of Management receives from the company - at
the company's discretion - either an additional share of
common stock or the equivalent in cash (share-based remu-
neration component/matching component) for every three
shares of common stock held after the four-year holding
period.
Share-based remuneration components have been included
in the remuneration of members of the BMW AG Board of
Management since 2011. In the financial year 2021, the
matching component of the share-based remuneration of
the vesting year 2016 was paid out.
c)
margin for the Automotive segment and ROCE for the Auto-
motive segment, as well as the return on equity for the
Financial Services segment. For the financial years 2020
and 2021, the Supervisory Board has taken into account the
impact of the coronavirus pandemic and the semiconductor
crisis on these key indicators. It was not necessary to change
the assessments relating to individual contributions to profit-
ability or the status of compliance within Board members'
areas of responsibility.
← = Q
Other Information
Corporate Governance
TARGET AMOUNT
PERFORMANCE CASH PLAN OVERVIEW
In the 2021 financial year, a consolidated net profit of € 12.5
billion and a consolidated return on sales after tax of 11.2%
were achieved. For both indicators, the defined maximum
values were thus exceeded, meaning that the earnings factor
was capped at the maximum value of 1.800 (corresponding
to a target being 180% achieved, the maximum possible
percentage). Based on the earnings factors for the individual
years of the assessment period (financial year 2019: 0.798,
financial year 2020: 0.444, financial year 2021: 1.800), the
multi-year performance factor is 1.014. The multi-year perfor-
2020
2019
2018
2017
2016
Bonus 2021
Disbursement after AGM 2022
Four-year holding period for
acquired BMW shares
Present value of own investment 2021
Payment after AGM 2022,
Acquisition of BMW shares
Payment after AGM 2022
Disbursement matching component 2016
(assessment period 2019-2021)
Performance Cash Plan 2019-2021
Four-year holding period for acquired BMW shares
▼ 2
Share-based remuneration 2016
OVERVIEW OF REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021 WITH PAYOUT PROFILE 1
In addition to the amount of remuneration, the relative share
of the relevant remuneration component in the total remu-
neration granted and owed is also shown. For the sake of
clarity, the service cost for the company pension scheme is
also shown, although this service cost is not classified as
remuneration within the meaning of § 162 AktG.
year.
Thus, the remuneration granted and owed includes all remu-
neration components earned through the activities of the
members of the Board of Management in the 2021 financial
year. In addition, it includes remuneration components
already earned as a result of activity in previous financial
years, but for which the respective member of the Board of
Management's payment entitlement only arose due to the
occurrence of conditions or at the end of the 2021 financial
11 May 2021
Basic remuneration and fringe benefits
Contribution to company pension scheme -
1 Simplified depiction.
2022
The Performance Cash Plan 2019-2021 was approved for
the performance of the Members of the Board of Manage-
ment in the 2019 financial year. As at the balance sheet date
of the reporting year, the three-year assessment period of
this remuneration component, which was subject to certain
forfeiture provisions, had expired.
The members of the Board of Management in office as at
1 January 2018 received an advance payment from the Per-
formance Cash Plan 2019-2021 in 2020. The advance pay-
ment amounted to € 0.5 million for a Board of Management
member in their first appointment period, and € 0.6 million
from the second appointment period or the fourth year of
appointment. For the Chairman of the Board of Manage-
ment, the advance payment was € 0.9 million. At the end of
the assessment period, the advance payments will be set off
or refunded, depending on the actual entitlement arising.
In addition to the multi-year earnings factor, the Supervisory
Board also sets a multi-year performance factor after the end
of the evaluation period. To this end, the Supervisory Board
takes account in particular of the development of the busi-
ness during the evaluation period, the forecast trend in the
development of the business, the Board member's individual
contribution to profitability and the status of compliance
within the Board member's area of responsibility. The mul-
ti-year performance factor can be between 0.9 and 1.1.
In order to determine the multi-year earnings factor, an earn-
ings factor is calculated for each year of the three-year eval-
uation period and an average is then calculated for the eval-
uation period. The earnings factor for the individual year of
the assessment period is determined on the basis of the
Group's consolidated net profit and the consolidated return
on sales after tax for the assessment year concerned, and
can amount to a maximum of 1.800. The underlying meas-
urement values are determined in advance for a period of
three financial years, and may not be changed retrospec-
tively.
In order to determine the PCP factor, a multi-year profit factor
is multiplied by a multi-year performance factor. The maxi-
mum amount that can be paid to a Board member is capped
at 180% of the PCP target amount p. a.
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
3.9
Combined Management Report
BMW Group Report 2021
297
PCP entitlements are paid in cash. The bonus is paid out
after the end of the Annual General Meeting, at which the
separate financial statements of BMW AG for the third year of
the evaluation period (consisting of the vesting year and the
following two years) are presented.
Board of Management's Performance Cash Plan (100%) in
the first appointment period is € 0.85 million p.a.; from the
second appointment period or the fourth year of mandate
onwards it is € 0.95 million p. a. For the Chairman of the
Board of Management, the target amount is € 1.6 million
p. a. For all members of the Board of Management, the max-
imum payout amount is limited to 180% of the target amount
of the Performance Cash Plan p. a.
For the purposes of calculating the Performance Cash Plan,
a fixed target amount is multiplied by a multi-year target
achievement factor (PCP factor) after the end of a three-year
assessment period. The target amount for a member of the
The remuneration system applicable for the financial years
2018-2020 provided for the Performance Cash Plan (PCP)
as a long-term variable cash remuneration component.
b) Performance Cash Plan 2019-2021
a) Variable remuneration for the 2021 financial year
The variable remuneration for the 2021 financial year and the
extent to which targets were achieved are set out above in
7 Variable remuneration for the 2021 financial year.
2 Payment of 2016 cash remuneration component (investment component) in 2017, immediately following the acquisition of BMW shares of common stock subject to holding requirements for 2017-2021.
2026
To Our Stakeholders
0.135
Share-based remuneration component (matching compo-
nent) 2016
ཥཊྛོ
1,211,349
Remuneration
(payment amount
PCP 2019-2021)
Total amount PCP
Target amount
1,194,624
PCP factor
2019-2021
1.014
Advance payment¹
712,900
11.0
(Upper limit)
1.014
143,650
212,500
1.014
215,475
(-)
215,475
850,000
3.0
143,650
9.0
498,449
1.637
3.0
(Lower limit)
1.014
3.9
5.0 5.3
1.8004
1.500
1.000
6.9
1 The advance payment was paid out in 2020.
(Lower limit)
Group net profit after tax
(in € billion)
1Simplified depiction 2Earnings factor 2019 3 Earnings factor 2020 "Earnings factor 2021
PERFORMANCE CASH PLAN 2019-2021
in €
Oliver Zipse
Ilka Horstmeier
Milan Nedeljković
Nicolas Peter
Pieter Nota
Frank Weber
Andreas Wendt
(-)
RoCE component
Personal cash investment amount 20214
Fixed
(-)
1,152,000
Share-based remuneration component (matching component) 2016 for holding
obligation 2017-2021
(-)
(-)
(-)
Fringe benefits (other remuneration)
Total
Strategic focus target component
593,600
(-)
Performance component of bonus 2021
Earnings component of bonus 2021
Performance component of bonus 2020
Earnings component of bonus 2020
BONUS
remuneration
(-)
24
(-)
13
14
21
(-)
(-)
609,500
Fixed remuneration
(-)
(-)
(-)
(-)
361,900
Share-based remuneration component (matching component) 2015 for holding
obligation 2016-2020
8
282,8508
500,0007
9
16
Variable
remuneration
Cash remuneration component (investment component) 2020 for holding
obligation 2021-2025
(-)
(-)
422,190
(-)
(-)
Development, Member of the Board of Management since 1 July 2020
100
← = Q
93 or 8
361,900
4,462,846
Remuneration for vesting year 2021 or earlier vesting years
69
2,143,240
78
3,752,000
Total variable remuneration
(-)
44 or 25
782,850
(-)
(-)
(-)
(-)
(-)
1,360,390
70 or 8
361,900
3,390,100
Total variable remuneration Vesting year 2021 or earlier vesting years
12
1,035,000
2,334,621
782,850
75 or 25
Remuneration according to § 162 German Stock Corporation Act (AktG)
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
304
8 An advance payment in the amount of € 500,000 was paid out from the PCP 2018-2020 in 2019.
7 An advance payment in the amount of € 500,000 was paid out from the PCP 2019-2021 in 2020.
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021 (2020)
FRANK WEBER
6 Corresponds to the previous disclosure of amounts received in accordance with the model tables in the version of the German Corporate Governance Code dated 7 February 2017. For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the
vesting year are to be taken into account. The defined maximum remuneration for the vesting year 2021 is € 5,500,000; the remuneration for the vesting year 2021 including service cost is € 4,863,945, which is below the maximum remuneration.
" Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
3 Remuneration for prior vesting years if, as of the balance sheet date, the activity underlying the remuneration component has been fully performed, and all conditions for the entitlement are met.
>
2 Remuneration system applicable until financial year 2020.
1 Remuneration system from financial year 2021.
3,117,471
351,746
3,469,217
100
4,824,746
401,099
5,225,845
Total amount received incl. service cost 6
Service cost 5
5 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group; this amount was not paid out in the financial year.
26
(-)
805,000
(-)
18,408
0.4
(-)
18,525
29
(-)
800,000
22
(-)
FY 2020
as a % of total
remuneration
in €3
1
Earlier vesting years
FY 2021
as a % of total
remuneration
in €³
in €¹
1,050,000
Earlier vesting years
Vesting year 2021
SHARE-BASED PAYMENT
PCP 2019-2021
PCP 2018-2020
PERFORMANCE CASH PLAN
Performance component of bonus 2021
Earnings component of bonus 2021
Performance component of bonus 2020
Vesting year 2020
in €2
Earnings component of bonus 2020
1,068,525
818,408
361,900
(-)
10
282,8508
(-)
(-)
(-)
13
609,500
(-)
(-)
21
22
1,035,000
(-)
684,250
(-)
(-)
(-)
4
(-)
113,220
(-)
(-)
(-)
30
25
BONUS
Fringe benefits (other remuneration)
Total
Fixed
remuneration
3,801,862
Remuneration for vesting year 2021 or earlier vesting years
56
37
(-)
(-)
(-)
(-)
(-)
(-)
285,000
37
215,475
317,950
777,615
100
307
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021
459,664
95 or 5
2,058,305
(-)
Fixed remuneration
Customer, Brands, Sales, Member of the Board of Management since 1 January 2018
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021 (2020)
PIETER NOTA
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
302
² Remuneration system applicable until financial year 2020.
1 Remuneration system from financial year 2021.
6 Corresponds to the previous disclosure of amounts received in accordance with the model tables in the version of the German Corporate Governance Code dated 7 February 2017. For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the
vesting year are to be taken into account. The defined maximum remuneration for the vesting year 2021 is € 4,925,000; the remuneration for the vesting year 2021 including service cost is € 4,208,023, which is below the maximum remuneration.
5 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group; this amount was not paid out in the financial year.
" Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
3 Remuneration for prior vesting years if, as of the balance sheet date, the activity underlying the remuneration component has been fully performed, and all conditions for the entitlement are met.
>
100
2,058,305
352,121
2,396,139
100
4,017,337
401,466
4,418,803
Total amount received incl. service cost 6
Service cost 5
Remuneration according to § 162 German Stock Corporation Act (AktG)
100
8
PERFORMANCE CASH PLAN
(-)
18
Vesting year 2021
in €¹
1,050,000
SHARE-BASED PAYMENT
PCP 2019-2021
PCP 2018-2020
PERFORMANCE CASH PLAN
Performance component of bonus 2021
Earnings component of bonus 2021
Performance component of bonus 2020
Earnings component of bonus 2020
BONUS
Fringe benefits (other remuneration)
Total
remuneration
Earlier vesting years
Fixed
Finance, Member of the Board of Management since 1 January 2017
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021 (2020)
NICOLAS PETER
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
303
8 An advance payment in the amount of € 500,000 was paid out from the PCP 2018-2020 in 2019.
Fixed remuneration
7 An advance payment in the amount of € 500,000 was paid out from the PCP 2019-2021 in 2020.
in €³
(-)
(-)
(-)
(-)
4
(-)
133,200
(-)
(-)
(-)
31
974,231
22
FY 2021
as a % of total
remuneration
1,072,746
(-)
24,231
0.5
(-)
22,746
30
(-)
FY 2020
as a % of total
remuneration
in €3
Earlier vesting years
Vesting year 2020
in €2
950,000
22
1
6 Corresponds to the previous disclosure of amounts received in accordance with the model tables in the version of the German Corporate Governance Code dated 7 February 2017. For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the
vesting year are to be taken into account. The defined maximum remuneration for the vesting year 2021 is € 5,500,000; the remuneration for the vesting year 2021 including service cost is € 4,861,477, which is below the maximum remuneration.
5 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group; this amount was not paid out in the financial year.
" Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
Total variable remuneration Vesting year 2021 or earlier vesting years
593,600
Strategic focus target component
(-)
(-)
(-)
24
1,152,000
RoCE component
Personal cash investment amount 20214
(-)
(-)
3,390,100
(-)
(-)
(-)
(-)
Share-based remuneration component (matching component) 2015 for holding
obligation 2016-2020
13
(-)
358,862
(-)
(-)
Cash remuneration component (investment component) 2020 for holding
obligation 2021-2025
remuneration
Variable
Share-based remuneration component (matching component) 2016 for holding
obligation 2017-2021
(-)
361,900
12
70 or 8
3 Remuneration for prior vesting years if, as of the balance sheet date, the activity underlying the remuneration component has been fully performed, and all conditions for the entitlement are met.
>
² Remuneration system applicable until financial year 2020.
1 Remuneration system from financial year 2021.
100
2,757,590
354,680
3,112,270
100
4,820,525
402,852
5,223,377
Total amount received incl. service cost 6
Service cost 5
Remuneration according to § 162 German Stock Corporation Act (AktG)
72 or 28
782,850
1,974,740
92 or 8
361,900
4,458,625
Remuneration for vesting year 2021 or earlier vesting years
70
1,939,182
78
3,752,000
Total variable remuneration
(-)
42 or 28
782,850
(-)
(-)
1,156,332
500,0007
PCP 2018-2020
3 Remuneration for prior vesting years if, as of the balance sheet date, the activity underlying the remuneration component has been fully performed, and all conditions for the entitlement are met.
SHARE-BASED PAYMENT
(-)
31
900,000
(-)
19
(-)
(-)
530,000
11
(-)
(-)
(-)
195,713
9
(-)
861,900
18
684,250
(-)
(-)
5
in €3
FY 2020
as a % of total
remuneration
(-)
36
60,303
(-)
1
56,319
(-)
(-)
997,803
21
856,319
39
(-)
(-)
113,220
(-)
3
in €2
800,000
(-)
PERFORMANCE CASH PLAN
RoCE component
1,030,500
21
(-)
Strategic focus target component
530,994
11
Total variable remuneration Vesting year 2021 or earlier vesting years
2,991,494
861,900
62 or 18
(-)
1,156,332
(-)
195,713
(-)
52 or 9
Total variable remuneration
3,853,394
Personal cash investment amount 20214
(-)
Share-based remuneration component (matching component) 2016 for holding
obligation 2017-2021
(-)
PCP 2018-2020
PCP 2019-2021
SHARE-BASED PAYMENT
Variable
remuneration Cash remuneration component (investment component) 2020 for holding
obligation 2021-2025
(-)
(-)
(-)
(-)
(-)
16
Share-based remuneration component (matching component) 2015 for holding
obligation 2016-2020
(-)
(-)
(-)
(-)
(-)
358,862
19
(-)
937,500
Total variable remuneration
57
(-)
578,166
74
(-)
2,858,625
Total variable remuneration Vesting year 2021 or earlier vesting years
(-)
(-)
(-)
13
(-)
(-)
(-)
235
(-)
2,858,625
74
578,166
57
>
2 Remuneration system applicable until financial year 2020.
1 Remuneration system from financial year 2021.
100
1,006,759
175,000
1,181,759
402,075
4,258,533
Total amount received incl. service cost 6
Service cost 5
510,125
100
Remuneration according to § 162 German Stock Corporation Act (AktG)
100
(-)
1,006,759
100
(-)
3,856,458
Remuneration for vesting year 2021 or earlier vesting years
3,856,458
Strategic focus target component
26
(-)
Purchasing and Supplier Network
Member of the Board of Management from 1 October 2018 until 31 December 2021
Fixed
remuneration
Fixed remuneration
Fringe benefits (other remuneration)
Total
BONUS
Earnings component of bonus 2020
Performance component of bonus 2020
ANDREAS WENDT
Earnings component of bonus 2021
FY 2021
Vesting year 2021
Earlier vesting years
in €1
in €3
as a % of total
remuneration
Vesting year 2020
Earlier vesting years
Performance component of bonus 2021
79
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021 (2020)
Other Information
990,000
RoCE component
Personal cash investment amount 20214
Τ
Т
(-)
(-)
(-)
← = Q
5 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group; this amount was not paid out in the financial year.
305
Share-based remuneration component (matching component) 2016 for holding
obligation 2017-2021
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
6 Corresponds to the previous disclosure of amounts received in accordance with the model tables in the version of the German Corporate Governance Code dated 7 February 2017. For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the
vesting year are to be taken into account. The defined maximum remuneration for the vesting year 2021 is € 4,925,000; the remuneration for the vesting year 2021 including service cost is € 4,258,533, which is below the maximum remuneration.
PCP 2019-2021
1,352,045
Remuneration for vesting year 2021 or earlier vesting years
" Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
(-)
(-)
(-)
Share-based remuneration component (matching component) 2015 for holding
obligation 2016-2020
18
(-)
179,431
I
(-)
Cash remuneration component (investment component) 2020 for holding
obligation 2021-2025
remuneration
Variable
(-)
(-)
(-)
(-)
59
459,664
Pensions
Waiting allow-
as a % of total
remuneration
4
4
47
Variable
Share-based remuneration component (matching component)
remuneration 2016 for holding obligation 2017-2021
(-)
(-)
96,3643
1 Remuneration for prior vesting years is due if, as of the balance sheet date, the activity underlying the
remuneration component has been fully performed, and all conditions for the entitlement are met.
2 The target amount of the 2019-2021 Performance Cash Plan is € 950,000. An advance payment of
€ 600,000 was made from the PCP 2019-2021 in 2020.
3 The number of shares purchased in 2017 with the 2016 cash remuneration component (investment
component) amounted to 3,470 (purchased on 12 May 2017 at a price of € 87.50). The 2016 matching
component was paid out in cash in May 2021. The number of mathematical matching shares for calcu-
lating the equivalent value in cash amounts to 1,156 (holding period expired on 11 May 2021). Reference
price for calculating the equivalent value of the matching shares: € 83.36).
ance/Pensions (Partial) capital payments
Total
Total remuneration for financial years 2021 or earlier vesting years
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Total
Waiting allowance
12
363,300²
13
(-)
3
(-)
97,833
40
(-)
FY 2020
as a % of total
remuneration
in €3
Earlier vesting years
Vesting year 2020
in €²
400,000
23
(-)
as a % of total
remuneration
in €³
in €¹
900,000
Earlier vesting years
Vesting year 2021
FY 2021
28,593
(-)
3
997,833
(-)
22
855,000
34
(-)
342,125
(-)
(-)
503,500
(-)
(-)
56,610
(-)
(-)
(-)
43
428,593
26
6
(-)
Performance Cash Plan 2019-2021
32,950
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
10. Remuneration granted and owed to former members of the
Board of Management pursuant to § 162 of the German Stock
Corporation Act (AktG)
The following tables show the fixed and variable remunera-
tion granted and owed to former members of the Board of
Management who have definitively terminated their service
within the last 10 financial years, in accordance with § 162
AktG.
For individual former members of the Board of Management,
the remuneration granted and owed also includes the Per-
formance Cash Plan 2019-2021 and/or the share-based
remuneration component (matching component) 2016. In
this regard, please refer to the statements on remuneration
granted and owed for the active members of the Board of
Management.
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021
FRANK-PETER ARNDT
Member of the Board of Management until 31 March 2013
Financial year 2021
Earlier vesting
in €
years in €1
as a % of total
remuneration
Fixed
Fringe benefits (other remuneration)
remuneration Total
To Our Stakeholders
BMW Group Report 2021
306
6 Corresponds to the previous disclosure of amounts received in accordance with the model tables in the version of the German Corporate Governance Code dated 7 February 2017. For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the
vesting year are to be taken into account. The defined maximum remuneration for the vesting year 2021 is € 5,068,750; the remuneration for the vesting year 2021 including service cost is € 4,390,396, which is below the maximum remuneration.
3,989,297
861,900
82 or 18
2,012,651
195,713
91 or 9
Remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost 5
30,128
Total amount received incl. service cost 6
100
2,208,364
351,746
2,560,110
100
1 Remuneration system from financial year 2021.
2 Remuneration system applicable until financial year 2020.
3 Remuneration for prior vesting years if, as of the balance sheet date, the activity underlying the remuneration component has been fully performed, and all conditions for the entitlement are met.
4 Assessment period five years in total: One year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
5 The pension expense in accordance with IAS 19 reflects the expense recognised by the BMW Group; this amount was not paid out in the financial year.
4,851,197
401,099
5,252,296
30,128
12
12
Performance Cash Plan 2019-2021
88
246,942
(-)
246,942
100
Waiting allowance
Waiting allow- Pensions
ance/Pensions
216,814
(Partial) capital payments
Total
^
in €
MILAGROS CAIÑA CARREIRO-ANDREE
Member of the Board of Management until 31 October 2019
Financial year 2021
Earlier vesting
years in €¹
Fixed Fringe benefits (other remuneration)
remuneration Total
32,950
Total remuneration for financial years 2021 or earlier vesting years
Total remuneration according to § 162 German Stock Corporation Act (AktG)
61
(-)
(-)
(-)
(-)
(-)
Variable
Share-based remuneration component (matching component)
remuneration 2016 for holding obligation 2017-2021
(-)
(-)
(-)
(-)
Total
(-)
KLAUS DRAEGER
(-)
(-)
(-)
216,814
(-)
88
(-)
Member of the Board of Management until 30 September 2016
Financial year 2021
(-)
in €
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021
HARALD KRÜGER
Chairman of the Board of Management until 15 August 2019
Financial year 2021
NORBERT REITHOFER
Chairman of the Board of Management until 13 May 2015
Chairman of the Supervisory Board since 13 May 2015
Earlier vesting
in €
years in €¹
as a % of total
remuneration
Financial year 2021
Earlier vesting
To Our Stakeholders
BMW Group Report 2021
308
>
76,9415
10
440,241
59
285,000
(-)
38
(-)
as a % of total
(-)
(-)
(-)
285,000
38
305,629
440,241
745,870
100
(-)
(-)
in €
remuneration
Waiting allow- Pensions
ance/Pensions (Partial) capital payments
Total
Total remuneration for financial years 2021 or earlier vesting years
Total remuneration according to § 162 German Stock Corporation Act (AktG)
(-)
153,966³
11
(-)
(-)
983,566
72
(-)
(-)
360,000
(-)
26
Waiting allowance
remuneration 2016 for holding obligation 2017-2021
Total
Share-based remuneration component (matching component)
Fixed Fringe benefits (other remuneration)
remuneration Total
27,241
2
40,156
(-)
11
27,241
years in €¹
2
11
Performance Cash Plan 2019-2021
(-)
829,6002
61
(-)
(-)
Variable
40,156
(-)
49
3
17
Share-based remuneration component (matching component) 2015 for holding
obligation 2016-2020
(-)
(-)
(-)
(-)
(-)
Share-based remuneration component (matching component) 2016 for holding
obligation 2017-2021
(-)
(-)
(-)
Τ
Personal cash investment amount 20214
RoCE component
990,000
25
(-)
(-)
358,862
(-)
(-)
(-)
855,000
21
(-)
33
(-)
503,500
13
(-)
(-)
(-)
215,475
5
(-)
(-)
Variable
remuneration
Cash remuneration component (investment component) 2020 for holding
obligation 2021-2025
(-)
(-)
3
(-)
510,125
Waiting allow-
Pensions
ance/Pensions (Partial) capital payments
Total
Total remuneration for financial years 2021 or earlier vesting years
Total remuneration according to § 162 German Stock Corporation Act (AktG)
1 Remuneration for prior vesting years is due if, as of the balance sheet date, the activity underlying the
remuneration component has been fully performed, and all conditions for the entitlement are met.
2 The number of shares purchased in 2017 with the 2016 cash remuneration component (investment
component) amounted to 2,603 (purchased on 12 May 2017 at a price of € 87.50). The 2016 matching
component was paid out in cash in May 2021. The number of mathematical matching shares for calcu-
lating the equivalent value in cash amounts to 867 (holding period expired on 11 May 2021). Reference
price for calculating the equivalent value of the matching shares: € 83.36).
3 The number of shares purchased in 2017 with the 2016 cash remuneration component (investment
component) amounted to 3,470 (purchased on 12 May 2017 at a price of € 87.50). The 2016 matching
component was paid out in cash in May 2021. The number of mathematical matching shares for calcu-
lating the equivalent value in cash amounts to 1,156 (holding period expired on 11 May 2021). Reference
price for calculating the equivalent value of the matching shares: € 83.36).
"The target amount of the 2019-2021 Performance Cash Plan is € 950,000. An advance payment of
€ 600,000 was made from the PCP 2019-2021 in 2020.
5 The number of shares purchased in 2017 with the 2016 cash remuneration component (investment
component) amounted to 2,771 (purchased on 12 May 2017 at a price of € 87.50). The 2016 matching
component was paid out in cash in May 2021. The number of mathematical matching shares for the
purposes of calculating the equivalent value in cash amounts to 923 (holding period expired on 11 May
2021). Reference price for calculating the equivalent value of the matching shares: € 83.36).
Earlier vesting
in €
20,629
years in €¹
(-)
20,629
363,3004
as a % of total
remuneration
Waiting allowance
Total
remuneration 2016 for holding obligation 2017-2021
Share-based remuneration component (matching component)
Total variable remuneration Vesting year 2021 or earlier vesting years
2,858,625
(-)
215,475
13
(-)
(-)
(-)
71 or 5
Strategic focus target component
1,156,332
56
Total variable remuneration
3,074,100
77
1,156,332
remuneration Total
Variable
Performance Cash Plan 2019-2021
(-)
684,250
(-)
(-)
(-)
87
2,882,022
87
Total remuneration for financial years 2021 or earlier vesting years
2,901,473
395,696
Total remuneration according to § 162 German Stock Corporation Act (AktG)
3,297,170
100
1 Remuneration for prior vesting years is due if, as of the balance sheet date, the activity underlying the
remuneration component has been fully performed, and all conditions for the entitlement are met.
2 The target amount of the PCP 2019-2021 is € 791,667. An advance payment of € 500,000 was made
from the PCP 2019-2021 in 2020.
3 The number of shares acquired in 2017 with the cash remuneration component (investment component)
2016 amounted to 3,346. The 2016 matching component was paid out in cash in May 2021. The number
of mathematical matching shares for the calculating the equivalent value in cash amounts to 1,115 (hold-
ing period expired on 11 May 2021). Reference price for calculating the equivalent value of the matching
shares: € 83.36).
310
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
(-)
2,882,022
(-)
(-)
1
1
9
Variable
Share-based remuneration component (matching component)
Total
remuneration 2016 for holding obligation 2017-2021
Waiting allowance
Corporate Governance
Waiting allow- Pensions
Total
(-)
92,9463
3
395,696
12
(-)
(-)
ance/Pensions (Partial) capital payments
as a % of total
remuneration
Remuneration Report
← = Q
Chairman of the Supervisory Board
3.00
600,000
2.00
400,000
2.25
450,000
Chairman of another committee 2
Member of the Audit Committee 2
Member of another committee 2
2.00
400,000
2.00
400,000
1.50
300,000
Chairman of the Audit
Committee 22
1 If a Supervisory Board member performs several additional remuneration-relevant functions, their
remuneration remuneration is measured only on the basis of the function that is remunerated with the
highest amount.
2 Provided the relevant committee convened for meetings on at least three days during the financial year.
3 Plus attendance fee of €2,000 per plenary session.
200,000
1.00
Member of the Supervisory Board
Factor Amount in € p. a. ³
III. Remuneration of the members of the Supervisory Board
1. Articles of Incorporation and procedure
The regulation governing remuneration for the Supervisory
Board applicable to the reporting year was adopted by the
Annual General Meeting on 14 May 2020. It is set out in Arti-
cle 15 of the Articles of Incorporation, and specifies both the
remuneration system to be used and the precise framework
for calculating the remuneration due to the members of the
Supervisory Board. The regulation was confirmed by the
Annual General Meeting on 12 May 2021 with a majority of
99.40% of the valid votes cast.
2.
Principles and elements of remuneration
With effect from the 2020 financial year, remuneration for
members of the Supervisory Board has been structured as
purely fixed remuneration, and complies with Suggestion
G.18 of the German Corporate Governance Code as amended
on 16 December 2019. This strengthens the independence of
the Supervisory Board in advising and monitoring the Board
of Management. The structure and amount of the fixed
remuneration ensure that highly qualified individuals can
continue to be proposed to the Annual General Meeting for
membership of the Supervisory Board. This strengthens its
advisory and supervisory function, which contributes to the
company's sustainable and long-term development.
In accordance with the Articles of Incorporation, each mem-
ber of the Supervisory Board of BMW AG who does not exer-
cise any additional function relevant to remuneration
receives in addition to the reimbursement of reasonable
expenses – fixed remuneration of € 200,000 p.a.
The latest version of the GCCC, dated 16 December 2019,
recommends that exercising the functions of the chair and
deputy chair of Supervisory Board should also be considered
when determining the level of remuneration, along with any
committees an individual chairs or sits on (Suggestion G.17).
This is to take account of the extra time commitment associ-
Other Information
ated with these positions. In view of the particular demands
placed on the members and, in particular, on the Chairman
of the Audit Committee and the increased scope of the Audit
Committee's tasks, a higher level of remuneration is pro-
vided for work on this committee than for work on other com-
mittees. Accordingly, the Articles of Incorporation of BMW
AG stipulate that the Chairman of the Supervisory Board
shall receive three times the amount and each Deputy Chair-
man twice the amount of remuneration paid to a Supervisory
Board member, excluding amounts relating to additional
remuneration-relevant functions. The Chair of the Audit
Committee receives two-and-a-quarter times the amount,
the Chair of other Supervisory Board committees twice the
amount, each member of the Audit Committee twice the
amount, and each member of another committee one-and-
a-half times the amount of the remuneration paid to a Super-
visory Board member, provided the relevant committee con-
vened on at least three days during the financial year. If a
member of the Supervisory Board exercises more than one
of the functions referred to above, their remuneration is
measured only on the basis of the function receiving the
highest amount.
In addition, each member of the Supervisory Board receives
an attendance fee of € 2,000 per meeting for each meeting
of the Supervisory Board (plenary) in which he or she partic-
ipates. This also applies to participation by telephone or
video link. If they attend more than one meeting on the same
day, the meetings are not remunerated separately.
In accordance with the provisions of the Articles of Incorpo-
ration, the remuneration and the attendance fee are only
paid after the end of the respective financial year. Further-
more, the company reimburses each member of the Super-
visory Board for their reasonable expenses. In order to be
able to perform his duties, the Chairman of the Supervisory
Board is provided with secretariat and chauffeur services.
3.
Remuneration granted and owed to members of the Super-
visory Board pursuant to § 162 of the German Stock
Corporation Act (AktG)
The following table shows the remuneration granted and
owed to the members of the Supervisory Board in the 2021
financial year pursuant to § 162 (1) Sentence 1 AktG. The
activities on which the remuneration for the 2021 financial
year is based were performed fully as at the balance sheet
date). Therefore, the remuneration for the Supervisory Board
activity is classified as granted for the 2021 financial year,
even if the payment of the Supervisory Board remuneration
(including the attendance fee) was only made after the end
of the 2021 financial year, in accordance with Article 15 of the
Articles of Incorporation.
Supervisory Board members did not receive any further
remuneration or benefits from the BMW Group for advisory
or agency services personally rendered.
OVERVIEW OF REMUNERATION 1
Deputy Chairman of the
Supervisory Board
In the event of changes in the composition of the Supervi-
sory Board during the year, or if additional remuneration-rel-
evant functions are performed, remuneration is determined
on a proportionate basis.
(-)
302,750²
Performance Cash Plan 2019-2021
remuneration Total
Performance Cash Plan 2019-2021
Variable
Share-based remuneration component (matching component)
remuneration 2016 for holding obligation 2017-2021
Total
Waiting allowance
Waiting allow- Pensions
ance/Pensions (Partial) capital payments
Total
Total remuneration for financial years 2021 or earlier vesting years
Total remuneration according to § 162 German Stock Corporation Act (AktG)
IAN ROBERTSON
Member of the Board of Management until 31 December 2017
Financial year 2021
in €
21,600
21,600
Fixed Fringe benefits (other remuneration)
100
(-)
363,847
363,847
(-)
(-)
323,691
(-)
89
(-)
(-)
(-)
Earlier vesting
(-)
360,000
26
323,691
89
387,241
983,566
1,370,807
100
(-)
(-)
years in €1
7
7
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021
PETER SCHWARZENBAUER
Member of the Board of Management until 31 October 2019
Financial year 2021
Earlier vesting
in €
Fixed Fringe benefits (other remuneration)
remuneration Total
19,451
years in €¹
(-)
19,451
BMW Group Report 2021
309
3 The number of shares purchased in 2017 with the 2016 cash remuneration component (investment
component) amounted to 5,542 (purchased on 12 May 2017 at a price of € 87.50). The 2016 matching
component was paid out in cash in May 2021. The number of mathematical matching shares for the
purposes of calculating the equivalent value in cash amounts to 1,847 (holding period expired on 11 May
2021). Reference price for calculating the equivalent value of the matching shares: € 83.36).
"The number of shares purchased in 2017 with the 2016 cash remuneration component (investment
component) amounted to 3,470 (purchased on 12 May 2017 at a price of € 87.50). The 2016 matching
component was paid out in cash in May 2021. The number of mathematical matching shares for calcu-
lating the equivalent value in cash amounts to 1,156 (holding period expired on 11 May 2021). Reference
price for calculating the equivalent value of the matching shares: € 83.36).
2 The target amount of the 2019-2021 Performance Cash Plan is € 1,600,000. The PCP factor is 1.081.
This differs from the PCP factor mentioned above, since a value of 1.0 was agreed for the earnings
factor of the 2019 financial year. An advance payment of € 900,000 was made from the PCP 2019-
2021 in 2020.
(-)
96,3644
31
96,364
31
(-)
(-)
(-)
as a % of total
remuneration
191,038
(-)
191,038
(-)
62
212,638
96,364
309,002
100
1 Remuneration for prior vesting years is due if, as of the balance sheet date, the activity underlying the
remuneration component has been fully performed, and all conditions for the entitlement are met.
62
Earlier vesting
(-)
(-)
72,273
24
96,3643
(-)
19
72,2732
(-)
Total remuneration according to § 162 German Stock Corporation Act (AktG)
285,000
Total remuneration for financial years 2021 or earlier vesting years
Total
ance/Pensions (Partial) capital payments
Waiting allow- Pensions
Waiting allowance
remuneration 2016 for holding obligation 2017-2021
Total
Share-based remuneration component (matching component)
Variable
(-)
(-)
(-)
(-)
(-)
(-)
Performance Cash Plan 2019-2021
7
27,335
7
27,604
19
24
(-)
(-)
301
(-)
Fixed Fringe benefits (other remuneration)
Member of the Board of Management until 30 June 2020
Financial year 2021
KLAUS FRÖHLICH
100
96,364
300,062
396,427
100
379,861
72,273
307,588
(-)
69
272,727
remuneration Total
74
(-)
(-)
(-)
(-)
279,984
69
(-)
272,727
74
(-)
279,984
(-)
(-)
(-)
(-)
(-)
7
96,364
7
SHARE-BASED PAYMENT
Vesting year 2021
Earlier vesting years
in €¹
900,000
in €³
FY 2021
as a % of total
remuneration
(-)
22
Vesting year 2020
in €²
800,000
Earlier vesting years
in €3
FY 2020
as a % of total
remuneration
39
43,237
PCP 2019-2021
(-)
101,973
(-)
5
943,237
23
901,973
44
(-)
(-)
(-)
113,220
27,335
6
(-)
1
PCP 2018-2020
(-)
Fixed
Fringe benefits (other remuneration)
27,604
PERFORMANCE CASH PLAN
as a % of total
remuneration
years in €¹
in €
Earlier vesting
Member of the Board of Management until 31 December 2016
FRIEDRICH EICHINER
Financial year 2021
years in €1
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
as a % of total
remuneration
Remuneration Report
Performance component of bonus 2021
Performance component of bonus 2020
Corporate Governance
Earnings component of bonus 2020
BONUS
Fringe benefits (other remuneration)
Total
Fixed
remuneration
Produktion, Member of the Board of Management since 1 October 2019
REMUNERATION GRANTED AND OWED IN FINANCIAL YEAR 2021 (2020)
MILAN NEDELJKOVIĆ
← = Q
Other Information
Fixed remuneration
Earnings component of bonus 2021
To Our Stakeholders
6 For the financial years 2019 and 2020, the calculation of remuneration also included the advances paid in the amounts of € 600,000 and € 500,000 from the Performance Cash Plan 2018-2020 and 2019-2021, which were paid out in 2019 and 2020, respectively..
317
BMW Group Report 2021
"For the financial years 2019 and 2020, the calculation of remuneration also took into account the advances in the amount of € 900,000 each from the Performance Cash Plan 2018-2020 and 2019-2021, which were paid out in 2019 and 2020, respectively.
5 Mr Krüger's contract of employment ran until 30 April 2020.
Other Information
Group Financial Statements
Corporate Governance
Remuneration Report
2 For the financial years 2019 and 2020, the calculation of remuneration also took into account the advances in the amount of € 600,000 each from the Performance Cash Plan 2018-2020 and 2019-2021, which were paid out in 2019 and 2020, respectively.
3 Ms Caiña Carreiro-Andree's contract of employment ran until 30 June 2020.
← = Q
Combined Management Report
1 The reported remuneration for the years 2017-2020 has been recalculated in accordance with the requirements of § 162 German Stock Corporation Act (AktG).
-10%
3,297,170
COMPARISON OF CHANGES IN EARNINGS AND REMUNERATION FOR EMPLOYEES, THE BOARD OF MANAGEMENT AND THE SUPERVISORY BOARD
- 21%
1,370,807
363,847
- 64%
1 %
until December 2017
149 %
- 69%
until October 2019
- 39%
- 83%
-2%
10%
- 54%
309,002
7%
Peter Schwarzenbauer6
IV. REMUNERATION OF THE SUPERVISORY BOARD IN €
430,000
2018 Change in %
- 1%
0%
430,000
since 1997, Deputy Chairman
0%
410,000
-5%
410,000
0%
430,000
0%
430,000
430,000
since 1988, Deputy Chairman
Stefan Quandt
Manfred Schoch¹
0%
2019 Change in %
2020 Change in %
2021
Change in %
Norbert Reithofer
since 2015, Chairman
2017
640,000
0%
640,000
0%
610,000
-5%
610,000
640,000
until May 2015, Chairman of the Supervisory Board since May 2015
0%
10%
since July 2020
Frank Weber
Andreas Wendt
since January 2017
Nicolas Peter³
since January 2018
Pieter Nota3
from October 2018 until December 2021
since October 2019
since November 2019
Ilka Horstmeier
Chairman since 16 August 2019
since May 2015,
Oliver Zipse²
III. REMUNERATION OF THE BOARD OF MANAGEMENT IN €¹
Milan Nedeljkovic
14%
4,115,640
- 34%
2,435,932
4,182,138
(-)
2,487,689
(-)
(-)
2,710,234
537,696
(-)
(-)
45%
3,923,856
384,435
(-)
(-)
(-)
-3%
86,715
- 4%
7.3
8.8
Group post-tax return on sales (in %)
- 17%
7,117
- 19%
- 17%
Net income of BMW AG according to the German Commercial Code (HGB) (in € million)
-25%
2,107
- 12 %
2,801
3,197
8,589
Profit attributable to shareholders of BMW AG (in € million)
1,702
4,915
4.8
- 31 %
3,775
89,353
3%
93,522
90,771
Employees of BMW AG
II. AVERAGE REMUNERATION OF EMPLOYEES IN €
I. CHANGES IN EARNINGS
187 %
11.2
- 19%
3.9
- 34%
192 %
228%
4,978
12,382
- 23%
(-)
- 34%
(-)
612,359
2,651,143
2,660,349
-25%
8%
- 39%
1 %
246,942
4%
777,615
- 28%
until October 2019
until September 2016
until December 2016
until March 2013
lan Robertson
Norbert Reithofer
Harald Krüger 4,5
Klaus Fröhlich²
until June 2020
Klaus Draeger
Friedrich Eichiner
- 68%
- 8%
-36%
until August 2019
- 69%
745,870
- 23%
10%
- 1%
-30%
396,427
62%
- 8%
- 73%
379,861
2%
2%
-32%
Frank-Peter Arndt
Milagros Caiña
Carreiro-Andree 2,3
FORMER MEMBERS OF THE BOARD OF MANAGEMENT IN €1
Change in 2021 on
2020 in %
- 1%
55%
75%
4% 4,820,525
17% 4,824,746
(-)
95%
4,017,337
3,856,458
4,851,197
93%
64%
8,752,558
36%
432 %
283 %
5,338,865
2,043,706
2,058,305
2,757,590
9% 3,117,471
(-) 1,006,759
265 % 2,208,364
(-) 2,233,062
7%
3,949,908
283 %
120%
1 The reported remuneration for the years 2017-2020 has been recalculated in accordance with the requirements of § 162 German Stock Corporation Act (AktG).
2021
Change in 2020 on
2019 in %
Change in 2018 on
2017 in %
COMPARISON OF CHANGES IN EARNINGS AND REMUNERATION FOR EMPLOYEES, THE BOARD OF MANAGEMENT AND THE SUPERVISORY BOARD
Change in 2019 on
2018 in %
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
316
>
2 For the financial years 2019 and 2020, the calculation of remuneration also included the advances paid in the amounts of € 566,667 and € 712,000 from the Performance Cash Plans 2018-2020 and 2019-2021, which were paid out in 2019 and 2020, respectively.
3 For the financial years 2019 and 2020, the calculation of remuneration also included the advances in the amount of € 500,000 each from the Performance Cash Plans 2018-2020 and 2019-2021, which were paid out in 2019 and 2020, respectively.
- 42%
(-)
99,169
210,000
0%
- 45%
114,602
- 5%
210,000
0%
220,000
0%
220,000
220,000
from May 1999 to July 2021
Willibald Löw¹
- 64%
75,118
-5%
210,000
Simone Menne
Brigitte Rödig¹
from May 2015 to May 2021
from July 2013 to October 2021
218,000
1 In line with the guidelines of the Deutscher Gewerkschaftsbund, these employee representatives have requested that their remuneration be paid into the Hans Bockler-Stiftung.
-25%
156,538
- 5%
- 64%
75,118
-5%
0%
210,000
210,000
1 %
220,000
220,000
0%
220,000
220,000
0%
218,000
0%
220,000
0%
220,000
0%
430,000
430,000
from May 2008 to May 2021, Deputy Chairman
Karl-Ludwig Kley³
FORMER MEMBERS OF THE SUPERVISORY BOARD IN €
0%
428,000
0%
210,000
0%
220,000
0%
220,000
220,000
since November 2001
51% 210,000
-5% 210,000
2 Dr. Bock was elected Chairman of the Audit Committee after the 2020 Annual General Meeting.
0%
0%
220,000
from May 2009 to May 2021
Horst Lischka¹
- 62%
75,118
0%
200,000
428,548
0%
5%
200,000
189,780
from May 2009 to May 2021
Reinhard Hüttl
- 65%
148,237
200,000
3 Chairman of the Audit Committee until 2020 Annual General Meeting.
318
BMW Group Report 2021
320
Andreas Fell
Wirtschaftsprüfer
Petra Justenhoven
Wirtschaftsprüferin
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
Munich, March 9, 2022
We issue this auditor's report on the basis of the engage-
ment agreed with Bayerische Motoren Werke Aktienge-
sellschaft. The audit has been performed only for purposes
of the company and the auditor's report is solely intended to
inform the company as to the results of the audit. Our
responsibility for the audit and for our auditor's report is only
towards the company in accordance with this engagement.
The auditor's report is not intended for any third parties to
base any (financial) decisions thereon. We do not assume
any responsibility, duty of care or liability towards third par-
ties; no third parties are included in the scope of protection of
the underlying engagement. Section 334 BGB [Bürgerliches
Gesetzbuch: German Civil Code], according to which objec-
tions arising from a contract may also be raised against third
parties, is not waived.
Restriction on use
BMW Group Report 2021
remuneration report, this audit opinion includes that the
information required by § 162 Abs. 1 and 2 AktG has been
disclosed in all material respects in the remuneration report.
Reference to an Other Matter - Formal Audit of the Remuneration
Report according to § 162 AktG
In our opinion, based on the findings of our audit, the remu-
neration report for the financial year from January 1 to
December 31, 2021, including the related disclosures, com-
plies in all material respects with the accounting provisions
of § 162 AktG.
Audit Opinion
We believe that the audit evidence we have obtained is suffi-
cient and appropriate to provide a basis for our audit opinion.
In making those risk assessments, the auditor considers
internal control relevant to the preparation of the remunera-
tion report including the related disclosures. The objective of
this is to plan and perform audit procedures that are appro-
priate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the company's
internal control. An audit also includes evaluating the appro-
priateness of accounting policies used and the reasonable-
ness of accounting estimates made by the executive direc-
tors and the supervisory board, as well as evaluating the
overall presentation of remuneration report including the
related disclosures.
An audit involves performing procedures to obtain audit evi-
dence about the amounts including the related disclosures
stated in the remuneration report. The procedures selected
depend on the auditor's judgment. This includes the assess-
ment of the risks of material misstatement of the remunera-
tion report including the related disclosures, whether due to
fraud or error.
Our responsibility is to express an opinion on this remunera-
tion report, including the related disclosures, based on our
audit. We conducted our audit in accordance with German
generally accepted standards for the audit of financial state-
ments promulgated by the Institut der Wirtschaftsprüfer (Insti-
tute of Public Auditors in Germany) (IDW). Those standards
require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance about
whether the remuneration report, including the related disclo-
sures, is free from material misstatement.
The audit of the content of the remuneration report described
in this auditor's report includes the formal audit of the remu-
neration report required by § 162 Abs. [paragraph] 3 AktG,
including the issuance of a report on this audit. As we
express an unqualified audit opinion on the content of the
Auditor's Responsibilities
To Our Stakeholders
Group Financial Statements
Change in %
6
INFORMATION
OTHER
← = Q
Other Information
Remuneration Report
Combined Management Report
352 Contacts
344 BMW Group Ten-year Comparison
346 Glossary and Explanation of Key Figures
342 Consumption and Carbon Disclosures
341 NFS-Index
337 TCFD-Index
332 SASB-Index
321 Further GRI Information
Corporate Governance
351 Financial Calendar
Werner Zierer¹
The executive directors and the supervisory board of Bayer-
ische Motoren Werke Aktiengesellschaft are responsible for
the preparation of the remuneration report, including the
related disclosures, that complies with the requirements of
§ 162 AktG. The executive directors and the supervisory
board are also responsible for such internal control as they
determine is necessary to enable the preparation of a remu-
neration report, including the related disclosures, that is free
from material misstatement, whether due to fraud or error.
Responsibilities of the Executive Directors and the Supervisory
Bayerische Motoren Werke Aktiengesellschaft
There are no plans to change the remuneration system for
members of the Supervisory Board for the 2022 financial
year,
sum of intangible assets, property, plant and equipment and
net working capital. This simplified definition aims to make
this indicator more transparent and easier to understand. In
addition, the capital employed items taken into account
reflect the focus of operational segment management. The
new definition leads to an increase in capital employed com-
pared to the previous definition. The strategic target value for
the ROCE in the Automotive segment according to the new
definition will therefore be 18 % from the financial year 2022
onwards (previous year: 40 %). In terms of content, this
amounts to an even more ambitious objective compared to
the previous measurement of return on capital.
Under this system, 50 % of the share-based remuneration
as a long-term component of the variable remuneration
depends on the RoCE achieved in the Automotive segment
in the relevant vesting year. For the financial year 2021, the
RoCE is defined as the segment profit before financial result,
divided by the average capital employed in the segment. The
definition of this key indicator has been adjusted for the
financial year 2022. Previously, "capital employed" com-
prised the sum of all current and non-current operating
assets, adjusted for deductible capital. The deductible capi-
tal corresponded to the capital shares that were available to
the operational business, largely without interest. This
included, for example, trade payables and other provisions.
In future, the definition of capital employed will include the
In principle, the current remuneration system for members of
the Board of Management will apply unchanged for the 2022
financial year.
VI. Outlook for the 2022 financial year
The company maintains a financial loss liability insurance
policy for company directors. The insurance provides cover
for legal liability claims and protects the private assets of
members of BMW AG's corporate entities if a claim is made
against them for financial loss in the course of exercising
their function as a corporate entity. A deductible is provided
for members of the Board of Management that complies
with the requirements of the German Stock Corporation Act
(AktG).
For the Supervisory Board
BMW AG did not grant any loans to members of the Board of
Management or the Supervisory Board in the financial year
2021, nor did it enter into any contingent liabilities in their
favour. In the year under review, members of the Board of
Management and the Supervisory Board concluded con-
tracts with BMW Group companies for vehicle leasing and
vehicle services (maintenance and repair work) at arm's
length conditions.
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
V. Other considerations
Board
Dr.-Ing. Dr.-Ing. E.h.
Norbert Reithofer
Chairman of the
Supervisory Board
Oliver Zipse
We have audited the remuneration report of Bayerische
Motoren Werke Aktiengesellschaft, Munich, for the financial
year from January 1 to December 31, 2021 including the related
disclosures, which was prepared to comply with § [Arti-
cle] 162 AktG [Aktiengesetz: German Stock Corporation Act].
To Bayerische Motoren Werke Aktiengesellschaft, Munich
Auditor's Report
Remuneration Report pursuant to § 162 AktG for the Finan-
cial Year from January 1 to December 31, 2021
To Bayerische Motoren Werke Aktiengesellschaft Munich
VII. Auditor's Report
← = Q
For the Board of
Management
Other Information
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
319
Chairman of the Board
of Management
Remuneration Report
210,000
(-)
139,532
51%
210,000
(-)
139,532
(-)
(-)
(-)
210,000
(-)
(-)
(-)
(-)
(-)
(-)
(-)
(-)
135,419
0%
0%
(-)
140,355
since May 2017
Heinrich Hiesinger
(-)
(-) 135,419
(-)
(-)
(-)
(-)
(-)
(-)
(-)
48,237
(-)
(-)
(-)
(-)
220,000
210,000
210,000
Kurt Bock2
0%
410,000
- 5%
410,000
0%
430,000
since May 2018, Deputy Chairman and Chairman of the Audit
Committee
0%
430,000
since 2007, Deputy Chairman
Stefan Schmid¹
0%
410,000
-5%
410,000
428,000
-5%
138,968
220,000
1 %
220,000
1 %
218,000
216,000
since 2014
since May 2021
since May 2019
since October 2021
since May 2021
(-)
Verena zu Dohna
Bernhard Ebner¹
Christiane Benner¹
Rachel Empey
25%
460,000
67 %
367,930
58%
Marc Bitzer
430,000
57%
0%
since May 2021
Christoph Schmidt
56%
210,000
(-)
134,344
(-)
(-)
(-)
(-)
(-)
since May 2020
Anke Schäferkordt
0%
210,000
-5%
(-)
0%
(-)
(-)
(-)
since May 2019
Thomas Wittig
1%
210,000
49 %
208,000
(-)
(-)
(-)
(-)
(-)
since May 2019
Vishal Sikka
(-)
135,419
139,532
220,000
220,000
220,000
- 1%
218,000
220,000
since May 1997
Susanne Klatten
(-)
(-)
220,000
(-)
(-)
since May 2021
Johann Horn¹
0%
210,000
-5%
210,000
(-)
0%
1 %
(-)
220,000
since June 2012
Dominique Mohabeer¹
(-)
86,258
(-)
(-)
(-)
210,000
(-)
since August 2021
Jens Köhler¹
0%
210,000
-5%
(-)
132,344
(-)
2021
(100)
2019 Change in %
Heinrich Hiesinger
200,000
95
10,000
5
210,000
100
(200,000)
(95)
(10,000)
(5)
(210,000)
(100)
1 These employee representatives have declared that they will transfer their remuneration to the Hans Böckler Foundation in accordance with the guidelines of the German Federation of Trade Unions.
2 Member of the Supervisory Board since 12 May 2021.
3 Member of the Supervisory Board since 8 October 2021.
>
4 Member of the Supervisory Board until 31 December 2021.
312
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
(-)
(-)
(-)
(-)
(10,000)
(5)
(210,000)
(100)
Bernhard Ebner 1,3
46,237
96
2,000
4
48,237
100
(-)
Other Information
(-)
(-)
(-)
(-)
Rachel Empey²
127,419
94
8,000
6
135,419
100
(-)
(-)
(-)
← = Q
COMPENSATION PAID AND OWED TO SUPERVISORY BOARD MEMBERS ACCORDING
TO § 162 OF THE GERMAN STOCK CORPORATION ACT (AKTG) IN FISCAL YEAR 2021 (2020)
MEMBERS OF THE SUPERVISORY BOARD IN OFFICE AS OF DECEMBER 31, 2021
(95)
(10,000)
(5)
(210,000)
(100)
Jens Köhler 1,3
82,258
95
4,000
5
86,258
100
(200,000)
(-)
(-)
(-)
(-)
(-)
Dominique Mohabeer¹
200,000
95
10,000
5
210,000
100
(200,000)
(-)
(95)
100
5
fixed remuneration
attendance fee
total remuneration
in €
as a % of total
remuneration
in €
as a % of total
remuneration
in €
as a % of total
remuneration
Johann Horn 1,2
126,344
95
210,000
6,000
132,344
100
(-)
(-)
(-)
(-)
(-)
(-)
Susanne Klatten
200,000
95
10,000
5
(95)
(200,000)
210,000
(10,000)
(2)
(610,000)
(100)
Manfred Schoch (Deputy Chairman)¹
400,000
98
10,000
410,000
100
(400,000)
(98)
(10,000)
(2)
(410,000)
(100)
Stefan Quandt (Deputy Chairman)
400,000
98
10,000
2
410,000
100
(400,000)
(98)
(98)
(600,000)
100
610,000
2020 Change in %
311
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
COMPENSATION PAID AND OWED TO SUPERVISORY BOARD MEMBERS ACCORDING
TO § 162 OF THE GERMAN STOCK CORPORATION ACT (AKTG) IN FISCAL YEAR 2021 (2020)
MEMBERS OF THE SUPERVISORY BOARD IN OFFICE AS OF DECEMBER 31, 2021
(10,000)
fixed remuneration
total remuneration
in €
as a % of total
remuneration
in €
as a % of total
remuneration
in €
as a % of total
remuneration
Norbert Reithofer (Chairman)
600,000
98
10,000
2
attendance fee
(2)
(410,000)
(100)
5
210,000
100
(200,000)
(95)
(10,000)
(5)
(210,000)
(100)
Marc Bitzer²
127,419
94
10,000
8,000
135,419
100
(-)
(-)
(-)
(-)
(-)
Verena zu Dohna 1,4
200,000
95
10,000
5
6
100
95
Christiane Benner¹
Stefan Schmid (Deputy Chairman)¹
400,000
98
10,000
2
410,000
100
(400,000)
(98)
(10,000)
(2)
(410,000)
200,000
(100)
450,000
98
10,000
2
460,000
100
(357,930)
(97)
(10,000)
(3)
(367,930)
(100)
Kurt Bock (Deputy Chairman, Chairman of the Audit Committee)
(10,000)
2
(210,000)
100
(200,000)
(95)
(10,000)
(5)
(210,000)
(100)
73,118
97
2,000
3
75,118
100
(200,000)
(95)
(10,000)
(5)
(210,000)
(100)
150,538
96
6,000
4
156,538
100
114,602
5
6,000
95
(100)
73,118
97
2,000
3
75,118
100
(190,000)
(95)
(10,000)
(5)
(200,000)
(200,000)
(100)
97
2,000
3
75,118
100
(200,000)
(95)
(10,000)
(5)
(210,000)
(100)
108,602
73,118
(95)
(10,000)
(5)
314
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Other Information
← = Q
IV. Comparison of change in remuneration and earnings
pursuant to § 162 (1) Sentence 2 No. 2 of the German
Stock Corporation Act (AktG)
Pursuant to § 162 (1) Sentence 2 No. 2 AktG, the following
table shows the change in earnings, the annual change in
the remuneration of the members of the Board of Manage-
ment and the Supervisory Board, and the annual change in
the average remuneration of the employees on a full-time
equivalent basis over the last five financial years.
For the members of the Board of Management and the
Supervisory Board, the remuneration granted and owed in
the relevant financial year is presented within the meaning of
§ 162 (1) Sentence 1 AktG. The remuneration granted and
owed to former members of the Board of Management
includes any variable remuneration from previous vesting
years and any remuneration from any contracts of employ-
ment that remained valid beyond the end of their mandate,
as well as retirement benefit plans (pension payments, pay-
ments from the capital account), other remuneration and any
waiting allowances paid.
The change in earnings is presented on the basis of BMW
AG's net profit for the year in accordance with the German
Commercial Code (HGB). In addition, the changes in the key
indicators "earnings attributable to shareholders of BMW
AG" and "Group post-tax return on sales" are reported, as
these key indicators are relevant to the calculation of the var-
iable remuneration of the members of the Board of Manage-
ment (earnings component of the bonus).
^
The presentation of average employee remuneration is
based on the average remuneration of all employees of
BMW AG on a full-time equivalent basis. In the 2021 financial
year, this was 78,144 people. As of 31 December 2021, BMW
Group employed 118,909 people worldwide. The compo-
nents of the average employee remuneration presented are
generally in line with the remuneration granted and owed to
the members of the Board of Management and the Supervi-
sory Board according to § 162 (1) Sentence 1 AktG.
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
COMPARISON OF CHANGES IN EARNINGS AND REMUNERATION FOR EMPLOYEES, THE BOARD OF MANAGEMENT AND THE SUPERVISORY BOARD
2017
2018 Change in %
(5)
315
(428,548)
"Member of the Supervisory Board until 1 October 2021.
2 Member of the Supervisory Board until 14 May 2021.
(210,000)
(100)
624,731
97
20,000
3
644,731
100
(1,408,548)
(96)
(60,000)
(4)
3 Member of the Supervisory Board until 16 July 2021.
(1,468,548)
5,311,827
(5,292,822)
96
196,000
4
5,507,827
100
(96)
(196,000)
(4)
(5,488,822)
(100)
1 These employee representatives have declared that they will transfer their remuneration to the Hans Böckler Foundation in accordance with the guidelines of the German Federation of Trade Unions.
(100)
(2)
Remuneration Report
(98)
5
210,000
100
(200,000)
(96)
(8,000)
(4)
(208,000)
(100)
Thomas Wittig
200,000
95
10,000
5
210,000
100
(200,000)
(95)
(10,000)
(5)
(210,000)
(100)
Werner Zierer¹
200,000
95
10,000
95
200,000
Vishal Sikka
(100)
Anke Schäferkordt
(10,000)
200,000
95
10,000
5
210,000
100
(126,344)
(94)
(8,000)
10,000
(134,344)
Christoph Schmidt 4
127,419
94
8,000
6
135,419
100
(-)
(-)
(-)
(-)
(-)
(100)
5
[6])
100
← = Q
COMPENSATION PAID AND OWED TO SUPERVISORY BOARD MEMBERS ACCORDING
TO § 162 OF THE GERMAN STOCK CORPORATION ACT (AKTG) IN FISCAL YEAR 2021 (2020)
FORMER MEMBERS OF THE SUPERVISORY BOARD
Karl-Ludwig Kley (Deputy Chairman)²
Reinhard Hüttl2
Horst Lischka 1,2
Willibald Löw 1,3
Simone Menne²
Brigitte Rödig 1,4
Total former members of the Supervisory Board
Total current and former members of the Supervisory Board
fixed remuneration
Other Information
attendance fee
in €
146,237
as a % of total
remuneration
in €
in €
as a % of total
remuneration
99
2,000
1
(418,548)
210,000
100
148,237
total remuneration
Remuneration Report
as a % of total
remuneration
Group Financial Statements
(5)
(95)
Corporate Governance
(200,000)
(210,000)
Total acting members of the Supervisory Board
(10,000)
96
176,000
4
4,863,096
100
(3,884,274)
(97)
4,687,096
(3)
Combined Management Report
(136,000)
313
4 Member of the Supervisory Board since 12 May 2021.
To Our Stakeholders
2 Member of the Supervisory Board since 14 May 2021.
3 Member of the Supervisory Board since 3 August 2021.
1 These employee representatives have declared that they will transfer their remuneration to the Hans Böckler Foundation in accordance with the guidelines of the German Federation of Trade Unions.
(100)
(4,020,274)
BMW Group Report 2021
33.6
14.2
37.5
20.1
31.1
17.6
27.2
17.1
Road in %
17.2
Rail in %
51.1
77.2
52.0
74.7
75.0
47.8
50.3
73.0
31.7
6.3
0.7
6.5
325
BMW Group Report 2021
1 Use and modelling of emissions factors primarily in accordance with DIN EN 16258 as well as figures from CleanCargo and JEC5; in some cases, extrapolations have been used for individual months.
2 Figures relate to automobile production (BMW Group including the BMW Brilliance Automotive Ltd. joint venture and partner plants, excluding Rolls-Royce and contract manufacturing) and spare parts deliveries to parts distribution centres.
3 Figures relate to automobile production (BMW Group including the BMW Brilliance Automotive Ltd. joint venture, contract production and parts for partner plants) and spare parts deliveries to distribution centres in markets worldwide as well as to dealerships in certain markets.
" Scope expanded to include the Greer packaging plant (South Carolina, USA) to supply production and distribute Rolls-Royce vehicles. The figures for 2021 are therefore not directly comparable with previous years.
5 The CO₂e emission values for 2020 are not directly comparable with those of previous years, as the analysis has been expanded to include the local data of suppliers, who are in the production supply for certain plants and in the vehicle transportation to dealers in certain markets as well as the additional volume of part deliveries.
52.9
17.9
1.0
10.6
0.5
12.2
0.6
16.3
0.9
12.9
Air in %
3.8
7.6
3.8
7.7
2.6
6.3
2.3
2.5
75.8
974,189
g CO₂e
26,489
25,777
25,881
Transport volume in million tkm
OUTBOUND³ (DISTRIBUTION OF VEHICLES AND SPARE PARTS)
23,244
820,226
13,623
472,290
15,634
577,077
589,730
537,928
14,491
14,545
CO₂e emissions in t
Transport volume in million tkm
SPARE PARTS DELIVERY)
INBOUND² (MATERIAL PROVISION OF THE PLANTS AND
2021
2020
To Our Stakeholders
2019
2018
CO₂e emissions in t
959,147
993,320
23,622
850,569
tkm
g CO₂e
tkm
g CO₂e
tkm
9 Соге
tkm
g CO₂e
tkm
PERCENTAGE SHARE OF CARRIERS IN TOTAL (INBOUND AND OUT-
BOUND) IN TERMS OF TRANSPORT VOLUME AND CO2 EMISSION
Sea in %
51,741
1,878,9104
1,570,397
42,123
1,563,919
40,268
1,497,075
40,426
CO₂e emissions in t
Transport volume in million tkm
TOTAL (INBOUND AND OUTBOUND)
28,497
1,058,685
37,245
1,322,8595
Combined Management Report
85.1
Corporate Governance
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
326
= Q
↑
1 Water consumed by automobile production (BMW Group plants, including the BMW Brilliance Automotive Ltd. joint venture, excluding partner plants and contract manufacturing).
0.3
0.0
14.6
13.6
12.6
4,924,477
2021
1111
4,722,310
Further GRI Information
2020
WASTE 1
in t
9,031
2017
Waste for disposal
822,848
768,292
771,162
779,911
776,179
Materials for recycling 2
829,498
775,459
780,911
789,817
785,209
in kg
2021
2020
2019
2018
2017
Total waste
WASTE FOR DISPOSAL PER VEHICLE
PRODUCED¹
Group Financial Statements
87.4
2019
2.39
in m³
PROCESS WASTEWATER PER VEHICLE
PRODUCED¹
50.3 Steel and iron
-1.9 Duromers
Others 10.0
(e.g. tyres and seals) 3.7
Elastomers
(e.g. aluminium) 20.0
Non-ferrous metals
Textiles 1.2
resins 12.6
Thermoplastic
Naturwerkst.) 0.3
M.O.N. (modif. organ.
in %
BMW GROUP VEHICLES 1,2
AVERAGE DISTRIBUTION OF MATERIALS IN
Further GRI Information
Other Information
Remuneration Report
2.32
5,417,428
2.22
2.15
90.4
88.0
5,425,073
5,073,220
2017
2018
of which rainwater in %
of which surface water in %
of which groundwater in %
of which drinking water in %
Water consumption
in m³
WATER CONSUMPTION1
2 At approximately 2.46 million vehicles, the number produced (BMW Group plants, including the BMW
Brilliance Automotive Ltd. joint venture, partner plants and contract production) increased in the year
under report compared with the previous year (2020: approximately 2.26 million). Based on an average
weight of BMW Group vehicles of approximately 1.8 tonnes, the total weight of input materials is
around 4.3 million tonnes. To calculate the individual material flows, the total weight is multiplied by
the average distribution of the materials in BMW Group vehicles.
1 Calculation based on unit-adjusted averages for the BMW 1 Series, 2 Series, 3 Series, 4 Series,
5 Series, 6 Series, 7 Series, 8 Series, X1, X2, X3, X4, X5, X6, X7, Rolls-Royce, MINI, MINI Countryman
and the BEV vehicles iX, iX3, 14, 13, MINI E as well as the PHEV variants.
2021
2020
2019
2018
2017
1.0
2.25
TRANSPORT LOGISTICS: CARRIERS AND CO2 EMISSIONS 1
5,852,666
← = Q
Further GRI Information
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
323
9 Use-phase emissions are based on global average fleet emissions. For definition, see glossary carbon emissions of new vehicle fleet worldwide, including upstream emissions. The calculation is based on an average mileage of 200,000 km.
8 Based on life cycle assessments in accordance with ISO 14040/44 of representative vehicles of the product lines using the LCA tool GaBi provided by the company Thinkstep (including the climate-impacting gases CO₂, CH 4, N₂O, SF 6, NF 3). Corresponding to the CO₂e emissions, the life cycle assessments show the energy consump-
tion (lower calorific value): around 86,095,113 MWh in the category "Bought-in goods and services" and around 600,049 MWh in the category "Waste disposal".
7 The figures from 2020 onwards are not directly comparable with previous years due to the improved data basis. In some cases, figures have been extrapolated based on surveys conducted at major national and international BMW Group locations.
6 Includes air travel, train travel and rental cars.
5 Scope expanded to include the Greer packaging plant (South Carolina, USA) to supply production and distribute Rolls-Royce vehicles. The figures for 2021 are therefore not directly comparable with previous years.
" Includes both upstream and downstream transportation. Use and modelling of emissions factors primarily in accordance with DIN EN 16258 as well as figures from CleanCargo and JEC5; in some cases, extrapolations have been used for individual months.
3 Emissions from company cars (Scope 1) are also included on a pro-rata basis under employee commuting and use phase (both Scope 3). A system-related delimitation is not currently possible.
2 Includes all refuelling of function-relabel vehicles within Germany and at major international locations (e.g. test sites in the USA, Sweden and France). All refuellings of company vehicles in Germany and, since November 2021, throughout Europe are also included. The latter include both business and private trips, except refuel-
ling paid for privately by employees.
1 Due to the broader definition of Scope 1 and Scope 2 emissions generated by BMW Group locations in the year under report and adjustments to the methodology for calculating use-phase emissions, the years 2019 (base year) and 2020 have been adjusted for comparison purposes. For these reasons, a direct comparison with
2017 and 2018 figures is not possible.
1,316,438
1,150,857
ENERGY CONSUMPTION 1,2,3
1,150,857
in MWh
Total energy consumption
Non-manufacturing areas
89,300
95,493
Motorcycle production
5,169,266
5,362,618
Vehicle production
TOTAL ENERGY CONSUMPTION BY SEGMENT
6,476,955
6,040,824
5,714,610
6,348,009
5,974,625
5,788,965
2021
2020
2020 old
2019
2019 old
2018
2017
TOTAL ENERGY CONSUMPTION
394,555
1,878,9105
29,765
139,999
18,534,765
99,805,490
46,200,385
Total emissions
SCOPE 3: INDIRECT GREENHOUSE GAS EMISSIONS
2021
2020
2020 old
2019
2019 old
2018
2017
← = Q
Further GRI Information
BMW GROUP CO₂ FOOTPRINT¹
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
322
9,906
Logistics4
98,782,354
Business trips 6
71,714,741
1,497,075
169,233
140,187
110,899,066
1,269,018
16,234,959
16,234,959
18,505,921
18,505,921
53,421,006
1,269,018
52,759,567
1,252,835
Disposal 8
Utilisation phase ³,9
17,221,109
16,786,192
Upstream chain 8
121,705,368
117,682,832
1,322,859
25,217
166,586
166,586
146,298
65,100,863
1,322,859
25,2172
129,646
132,520,346
1,570,397
75,042,286
1,570,397
129,646
146,298
136,608
73,093,077
1,563,919
159,039
Employees' commuter traffic 3,7
530,3993
5,226,227
120,583
627,825
5,226,227
220
67,038
65,065
65,065
68,560
68,560
86,787
84,166
177,564
192,911
192,911
164,957
164,957
205,320
224,819
508,318
498,299
498,299
425,796
412,451
294,724
220
258,380
68
56
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
324
4 The decrease was mainly due to the pandemic-related interruption of production at most BMW Group plants.
² Due to an extention in the reporting scope in the year under report, figures from 2019 and 2020 have been adjusted to enable better comparison. Figures for 2017 and 2018 are therefore not directly comparable.
3 Upper calorific value.
1 Energy consumption generated by vehicle production (BMW Group plants including the BMW Brilliance Automotive Ltd. joint venture and motorcycle, excluding partner plants and contract manufacturing)
and by other BMW Group locations not directly related to production (e.g. research centres, sales centres, office buildings).
2,344
2,316
2,316
1,703
1,703
1,091
381
Solar (photovoltaics)
1,211
1,161
1,501
3,517,068
3,206,948
3,093,542
266,112
2,453,215
2,320,314
2,154,8994
2,653,855
367,040
358,992
395,609
408,735
Community heating
2,439,675
2,513,308
2,588,409
Electricity
TOTAL ENERGY CONSUMPTION BY SOURCE
125,450
1,021,955
114,072
979,887
5,329,550
4,946,865
4,946,865
114,072
653,673
1,001,199
120,583
274,484
284,763
Community cooling
Heating oil
3,117,505
3,005,902
2,669,457
2,624,557
8,908
9,368
3,660
7,760
2,205
2,888
Further GRI Information
31,882
1,113
33,688
1,123
1,072
1,095
4,450
Wood pellets
of which CHP losses
Biogas (landfill gas)
of which CHP losses
Natural gas
33,322
9,749
UK
6,650
in Germany
30
0
2017
2018
2019
2020
2021
1 The term "employee" has been redefined with effect from the reporting year 2020 (for definition,
see Glossary). For the period 2018 and earlier, the percentage of employees no longer covered by the
new definition is between 7.5 und 8.0 %.
² Of whom 35.7% are tariff-bound production employees of the BMW Group
3 Of whom 35.3% are tariff-bound production employees of the BMW Group
4 Of whom 38.2 % are tariff-bound production employees of the BMW Group
5 Of whom 37.9 % are tariff-bound production employees of the BMW Group
6 Of whom 38.0 % are tariff-bound production employees of the BMW Group
329
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Employees
Other Information
60
90
2,892
2,503
Employees in part-time employment³
5,553
6,299
6,318
6,433
6,846
1 The term "employee" has been redefined with effect from the reporting year 2020 (for definition, see Glossary).
For the period 2018 and earlier, the percentage of employees no longer covered by the new definition is between 7.5% and 8.0%
2 Around 30,5% of these are women employed at BMW AG. For system-related reasons, this data is only collected for BMW AG.
3 Permanent and fixed-term employees.
EMPLOYEES IN GERMANY AND ABROAD¹
Number of employees in thousands
150
129.92
134.73
126.04
120.75
118.96
120
20
Employees
abroad
90
3,489
← = Q
SHARE OF EMPLOYEES REPRESENTED BY A TRADE UNION OR FALLING UNDER COLLECTIVE AGREEMENTS
100
100
100
100
100
South Africa
53
62
USA (no collective agreements exist)
0
20
59
63
70
0
0
0
Mexico¹
100
100
100
Austria¹
Further GRI Information
100
100
in %
2017
2018
2019
2020
2021
Germany¹
100
100
100
100
100
^
86
85
85
84
83
China (plant)
100
100
100
4,638
4,685
97
105
313
196
193
153
108
81
Number of existing supplier relationships that had to be terminated prematurely due to
serious sustainability violations
Number of notifications of potential violations of our sustainability principles received
through our supply chain reporting channels
of which number of notifications that were clarified during the reporting year
1 Basis: Industry-specific sustainability questionnaire.
2 Includes on-site visits and remote audits.
0
0
0
0
9
2
3
9
2
89
2
Number of audits and assessments conducted by or on behalf of the BMW Group²
Number of supplier locations not awarded contracts because they fail to meet the
BMW Group's sustainability or other requirements¹
64 %
327
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
SUSTAINABILITY ASSESSMENT OF RELEVANT SUPPLIER LOCATIONS
2018
2019
2020
2021
Proportion of audited suppliers of production-related material with a contract volume
greater than € 2 million¹
97%
95 %
98 %
98%
Number of identified sustainability deficits at potential and existing supplier locations
from an ESG perspective
48 %
62 %
61 %
8
8
co co
120,726
118,909
117,664
121,994
113,719
108,676
106,928
3,506
3,709
3,503
3,474
3,418
8,645
8,860
8,684
8,473
8,466
117
119
110
103
126,016
134,682
129,932
Employees with fixed-term contract²
328
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Further GRI Information
1 Excluding executives and contractors. 7 GRI 102-41
EMPLOYEES AND SOCIETY
2017
2018
2019
2020
2021
BMW Group
Automotive
Motorcycles
Financial Services
Other
EMPLOYEES AT END OF YEAR'
7,168
ALTERNATIVE WAYS OF WORKING AT BMW AG1
Number of employees
2018
2019
2020
2021
-17 Germany
-17 UK
- 25 USA
15 Austria (incl. sales region Eastern Europe)
-22 South Africa
33 Thailand
Total
2,077
2,247
2,794
4,535
3,720
Part-time retirement, retirement, death
1,207
1,314
1,700
1,884
2017
1,938
Number
TOTAL NUMBER OF EMPLOYEES LEAVING BMW AG, BY REASON FOR LEAVING¹
Employee category
2019
2020
2021
Non-tariff employees
16.7
14.1
30.7
"Meister"
(master craftsmen)
14.1
21.1
27
Tariff
10.6
7.1
10.8
Further GRI Information
↑
SHARE OF WOMEN IN THE WORKFORCE BY
COUNTRY WITH PRODUCTION SITE(S)
in %
-7 India
ACADEMY, BY EMPLOYEE CATEGORY
Voluntarily left company
(termination or suspension of employment contract by employee)
0
2.90
3.33
4.09
|
3.86
4.27
Efficiency indicator calculated from the solvent emissions (VOC) generated in automobile production
(BMW Group plants, including the BMW Brilliance Automotive Ltd. joint venture, excluding partner
plants and contract manufacturing) divided by the number of automobiles produced (BMW Group
plants, including the BMW Brilliance Automotive Ltd. joint venture and partner plants, excluding
contract manufacturing).
2021
2020
2019
2018
2017
0
0.70
0.81
0.85
0.93
1.03
in kg
SOLVENT EMISSIONS PER VEHICLE PRODUCED 1
1 Waste generated by automobile production (BMW Group plants, including the BMW Brilliance Automotive Ltd. joint venture, excluding partner plants and contract manufacturing).
2 Includes both recycling and thermal utilisation.
2017
- 20 Brazil
2018
2020
809
873
1,029
2,6012
1,749²
- 31 Mexico
Dismissed by employer
61
60
65
50
33
1 Figures refer to employees with permanent contracts.
37 Other countries
2 Increase mainly due to a set of personnel measures.
52 China
= Q
← = Q
Further GRI Information
1 Efficiency indicator calculated from the waste generated in automobile production (BMW Group plants,
including the BMW Brilliance Automotive Ltd. joint venture, excluding partner plants and contract ma-
nufacturing) divided by the number of vehicles produced (BMW Group plants, including the BMW Brilli-
ance Automotive Ltd. joint venture and partner plants, excluding contract manufacturing).
2021
2019
AVERAGE TRAINING HOURS AT THE BMW AG
Other Information
Remuneration Report
43,309
41,180
in % of total number of employees
63.3
66.1
70.8
87.2
84.3
of which fixed-term 39
India 562
Number of employees who use "Vollzeit Select"
4,690
5,508
5,474
4,747
3,736
of which fixed-term 12
in % of total number of employees"
5.3
6.1
6.6
6.0
36,208
4.8
34,339
Teleworking position³
China 2,059
Number of employees
Part-time workers²
2017
2018
2019
2020
2021
4,572
5,000
5,440
5,568
5,951
of which fixed-term 756
in % of total number of employees
5.2
5.6
6.6
7.0
7.7
Thailand 561
31,754
South Africa 2,894
Sabbaticals
567
4 Statistical population not including apprentices, interns, thesis students working at the company and doctoral candidates.
877 Brazil
of which fixed-term 426
Austria¹ 3,934
of which fixed-term 142
USA 12,171
of which fixed-term 0
UK 6,475
of which fixed-term 100
1 Including the Eastern Europe sales region.
of which fixed-term 2
3,033 Mexico
of which fixed-term 0
6,696 Other countries
of which fixed-term 299
79,647 Germany
of which fixed-term 727
330
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
3 Only workers in administrative positions who engaged in teleworking.
² Of which 3,716 were female (62%). For systemic reasons, this number is only calculated for BMW AG.
For the period 2018 and earlier, the percentage of employees no longer covered by the new definition is between 7.5% and 8.0 %.
1 The term "employee" has been redefined with effect from the reporting year 2020 (for definition, see Glossary).
648
764
653
464
in % of total number of employees
0.6
0.7
0.9
0.8
0.6
SHARE OF EMPLOYEES PER COUNTRY WITH
PRODUCTION LOCATION(S)
Parental leave
3,389
3,675
4,082
4,158
4,211
3.9
4.1
4.9
5.2
5.4
in % of total number of employees
>>>
1 Efficiency indicator calculated from the amount of water consumed by automobile production (BMW
Group plants, including the BMW Brilliance Automotive Ltd. joint venture, excluding partner plants and
contract manufacturing) divided by the number of automobiles produced (BMW Group plants, including
the BMW Brilliance Automotive Ltd. joint venture and partner plants, excluding contract manufacturing).
8 Emissions from company cars (Scope 1) are also included on a pro-rata basis under employee commuting and use phase (both Scope 3). A system-related delimitation is not currently possible.
2019 old
75,987,119
2019
133,552,843
2020 old
65,828,005
2020
2021
118,491,889
74,213,402
122,539,929
Total emission
625,072
581,703
642,259
678,403
642,885
BMW Group locations 3,4,5
SCOPE 1: DIRECT GREENHOUSE GAS EMISSION
529,728
72,850,724
2017
9 Biomethane certificates amounting to 164,000 MWh are taken into account in this indicator. This share has reduced carbon emissions by 30,024 metric tonnes.
321
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
2018
Remuneration Report
← = Q
Further GRI Information
FURTHER GRI INFORMATION
PRODUCTION, PURCHASING AND SUPPLIER NETWORK
BMW GROUP CO₂ FOOTPRINT¹
in t CO₂/CO₂e
Total emission²
Other Information
487,249
51,887,708
1,234,346
130,090
Scope 2: INDIRECT GREENHOUSE GAS EMISSION
Total emission
550,494
510,911
510,911
538,622
538,622
302,574
302,574
354,095
354,095
1,967
84,257
84,257
134,849
134,849
1 Due to the broader definition of Scope 1 and Scope 2 emissions generated by BMW Group locations in the year under report and adjustments to the methodology for calculating use-phase emissions, the years 2019 (base year) and 2020 have been adjusted for comparison purposes. For these reasons, a direct comparison with
2017 and 2018 figures is not possible.
2 The emissions listed account for approximately 90% of the BMW Group's total Scope 1 to Scope 3 emissions.
3 Carbon emissions (disregarding climate-impacting gases apart from carbon dioxide) generated by vehicle production (BMW Group plants including the BMW Brilliance Automotive Ltd. joint venture and motorcycle production, but excluding partner plants and contract manufacturing) and by other BMW Group locations not directly
related to production (e.g. research centres, sales centres, office buildings).
4 From 2021, this indicator also includes the carbon emissions generated by other BMW Group locations as well as those relating to production. For comparison purposes, the figures for 2019 (base year) and 2020 have been adjusted accordingly. The figures for 2017 and 2018 are therefore not directly comparable.
5 Calculation of Scope 1 and Scope 2 emissions, using the operational control approach in accordance with the GHG Protocol. Leased office space without the direct influence of the BMW Group on energy supply is therefore not included.
6 Scope 2 emissions calculated using the market-based method in accordance with the GHG Protocol Scope 2 guidance; mainly the use of VDA emissions factors and in some cases the use of local emissions factors; alternative calculation using the location-based method: 1,404,348 t CO₂.
7 Includes all refuelling of function-relabel vehicles within Germany and at major international locations (e.g. test sites in the USA, Sweden and France). All refuellings of company vehicles in Germany and, since November 2021, throughout Europe are also included. The latter include both business and private trips, except refuel-
ling paid for privately by employees.
130,090
1,793
Electricity/heat purchased by BMW Group locations 3,4,5,6
6,098
586,638
568,538
678,967
604,620
699,713
631,3049
1,793
company-owned planes
88,782
88,272
company vehicles 7,8
85,667
72,554
72,554
66,442
6,562
6,182
85,667
6,098
333
← = Q
Other Information
Remuneration Report
To Our Stakeholders
Group Financial Statements
Combined Management Report
BMW Group Report 2021
Corporate Governance
[C
Total amount of waste: 829,498 t.; 93.4 % of this was
recycled and 5.8 % thermally utilised.
Accounting Metric
Product Safety
Number of vehicles recalled
Category
Quantitative
Unit of Measure
Code
Number
TR-AU-250a.3
Labour Practices
^
Topic
]]
Percentage of vehicle models rated by
NCAP programmes with an overall 5-star
safety rating, by region
100 %* of the security-related complaints were
reviewed.
TR-AU-000.A
Number of vehicles sold
Quantitative
Number
TR-AU-000.B
Product Safety
Percentage of active workforce covered
under collective bargaining agreements
Quantitative
Percentage (%)
TR-AU-250a.1
Number of safety-related defect
complaints, percentage investigated
Quantitative
Number,
Percentage (%)
TR-AU-250a.2
Response Comment
2,461,269* (Automobiles)
187,500 (Motorcycles)
* Production including the joint venture BMW Brilliance Automotive Ltd., Shen-
yang (2017: 396,749 automobiles, 2018: 491,872 automobiles, 2019: 536,509
automobiles, 2020: 602,935 automobiles, 2021: 700,777 automobiles).
2,521,514* (Automobiles)
194,261 (Motorcycles)
*Deliveries including joint venture BMW Brilliance Automotive Ltd., Shenyang
(2017: 385,705 automobiles, 2018: 455,581 automobiles, 2019: 538,612
automobiles, 2020: 602,247 automobiles, 2021: 651,236 automobiles).
- 100% - European New Car Assessment Programme
(Euro NCAP)
- 87% China New Car Assessment Programme (C-NCAP)
― 60 % - U. S. National Highway Traffic Safety Admin-
istration's (NHTSA) New Car Assessment Programme
(NCAP)
-66% Korean New Car Assessment Programme (KNCAP)
In its report on NCAP programmes, the BMW Group
focuses on markets in the EU (including the UK), China,
the USA and South Korea. Further information on new
car assessment programmes is provided in the section on
effective safety systems.
*The survey period runs from November of the previous year through to November of
the reporting year, as to allow for a processing time after the receipt of complaints.
Quantitative
on the aforementioned countries for the purposes of
TR-AU-310a.1
Corporate Governance
Remuneration Report
Other Information
[C
Topic
Accounting Metric
Category
Unit of Measure
Code
Fuel Economy & Use-phase Emissions
Group Financial Statements
Sales-weighted average passenger fleet
fuel economy, by region
Mpg, L/km, gCO₂/km,
km/L
TR-AU-410a.1
Number of (1) zero-emission vehicles
(ZEV), (2) hybrid vehicles and (3) plug-in
hybrid vehicles sold
Quantitative
Number
TR-AU-410a.2
SASB-Index
↑
= Q
Response Comment
Quantitative
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
(1) Number of work stoppages and
(2) total days idle
Quantitative
Number, Days idle
TR-AU-310a.2
SASB-Index
Response Comment
In reporting year 2021, safety and compliance-relat-
ed technical recall actions took place for 1,920,977
vehicles. These were voluntary and were carried out in
coordination with relevant authorities. The main tech-
nical recall actions related to the exhaust gas recircula-
tion cooler and Takata airbags. For further information
regarding quality management see 7 Product safety as
part of quality management.
Germany: 100 %
UK: 83%
China (Plant): 100%
Austria²: 100 %
South Africa: 70%
USA: no collective agreements in place
Mexico: 100 %
Based on the availability of data, the BMW Group focuses
Number
reporting on this accounting metric.
* Excluding senior management and contractors.
Strike action is usually taken to reinforce pay rise
demands.
At BMW AG, strike action was taken in 2021 at the Leip-
zig plant. In this case, a series of five 24-hour strikes
was called by IG Metall as part of its campaign to secure
a so-called “equalization allowance" to compensate the
difference in contractual weekly working hours between
the collective bargaining areas in eastern and western
Germany. Due to the fact that the strikes took place
during the semiconductor supply crisis, the impact the
BMW Group cannot be quantified directly. Following
the conclusion of a collective bargaining framework
agreement on the harmonisation of working hours, the
BMW Group entered into corresponding discussions with
the Works Council.
At the BMW Group's international plants, strike action
resulted in operational disruptions at the Rosslyn site in
South Africa. Strikes were held on 13 days, spread over
four time-blocks, with the focus primarily on pay rise de-
mands. Lost production was compensated by additional
shifts. The number of employees involved in the strike
action was not recorded by the BMW Group.
]]
334
Percentage (%)
Code
3 Start of production 06/2019.
Category
Quantitative
89.8
89.5
Other 7.6
Transport 8.3
Cleaning 1.9
3.1 Driving
USA
Austria
South Africa
87.7
88.3
87.4
87.5
89.1
82.8
85.6
82.3
78.7
79.1
Secondary
Testing 2.8
activities 12.8
- 23.9 Walking
83.0
88.3
86.9
86.3
99.8
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Further GRI Information
SHARE OF LOCAL EMPLOYEES IN MANAGEMENT POSITIONS AT MAJOR COMPANY LOCATIONS 1
MAIN ACCIDENT FACTORS¹
in %
2017
2018
2019
2020
2021
6.7 Processing
Germany
UK
99.4
99.5
99.7
99.7
82.8
Unit of Measure
82.7
85.4
Mexico 3
48.4
62.9
67.8
1 "Local" refers to managers with local contracts. People deployed to work at the location who do not have a local employment contract are not included.
These are reflected in the difference to 100 in each case.
2 Including employees of the joint venture BMW Brilliance Automotive Ltd., Shenyang, which is not consolidated in the BMW Group.
Global carbon emissions of the new vehicle fleet,
including emissions generated by upstream supply chain
(normalised based on WLTP):
SASB-Index
332
BMW Group Report 2021
1 The accident severity rate in the reporting year was 66.1 lost days (due to occupational accidents)
per 1 million hours worked (2020: 53.4).
To Our Stakeholders
Group Financial Statements
Corporate Governance
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Other Information
← = Q
SASB-INDEX
[C
Topic
Activity Metric
Accounting Metric
Number of vehicles manufactured
Combined Management Report
60.0
57.8
57.1
Assembly/
dismantling 16.3
India
70.0
74.4
82.1
68.4
78.4
16.6 Handling
parts
Brazil
76.1
77.6
78.2
84.9
85.1
China2
76.5
76.7
73.7
78.8
82.2
Thailand
56.8
56.8
85.9
197.9 g CO2/km¹
Other Information
USA (USC): 140.9 g CO2/km (volume-weighted fleet car-
bon emissions, based on passenger cars and light trucks)
CN (WLTC): 163.0 g CO2/km²
7 Climate-Related Opportunities and Risks
BMW Group Integrated Strategy
Strategy Process
CDP questionnaire 2021
C2.1, C2.3, C2.3a, C2.4, C2.4a, C 2.2a
C2.3, C2.3a, C 2.4, C2.4a, C3.1, C3.3
C 3.1, C3.1a
]]
>
TCFD-Index
339
Outlook, Risk and Opportunity Management
BMW Group Report 2021
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
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[C
Risk Management
A. Group processes for identifying and
assessing climate-related risks
B. Group processes for managing
climate-related risks
To Our Stakeholders
C. Integrating processes for identifying,
assessing and managing climate-related
risks within the Group's general risk
management system
* Reducing Carbon Emissions in the Supply Chain
Production, Purchasing and Supplier Network
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
[C
Strategy
A. Climate-related risks and
opportunities
B. The impact of climate-related risks and
opportunities on the Group's business
activities and its strategic and financial
corporate planning
7 Carbon Emissions at BMW Group Locations
C. Resilience of the BMW Group's
strategy
Outlook, Risk and Opportunity Management
7 Climate-Related Opportunities and Risks
BMW Group Integrated Strategy
7 Environmental Analysis and Megatrends
Strategy Process
Outlook, Risk and Opportunity Management
― Climate-Related Opportunities and Risks
BMW Group Integrated Strategy
7 Environmental Analysis and Megatrends
7 Climate change and CO₂ reduction
7 Strategy Process
Products and Mobility Solutions
7 Carbon Emissions and Pollutants
- Electric Mobility
BMW Group Report 2021
BMW Group Report 2021
Outlook, Risk and Opportunity Management
7 Organisation of Risk Management
7 Climate-Related Opportunities and Risks
BMW Group Integrated Strategy
7 Dashboard
7 Performance Indicators
Other GRI Information (Table BMW Group CO₂ Footprint)
BMW Group Integrated Strategy
7 Performance Indicators
Products and Mobility Solutions
7 Carbon Emissions and Pollutants
Production, Purchasing and Supplier Network
― Circular Economy, Resource Efficiency and Renewable Energy
C. Targets according to which the Group
addresses climate-related opportunities
and risks
Other GRI Information (Table BMW Group CO₂ Footprint)
Strategy Process
7 Performance Indicators
Products and Mobility Solutions
7 Carbon Emissions and Pollutants
Production, Purchasing and Supplier Network
7 Circular Economy, Resource Efficiency and Renewable Energy
CDP questionnaire 2021
C4.2
C6.1, C6.3, C6.5
C4.1, C4.1b, C4.2
]]
BMW Group Integrated Strategy
B. Disclosure of Scope 1, Scope 2 and
Scope 3 greenhouse gas (GHG) emissions
A. Key sustainability indicators the Group
uses to assess climate-related risks and
opportunities
BMW Group Report 2021
BMW Group Integrated Strategy
7 Environmental Analysis and Megatrends
Outlook, Risk and Opportunity Management
7 Organisation of Risk Management
7 Climate-Related Opportunities and Risks
BMW Group Integrated Strategy
7 Environmental Analysis and Megatrends
Strategy Process
Outlook, Risk and Opportunity Management
7 Organisation of Risk Management
7 Climate-Related Opportunities and Risks
CDP questionnaire 2021
C2.2, C2.2a, C 2.1
C 2.2, C2.2a
C2.2
]]
>
340
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
TCFD-Index
(C
Key Sustainability Indicators and Targets
To Our Stakeholders
BMW Group Report 2021
338
TCFD-Index
Description of the management of
Discussion and Analysis
n/a
TR-AU-440a.1
risks associated with the use of critical
materials
SASB-Index
↑
= Q
Response Comment
In line with its corporate strategy, the BMW Group is
pursuing a clear course of decarbonisation. Against a
backdrop of increasing electrification, it is particularly
important to consider carbon emissions over the entire
life cycle of a vehicle. In this context, the BMW Group
has set itself decarbonisation targets by 2030 (base
year 2019) during the use phase, in the upstream supply
chain and in production. These targets were notified
to the SBTI and validated (Decarbonisation targets across
the value chain). The BMW Group is also taking measures
to mitigate and adapt to climate change. It is there-
fore imperative to identify climate-related risks and
opportunities and to take appropriate account of them
in determining the strategic direction to be followed,
managing the business and organising a Group-wide
risk management system. For further information, see
7 Climate-related opportunities and risks.
Material Sourcing
The BMW Group also has a set of rigorous measures in
place to reduce pollutant emissions generated by its ve-
hicles, such as nitrogen oxides (NOx), carbon monoxide
(CO) and particulate matter (PM) (pollutant emissions).
In order to meet the respective due diligence require-
ments in terms of environmental and social standards,
we rely on systematic risk analyses as well as preven-
tion, empowerment and remediation measures. Moreover,
the BMW Group enshrines its obligatory sustainability
standards in all its supply contracts. Sourcing the raw
materials required to produce battery cells, such as
lithium and cobalt, is generally a highly challenging task.
In order to establish traceability and transparency across
the supply chain for both of these raw materials and to
minimise the identified risks, the BMW Group sources
them directly from the producers and makes them avail-
able to its own suppliers in order to produce the current
generation of battery cells. Detailed information on the
approach taken by the BMW Group is provided in the
section Taking ecological and social responsibility.
Close cooperation with our suppliers in a spirit of part-
nership was one of the factors that enabled us, for ex-
ample, to cushion the effects of the global semiconductor
shortage to a large extent. In order to secure long-term
supplies in this area, the BMW Group concluded a direct
agreement with semiconductor suppliers for the first
time at the end of 2021. The agreement enables the
BMW Group to secure the supply of several million semi-
conductors per year. Global network and local procurement
336
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
← = Q
Topic
Materials Efficiency & Recycling
]]>>>
Discussion of strategy for managing fleet Discussion and Analysis n/a
fuel economy, and emissions risks and
opportunities
TR-AU-410a.3
Code
The BMW Group focuses on the core markets of Europe,
China, and the USA, which account for more than 80 %
of BMW Group sales. Further information is provided the
sections Decarbonisation during the use phase meets legal re-
quirements and Fleet emissions in the USA, China and worldwide.
1The figures are determined using a new calculation method, which was
applied retroactively back to the year 2019 (2019 before adjustment:
140 g/km; 2020 before adjustment: 133 g/km). For definition, see
7 Glossary: Carbon emissions of the new vehicle fleet worldwide, including
upstream emissions.
2 This is a preliminary internal calculation with a potential variation of +/-
0.5 g CO2/km, as official registration figures have not been provided by the
authorities of all EU states. Official values published by the EU Commission
are not expected to be made available until the following year.
3 Flexibilities defined in the regulatory requirements for 2021: eco-innovations
at 1.7 g CO2/km (WLTP).
"Average volume-weighted fleet emissions including regulatory credit
factors of 8.83 g CO₂/ km (off cycle technologies, NEV multiplier, phase-in)
according to WLTC (Worldwide Harmonized Test Cycle) under China-specific
test road conditions.
(1) Emission free vehicles (BEV): 103,854*
(2) The BMW Group portfolio includes BEVs (1) and
PHEVS (2). Based on BMW Group definitions, 48V
vehicles are not classified as hybrid vehicles see
7 Electrified vehicles.
(3) Plug-in hybrid electric vehicles (PHEV): 224,460*
*Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
]]
^
335
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
BMW Group Report 2021
[C
Topic
Fuel Economy & Use-phase Emissions
Accounting Metric
Category
Unit of Measure
Accounting Metric
EU (WLTP): 115.9 g CO2/km²,3
Category
Quantitative
Governance
A. Responsibility of the Board of
Management for climate-related risks
and opportunities
B. The role of management in assessing
and managing climate-related risks and
opportunities
BMW Group Report 2021
Outlook, Risk and Opportunity Management
7 Organisation of Risk Management
7 Climate-Related Opportunities and Risks
BMW Group Integrated Strategy
Strategy Process
7 Performance Indicators
- Performance Management
[c
7 Corporate Governance
7 Organisation of Risk Management
7 Climate-Related Opportunities and Risks
BMW Group Integrated Strategy
7 Strategy Process
7 Performance Indicators
CDP questionnaire 2021
C1.1a, C 1.1b
C 1.2, C 1.2a
]]
>
Outlook, Risk and Opportunity Management
TCFD-INDEX
← = Q
Other Information
Weight of end-of-life material recovered,
percentage recycled
Quantitative
Unit of Measure
Metric tons (t),
percentage (%)
Metric tons (t),
percentage (%)
Code
TR-AU-440b.1
TR-AU-440b.2
Average recyclability of vehicles sold
Quantitative
Percentage (%) by sales-
weighted metric tons (t)
TR-AU-440b.3
SASB-Index
Response Comment
At the Recycling and Dismantling Centre in Munich,
8,543 vehicles (including motorcycles) were taken back
and recycled during the reporting year. This is equivalent
to a total vehicle scrap weight of 12,799 t. In relation to
the entire vehicle, at least 85% of materials are recycled
and, including thermal utilisation, at least 95% as
stipulated by legal requirements (European End-of-Life
Vehicles Directive ELV 2000/53/EC).
All BMW Group vehicles sold since 2008 meet the
currently applicable worldwide requirements for the
recycling of end-of-life vehicles, components and mate-
rials. Vehicles are already currently required to be 95%
recyclable (based on vehicle weight). Together with its
national sales organisations, the BMW Group has already
introduced take-back systems for end-of-life vehicles
in 30 countries and offers eco-friendly vehicle recycling
at more than 2,800 take-back points. From product
development to recycling.
The BMW Group not only wants to make vehicle more
recyclable, it is also looking to reduce the use of primary
raw materials in the automotive value chain and increase
the proportion of secondary raw materials. Circularity
as a strategic priority.
TCFD-Index
337
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Total amount of waste from manufactur-
ing, percentage recycled
331
Other Information
303
€ million
Revenues
5,380,785 5,114,906 4,718,970 4,359,572 4,130,002 3,846,364
124,719 123,394 111,191 96,390 84,347 80,974
5,973,682 5,708,032
142,834 133,147
contracts 5,859,890 5,981,928
139,530 133,093
€ million
1,861,826
113,811
2,505,741 2,359,756 2,279,503 2,165,566 2,006,366
185,682 145,555 151,004 133,615 110,127
units 2,461,269 2,255,637 2,564,025 2,541,534
units 187,500 168,104 187,116 162,687
2,349,962 2,259,733 2,117,965 1,963,798 1,845,186
145,032 136,963 123,495 115,215 106,358
2,486,149 2,465,021
165,566 164,153
2,521,514 2,325,179 2,537,504
194,261 169,272 175,162
units
units
2012
2013
2014
2015
2016
2017
20181
2019
2020
2021
111,239
98,990
104,210
96,855
8,933
7,411
4,830
13,400
€ million
20.2
20.1
21.2
19.7
19.9
20.3
INCOME STATEMENT
19.0
13.7
19.8
%
Earnings before financial result
Gross profit margin
76,848
76,059
80,401
92,175
94,163
98,282
17.3
9,899
Business volume (based on balance sheet carrying amounts)
FINANCIAL SERVICES
Sabbatical
S
equity capital at the end of the last five quarters - attribut-
able to the Financial Services segment.
-
RoE in the Financial Services segment is calculated as seg-
ment profit before taxes, divided by the average amount of
-
Return on equity (ROE)
ROCE in the Automotive and Motorcycles segments is meas-
ured on the basis of relevant segment profit before financial
result and the average amount of capital employed
at the
end of the last five quarters in the segment concerned.
Capital employed corresponds to the sum of all current and
non-current operational assets, less liabilities that generally
do not incur interest.
-
Return on capital employed (ROCE)
← = Q
Glossary and Explanation of Key Figures
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
350
The engineering, IT and process expertise required for the
(pre-)development of hardware and software for all
BMW Group products and services is combined at the
Group's international research and development locations.
Research and development locations
Research and development expenditure ratio
Research and development expenditure as a percentage of
Group revenues.
The number of people with active employment contracts
who are absent from work for at least one month and for not
more than six months due to an employee-funded leave of
absence ("sabbatical").
Scope 1 to Scope 3 carbon emissions
The carbon emissions generated by a company are recorded
in various categories. The Greenhouse Gas Protocol, a part-
nership between the World Resources Institute (WRI) and
the World Business Council for Sustainable Development
(WBCSD), distinguishes between Scope 1, Scope 2 and
Scope 3 emissions, based on their various sources. Whereas
Scope 1 emissions are generated within a company through
the combustion of fossil fuels, Scope 2 refers to the indirect
emissions caused by the consumption of electricity and heat
from externally generated sources of energy. Scope 3 emis-
sions are generated in the upstream and downstream stag-
es of the value chain, both in the supply chain (upstream]
and in the subsequent use of products and services (down-
stream).
Motorcycles 3
Automobiles
PRODUCTION VOLUME
Motorcycles 3
Automobiles 2
DELIVERIES
BMW GROUP TEN-YEAR COMPARISON
BMW Group Ten-year Comparison
← = Q
Other Information
Remuneration Report
Contract portfolio
Corporate Governance
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
344
372 - 367
16.3-16.1
365-363
16.0-15.9
348
359
15.8
15.2
Group Financial Statements
9,386
9,593
9,118
2019
2020
2021
BMW Group Ten-year Comparison
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
345
5 Proposal by management.
For the timeframe including and prior to 2018, the share of the employees that are no longer reflected in reporting is about 7.5-8 %.
"Since the reporting year 2020, a new definition for workforce size has been applied ( Glossary). To enable better comparability, the value for 2019 was adjusted accordingly (2019 before adjustment: 133,778 employees).
² Retail vehicle delivery data presented for 2020 and 2021 is not directly comparable to such data presented for previous years. For further information on retail vehicle delivery data, please see Comparison of Forecasts with Actual Outcomes.
3 Excluding Husqvarna, deliveries up to 2013: 59,776 units; production up to 2013: 59,426 units.
1 The 2018 figures were adjusted due to the change in accounting policy in conjunction with the adoption of IFRS 16 (see Annual Report 2019, note 6 to the Group Financial Statements).
In addition, prior year figures were adjusted due to changes in the presentation of selected items that are of minor importance overall.
5,111
5,329
5,817
6,396
6,910
20181
2017
2016
2015
Capital expenditure (excluding capitalised development costs)
50,530
52,184
56,844
61,831
66,864
81,305
86,193
97,959
110,343
121,671
8,675
121,964
73,542
90,630
134,851
81,807
143,354
86,173
€ million
€ million
Current assets
Non-current assets
BALANCE SHEET
2012
2013
2014
137,404 124,202
84,736
7,064
5,022
3,857
10.8
10.0
10.3
10.9
9.9
6.8
5.3
14.4
%
Return on sales (earnings before tax revenues)
7,803
10.4
7,893
9,224
9,665
10,675
9,627
7,118
5,222
16,060
€ million
Earnings before tax
8,275
7,978
8,707
The sum of research and non-capitalised development cost
and capitalised development cost (not including the associ-
ated scheduled amortisation).
10.2
€ million
12,463
Net profit for the year
34.5
32.5
33.2
30.7
28.5
18.7
26.3
30.1
26.1
Income taxes
22.4
Effective tax rate
2,692
2,564
2,890
2,828
2,755
2,000
2,530
2,140
1,365
3,597
%
Research and development expenditure
R
nues.
A form of corporate financing involving the sale of receiva-
bles to a financing company.
Asset-backed financing transactions
The number of people on multi-year vocational training
courses at a BMW Group company (includes all of the con-
solidated and non-consolidated companies in which the
BMW Group holds more than 50% of the shares), with these
training courses consisting of practical and theory sections.
Apprentices
A
EXPLANATION OF KEY FIGURES
GLOSSARY AND
Glossary and Explanation of Key Figures
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
346
5 Proposal by management.
For the timeframe including and prior to 2018, the share of the employees that are no longer reflected in reporting is about 7.5-8 %.
"Since the reporting year 2020, a new definition for workforce size has been applied ( Glossary). To enable better comparability, the value for 2019 was adjusted accordingly (2019 before adjustment: 133,778 employees).
2 Retail vehicle delivery data presented for 2020 and 2021 is not directly comparable to such data presented for previous years. For further information on retail vehicle delivery data, please see Comparison of Forecasts with Actual Outcomes.
3 Excluding Husqvarna, deliveries up to 2013: 59,776 units; production up to 2013: 59,426 units.
1 The 2018 figures were adjusted due to the change in accounting policy in conjunction with the adoption of IFRS 16 (see Annual Report 2019, note 6 to the Group Financial Statements).
In addition, prior year figures were adjusted due to changes in the presentation of selected items that are of minor importance overall.
2.50/2.52
B
BMW Group employees
Since 2020, all people with active temporary or permanent
employment contracts (as of 31 December in the year in
question) with the BMW Group (includes all of the consoli-
dated and non-consolidated companies in which the
BMW Group holds more than 50% of the shares) have been
considered employees of the BMW Group. This excludes ap-
prentices, interns, temporary staff (working students), tem-
porary employees, dormant/inactive employment contracts
due to maternity leave, sabbaticals, parental leave, long-
term illness (as defined in the country in question), those in
inactive early retirement phase, and employees accompany-
ing their partner abroad. Up to 2019, temporary staff, post-
graduate students, interns, apprentices, and people on ex-
tended sick leave or on sabbatical were also included in this
definition.
ed figures are increased by 10% to account for possible dis-
crepancies between cycle values and real emissions, as re-
quired by the Science Based Targets Initiative. This indicator
also includes the upstream emissions for the respective en-
ergy sources (fossil fuels and electricity used for charging), in
line with the well-to-wheel approach. This covers the entire
causal chain behind vehicle motion, i. e. from the generation
and supply of power to its conversion into drivetrain energy.
This approach also includes the environmental impacts as-
sociated with the supply of energy. For example, to calculate
the volume of emissions resulting from upstream electricity
(drivetrain energy supply), the BMW Group uses the energy
report published by the International Energy Agency (IEA) as
a basis in order to assess the emissions associated with the
electricity mix in its core markets.
← = Q
Glossary and Explanation of Key Figures
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
347
1,640
This indicator documents the progress made by the
BMW Group in its strategic objective of reducing carbon
emissions during the utilisation phase including upstream
emissions (drivetrain energy supply) by an average rate of
more than 50% per kilometre driven by 2030 (base year
2019). For the purpose of this calculation, the volume-weight-
ed average fleet carbon emissions are calculated for the core
markets EU (27 EU countries incl. Norway and Iceland; plus
UK) (driving cycle: Worldwide Harmonized Light Vehicles
Test Procedure; basis: production volume), USA (driving cy-
cle: United States Combined; basis: production volume) and
China (driving cycle: Worldwide Harmonized Test Cycle, sub-
ject to China-specific framework conditions for testing; ba-
sis: import volumes/local production volumes; incl. joint
venture BMW Brilliance Automotive Ltd.) before deduction of
legally permitted offsetting factors (e.g. supercredits and
eco-innovations) and then standardised according to the
WLTP (European) driving cycle. These core markets account
for more than 80% of the BMW Group's sales. The calculat-
porting period. New registrations for these purposes com-
prise all newly registered vehicles of a given manufacturer in
the EU, including Norway and Iceland, during the calendar
year, plus any individual vehicle-specific carbon emissions
determined in accordance with the WLTP type test proce-
dure. The BMW Group's fleet carbon emissions figure for
2021, as measured internally, includes legally permitted off-
setting of eco-innovations.
Carbon emissions of the new vehicle fleet in the EU
The average carbon emissions of a manufacturer's fleet are
calculated on the basis of the weighted average of carbon
emissions across all vehicles newly registered during the re-
Capitalised development costs as a percentage of research
and development expenditure.
Capitalisation rate
Investments in property, plant and equipment and other in-
tangible assets (excluding capitalised development costs)
as a percentage of Group revenues.
Capital expenditure ratio
C
The sum of the balance sheet line items "Leased products"
and "Receivables from sales financing" (current and non-cur-
rent), as reported in the balance sheet for the Financial Ser-
vices segment.
Business volume in balance sheet terms
A securitised debt instrument in which the issuer certifies its
obligation to repay the nominal amount at the end of a fixed
term and to pay a fixed or variable rate of interest.
Bond
Carbon emissions of the new vehicle fleet worldwide,
including upstream emissions
1,707
2.60/2.62
2.90/2.92
3.20/3.22
118,909
103,569
€
DIVIDEND
Personnel cost per employee 4
Workforce at year-end 4
PERSONNEL
3,809
3,003
3,481
5,404
5,792
120,726
99,647
4,459
8,370
7,671
7,688
6,122
7,880
9,039
10,979
12,036
2,567
3,395
6,354
€ million
2,713
Cash flow
126,016
98,901
129,932
100,760
3.50/3.52
4.00/4.02
3.50/3.52
2.50/2.52
1.90/1.92
1,904
2,102
2,300
2,630
2,303
1,646
134,682
101,178
1,253
€
Dividend per share of common stock / preferred stock
€ million
Dividend total
89,161
89,869
105,876
110,351
116,324
92,337
122,244
97,136
124,729
99,575
3,8275
5.80/5.825
€ million
Liquid funds generated (cash inflows) or used (cash out-
flows) during a reporting period.
Similar to "value at risk” (see definition below).
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
349
The number of employees of the BMW Group (includes all
consolidated and non-consolidated companies in which the
BMW Group is the sole shareholder) participating in further
Number of training participants
N
The number of people with active employment contracts
who are absent from work, as permitted by law, before and
after the birth of a child (maternity protection) or due to par-
enthood, as provided for by law in the country in question
(parental leave).
Maternity protection, parental leave
Management positions are positions at functional levels I to
IV below the Board of Management level.
Management positions
M
Cash and cash equivalents as well as marketable securities
and investment funds.
Liquidity
L
The number of people obtaining voluntary or mandatory
work experience at a BMW Group company (includes all of
the consolidated and non-consolidated companies in which
the BMW Group holds more than 50% of the shares) while
studying for a degree.
Interns
I
Gross profit as a percentage of Group revenues.
Glossary and Explanation of Key Figures
← = Q
education worldwide. This data is collected by directly regis-
tering participants and, to a lesser extent, via qualified ex-
trapolation. It comprises the overall number of participants
on training and qualification courses, including e-learning
courses.
Group profit loss before tax as a percentage of Group reve-
Pre-tax return on sales
Group net profit as a percentage of Group revenues.
Post-tax return on sales
The number of people with active employment contracts
who are absent from work on grounds of illness for an ex-
tended period of time (as defined in the country in question
- in Germany, this means an absence of more than 42 calen-
dar days with a given illness).
People on extended sick leave
Ratio of unappropriated profit of BMW AG in accordance with
HGB to net profit for the year of the BMW Group in accord-
ance with IFRS.
Payout ratio
The number of employees (see definition of "Employees”),
distinguishing between employees who have contractually
stipulated weekly working hours as prescribed by law, in a
collective wage agreement or by the company in question
(full time) and employees with a contractually stipulated re-
duction in their number of weekly working hours, which are
thus less than the respective number of full-time working
hours (part time).
>= 10.0 %-pts.
[-0.9%-pts. / +0.9%-pts.]
[+1.0%-pts. / +4.9%-pts.]
[-1.0%-pts. / -4.9 %-pts.]
[+5.0%-pts. / +9.9 %-pts.]
[-5.0%-pts. - 9.9 %-pts.]
>= 10.0%-pts.
Gross profit margin
Part time, full time
At previous year's level
Slight increase
P
Unlike the other key performance indicators, the RoCE fore-
cast for the Automotive and Motorcycles segments is based
on the change in percentage points:
[-0.9% +0.9%]
[+1.0% / +4.9%]
[-1.0% / -4.9%]
[+5.0% / +9.9%]
[-5.0% / 9.9%]
>10.0%
>=-10.0%
Slight decrease
Solid increase
Moderate decrease
Significant increase
Significant decrease
At previous year's level
Slight increase
The BMW Group uses the following terminology and ranges
when forecasting key performance indicators:
Outlook
This entails compensating for carbon emissions which can-
not be avoided by reducing emissions elsewhere (avoid-
ance) or else by absorbing them by means of so-called car-
bon sinks (carbon removals). In its activities, the BMW Group
stresses the avoidance of carbon emissions over compensa-
tion. Unavoidable carbon emissions are neutralised in ac-
counting terms by means of offsetting. Offsetting involves
purchasing certificates on the voluntary carbon market and
thus goes beyond the carbon offsetting approach which is
implemented via the European Union Emissions Trading
System (ETS). Criteria such as additionality, permanence,
additional social benefits (e.g. will the avoidance of open
fires in enclosed spaces provide health benefits), certifica-
tion, transparency and the avoidance of double counting
contribute to the quality of the certificates used and thus to
the effectiveness of offsetting.
Offsetting
0
Slight decrease
Solid increase
Moderate decrease
Significant increase
Significant decrease
Goodwill corresponds to the consideration paid to acquire an
entity, less the fair value of the separate assets acquired and
liabilities assumed. The buyer is willing to pay the additional
amount in return for future expected earnings.
Goodwill
G
Electrified vehicles
The effective tax rate is calculated by dividing the income tax
expense by the Group profit before tax.
Effective tax rate
EBIT plus financial result.
EBT
nues.
Profit loss before financial result as a percentage of reve-
EBIT margin
Abbreviation for "Earnings Before Interest and Taxes", equiv-
alent in the BMW Group income statement to "Profit / loss
before financial result". This is comprised of revenues less
cost of sales, selling and administrative expenses and the
net amount of other operating income and expenses.
EBIT
Basic earnings per share are calculated for common and
preferred stock by dividing the net profit after minority inter-
ests, as attributable to each category of stock, by the aver-
age number of shares in circulation. Earnings per share of
preferred stock are computed on the basis of the number of
preferred stock shares entitled to receive a dividend in each
of the relevant financial years.
The BMW Group uses the terms Battery Electric Vehicle
(BEV) to denote fully electric vehicles and Plug-in Hybrid Ve-
hicle (PHEV) to denote vehicles that can be charged and
also driven on a fully electric basis.
Earnings per share (EPS)
A new or used vehicle will be recorded as a delivery once
handed over to the end user. End users also include lease-
holders under lease contracts with BMW Financial Services
and in the US and Canada - dealers when they designate
a vehicle as a service loaner or demonstrator vehicle. In the
case of used vehicles, end users may include dealers and
other third parties when they purchase a vehicle at auction or
directly from the BMW Group. Vehicles designated for the
end user and suffering total loss in transit will also be record-
ed as deliveries. Deliveries may be made by BMW AG, one of
its international subsidiaries, a BMW Group retail outlet, or
independent dealers. The vast majority of deliveries - and
hence the reporting to BMW Group of deliveries - are made
by independent dealers. In the US and Canada, the period
start and end dates for the reporting of deliveries may imma-
terially deviate from the beginning and, respectively, end of
calendar years or calendar quarters and instead follow in-
dustry-standard reporting calendars.
Deliveries
D
Financial swap agreements, under which creditors of securi-
ties (usually bonds) pay premiums to the seller of the CDS to
hedge against the risk that the issuer of the bond will default.
As with credit default insurance agreements, the party re-
ceiving the premiums gives a commitment to compensate
the bond creditor in the event of default.
Credit default swap (CDS)
the financial position, net assets and results of operations of
the Group as a single economic entity.
ue.
Short-term debt instruments with a term of less than one
year which are usually issued at a discount to their face val-
Commercial paper
Hedges against exposures to the variability in forecasted
cash flows, particularly in connection with exchange rate
fluctuations.
Cash flow hedge
E
Cash flow at risk
Consolidation
348
Free cash flow is derived from cash flows from operating and
investing activities. The cash flows from investing activities
from the purchase and sale of marketable securities and in-
vestment funds is not included. Cash flows from the pur-
chase and sale of shares and the dividend payout from in-
vestments accounted for using the equity method are
included in the cash flows from investing activities.
BMW X6M
Free cash flow
A hedge against exposures to fluctuations in the fair value of
a balance sheet item.
Fair value hedge
The amount at the measurement date for which an asset
could be exchanged, or a liability settled, between knowl-
edgeable, willing parties in an arm's length transaction.
Fair value
F
Expenditure on training and further education
Expenditure on training comprises all costs incurred in the
reporting year for vocational training within the consolidated
and non-consolidated, wholly owned subsidiaries of the
BMW Group, including personnel costs for trainers and ap-
prentices as well as other costs and investments related to
vocational training. The volume of expenditure for further ed-
ucation is calculated for all consolidated and non-consoli-
dated wholly owned subsidiaries of the BMW Group. This
includes preparation and implementation costs, opportunity
costs and investments made in order to provide such further
education. These costs also include notional depreciation,
measured on the basis of inventory lists.
Equity capital as a percentage of the balance sheet total.
Equity ratio
The process of combining separate financial statements of
Group entities into Group Financial Statements, depicting
The number of people with temporary or permanent employ-
ment contracts who have opted for retirement via partial re-
tirement working arrangements and who are in the non-ac-
tive phase of this model (i. e. the second part, following the
active phase in this model).
The number of employees includes BMW AG and all compa-
nies in which it holds a majority interest, irrespective of
whether they are consolidated in the Group Financial State-
ments. The figure does not include employees in dormant
employment relationships, those in the non-work phase of
partial retirement working arrangements and low-wage
earners. With effect from the financial year 2020, the defini-
tion also includes employees with permanent and fixed-term
contracts. Up to 2019, it also included temporary staff, post-
graduate students, interns, apprentices, those on extended
sick leave and sabbaticals.
Employees
← = Q
Glossary and Explanation of Key Figures
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
Employees in the non-work phase of partial retirement
working arrangements
5,012
€ million
5,650
44-38
1.9 1.7
50-59
18.6 -16.7
44-32
1.9-1.4
BMW 320e Touring
14.8 - 14.2
41-35
1.8-1.5
52-61
18.1 -16.1
41-30
1.8 1.3
13.7
43
1.9
51-53
15.2 -14.9
42-38
1.8-1.7
BMW 320e (automatic transmission)
BMW X2 xDrive25e
15.3 14.3
BMW 320e xDrive Touring
2.2-1.5
49-35
42-31
1.9-1.4
BMW 330e Touring
15.9-15.2
45-40
2.0-1.7
51-60
18.6-16.5
43-31
1.9 1.4
14.8-13.9
3,922
41-35
52-60
18.4-16.5
41-30
1.8 1.3
BMW 330e xDrive
BMW 330e
16.4-16.0
49-43
2.1 1.9
46-57
19.5-17.3
1.8 1.5
20.0 17.9
30-22
1.4 1.1
Electricity power
CO2 emissions
in g/km
(combined/weighted
combined) max/min
Fuel consumption
in l/100km
(combined weighted
combined) max/min
As of February 2022
official figures are only based on WLTP. In the vehicles, different figures
than those published here may apply for the assessment of taxes and
other vehicle-related duties which are also based on CO2 emissions. For
further details of the official fuel consumption figures and official spe-
cific CO2 emissions of new cars, please refer to the "Manual on fuel con-
sumption, CO₂ emissions and power consumption of new cars", available
at www.dat.de/co2
The figures for fuel consumption, CO₂ emissions and power consumption
are calculated based on the measurement methods stipulated in the cur-
rent version of Regulation (EU) 715/2007. This information is based on a
vehicle with basic equipment in Germany; ranges take into account differ-
ences in wheel and tyre size selected as well as optional equipment and can
change based on configuration. The figures have been calculated based on
the new WLTP test cycle and adapted to NEDC for comparison purposes.
For vehicles that were newly type approved on or after January 1, 2021,
FIGURES FOR FUEL CONSUMPTION, CO2-EMISSIONS AND POWER CONSUMPTION
CONSUMPTION AND
CARBON DISCLOSURES
Consumption and Carbon Disclosures
← = Q
Other Information
consumption
Remuneration Report
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
342
* Regulation (EU) 2020/852 of the European Parliament and of the Council of 18
June 2020 on the establishment of a framework to facilitate sustainable invest-
ment, and amending Regulation (EU) 2019/2088 (Text with EEA relevance).
NFS-Index
13.4 13.1
39-27
305-299
27.7 24.3
77-88
Corporate Governance
18.3-16.2
in kWh/100 km
(combined/weighted
combined) max/min
Electric range
(combined weighted
combined)
13.5-13.5
14.3 13.8
41-41
1.8-1.8
69-80
15.0-14.4
39-35
1.7-1.5
48-43
2.1-1.9
47-52
Figures according to WLTP
15.7-15.0
2.1 1.7
BMW 230e xDrive Active Tourer (preliminary figures)
BMW 225xe Active Tourer (model year 2021)
BMW X1 xDrive25e
BMW
Model
combined) max/min
in kWh/100 km
(combined/weighted
Figures according to NEDC
Electricity power
consumption
CO2 emissions
in g/km
(combined weighted
combined) max/min
Fuel consumption
in l/100km
(combined weighted
combined) max/min
44-39
2.1-1.6
52-61
44-38
2.2-1.6
BMW 530e xDrive
14.9-13.8
43-39
1.9 -1.7
53-61
18.3-16.2
41 - 30
1.8 1.3
BMW 530e
15.6-15.0
46-42
15.1-14.5
43-39
1.9-1.7
2.0-1.8
51-57
18.4-17.0
43-35
1.9 1.5
BMW 520e Touring
53-61
18.2-16.3
41-30
49-35
19.4-17.4
47-55
2.1 2.0
13.3
307-303
1.7 1.2
13.6-13.3
BMW X5 xDrive45e
BMW X5M
16.3-15.8
53-49
2.3-2.2
47-57
19.2-17.2
1.8 1.3
51-37
BMW 545e xDrive
16.1-15.4
46-42
2.0 1.8
51-57
18.6-17.1
44-35
1.9 1.5
BMW 530e Touring
16.5-15.9
49-46
2.2-1.6
BMW 520e
416-521
493-590
19.1 16.1
10.1 9.9
BMW M4
453-461
18.9 18.5
BMW iX3
42-50
20.5-18.9
59-45
2.6-2.0
BMW X3 xDrive30e
248
230-226
10.8
10.2 10.0
BMW M3
15.8-14.7
49-43
2.2 1.9
48-57
19.3 17.3
48-35
2.1-1.6
BMW 330e xDrive Touring
15.6-14.5
231-227
1.9 1.7
343
To Our Stakeholders
22.5 18.0
BMW i4 eDrive40
BMW i4 M50
BMW
Figures according to WLTP
in kWh/100 km
(combined/weighted
combined) max/min
Electricity power
consumption
CO₂ emissions
in g/km
(combined/weighted
combined) max/min
in l/100km
(combined weighted
combined) max/min
Fuel consumption
in kWh/100 km
(combined weighted
combined) max/min
BMW Group Report 2021
Figures according to NEDC
Electricity power
consumption
Fuel consumption
in l/100km
(combined weighted
combined) max/min
Electric range
(combined weighted
combined)
Model
As of February 2022
Consumption and Carbon Disclosures
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
CO₂ emissions
in g/km
(combined/weighted
combined) max/min
13.1
up to 90
25.2-23.5
131,835
138,377
154,803
172,174
188,535
195,506
208,938
228,034
216,658
229,527
€ million
Balance sheet total
48,395
51,134
59,078
65,591
67,989
71,765
71,411
82,625
71,963
76,466
€ million
CASH FLOW STATEMENT
Cash and cash equivalents at balance sheet date
€ million
16,009
7 Product Safety and Data Protection
7 Purchasing and Supplier Network
7 Corporate Citizenship
7 Compliance and Human Rights
7 Purchasing and Supplier Network
7 Compliance and Human Rights
7 EU Taxonomy
Contractually stipulated weekly hours of work.
Working hours/working times
W
A measure of the potential maximum loss in value of an item
during a set time period, based on a specified probability.
Current provisions and liabilities
Value at risk
Expenditure for further education includes all costs incurred
by the BMW Group's consolidated companies in connection
with ongoing and advanced training. This includes prepara-
tion and implementation costs, opportunity costs and in-
vestments made in order to provide such training. Costs also
include notional depreciation, measured on the basis of as-
set inventory lists.
The number of apprentices undergoing training within the
BMW Group includes those employed at domestic and inter-
national plants in a total of seven countries as well as those
working in corporate functions, at Group plants in Germany
and international sales companies as well as in the Financial
Services segment.
Expenditure for training comprises all costs incurred in the
year under report for vocational training within the
BMW Group in a total of seven countries, including personnel
costs for trainers and apprentices as well as other costs and
investments related to vocational training.
Training and further education
The number of people employed on an hourly basis as tem-
porary staff at a BMW Group company (includes all of the
consolidated and non-consolidated companies in which the
BMW Group holds more than 50% of the shares) while stud-
ying for a degree.
Temporary staff/working students
The number of people employed by the BMW Group (in-
cludes all of the consolidated and non-consolidated compa-
nies in which the BMW Group holds more than 50% of the
shares) whom the BMW Group has actively hired from a
temporary employment agency as temporary employees.
Temporary employee
T
Free cash flow Automotive segment
13,537
V
52,834
51,643
58,288
59,907
61,520
75,132
€ million
Equity
5.4
6.5
5.7
4.2
4.0
4.8
57,829
5.2
4.0
4.5
%
Capital expenditure ratio (capital expenditure / revenues)
4,151
4,967
4,601
3,826
3,731
4,688
5,029
5.4
7 Environmental Analysis and Megatrends
54,107
42,764
47-37
301
73,183
69,634
79,698
85,502
83,175
77,929
€ million
23.2
25.7
24.2
47,363
24.8
27.7
27.7
26.3
28.4
32.7
%
Non-current provisions and liabilities
Equity ratio
30,606
35,600
37,437
25.1
7 BMW Group Integrated Strategy
63,819
7 Health and Performance
2.2-2.2
51-49
17.1 -16.5
MINI
MINI Cooper SE
17.6 -15.2
MINI Cooper S Countryman ALL4
7.5-6.9
MINI Cooper SE Countryman ALL4
2.1 1.7
47-39
47-54
15.9 14.8
Rolls-Royce Black Badge Ghost
15.8
359
Rolls-Royce Cullinan
16.5 16.1
377-368
Rolls-Royce Wraith
16.3 -15.8
369-357
Rolls-Royce Dawn
16.9-16.2
ROLLS-ROYCE
381-367
19.1 - 18.1
2.2 1.8
7 Diversity
BMW iX xDrive40
BMW iX xDrive50
BMW iX M60
22.5 19.3
372-425
23.0 19.8
24.5-21.9
550 - 631
502-561
BMW 745e
2.1 1.8
50-42
49-41
48-55
2.2 -2.1
BMW 745Le xDrive
2.5 2.1
57-47
20.1 18.8
45-52
2.6-2.5
51-47
59-56
16.9-16.6
17.8-17.5
BMW 745Le
18.9 17.9
* Figures are preliminary and rely on an outlook based on the WLTP type test procedure.
170-158
6.5-6.2
2.1-1.9
Operational expenditures that are taxonomy eligible
BMW Group Report 2021
7 Business Model and Segments
7 BMW Group Integrated Strategy
7 BMW Group Integrated Strategy
7 Strategy Process
7 Performance Indicators
7 Managing sustainability
7 Environmental Analysis and Megatrends
Risk and Opportunity Management
About this Report
Capital expenditures that are taxonomy eligible
7 Compliance and Human Rights
7 BMW Group Integrated Strategy
7 Environmental Analysis and Megatrends
16.9-14.9
7 Products and Mobility Solutions
Production, Purchasing and Supplier Network
7 BMW Group Integrated Strategy
-
How does the BMW Group ensure cooperation?
7 Performance indicators
7 Employees and Society
7 Employer Attractiveness and Employee Development
7 Employer Attractiveness and Employee Development
Revenues that are taxonomy eligible
7 Performance Indicators
Mandatory disclosure requirement according to Art. 8 of the
EU Taxonomy Regulation*
149-142
48-44
14.8 14.1
341
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
BMW Group Report 2021
Mandatory disclosure pursuant to section 289 c - e HGB
Respect for human rights
NFS-INDEX
Social matters
Employee matters
Environmental matters
Combatting corruption and bribery
Risks
Integration of top management
Business model
Connection to figures in financial statements
Fax
CONTACTS
Further information about the BMW Group is available
online at:
THE BMW GROUP ON THE INTERNET
Telephone +49 89 382-2 45 44
+49 89 382-2 44 18
BUSINESS AND FINANCE PRESS
+49 89 382-2 41 18
Other Information
← = Q
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
7 www.bmwgroup.com
To Our Stakeholders
Contacts
E-mail
+49 89 382-1 46 61
Investor Relations information is available directly at:
BMW Group Report 2021
WWW.BMWGROUP.COM
7 www.bmw-motorrad.com
7www.rolls-roycemotorcars.com
www.mini.com
7 www.bmw.com
ir@bmwgroup.com
E-mail
Fax
Information about the various BMW Group brands is
available at:
Telephone +49 89 382-2 53 87
INVESTOR RELATIONS
Telephone +49 89 382-0
80788 Munich
Germany
Bayerische Motoren Werke
Aktiengesellschaft
PUBLISHED BY
7www.bmwgroup.com/ir
presse@bmwgroup.com
352
Group Financial Statements
3 November 2023
5 May 2022
BMW Group Annual Conference. Analyst and Investor Day
17 March 2022
BMW Group Annual Conference. Media Day
16 March 2022
2022
FINANCIAL CALENDAR
Quarterly Statement to 31 March 2022
← = Q
Remuneration Report
Corporate Governance
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
351
Quarterly Statement to 30 September 2023
Other Information
11 May 2022
Financial Calendar
3 August 2022
Half-Year Report to 30 June 2023
Annual General Meeting
3 August 2023
Annual General Meeting
11 May 2023
Quarterly Statement to 31 March 2023
BMW Group Annual Conference. Analyst and Investor Day
16 March 2023
4 May 2023
15 March 2023
BMW Group Report 2022
15 March 2023
2023
Quarterly Statement to 30 September 2022
3 November 2022
Half-Year Report to 30 June 2022
BMW Group Annual Conference. Media Day
Standard
P-1
Moody's
and Poor's
A2
A
Short-term debt
The BMW Group strategy comprises four elements: position, di-
rection, strategic approach and collaboration. These formulate
the various aspects of our aspirations and are combined in a
"strategy arrow" that serves as a symbol for our forward-looking
approach. This strategic framework provides a fixed point of ref-
erence for all decisions of Company-wide significance.
Group Financial Statements
Corporate strategy
The strategy is integrated into annual longer-range corpor-
ate planning, with implementation monitored by a target
system that is comprised of aspects finance, customers, pro-
cesses, learning and development. Performance indicators.
← = Q
Other Information
Remuneration Report
Corporate Governance
Combined Management Report
BMW Group Integrated Strategy
Company rating
Long-term debt
The BMW Group's corporate strategy, referred to as the
"BMW Group strategy", forms the core of our integrated ap-
proach. It defines the framework for decision-making and lays
the foundation for the Company to maintain a consistent focus
on profitability, growth and sustainability, even in an increas-
ingly dynamic environment.
With its above-average ratings, the BMW Group enjoys good
access to international capital markets and is thus able to
benefit from highly attractive refinancing conditions.
31
tations that the BMW Group will continue performing well, SUSTAINABILITY RATINGS
To Our Stakeholders
What does the BMW Group stand for?
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
despite the challenging economic environment. Moreover,
both agencies explicitly highlight the fact that BMW AG con-
tinues to implement its policy of decarbonisation, thereby
enabling it to undercut the targets set by the EU for 2020.
Other Information
BMW Group and Capital Markets
BMW GROUP AND CAPITAL MARKETS
RATINGS REMAIN AT
HIGH LEVEL
The BMW Group continues to enjoy the best ratings on the
capital market of Europe's automobile manufacturers.
The persisting impact of the coronavirus pandemic and the
challenges posed by the ongoing transformation of the auto-
motive industry caused rating agencies to reassess their rat-
ings for the automotive sector in 2020, resulting in the ratings
and outlooks of numerous companies being downgraded.
However, in light of the generally improved situation, upward
adjustments were made over the course of 2021.
In this context, Moody's raised its outlook for BMW AG from
"negative" to "stable" on 26 March 2021. At the same time,
the long-term rating of A2 and the short-term rating of P-1
were both confirmed. On 5 August 2021, Standard & Poor's
(S&P) adjusted its outlook for BMW AG from "negative" to
"stable" and confirmed its long-term and short-term ratings
of A and A-1 respectively.
In addition to the general recovery in the automotive indus-
try, the upgraded outlook reflects the rating agencies' expec-
GOOD PLACEMENT IN
← = Q
BMW Group Report 2021
98
40
Diversity
38
BMW Group Integrated Strategy
89
Corporate Citizenship
38
Environmental Analysis and Megatrends
91
Financial Performance
39
Strategy Process
91
General and Sector-Specific Environment
43
Performance Indicators
95
Overall Assessment by Management of the Financial Year
44
Performance Management
96
Comparison of Forecasts with Actual Outcomes
48
Compliance and Human Rights
86
Locations
35
Health and Performance
1 Xetra closing prices.
2 Proposed by management.
3 Weighted average number of shares for the year.
4 Stock weighted according to dividend entitlements.
5 The 2018 figures were adjusted due to the change in accounting policy in conjunction with the adoption of IFRS 16 (see Annual Report 2019, Note 6 to the Group Financial Statements).
33
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Earnings Performance of the BMW Group
Remuneration Report
← = Q
34
Overview of the BMW Group
80
Employees and Society
34
Organisational Structure
80 Employer Attractiveness and Employee Development
34
Business Model and Segments
83
Other Information
51
Products and Mobility Solutions
101 Financial Position of the BMW Group
144 Disclosures Relevant for Takeovers and Explanatory Comments
COMBINED
MANAGEMENT
REPORT
34
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Overview of the BMW Group
Group Financial Statements
Corporate Governance
Remuneration Report
143 Internal Control System
Other Information
OVERVIEW OF THE BMW GROUP
ORGANISATIONAL
STRUCTURE
The BMW Group successfully manufactures automobiles
and motorcycles for the premium and luxury segments on a
global basis. With BMW, MINI and Rolls-Royce, the
BMW Group owns three of the best-known brands in the au-
tomotive industry worldwide. It also occupies a strong mar-
ket position in the premium motorcycles segment. At 31 De-
cember 2021, the BMW Group employed a workforce of
118,909 people worldwide.
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
based in Munich, Germany, is the parent company of the
BMW Group, which comprises BMW AG itself and all sub-
sidiaries over which BMW AG has either direct or indirect
control. List of Investments. BMW AG is also responsible for
managing performance throughout the Group, which is
sub-divided into the Automotive, Motorcycles and Financial Services
operating segments Presentation of segments. The Group's Other
Entities segment primarily comprises holding companies
and Group financing companies. The structure of the
BMW Group changed significantly at the beginning of the
financial year 2022 due to the BMW Group's majority ac-
quisition of the joint venture BMW Brilliance Automotive
Ltd. (BBA). Further information on the consolidation of
BMW Brilliance Automotive is provided in the 7 Notes to the
Group Financial Statements.
BUSINESS MODEL
AND SEGMENTS
Business model
The BMW Group develops, manufactures and sells innova-
tive premium automobiles and motorcycles on a worldwide
basis. It also offers a broad range of financial and mobility
services. The Group is structured into operating segments,
namely the Automotive, the Motorcycles and the Financial
Services segments.
Automotive segment
The BMW Group manufactures BMW, MINI and Rolls-Royce
brand vehicles. The BMW brand caters to a broad variety of
customer requirements. Its wide-ranging model portfolio
1 The change took place outside of the financial period under report.
← = Q
82.95
129 Risk and Opportunity Management
124 Outlook, Risk and Opportunity Management
51
Innovation and Customer Orientation
56
Carbon Emissions and Pollutants
59
Electric Mobility
62
Mobility Concepts and Services
65
Product Safety and Data Protection
67
124 Outlook
Production, Purchasing and Supplier Network
Production Network
70
Circular Economy, Resource Efficiency and Renewable Energy
74
Purchasing and Supplier Network
103 Refinancing
105 Net Assets Position of the BMW Group
107 Value Added Statement
109 Course of Business
117 Comments on the Financial Statements of BMW AG
121 EU Taxonomy
67
27 Consumption and carbon emissions data
88.265
93.26
601,995
601,995
601,995
601,995
High
88.49
72.23
73.14
70.70
86.83
95.89
76.68
77.75
96.26
90.83
68.34
37.66
58.70
69.86
77.71
PREFERRED STOCK
Number of shares in 1,000
59,404
601,995
Number of shares in 1,000
Stock exchange price in €1
Year-end closing price
2017
2018
A-1
Outlook
stable
stable
The BMW Group has maintained a good ranking in presti-
gious sustainability ratings in 2021. For instance, the
BMW Group is represented in the MSCI ESG, Sustainalytics
and ISS ESG indexes and is well positioned in its sector in all
three. Due to its transparent reporting of carbon emissions,
the BMW Group is again in the top grouping (A List) of the
CDP rating list.
32
32
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
57,689
Corporate Governance
Other Information
← = Q
BMW Group and Capital Markets
DIVIDEND TO RISE
SIGNIFICANTLY
BMW AG STOCK
The Board of Management and the Supervisory Board will
propose to the Annual General Meeting that the unappropri-
ated profit of BMW AG amounting to € 3,827 million (2020:
€ 1,253 million) be used to pay a dividend of € 5.80 per
share of common stock (2020: € 1.90) and a dividend of
€ 5.82 per share of preferred stock (2020: € 1.92). The pay-
out ratio for 2021 therefore stands at 30.7% (2020: 32.5%).
COMMON STOCK
Low
2021
2020
2019
Remuneration Report
56,867
56,127
55,605
1.92
2.50
3.52
4.02
Earnings per share of common stock³
18.77
5.73
7.47
10.605
13.07
Earnings per share of preferred stock"
5.822
18.79
7.49
10.625
13.09
Free cash flow Automotive segment
9.61
5.15
3.90
4.12
6.78
Equity
113.60
5.75
90.92
Preferred stock
3.50
Stock exchange price in €1
Year-end closing price
73.30
55.20
55.05
62.10
74.64
High
82.00
57.60
67.85
4.00
85.50
Low
51.60
32.50
47.54
60.70
67.29
KEY DATA PER SHARE IN €
Common stock
5.802
1.90
2.50
78.89
40
M.ST 9056
35
Partner plants in Europe
Partner plant, Born, the Netherlands
Partner plant, Graz, Austria
Partner plant, Kaliningrad, Russia
▲ Research and development network in Europe
BMW Group Research and Innovation Centre (FIZ),
Munich, Germany
BMW Car IT, Munich, Germany
BMW Group Autonomous Driving Campus,
Unterschleißheim, Germany
BMW Group Designworks, Munich, Germany
BMW Group Lightweight Construction and
Technology Center, Landshut, Germany
BMW Group Diesel Competence Centre, Steyr, Austria
Critical TechWorks S.A., Porto, Portugal
BMW France, S. A. S., Montigny, France
Rolls-Royce Motor Cars Ltd., Goodwood, UK
CIRCULAR
38
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
BMW Group Integrated Strategy
Group Financial Statements
Corporate Governance
Remuneration Report
Rolls-Royce Manufacturing Plant, Goodwood, UK
BMW Group plant Swindon, UK
BMW Group plant Munich
BMW Group plant Regensburg
BMW Group plant Wackersdorf
BMW Group plant Steyr, Austria
BMW Group plant Hams Hall, UK
BMW Group plant Oxford, UK
BMW Group plant Leipzig
11 Switzerland
4 Sweden
12 Italy
5 Finland
13 Slovenia *
6 The Netherlands
14 Spain
7 UK
15 Portugal
Sales locations only.
15
Other Information
10
18 Austria
19 Slovakia
20 Hungary*
21 Romania *
22 Bulgaria *
23 Greece
20
☐
23
BMW Group plant Eisenach
BMW Group plant Landshut
■ Production in Europe
BMW Group plant Berlin
BMW Group plant Dingolfing
← = Q
38
39
Combined Management Report
BMW Group Integrated Strategy
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
especially in urban areas, but will mainly be used as a sup-
plementary option 7 Mobility concepts and services.
Around the world, the conditions for individual mobility in
cities and their surrounding suburban areas are developing
very differently in some cases and depend above all on the
location of these conurbations, their population density
and the focus of emissions policy in the respective urban
regions. Mobility concepts and services.
Climate change and CO₂ reduction
We see the consequences of climate change as a major
challenge for the future. As governments around the world
work to translate the goals of the Paris Climate Agreement
into national laws, investors are increasingly evaluating
companies and their business models according to ESG cri-
teria BMW Group and capital market.
The European Union (EU) sees itself as a global leader in
achieving these climate goals. Within the EU, the Sustain-
able Finance Framework aims to classify a company's busi-
ness activities according to sustainability criteria.
To Our Stakeholders
The US government has also proposed more ambitious cli-
mate-protection goals that aim to halve greenhouse gas
emissions by 2030 from 2005 levels. China is relying on fleet
limits and a growing percentage of zero-emissions vehicles.
In the transport sector, a swift transition to electromobility is
an important prerequisite on the road to climate neutrality.
By 2030, the BMW Group will be capable of offering a com-
plete array of electric vehicles in terms of both product diver-
sity and range. Growing demand is additionally strength-
ened by the benefits of lower running costs and framework
conditions such as government subsidies Electromobility.
Digitalisation and connectivity
In addition to the topics already referred to, the combination
of digitalisation and connectivity is another important mega-
trend for the BMW Group. The modern vehicle is already one
of the most complex and software-intensive items owned by
consumers. Vehicles are increasingly viewed as digital ob-
jects, with corresponding functions expected. Customers de-
mand products that are seamlessly and perfectly integrated
into their familiar living environment. It is therefore safe to
assume that digital business models will generate a growing
percentage of added value in the future. China, in particular,
is setting new standards for digitalisation. Customer desires
are increasingly influenced by the world of consumer elec-
tronics and are an important factor in purchasing decisions
7 Innovation and customer orientation.
In addition to the new possibilities digitalisation can offer
customers, further potential lies in networking mobile value
creation. To create a virtual platform and meet future chal-
lenges, the BMW Group founded the Catena-X Automotive
Network, together with other manufacturers, system suppli-
ers and technology partners Production, purchasing and supplier
network.
Automated/autonomous driving
Alongside digitalisation, development of automated/autono-
mous driving remains a key expectation for the future of mo-
bility. Due to the importance of this topic for the automotive
industry and the complexity of the technologies and exper-
tise involved, extensive funding is being channelled into de-
velopment in this area worldwide.
Concrete requirements and regulations for autonomous driv-
ing are likely to be in place in individual countries and re-
gions by 2025. The aim of all regulators is assumably to au-
thorise autonomous driving systems in the medium term
7 Products and mobility solutions.
M&BX 524E
STRATEGY PROCESS
The BMW Group regards the strategy process as a continu-
ous task. The assumptions underpinning our strategies are
regularly reviewed, based on the findings from our analysis of
environmental and external factors. The Board of Manage-
ment sets the strategic direction for this process, regularly
addressing strategic issues for the BMW Group and assess-
ing the impact of external factors. The BMW Group's corpo-
rate strategy is the starting point for business departments to
systematically align their own strategy with the Company's
strategic goals and define the concrete measures that must
be implemented in order to achieve them. This process takes
place via a planning and management system with a built-in
feedback loop.
* 7 Consumption and carbon emissions data.
Electromobility and drive technologies
10 France
BMW Group Report 2021
Individual mobility appears likely to remain a fundamental
human need for the foreseeable future, although vehicle
ownership depends to a large extent on income, household
size and location (urban/suburban). Mobility services, so-
called on-demand mobility (ODM), will remain relevant,
Strategy Process
43
Performance Indicators
44 Performance Management
48
Compliance and Human Rights
ELECTRIC
BMW GROUP INTEGRATED STRATEGY
Environmental Analysis and Megatrends
BMW GROUP INTEGRATED STRATEGY
The BMW Group operates at the intersection of challenging,
increasingly complex and differentiated conditions around
the world. This includes:
39
Global competition
Diverging social expectations in the face of climate change
We constantly refine our corporate strategy and align our
strategic targets with these external factors and their dy-
namic rate of change as important input parameters.
The BMW Group's integrated strategy is based on funda-
mental elements, like the integrity of our actions.
7 Compliance and Human rights.
The BMW Group strategy is developed from an analysis of
the global megatrends that are crucial to the transformation
of the automotive industry and essentially comprises the in-
tegrated and continuous strategy process, the target system
and Corporate management.
ENVIRONMENTAL ANALYSIS
AND MEGATRENDS
A company's success depends to a large extent on its ability
to recognise changes in its environment early on, plan for
different scenarios, effectively manage risks and take advan-
tage of opportunities that may arise from such changes
(Risks and opportunities.) To this end, we continuously monitor
the business environment in our key regions, using available
data to analyse in detail the trends and developments that
could affect our business in the future. Regular Dialogue with
stakeholders within the framework of the BMW Group Xchange
formats rounds out the picture from the analysis of external
and environmental factors.
The most important megatrends with long-term implications
for the BMW Group's business model are currently climate
change and the reduction of carbon dioxide (CO2) emissions,
electromobility, digitalisation and connectivity - including
automated and autonomous driving, as well as mobility pat-
terns within society. GRI 102-46
Mobility patterns
Megatrends such as electrification and connectivity
A capital market focused on profitability and growth
Sustainability
M.NW 5143
3 Denmark
17 Poland
Combined Management Report
Overview of the BMW Group
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
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LOCATIONS WORLDWIDE
• Sales subsidiaries and
Financial Services
1 Headquarters
2 Canada
3 USA
4 Mexico
5 United Arab Emirates
6 Brazil
8 South Africa
7 Argentina *
14 Thailand
15 Malaysia
16 Singapore
9 Russia
10 India
11 China
12 South Korea
To Our Stakeholders
BMW Group - Report 2021
36
2 Including cooperation partners
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Overview of the BMW Group
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
covers several automobile classes, ranging from the pre-
mium compact class, the premium mid-size class and
through to the ultra-luxury class. Alongside its state-of-the-
art plug-in hybrids and vehicles powered by highly efficient
combustion engines, the BMW brand also includes all-elec-
tric models manufactured under the BMW i sub-brand, such
as the BMW iX and the BMW i4 launched in 2021, as well as
modern plug-in hybrid models and high-performance vehi-
cles belonging to the BMW M sub-brand.
The MINI brand promises driving pleasure in the premium
compact segment and, alongside models powered by effi-
cient combustion engines, it also offers plug-in hybrid and
all-electric models. The all-electric MINI Cooper SE¹ was the
best-selling model in the MINI family in the year under
report.
With a tradition stretching back well over a century, Rolls-
Royce is the ultimate marque in the ultra-luxury class. Rolls-
13 Japan
Royce Motor Cars specialises in providing bespoke customer
specifications and offers the utmost in terms of quality and
service.
Motorcycles segment
As in all other areas, the BMW Group focuses rigorously on
the premium segment with its Motorcycles segment and its
model range of motorcycles and scooters in the Sport, Tour,
Roadster, Heritage, Adventure and Urban Mobility catego-
ries. BMW Motorrad also offers a broad range of equipment
options to enhance riding safety and comfort as well as per-
sonalised configurations. The Motorcycles segment's sales
network is organised similarly to that of the Automotive seg-
ment. Currently, BMW motorcycles are sold by more than
1,200 dealerships and importers in over 90 countries world-
wide. Motorcycles segment
Financial Services segment
The BMW Group is a leading provider of financial services in
the automotive sector. It offers these services in more than
50 countries worldwide via companies and cooperation ar-
rangements with local financial service providers and im-
porters. The Financial Services segment's main line of busi-
ness comprises credit financing and the leasing of
BMW Group brand automobiles and motorcycles to retail
customers. Customers can also select from an attractive ar-
ray of insurance and banking products.
Operating under the brand name Alphabet, the BMW Group's
international multi-brand fleet business provides financing
and comprehensive management services for corporate car
fleets in more than 20 countries.2 These services also in-
clude assisting customers to manage their fleets on a sus-
tainable and climate-friendly basis.
Financing dealership vehicle fleets serves to support the
dealership organisation and rounds off the segment's range
of services. Financial Services segment
LOCATIONS
Global overview
The BMW Group operates on a worldwide basis. The
BMW Group's largest automobile and motorcycle markets
are located in Europe, particularly in Germany and the
United Kingdom (UK) as well as in China and the USA.
17 Consumption and carbon emissions data
Its comprehensive range of products enables the BMW Group
to meet the diverse expectations and needs of its customers
worldwide. The global sales network of the BMW Group's
automobile business currently comprises more than 3,500
BMW, 1,600 MINI and over 150 Rolls-Royce dealerships.
7 Automotive segment
17 Indonesia *
18 Australia
19 New Zealand
BMW Group Technology Office USA, Mountain View, USA
BMW Group Engineering and Emission Test Center, Oxnard, USA
BMW Group ConnectedDrive Lab China, Shanghai, China,
and BMW Group Designworks Studio Shanghai, China
18
BMW Group Technology Office, Shanghai, China
BMW Group Engineering China, Beijing, China
BMW Group Engineering Japan, Tokyo, Japan
BMW Group Engineering USA, Woodcliff Lake, USA
BMW Group IT Technology Office, Greenville, USA
BMW Group IT Technology Office, Singapore
BMW Group IT DevOps Hub, Rosslyn, South Africa
BMW do Brasil, Araquari, Brazil
BMW Group Technology Office Tel Aviv, Tel Aviv, Israel
BMW Group R&D Center Seoul, Seoul, South Korea
37
BMW Group - Report 2021
To Our Stakeholders
BMW Group Designworks, Newbury Park, USA
Combined Management Report
Overview of the BMW Group
Corporate Governance
Remuneration Report
Other Information
← = Q
LOCATIONS IN EUROPE
• Sales subsidiaries and
Financial Services
1 Germany
8 Ireland
16 Czech Republic
9 Belgium/Luxembourg
Group Financial Statements
2 Norway
▲ Research and development network outside Europe
Partner plant, Cairo, Egypt
☐
☐
10
41
Sales subsidiaries and Financial
Services locations worldwide
31
Production and assembly plants
13
Countries with research
and development locations
*Sales locations
Partner plant, Kulim, Malaysia
0.15
■ Production outside Europe
BMW Group plant Araquari, Brazil
BMW Group plant Chennai, India
BMW Group plant Manaus, Brazil
BMW Group plant Rayong, Thailand
BMW Group plant Rosslyn, South Africa
BMW Group plant San Luis Potosí, Mexico
BMW Group plant Spartanburg, USA
BMW Brilliance Automotive, China (joint venture - 3 plants)
☑
Partner plants outside Europe
Partner plant, Chongqing, China
Partner plant, Hosur, India
Partner plant, Jakarta, Indonesia
☐
Dividend
Position -
1. In the use phase of the vehicle, an average reduction
of more than 50 % for every kilometre driven
The BMW Group is committed to first-class individual mobil-
ity and contributes to sustainable development. It aims to
find the right balance between business, the environment
and society. The BMW Group combines driving pleasure and
responsibility without compromise and, together with its
partners, leads the industry in environmental, social and in-
tegrity standards. The Company is committed to the Paris
Climate Agreement and providing a verifiable track record of
continuous improvement. To achieve this and reduce the im-
pact on the environment as a whole, the BMW Group is pro-
moting as well the reduction of CO2 emissions throughout
the whole product life cycle as the principles of the circular
economy from the supply chain, to production, the use
phase and the recycling of its products. For this reason,
BMW has also laid out ambitious targets to reduce CO2 emis-
sions by 2030 (reference year 2019), understood as follows:
―
2. In production, a reduction of 80 % for every vehicle
produced
3. In the supply chain, a reduction of more than 20 %
Measurable science-based targets, initially up until 2030,
have been firmly established across the Company, laying the
foundation for the reduction of our CO2 emissions. We have
joined the Science-Based Targets Initiative (SBTI) for this
purpose. This will enable us to guarantee transparency and
comparability in the validation and measurement of our tar-
gets and, at the same time, ensure they are in line with the
latest scientific findings CO₂ and emissions.
Control parameters such as life cycle CO₂ emissions and sec-
ondary raw material quotas are already important perfor-
mance indicators during the development phase of our vehi-
cle projects
Performance indicators.
Position
Strategic
approach
Collaboration
To leverage the potential for lowering CO₂ emissions during
the use phase, in particular, the BMW Group is actively
working on numerous projects and initiatives to improve the
framework conditions for electromobility. However, while
the ambitious goals of the Paris Climate Agreement are de-
signed to tackle climate change in the transport sector, they
I can only be achieved through a combination of all modern
drive technologies in addition to electromobility that are
closely aligned with customer needs and different mobility
requirements around the world. Modern combustion-en-
gine technology continues to make a meaningful contribu-
tion to the effective reduction of CO2 emissions worldwide.
For this reason, the BMW Group offers those customers
who choose not to buy an electrified vehicle - because of
their mobility needs or because the prerequisites are not
met vehicles with modern, efficient internal combustion
engines that rely on technology that is continuously further
developed. Plug-in hybrid (PHEV) concepts also provide a
good alternative in these circumstances. Products and mobility
solutions.
Sustainability is built into individual market strategies
across our global sales organisation. Centralised measures
are combined with local activities in the markets to imple-
ment a holistic programme. Best practices in the fields of
environmental protection, social sustainability, corporate
citizenship and governance are also shared within an es-
tablished international sustainability network.
Direction
-
What drives the BMW Group?
Direction is the second strategic element, after position. The
BMW Group offers exciting products for current and future
generations and secures its independence as a company by
maintaining a high level of profitability. The BMW Group is
shaping the future of sustainable mobility with its passion
and strong capacity for innovation. Thanks to its exciting
products, the Company is able to achieve maximum custom-
er satisfaction and brand strength, and thus grow its market
share.
Direction
Corporate Governance
45
An integrated approach to target management ensures that
the BMW Group's vehicle projects make a positive contribu-
tion towards achieving the sustainability targets that have
been set. By 2030, the BMW Group intends to drastically
broaden the scope of recycling, while further increasing the
proportion of secondary raw materials used to manufacture
its automobiles. With this point in mind, the BMW Group es-
tablished the so-called "Secondary First" approach during
the year under report. Non-financial performance indicators
such as carbon emissions and secondary raw materials quo-
tas are therefore key performance indicators for all new vehi-
cle projects. The overall result is a cohesive management
model across all aspects of the business. 7 GRI-Index: 102-19
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
BMW Group Integrated Strategy
Group Financial Statements
Remuneration Report
The financial services business entails specific risks, due to
the nature of its products and processes. The focus of com-
pliance management is therefore anti-money-laundering,
compliance with financial sanctions, information and privacy
protection, fraud prevention, legislative and regulatory moni-
toring, consumer protection and implementing the require-
ments of the Financial Supervisory Authorities. To manage
risk in these areas, the Financial Services segment has
established its own Compliance and Governance depart-
ment, which works closely with the central Group Compli-
ance function as a decentralised unit. Based on an annual
trend analysis it identifies the possible need for adjustments
and defines resulting measures. Implementation by the
BMW Group's financial services companies worldwide is
continuously reviewed and reported to the management of
the Financial Services segment on a quarterly basis.
← = Q
Managing operational performance at segment level
At segment level, operational performance is managed us-
ing an aggregated approach based on returns on capital.
Depending on the business model, the segments are meas-
ured on the basis of return on total capital or return on equity.
Return on capital employed (ROCE) is used for the Automo-
tive and Motorcycles segments and return on equity (ROE)
for the Financial Services segment. These indicators com-
bine a wide range of relevant economic information, such as
profitability (return on sales) and capital efficiency (capital
turnover) to measure segment performance and the devel-
opment of enterprise value.
Automotive segment
The most comprehensive key performance indicator used for
the Automotive segment is RoCE, which is measured on the
basis of segment profit/loss before financial result and the
average capital employed in the segment. It provides infor-
mation on the profitability of capital employed and business
operations. Value driver analyses are used to interpret the
causes of a change in RoCE and derive suitable measures to
influence its development.
Up to and including the reporting year 2021, capital em-
ployed has been defined as the sum of all current and
non-current operational assets less liabilities that were
available to the operational business and generally did not
incur interest (e.g. trade payables and other provisions).
With effect from the reporting year 2022, a simplified defi-
nition of capital employed will be applied to make the calcu-
lation of RoCE more comprehensible and transparent. More-
over, the capital employed figures reflect the focus of the
operating segment management. In future, capital employed
will be calculated as the sum of intangible assets, property,
plant and equipment and net working capital, the latter com-
prising inventories and trade receivables less trade pay-
ables. The new definition results in a higher level of capital
As part of the procedures for managing sustainability on an
integrated basis at corporate level, a Group target system
has been created, which has been implemented for each of
the Board members' areas of responsibility. The BMW Group
has set itself the target of decarbonising its vehicle fleet by
an average of 40% overall over the entire life cycle by 2030,
based on the reference year 2019. In this context, specific
targets have been set for the vehicle's use phase, production
and the supply chain (7 Position) including emissions reduc-
tion targets across the entire value chain (carbon emissions and
pollutants). Additionally, specific carbon targets have been set
for each vehicle project.
employed than previously reported. We also expect the
amount of capital employed to increase in light of the acqui-
sition of further shares in BMW Brilliance Automotive Ltd.
and the resulting full consolidation of that entity in the finan-
cial year 2022, whereby the increase will arise primarily due
to the capitalisation of reacquired rights in conjunction with
the purchase price allocation. The RoCE will be impacted
temporarily by the higher capital base as well as the related
amortisation expense expected to be recorded.
Other Information
with the full Board. All topics submitted to the Board of Man-
agement for decision-making must also be evaluated from
the point of view of sustainability, thereby ensuring that sus-
tainability issues are systematically integrated in deci-
sion-making processes.
Return on sales
Expenses
The BMW Group's performance management system fol-
lows a value-based approach that focuses on profitability,
consistent growth, value enhancement for capital providers,
sustainability, climate protection and job security. Capital is
considered to be employed profitably when the amount of
profit generated on a sustained basis exceeds the cost of
equity and debt capital. This strategy also secures the de-
sired degree of corporate autonomy in the long term.
The BMW Group's performance management system is
based on a multi layered structure. Operational performance
BMW GROUP
-
VALUE DRIVERS
is managed primarily at segment level. In order to manage
long-term corporate performance and assess strategic is-
sues, additional key performance figures are taken into ac-
count within the management system at Group level. In this
context, the value added serves as one of several indicators
to measure the contribution made to enterprise value during
the financial year. This aspiration to add value is measured
at both Group and segment level by means of the key finan-
cial and non-financial performance indicators (value drivers).
The link between value added and the relevant value drivers
is presented in a simplified form below.
Managing sustainability
The BMW Group's long-term corporate strategies are deter-
mined by the Board of Management. Responsibility for im-
plementing the Group's sustainability goals therefore lies
Profit
The new strategic target for RoCE is 18% (target under the
previous definition: 40%). In substance, the new target is
even more ambitious than that previously used to measure
the return on capital employed. Value is enhanced for
BMW AG shareholders when the RoCE exceeds the cost of
capital.
Value added
Return on capital
(ROCE or RoE)
Capital turnover
Capital employed
Cost of capital
Average weighted
cost of capital rate
Revenues
ROCE Automotive
Furthermore, the Automotive segment manages its compli-
ance with fleet carbon emissions requirements in regulated
markets. In this context, it also reports on the share of elec-
trified vehicles in total deliveries performance indicators. As
compliance with regulatory requirements is a significant fac-
tor in the BMW Group's success, business decisions relating
to vehicle projects also take targets for fleet carbon emis-
sions into account. Managing sustainability
Average capital employed
2,162
16,486
17,026
59.9
12.7
46
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Other Information
← = Q
Motorcycles segment
The Motorcycles segment is largely managed according to
the same logic applied to the Automotive segment. The prin-
cipal key performance indicator is the return on capital em-
ployed (ROCE). The new definition of capital employed
adopted by the Automotive segment will also be applied by
the Motorcycles segment, beginning with the 2022 reporting
period. As in the Automotive segment, the new strategic
ROCE target set for the Motorcycles segment is 18%.
9,870
Profit before
financial result
2020
2020
Due to the special significance of ROCE for the BMW Group,
the Automotive segment is also managed on the basis of a
number of additional key performance indicators that have a
significant impact on RoCE and hence on segment perfor-
DUNAOC
GENDER
EQUALITY
UN ALLIANCE OF
CIVILIZATIONS
mance. These value drivers are the number of vehicle deliv-
eries and the operating return on sales (EBIT margin: seg-
ment profit before financial result as a percentage of segment
revenues) as the key performance indicator for segment
profitability.
PERFORMANCE
MANAGEMENT
RETURN ON CAPITAL EMPLOYED (AUTOMOTIVE SEGMENT)
Automotive
Profit before financial result
in € million
Average capital employed
in € million
Return on capital employed
in %
2021
2020
2021
2021
← = Q
M.VE 291E
Remuneration Report
To make this transformation possible, the BMW Group is
pushing ahead, both by restructuring existing plants and by
further developing employee competences (Employees and
Society). The restructuring of BMW Group Plant Munich pro-
vides a clear example of how the BMW Group can success-
fully and smoothly transform a full plant, including produc-
tion of internal combustion engines, to 100% electromobility
during ongoing production by 2026. Production, Purchasing and
Supplier network.
7 Consumption and carbon emissions data
42
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BMW Group Report 2021
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By 2023, in the middle of the second phase, we will already
have at least one fully electric model on the roads in virtually
all key model series from the compact segment to the
ultra-luxury class. In this context, we are investing additional
funds and plan to increase electrified vehicles' share total
deliveries to over 30% by 2025. The trend towards electro-
mobility will also continue to progress dynamically beyond
the year 2025. By 2030, the BMW Group plans to increase
the share of fully electric automobiles in its total deliveries to
more than 50%. Performance indicators.
Corporate Governance
Other Information
← = Q
In addition to delivering product substance, we also offer our
customers a 360° approach to electrification, by creating an
appropriate charging ecosystem - because charging is a
trailblazer for electromobility. As well as offering charging
options at home and at work, we also provide public charg-
ing through BMW Charging and MINI Charging Mobility con-
cepts and services.
The BMW iX is the first BMW Group vehicle to offer automated
driving and parking functions from a new technology kit that
will enable continuous improvement and expansion of driver
assistance functions and highly automated driving in the mid-
term (Level 3). These functions will continue to be rolled out
and used in the next-generation BMW 7 Series and BMW 5
Series, for instance. Moreover, with the launch of the BMW iX,
the BMW Group became the first premium manufacturer to in-
clude the 5G mobile communications standard in a series pro-
duction vehicle on a worldwide basis. In terms of mobility, this
means comprehensive expansion of data-based services in
the fields of entertainment and infotainment, automated and
assisted driving and, above all, road safety.
The third phase of the transformation will begin in 2025 with
our global fully electric product line-up, the Neue Klasse.
Production of vehicles for the Neue Klasse will get underway
at the newly constructed BMW Group Plant Debrecen and
then expanded to BMW Group Plant Munich from 2026 on-
wards. The Neue Klasse sets the standard for digitalisation,
electrification and sustainability. It will be characterised by a
New Cluster Architecture (NCAR) geared exclusively towards
battery electric vehicles (BEVs), a completely redefined tech
stack autonomous driving and a newly developed high-per-
formance electric drivetrain generation. The Neue Klasse
also makes a significant contribution to sustainability, by re-
lying on the concept of circularity Circular design.
BMW M is also currently working on various forms of electri-
fication and already launched a performance car with a fully
electrified drive train, the BMW i4 M50*, in 2021. At the same
time, MINI's transition to an all-electric brand underlines its
urban identity. Rolls-Royce, the world's leading luxury brand,
will also focus on electromobility in the future Automotive
segment.
BMW Motorrad is continuing to evolve in the direction of
electromobility. The "Vision Amby" Vision Vehicle and the
fully-electric Concept CE 02 provide a glimpse of the future of
urban mobility. In the urban mobility segment, the CE 04
electric scooter is a trailblazer for BMW Motorrad's electro-
mobility strategy 7 Motorcycles segment.
Remuneration Report
The current, second phase of the transformation began in
2020 with our all-electric model offensive, led by the MINI
Cooper SE* and the BMW iX3*, and followed in late 2021
with the BMW i4 and BMW iX. Since 2013, the BMW Group
has delivered a total of more than 1 million electrified vehi-
cles to customers. From 2022 onwards, alongside the BMW
X3/iX3, additional models will be available with a choice of
fully electric or plug-in hybrid drivetrain, or with a state-of-
the-art internal combustion engine - for example, in the next
generation of luxury BMW 7 Series and BMW 5 Series se-
dans and the BMW X1. Going forward, the BMW Group will
continue to meet specific customer needs in individual mar-
kets and segments with a broad range of state-of-the-art
drive systems. Innovations and customer orientation.
We recognised the importance of electromobility early on
and began our transformation in this direction accordingly. In
the initial phase, the BMW Group introduced electrification
into standard production with the launch of the fully electric
BMW i3 in 2013. In 2014, the BMW Group launched the BMW
18, with ground breaking technology and a futuristic design.
The launch of the My BMW app in July 2020 has given BMW
a direct channel to its customers and provided them with a
direct link not only to their BMW dealership, but also to the
BMW brand as a whole. Customers can use the app to make
service appointments, request information on the condition
of their vehicle, or receive the latest news on BMW brand
products and services. The topic of battery charging has also
been fully integrated in this digital ecosystem. The My BMW
app can also be used to plan trips and display suitable
charging points along the route. The same applies, of course,
to the MINI brand with the MINI app.
In the BMW Group's Financial Services segment, compli-
ance is incorporated into the target management process.
Integration of specific targets into strategic steering under-
lines the importance of this topic and helps to monitor the
implementation. A management system also supports the
process of identifying risks arising from non-compliance with
internal and external regulations at an early stage.
41
BMW Group Report 2021
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The focus on profitability is a very important aspect of the
BMW Group's corporate management system. All measures
and initiatives are aimed at further developing the BMW
Group's strong economic base, so it can continue to operate
independently and invest in the future.
To underline the importance of the BMW Group's economic
performance capabilities, our ambitious financial targets are
tied to the following strategic key performance indicators:
EBIT margin in the Automotive segment (between 8 and
10%), RoCE in the Automotive segment (at least 18%) and
Group EBT margin (more than 10%) Performance indicators.
As part of our focus on efficiency, we regularly assess ways
to utilise synergies and efficiencies across the Company in
an effort to reduce the complexity that arises from increas-
ingly strict and heterogeneous regulatory requirements.
Faster, digitalised processes within lean structures are fun-
damental to systematically leveraging efficiencies. In vehicle
development, for instance, we see considerable potential for
reducing process time through digitalisation. In addition to
this, distinguishing the BMW Group from its competitors, we
are also taking advantage of the expanded possibilities of
digitalisation for customer contact, with integrated product
and service offerings, functional upgrades and customer
support. The BMW Group is also bolstering its portfolio with
attractive new models especially in highly profitable
segments.
Strategic approach -
Where is the BMW Group heading?
The BMW Group is focused on its customers worldwide and
on meeting their different requirements. It does so by un-
derstanding the needs of its current and future customers
and exceeding their expectations. It combines ground
breaking technologies, emotional products and individual
customer care to create a unique overall experience. Creat-
ing the best customer experience, both physically and digi-
tally, as well as personalised, reliable communication, is of
primary importance to us.
The BMW Group is making customer experience the focus of
all its marketing and sales activities. The aim is to offer the
industry's best premium customer experience and to seam-
lessly integrate all customer touchpoints, online and offline.
In the Financial Services Segment, the strategic approach is
geared towards making the product range available to all
customer groups across all channels Financial Services segment.
How does the BMW Group
ensure cooperation?
Our ambitious strategic objectives can only be achieved if all
employees work together. Diversity is an important compo-
nent of our competitiveness Employees and society. The diver-
sity metric defines the share of women in management po-
sitions as a key performance indicator and a strategic target
variable. The aim is to increase the share of women in man-
agement positions at the BMW Group to 22% by 2025 7 Per-
formance indicators.
To anchor strategy within the Company, it is critical to keep em-
ployees and managers informed, to strengthen their creativity
and to encourage them to actively participate in the implementa-
tion and achievement of goals. The results of the Employee Sur-
Profit before financial result as a percentage of segment
revenues (EBIT margin)
Return on capital employed (ROCE) in %
Deliveries (in units)
Share of electrified cars in total deliveries (in %)
CO2 emissions EU new vehicle fleet (in g CO2/km)
CO₂ emissions per vehicle produced (in tons)
Motorcycles segment
-
Profit before financial result as a percentage of segment
revenues (EBIT margin)
Return on capital employed (ROCE) in %
Deliveries (in units)
Financial Services segment
Return on equity (ROE) in %
* 7 Consumption and carbon emissions data
ROCE Motorcycles
44
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BMW Group Report 2021
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Automotive segment
Other Information
Number of employees at the end of the year
Share of women in management positions
Group
vey confirm high internal acceptance of the BMW Group's strat-
egy and sustainability activities, as well as employees' willingness
to play their part Employees and Society. BMW Group employees
not only work closely together within the Company, but also with
external partners. The stable relationships that have grown over
time in our partner networks are based on the same values as
those at the BMW Group. This has been especially evident during
the pandemic years of 2020 and 2021. Even when confronted
with the challenges of global lockdowns and the shortage of
semiconductor components, our supply chains have held up well
and our retail network showed its strength. This is the only way
we can maximise our effectiveness and, together, lead the Com-
pany to success.
We are constantly expanding our collaborations to secure
access to new technologies and increase value creation
setting cooperation goals and defining strategic fields of co-
operation with our partners based on the strategic frame-
work.
* Consumption and carbon emissions data
43
BMW Group Report 2021
To Our Stakeholders
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BMW Group Integrated Strategy
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
PERFORMANCE
INDICATORS
Once strategic targets have been derived from the findings
of the environmental analysis and the ongoing strategy process
within the Company, the BMW Group target system trans-
lates the strategy into a clear system for measuring perfor-
mance. The target system is therefore a key instrument for
anchoring strategy throughout the Company. For corporate
management purposes, the strategic targets are backed by
effective performance indicators.
Long-range corporate planning for the Company as a whole
and its segments is geared towards the structure of the
BMW Group target system. In this way, the targets set out in
the planning are regularly compared with the BMW Group's
strategic goals. Department strategies are also aligned with
the corporate strategy.
Once approved by the Board of Management and Super-
visory Board, the target figures in the strategic target system
form the planning basis for the current reporting year and the
target agreements for BMW Group managers. Remuneration
report GRI-Index: 102-35. Companies subject to the provisions of
German Accounting Standard No. 20 (DRS 20) must define
the Company's most effective performance indicators for
corporate management during the external reporting period
(key performance indicators).
The following summarises the strategic targets and key per-
formance indicators defined in DRS 20, which also form the
basis for Performance Management. GRI-Index: 102-19
Group profit before tax (Group EBT)
Profit before
financial result
Group Financial Statements
The main value drivers include the number of deliveries as
well as the operating return on sales (corresponding to the
EBIT margin: segment profit/loss before financial result as a
percentage of segment revenues) as the key performance
indicator for segment profitability.
Human
rights
PREVENT
Technical
compliance
Corruption
prevention
Fraud
prevention
Antitrust
compliance
Export
control
Anti-money-
laundering
DETECT
The Supply Chain Due Diligence Law will take effect on
1 January 2023 in Germany; the adjustments it requires for
the human rights compliance programme have been a key
focus for Group Compliance during the reporting period. It
should be noted that the Board of Management decided in
December 2021 to appoint a Human Rights Officer and
assign this role to the head of Group Compliance. Concen-
trating relevant expertise in this new function will also
contribute to the strategic alignment of the Company in the
social dimension of sustainability. Other priorities arose in
49
BMW Group Report 2021
protection
To Our Stakeholders
Data
THREE-STAGE APPROACH TO COMPLIANCE
MANAGEMENT SYSTEM AND COMPLIANCE TOPICS
To Our Stakeholders
Combined Management Report
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Corporate Governance
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Other Information
← = Q
COMPLIANCE AND
HUMAN RIGHTS
Compliance means much more to the BMW Group than just
complying with applicable laws and Company rules: it is part
of our identity and our living culture of integrity and creates a
binding framework for all our business activities worldwide.
As such, compliance lays the foundation for the long-term
success of the Company, builds trust in our products and
brands, and shapes the public image of the BMW Group.
Compliance as a corporate function
Compliance is the managerial responsibility of the Board of
Management of BMW AG and is primarily executed by creat-
ing an appropriate regulatory and supervisory framework, as
well as through regular and ad hoc compliance reporting, ac-
companied by clear and unambiguous compliance commu-
nications. This approach is based on the core belief that
compliance with applicable laws and related internal regula-
tions is the personal responsibility of each individual em-
ployee. As role models, BMW Group managers are also
tasked with anchoring compliance culture in their respective
area of responsibility and ensuring compliance requirements
and processes are implemented accordingly. 7 GRI-Index 102-16
During the reporting period, the Board of Management of
BMW AG significantly refined the compliance organisation
and created a new Chief Compliance Officer role, which took
effect on 1 January 2021 and which serves as head of the
Group Compliance. In addition to being responsible for the
Compliance Management System (CMS), the Chief Compli-
ance Officer manages the Group Compliance division and
briefs the Board of Management and Supervisory Board of
BMW AG on development and implementation of the CMS at
regular intervals. Furthermore, compliance has been an-
chored by the Board of Management in the Company's en-
hanced understanding of leadership.
Compliance Management System (CMS)
The BMW Group's Company-wide CMS is based on the Pre-
vent, Detect, Respond Model, which defines specific preven-
tion, monitoring, control and response measures, on the ba-
sis of clearly assigned roles and responsibilities.
The CMS is tailored to the Company's specific risk situation.
It addresses all relevant compliance topics, including fraud
prevention, export control, anti-money laundering, antitrust
compliance, corruption prevention and human rights as well
as data privacy and technical compliance. These last two topics are
the responsibility of the respective specialist departments.
An effective and efficient compliance organisation is funda-
mental to reducing sanction and liability risks, as well as
risks arising from other (non-) financial disadvantages, such
as reputational risks.
Further development of the CMS
During the reporting period, the organisation and content of
the CMS were refined according to defined strategic focus
topics. The objective is to further strengthen the culture of
compliance and integrity at the Company, with the declared
aim of avoiding Company-related violations of the law.
Further development of the CMS is also taking place against
the backdrop of external factors, such as global legal devel-
opments and the evolution of compliance at other compa-
nies. To this end, the BMW Group is involved in various asso-
ciations and interest groups and has been an active
corporate member of the German Institute for Compliance
(DICO) for many years, at the Board level and through its
leadership of the working group "Human Rights/CSR".
RESPOND
Combined Management Report
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Corporate Governance
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BMW Group Report 2021
To Our Stakeholders
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Group Financial Statements
Corporate Governance
Average capital employed
Other Information
← = Q
law. So-called Compliance Spot Checks were also carried
out in 2021, with a focus on possible corruption risks. Cor-
porate Audit also conducts audits focused on compliance
requirements.
All control checks are geared towards reducing compliance
risks for the BMW Group. Any infringements are immediately
remedied, with an emphasis on minimising the risk of repeat
offenses and strengthening the understanding of compli-
ance within the Company. Where incidences of non-compli-
ance can be traced to an individual, such persons will be
appropriately sanctioned, in accordance with the processes
defined for this purpose.
Regular compliance reporting to the Board of Management and
Supervisory Board
The Board of Management and Supervisory Board of
BMW AG, the Audit Committee and other executive commit-
tees are informed on a regular basis and, if necessary, im-
mediately by the Chief Compliance Officer. In 2021, the con-
tent reported to committees was focused and the frequency
of reports increased – for example, at least twice a year for
the Board of Management.
-
[Global implementation of labour standards and human
rights
Internationally recognised guidelines for environmental and
social compliance set the benchmark for the BMW Group's
entire value chain. This applies, in particular, to the Guide-
lines for Multinational Companies issued by the Organisa-
tion for Economic Cooperation and Development (OECD),
the UN Guiding Principles on Business and Human Rights,
the Ten Principles of the UN Global Compact, the content of
the ICC Business Charter for Sustainable Development, and
the United Nations Environment Programme's (UNEP) Dec-
laration on Cleaner Production. The BMW Group concen-
trates on topics and action areas where it can exert its influ-
ence as a company. With the participation of employee
representatives, these (supra) national requirements were
incorporated into internal company rules and principles
through the Joint Declaration on Human Rights and Working Conditions in
the BMW Group of 2005 (updated in 2010), clarified in the
7 BMW Group Code on Human Rights and Working Conditions of 2018 and
integrated with the human rights compliance programme.
The automotive industry is heavily involved in global supply
chains. In a collaborative global value creation process such
as this, there is a risk that human rights may not be respect-
ed throughout the supply chain. Respect for human rights
has been incorporated into the BMW Group Supplier Sustainability
Policy. To fulfil our environmental and social responsibility, we imple-
ment a multistage due diligence process in our Purchasing
and Supplier Network division.
In addition to the Company's international purchasing terms
and conditions, BMW Group dealer and importer contracts
include requirements relating to compliance and human
rights. Human rights issues also play an important role in
the Company's choice of locations and major investment
decisions. 1] GRI-Index: 412-3
Compliance management in the Financial Services
segment
50
Observance and implementation of compliance regulations
and processes are subject to regular audits. The BMW Group
CMS provides differentiated monitoring levels for this pur-
pose. Compliance Officers are those primarily responsible
for performing direct checks in their area of responsibility.
Further measures integrated into business processes to help
reduce risk generally form part of the ▾ Internal Control System.
The central Group Compliance function refined its audit ap-
proach in 2021, with the aim of increasing audit frequency by
introducing risk-based compliance audits without cause.
These compliance audits are currently focused on antitrust
CMS monitoring/controls
The BMW Group protects information providers in two ways.
If they prefer, individuals may provide information without
disclosing their identity. Policy also stipulates that no one
providing information should face retaliatory action. All com-
pliance-related queries and concerns are documented and
processed using an electronic Case Management System. If
necessary, Corporate Audit, Corporate Security, the legal de-
partments or the Works Council may be called upon to assist
in processing the case. GRI-Index: 102-34
Remuneration Report
Other Information
← = Q
the context of export controls from heightened trade rela-
tions between the US and China and in connection with
efforts to prevent money laundering, due in part to the in-
crease in legislative initiatives to tighten multinational
anti-money-laundering requirements.
A further priority was developing and implementing more ex-
tensive preventive measures in response to the antitrust
proceedings brought by the European Commission and con-
cluded in July 2021, concerning restriction of competition in
innovation in certain emissions control systems1.
Note 10 to the Group Financial Statements GRI-Index: 205-3
Increasingly strict national legislation to protect personal
data, and the higher risks associated with this, shaped com-
pliance measures regarding data privacy.
In response to the rapid pace of transformation in the auto-
motive industry, activities in the field of technical compliance
were also significantly expanded during the period under
report.
Company-wide compliance network
BMW Group Report 2021
Business departments at the BMW Group are responsible
for lawful conduct during the performance of their assigned
tasks. This means they are also responsible for identifying
and evaluating any compliance risks that arise in the course
of their daily business. Monitoring and reducing these risks
also falls under their scope of duties. More than 230 man-
agers group-wide perform these tasks. These Compliance
Officers form part of the Compliance Organisation.
relevant topics within their area of responsibility. Business
unit and division compliance functions also perform the task
of identifying and implementing specific compliance meas-
ures in their area of activity.
Expanded training activities
The BMW Group continuously refines the Group Compliance
training opportunities for specific target groups. For exam-
ple, during the year under review, we redesigned our Group-
wide mandatory Compliance Essentials online training to
create a user-oriented approach with focused content and a
high level of interactivity. This training formed part of the
mandatory training programme and included human rights
topics in the year under report. > GRI-Index: 412-2
In addition to imparting knowledge, online and classroom
training options, including practical case studies, play an im-
portant part in strengthening the compliance culture and un-
derstanding of compliant behaviour at the Company. Online
training must be completed every two years by relevant tar-
get groups. The training modules include exercises and test
questions relating to the BMW Group Legal Compliance
Code and corruption prevention, as well as other topics. So
far, more than 69,000 employees worldwide have com-
pleted the Compliance Essentials training, and over 36,000
employees completed online antitrust compliance training.
Department-specific training modules supplement the ex-
tensive options - for instance, in the areas of antitrust law or
human rights. GRI-Index: 205-1
Digitalisation supports compliance
BMW Group employees have used IT-based systems for
swift and efficient documentation, assessment and approval
of compliance-relevant matters for years. Examples include
IT-supported processes to monitor money laundering, sanc-
tion lists and exchange activities with competitors as well as
to conduct background checks on the reliability of business
partners and verify, approve and document the legal admis-
sibility of benefits in kind. Measures are implemented to
avoid compliance risks on the basis of this evaluation.
Reporting system for detecting possible non-compliance with the
law and compliance controls
Any employee with questions or concerns relating to compli-
ance can discuss these matters with their managers and
with the relevant departments within the BMW Group: spe-
cifically, with Group Compliance, Legal Affairs and Corporate
Audit. The BMW Group Compliance Contact serves as a fur-
ther point of contact and provides non-employees with a
process for reporting compliance concerns. Our employees
worldwide can also submit information relating to possible
infringements of the law at the Company in several lan-
guages via the BMW Group SpeakUP Line. In 2021, an
ombudsperson for suppliers was dedicated. Verification of
effectiveness
Specialist departments are supported in their work by the
central Group Compliance function, as well as a Group-wide
network of business unit and division compliance functions,
supplemented by around 80 local Compliance Officers
(heads of local compliance functions) at BMW AG's inter-
national subsidiaries. Local Compliance Officers are tasked
with implementing the CMS and compliance programmes for
48
Remuneration Report
Board of Management remuneration
Performance criteria for the short- and long-term variable
remuneration of the Board of Management are also based
on the main strategic financial and non-financial targets
and key performance indicators and contribute towards the
BMW Group's long-term development. Non-financial key
performance indicators used in this context include the
number of vehicles delivered, the share of women in man-
agement functions, carbon emissions and sales of electri-
fied vehicles. Financial key performance indicators that
have an impact on variable remuneration include the return
on capital employed for the Automotive segment as well as
other key financial performance indicators monitored at
Group level. Remuneration Report
Profit before tax
in € million
Average equity capital
in € million
Return on equity
in %
2021
2020
2021
2020
2021
46
Financial Services
3,753
1,725
16,586
15,343
22.6
11.2
47
RETURN ON EQUITY (FINANCIAL SERVICES SEGMENT)
15.0
2020
2021
35.9
Financial Services segment
687
632
2020
2021
2020
103
227
2021
Motorcycles
BMW Group Report 2021
in %
Average capital employed
in € million
in € million
Profit before financial result
RETURN ON CAPITAL EMPLOYED (MOTORCYCLES SEGMENT)
Average equity capital
Financial Services
RoE
Profit before tax
The performance of the Financial Services segment is meas-
ured on the basis of the return on equity (ROE), a key perfor-
mance indicator commonly used in the banking sector. With-
in the BMW Group, RoE is defined as segment profit/loss
before tax, divided by the average amount of equity capital
in the Financial Services segment. The target is a return on
equity of at least 14%.
Return on capital employed
To Our Stakeholders
2020
Group Financial Statements
12.0
Combined Management Report
BMW Group Integrated Strategy
12.0
12.0
13.4
13.4
Value added Group
2021
2020
2021
2020
2021
16,289
5,464
8,938
8,061
7,351
2020
-2,597
Value-based management for project decisions
Operational business in the Automotive and Motorcycles
segments is largely shaped by the life-cycle-dependent
character of investment projects that have a substantial in-
fluence on future performance. Project-related decisions are
therefore a crucial element of financial management in the
BMW Group. Project decisions are based on calculations de-
rived from the expected cash flows of each individual project.
Calculations are made for the complete term of a project, in-
corporating future years in which the project is expected to
generate cash flows. Project decisions are taken on the ba-
sis of net present value and the internal rate of return calcu-
lated for the project. The net present value indicates the ex-
tent to which the project will be able to generate future net
cash inflows over and above the cost of capital. A project
with a positive net present value enhances future value add-
ed and therefore results in an increase in enterprise value.
The project's internal rate of return measures the average
return on the capital employed in the project. For all project
decisions, the project criteria and long-term impact on peri-
odic results are measured and incorporated in the long-term
Group plan. This approach enables an analysis of the impact
of project decisions on periodic earnings and rates of return
for each year during the term of the project.
2020
2021
12.0
BMW Group
Corporate Governance
Remuneration Report
Other Information
← = Q
Earnings amount Cost of capital (equity + debt capital)
The information provided by these key performance indica-
tors at Group level is complemented by the two financial per-
formance indicators of pre-tax return on sales and value
added. Value added, as a highly aggregated performance
indicator, also provides an insight into capital efficiency and
the (opportunity) cost of capital required to generate Group
profit. A positive value added means that a return on invest-
ment above the cost of capital has been achieved.
Capital employed comprises the amount of Group equity and
pension provisions as well as the financial liabilities of the
Automotive and Motorcycles segments employed on aver-
age at the end of each of the last five quarters. The earnings
amount corresponds to Group profit/loss before tax, adjust-
ed for interest expense incurred in conjunction with the pen-
sion provision and on the financial liabilities of the Automo-
tive and Motorcycles segments (profit/loss before interest
expense and tax). The cost of capital is the minimum rate of
return expected by capital providers in return for the capital
employed. Since capital employed comprises an equity cap-
ital (e.g. share capital) and a debt capital element (e.g.
bonds), the overall cost of capital is determined on the basis
of the weighted average rates for equity and debt capital,
measured using standard market procedures. The pre-tax
average weighted cost of capital for the BMW Group in 2021
was 12%, unchanged from the previous year.
In order to determine the internal rate of return, risk-adjusted
cost of capital rates are based on the average of actual rates
in recent years. In light of the long-term nature of product
and investment decisions, the following internal rates of re-
turn are used in conjunction with segment management:
Value added
Group
=
earnings amount -
cost of capital
earnings amount -
in %
Strategic management at Group level
Strategic management and the measurement of its financial
impact are coordinated primarily at Group level in conjunc-
tion with the long-term corporate plan. One of the key perfor-
mance indicators used in this context is Group profit/loss
before tax, which provides a comprehensive measure of the
Group's overall corporate performance after consolidation
effects and enables a transparent comparison over time.
Other key performance indicators at Group level are the size
of the workforce at the year-end and the share of women in
management functions. By 2025, the BMW Group aims to
increase the share of women in management functions to
22%.
=
(cost of capital rate x
capital employed)
Motorcycles
Financial Services
VALUE ADDED GROUP
in € million
Automotive
[ Following the overall drop in carbon emissions one year
earlier due to the coronavirus pandemic, the figure rose
again by around 3% to approximately 123 million tonnes in
the year under report, mainly driven by renewed growth in
production volume. Nonetheless, carbon emissions are 8%
down overall compared to the base year 2019, mainly due to
lower average fleet emissions worldwide. 1]
M.VE 2918
For a detailed version, see 7 Carbon footprint of the BMW Group in "Further GRI information" ]]
2020
8
Decarbonisation during the use phase meets legal
requirements
122,539,929
699,713
134,849
121,705,368
2021
118,491,889
678,967
130,090
117,682,832
The carbon emissions generated during the use phase are
the subject of numerous regulatory requirements and also a
key parameter in our life cycle assessment. With the early
serial introduction of electrified vehicles since 2013 and the
fleet-wide use of innovative Efficient Dynamics technologies since
2007, we have continuously and permanently reduced both
vehicle fuel consumption and emissions. These two param-
eters form the basis for us for again meeting mandatory car-
bon emissions and fuel consumption requirements in the
year under report. SASB-Index
JOINING THE INITIATIVE BUSINESS AMBITION
FOR 1.5°C
As from 2021, average fleet CO₂ emissions in the EU4 must
be reported according to the new WLTP5 type test cycle. In
the year under report they totalled 115.9 g CO2/km, taking
regulatory requirements into account. We have thus signifi-
cantly reduced fleet carbon emissions compared with the
previous year (2020: 135 g CO₂/km 6,7). We were significantly
below the limit of 125.8 g CO2/km applicable for the
BMW Group by 9.9 g CO2/km. The reduction is therefore in
line with the trend seen in previous decades, driven by the
increasing electrification of our vehicle fleet and continuous
improvements in the efficiency of our internal combustion
engines. On this basis, we continue to work unabated to fur-
ther reduce greenhouse gas emissions going forward.
7 GRI-Index: 305-5
In line with the targets set at the Paris Climate Agreement, the
BMW Group wants to make its contribution to limiting global
warming. We are demonstrating this commitment with our me-
dium- and long-term plans for decarbonisation. To emphasise
our intention, during the year under report we became the first
German automotive manufacturer to join the Business Ambi-
tion for 1.5°C initiative of the SBTi. The campaign brings together
companies that have set themselves the target of net zero emis-
sions in line with the SBTI and are thus following a long-term
1.5 degree pathway. By joining the initiative, the BMW Group is
also part of the international Race to Zero campaign organised
by the United Nations. With this move, we also want to motivate
other companies to take ambitious steps to protect the climate.
1 Excluding carbon emissions relating to disposal.
7 To improve comparability of the previous year's figures with those of the current
year under report, the 2020 NEDC figures have been converted to WLTP after ad-
justment for the applicable flexibilities - specifically, from 99 g CO2/km according
to NEDC (incl. 5 g CO2/km phase-in, 7.5 g CO2/km supercredits and 2.4 g CO₂/km
eco-innovations) to 135 g CO2/km according to WLTP (excluding flexibilities). In
2020, a phase-in regulation was accepted, as was the recognition of supercredits.
As of 2021, these two simplifications no longer apply for the BMW Group.
87 Consumption and carbon emissions data
6 This is a preliminary internal calculation with a potential variation of
+/- 0.5 g CO2/km, as official registration figures have not been provided by the
authorities of all EU states. The EU Commission is not expected to publish official
figures until November 2022.
5 WLTP stands for the new Worldwide harmonized Light vehicles Test Procedure.
Since 2021, the EU Commission has used this procedure as the basis for calculating
fleet carbon emissions.
" EU-27 countries including Norway and Iceland.
3 Due to the broader extent of reporting on Scope 1 and Scope 2 emissions at BMW
Group locations and the changed method for calculating Scope 3 downstream
emissions in the use phase, the previous year's figures have been adjusted to
enable better comparison.
2 Scope 3 in this case includes emissions from logistics, business travel, employee
commuting, upstream supply chain, use phase and waste disposal.
EU carbon emissions targets achieved
For definition, Glossary: Carbon emissions Scope 1 to Scope 3
[ Mitigating the impact of climate change is one of the great-
est challenges of our time and requires a massive effort, not
only on the part of society as a whole, but also from policy-
makers and the business community. The BMW Group is
also involved in these endeavours. By 2050, we intend to
achieve the target of net zero in terms of our emissions
across the entire value chain. With this aim in mind, in 2020
the BMW Group set itself ambitious, science-based targets
for the year 2030, which have been validated by the Science
Based Targets initiative (SBTI). We intend to achieve these
targets by further reducing the carbon footprint and pollutant
emissions of our vehicles, as we have done in the past.
Scope 2
An average of 80% carbon reduction at our own produc-
tion sites and locations (Scope 1 and 2) per vehicle pro-
duced. Decarbonisation at BMW Group locations From 2021,
carbon emissions in accordance with Scope 1 and 2 include
not only production-specific emissions, but also those
generated at locations not directly related to production.6
We have set ourselves the following decarbonisation targets¹
to be achieved by 2030 (base year 2019). These targets were
notified to the SBTI and validated in 2020.
Measurable, science-based targets that initially extend to
2030 form the basis for our decarbonisation strategy and for
this reason we have joined the SBTi. The use of sci-
ence-based targets makes the measurability of our targets
transparent and at the same time ensures that they are in
line with the latest scientific findings. ]]
Decarbonisation targets across the value chain
encompass the supply chain, production and the subse-
quent use of the vehicle by the customer. Our system for
7 measuring performance enables us to ensure that these tar-
gets are implemented both rigorously and consistently
throughout the entire Group. The strategy allows us to
take our decarbonisation targets into account right from
the product development stage as well as market-related
requirements for our vehicle fleet at the same time. We
manage the implementation of our targets and the as-
sessment of progress during the development process
with the help of a carbon footprint based on ISO stand-
ards 14040 and 14044.
The BMW Group intends to leverage its holistic manage-
ment system to substantially improve its carbon footprint
from one vehicle generation to the next across the entire
life cycle. In view of the increasing electrification, it is par-
ticularly important to be aware that although the trend
reduces carbon emissions during the use phase. It in-
creases them at the same time in the supply chain. The
reason for this lies primarily in the carbon-intensive com-
ponents needed to power electric mobility, such as
high-voltage batteries in particular. With this point in
mind, the BMW Group defines specific decarbonisation
targets for all its vehicles right from the outset. The targets
Holistic management system
The BMW Group is pursuing a clear strategy of decarbonisa-
tion across the entire life cycle of its vehicles and has defined
specific targets in order to do so. With this holistic approach,
we are moving forward on a path in line with the climate pro-
tection targets designed to limit global warming enshrined in
the Paris Climate Agreement.
Decarbonising across the entire life cycle
58
CARBON EMISSIONS AND
POLLUTANTS
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
Products and Mobility Solutions
An average of at least 20 %² carbon reduction in the sup-
ply chain (Scope 3 upstream³) per vehicle produced. This
data also provides us with a scientifically tested and con-
firmed target for reducing carbon emissions in the supply
chain. Reducing carbon emissions in the supply chain
Carbon reduction during the use phase (Scope 3 down-
stream) by an average of at least 50% per kilometre
driven. Thus we again significantly raised the original tar-
get of more than 40% that we had set ourselves. The
main reason for this is the dynamic growth in demand for
our electrified vehicles. Electric mobility, 7 Automotive segment
The adjusted target of 50% has been submitted and
successfully validated by SBTi in february 2022.
1 Scope 3 emissions generated by the upstream value chain, logistics services and
well-to-tank emissions are stated in carbon equivalents. When measuring Scope 1
and Scope 2 emissions and the further Scope 3 emissions, climate-impacting
gases apart from carbon dioxide have been ignored.
2 Figure rounded for simplification purposes. The target validated in conjunction with
the SBTi is 22%.
Scope 1
TOTAL EMISSIONS
in t CO₂ / CO₂e
[ THE BMW GROUP'S CARBON FOOTPRINT
(ABRIDGED VERSION)³
With the even more ambitious target of reducing carbon
emissions during the use phase by more than 50%, the
overall view over the complete life cycle¹ of a vehicle by 2030
results in an average carbon emissions reduction of at least
40%. By 2050, we intend to achieve net zero in terms of our
carbon emissions across the entire value chain. As of the
year under report, we made the remaining carbon emissions
generated at our own plants and locations completely car-
bon-neutral through the use of voluntary offsetting certifi-
cates. Compensation of site-related carbon emissions
← = Q
Other Information
Remuneration Report
Scope 32
Corporate Governance
Combined Management Report
Products and Mobility Solutions
To Our Stakeholders
BMW Group Report 2021
57
57
5 Categories included under Scope 3 downstream: Use phase Carbon footprint.
6 For comparison purposes, the figures for 2019 (base year) and 2020 have been
adjusted accordingly.
"Based on the well-to-wheel method, which in addition to the tank-to-wheel
approach also takes into account the generation and supply of fuel and thus the
entire impact chain relating to the driving of vehicles.
3 Categories included under Scope 3 upstream according to the Greenhouse Gas
Protocol: 1. Bought-in goods and services and 4. Transport and distribution.
Carbon footprint
Group Financial Statements
BMW Group Report 2021
Corporate Governance
Combined Management Report
Products and Mobility Solutions
Drive system diversity
The BMW Group has always focused its business on the
needs of its customers, and our product portfolio amply re-
flects this enduring ambition. Leveraging the benefits of
scalable, modular design and the Group's flexible production
systems, customers can now choose between fully electric ve-
hicles, plug-in hybrids and efficient conventionally powered
models. A prime example of the freedom of choice our cus-
tomers enjoy is the BMW X3, which is the first model series
to be available as a plug-in hybrid*, a combustion engine
version (both diesel and petrol), and as a BMW iX3* with an
all-electric drive system.
By the year 2030, at least half
of the BMW Group's vehicle
deliveries worldwide are set to
be fully electric models.
By offering parallel drive technologies, we are creating a
smooth transition to the future of electric mobility, while sim-
ultaneously making the best possible use of our existing re-
sources. At the same time, we are systematically continuing
to electrify our product range, driven by the dual forces of
growing customer demand and regulatory requirements. ]]
By 2025, the proportion of electrified automobiles in total
Group deliveries is projected to rise to at least 30%. By the
year 2030, at least half of the BMW Group's vehicle deliver-
ies worldwide are set to be fully electric models. Moreover,
we intend to put some ten million fully electric vehicles on
the road during the next ten years. [t By the early 2030s, the
BMW Group plans to offer only all-electric vehicles to its
MINI and Rolls-Royce customers. The fact that we are sys-
tematically electrifying both brands has to do with their typ-
ical user profiles, as MINIs are predominantly used for urban
driving, while Rolls-Royce cars are mainly used for shorter
distances. 1]
7 Consumption and carbon emissions data.
60
60
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Products and Mobility Solutions
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
[Broader offering
1 Battery electric vehicle.
2 Plug-in hybrid electric vehicle.
An expanded, customer-friendly charging infrastructure will
pave the way for the rapid and widespread use of electric
mobility. For this reason, the BMW Group is committed to
creating standardised framework conditions and services
that enable easy charging. 1]
Expanding charging infrastructure and enabling faster
charging
We are also driving hydrogen fuel cell technology forward at
a higher level. For example, we are involved in worldwide or-
ganisations and associations, such as the 7 Hydrogen Council.
As an associated partner of H2 Mobility Deutschland GmbH, the
BMW Group supports the establishing of infrastructure re-
quired for hydrogen-powered vehicles. In this context, the
BMW Group welcomes the call in the EU's Fit for 55 legisla-
tive package to establish a basic infrastructure of 700-bar
hydrogen refuelling stations.
Our customer-oriented technological diversity approach also
includes the further development of fuel cell technology, for
which we see considerable potential, depending on the seg-
ment. We see electric drive systems that use hydrogen as an
energy storage system as a complementary addition to bat-
tery electric mobility and as an opportunity to reduce carbon
emissions at an even faster rate. In this context, we present-
ed the BMW X5 Hydrogen at the IAA Mobility 2021.
Hydrogen
Our electrified vehicles are making an essential contribution
to driving down fleet emissions and thus to meeting our am-
bitious strategic decarbonisation targets right across the value
chain. For this reason, we are systematically continuing to
electrify our model range as a vital ingredient of our product
strategy.
For these reasons, the MINI Cooper SE6 is designed for ur-
ban driving and has a range of more than 200 kilometres
(WLTP4), in line with customer requirements. The new BMW
iX and i4 models are designed for covering long distances of
around 600 kilometres (WLTP4) on just one charge. In view
of the customer and usage profiles of both vehicles, we con-
sider these ranges to be optimal. Fully electric vehicles will
be capable of achieving ranges of more than 600 kilometres
(WLTP4), depending on vehicle size and type, as the use of
electric mobility continues to become more widespread.
[[Increasing range to suit customer needs
share of electrified vehicles to total BMW Group deliveries
reached 13.0%.
In 2021, the BMW Group delivered a total of 328,314 all-elec-
tric and plug-in hybrid vehicles (2020: 192,6625] to custom-
ers, around 104,000 of them with all-electric drive systems,
thus surpassing our self-imposed target of more than doub-
ling our sales of electrified vehicles compared with the 2019
figure (146,158 units). Therefore, at the end of 2021, more
than one million BMW Group vehicles with fully electric or
plug-in hybrid drive systems were on the road worldwide
(Automotive segment). In the year under report, the percentage
During the year under report, the BMW Group also added
further engine variants to its PHEV model range with the
BMW 320e6 and the BMW 520e6. Including these innov-
ations, we are currently offering 17 plug-in hybrid basic mod-
els in a total of 83 markets worldwide. With innovations
such as the BMW eDrive Zone, extensive charging options and
increased ranges, we are enabling drivers of plug-in hybrids
to travel electrically as often and over as long a distance as
possible. The BMW 2 Series Active Tourer compact plug-in
hybrid model will be launched in 2022 and capable of trav-
elling up to 80 kilometres (WLTP4) purely on its own battery
power. 1]
Apart from the established all-electric BMW i3, MINI Cooper
SE6 and BMW iX36 models already available, two key inno-
vation drivers were added during the year under report - the
BMW X6 and the BMW i46. Over the next two years, the
all-electric versions of the BMW 7 Series, the BMW X1, the
high-volume 5 Series and the MINI Countryman are set to
follow, as will the all-electric Rolls-Royce Spectre. From
2025, we will be rigorously taking the core BMW brand into
a new all-electric dimension with the 7 Neue Klasse.
The BMW Group's range of electrified products consists of
purely battery electric vehicles (BEV¹) and plug-in hybrid
models (PHEV²).
The BMW Group assesses the increase in electric vehicle
ranges from various points of view. We are not aiming to pro-
vide the technically greatest possible range across all vehicle
segments as a matter of pure principle. It is far more important
to adapt the range to suit the intended use of each individual
vehicle. At the same time, we also need to consider the eco-
logical impact, as a longer range means larger and therefore
heavier high-voltage batteries. This relationship has a direct
effect on resource consumption, the environmental footprint
of the respective supply chain, and vehicle weight, which in
turn has a significant influence on the overall consumption of
a given vehicle.
To Our Stakeholders
Driving electric mobility forward
ELECTRIC MOBILITY
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Fleet emissions in the USA, China and worldwide
In the USA, average fleet emissions¹ for model year (MY]
2021 were calculated at 134.0 g CO2/km for passenger cars
(MY 2020: 155.7 g CO2/km) and 150.1 g CO2/km for light
trucks (MY 2020: 185.6 g CO2/km). Volume-weighted fleet
carbon emissions in the USA averaged 140.9 g CO2/km (MY
2020: 166.8 g CO2/km) (BMW internal calculation). In the
2021 reporting year, legally permissible imputation factors¹
were included for the first time. For this reason, direct com-
parability with the previous year is not possible. In China, av-
erage fleet carbon emissions² were 163.0 g CO2/km accord-
ing to the new WLTC test cycle introduced in the year under
report (2020: 151.1 g CO2/km NEDC). Due to the change
of cycle, a direct comparison with the previous year is not
possible.
The BMW Group's global carbon fleet emissions³ averaged
197.9 g CO2/km³ in the year under report (2020: 212.4g
CO2/km). The figure represents a reduction of 9.4% com-
pared with the 2019 baseline. When calculating these emis-
sions, the BMW Group takes into account the average fleet
carbon emissions in the EU, the USA and China and stand-
ardises them according to WLTP. Accounting for more than
80% of BMW Group deliveries overall, these three core mar-
kets and regions are a reliable basis for calculating fleet car-
bon emissions worldwide. In line with the SBTI, we add 10%
to the figures calculated to cover any possible differences
between the figures according to WLTP and actual emis-
sions. The figure also includes the upstream supply chain
emissions generated by energy sources (fossil fuels and
electricity) in accordance with the well-to-wheel approach.4
7 GRI-Index: 305-5
[Legal framework
The BMW Group has the clear ambition not only to comply
with statutory carbon emissions limits worldwide, but also
to significantly undercut them wherever possible. At the
same time, we support the development of harmonised reg-
ulations both nationally and internationally. Comparable
regulations in major markets create reliable, predictable
framework conditions that make a key contribution to com-
batting climate change and improving air quality. We ad-
dress the opportunities and risks associated with increas-
ingly strict carbon emissions regulations as part of our
7 climate-related risks. TCFD-Index
The BMW Group supports the proposal published by the EU
Commission in the year under report for implementing the
EU's 2030 climate protection target. The associated goals of
Fit for 55 largely coincide with those of the BMW Group.
Moreover, we are closely monitoring regulatory develop-
ments in the USA. In 2020, the BMW Group entered into a
voluntary agreement with the US state of California to reduce
its fleet emissions. The bilateral agreement is applicable for
all new BMW Group vehicle registrations in every state of the
USA. In 2021, the US government announced plans to intro-
duce tougher fleet fuel consumption targets at national level.
The BMW Group also intends to comply with these future
requirements. The US federal requirements regarding Green-
house Gas Emissions (GHG) generated by vehicle fleets and
the Corporate Average Fuel Economy (CAFE) regulations are
applicable in this case.
Designing conventional drive systems for greater
efficiency and lower emissions
The BMW Group expects state-of-the-art, highly efficient
combustion engines to continue playing a vital role. As part
of our Efficient Dynamics approach, we will therefore con-
tinue to work on further reducing the fuel consumption of
conventional drive systems in the coming years, thereby in-
creasing their efficiency. 7 SASB-Index
Technological improvements
The BMW Group has been implementing its Efficient Dy-
namics package of technological measures across its entire
fleet since 2007. The package comprises a range of coordi-
nated measures designed to reduce fuel consumption. We
will continue to pursue this strategy with innovative ap-
proaches to the use of internal combustion engines, aerody-
namics and lightweight construction. The broader use of 48-
volt technology is a key component in this regard. 48-volt
recuperation systems gather the energy recovered during
braking to supply the vehicle's electrical system and gener-
ate additional power, which reduces fuel consumption and
therefore carbon emissions. In the EU, apart from our
all-electric and plug-in hybrid models, we are also offering a
wide range of new models featuring a 48-volt recuperation
system. As from 2022, our modular motors will be fitted with
the second, even more efficient generation of 48-volt tech-
nology. The continued further development of energy man-
agement technologies in our vehicles, supplemented by oth-
er measures such as switching to highly efficient tyres,
should ensure even greater efficiency and optimise fuel con-
sumption. 1]
1 Average volume-weighted fleet emissions including regulatory credit factors (EV
multipliers, credits advanced technologies) of 21.6 g CO2/km according to USC
(United States Combined).
2 Average volume-weighted fleet emissions including regulatory credit factors of
8.83 g CO2/km (off-cycle technologies, NEV multiplier, phase-in) according to
WLTC (Worldwide Harmonized Test Cycle under China-specific test road conditions).
3 The figures are determined using a new calculation method, which was applied
retroactively to the year 2019 (2019 prior to adjustment: 140 g/km; 2020 prior to
adjustment: 133 g/km). For the defintion see Glossary Carbon emissions of the
new vehicle fleet worldwide incl. upstream emissions.
7 GRI-Index: 305-7
Nitrogen oxide levels are a crucial factor determining the
quality of air in towns and cities. With this point in mind,
since mid-2018 the BMW Group has been using a highly ef-
fective combination of a NOx storage catalytic converter
(NSC) and a selective catalytic reduction (SCR) system with
urea injection (AdBlue) in all diesel-powered BMW vehicles
as well as in the larger MINI diesel models. The efficiency of
exhaust gas after-treatment has been additionally boosted
by the use of an improved oxidation catalytic converter com-
bined with a two-stage SCR system. The new technology
has been available since 2020 with the revised generation of
six-cylinder diesel engines and is due to be rolled out across
the entire product range during the coming years. There
have already been noticeable reductions in NOx pollution
levels in German cities over the past few years, partially driv-
en by the ongoing renewal of the vehicle fleets of all automo-
tive manufacturers. ]]
Since the early 1990s, the BMW Group has significantly re-
duced the level of regulated pollutant emissions generated
by its vehicles, such as nitrogen oxides (NOx), carbon mon-
oxide (CO) and particulate matter (PM), by deploying new
technologies and continually improving existing ones. Be-
tween 1992 and 2021, in Europe alone we reduced the rele-
vant exhaust emissions of our new fleet of diesel cars in line
with Euro 1 to Euro 6d exhaust standards by more than 90%
compared to the level recorded prior to their introduction.
Measures aimed at minimising air pollution have made a
significant contribution to these achievements. All
BMW Group vehicles offered for sale during the year under
report meet the current Euro 6d emissions standard in the
European Union as well as similar regulations in Switzer-
land, Norway, the United Kingdom and Iceland.
[Pollutant emissions
← = Q
Other Information
[Electric mobility is one of the key topics shaping the future
of the BMW Group in terms of sustainable mobility. The in-
creasing number of electrified models and continuously
growing sales volume figures place the BMW Group firmly
among the leading providers of premium electric mobility
worldwide. We see electrification from a holistic point of view
and consider it essential to promote electric mobility by put-
ting in place the necessary charging infrastructure as well as
customer-friendly charging solutions. Accordingly, we are
continuously expanding our range of products and providing
a comprehensive range of charging products and services.
Remuneration Report
Group Financial Statements
Combined Management Report
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To Our Stakeholders
BMW Group Report 2021
59
4 The well-to-wheel method takes into account the entire impact chain relating to
the movement of vehicles. The method covers everything from the generation and
provision of fuel to its conversion into energy and thus also takes into account the
environmental impact of producing the required fuel. For example, the BMW Group
takes the IEA Energy Report as the basis for calculating emissions in the upstream
value chain (Provision of electrical energy).
To Our Stakeholders
BMW Group Report 2021
MHEV 5057 E
Information on the overall scope of the BMW Group's re-
search and development activities is provided in the section.
7 Earnings performance
[100 %
recycled and recyclable. This design study points
to what is conceivable as we move forward. ]]
3 GOOD HEALTH
AND WELL-BEING
W
QINDUSTRY INNOVATION
CLIMATE
ANDINFRASTRUCTURE
ACTION
52
BMW Group Report 2021
To Our Stakeholders
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7 SASB-Index
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[Digitalisation - an opportunity for innovation and
customer orientation
We view digital technologies as an excellent opportunity to
further improve our existing processes, come up with new
solutions, and engage seamlessly with our customers. For
example, in many markets vehicles can be demonstrated live
on a screen shared with a customer or configured online to-
gether with a member of our sales team. A complete online
sales process has already been successfully implemented in
some of our markets, with others to follow in the foreseeable
future.
Furthermore, digitalisation is a vital key to keeping our ve-
hicles "fresh" throughout their entire life cycle. Since the
launch of Operating System 7 in 2018, remote software up-
grades have become a reality for BMW automobiles.
Remote software upgrades also provide BMW owners with
the option to tap into new digital business models such as
"functions on demand". Customers can either purchase
additional functions or simply order them for a specific
amount of time. The response to these offers has already
been highly positive. 7 Online Report
In autumn 2021, with the launch of the new, all-electric BMW
iX, the BMW Group simultaneously introduced its new BMW
Operating System 8 as well as a new display and control
system. The principal design focus was on clarity and
straightforward, intuitive usability. The large BMW curved
display enables drivers to customise the content of their dis-
play via a touchscreen. Buttons and switches have been re-
duced to a necessary minimum.
Digitalisation also enables innovations, simplifications and
advances outside the vehicle. The My BMW app and the
MINI app for smartphones have been available since 2020.
They provide a connection from wherever the user is located
to the vehicle - or to the service partner if required. Both
apps were equipped with additional new features during the
period under report. For example, the My BMW app now also
includes a digital tyre diagnosis feature that uses artificial
intelligence to assess the condition of the vehicle's tyres.
The MINI app now enables users to access a broader range
of services, including booking appointments and paying for
services contactlessly. In an optionally available service
video, they can find out about the vehicle check or opt for a
variety of services. Innovative digital solutions are also de-
ployed in other areas of the BMW Group, such as in
production or development scenarios. When it comes to
maintaining production systems, we are switching to what is
known as a predictive maintenance strategy. With the help of
sensors, cloud-based data analysis and artificial intelli-
gence, the system assesses when a particular piece of
equipment needs to be serviced in order to prevent unneces-
sary production downtime. The technology allows mainten-
ance to be planned and components to be replaced before
they actually break down.
REMOTE SOFTWARE UPGRADES
XDrive
MPZ 1869
Liptond
Remuneration Report
Efficient urban mobility is another strategic focus reflected in
the vision and concept vehicles that the BMW Group pre-
sented in 2021. The Group also demonstrated its ability to
develop innovative solutions with design studies such as the
7 BMW Motorrad Vision AMBY and the BMW i Vision AMBY two-wheel-
ers. Powered by smart speed and drive system controls, they
can be used both on the road and on cycle paths. The 7 MINI
Vision Urbanaut shows a facet of the automobile that goes far
beyond its core purpose as a means of mobility and can be
used in a highly flexible manner. 1]
The BMW Group and its brands are well-known for their
emotive, forward-thinking design. In the course of the re-
porting year we also focused on another key facet of our
work: circular design. At the IAA Mobility in September 2021,
design geared to promoting sustainability and driven by the
circular economy concept 7 Circularity as a Strategic priority found its
expression in the BMW i Vision Circular. The design of this vision
vehicle has been optimised for closed material loops and
shows what a vehicle can look like that is not only made of
100% recycled materials, but is, in fact, itself fully recyclable.
Circular design - a topic shaping the future
3 All performance and body variants are counted as basic models. Specifically, these
are the following: BMW 225xe*, BMW 320e*, BMW 320e Touring*, BMW 330e*,
BMW 330e Touring*, BMW 520e*, BMW 530e*, BMW 530e Touring*, BMW 545e*,
BMW 545e Touring*, BMW X1 xDrive25e*, BMW X1 xDrive25Le* (China only), BMW
X2 xDrive 25e*, BMW X3 xDrive30e*, BMW X5 xDrive 45e*, BMW 745e/Le/Le
xDrive* and MINI Cooper SE Countryman ALL4*.
328,314
decrease in carbon emissions on average per
vehicle over its entire life cycle compared with
2019 that is our target by 2030.
Decarbonisation targets
> 40%
AT A GLANCE
PRODUCTS AND MOBILITY SOLUTIONS
Product Safety and Data Protection
65
Mobility Concepts and Services
62
Electric Mobility
59
Carbon Emissions and Pollutants
56
Innovation and Customer Orientation
51
PRODUCTS AND MOBILITY SOLUTIONS
[[An innovation only differs from a mere idea or an invention
when successfully applied to create new products, services
or processes. In this particular sense, innovation within the
BMW Group is inextricably linked with the concept of cus-
tomer orientation. During the year under report, innovations
again led to processes being optimised, products improved,
and new technologies introduced that make everyday life
easier for our customers. We see the future as electric, digital
and circular.
CUSTOMER ORIENTATION
INNOVATION AND
7 Range of reliable charging services ]]
charging points available to customers in Europe
with the BMW and MINI Charging Cards.
51
Drive technologies of the future
The BMW Group also focuses on the needs and wishes of its
customers worldwide when developing its drive technolo-
gies. For this reason, we are constantly enhancing our exist-
ing drive technologies in the interests of efficiency, decar-
bonisation and resource conservation. At the same time, of
course, the BMW Group is researching new drive technolo-
gies with the aim of preparing them for series production. 1]
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To Our Stakeholders
REMOTE SOFTWARE UPGR
Some 30 BMW models are currently upgradeable, which means
that suitable vehicles can receive the latest software upgrades
"over the air". These remote software upgrades provide BMW
vehicles with improvements as well as new digital products and
services and keep the software up to date.
The BMW Group has already offered automated remote soft-
ware upgrades to more than four million of its vehicles, and cus-
tomers have successfully installed them more than 2.3 million
times. Read more in our online special. Online Report
In order to build up an efficient hydrogen-based economy
and promote the production of green Hydrogen, the
BMW Group supports initiatives right across Europe.
Inspiration and cooperation
Good ideas often come into being when different partners
decide to work together. Accordingly, we focus on cooper-
ations in which the strengths of the BMW Group comple-
ment those of established partners and innovation drivers
such as start-ups. Using this approach, we are constantly
developing the innovative strength of the BMW Group.
Regional BMW Group Technology Offices are in search of
promising business partners worldwide in fields of innova-
tion such as sensor technology, artificial intelligence, bat-
tery technology, smart materials, natural user interfaces
and smart logistics. To maintain this network, the
BMW Group also holds an intensive dialogue with selected
colleges and universities. For example, numerous Group
employees also lecture at universities and higher education
institutions and a great many students come to the
BMW Group each year to complete an internship or write a
scientific thesis, enabling us to ensure the transfer of
knowledge between theory and practice and help train
highly qualified junior staff. 1]
QUANTUM COMPUTING
The BMW Group clearly sees quantum computing as a groundbreak-
ing technology of the future that has considerable potential for use in
a broad range of applications, such as for researching materials, in
the field of battery cell chemistry, or to power the future of automated
driving with quantum machine learning. However, it is still a long way
from achieving technological maturity and that's why it is particularly
important for us to provide the best possible support for cutting-edge
research and its transfer to industrial applications.
The BMW Group is one of ten German companies that formed the
Quantum Technology and Application Consortium (QUTAC) in June
2021. The aim of the consortium is to continue developing the existing
fundamentals of quantum computing to create truly usable industrial
applications.
Worldwide culture of innovation
The Munich Research and Innovation Centre (FIZ) is the
main hub of the BMW Group's international network of re-
search and development locations. After the initial construc-
tion phase, the extension was first occupied in autumn 2020,
the new driving simulation centre was also put into oper-
ation during the year under report. In five of a total of 14 sim-
ulators and usability labs, LED walls are deployed to create
a virtual environment for development purposes, to enable
more realistic representations than previous projection
systems.
The global dialogue with start-ups is another important
means for us to bring new impulses into the Company. The
dialogue is based on three key pillars: BMW i Ventures through
which we invest in technology start-ups, the Accelerator
URBAN-X start-up, which was initiated by the MINI brand and
In June 2021, the BMW Group and the Technical University of Munich
(TUM) jointly announced the establishment of the endowed chair for
Quantum Algorithms and Applications. The move was followed in
November 2021 by an agreement with RWTH Aachen University also
aimed at supporting research into quantum computing. Both of these
collaborations are intended to build a bridge between basic research
and industrial application.
In July 2021, the BMW Group launched the BMW Group Quantum Com-
puting Challenge crowd innovation initiative in collaboration with
Amazon Web Services Inc. Researchers, start-ups and companies
alike are called upon to develop innovative quantum algorithms that
serve as solutions to one of four industrial challenges that were an-
nounced. The winners will be invited to implement the selected pilot
projects together with the BMW Group as their customer.
focuses on life in the city, and the BMW Startup Garage, which
represents the third and final pillar. In May, the BMW Group
opened a so-called "incubation site" in Shanghai in cooper-
ation with Alibaba Cloud. This joint innovation base aims to
help Chinese tech start-ups scale their innovations.
Cooperations and partnerships
In order to maintain its long-term success, the BMW Group
enters into targeted cooperations and partnerships, not only
with companies from the automotive industry, but with tech-
nology leaders from other sectors as well. The aim of co-
operating with external partners is to pool our common ex-
pertise and implement innovations as swiftly as possible.
Some of the BMW Group's major collaborations and invest-
ments are listed below:
55
BMW Group Report 2021
Moreover, the BMW Group and Solid Power, Inc. have ex-
tended the development agreement that has been in place
since 2016; the BMW Group intends to purchase solid-state
battery cells from Solid Power, Inc. for use in a prototype
within the first half of the current decade.
In 2021, the BMW Group, together with the Ford Motor Com-
pany, Volta Energy Technologies and other investors, invest-
ed in Solid Power, Inc., one of the industry's leading develop-
ers of solid-state battery cells with high energy density that
can also be used to power electric vehicles. This investment
and the subsequent IPO provided Solid Power, Inc. with the
financial resources to secure its research and development
activities for the years to come.
Under the brand name YOUR NOW, the BMW Group and
Daimler Mobility AG offer innovative, customer-friendly solu-
tions for business partners, cities, towns and municipalities
that are looking to make their mobility more efficient and
sustainable. The cooperation includes the joint ventures
FREE NOW (ride-sharing and multimodality), REACH NOW
(on-demand mobility and multimodality), SHARE NOW
(car sharing) and CHARGE NOW (charging). In 2021, the en-
ergy company bp also joined to become the third partner in
Digital Charging Solutions GmbH (DCS), which operates the
CHARGE NOW brand. Innovative mobility services on offer
The BMW Group is a founding partner of the IONITY joint
venture, the aim of which is to establish a high-performance,
high-power charging network for electric vehicles right
across Europe. The joint venture represents a vital step to-
wards ensuring that electric mobility also becomes a con-
venient means of transport for long-distance travel, thus es-
tablishing it firmly on the market. The founding partners, i. e.
the BMW Group, Daimler AG, the Ford Motor Company and
the Volkswagen Group together with Audi and Porsche, all
participated in equal measure. In 2019, the Hyundai Motor
Group with its Hyundai and Kia brands joined as an addi-
tional partner. In the year under report, the existing partners
signed the inclusion of Blackrock as a further investor (clos-
ing after approval through anti-trust authorities). The move
will enable IONITY to further invest in consolidating and ex-
panding the fast charging network. Expanding charging infra-
structure and enabling faster charging
Since the BMW Group, Daimler and Audi acquired the HERE
mapping service in 2015, the three partners have been work-
ing on developing high-precision digital maps that can be
linked to real-time vehicle data. The maps form the basis for
the next generation of location-related services, thereby
marking another key step in the evolution of individual mobil-
ity as well as building a solid foundation for developing new
assistance systems. HERE remains accessible as an inde-
pendent platform for the automotive industry as well as for
other partners. During the year under report, the location
data and technology platform had nine direct and indirect
shareholders, i. e. Audi, Bosch, the BMW Group, Continental,
Intel, Mitsubishi, Daimler, Nippon Telegraph and Telephone,
and Pioneer.
Spotlight Automotive Limited (Spotlight), a joint venture be-
tween the BMW Group and the Chinese manufacturer Great
Wall Motors, will produce all-electric MINIs as well as electric
vehicles for Great Wall Motors. Established in December
2019, the joint venture also includes the collaborative devel-
opment of battery electric vehicles. The construction of a
production plant in Zhangjiagang (Jiangsu Province) is
meanwhile in the advanced stages. With this collaboration,
the BMW Group is stepping up its commitment in China and
significantly increasing its production capacities.
[The BMW iX5 Hydrogen is powered by fuel cells that stem
from the Group's development cooperation with the Toyota
Motor Corporation. However, the fuel cell stack and the over-
all drive system are being developed in-house by the
BMW Group. The collaborative project, which began in 2013,
aims to optimise the everyday suitability of fuel cell technol-
ogy and its use in each company's own production vehicles.
BMW Brilliance Automotive Ltd. (BBA) is a joint venture
founded in 2003 and owned equally by the BMW Group and
Brilliance China Automotive Holdings Ltd. (CBA). BMW Bril-
liance Automotive manufactures BMW brand models at an
engine plant and two automobile plants in Shenyang, China
(Liaoning Province). In February 2022, the BMW Group ac-
quired a further 25% of the shares in the BMW Brilliance
joint venture. Further information on the consolidation of
BMW Brilliance Automotive is available in the Notes to the
Group Notes to the Financial Statement.
Other Information
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Combined Management Report
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56
← = Q
Remuneration Report
53
BMW Group Report 2021
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[Electric-powered future with the Neue Klasse
The BMW Group sees the transformation to all-electric, con-
nected, sustainable mobility as an opportunity and has de-
veloped a clear road map that consists of three phases. In
the first phase, the Group began pioneering e-mobility as
early as 2007 with project i, enhancing the technology and
then developing electrified vehicles for series production. In
the second phase, which is currently underway, we are intro-
ducing electrification to the product portfolio with a new
model initiative Broader offering based on smart vehicle archi-
tectures and our highly flexible 7 production network, which is
capable of manufacturing the full range of vehicles from
all-electric to combustion engine drive systems on the same
production line. By the peak of the second transformation
phase at the end of 2025, the share of electrified cars in the
BMW Group's total deliveries is scheduled to rise to at least
30%.
From 2025, the third phase will begin with the Neue Klasse,
which will be characterised by three key aspects: a com-
pletely redefined IT and software architecture, a new genera-
tion of electric drive systems and batteries, and a new level of
sustainability across the entire vehicle life cycle. Contributing
factors include:
the all-electric drive system
the use of carbon-free energy in ever larger parts of the
supply chain
the increasing use of secondary materials
closed-loop systems for essential production materials
This high technological standard will be integrated in a com-
plete vehicle architecture exclusively geared towards electric
drive systems. 1]
[[Additionally bolstering battery expertise
Powerful, sustainable energy storage systems and the de-
velopment of new, innovative battery cells are key elements
for powering future generations of all-electric vehicles. For
the Neue Klasse, we are working on significantly increasing
the energy density of the cells, while at the same time cutting
material and production costs. Battery recyclability is an-
other key consideration that will impact the development of
all our future generations of battery cells. Moreover, the
BMW Group is already conducting intensive research into
solid-state battery technology, which shows great promise
for the future.
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BMW Group Report 2021
54
Other Information
** Consumption and carbon emissions data
tween the carbon-free drive system, the chassis technology
and the electronic systems under realistic conditions. The
BMW iX5 Hydrogen uses hydrogen as a fuel and converts it
into electricity via a fuel cell, making the BMW iX5 Hydrogen
a fully electrically powered vehicle. A pilot series of this mod-
el will be produced at the end of 2022 in order to gain further
practical experience in a broadly based field trial.
HYDROGEN
CONCEPT PROTECTION VRS
HYDROGEN
During the year under report we began testing the BMW iX5
Hydrogen with its hydrogen fuel cell drive in everyday driving
scenarios in Europe. The aim is to test the interaction be-
Hydrogen fuel cell technology
Hydrogen fuel cell technology has the potential to become a
sustainable alternative to battery electric drive systems. The
technology really comes into its own when comprehensive
electric charging infrastructure is not available and there are
also a broad number of applications for this technology on
long-distance journeys or in larger classes of vehicle. De-
pending on market requirements and other general condi-
tions, the BMW Group intends to offer a production vehicle of
this type in the second half of the decade. ]]
"Range calculated on the basis of the new WLTP test cycle (Worldwide Harmonized
Light Vehicles Test Procedure). The actual range achievable depends on a variety
of factors, including personal driving style, route characteristics, the outside tem-
perature, heating, air conditioning, preheating and precooling. Provisional figure
5 Vehicle delivery figures presented for the year 2020 are not directly comparable
with those of previous years. See sales figures for deliveries in the section "Com-
parison of Forecasts with Actual Outcomes" for further information.
67 Consumption and carbon emissions data.
"> 250,000
electrified vehicles delivered by the BMW Group
in 2021 more than twice as many as in 2019.
7 Broader offering
Corporate Governance
By the end of 2022, every production plant in Germany shall
have the capacity to manufacture at least one all-electric
model. From the middle of the decade, the 7 Neue Klasse will
also feature a cluster architecture consistently geared to pro-
ducing electric drive systems. The new architecture will be
deployed for the first time at the Group's new plant in Debre-
cen, Hungary, as well as at the Munich plant, and will be
gradually transferred to the BMW Group's global production
network in the coming years.
Component production for electrified vehicles
The Dingolfing plant now plays a leading role as a compe-
tence centre for electric drive systems, producing battery
modules, high-voltage batteries and fifth-generation electric
motors, which are also produced at the Landshut plant. The
BMW Group plants in Spartanburg (USA) and Shenyang
(China) also make high-voltage batteries. The Leipzig plant
began manufacturing battery modules and other battery
components during the year under report. The Regensburg
plant also began producing battery components during the
same period. In Thailand, the BMW Group collaborates with
a partner that makes high-voltage batteries for electrified ve-
hicles that are produced locally.
* BMW Group production sites, including contract manufacturing at Magna Steyr
Fahrzeugteile (Austria), VDL Nedcar (the Netherlands) and Inokom Kulim (Malaysia).
Developing expertise for battery cell production
The approval process for the planned pilot plant in Parsdorf
near Munich for near-series battery cell production came
closer to completion during the year under report. The
BMW Group intends to further optimise the production of
battery cells at the Parsdorf plant in terms of quality, perfor-
mance and costs. Since 2019, we have been pooling our
knowledge at the Battery Cell Competence Centre in Munich.
The entire value chain of battery cell technology is concen-
trated at the Centre, including research and development,
the composition and design of the battery cell and industrial
producibility.
CIRCULAR ECONOMY,
RESOURCE EFFICIENCY
AND RENEWABLE ENERGY
[[ Circularity is one of our key strategic priorities. The in-
creased use of secondary raw materials is a cornerstone of
the BMW Group's long-term decarbonisation strategy. We
also see the circular economy concept as an important factor
in our efforts to significantly mitigate the social and environ-
mental impacts of mining and processing primary raw ma-
terials. The use of secondary materials also has economic
benefits, as it conserves primary raw materials. Circularity
calls for a holistic strategic approach, beginning at the product
design stage and encouraging the increased use of second-
ary raw materials in our supply chain as well as the recycling
of BMW Group vehicles at the end of their life cycle. At the
same time, in our own production cycles we are systematically
pursuing the strategy of conserving resources, improving
energy efficiency and continuously cutting emissions.
Since 2019, we have been
building up relevant knowledge
in this field at the Battery Cell
Competence Centre in Munich.
Circularity as a strategic priority
The responsible and efficient use of resources is of great im-
portance to the BMW Group, which takes a targeted ap-
proach to the circular economy concept based on the four
principles Re:think, Re:duce, Re:use and Re:cycle.
We are working hard to further integrate the principle of cir-
cularity in all our processes. However, the availability of
high-quality secondary raw materials is currently limited and
in some cases insufficient to meet demand. Depending on
material requirements, adequate amounts of secondary ma-
terial are not yet available for every application. As part of its
efforts to meet these challenges, the BMW Group is working
together with its partners to form closed material loops in the
automotive industry. In collaboration with BASF and the
ALBA Group, we are currently testing improved methods of
recycling automotive plastics as part of a pilot project.
7 Online-Report
From product development to recycling
The efficient use of resources needs to be considered right
from the outset, not only during the design process, but also
later at the product development stage, and is therefore an
essential requirement. The BMW Group aims to design its
vehicles so that as many material cycles as possible are
closed. We summarise this principle under the concept of
circular design. With the BMW i Vision Circular, we have
shown that we are taking a critical look at the trend towards
increasingly complex composites of materials and analys-
ing new approaches to using compounds of (mono)mater-
ials (Innovations). ]]
BMW 2 Series, BMW 3 Series
Mexico
USA
BMW X3
South Africa
The BMW Group already manufactures automobiles with
all-electric or plug-in hybrid drive systems at 13 locations*
across its worldwide production network. All-electric mod-
els are already part of the production programme in Dingolf-
ing, Leipzig, Munich, Oxford and Shenyang, including the
BMW iX produced in Dingolfing and the BMW i4, which has
been manufactured at the Munich plant since the year
under report.
PHEV
Restructuring production for electric mobility
Other Information
Partner plants
29,220
26,256
11.3
Total
2,461,269
2,255,637
9.1
1 Includes vehicles produced by the BMW Brilliance Automotive Ltd., Shenyang joint
← = Q
venture (2021: 700,777 units; 2020: 602,935 units).
3 Contract manufacturing.
70
70
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Combined Management Report
Group Financial Statements
Production, Purchasing and Supplier Network
Corporate Governance
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2 BMW Brilliance Automotive Ltd., Shenyang joint venture.
BMW 1 Series, BMW 2 Series, BMW X1, BMW X2
Germany
Rolls-Royce Manufacturing Plant, Goodwood
Electrification portfolio
Production programme 2021
Country
Brazil
Berlin
Chennai
Araquari
Location
BMW GROUP VEHICLE PLANTS
The BMW Group aims to strike a good balance between pro-
duction and deliveries in the various regions of the world
where it operates. While 20 of its 31 locations are BMW Group
plants, three belong to the BMW Brilliance Automotive Ltd.
joint venture in Shenyang (China), which is currently being
enlarged to create additional production capacity. Further in-
formation on the consolidation of BMW Brilliance Automo-
tive Ltd. is provided in the 7 Notes to the Group Financial Statements.
Eight production sites are operated by Group partners or
contract manufacturers.
Production sites in key markets
Germany
India
← = Q
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Production, Purchasing and Supplier Network
To Our Stakeholders
BMW Group Report 2021
68
69
* BMW Group production sites, including contract manufacturing at Magna Steyr
Fahrzeugteile (Austria), VDL Nedcar (the Netherlands) and Inokom Kulim (Malaysia).
The restructuring of its plant in Munich amply demonstrates
how the BMW Group is transforming itself going forward. Since
the launch of the all-electric BMW i4 in November 2021, the
BMW Group's main plant has been manufacturing vehicles with
all types of drive system on the same production line. From 2023,
at least half of all vehicles produced at the Munich plant will be
powered by an electrified drive system and the majority of these
will be all-electric models.
Other Information
52.6
BMW 3 Series, BMW X1, BMW X3, BMW X4, BMW X5
BMW motorcycles
Dingolfing
San Luis Potosí
Spartanburg
Rosslyn
The BMW Group also awards contracts to external partners
(contract manufacturers) to produce its automobiles and
motorcycles in series. During the period under report, Magna
Steyr Fahrzeugtechnik produced both the BMW 5 Series Se-
dan and the BMW Z4 in Graz (Austria). VDL Nedcar in Born
(the Netherlands) manufactures the MINI Convertible, the
MINI Countryman and the BMW X1. BMW motorcycles are
also produced by the TVS Motor Company in Hosur (India)
and by Loncin Motor Company in Chongqing (China).
PHEV
BMW 2 Series, BMW 3 Series, BMW 5 Series, BMW 7
Series, BMW X1, BMW X3, BMW X5, BMW X7
BMW motorcycles
BEV
BEV, PHEV
BMW 3 Series, BMW 4 Series, BMW i4, BMW M
MINI, MINI Clubman, MINI Cooper SE*
United Kingdom
Thailand
BEV
Rayong
BEV, PHEV
BEV, PHEV
BMW 2 Series, BMW 3 Series, BMW 5 Series, BMW 6
Series, BMW 7 Series, BMW X1, BMW X3, BMW X4,
BMW X5, BMW X7, MINI Countryman
BMW 3 Series, BMW 4 Series, BMW 5 Series, BMW 6
Series, BMW 7 Series, BMW 8 Series, BMW M; BMW IX
BMW 1 Series, BMW 2 Series, BMW i3, BMW M
BMW motorcycles
Brazil
Germany
Munich
The BMW Group's automotive partner plants in Jakarta (In-
donesia), Cairo (Egypt), Kaliningrad (Russia) and Kulim (Ma-
laysia) mainly produce BMW and MINI brand models for their
respective regional markets.
Germany
Leipzig
Manaus
Germany
Oxford
35,747
54,547
Graz (Magna Steyr)³
Remuneration Report
Other Information
← = Q
The BMW Group's production network also includes engine
plants in Hams Hall (UK), Munich (Germany), Steyr (Austria)
and Shenyang (China), as well as component plants in Ei-
senach, Landshut and Wackersdorf (Germany) and Swindon
(UK). By 2024, the BMW Group intends to concentrate its
production in Europe of combustion engines at the Steyr and
Hams Hall plants.
Significant growth in production volume
The coronavirus pandemic had a lower impact on BMW Group
production volumes than one year earlier. However, the limit-
ed availability of semiconductor components led to adjust-
ments in the production programme. Despite these chal-
lenges, the BMW Group achieved significant year-on-year
growth during the reporting period with a production volume
of 2,461,2691 BMW, MINI and Rolls-Royce brand vehicles
(2020: 2,255,6371 units; +9.1%), comprising 2,166,6441
BMW (2020:1,980,740¹ units; +9.4%), 288,713 MINI (2020:
271,121 units; +6.5%) and a record number of 5,912 Rolls-
Royce (2020: 3,776 units; +56.6%) brand vehicles. In the
reporting year 2021, the number of electrified vehicles pro-
duced grew by 51% to 341,097 units (2020: 225,604 units).
With 187,500 units produced (2020: 168,104 units), BMW
Motorrad recorded growth of 11.5 % year-on-year.
BMW GROUP AUTOMOBILE PRODUCTION BY PLANT
in units
Spartanburg
Corporate Governance
Dingolfing
Regensburg
Oxford
Munich
Rosslyn
Rayong
Chennai
Araquari
Goodwood
San Luis Potosí
Tiexi (BBA)²
Leipzig
Dadong (BBA)²
Group Financial Statements
To Our Stakeholders
PHEV
United Kingdom
Rolls-Royce Cullinan, Dawn, Ghost, Phantom, Wraith
BEV from 2023
** Additional information on consumption and carbon emissions data.
BMW BRILLIANCE AUTOMOTIVE JOINT VENTURE (VEHICLE PLANTS)
Location
Dadong (Shenyang)
Tiexi (Shenyang)
Combined Management Report
Production, Purchasing and Supplier Network
Country
China
Production programme 2021
Electrification
BMW 5 Series, BMW X3; BMW iX3*
BMW 1 Series, BMW 3 Series, BMW X1, BMW X2
BEV, PHEV
PHEV
69
BMW Group Report 2021
China
Born (VDL Nedcar)³
2021
2020
6,228
36.0
10,104
8,400
20.3
5,912
3,776
56.6
69,149
8,472
56,081
335,311
311,137
7.8
365,466
291,798
25.2
105,214
125,666
- 16.3
23.3
- 4.4
25,752
24,624
433,810
361,365
Change in %
20.0
244,734
231,970
5.5
183,485
199,991
- 8.3
191,604
200,968
-4.7
186,883
175,984
6.2
151,154
143,758
5.1
61,580
50,760
21.3
MUNICH
TRANSFORMING THE MAIN PLANT IN
The BMW Group production network comprises 31 locations
in 15 countries. The same high standards of quality, safety
and sustainability apply at all Group locations* worldwide.
Our state-of-the-art production facilities enable us to manu-
facture all-electric, plug-in hybrids and conventionally pow-
ered automobiles all on one line. Electric mobility is playing
an increasingly key role in this regard. For example, at the
end of 2021, electrified vehicles already accounted for some
26% of the total number produced at the BMW Group plant in
Munich.
The BMW Group production network
Shaping the future of mobility
The BMW Group is currently working together with the three
German cities of Munich, Berlin and Hamburg, and at inter-
national level with Rotterdam, Los Angeles and Beijing, on
cooperative research and implementation projects.
In Munich, for example, the BMW Group is currently working
with partners from the local business community to develop
a new model of collaboration between policymakers, stake-
holders and the private sector, building on 25 years of in-
volvement in the so-called Inzell-Initiative. The focus is on
creating strategic measures for developing sustainable
transportation in the region.
In the German capital, the BMW Group is involved in the
7 New Mobility Berlin project, which addresses people's chan-
ging mobility needs and the shortage of space in a growing
city. Against this backdrop, the project aims to make public
street space more flexible to use. The project is looking to
create shared spaces to provide mobility stations for car
sharing or rental bicycles, for example.
In the National Platform for the Future of Mobility, which was set up
by the previous federal government, the BMW Group chaired
the working group on digitalisation for the mobility sector.
The group developed measures to make mobility more cli-
mate-neutral, efficient, convenient and cost-effective for the
future.
cooperation
In October 2021, the BMW Group extended its
with the City of Rotterdam, which has been ongoing since
2018, for a further six years. One successful example of this
collaboration is the BMW eDrive Zone technology, which was
launched in 2020. BMW eDrive Zone technology
The importance of cooperation between cities and energy
suppliers was meaningfully demonstrated in the 7 BMW
Charge Forward project in California. The project enabled us to
demonstrate that intelligently controlled charging coordinat-
ed to suit the availability of renewable energy is more envi-
ronmentally friendly, more energy-efficient and more cost-ef-
fective for the customer.
Range of innovative mobility services
Together with Daimler Mobility AG, the BMW Group offers
mobility services via the joint venture YOUR NOW, which was
established in 2019. The YOUR NOW range of services in-
cludes car sharing and the use of e-scooters, e-bikes and
e-kick scooters (multimodality) as well as driving and char-
ging services and provides customers with access to the
charging infrastructure as well as to alternative means of
transportation apart from their own cars. At the same time,
they are promoting the expansion of public charging points
with their increasingly electrified range of vehicles. All YOUR
NOW subsidiaries continued to consistently develop their
activities throughout 2021 against a backdrop of pandem-
ic-related restrictions.
[The BMW Group aims to make mobility more sustainable
and cities more pleasant places to live in. With these aims in
mind, we are cooperating with cities around the world and
are involved in overarching platforms for mobility, thus mak-
ing our contribution to reducing both traffic density and the
associated negative impacts. Via BMW Group subsidiaries,
we also offer a range of innovative urban mobility services,
which include car sharing, driving and charging services, and
a digital, multimodal platform that allows users to conveni-
ently order, combine and use various modes of transport via
their smartphones. To make these services more sustain-
able, the YOUR NOW companies FREE NOW and SHARE
NOW are gradually electrifying their fleets of vehicles. In
addition, the BMW Group is driving forward the connectivity
and automation of its vehicles as key elements towards en-
suring eco-friendly, safe and free-flowing traffic in cities.
As Europe's largest multimodal mobility platform, FREE
NOW combines various forms of mobility in one single app.
With this strategy, the service brings registered users in
European and Latin American cities to their destination
quickly and in line with their individual needs. Apart from taxi
cabs and private ride services, e-scooters and e-kick scooters,
SHARE NOW vehicles have also been bookable via the FREE
NOW app since mid-2021. At the same time, FREE NOW is
systematically promoting the electrification of the fleet it uses.
FREE NOW intends to grow its share of electrically powered
trips to 50% by 2025 and go all-electric by 2030.
63
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Products and Mobility Solutions
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
SHARE NOW is one of the pioneers in the field of car sharing
and offers vehicles for on-demand rental. In 2021, the mobil-
ity brand launched its first connection between two metro-
politan areas with the route between Rotterdam and
Amsterdam. Furthermore, SHARE NOW systematically con-
tinued to electrify its vehicle fleet during the year under re-
port and more than a quarter of its vehicles are meanwhile
powered by electricity. ]]
[The joint venture also includes Digital Charging Solutions
(DCS) GmbH, one of the leading developers of digital char-
ging services for car manufacturers and fleet operators in
Europe. Under the CHARGE NOW brand, DCS offers com-
prehensive access to public charging points. As a so-called
white-label solution, business customers can offer their end
customers made-to-measure access to a network of more
than 360,000 public charging points from a variety of oper-
ators in 30 countries. The BMW Group utilises the DCS offer-
ing by giving its customers access to the public charging ser-
vices provided by BMW Charging and MINI Charging at competitive
tariff rates in both Europe and Japan. The addition of the
energy company bp as DCS's third partner will make a sig-
nificant contribution towards further expanding the available
charging network.
AND SERVICES
← = Q
We support political initiatives in favour of sector coupling,
with the aim of forming smart connections between the mo-
bility and the energy sectors. The BMW Group is also con-
ducting its own targeted research and development work in
this area. For example, as part of a pilot project in California,
USA, customers can already use the 7 BMW Charge Forward
service to synchronise their charging behaviour with grid
capacity utilisation and the use of renewable forms of energy
(Collaboration with cities). The further expansion of this tech-
nology is planned.
Another project aimed at promoting sector coupling is so-
called Bidirectional Charging Management (BDL), which is funded by
Germany's Federal Ministry for Economic Affairs and Ener-
gy. BDL transforms electric vehicles into mobile energy stor-
age devices and thus into a part of the energy system in that
their batteries are not only able to store electricity, but also
simultaneously feed it into the operator's power grid in the
opposite direction.
Recording electric mobility over the entire life cycle
Electrified vehicles need to be as eco-friendly as possible,
not only during their use phase, but also in terms of their
overall footprint, including the supply chain. 7 Holistic manage-
ment system. In the BMW Group's case, for instance, this was
confirmed by the environmental report on the BMW iX3³:
Over its life cycle, the all-electric vehicle emits around 40%
fewer carbon emissions' than the BMW X3 30i reference
vehicle. If the battery is charged using renewable energy
only, carbon emissions are even around 67% lower.
IONITY EUROPEAN FAST-CHARGING NETWORK
[ At European level, in collaboration with the joint venture
7 IONITY, the BMW Group is further expanding a comprehen-
sive, high-performance, fast-charging network along major road
routes. Depending on the vehicle, charging is particularly fast
with capacities of up to 350 kW. All IONITY charging points are
publicly accessible, regardless of vehicle brand, and designed in
accordance with the European Combined Charging System (CCS)
standard. A ubiquitous high-power charging network is key to
achieving sufficient market penetration and ultimately the suc-
cess of electric mobility. All 6,600 IONITY charging points are
powered by 100% green electricity.
> Cooperations and partnerships ]]
The environmental impact of a battery vehicle is predomi-
nantly caused in the upstream value chain, where the pur-
chasing of raw materials to manufacture battery cells and
the carbon-intensive production of the batteries themselves
leave a significant footprint.
For this reason, the BMW Group sees it as particularly im-
portant to produce components such as the electric motor,
high-voltage storage systems, and battery cells in a more
sustainable manner. Reducing carbon emissions in the supply chain.
Other methods of mitigating the environmental impact in-
clude recycling and reusing the high-voltage storage units
installed in our BEV and PHEV models. The BMW Group al-
ready offers all customers that use its battery-powered vehi-
cles to take back their high-voltage batteries free of charge
at the end of their life cycle. ]]
1 Disclosure in CO₂ equivalents.
MOBILITY CONCEPTS
2 The entire value chain was taken into account and standard consumption levels as
37 Consumption and carbon emissions data.
62
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Products and Mobility Solutions
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
well as the European electricity mix were used as a basis.
In 2021, the YOUR NOW holding company sold its digital
parking services, which were offered under the PARK NOW
brand, among others, to the Swedish company EasyPark. 1]
AUTOMATED AND AUTONOMOUS DRIVING
At the end of 2021, the all-electric BMW iX was the first BMW Group
vehicle to offer automated driving and parking features from a new
technology kit that will also be deployed in the upcoming BMW 7
Series. With the introduction of completely new software and state-
of-the-art sensor technology - including the use of an 8-megapixel
camera for the first time in the automotive sector - customers can
now choose from around 40 driver assistance features designed to
make their driving experience more pleasant, convenient and ulti-
mately safer.
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
[ Digital connectivity and automation
Automated features and digitally connected vehicles can
help reduce emissions, the risk of accidents and traffic con-
gestion. Since 2017, the Group has been pooling the devel-
opment of assistance and automation functions at the Au-
tonomous Driving Campus, located just north of Munich. It
also operates research facilities in both China and the USA,
the BMW Group's two largest markets in terms of traffic-re-
lated as well as traffic law specifics, the very beginning. In
order to develop new technologies to maturity for series pro-
duction and expand our testing capacities, we are currently
building a new test site in the Czech Republic.
Since 2021, the Munich-based research project TEMPUS*, in
which the BMW Group is participating, has been following up
questions relating to technical feasibility. The project also aims
to assess the acceptance of automated traffic systems among
the general public.
With the all-electric BMW iX, which was launched in 2021, we
are also offering state-of-the-art driver assistance systems.
The BMW iX is the first BMW Group vehicle to feature auto-
mated driving and parking functions from a new modular tech-
nology toolkit that will be deployed across the entire product
portfolio from next year.
With its BMW eDrive Zone technology, the BMW Group is
demonstrating how vehicle connectivity can help make urban
mobility more sustainable. Plug-in hybrids equipped with the
appropriate module can automatically switch to all-electric
driving when entering a defined zone, making it easier for cus-
tomers to drive emissions-free as often as possible, provided
their vehicles are charged with green electricity. BMW eDrive
Zone technology is already available in over 138 towns and
cities across Europe.
Combined Management Report
Products and Mobility Solutions
Safety of automated and smart systems
Artificial intelligence (AI) has been used in BMW driver
assistance systems since 2018. It helps to detect dangerous
situations, such as other vehicles swerving into traffic, at an
early stage so that the driver can react accordingly. The Al's
learning is controlled and safeguarded throughout the pro-
cess. Here, too, the Group is working to achieve the inter-
national harmonisation of Al standards and helped initiate the
development of the new ISO Safety and Artificial Intelligence
standard in 2021. In this context, as a founding member of the
European GAIA-X project, we are committed to establishing a
protected, high-performance data infrastructure as the basis for
safe, efficient traffic management. ]]
$138
European towns and cities are compatible with
BMW eDrive Zone technology. ]]
* Munich test site, pilot test of automated driving in urban traffic.
65
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Products and Mobility Solutions
Group Financial Statements
The BMW Group gives the safety of its automated systems
the highest priority. For that reason, we support the develop-
ment of an industry-wide ISO standard for highly and fully
automated driving functions. In 2019, the BMW Group, to-
gether with 11 leading companies in the field of automated
driving, published the white paper Safety First for Automated
Driving, which was translated into an ISO Technical Report in
2020. The work is currently being continued in a worldwide
ISO working group and scheduled to be published as an ISO
Technical Specification in 2023 with the aim of defining uni-
form technical standards for safe automated driving.
To Our Stakeholders
BMW Group Report 2021
64
Around 1,200 engineers are working on developing and testing new,
automated driver assistance functions to achieve these aims. Around
half of these employees are highly qualified software developers. Ar-
tificial intelligence (AI) is a key technology for enabling automated
and autonomous driving. A large number of Al-based applications
are currently in use and being tested under everyday conditions.
Automated driver assistance functions are being rigorously devel-
oped at more than 12 locations worldwide (including test sites) in
order to allow for local circumstances such as regulatory, road and
climatic conditions. Regionally differing customer requirements also
play a key role.
The recently opened Driving Simulation Centre in Munich is unique
worldwide. Visitors can virtually test driver assistance systems and
automated driving functions that realistically simulate the product
requirements of the future.
[[The DCS offering includes
360,000
public charging points in 30 countries. ]]
Front
camera (8 Mpi).
Surround
view camera.
Full range
radar
(300 m).
M&DI 270E
Surround
view cameras.
O
Ultrasonic
sensors.
Short range
radars.
Sensor-setup for driving
Sensor-setup for parking
49
The BMW Group still sees a need for political action in order
to better promote electric mobility in many countries and
cities. EU market research data highlight the close correlation
between the density of charging infrastructure and the sale
of electrified vehicles - both at the level of member states
and in a comparison of various regions.
Remuneration Report
Improving framework conditions
Apart from the public charging services they offer, BMW
Charging and MINI Charging provide a standard charging
solution in the form of the Flexible Fast Charger and other
charging products designed for home use. BMW also offers
charging solutions for corporate customers in collaboration
with partners. The BMW Group itself operates one of the
largest company charging networks in Germany. Employee mobility
Circular Economy, Resource Efficiency and
Renewable Energy
70
67
Production Network
SUPPLIER NETWORK
PRODUCTION, PURCHASING AND
← = Q
Other Information
Remuneration Report
74
Corporate Governance
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
67
[ BMW CarData provides BMW
and MINI customers with
transparency and sovereignty
over any data transferred to
authorised third parties. 1]
DINNER WITH
FRIENDS AT 7PM
CALENDAR LOCATIONS
NAVIGATION IS
NOW SET TO
ISLA TAPAS
NAVIGATION
Group Financial Statements
Production, Purchasing and Supplier Network
The secure transmission of data to third parties was imple-
mented with the introduction of BMW CarData in Germany
and Europe (2017) and in the USA (2020). CarData provides
BMW and MINI customers with complete transparency and
sovereignty over any data transferred to authorised third par-
ties, allowing them to decide independently at any time which
data they release to service providers such as workshops, in-
surance companies or fleet managers in order to receive indi-
vidual service offers. 1]
Purchasing and Supplier Network
80%
Electrification, digitalisation, efficiency and sustainability
are the key factors shaping the future of the BMW Group's
production system and the main guiding principles in the
restructuring of its global production network. As production
of the all-electric BMW iX and BMW 14 models began in
2021, we rigorously attuned our vehicle assembly systems
to suit the requirements of electric mobility. At the same
time, we are benefiting from the high flexibility of our pro-
duction system. During the year under report, this agility en-
abled us to respond both swiftly and specifically to major
challenges such as the tense semiconductor supply situ-
ation and the ongoing coronavirus pandemic, despite which
we still managed to significantly increase production vol-
ume year-on-year.
PRODUCTION NETWORK
SUPPLIER NETWORK
PRODUCTION, PURCHASING AND
QO
AND PRODUCTION
CONSUMPTION
RESPONSIBLE
M
AT A GLANCE
ECONOMIC GROWTH
QINDUSTRY INNOVATION
DECENT WORK AND
is a network-based system for exchanging
information and data that creates greater
transparency in the supply chain.
* Highlight box ]]
"Catena-X
7 Preference for secondary raw materials ]]
share of secondary raw materials in our vehicles -
and that figure is set to increase.
"Up to 30%
* Carbon emissions at BMW Group locations
decrease in carbon emissions on average per
vehicle produced compared with 2019 - that is
our target by 2030.
ANDINFRASTRUCTURE
The BMW Group's responsibility for its products includes the
secure transfer of vehicle data to third parties. For this rea-
son, BMW Group vehicles are not directly connected to the
Internet, but communicate directly and exclusively with the
BMW Connected Drive back end via a highly secure connec-
tion in a virtual private network. This strategy enables us to
minimise the risk of unauthorised third parties gaining ac-
cess to either the vehicle or the driver's personal data. The
point of access to the Internet is controlled via a gateway. We
see this Extended Vehicle Approach in accordance with ISO
20078 as the best solution to ensure an outstanding level of
data security and protection and to meet statutory cyber-
security requirements (e. g. UN R155).
Securely connected
The BMW Group collaborates closely with the relevant data
protection supervisory authorities particularly regarding
fundamental data protection issues, such as those relating
to the increasing connectivity of our vehicles.
Effective safety systems
These actions were all of a voluntary nature and carried out
in coordination with the respective authorities. The main
technical actions related to exhaust gas recirculation issues
and Takata-airbags. GRI-Index: 416-1, 7 SASB-Index
The BMW Group operates a comprehensive system of qual-
ity management, as we want to ensure that our products are
of high quality, safe and compliant with the law. All
BMW Group vehicles are therefore subject to stringent test-
ing from the development stage right through to production.
However, our quality management system goes further and
also includes the use of our vehicles after they have been
delivered to our customers; if any deviations from the quality
standard are observed, they are rigorously followed up. The
BMW Group also informs the relevant authorities without
delay if required to do so by market-specific regulations. This
is especially true for safety-related aspects. If a safety risk is
detected, the BMW Group implements any technical meas-
ures required in close coordination with the responsible au-
thorities. Corresponding committees, processes and organ-
isations are in place for this purpose, which are controlled by
the Product Support, Technical Actions and Warranty Costs
department. In the reporting year 2021, safety- and compli-
ance-related technical actions affected 1,920,977 vehicles.
Product safety as part of quality management
[We aspire to deliver the highest standards of quality and
safety for all BMW Group vehicles. In all measures, the safety
of people is key. In its manufacturing processes, the
BMW Group avoids the use of any substances that pose a
health risk. The active and passive safety systems built into
our vehicles ensure greater safety on the road. In our driving
safety training courses, we instruct customers on all aspects
of safety and show them how to recognise and react appro-
priately to dangerous situations. Responsibility towards our
customers also includes the responsible handling of their
data. In this respect we focus on transparency, informational
self-determination, data sovereignty and data security.
PRODUCT SAFETY AND
DATA PROTECTION
← = Q
Other Information
61
State-of-the-art safety systems play a major role in reducing
the risk of accidents and injuries (active safety) and largely
mitigate the consequences of a possible accident (passive
safety). Safety begins with key factors such as optimal chas-
sis tuning, highly effective braking systems and stable pas-
senger compartments, but also includes airbags as standard
and digital driver assistance systems such as active cruise
control, collision warning, lane guidance and emergency
braking assistants. They also promote greater safety for all
road users. The connectivity and automation of vehicles also
provides a growing number of opportunities to improve safe-
ty. The BMW iX sets new standards in this regard, thanks in
part to its advanced front collision warning system with brak-
ing intervention, which comes as standard.
BMW Group Report 2021
Combined Management Report
Products and Mobility Solutions
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
[Range of reliable charging services
With BMW Charging and MINI Charging, the BMW Group
offers a comprehensive range of charging solutions that
make electrified vehicles more convenient to use in a variety
of situations. These include charging products and services
that benefit customers on the road, at home and at work.
Customers can use their BMW and MINI charging cards to take
advantage of public charging services, providing them with
straightforward, transparent access to one of the world's larg-
est charging networks with over 250,000 charging points
across Europe, of which 48,000 are located in Germany alone,
and also include fast-charging stations with a capacity of over
150 kilowatts (kW). The IONITY European high-power charging
service can also be accessed via BMW Charging and MINI
Charging. In 2021, the BMW Group introduced a standardised
tariff structure for public charging in 22 European countries.
With the Connected Charging application, available both within
the vehicle and as a smartphone app, we also enable MINI and
BMW drivers to charge their vehicles in a predictive, convenient
and cost-efficient manner. The service provides drivers with
comprehensive information at any time, including the remain-
ing range of their vehicle and the availability of charging points.
To Our Stakeholders
We work continuously on improving vehicle safety. The
7 European New Car Assessment Programme (Euro NCAP), a vehicle
crash safety assessment scheme, confirms the effective-
ness of the safety measures installed in our vehicles. In the
2021 Euro-NCAP-Rating, the BMW iX received the highest
rating, just like numerous models did in past years, such as
the BMW 4 Series Coupé and BMW 4 Series Convertible,
thus demonstrating the Group's premium-level standards in
terms of vehicle safety.
Pollutants management
SASB-Index
At the same time, we continuously strive to maintain our
high level of data protection and regularly check all applica-
tions that process customer data to ensure that they comply
with all current and appropriate IT security measures. In the
course of this process, we specifically search for any possible
weak points and eliminate them with teams of IT specialists.
We implement any new insights into mandatory corporate
standards as the need arises.
[In 2021, more than 100,000
customers worldwide took part
in BMW and MINI Driving
Experience training courses. 1]
At the BMW Group, data and information protection is based
on the relevant laws and standards, particularly the EU Gen-
eral Data Protection Regulation and the ISO/IEC 27001 in-
ternational security standard. The personal data of custom-
ers are only collected, processed or used to the extent
legally permitted and with the consent of the data subject.
However, should customers have any queries or complaints
regarding the protection of their personal data, they are wel-
come to contact the Customer Interaction Centre or the data
protection officer in their respective markets.
Customer data protection
The BMW Group views data protection as one of the most
important tasks in these times of increasing digitalisation.
For this reason, the strictest data protection requirements
are taken into account at an early stage when developing
features and services. Via an individually configurable data
protection menu, we provide our customers with transpar-
ency, informational self-determination and ultimately data
sovereignty.
Data protection - an essential task
[With its BMW and MINI Driving Experience, the BMW Group offers
product experiences and safety training with BMW, MINI and
BMW Motorrad brand vehicles in 25 countries. The Driving
Experience teaches participants safe vehicle handling and
prepares them for any dangerous situations that may occur
on the road. In 2021, more than 100,000 customers world-
wide took part in these training courses.
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
Products and Mobility Solutions
To Our Stakeholders
BMW Group Report 2021
66
The BMW Group provides its customers with extensive infor-
mation on the correct use of its products and services. Infor-
mation on safety, the proper use of its vehicles, and health
protection is available in the integrated operating instruc-
tions in printed form, online, or via an app. The information is
supplemented by notes and background tips on services,
accessories and the vehicle's various components. ]]
Customer awareness and empowerment
the same time, we are working to reduce emissions in the
vehicle interior to an absolute minimum. All BMW, MINI and
Rolls-Royce vehicles are equipped with passenger compart-
ment air filters as standard, reliably filtering out pollutants
and particles such as dust or pollen from the outside air. In
2020, the BMW Group fitted passenger compartment air fil-
ters with nanofibre filter technology, which keeps certain micro-
bial particles and allergens from entering the vehicle's interior.
Since 2021, we have been gradually introducing this technol-
ogy in a range of other BMW Group models.
[ All BMW Group vehicles are
subject to stringent quality,
safety and legal compliance
tests, right from the develop-
ment stage through to
production. 1]
The BMW Group endeavours to meet legal requirements re-
garding the use and handling of pollutants at every stage of
the value chain. Right from the design stage, the BMW Group
is careful to exclude any substances of concern from its ve-
hicles to the greatest extent possible. In doing so, we use the
7 Global Automotive Declarable Substance List (GADSL) as a guide. At
In addition to the BMW Charging and MINI Charging ser-
vices, we offer green electricity tariffs and attractive solar
power services for the home in certain countries, and plans
are being put in place to expand this offering to other markets.
Regensburg
PHEV
BMW X3, BMW X4, BMW X5, BMW X6, BMW X7,
BMW M
Strategic personnel planning serves as a tool for identifying
the need to readjust personnel and competence structures
at an early stage. The BMW Group uses this information as
the basis for making targeted improvements in the fields of
vocational and further training, personnel development, HR
marketing, recruiting and training programmes for future tal-
ents. 7 GRI-Index: Employee development, vocational and further training
Further GRI information GRI-Index: 308-1, 414-1 SASB-Index
Management system and mission statement
The BMW Group is committed to respecting internationally
recognised human rights and is guided, among other things,
by the UN Guiding Principles on Business and Human
Rights, the OECD Due Diligence Guidance for Responsible
Business, and the German government's National Action
Plan as well as the Supply Chain Due Diligence Act derived
from it Worldwide Implementation of Labour Standards and Human
Rights.
REGIONAL DISTRIBUTION OF BMW GROUP
PURCHASE VOLUMES¹
in € billion
Asia/Australia
6.9%
Rest of Western
Europe
15%
North America
20.1%
IMPLEMENTATION OF THE SUPPLY CHAIN DUE DILIGENCE ACT
Total
€ 64.1 billion
Other
1.3%
Germany
38.4%
Eastern Europe
18.3%
[[ In 2021, the German Bundestag passed the Supply Chain Due
Diligence Act, in which the BMW Group actively participated
through its involvement in the National Action Plan "Business
and Human Rights". We very much welcome the regulation that
has now been adopted and are also advocating for Europe-wide
directives that ensure fair competitive conditions.
Our sustainability programme has fulfilled key due diligence re-
quirements since 2014. For example, as a preventive measure, the
BMW Group requires its suppliers to draw up a guideline on work-
ing conditions and human rights. Since 2019, we only commission
suppliers with more than 500 employees if they have a certified
occupational health and safety management system in place in
accordance with ISO 45001. Our suppliers are also trained as part
of the certification process. Moreover, if we identify high-risk
suppliers, we conduct additional audits at the supplier's premises
with the help of our own assessors and external auditors. In the
year under report, we reviewed approximately 200 potential and
active supplier locations via this method². Auditing, however, was
hampered by pandemic-related travel restrictions and is thus be-
low the level of the previous year (2020:313). 1]
1 Direct and indirect procurement; without BMW Brilliance Automotive Ltd., Shenyang joint
venture.
2 The audits conducted worldwide were in accordance with the standards of the Responsible
Business Alliance (RBA) and the United States Environmental Protection Agency (EPA).
76
76
BMW Group Report 2021
To Our Stakeholders
Combined Management Report Group Financial Statements
Production, Purchasing and Supplier Network
Corporate Governance
requirements are set out in the BMW Group Supplier Sustainability
Policy, the order documents and the contract documents.
These requirements must be implemented prior to the start
of production or by the agreed target date.
In 2014, we extended our standards to include a multistage
due diligence process. Since then, the process has included
the procurement of production materials for vehicle models
as well as risk-based, non-production-related goods and
services. Every supplier who has a direct business relation-
ship with the BMW Group is obliged to sign these require-
ments for its manufacturing and delivery locations and pass
them on contractually to its respective sub-suppliers. Specific
Taking ecological and social responsibility
The BMW Group sees itself as a pioneer in terms of corpo-
rate due diligence in its supplier network. Back in 2008, we
defined a comprehensive draft of preventive measures, in-
cluding contractual obligations to comply with environmental
and social standards, and stipulated them for the first time
when selecting suppliers for the BMW i3. We have also de-
fined and implemented raw-material-specific sustainability
requirements for certain components.
[t The department Purchasing and Supplier Network is re-
sponsible for the worldwide procurement and quality assur-
ance of production materials, raw materials, capital goods
and services as well as the production of vehicle components
manufactured in-house. The BMW Group follows the princi-
ple of sourcing vehicle components as closely as possible to
its production sites. Efficient teams are in place in all major
purchasing markets in order to identify risks swiftly and re-
spond flexibly and at short notice to changing market situa-
tions. Close cooperation with our suppliers in a spirit of part-
nership was one of the factors that enabled us, for example,
to cushion the effects of the global semiconductor shortage
to a large extent. In order to secure long-term supplies in this
area, the BMW Group concluded a direct agreement with
semiconductor suppliers for the first time at the end of 2021.
The agreement enables the BMW Group to secure the supply
of several million semiconductors per year. Overall, however,
the supply situation for semiconductor components will again
remain tight in 2022.
3 As of 2021, this figure also includes the carbon emissions of all other BMW Group
locations in addition to those generated by production processes. For comparison
purposes, the figure for 2020 has been adjusted accordingly (2020 before adjustment:
652,795).
"Figure rounded for simplification purposes. The target percentage validated in
conjunction with the SBTi is 22%.
CO2 EMISSIONS PER VEHICLE PRODUCED 1,2
in t
0.40
0.35
0.33
0
2019
2020
2021
[Carbon emissions relating to transport logistics
As part of the Green Transport Logistics project, the
BMW Group is aiming to make transport logistics cli-
mate-neutral, both within the production network and for ve-
hicle deliveries. The carbon footprint and the use of car-
bon-efficient energy and modes of transport play a significant
role in this regard. We are therefore making a major contribu-
tion to transforming the transport sector, pursuing a techno-
logically open, innovative approach across all modes of
transport. In order to ensure sufficient supplies between our
plants, however, we were compelled to increase the year-on-
year use of air freight during the reporting year due to issues
relating to the supply of semiconductors.
Since the beginning of 2021, in cooperation with transport
service providers, the BMW Group has been using low-car-
bon liquefied natural gas (LNG) on certain European trans-
port routes to cover its production requirements. Depending
on availability, we are gradually increasing the biogenic con-
tent of the LNG fuel we use. At the same time, we are in-
creasing the volume of products transported by rail: around
half of the vehicles produced leave our plants by rail.
PURCHASING AND
SUPPLIER NETWORK
The BMW Group's supplier network comprises over 32,000
direct supplier locations worldwide, with whom we maintain
direct supplier relationships. Our rigorous partner selection
process is based on the criteria of quality, innovation, flexi-
bility, cost and sustainability. To meet the respective due dili-
gence requirements in terms of environmental and social
standards, we rely on systematic risk analyses as well as
prevention, empowerment and remediation measures. We
also use standardised online assessments and audits that
are integrated in our business processes. Moreover, the
BMW Group enshrines its obligatory sustainability standards
in all its supply contracts. 1] We have set ourselves the goal of
reducing carbon emissions in the supply chain by at least
20% by 2030 (base year 2019), while simultaneously in-
creasing the use of secondary materials.
[t Global network and local procurement
Global purchasing, the management of international suppli-
er relationships, in-house component production and the
efficient management of challenges within the supplier net-
work are key factors in ensuring stable supplies to our pro-
duction sites. At the same time, Purchasing ensures the fu-
ture viability of the BMW Group by rigorously aligning the
supplier network with strategic future topics such as digital-
isation and electric mobility, while securing the required pur-
chasing volume. 1]
75
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Production, Purchasing and Supplier Network
Corporate Governance
Remuneration Report
Other Information
← = Q
Remuneration Report
Other Information
← = Q
[ Obligatory sustainability standards
apply to all BMW Group suppliers
and are incorporated in the supply
contracts. 1]
Any information received regarding potential breaches of
the BMW Group's sustainability standards in the supplier
network is processed by the internal Human Rights Contact
Supply Chain function, where tips can be submitted anony-
mously by telephone or email. In addition, suppliers and
their employees have the option of reporting potential hu-
man rights or environmental violations to our Compliance
Ombudsman for the supplier network. Whistle-blower systems
to uncover possible violations of the law and compliance controls. A human
rights officer was appointed for the first time during the year
under report. Compliance and human rights
Standardisation and cooperation
At the instigation of the BMW Group and with the support of
other automotive manufacturers in the Drive Sustainability
initiative, in 2017 an analysis of the 37 most important raw
materials was conducted at the European business network
CSR Europe. Since then, the resulting Material Change Report
has served as the basis for potential improvements and the
development of both BMW-Group-specific and common
solutions for the automotive and electronics industries. In
2021, further improvements were made to the report on the
TRAINING FOR THE SUPPLY CHAIN
[[ Alongside the required prevention measures, the BMW Group
has been offering training courses aimed at buyers, internal
process partners and suppliers since 2012. To raise awareness
of social and environmental standards in the supply chain, we
explain interdependencies and clearly describe what we expect
of the companies we work together with. Moreover, together
with partner companies, in selected cases we are breaking new
ground with the aim of taking action at the very beginning of the
supply chain. Further GRI information GRI-Index: 412-21]
7 Raw Material Outlook Platform. The platform currently contains
risk profiles for ten raw materials.
In the automotive supply chain, which is particularly complex
by industry standards, traceability right back to the raw ma-
terial extraction stage can be significantly improved with
new digital tools. The BMW Group is committed to driving
improvements within the framework of initiatives such as the
Catena-X Automotive Network - and is working with partner
companies to standardise data and information flows in the
automotive value chain in order to comply with antitrust-re-
lated and legal requirements. Together with partners at Cat-
ena-X and the WBCSD, we are working on solutions to
measure actual carbon emissions data in the supply chain and make
it comparable, with the aim of effectively reducing carbon
emissions in our supply chain. 1]
18
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BMW Group Report 2021
To Our Stakeholders
Combined Management Report
* With effect from the reporting year 2020, a new definition of the term "employee"
is applied (see the Glossary for the definition). For the periods 2018 and older,
the percentage of employees no longer reported was between 7.5% and 8.0 %.
Group Financial Statements
Remuneration Report
Other Information
← = Q
Production, Purchasing and Supplier Network
[[Rigorous reduction and traceability of critical raw materials
Due to the complexity of multilayered, dynamic, globalised
value chains and customer-supplier relationships, it is a major
challenge to ensure sustainability standards right from the
raw materials extraction stage. We have a clear aspiration to
comply with environmental and human rights standards at
every level of our supply chains. Sourcing the raw materials
required to produce battery cells, such as lithium and cobalt, is
generally a highly challenging task. In order to establish trace-
ability and transparency across the supply chain for both of
these raw materials and to minimise the identified risks, the
BMW Group sources them directly from the producers, and
ALLIANCE FOR CROSS-COMPANY,
DECENTRALISED DATA EXCHANGE
[[ As part of the Catena-X Automotive Network initiative, the
BMW Group is working to establish an open, scalable, decentral-
ised network for the secure exchange of information and data
across companies in the automotive value chain. The network
is based on an industry consortium funded by the Federal Min-
istry for Economic Affairs and Energy (BMWK)* consisting of
national and international partners from the automotive value
chain. Continuously connected data chains will make it possible
to create completely digital images of automobiles and the core
processes of automotive value creation, so-called digital twins.
New business processes and services can be either made pos-
sible or collaboratively enhanced, based on these digital twins.
By using the European GAIA-X and International Data Spaces
Frameworks as the architectural basis for the Catena-X network,
the companies involved have already agreed on the essential in-
frastructural principles for project implementation.]]
makes them available to its own suppliers in order to produce
the current generation of battery cells. The strategy allows us
to fully document both the origin and the path of the lithium
and cobalt we use, while creating transparency regarding
mining methods at the same time.
Further measures that serve to meet our due diligence require-
ments include reducing or eliminating the use of so-called
high-risk primary raw materials. For example, we have re-
duced the use of cobalt in the cathodes of our current gener-
ation of battery cells to less than 10%. Our latest generation of
electric motors is made without the need for any rare earths.
The BMW Group also keeps a close eye on raw materials
that are classified as so-called "conflict minerals". These in-
clude ores whose mining and trade are frequently associ-
ated with violations of environmental and social standards.
By using standardised applications such as the Conflict Min-
erals Reporting Template (CMRT) of the Responsible Miner-
als Initiative (RMI), the BMW Group ensures the traceability
of the raw materials it uses, right from the direct supplier to
the certified smelter. SASB-Index
Mitigating risks through industry initiatives and partnerships
Apart from eliminating, substituting or reducing the use of
risk-related primary raw materials, we rely on close cooper-
ation with our partners in the supplier network. Our aim is to
continue reducing the potential negative impacts of our busi-
ness activities in our raw materials supply chains.
[t Traceability of conflict minerals
back to the certified mine. ]]
Corporate Governance
2 As of 2021, this figure also includes the carbon emissions of all other BMW Group
locations in addition to those generated by production processes. For comparison
purposes, the figure for 2020 has been adjusted accordingly (2019 before adjust-
ment: 0.30 t; 2020 before adjustment: 0.23 t).
standards at supplier locations in high-risk regions or for
high-risk product groups. For this reason, we are members of
the Responsible Business Alliance (RBA) and the German
Association of the Automotive Industry (VDA). Together with
other automotive manufacturers and suppliers in the VDA,
we have developed the Responsible Supply Chain Initiative
(RSCI), an assessment programme newly established for this
purpose that we will implement as of 2022.
Checking effectiveness
The respective demands placed on us and our suppliers are
integrated throughout the Group by means of the following
internal standards:
The BMW Group Code of Conduct on Human Rights and Working
Conditions explains how we promote human rights and
good working conditions and implement the core working
standards of the International Labour Organisation (ILO).
The BMW Group Supplier Sustainability Policy summarises the
BMW Group's principles governing the global supplier
network in accordance with internationally acknowl-
edged standards and guidelines. We regularly update the
risks we have identified in our supplier network.
Risk analyses on ecological and social responsibility
The BMW Group monitors and assesses human rights risks
and impacts in its supplier network, both in its existing busi-
ness relationships and whenever it enters a new market or
field of business. The BMW Group Due Diligence Programme
within the Purchasing and Supplier Network consists of vari-
ous coordinated procedures, measures and standardised
applications that are integrated in business processes such
as procurement.
The BMW Group has been using a risk filter to identify human
rights risks at the locations of direct and indirect suppliers*
since 2012. In a dynamic, location-specific risk analysis, it
draws on various country- and commodity-group-specific risk
databases and standardised risk maps, and includes all sup-
plier locations that have already been awarded orders as well
as all potential supplier locations. Since 2020, the risk filter
has also included risk databases and standardised risk maps
provided by the Responsible Business Alliance (RBA). This
view of risks is supplemented by commodity-group-specific
assessments provided by our internal purchasing experts.
Another component when assessing the potential negative
impacts of business activities is the Drive Sustainability
questionnaire, which is subject to continuous improvement.
In this context, both direct and indirect suppliers are required
to provide information on their sustainability performance
and the preventive and remedial measures they have imple-
mented. The information provided is checked for accuracy
and completeness by an independent third party. The infor-
mation is obtained from new suppliers as part of the contract
awarding process. Existing business relationships are audit-
ed and updated on a continual basis. Further GRI information. In
order to minimise the risks, we pay close attention to imple-
menting preventive measures. Further information is availa-
ble 7 online.
Our aim is to check compliance with our sustainability stand-
ards in the intermediate stages of the value chain on an ad
hoc basis. The audit is partially conducted via the supply
chain mapping of suppliers for whom an indirect risk has
been identified. Moreover, the BMW Group develops
raw-material-specific sustainability strategies and derives
so-called empowerment activities and pilot projects from
them to both ensure and improve compliance with environ-
mental and social standards.
7 GRI-Index: 308-1, 412-1, 412-3, 414-1
Preventive and remedial measures
In 2014, we agreed upon preventive measures with our direct
suppliers concerning working conditions, occupational
health and safety, human rights and the environment. The
extent of these measures is based on the size of the supplier
In addition to the preventive measures mentioned above, the
BMW Group conducts audits of environmental and social
and the potential risks. Direct suppliers with more than 50
employees are required to implement preventive measures
such as guidelines regarding child labour, freedom of associ-
ation, and collective bargaining as well as occupational safe-
ty and environmental protection. We require suppliers with
more than 100 employees to communicate our sustainability
standards to their suppliers and have a control mechanism
in place in the form of externally audited and certified envi-
ronmental management systems. If a supplier employs more
than 500 people, we require, among other things, the publi-
cation of a sustainability report, a code of conduct, and ex-
ternally audited and certified occupational safety and envi-
ronmental protection management systems as additional
control mechanisms.
* Direct suppliers are tier-1 suppliers of the BMW Group. Indirect suppliers operate
downstream in the value chain between tier-1 suppliers and raw materials suppliers.
77
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Production, Purchasing and Supplier Network
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
[ We require suppliers with more than 100
employees to have externally audited and
certified environmental protection man-
agement systems in place. 1]
[By signing a contract with the BMW Group, the supplier un-
dertakes to implement and apply the preventive measures
prior to the start of production or by an agreed target date.
The supplier undertakes to demand compliance with these
agreements from his subcontractors and to follow them up.
All BMW Group supplier contracts include resource efficiency
requirements and demand compliance with the principles of
the UN Global Compact and the International Labour Organ-
isation (ILO). For this reason, the BMW Group has set itself
the goal of ensuring compliance with these commitments.
7 GRI-Index: 308-2, 412-2, 414-2
During the year under report, the BMW Group identified sus-
tainability deficits at 61% of its suppliers (2020: 64%) and
agreed on corrective preventive measures. The measures
related to subcontractor management, reporting, control
mechanisms and mission statements. 1]
Efficiency indicator calculated from the absolute energy consumption (adjusted
for CHP losses) of automobile production (BMW Group plants incl. BMW Brilliance
Automotive Ltd. joint venture, excluding partner plants and contract manufacturing)
divided by the number of vehicles produced in automobile production (BMW Group
plants incl. BMW Brilliance Automotive Ltd. joint venture and partner plants, exclud-
ing contract manufacturing).
The main reason for the drop in relative carbon emissions
per vehicle produced was improved energy efficiency on the
back of higher production volumes following the pandem-
ic-related restrictions. From mid-2021, however, supply
bottlenecks for semiconductor components and the necessary
adjustments to the production programme dampened the
positive trend. As a result, absolute carbon emissions³ at
BMW Group locations increased to 766,153 t of CO₂ (2020:
734,710 t of CO2) due to the overall increase in energy con-
sumption relating to higher production volumes. In the previ-
ous year, consumption and production volumes were signifi-
cantly lower due to pandemic-related restrictions. In the first
half of 2021, the cold weather in Germany also led to greater
energy requirements for heating and thus to an increase in
carbon emissions. GRI-Index: 305-1, 305-2, 305-3, 305-5
Carbon emissions at BMW Group locations
Year-on-year, the carbon emissions per vehicle 12 generated
at BMW Group locations fell by 5.7% to 0.33 t of CO₂ (2020:
0.35 t of CO₂), i. e. a reduction of 17.5% compared with the
2019 base year.
8,6%
1,4%
RE:CYCLE
be
13,9%
With this point in mind, through BMW i Ventures we have
been investing in the US start-up Lilac Solutions since 2021.
Lilac is pursuing the goal of extracting lithium from the brine
of saltwater deposits using ion exchangers, deploying a far
more eco-friendly method that conserves resources more
effectively than conventional processes. Since the year un-
der report, our investments through BMW i Ventures have
additionally focused on an innovative process developed by
the US start-up Boston Metal for producing steel without
generating carbon emissions. We have also entered into an
agreement with the Swedish start-up H2 Green Steel to pur-
chase hydrogen steel produced using green electricity.
Resource management at every location
The BMW Group wants to lead the way by keeping resource
consumption and carbon emissions in its production pro-
cesses to an absolute minimum. Apart from carbon emissions,
the other relevant variables are energy and water consump-
tion, waste for disposal, the use of solvents and the reduction
of solvent emissions (VOC). ]]
1 Based on vehicle weight, calculated on the basis of actual supplier feedback,
studies and expert assessments.
2 Based on the Gabi database.
72
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Production, Purchasing and Supplier Network
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
[ Controlling resource consumption is an integral part of en-
vironmental management in the BMW Group's global pro-
duction network and managed by a dedicated steering com-
mittee for the international environmental protection network.
Each facility, area and building is assigned to an internal op-
erator, who is responsible not only for the technical systems
and the smooth running of processes and procedures, but
also for their environmental impacts'.
A certified environmental management system in accord-
ance with ISO 14001 is implemented at every BMW Group
production site. A total of five competence centres, i. e. Emis-
sions, Water, Waste, Qualification and the Environmental
Management System, coordinate environmental protection
measures throughout the BMW Group worldwide. According-
ly, any ecological improvements that have proven to be effec-
tive at one location are implemented at other locations to the
extent possible. Continuous training and the exchange of ex-
periences among employees ensure the transfer of know-
ledge and the Group-wide application of the latest findings.
In the year under report, our environmental management
system again made a major contribution to ensuring that
there were no significant environmental incidents involving
the payment of fines throughout the production network.
Water
The BMW Group pursues the aim of continuously reducing
the amount of water used in its production processes. Ac-
cordingly, its production plants optimise their circulation sys-
tems, for example by treating wastewater and putting
water-saving processes in place. One example is the dry
separation system used in the paint shop. Other closed-loop
1 In accordance with the BMW Group's environmental management system, each
operator is required to describe the environmental impacts in the aspects register
and identify measures for improvement (e. g. long-term targets).
² Related to the total weight of the waste.
3 VOC (volatile organic compounds) emissions are mostly generated during the
WIEDERVER-
54,2%
IM AKTUELLEN BMW 3ER
MATERIALVERTEILUNG
71
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Production, Purchasing and Supplier Network
Corporate Governance
Remuneration Report
Other Information
← = Q
Re:think, Re:duce, Re:use,
-
Re:cycle our circular economy
principles.
painting process and can be reduced through the use of new painting technologies.
[At the end of a product's life cycle, it needs to be possible
to increasingly separate and recycle key groups of materials
at a high degree of purity so that they can be reused in the
automotive industry in so-called closed loops. The strategy
reduces the need for primary materials and thus the neces-
sity to source potentially critical raw materials.
In this context, the BMW Group regards end-of-life vehicles
as a source of secondary materials. We therefore promote
the recovery of end-of-life vehicles, components and mater-
ials in order to reintegrate them in the raw materials cycle.
Together with its national sales organisations, the
BMW Group has already introduced take-back systems for
end-of-life vehicles in 30 countries and offers eco-friendly
vehicle recycling at more than 2,800 take-back points. All
BMW Group vehicles sold since 2008 meet the currently ap-
plicable worldwide requirements for the recycling of end-of-
life vehicles, components and materials. Vehicles are already
currently required to be 95% recyclable (based on vehicle
weight). GRI-Index: 301-3 SASB-Index
Preference for secondary materials
The BMW Group not only wants to create the basic condi-
tions for recycling vehicles, it is also looking to reduce the
use of primary raw materials in the automotive value chain.
This means closing loops in the production chain, i.e. by re-
turning production remnants to the material supplier or re-
covering materials at the end of a product's life cycle. In
doing so, we take special care to avoid downcycling these
materials into inferior secondary materials. By 2030, the
BMW Group aims to take the recycling process to a new
level, while at the same time further increasing the proportion
of secondary materials it uses to manufacture its vehicles. To
achieve this aim, the BMW Group established the "Second-
ary First" approach during the year under report, which gen-
erally gives preference to the use of secondary materials
when stipulating specifications for products, materials and
suppliers. This principle can only be deviated from in justi-
fied exceptional cases.
Currently, an average of up to 30% of the components
used in vehicle manufacture across Europe originate from
recycled and reused materials. However, the percentage of
material recycled differs considerably, depending on the
group. While the recycled proportion of many plastics, for
example, is in the single-digit percentage range, secondary
cast aluminium is already used at a rate of over 50% in cer-
tain components.
The use of secondary raw materials also significantly re-
duces carbon emissions compared with primary materials –
for example around 80% of aluminium and up to 70% of
steel² are recycled. At the same time, this strategy reduces
the amount of natural resources and critical raw materials
that need to be extracted. The circularity principle also helps
to more effectively mitigate risks that can be associated with
the extraction of primary raw materials from market-
related or even political availability risks to those relating to
environmental and social standards.
-
In general, any secondary raw materials used have to meet
the same strict requirements as primary materials in terms
of quality, safety and reliability. Therefore, the market avail-
ability of these high-quality materials needs to increase sig-
nificantly. In order to improve the structural framework condi-
tions required to achieve this aim, both cross-industry
approaches and political initiatives are necessary.
7 SASB-Index
Investments in resource-friendly technologies
The BMW Group invests, partly through its own venture capital
fund, in key technologies that can make a decisive contribu-
tion to achieving carbon neutrality and conserving resources.
WERTUNG
RECYCLING
7 Average distribution of materials in BMW Group vehicles
systems are also currently being tested in the painting pro-
cess and gradually introduced throughout the Group's pro-
duction network. Specific water consumption in production was
improved slightly to 2.15 m³ (2020: 2.25 m³) per vehicle pro-
duced during the year under report.
Waste
In its efforts to reduce the volume of waste it generates, the
BMW Group deploys coordinated recycling and treatment
concepts adapted to the waste streams in its various plants,
to regionally applicable regulations and to locally existing
waste disposal structures. In 2021, 99.2%² of the waste
generated by production processes was either recycled or
recovered. During the year under report, the volume of waste for
disposal per vehicle produced decreased to 2.90 kg, 12.9% lower
than the 2020 figure. We aim to maintain this high recycling
and recovery rate within the BMW Group as we increasingly
transition to electric mobility. We are therefore integrating
the newly generated waste streams in our recycling and
treatment systems. SASB-Index
2020
2021
Renewable energy
The BMW Group is committed to the use of renewable ener-
gy at all its locations. Worldwide, all BMW Group production
sites and the vast majority of its other locations procure
their electricity from renewable self-generation plants, direct
supply contracts for green electricity, and electricity of certi-
fied origin. We also made additional use of biogas certifi-
cates in the year under report. Moreover, we are increasing
the amount of renewable energy generated at our own sites.
Additions made during the reporting year included large-
scale photovoltaic installations at our plant in Araquari, Bra-
zil, which generate some of the electricity required for pro-
duction at the site.
At present, however, the BMW Group is unable to entirely
cover its electricity requirements by producing its own re-
newable energy, and therefore purchases additional power
from renewable and predominantly local or regional sources.
We cover an increasing proportion of our electricity require-
ments through so-called Power Purchase Agreements
(PPAs), i. e. direct purchases from defined renewable energy
generation plants, such as the regional green electricity
bought in to manufacture the BMW iX and the BMW i4.
report, which also negatively impacted energy consumption
per vehicle at some of its plants. For this reason, absolute
consumption³ within the BMW Group increased to 6,476,955
MWh during the year under report (2020: 6,040,824 MWh).
However, at 2.10 MWh per vehicle produced, specific energy
consumption in the BMW Group's vehicle production fell by
0.9% in 2021 compared to 2020. This fact is attributable to
various energy efficiency measures as well as improved pro-
duction capacity utilisation.
7 GRI-Index: 302-1, 302-3, 302-4
Energy consumption in detail
COMPENSATION OF SITE-RELATED CARBON EMISSIONS
1 Efficiency indicator calculated from the absolute energy consumption (adjusted for CHP
losses) of automobile production (BMW Group plants incl. BMW Brilliance Automotive Ltd.
joint venture, excluding partner plants and contract manufacturing) divided by the number
of units produced in automobile production (BMW Group plants incl. BMW Brilliance
Automotive Ltd. joint venture and partner plants, excluding contract manufacturing).
2 Figures for 2017 and 2018 figures were subjected to a limited assurance review.
3 As of 2021, this figure also includes energy consumption at further BMW Group loca-
2019
tions as well as energy consumption in production. For comparison purposes, the figure
5 To the extent recordable in the carbon footpring; market-based-method according to
GHG-Protocol.
[[ The carbon emissions generated within its own production
network are already below the 1.5°C path calculated for the
BMW Group. Since the year under report, the BMW Group has
been making the remaining carbon footprint generated by its
plants and other locations carbon-neutral on the energy bal-
ance sheet, including company cars and business trips, through
the use of voluntary offsetting certificates. Via this method, we
are demonstrably offsetting the associated carbon emissions by
supporting external projects. In collaboration with experienced
partners such as atmosfair and First Climate, we support climate
protection projects that meet strict criteria. As part of the certifi-
cation process, projects are required to demonstrate, for exam-
ple, the permanence of the decarbonisation impact they achieve.
Another vital criterion is additionality, i. e. proof that the project
in question would not have come about without financing via
carbon offsetting certificates. Furthermore, for the post-Kyoto
phase of the carbon offsetting market, we emphasise the import-
ance of ensuring that there is no double counting of the emissions
saved alongside the nationally determined contributions of the
affected countries named in the Paris Climate Agreement. We
also ensure that the projects additionally generate a social ben-
efit. 7 GRI-Index: 305-51]
74
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Production, Purchasing and Supplier Network
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
for 2020 has been adjusted accordingly (2020 prior to adjustment: 5,714,610 MWh).
"Including BMW Brilliance Automotive Ltd., Shenyang.
We also expect our direct suppliers to demand minimum
standards in their chain of upstream suppliers, which has
been done for all the 37 raw materials we analysed. The
BMW Group even goes one step further in this regard be-
cause, as a precautionary measure, we are committed to
not using minerals such as cobalt that are extracted from
the deep sea. Together with other companies, we have de-
clared this in a 7 moratorium. ]]
2018
0
Solvents
The BMW Group reduced its emissions of volatile organic
compounds (VOC³) per vehicle produced by 13.6% to 0.70
kg during the period under report. The year-on-year improve-
ment was mainly due to the use of solvent-free cleaning
agents and the new thermal afterburners deployed in the
paint shops at the Group's plants in Shenyang (China) (* Sol-
vents per vehicle produced). Due to the progress made in the use
of solvent-free substances and the optimisation of our paint
shops, we expect to see a further reduction in emissions lev-
els going forward. GRI-Index: 305-71]
Carbon emissions at BMW Group locations
Compared with the base year 2019, the BMW Group intends
to reduce the average amount of carbon emissions per ve-
hicle produced by a further 80% by 2030. [[ Production
accounts for biggest share of the 7 Scope 1 and Scope 2 emissions
generated by the BMW Group and this is where the greatest
An 80% average reduction of
carbon emissions per vehicle
produced by 2030.
opportunities to further reduce these emissions lie. As in the
past, we are focusing on additional energy efficiency meas-
ures, the increasing generation of our own electricity from
renewable sources, the purchasing of green electricity from
supply contracts, and the use of certificates of origin.
The remaining emissions are largely due to the use of nat-
ural gas. Here we face the challenge of replacing natural gas
with non-fossil energy sources such as biogas, hydrogen or
renewable electricity. The "heat transition" required to do so
is made more complicated by the physical availability of al-
ternative energy sources, the technical retrofitting of plants,
and political framework conditions.
Energy management and efficiency
It is vitally important to use energy in an efficient, responsible
manner in order to conserve resources. The BMW Group
has processes in place throughout the organisation to plan
and implement energy management measures with the aim
of continuously optimising its use. Clear roles are assigned
with corresponding responsibilities, targets and reporting
obligations to the central strategy departments, the regional
controlling bodies and the various production plants at local
level. ]]
The BMW Group invests systematically in the energy effi-
ciency of its global production network, enabling it to cut the
energy consumption of machines to a minimum, such as
those deployed to generate the required processing heat in
its paint shops. The limited availability of semiconductor
components compelled the BMW Group to make adjust-
ments to its production programme during the year under
73
BMW Group Report 2021
To Our Stakeholders
2017
Combined Management Report
Corporate Governance
Remuneration Report
Other Information
← = Q
ENERGY CONSUMPTION PER VEHICLE PRODUCED 1,2
in MWh
2.17
2.12
2.04
2.12
|
2.10
|
Group Financial Statements
Production, Purchasing and Supplier Network
CONFLICT MINERAL TUNGSTEN:
CLOSING MATERIAL CYCLES
Since September 2021, we have supplemented our preven-
tion and remediation review methods with the standard-
ised use of RBA Voices, a grievance mechanism for em-
ployees of the companies we audit. RBA Voices will be
applied to all high-risk suppliers that are part of the RBA's
audit programme and do not yet have their own grievance
mechanism.
Corporate Citizenship
Direct link to section
"€ 35 million
spent by the BMW Group in 2021 on social pro-
jects and other activities in conjunction with its
corporate citizenship responsibilities.
7 Direct link to section ]]
8 DECENT WORK AND
ECONOMIC GROWTH
M
EMPLOYER ATTRACTIVE-
NESS AND EMPLOYEE
DEVELOPMENT
of management positions at BMW Group held by
women at the end of 2021. By 2025, the share is
expected to rise to 22%.
[The personal commitment and technical expertise of our
employees are crucial to the success of the BMW Group.
With a broad range of interesting and future-oriented jobs at
attractive conditions, we offer our employees secure pros-
pects and the opportunity to develop personally as well as
help shape the BMW Group's future. The objectives of our
Human Resources (HR) strategy have been defined with a
view to attracting skilled employees, optimising their deploy-
ment and providing them with opportunities to develop their
potential, thereby ensuring that all their skills and expertise
are available to meet the future needs of the BMW Group.
The success of this approach is borne out by the results of
employee satisfaction surveys and the outstanding positions
consistently achieved in employer rankings. 1]
At 31 December 2021, the BMW Group employed a total of
118,909 people worldwide*, slightly below the headcount at
the end of the previous year (2020: 120,726; -1.5%). Further
GRI information This reduction was achieved through a combi-
nation of natural employee fluctuation and voluntary agree-
ments in line with planned workforce restructuring meas-
ures. For this purpose, appropriate provisions were made
which were taken into account in personnel expenses. Notes
to the Group Financial Statements, no. 15. At the same time, we
stepped up our recruitment efforts in 2021 with a view to en-
suring the continued availability of all the required expertise
within the workforce to ensure the planned future growth of
the BMW Group. 7 GRI-Index: 102-8
7 GRI-Index: 308-1, 308-2, 414-21]
The BMW Group has integrated the assessments of the CDP
Supply Chain Programme in its key purchasing processes.
The results are used in supplier discussions, in strategic
management discussions and in the overall supplier strat-
egies to point out potential for improvement. They also form a
basis for determining the group of bidders in purchasing
strategies when awarding contracts. The BMW Group uses
the CDP's assessment to support and further encourage its
own suppliers to implement the Paris Climate Agreement.
Suppliers who have participated for some time generally at-
tain a significantly improved CDP rating.
Supply Chain Programme increased from 218 to 250 sup-
pliers, which covers 80% (2020: 79%) of the BMW Group's
production-relevant purchasing volume. Some 34% of sup-
pliers (2020: 29%) had at least a 2-degree-compliant target
system in place and 38% (2020: 35%) of suppliers received
at least a B rating. As in previous years, in 2021 the average
CDP rating among the BMW Group's participating suppliers
was a score of C.
at least 20% by 2030 (base
year 2019).
We aim to reduce carbon
emissions in the supply chain by
Carbon Disclosure Project (CDP) for supplier empowerment
Through its participation in the CDP Supply Chain Pro-
gramme, the BMW Group has been motivating its suppliers
to operate sustainably since 2014 and, for example, to use
renewable energy in their production processes. The core of
the programme is an annual report, which includes a variety
of climate-related aspects such as decarbonisation and in-
creasing the percentage of renewable energy used. The
BMW Group strongly encourages its suppliers to set targets
in line with the Paris Climate Agreement in their efforts to
help limit global warming. Together with the BMW Group's
specified target for decarbonising the supply chain, this led
to a further significant increase in supplier commitment.
For example, year-on-year, supplier participation in the CDP
These measures have already enabled the Group to reach
agreements that cut carbon emissions² by well over 20 million
tonnes during the period from 2021 to 2030. For example, car-
bon emissions generated in the supply chain to produce bat-
tery cells for the BMW iX have been reduced by up to 1.5 t CO₂
per vehicle, simply by agreeing to use green electricity to man-
ufacture them. The implementation of the strategic target was
incorporated in the necessary areas across the Group in 2021
and will be measured and reported in future by using the key
parameter of carbon emissions per vehicle produced.
The BMW Group's attractiveness as an employer
18.8%
Direct link to section
invested in vocational and further training of BMW
Group employees in 2021.
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Employees and Society
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
EMPLOYEES AND SOCIETY
80
Employer Attractiveness and Employee
Development
83
Health and Performance
86
Diversity
89
1 Average per vehicle produced; figure rounded for simplification purposes. The
target validated in conjunction with the SBTi is 22%.
EMPLOYEES AND SOCIETY
AT A GLANCE
€ 389 million
-
One of the most effective ways of decarbonising the supply
chain is the use of green electricity. For this reason, in 2020,
we entered into contractual agreements with battery cell
manufacturers to use only energy generated from renewable
sources to produce the current generation of battery cells. In
2021, the BMW Group also introduced green electricity as a
mandatory criterion for awarding new contracts in its supply
chain and has already concluded green electricity agree-
ments in the awarding of 427 orders, particularly with up-
stream suppliers of energy-intensive products.
framework, we bindingly agreed corresponding measures for
429 contracts awarded in the course of 2021.
[I In 2021, the BMW Group introduced the use of FSC-certified
tyres on a first vehicle model - the BMW X5 xDrive45e plug-in
hybrid² FSC-certified tyres made of natural rubber, making
the BMW Group the first automotive manufacturer in the world
to equip its vehicles with tyres based on sustainable, certified
natural rubber and rayon - a wood-based material used to re-
inforce tyres. ]]
80
[[ The circular economy concept is a key method for ensuring the
responsible use of raw materials and resources. For example,
since the year under report, the BMW Group has been reducing
the amount of the primary raw tungsten it requires by introducing
a closed material cycle. To achieve this aim, we collect discarded
drill and screw inserts in our German and Austrian plants, recycle
them, and have new tools manufactured from the secondary
raw material obtained. Apart from reducing our consumption of
primary raw materials, the strategy also cuts carbon emissions.
7 SASB-Index ]]
* Since the end of 2021: Federal Ministry for Economic Affairs and Climate Protection (BMWK).
79
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Production, Purchasing and Supplier Network
Group Financial Statements
27 Consumption and carbon emissions data.
Remuneration Report
Other Information
← = Q
[The BMW Group is actively involved in multi-stakeholder
initiatives such as the Initiative for Responsible Mining Assurance
(IRMA), the Aluminium Stewardship Initiative (ASI), the Global Plat-
form for Sustainable Natural Rubber (GPSNR) and the > Responsible
Mica Initiative (RMI) with the aim of establishing and further de-
veloping certification systems for suppliers. We therefore re-
quire certification in accordance with these standards for
prioritised raw materials in our supplier network. Online
-
Reducing carbon emissions in the supply chain
With the growing demand for electrified vehicles, the need for
suitable components and parts in production is also increas-
ing and with it the volume of carbon emissions they gener-
ate. If no countermeasures are taken, the supply chain foot-
print of an all-electric vehicle could be nearly twice that of a
conventional combustion engine model, practically eroding
part of the benefit of electric driving during the use phase. ]]
The BMW Group is reversing this trend and also intends to
reduce the volume of carbon emissions generated in the sup-
ply chain by at least 20% per vehicle by 2030 compared to
the base year 2019. [ To achieve this aim, we have been es-
tablishing decarbonisation as well as other measures among
our suppliers as an award criterion since 2020. Within this
Corporate Governance
TYRES MADE OF FSC-CERTIFIED NATURAL
RUBBER
[[The BMW Group offers its employees a variety of eco-friend-
ly mobility and commuting solutions. The creation of one of
Germany's largest corporate charging networks marks a spe-
cial milestone. The network of some 5,000 charging points at
numerous locations in Germany is available to charge not only
company and fleet vehicles, but employees' private electric ve-
hicles, too. More than 1,000 e-roaming³ charging points are also
available for use by the general public. All charging points are
powered entirely by renewable electricity sources.
EMPLOYEE MOBILITY
cant progress was evident in all areas surveyed. For in-
stance, the BMW Group's corporate strategy received a
very high level of approval from the workforce. Particularly
noteworthy was the fact that 84% of participants were
convinced by the strategy of integrating sustainability and
setting ambitious targets in this respect. They also sig-
nalled a high level of willingness and motivation to play an
active role in this process, with some 82% of respondents
concluding that they are optimistic about the future of the
BMW Group. 1]
[The survey conducted in autumn 2021 showed a signifi-
cant improvement in the HPO-I compared with two years
earlier. At the same time, the participation rate rose to a
record high, with some 100,000 employees or 79% of the
total workforce² taking part in the survey. Moreover, signifi-
The Group-wide survey of the workforce conducted every
two years enables employees to assess the organisation's
performance on a regular basis and from their own perspec-
tive. The assessment is performed with the aid of the High-
Performance Index (HPOI).
Employer rankings and awards
Highly regarded employer ratings once again ranked the
BMW Group as one of the world's most attractive employers.
In 2021, for instance, the BMW Group was again the world's
top-ranked automotive manufacturer in the current ranking of
the World's Most Attractive Employers 2021 as rated by Universum, a
well-known study provider. Among aspiring engineers, the
BMW Group ranked third worldwide, directly after Google and
Microsoft. For IT students, the BMW Group is the only auto-
motive company among the world's top 10 employers, mostly
in competition with prestigious technology enterprises. The
BMW Group again achieved the top spot in the Trendence
Professionals Barometer for Germany in 2021.
At the same time, we encourage our employees to use alterna-
tive means of transport such as bicycles, including BMW Lease-
Rad arrangements. The Munich location is also served by a net-
work of Group-owned shuttle buses -30% of which are already
fully electric - that operate between the Group's various sites.
The BMW Group also subsidises the use of public transport with
the BMW JobTicket in Munich. ]]
Employees have varying needs when it comes to organising
their work and their working hours. For this reason, the
BMW Group offers a great deal of individual personal scope
in the form of working time arrangements, including flexible
working hours, remote working, additional holidays in return
for a corresponding reduction in salary, sabbaticals, and
temporary or permanent part-time solutions. Further GRI infor-
mation During the reporting year, under the title Connected-
Works, we continued to develop a process that was started
back in 2013 to implement a diverse range of options for em-
ployees to work within a spatially flexible, autonomous and
needs-oriented environment.]]
the latest ranking of the
World's Most Attractive
Employers 2021.
The BMW Group confirmed its
position as the most popular
automotive manufacturer in
As a key factor for the BMW Group's attractiveness as an
employer, we aim to ensure that, based on their overall re-
muneration package, our employees earn above average for
the respective labour markets. To confirm this, we conduct
remuneration studies each year on a worldwide basis. The
total salary package consists of a monthly remuneration
and a variable component dependent on the BMW Group's
overall performance. We also offer additional benefits such
as Company pension schemes and an attractive range of
mobility benefits, which can differ from country to country.
7 GRI-Index: 102-35, 102-38, 102-39, 401-2, SASB-Index
Results of the employee survey
1 BMW AG; departures of employees with permanent employment contracts.
BMW Group Report 2021
3 E-roaming enables electric vehicles to be charged irrespective of the provider.
82
To Our Stakeholders
Combined Management Report
Employees and Society
Group Financial Statements
Corporate Governance
Other Information
← = Q
[ Despite the good progress, however, employees also
identified a number of potential areas for optimising busi-
ness processes. The results of the survey will form the ba-
sis for concrete measures that are scheduled for implemen-
tation by mid-2022. GRI-Index: 102-43
Employee involvement
Our employees represent a crucial stakeholder group for the
BMW Group. As such, we actively involve them in our cor-
porate strategy development. The internal dialogues on the
topic of sustainability, first introduced in 2020, have become
one of the main platforms used to achieve this end. At the
two dialogue events held in 2021, we provided information
and findings on sustainability topics such as decarbonisa-
tion and the social dimension of sustainability. Dialogue with
the stakeholders
The BMW Group's ideas management system as a further
opportunity for employee involvement encourages employ-
ees to contribute ideas on matters that do not fall within their
normal remit. Employee ideas that generate a positive finan-
cial effect for the BMW Group are rewarded with the pay-
ment of a bonus. In 2021, 4,810 ideas were submitted (2020:
5,980), more than a quarter of which were directly related to
sustainability - similar to one year earlier. A total of 1,318
ideas were implemented during the year under report (2020:
1,561), resulting in first-year benefits totalling € 30.4 million
(2020: €18.2 million). GRI-Index: 102-42
Developing expertise for the future
The transformation of the automotive industry entails nu-
merous far-reaching changes. The BMW Group takes a for-
ward-looking approach to the related challenges for the
workforce structure, equally considering social, economic
and technological developments. Against this backdrop, we
strive continuously to ensure our employees have the neces-
sary skill sets, for both the present and the future. The
BMW Group is combining the transformation of expertise
2 All BMW Group employees on fixed contracts at 1 August 2021.
Remuneration Report
People from over 110 countries work successfully together at
the BMW Group. Further GRI Information A broad range of op-
portunities for personnel development, qualification and fur-
ther training helps to promote intercultural understanding. For
example, the BMW Group deliberately gears the Global
Leader Development Programme towards international par-
ticipants. As in the previous year, new employees from eight
countries took part in the programme. Moreover, the
BMW Group uses various dialogue formats to ensure an un-
prejudiced working environment in a spirit of mutual respect.
necessitated by electrification with substantial levels of in-
vestment at its various
2020
2021
]]
1 Further training of BMW Group employees in consolidated and non-consolidated
100% subsidiaries worldwide. Data are collated on the basis of direct inputs of
participants and, to a small extent, by extrapolation. Data also include e-learn-
ing formats.
2 Vocational and further training comprises the in-house training of all BMW Group
apprentices (Glossary [Apprentices]) as well as the further training of BMW
Group employees and temporary staff at consolidated companies worldwide.
83
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Employees and Society
Group Financial Statements
Corporate Governance
Remuneration Report
2019
Other Information
[Key role for managers in the transformation process
BMW Group managers have a key role to play in shaping the
ongoing transformation process. For this reason, the
BMW Group promotes personalities who have the right atti-
tude and willingness to perform, joint leadership skills and a
high degree of identification with the organisation. We en-
courage leadership skills by means of strategically aligned
management training programmes based on a uniform un-
derstanding of leadership. Apart from careers in manage-
ment, the BMW Group also offers the so-called "Expert
Career", which does not generally involve disciplinary re-
sponsibility for other employees. It focuses instead on tech-
nical, project-related or corporate topics as well as other
tasks driving the transformation process.
Recruiting and promoting new staff
Through its comprehensive range of apprenticeships, the
BMW Group creates a broad range of attractive employment
prospects for young people. Promoting future talents also
plays a key role in building up expertise within the Group. 1]
[The recruitment and promotion
of future talents is increasingly
focused on the future-oriented
topics of electrification,
automation and artificial
intelligence. 1]
APPRENTICES AND PARTICIPANTS IN YOUNG
TALENT PROGRAMMES¹
Number
The BMW Group covers its recruiting requirements with the
help of future talents programmes, either with an academic
emphasis or through qualified vocational training. Trainees
are currently preparing for their future occupations within the
BMW Group in 30 skilled trades and 18 dual study pro-
grammes at 19 training locations around the world. The total
number of apprentices, dual study students and participants
in future talents programmes* remained at the high level of
4,517 in the year under report (2020: 4,672; -3.3%). In Ger-
many, some 1,200 young people began an apprenticeship or
a dual study programme in 2021 (2020: 1,200). A similar
number of apprenticeships and study places has been an-
nounced for the coming year. BMW AG continues to offer its
apprentices and dual study students permanent employ-
ment at the BMW Group's plants and headquarters after
they have completed their vocational training.
[Focus on future-oriented fields
Electrification, automation and connectivity as well as artifi-
cial intelligence (AI) are shaping and influencing apprentice-
ship and future talents training programmes offered by the
BMW Group. The relevant programme contents are therefore
updated annually to ensure that our expertise needs for the
future are adequately covered. In the year under report, for
instance, training for all vocational fields was expanded to
include fundamental aspects of cloud computing, 3D print-
ing and data analytics. At the same time, further vocational
profiles were added in 2021, such as IT specialist for data
and process analysis.
HEALTH AND
PERFORMANCE
The health and performance of employees are key factors in
the success of the BMW Group. We are therefore committed
not only to maintaining the status quo, but also to conscious-
ly encouraging improvement. Despite the coronavirus pan-
demic and the challenges it has posed, we continued to
make good progress in terms of the various health manage-
ment and occupational safety measures in place throughout
the BMW Group. Overall, for example, the accident frequency
rate decreased.
← = Q
2021
2018
200
locations.
Largest training initiative in the BMW Group's history
In 2021, the BMW Group launched the largest training initia-
tive in its history, aimed at promoting and maintaining the
ability of its workforce to perform with the requisite expertise
and ensuring the Group's long-term competitiveness. Apart
from electric mobility and digitalisation, the BMW Group is
also focusing on a number of future-oriented fields, such as
electrics and electronics, data analytics, innovative produc-
tion technologies and new working methods.
The scale of the training initiative is reflected in the signifi-
cant increase in the number of participants compared with
the previous year. Training measures undertaken across the
BMW Group in 2021 involved a total of 1.1 million participants
(2020: 770,000). Each member of the BMW Group work-
force received an average of 23.1 hours of training during the
year under report (2020: 16.0 hours). Further GRI Information. ]]
In total, the BMW Group invested € 388.6 million (2020:
€ 279.0 million) in training and further education in the fi-
nancial year 2021. The total expense for the years 2020 and
2021 therefore exceeds half a billion euros. GRI-Index: 404-2
[AVERAGE HOURS OF FURTHER TRAINING1
Number of hours
27.1
26.6
26.0
16.0
Illi
23.1
2017
0
2018
2019
2020
2021
INVESTMENT IN TRAINING AND FURTHER
EDUCATION²
in € million
389
373
370
349
279
illil
2017
[Attractive employment conditions
4,964
2019
To Our Stakeholders
BMW Group Report 2021
90
90
3 The BMW Group's corporate citizenship activities are divided into three main
areas: donations (comprising cash and non-cash contributions), community in-
vestments (including expenditure on our own project initiatives and partnerships
as well as corporate volunteering) and commercial activities (covering activity
and event sponsoring undertaken to promote culture, sports and sustainability).
Commercial activities also include cause-related marketing.
"In the form of cash and non-cash contributions.
2 Of which approximately €900,000 was called upon in 2021.
1 The number of people supported by projects is provided by the award winners
at the end of each year. It is calculated based on combined data from media and
sources. The figure reported relates only to the people who benefit directly from
the projects concerned.
lasting contribution towards more equal opportunity. The
BMW Group bases its funding approach on the specific
needs and requirements at each location. During the year
under report, the BMW Group supported a range of educa-
tional projects for example in China, India, South Korea,
Russia and the USA. Further information is provided and ad-
ditional projects described on the website 7 BMW Group Cor-
porate Citizenship. ]]
Science /
Education
57.8%
Politics
0.1%
€ 16.6 million
Total
24.9%
Society /
Community
9.6%
Culture
1.4%
Sports
6.2%
Environment /
Sustainability
in € million
Combined Management Report
[[DONATIONS WORLDWIDE
Group Financial Statements
Remuneration Report
2 The BMW Foundation Herbert Quandt is a corporate foundation of BMW AG. The
Foundation implements its programme with the income earned on endowment
assets or received in the form of regular financial contributions from the bene-
factor. In accordance with its statutes, the independent foundation is advised
by a board of trustees, on which the Chairman of the Supervisory Board and
one member each of the Supervisory Board and the Board of Management of
BMW AG are represented.
1 Designation until 2020: BMW Group Award for Social Commitment.
engagement on the part of our
employees. 1]
[The BMW Group Award honours
particularly dedicated social
we support young employees who
are making a valuable social or
ecological contribution with innova-
tive technologies. 1]
[With our accelerator programme,
[[The mission statement of the 7 One Young World network is to
meet global challenges together, while creating lasting, global
connections. This guiding principle brings together young people
from all over the world who are committed to social responsibility.
The BMW Group has been sending a delegation to the One Young
World Summit since 2016. In 2021, around 60 young employees
from the BMW Group took part in the event. ]]
CREATING A FORUM FOR YOUNG TALENT
ACROSS THE WORLD
Inspiring Responsible Leadership -
the BMW Foundation Herbert Quandt
The BMW Foundation Herbert Quandt2 is an independent corpor-
ate foundation and, as an important partner, contributes
with its activities to the social responsibility aspirations of
the BMW Group. At the same time, the Foundation encour-
ages leaders worldwide to take action as "Responsible
Leaders" and is committed to help shape a peaceful, just
and sustainable future. The Foundation strives to promote
the UN Sustainable Development Goals. These goals also
play a key role in the Foundation's grants, collaborations and
investments, with social and sustainability-related impacts
taken into account in every investment decision. Detailed in-
formation on this process is provided in the latest Impact In-
vesting Report. Significant activities during the year under re-
port included the 7 RESPOND Accelerator programme, the Equity,
Diversity, and Belonging Week and a Responsible Leaders Lab on
the topic of Reshaping Mobility to Serve Citizens' Needs. 1]
We encourage young talented people within the BMW Group
to use their know-how to set up their own projects to help
solve the social and ecological challenges of our day. In the
"Innovation for Impact" accelerator programme, we support
young employees who are making a valuable contribution
with innovative technologies.
Promoting innovation
The BMW Group actively involves its employees in its social
engagement activities. Over the past ten years, particularly
dedicated charitable work has been recognised with the
BMW Group Award for Social Engagement. In 2021, the
BMW Group honoured four employees for their social en-
gagement, in one case even with a special prize sponsored
by the Doppelfeld Foundation. The BMW Group Awards for
social engagement are each endowed with € 10,000 and di-
rectly benefit the projects concerned.
Awards for social engagement
-
A great number of BMW Group employees around the world
are committed to social and environmental issues in a va-
riety of ways. This includes, above all, supporting education-
al projects and campaigns for the benefit of the communities
at the locations where we have operations. In order to make
it easier for employees to become involved in such activities,
the BMW Group launched a so-called Social Week in 2021,
comprising a lecture series as well as introductory events. In
addition, the creation of a Social Marketplace provides em-
ployees with a digital platform on which they are able to ob-
tain information about charitable projects and exchange
ideas with like-minded people. Environment-related initia-
tives such as collecting plastic waste, planting trees or
growing vegetables - are also a recurring feature of the pro-
jects pursued by our employees.
[Strengthening employee engagement
Employees and Society
← = Q
Other Information
Corporate Governance
2021
2020
2019
81
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Employees and Society
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
EMPLOYEE ATTRITION RATE1
as a percentage of workforce
3.39
2.64
2.78
5.51
4.71
0
2017
2018
Securing future talents
2021
2020
2019
2018
2017
0
34,646
33,229 33,631
33,436
37,242
Donations/
payments in kind →
Commercial Activities →
Community Investment →
2020
in € thousand
Centralised health and occupational safety management
Health and occupational safety activities within the
BMW Group are combined in the Work Environment, Health,
Group Safety and Group Data Protection unit and allocated
to the Board of Management's Human Resources and Social
Affairs area of responsibility. The managers in the various
specialist departments are responsible for all related pro-
cesses, supported and advised by the centralised health
management and occupational safety teams. ]]
4,801
4,750
4,672
4,517
iliii
4,000
2017
2018
[[TOTAL EXPENDITURE ON CORPORATE
CITIZENSHIP BY TYPE OF ACTIVITY3
* Includes SpeedUp (an undergraduate programme) and Fastlane (a master's
programme).
84
BMW Group Report 2021
Corporate Governance
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2021
89
1 Regarding the term "management function" please see the Glossary.
2 The new definition of the term "employee" is provided in the Glossary.
[The BMW Group is also aware of the need to achieve a
high percentage of women in our future talents programmes.
The aim is to ensure that the share of women in the total
workforce and in management functions continues to rise in
the future. The share of women participating in the trainee
programme (Global Leader Development Programme) in-
creased to around 47% in 2021 (2020: 42%). By contrast,
the percentage in student proportion programmes (Fastlane,
Speed Up) fell slightly to around 32% (2020: 33%). 1]
Entire workforce
2021
2020
2019
2018
Management positions
2017
The share of women in the BMW Group workforce as a whole
reached 19.7% (2020: 19.5%). At BMW AG, women ac-
counted for 16.0% of the total workforce (2020: 15.9%)
Further GRI Information.
The share of women in management functions¹ within the
BMW Group has been rising steadily for many years. Global-
ly, the share of female managers in the BMW Group stood at
18.8% at the end of 2021 (2020: 17.8%). At BMW AG, the
number of women in management functions has more than
doubled between 2011 and the present day. Expressed as a
percentage, the share of female managers at BMW AG was
17.5% at the end of the period under report (2020:16.2%).
by 2025, namely to 22% for the BMW Group and 20% for
BMW AG. By 2025, we aim to increase the share of women
in the BMW Group workforce as a whole to between 20 and
22% and to between 17 to 19% for the BMW AG.
Entire workforce
Management positions
2021
2020
2019
2018
2017
0
19.7
18.8
Remuneration Report
Other Information
← = Q
Employees and Society
59.9
30.3
direct¹
13.3
53.6
33.1
indirect²
7.8
63.6
28.6
male
8.8
59.2
19.5
17.8
31.9
15.2
63.4
21.4
]]
Improving prospects for life with educational projects
At its various locations, the BMW Group develops education-
al projects that facilitate young people's first steps into the
labour market and, in this way, offer them better prospects
for life. With its programmes from primary school level
through to higher education, the BMW Group is making a
The BMW Group's expenditure on corporate citizenship ac-
tivities in 2021 totalled € 34.6 million (2020: € 33.6 million).
These include social projects, communication activities,
sponsorship of cultural and sporting events, and donations
of various kinds.
The BMW Group aspires to address concrete needs and
achieve a long-term impact by means of its corporate citi-
zenship activities. We therefore focus primarily on projects
where our expertise can be best leveraged to make a pur-
poseful contribution. In the event of a crisis, we also provide
fast and unbureaucratic assistance. During the year under
report, for instance, the BMW Group made € 1.5 million
available for rescue services in connection with the flood dis-
aster in Germany.²
Our aspiration
The BMW Group's target is to reach a total of six million people
by 2025 with the award-winning projects. By the end of 2021,
the award-winning projects will already have benefited around
5.7 million people (2020: 5.1 million people).' The BMW Group
therefore considers it is well on the way to exceeding the target
it has set itself. ]]
[[ As an enterprise with global operations and a highly diverse
workforce, we have a keen interest in encouraging tolerance
and understanding between various nations, cultures and reli-
gions. Together with the United Nations Alliance of Civilisations
(UNAOC), since 2011 we have regularly presented the Intercul-
tural Innovation Award. The Award is given in recognition of pro-
jects that seek constructive solutions to intercultural tensions
and conflict.
BUILDING BRIDGES BETWEEN CULTURES
[As a corporation with a multinational workforce and loca-
tions on six continents, we are very much a part of society.
For this reason, our ecological, economic and social respon-
sibility extends beyond our core business. The main focus of
our corporate citizen activities at our international locations
is to make a contribution towards achieving better living con-
ditions, educational opportunities and greater intercultural
understanding. Through a broad range of activities, we also
contribute towards the attainment of the UN's Sustainable
Development Goals.
CORPORATE CITIZENSHIP
female
9.8
19.3
17.2
16.0
2 All employees without clock control.
1 Clock-controlled and production employees.
]]
2021
2020
2019
2018
2017
4.0
|||||
work successfully together at
the BMW Group. 1]
[t People from over 110 countries
In 2021, the BMW Group systematically implemented the
measures decided upon in 2020 aimed at promoting women
in the workforce. One focus was placed on future talents and
executive management training programmes. Increasing the
share of women at all levels. In the Inspired Lead leadership pro-
gramme, for example, gender diversity is taken into account
in both the selection of participants and the learning content.
The option of filling management functions in tandem (joint
leadership) was also well received by employees in the first
year after the programme was introduced. In 2021, our
measures relating to the promotion of women were evaluat-
ed externally on the basis of the Women's Career Index. This
assessment confirmed the effectiveness of the measures
taken and the progress we have made.
Gender
The focus we place on sexual orientation and identity is a
clear reflection of diversity in action within the BMW Group.
An open-minded, unprejudiced and respectful working envi-
ronment is a prerequisite for LGBT+ employees to be able
to contribute their full potential. For this reason, the
BMW Group uses a range of informational events and dia-
logue formats to raise awareness of LGBT+ issues among
employees and managers. We are supported in the imple-
mentation of measures by the internal network BMW Group
PRIDE. We also send a clear signal to the outside world: in
2021, for instance, we joined the PROUT EMPLOYER net-
work of the Prout at Work Foundation and signed the UN Stand-
ards of Conduct for Business for Tackling Discrimination
against LGBTI people.
Sexual orientation and identity
6.5
6.6
|
6.4
6.3
6.5
in %
[[SHARE OF EMPLOYEES WITH SEVERE
DISABILITIES AT BMW AG³
In line with its core values, the BMW Group is convinced of
the need to offer an inclusive and barrier-free working envi-
ronment for employees with physical or mental disabilities.
This begins with providing training opportunities for severe-
ly disabled young people and continues by designing work-
places that meet their needs. We have reaffirmed this as-
piration in 2021 by joining the international initiative The
Valuable 500. Furthermore, in the year under report BMW AG
awarded contracts amounting to around € 24.2 million
(2020: € 25 million) to workshops staffed by people with
severe restrictions.
Physical and mental abilities
The BMW Group sees demographic change as both a chal-
lenge and an opportunity. Since 2019, as part of the Senior
Expert Programme, retired employees have been passing on
their knowledge and experience to their younger colleagues.
Conversely, within the Reverse Mentoring Programme or-
ganised by the BMW Group, older employees benefit from
the new knowledge of the younger generation. We train our
managers to recognise and leverage the opportunities that
mixed-age teams offer. GRI-Index: 404-2
Age and experience
3 The share of employees with severe disabilities is based on the statutory require-
ments in accordance with the German Social Code (SGB IX).
"The figure for 2021 comprises all orders completed and billed by 31 December
2021.
88
19.9
19.3
16.0
17.5
15.9
16.2
15.7
15.5
16.5
15.1
14.0
16.1
in %
POSITIONS AND IN THE TOTAL WORKFORCE OF THE
BMW GROUP²
PERCENTAGE OF WOMEN IN MANAGEMENT
in %
PERCENTAGE OF WOMEN IN MANAGEMENT
POSITIONS AND IN THE TOTAL WORKFORCE AT
BMW AG²
17.2
BMW Group at 18.8 %.
The BMW Group has set targets for the percentage share of
women at all levels of the Company. We have raised our tar-
gets for the percentage of women in management functions
The BMW Group is working continuously to increase the
share of women in the workforce as a whole and in manage-
ment functions in particular. This remains a challenging task
in that it is still the case that more men go through the pro-
cess of vocational training, particularly in technical fields,
and are therefore in the majority on the labour market.
Increasing the share of women
BMW AG regularly compares the monthly salary levels and
variable remuneration of women and men employed by the
Company. The respective degree of employment and func-
tional level are also taken into account. The objective of the
audit is to ensure that the remuneration structures result in
fair pay. There were no significant differences in the overall
remuneration package between the genders within BMW AG
in the year under review. GRI-Index: 405-21]
← = Q
Other Information
Remuneration Report
Corporate Governance
Group Financial Statements
Combined Management Report
Employees and Society
To Our Stakeholders
BMW Group Report 2021
88
Share of women in manage-
ment functions in the
2021 total
29.7
59.9
Certified occupational health and safety management system
In addition to international cooperation arrangements, occu-
pational health and safety activities throughout BMW Group
are coordinated on a global basis in line with a corresponding
management system that is certified to ISO 45001 or OHRIS2
level at 28 out of 31 plants. This means that 70,459 (2020:
69,092) or 99.72% (2020: 99.7%) of permanent employees
and 14,772 or 98.98% of temporary employees³ at BMW Group
plants work at a site covered by an international occupational
health and safety management system. It is the stated aim of
the BMW Group to obtain certification to one of these inter-
national standards for all of its plants by 2025. The only plants
for which this remains to be done are the Manaus plant (Bra-
zil), the partner plant in Kaliningrad (Russia) and the contract
manufacturing facility in Born (the Netherlands). Employer and
employee representatives work together at nearly all locations
to bring about a continual improvement in health and safety
standards. GRI-Index: 403-1, 403-41]
1 BMW AG; number of hours of absence due to paid sick leave divided by the con-
tractually agreed number of working hours; up to 2018, absence due to unpaid was
also taken into account. Figures up to 2018 are not comparable.
2 Occupational Health and Risk Management System.
3 Figures excluding temporary employees included in the management system.
85
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Employees and Society
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
[[ACCIDENT FREQUENCY RATE¹
3.6
3.5
3.5
3.2
2.8
|||||
0
2017
2018
2019
2020
[ Accident frequency
2021
[ 99.72% of employees at BMW Group
plants work at a site covered by an
international occupational health and
safety management system certified to
either ISO 45001 or OHRIS level. 1]
Occupational safety and ergonomics at Group sites
Preventive measures such as safe and ergonomically fa-
vourable workplaces are well-established aspects of the
BMW Group's approach to health protection. The right to
health and safety in the workplace is also a key feature firm-
ly embedded in the BMW Group's Code on Human Rights and Working
Conditions, which includes a commitment to comply with cur-
rently applicable occupational health and safety legislation
worldwide. Furthermore, uniform standards applying to all
sites are constantly improved, and help to ensure that health
and safety requirements are consistent throughout the
Group.
]]
One of the parameters the BMW Group uses to quantify the
success of its health management measures is the sickness
rate. At 3.4%, the sickness rate at BMW AG was at the same
level to one year earlier (2020: 3.4%). The Group continu-
ously strives to improve this figure. 7 GRI-Index: 403-10
To Our Stakeholders
Combined Management Report
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
Employees and Society
[Health management on a holistic basis
The BMW Group bundles all measures aimed at promoting
the health and performance of its workforce within its Health
Initiative programme. Current health-related topics such as
nutrition, exercise and fitness as well as behavioural ergo-
nomics, cancer prevention or mental resilience are ad-
dressed in action days, dialogue events and training courses,
with the aim of raising employee awareness for these impor-
tant issues.
Global approach
The BMW Group places great emphasis of ensuring that all
employees have access to its in-house health services. In
Germany, these services focus on providing acute care for
employees and temporary workers during working hours. In
certain countries, however, the Group's health service also
takes on primary care tasks, such as at the sites in Thailand,
India or Mexico. The BMW Group's Company doctors also
advise employees on individual preventive measures if re-
quested to do so, and help them adapt their work environ-
MEASURES ADOPTED IN LIGHT OF THE
CORONAVIRUS PANDEMIC
The measures implemented by the BMW Group are also
helping in accident prevention terms. The accident frequency
rate dropped further to 2.8 accidents per million hours
worked (2020: 3.2). There were no fatal accidents during the
year under report (2020: one) 7 Further GRI information. The
stated goal is to have occupational health and safety stand-
ards in place throughout the Group. The success of the
plants of our joint venture BMW Brilliance Automotive Ltd.,
Shenyang, China, in this respect with their very low acci-
dent frequency rate – is a good example. 7 GRI-Index: 403-9
[[ The SARS-CoV-2 occupational health and safety regulations
applicable for Germany and the Works Agreement concluded in
2020 continued to apply in 2021. A Group-wide "Corona Manual",
which is updated regularly, provides guidelines for implementing
infection control measures. In addition to protection and hygiene
concepts, the emphasis of the prevention efforts made during
the year under report was on the vaccination of employees. The
BMW Group's health service teams carried out Covid-19 vacci-
nations at numerous international plant locations. In Germany
alone, the BMW Group carried out almost 50,000 vaccinations
in 2021. 1]
in %
4.9
4.6
3.7
3.4
3.4
سال
2.0
2017
2018
2020
2021
ment to ensure that their health and performance are main-
tained in the long term. GRI-Index: 403-3, 403-6
[[ SICKNESS RATE¹
Recognising and avoiding risks
-
The BMW Group conducts comprehensive risk and stress
analyses in order to identify potential work-related risks in
both production and office workplaces. Pilot work continues
on the so-called Digital Workplace Stress Management sys-
tem which is used to assess ergonomic aspects of work-
Group-wide initiatives
The BMW Group is committed to raising awareness for di-
versity throughout the organisation. In this context, for in-
stance, we organise an annual Diversity Week, which in 2021
involved 170 activities aimed at motivating employees world-
wide to address the issue of diversity. The international com-
munication campaign Driven by Diversity was also launched
at the same time. The aim of the internal campaign is to
make the diverse identities, ways of thinking and experi-
ences of our employees visible and to embed diversity even
deeper in the corporate culture of the BMW Group and in the
mindset of its employees.
Employee engagement
Employee initiatives play a key role in ensuring that diversity
is actively practised. For example, two teams from the future
talents programme took part in the Germany-wide Diversity
Challenge of the Diversity Charter during the year under report.
One of the teams was awarded first place for developing a
diversity app.
Many other employees are involved in internal networks that
have been set up, including a number of women's networks
at various locations and the BMW Group PRIDE group, which
campaigns across borders for the interests of the LGBT+*
community. Sexual Orientation and Identity The dialogue generat-
ed by the aforementioned internal networks creates further
momentum for the BMW Group's commitment to support
diversity.
Promoting diversity
The BMW Group takes an holistic approach to the subject of
diversity, focusing primarily on five key dimensions, namely
cultural background; age and experience; sexual orientation
and identity; physical and mental ability; and gender. The
two departments, HR Policy and Strategy and HR Oper-
ations, working together with the relevant disciplinary line
managers, are responsible for implementing the measures
decided upon. 1]
*Abbreviation for all sexual orientations and forms of identity.
87
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Group Financial Statements
Diversity-promoting concepts have also been developed in
relation to the composition of the Board of Management and
Supervisory Board. Information on the stipulated diversity
criteria and their implementation is provided in the Corporate
Governance Statement. GRI-Index: Diversity and equal opportunity
Corporate Governance
Other Information
← = Q
Employees and Society
> 50
years old
29.2
[ BMW AG EMPLOYEES ACCORDING TO AGE GROUP,
DIVIDED INTO FUNCTIONS AND GENDER
in %
<30
years old
30-50
years old
2019 total
11.6
59.2
2020 total
10.4
Remuneration Report
[Cultural background
Using a variety of training events, presentations and dia-
logue formats, we endeavour to sensitize employees and
managers to the positive contribution that diversity can
make to the business. The BMW Group also promotes diver-
sity and equal opportunity in its recruiting and personnel de-
velopment strategies.
[ A diverse workforce brings with it different
perspectives, experiences and competen-
cies – making the BMW Group more
innovative and competitive. ]]
places on a fully automated basis. With this project, the
BMW Group is going beyond current legal requirements and
setting the benchmark for the automotive industry. The
range of risk assessments was expanded to include a mobile
workplace analysis in view of the increased scale of working
from home.
The BMW Group uses various management systems to as-
sess the methods and tools deployed across the Group. The
results of the assessments are subsequently used to en-
hance internal norms. As part of co-determination arrange-
ments, the Works Council and, if necessary, the representa-
tives of severely disabled employees and HR management
are involved.
The BMW Group ensures the quality of its processes by
means of annual internal audits. Audits and certifications of
sites are conducted by external service providers. All neces-
sary audits were again successfully performed in 2021, re-
sulting, for example, in the elimination of defects identified in
plant and equipment. 7 GRI-Index: 403-2
Regular training for employees
An important prerequisite for ensuring that its occupational
safety and health procedures work well at all locations is the
provision of regular training to employees. Responsibility for
the training measures implemented in this field lies with the
Training Competence Centre, which comprises staff from the
occupational safety, ergonomics, environmental protection
and health management departments. The seminar curricu-
lum is drawn up in collaboration with safety specialists,
Company doctors and the BMW Group Academy. The spe-
cialised departments can also be called on to provide solu-
tions to help meet short-term needs.
[The BMW Group requires its
suppliers to comply with
internationally recognised
occupational health and safety
requirements. 1]
Occupational safety along the value chain
It is extremely important for the BMW Group that external
partners and their employees also find a safe work environ-
ment at our locations and take advantage of the available
safety measures. For this purpose, cooperation with con-
tractual parties is regulated in a separate contractor declar-
ation, enabling potential hazards to be identified and appro-
priate protective measures to be taken on this basis. On
large-scale construction sites of the BMW Group, all employ-
ees of partner companies are given safety briefings by
BMW Group experts. In the case of smaller contracts, the
contractor is responsible for performing this duty. The de-
partment responsible for placing the order monitors compli-
ance with the occupational health and safety regulations,
supported by the relevant occupational health and safety
unit as required.
In order to improve occupational safety at the upstream
stages of the value chain, too, the BMW Group requires its
suppliers via the agreed purchasing terms and conditions
to comply with internationally recognised occupational
health and safety requirements.² GRI-Index: 403-71]
-
[12.8 accidents per million hours
worked. ]]
1 Number of occupational accidents with at least one day of absence from work per
one million hours worked.
specialist departments, the HR department or the Works
Council if they have any pertinent concerns. The BMW Group
SpeakUP Line is a telephone service available in over 30
languages that gives employees worldwide the opportunity
to report possible violations both anonymously and confi-
dentially (Whistleblower Systems for Detecting Possible Legal Violations
and Compliance Controls). GRI-Index: 406-1
2 Management systems in accordance with ISO 45001 and derived from the Interna-
tional Labour Organization (ILO) or UNGC (United Nations Global Compact).
BMW Group Report 2021
To Our Stakeholders
Combined Management Report
Employees and Society
Group Financial Statements
Corporate Governance
Remuneration Report
Other Information
← = Q
DIVERSITY
-
[ The BMW Group sees diversity as a strength. A diverse
workforce brings with it different perspectives, experiences
and competencies – and can therefore make us more in-
novative and competitive as a company. For this reason, we
encourage a working environment that actively incorporates
different perspectives. We embrace diversity in all its facets
on the basis of our diversity concept. Our guiding principle is
to create “a sense of community" in which people can work
together in a spirit characterised by appreciation, mutual un-
derstanding, openness and fairness.
Embedding diversity
The BMW Group places great emphasis on an unprejudiced,
appreciative and inclusive working environment for all its
employees. Key principles such as protection against dis-
crimination, equal treatment of all employees and respect at
all times are firmly embedded in the BMW Legal Compliance Code
and the BMW Group Code of Human Rights and Working Conditions. All
employees can contact their line managers, the relevant
86
2019
-235
- 33.3
6- Other Information
-
5 Remuneration Report
4- Responsibility Statement and Auditor's Report
3- Group Financial Statements
2 Combined Management Report
Reporting Outlook for 2024
Non-financial disclosure requirements are continuing to evolve.
From the 2024 reporting year onwards, the BMW Group will be
subject to the transparency requirements of the Corporate Sus-
tainability Reporting Directive (CSRD) and the European Sustain-
ability Reporting Standards (ESRS). We are currently implement-
ing the new sustainability reporting standards and assessing
their impact on the structure and scope of the BMW Group's
reporting with a particular focus on the management report.
GRI Index: 2-4
1 To Our Stakeholders
On 12 March 2024, the Financial Statements of BMW AG were
authorised for issue by the Board of Management and the Group
Financial Statements approved for publication. The BMW Group
Report (hereinafter also "the Report") combines the manage-
ment reports of Bayerische Motoren Werke Aktiengesellschaft
(BMW AG) and the BMW Group in a Combined Management
Report.
The BMW Group regards its balance of economic, ecological and
social interests as the basis for its commercial success. This re-
port is intended to provide qualified insight into the BMW Group
and explain our activities in a transparent, comprehensible and
measurable manner. We are keen to demonstrate to our stake-
holders how economic, ecological and social issues complement
one another and are mutually dependent, and to identify the gen-
eral external conditions that influence the Company. For these
reasons, we explain the BMW Group's strategy as well as the latest
developments and the way in which the business is managed on
the basis of key financial and non-financial indicators and tar-
gets. Dashboard
Integrated reporting and corporate strategy
REPORTING CONCEPT
ABOUT THIS REPORT*
About This Report
The report is divided into the following sections:
FRAMEWORKS APPLIED
The BMW Group Report is based on the following reporting and
accounting standards.
Combined Management Report
The Combined Management Report is also based on:
← = Q
Other Information
Remuneration Report
BMW Group Report 2023 To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
About This Report
6
* Part of the Combined Management Report.
Taxonomy Regulation (Regulation (EU) 2020/852 of the
European Council and of the European Parliament on the
Establishment of a Framework to Facilitate Sustainable
Investment, and amending Regulation (EU) 2019/2088)
and its delegated acts ( EU Taxonomy)
German Stock Corporation Act (AktG)
German Accounting Standards (GAS 20) underpinning
HGB requirements
Combined Non-Financial Statement (NFS) at Group and
Company level in accordance with § 289 b and § 315 b
HGB (NFS Index)
Content of the Management Report in accordance with
§§ 289 and 315 HGB
German Commercial Code (HGB) (among other relevant
legislation)
-
The Combined Management Report is based on the following le-
gal frameworks:
← = Q
Guidelines on Alternative Performance Measures issued by
the European Securities and Markets Authority (ESMA)
German Corporate Governance Code (GCGC)
Furthermore, the Combined Management Report makes refer-
ence to the following reporting standards and transparency
requirements:
Other Information
Group Financial Statements Responsibility Statement and Auditor's Report
123 Outlook
115 Employees and Society
104 Production and Supplier Network
Products
90
EU Taxonomy
126 Appropriateness and Effectivness of the Internal
Control System and Risk Management System
78
52
The BMW Group Strategy
42
Overview of the BMW Group
38
252 Independent Practitioner's Report
Financial Performance
127 Risks and Opportunities
142 Compliance and Human Rights
146 Internal Control System
To Our Stakeholders Combined Management Report
BMW Group Report 2023
5
CONTENTS
个
三
305 Auditor's Report
304 Other Considerations
Remuneration of the Members of the Board of Management
297 Remuneration of the Members of the Supervisory Board
300 Comparison of Change in Remuneration and Earnings
pursuant to § 162 (1) Sentence 2 No. 2 of the German Stock
Corporation Act (AktG)
258
257 Outlook for the 2024 Financial Year
256 Review of the 2023 Financial Year from a
Remuneration Perspective
256 Remuneration Report
5 - REMUNERATION REPORT
147 Disclosures Relevant for Takeovers and Explanatory
Comments
Remuneration Report
245 Independent Auditor's Report
-
SASB Standards according to the Sustainable Accounting
Standards Board ( SASB Index)
The Board of Management
27
Statement of the Chairman of the Board of Management
20
Report of the Supervisory Board
12
29
BMW Group in Figures
← 三〇
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
To Our Stakeholders
9
Composition of the Board of Management and Supervisory Board
32
Dialogue with Stakeholders
BMW Group in Figures
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2023
9
STAKEHOLDERS
TO OUR
01
BMW Group and Capital Markets
35
BMW Group Report 2023
GRI Standards 2021 of the Global Reporting Initiative (GRI)
(GRI Index)
8
Summarised disclosures of fuel consumption, carbon emissions
and electricity consumption are provided in the section
7 Consumption and Carbon Disclosures.
7
The material topics covered in our non-financial reporting for the
reporting year are derived from the materiality analysis which the
BMW Group performed in 2022 in accordance with § 289 c and
§ 315 c HGB and validated for the 2023 reporting year. The top-
ics that were categorised as material remain those where the ac-
tions of the BMW Group may have a significant sustainability im-
pact on the environment and society (inside-out) and which may
be of high business relevance to the BMW Group (outside-in). As
a result, our focus is on alternative drive systems Electromobility,
decarbonisation along the value chain Carbon emissions, respon-
sible sourcing Purchasing and Supplier Network, resource manage-
ment in line with the principle of the circular economy Circular
Economy, Resource Efficiency and Renewable Energy as well as compli-
ance Compliance and Human Rights. Employee diversity and equal
opportunity Diversity, Equal Opportunity and Inclusion as well as an at-
tractive workplace Employer Attractiveness and Employee Development
are also given high priority within the BMW Group. Our reporting
under the GRI standards also covers topics which are considered
material from a double materiality perspective because they
have a significant environmental impact (inside-out) or are of
high business relevance to the BMW Group (outside-in). This
concept must be applied from 2024 onwards in accordance with
the Corporate Sustainability Reporting Directive. The topics cov-
ered in this context are responsible digitalisation ▾ Innovation,
Digitalisation and Customer Orientation, Product and Road Safety
7 Product Quality and Safety, Occupational Health and Safety Health
and Performance and Sustainable Governance Performance
Management.
Materiality analysis
assurance and are denoted with the symbol [[ ]]. The section
7 Dialogue with Stakeholders and the additional information provided
in the section Further GRI Information were also subjected to a lim-
ited assurance engagement. Information provided in the SASB
Index is also subjected to a limited assurance review on a volun-
tary basis. The TCFD Index indicates the sections in which the
depth of the audit is identified. Certain individual parts of the
7 NFS as well as the remainder of the Combined Management
Report were also subjected to a reasonable assurance engage-
ment.
PwC has audited the Group Financial Statements and the Com-
bined Management Report for the 2023 reporting year and is-
sued an unqualified audit opinion thereupon. Further information
is provided in the Independent Auditor's Report and the Independent
Practitioner's Report on Non-financial Disclosures.
The report, comprising the Combined Management Report, the
Group Financial Statements and the additional GRI information,
has been subject to an annual independent audit by Pricewater-
houseCoopers GmbH Wirtschaftsprüfungsgesellschaft ("PwC" or
"Auditor"). Unaudited sections are marked accordingly. The ex-
ternal audit serves to underpin the reliability and trustworthiness
of the information contained therein for the public. The external
audit supports the Supervisory Board of BMW AG in fulfilling its
auditing duties. Any links and disclosures that refer to infor-
mation outside the BMW Group Report and the GRI Index are
not part of the audit. The Remuneration Report 2023 was prepared
in accordance with the requirements of § 162 of the German
Stock Corporation Act (AktG) and its content audited by PwC.
BMW Group Report 2023
About This Report
External audit
The BMW Group Report is published annually to coincide with
the BMW Group Annual Conference - most recently held on 15
March 2023 and is subsequently available in both German and
English on the BMW Group website. The GRI Index is also avail-
able on the website as a separate document. The reporting pe-
riod covers the financial year from 1 January to 31 December
2023. The statements made in the report generally relate to the
BMW Group reporting entity. Any deviations are marked accord-
ingly. The BMW Group Report 2024 will be published in March
2025.
Publication and scope
ADDITIONAL INFORMATION
ON THE REPORT
The Group Financial Statements of Bayerische Motoren Werke
Aktiengesellschaft for the year ended 31 December 2023 have
been prepared in accordance with International Financial Re-
porting Standards (IFRS) as endorsed by the European Union
(EU) and the supplementary requirements of § 315 e HGB.
Group Financial Statements
Recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD) (TCFD Index)
7 GRI Index: 2-2, 2-3, 2-4
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Key figures presented in the report have been rounded in accord-
ance with standard commercial practice. In individual cases, this
may mean that figures do not add up exactly to the stated total
and that percentages cannot be derived from the values shown.
Editorial comments
The Board of Management and the Supervisory Board of BMW
AG prepare a yearly combined Statement on Corporate Govern-
ance in accordance with § 289 f and § 315 d HGB to report on
corporate governance within the BMW Group. The Statement on
Corporate Governance is published on BMW AG's website at
7 www.bmwgroup.com/ezu. It also includes the Declaration of Com-
pliance pursuant to § 161 AktG.
Statement on Corporate Governance
The BMW Group is also required to ensure that third parties re-
port relevant data to the BMW Group correctly. These third par-
ties include independent dealerships - the overwhelming major-
ity of which report vehicle delivery figures to the BMW Group -
and suppliers, which provide the BMW Group with data on the
implementation of agreed measures designed to reduce carbon
emissions.
Certain non-financial performance figures reported by the
BMW Group are based on a significant number of estimates and
valuations. Some are complex and subjective in nature, or sub-
ject to uncertainty for other reasons. The BMW Group is also con-
tinuously updating the policies and procedures used to calculate
its non-financial performance figures. It is not always practical to
apply new policies and procedures to prior reporting periods. Alt-
hough the methodology used to calculate indicators is in line with
standard practice, some indicators are not directly comparable
with the values reported by other companies.
Preparation of non-financial performance figures
This report contains various forward-looking statements con-
cerning future developments that are based on the current status
of the BMW Group's assumptions and forecasts. These state-
ments are therefore subject to a variety of predictable and unpre-
dictable risks, uncertainties and other factors, which means that
the actual outcome, including that of the BMW Group's net as-
sets, financial position and results of operations, its development
or performance, could differ considerably from those statements.
Forward-looking statements
With its business operations, the BMW Group is in a position to
contribute directly to the achievement of Sustainable Develop-
ment Goals (SDGs), in particular SDG 3, 8, 9, 12 and 13. Infor-
mation about the importance of these goals for the BMW Group
is provided on our website.
Sustainable Development Goals
Connection to figures in the Group Financial Statements
For each topic, an assessment was carried out to identify figures
reported in the Group financial statements that enable a better
understanding of the NFS, and which therefore need to be dis-
closed and explained.
← = Q
Other Information
Remuneration Report
* See Glossary for a definition of deliveries.
244 Responsibility Statement by the Company's Legal
Representatives
2 COMBINED MANAGEMENT REPORT
Part of the Combined Management Report.
209,066
2,554,183
154,950
in %
SHARE OF ALL-ELECTRIC
CARS IN DELIVERIES
in units
14.7
DELIVERIES IN THE MOTORCYCLES
SEGMENT
DELIVERIES IN THE AUTOMOTIVE
SEGMENT
at year-end
GROUP WORKFORCE
Within the corridor of 17 to 20%
Within the corridor of 8 to 10%
Within the corridor of 8 to 10%
in units
Slight increase over previous year
7
Slight increase over previous year
THE BMW GROUP'S STRATEGIC GOALS
← = a
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023 To Our Stakeholders Combined Management Report
3
The BMW Group Strategy
LINK TO CHAPTER →
This is a simplified presentation of the data. Detailed information on the performance figures
as well as the identification of the depth of the audit can be found in the respective chapters.
↑
Significant increase over previous year
7
Slight increase over previous year
7
↓
FINANCIAL GOALS
17.2
9.8
BMW Group Report 2023 To Our Stakeholders Combined Management Report
2
NEXT ERA
Link to the online report
On the path to electric and digitalised mobility in a sustainable circular economy.
Report on the economic performance of the BMW Group and its environmental
and social contribution.
BMW GROUP REPORT 2023
Group Financial Statements Responsibility Statement and Auditor's Report
DRIVING THE
MOTOR CARS LTD
ROLLS-ROYCE
MINI
W
M
BMW
GROUP
Neue Klasse
Remuneration Report
Other Information
← = a
in %
ROE IN THE FINANCIAL SERVICES
SEGMENT
in %
EBIT MARGIN IN THE MOTORCYCLES
SEGMENT
in %
EBIT MARGIN IN THE AUTOMOTIVE
SEGMENT
in € million
Significant decrease from previous year
17,096
BEFORE TAX
GROUP PROFIT/LOSS
KEY PERFORMANCE INDICATORS
You can find more information on the BMW Group and reporting year 2023 in the following report.
The BMW Group can look back on a successful year 2023. The company is growing and also profitable. BMW is once again number one in the premium segment, with a highly attractive, innovative
range of products available to our customers across all brands, segments and drivetrain technologies. Vehicles with all-electric drivetrain systems are our biggest growth drivers. At the same time,
our Vision Vehicles demonstrate how we are setting up the NEUE KLASSE as our next innovative leap. Strong performance figures show that we are on track despite the numerous challenges in
our environment.
BMW GROUP REPORT 2023
8.1
Group EBT margin
> 10%
EBIT margin in the
35
Dialogue with Stakeholders
32
Composition of the Board of Management and
Supervisory Board
The Board of Management
Statement of the Chairman of the Board of Management
BMW Group and Capital Markets
29
20
Report of the Supervisory Board
12
BMW Group in Figures
9
1 TO OUR STAKEHOLDERS
27
3 - GROUP FINANCIAL STATEMENTS
152 Income Statement for Group and Segments
153 Statement of Comprehensive Income for Group
338 Contacts
330 Glossary and Explanation of Key Figures*
337 Financial Calender
328 BMW Group Ten-year Comparison
326 Consumption and Carbon Disclosures
325 NFS Index
321 TCFD Index
318 SASB Index
307 Further GRI Information
6 - OTHER INFORMATION
REPORT
4 - RESPONSIBILITY STATEMENT AND AUDITOR'S
160 Notes to the Group Financial Statements
158 Statement of Changes in Equity for Group
156 Cash Flow Statement for Group and Segments
154 Balance Sheet for Group and Segments at 31 December 2023
About This Report*
5
← = Q
Other Information
cars in deliveries
Share of all-electric
NON-FINANCIAL GOALS - TARGETS FOR THE PERIOD UP TO 2030
↑
22%
in management positions
Å% |
% Share of women
NON-FINANCIAL GOALS - TARGETS FOR THE PERIOD UP TO 2025
This is a simplified presentation of the data. Detailed information on the performance figures
as well as the identification of the depth of the audit can be found in the respective chapters.
≥ 18%
of Automotive segment
Return on capital employed
8-10%
Automotive segment
> 50%
BMW GROUP IN FIGURES
Reduction in carbon emissions
> 50%
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
Contents
4
The BMW Group Strategy
LINK TO CHAPTER →
↓
> 20%
↓
in the supply chain
Reduction in carbon emissions
80%
↑
Reduction in carbon emissions
per vehicle in production
during a vehicle's use phase
KEY PERFORMANCE INDICATORS
The contents of the NFS, in accordance with § 289 b ff. and
§ 315 b ff. HGB, were subjected to an audit to obtain limited
2019
13,999
13,400
4,830
7,411
- 15.9
- 16,231
18,482
- 19,298
- 14,194
-19,443
37.5
11
8
5
- 19,857
32.0
4,499
2,162
3,055
3,163
3,701
1,721
2,312
0.8
259
257
227
GROUP
194
22.1
12,981
10,635
9,870
3
- 3.4
5
36,227
111,239
98,990
104,210
- 37.3
6,942
11,071
142,610
6,354
2,567
4.8
8,974
8,566
6,495
6,143
3,395
155,498
9.0
91,682
35,122
32,867
30,044
29,598
1.2
3,214
3,176
2,748
2,284
2,368
7.0
132,277
123,602
95,476
80,853
3.1
29
36
8
12,165
18,582
12,463
3,857
4,978
0.1
- 34.5
- 4,931
- 3,597
- 1,365
- 2,140
1,334
122
-257
- 4,927
44
7.47/7.49
6.8
11.0
16.5
14.4
5.3
- 35.3/-35.3
17.67/17.69
27.31/27.33
18.77/18.79
- 34.5
12,165
18,582
12,463
3,857
5.73/5.75
5,022
910
288
- 100
995
4,467
- 27.3
17,096
23,509
16,060
5,222
7,118
2,200
147
- 390
808
377
- 93.6
-13
- 203
2,722
6,017
11,805
12,642
531
-96
-7.6
2,962
3,205
3,753
1,725
2,272
- 4.1
258
269
228
100
187
- 33.2
18,918
7.8
103
10,610
2,399,632
2,521,514
2,325,179
2,537,504
11.6
20.2
2,554,183
18.1
12.7
29.0
14.0
9.8
8.6
10.3
24.0
6.4
1.6
1.9
0.28
0.32
0.33
0.35
0.40
- 2.8
102.1
105.0
115.9
99.1 (135.0)8
127.0
63.3
14.7
9.0
4.1
2.7
- 12.5
4.9
RoE in %
17.2
Share of women in management positions in the BMW Group (in %)²
16,060
118,909
11,440
126,016
Employees at year-end¹
17.8
5,222
Profit/loss before tax in € million
Change in %
2023
2022
2021
2020
7,118
18.8
23,509
149,475
20.2
17,096
154,950
20.8
FINANCIAL SERVICES SEGMENT
Deliveries
ROCE in %10
EBIT margin in %
MOTORCYCLES SEGMENT
CO₂ emissions per vehicle produced (in tonnes)
CO2 emissions of the EU new vehicle fleet (in g/km) 5,6,7
Share of all-electric cars in deliveries (in %)
Deliveries
RoCE in %3
EBIT margin in %
AUTOMOTIVE SEGMENT
3.0
3.7
- 27.3
1 The term "employee" has been redefined with effect from the reporting year 2020 (for definition, see Glossary).
8.2
120,726
8.3
Financial Services
Motorcycles
Automotive
Group profit/loss before tax (EBT)
Eliminations
Other Entities
Financial Services
Motorcycles
Automotive
Group profit/loss before financial result (EBIT)
Eliminations
Other Entities
Financial Services
Motorcycles
Automotive
Other Entities
Group revenues
Eliminations
Profit/loss from continuing operations
4.5
7,518
6,222
7,784
Change in %
2023
2021
2020
2019
2 Group profit/loss before tax as a percentage of Group revenues.
1 Expenditure for capitalised development costs, other intangible assets and property, plant and equipment.
Pre-tax return on sales² in %
Earnings in € per share of common stock/preferred stock
Group net profit/loss
Profit/loss from discontinued operations
Group income taxes
Free cash flow Automotive segment
2022
Total capital expenditure¹
3.0
209,066
202,895
194,261
169,272
175,162
15.0
- 11.2
24.9
21.9
29.4
8.1
Depreciation and amortisation
8.1
22.1
11.2
15.0
17.9
22.6
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
in € million
Combined Management Report
To Our Stakeholders
BMW Group in Figures
OTHER FINANCIAL PERFORMANCE FIGURES
10
9 Efficiency ratio calculated on the basis of Scope 1 and Scope 2 carbon emissions (i.e. a market-based method according to GHG Protocol Scope 2 guidance; mainly based on the use of emissions factors for electricity, district heating and fuels of the VDA (each in the most current valid version: 12/2023) and
occasionally using local emissions factors; excluding climate-changing gases other than carbon dioxide from vehicle production (BMW Group manufacturing sites and Motorrad, but excluding partner plants and contract manufacturers), as well as BMW Group non-manufacturing sites (e.g. research centres,
sales centres, office buildings) divided by the number of vehicles produced (BMW Group manufacturing sites and partner plants, but excluding contract manufacturers).
10 The term "ROCE" has been redefined with effect from the reporting year 2022 (for definition, see Glossary). The 2021 figure was adjusted accordingly for comparison purposes (2021 before adjustment: 35.9%).
8 To improve comparability, the 2020 NEDC figures were converted to WLTP after adjusting for permissible flexibilities - specifically from 99 g CO2/km according to NEDC (including 5 g CO2/km phase-in, 7.5 g CO2/km supercredits and 2.4 g CO2/km eco-innovations) to 135 g CO2/km according to WLTP
(excluding flexibilities). In 2020, a phase-in regulation was accepted, as was the recognition of supercredits, which ceased in 2021.
2 The new definition of the term "employee" (see footnote 1) also has an impact on disclosures relating to the percentage of female employees.
3 The term "ROCE" has been redefined with effect from the reporting year 2022 (for definition, see Glossary). The 2021 figure was adjusted accordingly for comparison purposes (2021 before adjustment: 59.9%).
"Deliveries including BMW Brilliance Automotive Ltd., also for the period prior to full consolidation in the Group Financial Statements (2019: 538,612 units, 2020: 602,247 units, 2021: 651,236 units, 1 January to 10 February 2022: 96,133 units).
5 EU-27 countries including Norway and Iceland; with effect from 2021, values are calculated on a converted basis in line with WLTP (Worldwide Harmonised Light Vehicles Test Procedure), values for 2018 to 2020 were calculated based on the New European Driving Cycle (NEDC).
6 This is a preliminary internal calculation with a potential variation of +/- 0.5 g CO2/km, as official registration figures from the authorities are not available for all EU states. Figures officially published by the EU Commission are not expected to be available until November of the following year.
7 Including an allowance for eco-innovations (amounts of clearly minor significance).
- 3.9
BMW Group Report 2023
17.2
94
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Products
Group Financial Statements
Other Information
Remuneration Report
← = Q
[[Inspiration and a culture of innovation
94
These offices are strategically positioned worldwide and focus
on key hotspots of technology and innovation. The potential of
new technologies is therefore being explored in pilot projects and
transferred to the Group's centralised teams. Whether manufac-
turing, developing smart city solutions or the mobility of the fu-
ture, these Technology Offices are driving forward innovations
that benefit the Group in all its lines of business.
Responsibility Statement and Auditor's Report
Good ideas often emerge when different partners work together.
According to this principle, we focus on collaborations in which
the BMW Group complements its strengths with those of estab-
lished partners and innovation drivers such as start-ups, ena-
bling us to continue developing our innovative strengths. The
global network of BMW Group Technology Offices is also making
an essential contribution to maintaining the Group's leading role
in terms of innovation.
Market and sales communication, e.g. generated
marketing texts
The BMW Group is involved in numerous research and imple-
mentation projects for developing new mobility concepts. The
main focus is on pilot projects that improve the quality of life and
promote more sustainable urban mobility. In Munich, we are co-
initiators of the new Mobile Future Alliance Munich. Together with
policymakers, the Technical University of Munich and the Munich
Transport and Tariff Association, a strategy for sustainable mo-
bility in the greater Munich area is to be developed. Specifically,
it is about using street space more efficiently, creating open
spaces for liveable urban areas, establishing new mobility solu-
tions and promoting parking space management, among other
things.
Shaping the future of mobility
Testing and comparison of vehicle specifications
Coding support for IT and vehicle development
Knowledge management or comparison of offers in
purchasing
Knowledge management for customer interaction in call
centres
Application of generative Al in various processes at the
BMW Group, such as:
Text and image generation applications, as well as
knowledge management based on large language models
for exploration for all employees
Large language models, such as those on which ChatGPT
is based, for voice applications within the vehicle
Image-generating Al for end-to-end support of our design
and vehicle construction processes
The development of generative Al is still in its infancy and indus-
trialisation has only just begun. We are already using the first
tools based on this technology or investigating its potential for
specific applications, such as:
In recent years, artificial intelligence (AI) has been increasingly
developed and performs ever more comprehensive tasks. GPTs
(Generative Pretrained Transformers) support and accelerate
operational processes, including creative tasks. The technology
holds considerable potential for the way we work, collaborate,
develop, share knowledge and interact with our customers and
how the future experience within our vehicles will be designed.
Global dialogue with start-ups is an important means for the
BMW Group to gain impetus. This is based on three pillars, com-
prising BMW i Ventures (through which we invest in technology
start-ups), the start-up Platform URBAN-X (a MINI brand-initiated
start-up that focuses primarily on urban living) and the 7 BMW
Startup Garage. The latter serves as the BMW Group's venture cli-
ent unit and is tasked with searching for innovations that repre-
sent a significant benefit for products, services, systems and pro-
cesses. The aim of the programme is to evaluate and empower
start-ups to become suppliers and partners.
Artificial intelligence
With the M Mixed Reality approach, for example, a team of
engineers at BMW M GmbH has developed an immersive
driving experience for the BMW M2 and M4, which is now
being made available to Driving Experience customers for
the first time. Wearing VR goggles, drivers can be immersed
in a virtual world while driving the real vehicle. In addition,
the BMW Group has made further inroads into the gaming
scene with the launch of Air Console, i.e. casual gaming in
numerous current BMW and MINI models.
In Rotterdam, we are working with the city authorities, Erasmus
University and other local partners on various pilot projects, in-
cluding the improved interconnectedness of different modes of
transport (intermodality), visionary urban vehicle concepts and
the more efficient use of charging infrastructure. The BMW Group
also held a stakeholder dialogue together with the City of Rotter-
dam in the reporting year. Over 100 participants from city admin-
istrations, the scientific community, industry and start-ups from
Europe, the USA and China discussed the urban mobility of the
future. The findings are now being incorporated into other pro-
jects.]]
The trend research conducted by the technology offices enables
the BMW Group to anticipate the technological developments of
tomorrow. The results are made publicly available in the Trend
Radar where scientific institutions, start-ups, but also potential
partners can make use of them.
Group Financial Statements Responsibility Statement and Auditor's Report
based in Palo Alto, the BMW tech office moved to its current lo-
cation in Mountain View in 2011. Today, the Mountain View
team is part of a global network of BMW tech offices strategically
located in key technology hotspots around the world. They all
play a crucial role in the BMW Group's open approach to innova-
tion. Apart from the locations in Silicon Valley and Munich, the
worldwide network also includes Seoul, Shanghai, Tel Aviv and
Tokyo.
If a safety risk or a compliance-related defect is found, the BMW
Group implements all the measures required to remedy the issue
following detailed discussions with the relevant authorities. In
2023, safety- and compliance-related technical campaigns af-
fected around 1.8 million vehicles (2022: 3.4 million vehicles). All
these actions were voluntary and carried out in coordination with
the authorities concerned. The BMW Group works according to
the principle of prevention. To avoid technical campaigns of this
type going forward, the BMW Group has also developed a com-
prehensive programme that has been in place since 2023.
In-car experiences: Enhancing the quality of experience with
a focus on infotainment, productivity and gaming.
In addition to its high quality and compliance with statutory reg-
ulations and standards, the BMW Group's comprehensive quality
management system also focuses on ensuring the safety of its
products. From the development stage to manufacturing, they
are therefore subject to rigorous testing procedures. Further-
more, any information received from customers regarding poten-
tial deviations from quality standards are systematically followed
up.
Quality management
We are also working continuously to further improve the safety of
our vehicles. In 2023, the new BMW 5 Series achieved top marks
in the European New Car Assessment Programme (Euro NCAP).
The new BMW i5* was also named "Safest car of the year" by
the Korean New Car Assessment Programme (KNCAP). Further
awards gained in 2023 included the "Top Safety Pick+" from the
Insurance Institute for Highway Safety (IIHS, USA) for the new
BMW 5 Series, the BMW X3 and the BMW X1, as well as a triple
"Good" rating in the China Insurance Automotive Safety Index (C-
IASI) for the BMW X1. GRI Index: 416-1 SASB Index
[[All BMW Group products and services are required to meet the
highest standards in terms of quality and safety, People's safety
has top priority, right from the product development stage. With
this point in mind, optimum chassis tuning, highly effective brak-
ing systems and stable passenger compartments are key fac-
tors. Moreover, BMW Group vehicles are equipped with state-of-
the-art safety systems that reduce the risk of accidents and inju-
ries (active safety systems such as collision warning or lane de-
parture warning systems) as well as mitigate the consequences
in the event of an accident (passive safety systems such as air-
bags or seat belts).
SAFETY
PRODUCT QUALITY AND
The BMW Group offers a range of additional mobility services in
the MyBMW app. It provides customers with access to exclusive
FREE NOW services and, in cooperation with SIXT, to rental cars
with exclusive specialised services. This BMW add-on mobility
offering is currently available to BMW and MINI customers in a
growing number of markets. For business customers and fleet
operators, among other services the BMW Group offers keyless
vehicle use for flexible fleet concepts or digital and efficient vehi-
cle management options. The BMW Group's range of services
also includes comprehensive charging solutions for the home,
the workplace and on the road. 7 Reliable and comprehensive charging
opportunities]]
As Europe's largest multimodal mobility platform, FREE NOW
combines the entire range of various forms of mobility in one app.
Apart from taxi cabs and private ride services, various types of e-
scooters as well as car-sharing vehicles can also be booked via
the FREE NOW app. By 2025, the share of electrically powered
trips is projected to increase to 50% and users are set to travel
fully electrically as of 2030.
Together with Mercedes-Benz, the BMW Group offers innovative
mobility services via the YOUR NOW joint venture. The range of
services provides customers with access to various modes of
transport other than their own vehicle.
[[Mobility services offered by the BMW Group
← = Q
When it opened in Silicon Valley in 1998, the BMW Group Tech-
nology Office USA was the Group's first research and develop-
ment facility to be established outside of Munich. Originally
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On 6 November 2023, the BMW Group signed an agreement
with Mercedes-Benz to establish a company based in China with
the objective of building charging infrastructure in that market.
The approval by the antitrust authorities has already been given.
The BMW Group holds a 50% stake in the recently founded
company. Reliable and comprehensive charging opportunities]]
On 19 October 2023, the BMW Group jointly founded a com-
pany together with General Motors, Honda, Hyundai, Kia, Mer-
cedes-Benz and Stellantis. The partners are working together
with the aim of establishing a public charging network in the USA
and Canada.
The BMW Group is continuously building on its various coopera-
tion arrangements aimed at expanding charging infrastructure in
general. In addition to the BMW Group, Mercedes-Benz, Ford,
Porsche, Volkswagen, Audi, Hyundai/Kia and BlackRock are all
involved in the long-established IONITY joint venture. The aim is
to set up an efficient, high-power charging network for electric
vehicles right across Europe.
Since the launch of the first BMW voice assistant (BMW Intelli-
gent Personal Assistant) in 2018, voice interaction has become
an increasingly important part of the BMW iDrive display and op-
erating concept. The next generation of the voice assistant will
be based on Amazon's Alexa technology, thus enabling an even
more natural dialogue between driver and vehicle.
In collaboration with Amazon Web Services (AWS), the
BMW Group is developing innovative cloud technologies for pro-
cessing vehicle data. The two companies are also working to-
gether to develop commercial standard cloud solutions for the
secure handling of vehicle data. The agreement is a continuation
of the partnership in the field of vehicle data that began back in
2015. As in all previous collaborations with AWS, the
BMW Group retains full and exclusive control over the data and
complies with the data protection regulations applicable in its re-
spective markets.
The HERE mapping service was acquired by BMW, Mercedes-
Benz and Audi in 2015. Continental, Intel, Mitsubishi, Nippon
Telegraph and Telephone, and Pioneer are also current share-
holders. The participation in HERE ensures long-term access to
scalable, high-resolution maps. The development of a central-
ised, more efficient geo-database, from which all HERE products
(including the currently used SD navigation map and HD maps)
can be fed and continuously updated, was completed in 2023.
Since 2022, the BMW Group and Qualcomm Technologies have
been working together to develop solutions for the next genera-
tion of automated driving. The three companies aim to develop
technologies ranging from New Car Assessment Program
(NCAP) solutions and advanced Level 2 driving assistance sys-
tems to the Level 3 functionalities of highly automated driving.
The joint development of software functions is based on BMW's
current software toolkit for automated driving. Within the terms
of the cooperation, ultimately some 1,300 specialists will work
together at various locations worldwide, including sites in Ger-
many, the USA, Sweden, China, Romania and the BMW Test
Centre in Sokolov in the Czech Republic.
To ensure its long-term success, the BMW Group enters into tar-
geted cooperations and partnerships with companies from vari-
ous industries Several of the Group's largest collaborations and
investments are listed below:
Worldwide cooperations and partnerships
Remuneration Report
Engagement on digital platforms enables experience-
oriented interaction with young target groups (Gen Z) within
their digital ecosystems with the aim of enhancing brand
image and developing long-term customer loyalty. In
dedicated virtual worlds such as the BMW Motorrad
MetaRide, innovative products can be experienced in a new
way and supported throughout the entire customer journey.
3 SAE (Society of Automotive Engineers) levels categorise the degree of automation from manual
For example, as part of the iFactory, planners can use vir-
tual reality to virtually assess buildings, systems, logistics
and the assembly of new production areas and test pro-
cesses in 3D, long before construction is scheduled to
begin.
to autonomous driving in five stages.
2 The use of OS 8.5 and OS 9 depends on the vehicle class and the production period.
1 The availability and contents of remote software upgrades depends on the country, model, equip-
ment and software version installed.
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To ensure the safety of automated systems, the BMW Group is
promoting the development of industry-wide ISO standards for
partially, highly and fully automated driving functions. The work
on classifying the standardisation of SAE³ Level 3 and Level 4
functions has resulted in an ISO technical report that is due to be
published as an ISO technical specification in 2024. Further-
more, in 2023 an ISO PAS standard was published that supports
the introduction of Level 2 systems with innovative driver inte-
gration. The documents define uniform technical standards for
safe assisted and automated driving.]]
Digital connectivity and automation
Automated functions and digitally connected vehicles can help
cut emissions, reduce the risk of accidents and ease traffic con-
gestion. That's why the BMW Group is consistently driving this
issue forward - with a sharp focus on customer convenience and
safety.
More than twenty years ago, with the founding of BMW Car IT
the BMW Group began developing its own software Since then,
the company has continued to expand its teams of developers to
form a global network. Beginning with the Ulm site in southern
Germany, its software expertise has been bolstered by the joint
ventures Critical TechWorks in Portugal and BA TechWorks in
China.
Software expertise at the BMW Group
The latest MINI vehicles in the "New MINI Family" also incorpo-
rate these technology modules and, with the MINI Operating
System 9, offer their customers an unmistakable digital user ex-
perience typical for the MINI brand. The iconic, round OLED dis-
play takes centre stage in this concept.
With the further development of the BMW iDrive in 2023 and the
"QuickSelect" fast access concept, an improved menu structure
based on devices from the consumer electronics sector is being
added to the system. With the right information in the right place,
the new BMW iDrive provides users with a concentrated, confi-
dent driving experience. The latest BMW iDrive generation is
based on the BMW Operating System 8.5 and BMW Operating
System 9.2
47 Consumption and Carbon Disclosures.
The latest generation of BMW Group vehicles offers customers a
maximum of interaction, infotainment and connectivity. State-of-
the-art on- and off-board technologies such as 5G connectivity
and cloud services make the latest BMW vehicles an integral part
of their users' digital ecosystems. The comprehensive connectiv-
ity enables a whole host of digital services and functions, from
smart and learning navigation to in-car gaming and video
streaming. The vehicle is thus becoming the "next living space"
for its users.
BMW ConnectedDrive upgrades also allow additional functions
to be either bought or simply booked for a specific period after
the vehicle has been initially purchased.
Digitalisation stands for innovation and customer focus
Digitalisation is a key element in keeping the vehicle constantly
up to date for customers long after they have taken delivery of
their new automobile. Since the launch of Operating System 7 in
2018, remote software upgrades' have been available for BMW
vehicles. Apart from these software upgrades, the BMW Group
also releases new functions and features on an ongoing basis.
At the end of 2023, over six million BMW vehicles worldwide
were already fully updatable. In other words, these vehicles can
be updated in every respect, including infotainment, the drive
system, driver assistance, convenience and safety. The BMW
Group can currently update over 30 derivatives of all its drive var-
iants remotely over the air.
The BMW VISION Neue Klasse represents the entire range of
technological innovations with which the BMW Group is under-
lining its future entrepreneurial viability. It stands for the dawn of
a new era of individual mobility: electric, digital and circular.
The BMW VISION Neue Klasse is also characterised by the in-
creased use of secondary raw materials, resource-friendly pro-
duction methods and an electric drive system featuring sixth-
generation BMW eDrive technology.
[[In the interior, the next generation of the BMW iDrive provides a
unique digital user experience: analogue controls are reduced to
a minimum in the BMW VISION Neue Klasse. The driver interacts
with the vehicle via the BMW Panoramic Vision, the central dis-
play unit and multifunctional buttons on the steering wheel. The
user experience is complemented by the tried-and-tested voice
control system via the BMW Intelligent Personal Assistant. The
next generation of the BMW iDrive thus offers a modern interpre-
tation of the brand's typical driver-oriented focus. Similar to the
BMW iDrive controller that was formerly on the centre console or
the BMW head-up display, the brand is setting new standards
with the BMW Panoramic Vision, which will be available for the
first time in the NEUE KLASSE. It projects information at a height
ideally aligned with the driver's line of sight and, for the first time,
across the entire width of the windscreen. This innovation will
complement the enhanced BMW head-up display in the NEUE
KLASSE series models.
← = Q
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Pollutants management
The vehicle as a digital experience
92
92
BMW Group Report 2023
Corporate: The virtualisation of internal processes, methods
and products with real-time collaboration, regardless of
location
For the BMW Group, the virtualisation of products, processes and
interaction spaces are a catalyst for digitalisation, reflecting the
fact that the combination of rapidly developing technologies such
as Web 3.0, artificial intelligence, X-reality (virtual reality, aug-
mented reality, mixed reality) and spatial computing generates
benefits across all areas of the value chain. Our holistic activities
comprise the following three pillars and underline the
BMW Group's commitment to innovation:
[[Virtualisation
← = Q
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93
* Munich test site - pilot test of automated driving in urban traffic.
The BMW Group is conducting its own research and develop-
ment work with the aim of integrating electrified vehicles in the
power grid. The focus is on technologies such as smart charging,
a key component of the 7 BMW Charge Forward service, which en-
ables customers to synchronise their charging behaviour with the
current grid load and the use of renewable energy. The technol-
ogy has been available to all drivers of electrified vehicles in the
USA since November 2023. Another cross-sectoral project
known as Bidirectional Charging Management (BCM) was successfully
completed at the end of 2022. Over a period of three years,
BMW Group, together with grid operators and universities, tested
how electric vehicles can become mobile energy storage units
and thus part of the power grid system. The results of the project
underline the great potential of bidirectional charging and were
incorporated in an initial customer offering, Connected Home
Charging, in 2023. The project is a strategic cooperation with the
grid operator E.ON, which aims to establish a Europe-wide eco-
system for smart charging at home. The innovation enables cus-
tomers to connect their electrified BMW or MINI vehicle with their
smart home and the power grid. The service has been available
in an initial expansion stage in several European countries since
late 2023. In the coming years, it is to be expanded and ex-
tended to include additional scope with the ultimate aim of ena-
bling bidirectional charging as well.]]
the
Electrified vehicles as part of the power grid
New generation of battery cells
High-performance, innovative and sustainably produced battery
cells are the key to success for individual electric mobility. With its
NEUE KLASSE models, as of 2025 the BMW Group will be using
newly developed, round battery cells for the first time, which are
optimally coordinated to suit the new architecture. The sixth gen-
eration of our lithium-ion cells represents a giant technological
leap forward compared with the previous generation, effectively
increasing energy density by more than 20%, charging speed by
up to 30% and range by around 30%. The carbon emissions
generated by cell production will be reduced by up to 60%.
When developing drive system technologies, the BMW Group
considers the needs of its customers worldwide. For this reason
we are constantly developing existing drivetrain technologies in
the interests of efficiency, decarbonisation and resource conser-
vation. At the same time, we continue to research new drivetrain
technologies with the ultimate aim of developing them for series
production.
Drivetrain technologies of the future
Following recent approval by the Federal Motor Transport Au-
thority, the new BMW 7 Series will be equipped with Level 3 func-
tions for the first time. The option will be available as of March
2024, making the BMW Group one of the leading automobile
manufacturers in the field of highly automated driving.
The new BMW 5 Series sets new standards in terms of digital
connectivity and automation. Among other things, the vehicle
can be optionally equipped with a highway assistant, which per-
manently takes over distance control and steering tasks and, for
the first time, actively changes lanes when confirmed by the
driver's gaze.
[[During the year under report, the BMW Group opened a new test
site, the Future Mobility Development Centre in Sokolov, Czech
Republic, where we are currently testing automated driving and
parking functions and even fully automated driving (Level 4) on
an area of 600 hectares. With the help of virtual simulations and
real-life testing, all driving situations are covered, whether in the
city, in the country, on the highway or when parking. We are thus
creating the basis for meeting our customers' high safety stand-
ards when it comes to automated driving. We also operate re-
search facilities in Munich, where we were involved in the
7 TEMPUS* research project in collaboration with the city authori-
ties. Between 2021 and 2023, we gathered practical experience
on a wide range of use cases relating to automated driving func-
tions and innovative mobility services in urban areas. The BMW
Group also has research facilities located in China and the USA,
enabling it to integrate its two largest markets with regard to
road- and traffic law-related issues right from the outset.
Take your hands off the steering wheel and temporarily turn your at-
tention away from the traffic situation – this is highly automated driving
at Level 3 and can be experienced in new BMW 7 Series models as of
March 2024. BMW Personal Pilot L3 is the name of the new function
that relieves customers of the task of driving in defined traffic situa-
tions and regulates speed, distance and lane guidance for them. The
innovative system enables drivers to engage in secondary activities
(such as writing messages or watching video streaming) on highways
with structurally separated lanes and at speeds of up to 60 km/h. ]]
In the new BMW 5 Series Sedan, customers can use the BMW Highway
Assistant and Active Lane Change feature for the first time. The BMW
Highway Assistant enables drivers to take their hands off the steering
wheel and place them in a comfortable position when driving for pro-
longed distances. The function is also supplemented by a new feature:
the Active Lane Change assistant with driver's gaze confirmation,
which enables the vehicle to change lanes automatically without the
driver having to touch the steering wheel. All the driver needs to do is
glance at the wing mirrors to confirm the lane change. The prerequi-
sites for this technology include high-precision sensors, a powerful
computing platform and connection to the BMW Cloud.
[[BMW Highway Assistant and Active Lane Change
← = Q
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Commercial: Interaction with both new and existing tech-
savvy target groups in virtual spaces and virtual worlds.
To the extent possible, the BMW Group excludes the use of prob-
lematic substances right from the vehicle design stage and sets
out corresponding stipulations for its suppliers. Guidance is pro-
vided in the form of the Global Automotive Declarable Substance List
(GADSL). At the same time, we are working to reduce pollutant
emissions in the interior of our vehicles to an absolute minimum.
All BMW, MINI and Rolls-Royce brand vehicles are equipped as
standard with interior air filters that prevent exterior pollutants
and particles such as dust or pollen from entering the vehicle.
Since 2020, the BMW Group has been using air filters equipped
with nanofibre technology that are specially designed to prevent
certain microbial particles and allergens as well as ultra-fine par-
ticulate matter from entering the vehicle.]]
All type-approved BMW Group internal combustion engine vehi-
cles currently on sale in the EU comply with the latest Euro 6d or
Euro 6e emissions standards. The same applies to non-EU
countries as for example Switzerland, Norway, the UK and Ice-
land, where comparable regulations apply. At the same time, the
BMW Group is already preparing for the introduction of the up-
coming Euro 7 emissions standard, which is currently undergo-
ing the legislative process and will include for the first time limits
for brake particle emissions and tyre abrasion amongst other
things.
96
their emissions
The BMW Group pays close attention to carbon emissions legis-
lation in its various markets. Current developments in the year
under report included the adoption of fleet-wide carbon emis-
sions limits in the EU for the years 2030 and 2035 and the pub-
lication of draft legislation for GHG fleet-wide consumption tar-
gets in the USA for the period from 2027 to 2032. The statutory
framework for China's Zero Emission Vehicle (ZEV) mandate
was amended in the year under review. The amendment covers
the years 2024 to 2025 and increased the quota set for the
number of zero emissions vehicles. The BMW Group supports
the development of harmonised regulations - both nationally
and internationally. Comparable specifications in large markets
create reliable and predictable framework conditions and make
a vital contribution to combating climate change effectively. We
provide information on the BMW Group's most important climate
policy positions and activities in our Climate Commitment Report.
6
Carbon emissions generated in the use phase are not only an
important metric in our life cycle assessment, but also subject to
numerous regulatory requirements. Average fleet carbon emis-
sions within the EU¹, taking into account regulatory require-
ments² and in accordance with WLTP³, were 102.1 g CO2/km².
We have thus further reduced the carbon emissions generated
by our new vehicles within the EU5 fleet by 2.9 g year on year
(2022: 105.0 g CO2/km 4). In the year under report, we remained
significantly below the legal limit applicable to the BMW Group
(128.6 g CO2/km²) by 26.5 g CO2/km, thus continuing the trend
seen in recent decades, driven by the electrification of the vehicle
fleet and the fleet-wide use of innovative Efficient Dynamics
technologies.
As in previous years, statutory carbon emissions limits
during the use phase are met again
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BMW Group Report 2023
Regulatory GHG-based fleet consumption targets were met in
the US market during the year under report. In the USA, fleet [[ Making conventional drivetrains more efficient and lowering
GHG emissions 7 averaged 116.5 g CO2/km for model year (MY)
2023 in the Passenger Cars category (MY 2022: 137.3 g
CO2/km) and 137.6 g CO2/km (MY 2022: 154.9 g CO2/km) in
the Light Trucks category. Volume-weighted fleet-wide carbon
emissions came to 126.5 g CO2/km on average in the USA (MY
2022: 145.9 g CO2/km). The significant year on year reduction
in fleet-wide carbon emissions in the US market was driven by
an upturn in all-electric vehicle sales in MY 2023. In China, aver-
age fleet carbon emissions were 146.4 g CO2/km in accord-
ance with the WLTC test cycle (2022: 150.6 g CO2/km WLTC).
Thus, we also met the regulatory CAFC fleet-wide consumption
requirements applicable during the year under report. 10
99
]]
4 The methodology used to calculate carbon emissions changed in the 2023 reporting year for the
items "Purchased Goods and Services" and "Logistics - material supply of the plants and distri-
bution of vehicles". The prior-year figure has been retrospectively adjusted. Figure before change
in methodology: 117.4 million t CO2.
2 In-house generation, direct purchase or Energy Attributes Certificates (e.g. guarantees of origin).
37 Consumption and Carbon Disclosures.
1 Not including carbon emissions generated through waste disposal.
in the technology clusters
for all scopes
to meet targets and implementation
Development of measures
Development and Production depart-
ments
(t CO₂/vehicle) of the Purchasing,
Targets for product projects and
anchoring in the periodic targets
Steering
CO₂
M
99
Target guidance and target control
through ongoing evaluation of
contribution to the measures
(avoidance of carbon emissions)
The BMW Group's global fleet-wide carbon emissions¹¹ aver-
aged 185.4 g CO2/km¹² (2022: 193.7 g CO2/km) in the year un-
der report. These figures correspond to a decrease of 15.1%
compared to the base year 2019 (2019: 218.5 g CO2/km). As in
previous years, when calculating the emissions figure, the
BMW Group takes into account average fleet-wide carbon emis-
sions (including upstream emissions for fuel and electric charg-
ing) in the EU, the USA and China and standardises them in ac-
cordance with the WLTP. With a share of more than 80% of
BMW Group deliveries, these three core markets and regions
form a reliable basis for calculating global carbon fleet emissions.
1 EU-27 countries including Norway and Iceland.
** Consumption and Carbon Disclosures.
1 The other non-EU countries to which this statement applies are Albania, Andorra, Bosnia and
Herzegovina, Liechtenstein, Macau, North Macedonia, Montenegro and Turkey.
27 Consumption and Carbon Disclosures.
As of 2025, the Group will take its core BMW brand into a new,
consistently all-electric era with the NEUE KLASSE. By the early
2030s, the MINI and Rolls-Royce brands will have an exclusively
all-electric product portfolio. The strategy will help to achieve a
share of more than 50% of the BMW Group's global sales with
all-electric vehicles - depending on certain framework conditions
such as the development of a comprehensive charging infra-
structure by 2030. The BMW Group aims to have delivered more
than 10 million all-electric vehicles to customers by 2030.
With our growing range of all-electric models, we are serving a
rapidly increasing level of demand. Deliveries of all-electric cars
increased significantly again year on year to 375,716 units
(2022: 215,752 units/+74.1%). The share of all-electric vehi-
cles to total deliveries was 14.7%, also significantly higher than
in the previous year (2022: 9.0%/+63.3%). Since the 2023 fi-
nancial year, this key figure has replaced the proportion of elec-
trified vehicles, including PHEV vehicles, which was reported as
a key performance indicator up to 2022.
Demand for all-electric vehicles rising
We already provide our customers with an extensive range of all-
electric, battery-powered vehicles (BEV). In 2023, another high-
volume model, the all-electric BMW i52 business sedan, went on
sale. MINI presented the new all-electric MINI Cooper SE² to the
public during the year under report. The Rolls-Royce brand
launched its first all-electric model, the Rolls-Royce Spectre², in
2023. The BMW Group therefore has at least one all-electric
model in its range for all three premium brands and in all seg-
ments. At the end of the reporting period, a total of 20 all-electric
models in ten different series were available to order from the
BMW Group.
[[The BMW Group sees the electrification of its model range as a
key component of its product strategy to reduce fleet emissions
and thus achieve its ambitious strategic decarbonisation targets.]]
ELECTROMOBILITY
The level of nitrogen oxides is a crucial factor for air quality in
cities. For this reason, since mid-2018 the BMW Group has been
using a highly effective combination of nitrogen oxide storage
catalytic converters (NSCs) and selective catalytic reduction
(SCR) systems that include urea injection (AdBlue) in all BMW
vehicles as well as in the larger diesel-powered MINI models.
The efficiency of exhaust gas aftertreatment has been further in-
creased by the use of an improved oxidation catalyst in combi-
nation with a two-stage SCR system. The new technology has
been available since 2020 with the revised generation of six-cyl-
inder diesel engines and is currently being rolled out to other
models. There have already been signs of a reduction in NOx
pollution in German cities over the last few years. Apart from var-
ious measures taken to reduce pollutants, the ongoing renewal
of the vehicle fleets of all automobile manufacturers has also
contributed to the improvement. GRI Index: 305-71]
[[ Further reduction in pollutant emissions
← = Q
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Vehicles powered by modern, efficient internal combustion en-
gines continue to play a major role for our customers. This fact is
particularly true in regions where unrestricted access to charging
infrastructure is not yet available nationwide. For this reason, the
BMW Group will continue to work on improving the already high
efficiency of its conventional drivetrains going forward through
the use of innovative technologies as part of the Efficient Dynam-
ics technology package. A key component in this respect is the
broader use of 48-volt technology. 48-volt recuperation systems
use the energy recovered when braking to supply the vehicle's
electrical system and generate additional propulsion, thereby re-
ducing fuel consumption and carbon emissions. In Europe, in ad-
dition to our all-electric models and plug-in hybrids, we offer nu-
merous new model series that feature a 48-volt recuperation
system. Since 2022, our modular engines have been fitted with
the second, even more efficient generation of 48-volt technology.
The further development of energy management in BMW Group
vehicles, alongside other measures such as switching to highly
efficient tyres, is designed to ensure additional efficiency and op-
timised consumption figures.]]
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BMW Group Report 2023
100
9 Average volume-weighted fleet-wide emissions, including regulatory allowable crediting factors
(off-cycle technologies, NEV multipliers, phase-in) in accordance with WLTC (Worldwide Harmo-
nised Test Cycle under China-specific test boundary conditions). Preliminary internal calculation.
10 On the Chinese market, manufacturers receive positive credits for undercutting regulatory CAFC
(Corporate Average Fuel Consumption) fleet limits. Failure to remain below the regulatory limits
results in negative credits. In addition, manufacturers receive positive credits for meeting or un-
dercutting the ZEV quota specifications (Zero Emissions Vehicle quota). At the end of a calendar
year, a positive CAFC/ZEV credit balance must be achieved in order to meet regulatory require-
ments. As CAFC/ZEV credits are valid for five years on the Chinese market, a short-term failure to
meet fleet limit targets in one year can be compensated by undercutting them in a previous year.
Moreover, it is possible to purchase credits from other manufacturers. In 2023, the BMW Group
drew on existing credits from previous years. However, it did not purchase any external credits
from other manufacturers. The requirements were therefore met without exception by using self-
generated and existing credits. A settlement between CAFC and ZEV remains in place.
11 For a definition, see Glossary.
8 Average volume-weighted fleet-wide emissions, including regulatory allowable crediting factors
(EV multipliers, credits for advanced technologies) in accordance with USC (United States Com-
bined). Preliminary internal calculation.
7 Converted from g/mi to g/km for comparison purposes.
6 In the US market, manufacturers receive positive credits for undercutting regulatory GHG (Green-
house Gas) fleet limits. Failure to remain below the regulatory limits results in negative credits. At
the end of a model year, a positive GHG credit balance must be achieved in order to meet regula-
tory requirements. As GHG credits are valid for five years on the US market, a short-term failure to
meet fleet-wide limit targets in one year can be compensated by undercutting them in a previous
year. Moreover, it is possible to purchase credits from other manufacturers. In 2023, the BMW
Group drew on existing credits from previous years. However, it did not purchase any external
credits from other manufacturers. The requirements were therefore met without exception by us-
ing self-generated and existing credits.
Glossary.
5 For a definition, see
"This is a preliminary internal calculation with a potential variation of +/- 0.5 g CO2/km, as official
registration figures from the authorities are not available for all EU states. Figures officially pub-
lished by the EU Commission are not expected to be available until November of the following
year. Prior-year figures have not been retrospectively adjusted.
3 Average carbon emissions fleet-wide within the EU (including Norway and Iceland) are required
to be reported in accordance with the new Worldwide Harmonised Light Vehicles Test Procedure
(WLTP) type test cycle as of 2021. Since 2021, this metric has been used by the EU Commission
as the basis for calculating carbon fleet emissions.
2 Including an allowance for eco-innovations (with minor significance).
Group Financial Statements
N
12 Takes into account an additional 10 % in line with SBTi to cover possible differences between
WLTP figures and real driving emissions. The upstream supply chain emissions generated by var-
ious energy sources (fossil fuels and electricity) according to the well-to-wheel approach are also
included. The assumed average mileage is 200,000 km (in accordance with VDA 900-100). For
definition and further information, see Glossary.
(Scope 1, 2, 3) and SBTi commitment
[[The BMW Group is fully committed to the climate protection tar-
gets set out in the Paris Agreement. We are taking ambitious
steps to contribute to progressive decarbonisation, and have
therefore developed a carbon reduction strategy based on a ho-
listic approach.
CARBON EMISSIONS
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97
7 CarData provides BMW and MINI customers with transparency
and sovereignty over the transfer of data to authorised third par-
ties. With the introduction of the service in Germany and Europe
in 2017 and the USA in 2020, the BMW Group is fully imple-
menting the current requirements of the EU General Data Pro-
tection Regulation (EU GDPR) and the California Consumer Pri-
vacy Act (CCPA). The BMW Group deploys state-of-the-art tech-
nologies to prevent vehicle theft. The new BMW 5 Series and 7
Series also feature the latest ultrawide-band technology, which
further raises the level of vehicle safety.]]
The BMW Group's responsibility for its products includes the se-
cure transmission of vehicle data to third parties. For example,
Group vehicles are not directly connected to the Internet, but
communicate directly and exclusively with the BMW Connect-
edDrive back-end facilities via a secure connection within a vir-
tual private network. The strategy enables the BMW Group to
minimise the risk of unauthorised third parties accessing either
the vehicle itself or any of its sensitive data. The access point to
the Internet is controlled via a gateway. We currently see this ex-
tended vehicle approach in accordance with ISO 20078 as the
best solution for offering an outstanding level of data security and
data protection and meeting the statutory cybersecurity require-
ments (e.g. UN R155).
Secure connectivity
For the BMW Group, holistic means decarbonising the emissions
generated by its vehicles over their entire life cycle. Although the
gradual electrification of the Group's fleet is contributing towards
decarbonisation during the use phase, emissions are also in-
creasing at the same time, particularly in the supply chain. The
main reason for this is the carbon-intensive production of com-
ponents such as high-voltage batteries. Reducing carbon emis-
sions within the supply chain is therefore one of our main selec-
tion criteria when awarding contracts to suppliers. With this strat-
egy, the BMW Group is making a vital contribution to decarbon-
ising the entire life cycle of its products, including energy-inten-
sive raw materials such as steel, light metals and plastics. The
approach also helps reduce carbon emissions across various
sectors. Carbon emissions in the supply chain
The BMW Group collaborates closely with the relevant data pro-
tection supervisory authorities particularly regarding funda-
mental data protection issues such as those arising from the in-
creasing connectivity of vehicles. 7 GRI Index: 3-3,418-1
In order to ensure the protection of customer data, despite the
challenge posed by the growing number of digitalised services,
we are constantly developing our data management systems
and respond promptly to any information received regarding
data protection risks. If customers have any queries regarding
the processing of their personal data, they can contact the Cus-
tomer Interaction Centre or the Data Protection Officer in their re-
spective market. With the aim of maintaining our high level of
data protection, we regularly check all applications that process
customer data to ensure full implementation of all current and
appropriate IT security measures. Teams of experts also search
specifically for any vulnerabilities in existing applications. We also
translate any new findings into binding, Group-wide standards.
Right from the early stages of developing its functions and ser-
vices, the BMW Group sets out strict requirements for data pro-
tection due to the growing IT risks. Any personal data required in
the course of contact with our customers are only collected, pro-
cessed or used to the extent legally permitted and with the active
consent of the data subject.
With the BMW M Driving Experience, the BMW Group offers driver
and rider safety training for BMW, MINI and BMW Motorrad
brand vehicles in 25 countries. Participants learn how to handle
their vehicles in a safe manner and are sensitised to recognise
dangerous situations in road traffic. In 2023, more than 110,000
customers worldwide took part in these training courses.
[[Sensitising and empowering customers to drive safely
The BMW Group provides its customers with a broad range of
information regarding the proper use of its products and services.
Information on safety, the correct operation of vehicles, and
health protection is available in both printed and digital form. The
information is supplemented by detailed notes and background
information on the services, accessories and components per-
taining to each individual vehicle.
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Products
To Our Stakeholders
Monitoring & Reporting -
Governance
(Group reporting,
publications)
BMW Group Report 2023
96
-
The BMW Group's decarbonisation targets are part of its inte-
grated corporate target system and validated by the Science
Based Targets initiative (SBTi). They are being implemented
under the responsibility of the Board of Management in the BMW
Group's various departments and thus throughout the organisa-
tion Performance Indicators and Performance Management. Specific de-
carbonisation targets are derived from the overarching objectives
for each vehicle project, with the aim of achieving substantial im-
provements from one vehicle generation to the next. The respon-
sibility for achieving these goals lies with specialist units in the
management areas of Development, Purchasing, Supplier Net-
work, Production and Logistics. Internal control and reporting
systems take into account the various stages in the value chain,
comprising the supply chain, development, production and the
use phase. Among other factors, our decarbonisation measures
are based on emissions specifications at material and compo-
nent level. Target management and the monitoring of target
Customer data protection
We explain how the BMW Group manages the topic of sustaina-
bility across the organisation in the chapter 7 The BMW Group
Strategy. We also report on the management of climate-related
opportunities and risks in the chapters Outlook and 7 Risks and
Opportunities.
Consistency with the objectives of the
Paris Agreement
BMW Group
Strategy
achievement are performed at vehicle level and subsequently
aggregated for reporting at Group level.
[[Carbon steering
Absolute carbon emissions rose by 3.0% to around 134.7 mil-
lion t CO2 during the year under report (2022: around 130.7 mil-
lion t CO₂), driven mainly by increased vehicle volumes and a rise
in emissions in the supply chain due to the increasing electrifica-
tion of the BMW Group's product portfolio. On the other hand,
electrification had a proportionate positive effect in the use
phase. Comprehensive information on the BMW Group's carbon
footprint is provided in the chapter Further GRI Information.]]
[[We reviewed our carbon targets in 2023, as previously an-
nounced. The aim of this process was to set absolute targets for
reducing carbon emissions by 2030. The targets are expected to
be revalidated in the course of 2024. At the same time, we also
improved the quality of carbon-emissions-related data in our
supply chain (Scope 3 upstream) in 2023. In addition, greater
transparency was achieved with the first-time publication of a
Vehicle Footprint for the new BMW i5³, providing stakeholders
with useful information, including the greenhouse gas potential
of the vehicle over its entire life cycle. New level of transparency
achieved for vehicle data
Across the entire the life cycle of a vehicle, the above-mentioned
individual targets will result in an average carbon reduction of at
least 40% by 2030 compared to 2019. In order to achieve this
target, we are committed to promoting decarbonisation
measures such as the use of green electricity² in our own opera-
tions and those of our suppliers, without compensation
measures being taken into account. The combination of a signif-
icant increase in the sale of electrified vehicles, efficiency im-
provements in all drivetrain technologies and effective measures
to reduce carbon emissions in the supply chain are expected to
help achieve the targets that have been set.
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Combined Management Report Group Financial Statements
To Our Stakeholders
Products
88
BMW Group Report 2023
Decarbonisation by an average of 80% per vehicle
produced at our own plants and sites (Scope 1 and 2)³.
These targets can be achieved, for example, by reducing our
energy requirements and simultaneously increasing the use
of renewable energy." Carbon emissions of BMW Group locations
Decarbonisation in the use phase of the vehicle (Scope 3
downstream) by an average of more than 50% per
kilometre driven. To accomplish this target, we are driving
the electrification of the entire product portfolio forward and
using new, efficiency-enhancing technologies. Efficient
Dynamics technologies
1 In this context the entire value chain is to be understood as Scope 1 and 2 as well as the Scope 3
categories applicable to the BMW Group (categories 1, 4 and 11) in accordance with the Green-
house Gas Protocol.
2 Scope 3 emissions (upstream) in the supply chain and transport logistics, as well as well-to-tank
emissions from the supply of fuel in the use phase, take into account not only carbon dioxide but
also other climate-impacting greenhouse gases such as methane and are stated in carbon equiv-
alents (CO₂e). The measurement of Scope 1 and Scope 2 emissions, as well as the additional
Scope 3 emissions, does not include climate-impacting gases other than carbon dioxide.
7 Glossary.
Decarbonisation by an average of more than 20% per
vehicle produced in the supply chain (Scope 3 upstream³).
Thus we also have a scientifically approved and confirmed
target for reducing carbon emissions in the supply chain.
The use of green electricity as a criterion when awarding
contracts to suppliers, a continuously increasing secondary
raw materials quota as well as innovations in the production
of primary raw materials contribute in particular to achieving
the target. Carbon emissions in the supply chain
"In-house generation, direct purchase or Energy Attributes Certificates (e.g. guarantees of origin).
5 Takes into account an additional 10% in line with SBTI to cover possible differences between
WLTP figures and real driving emissions. The upstream supply chain emissions generated by var-
ious energy sources (fossil fuels and electricity) according to the well-to-wheel approach are also
included. The assumed average mileage is 200,000 km (in accordance with VDA 900-100). For
definition and further information, see Glossary
We have set ourselves the following decarbonisation targets² to
be achieved by 2030 (base year 2019 for each scope):
3 In addition to production emissions, Scope 1 and 2 carbon emissions also include those gener-
ated at non-manufacturing sites.
Reducing carbon emissions across the entire value chain
The BMW Group aims to achieve Net zero carbon emissions
across the entire value chain¹ by no later than 2050. This objec-
tive is based on decarbonisation targets up to 2030 that were
validated in 2021 by the SBTI and are in line with the climate
targets set out in the Paris Agreement to limit global warming.
Based on this commitment, we are part of the SBTI and the in-
ternational Race to Zero Campaign led by the United Nations.]]
7 This figure has been rounded. The target validated under SBTI is 22%.
8 Categories included under Scope 3 upstream according to the Greenhouse Gas Protocol: Cate-
gory 1: Purchased goods and services; Category 4: Transportation and distribution. Further GRI
Information.
98
6 Categories included under Scope 3 downstream according to the Greenhouse Gas Protocol: Cat-
egory 11: Use phase. Further GRI Information.
107 BMW Group Report 2023
To Our Stakeholders Combined Management Report
Production and Supplier Network
2 Contract manufacturing.
17 Consumption and Carbon Disclosures.
11.7
2,382,305
2,661,922
- 41.4
18,612
20,808
45,184
26,461
21.3
Group Financial Statements Responsibility Statement and Auditor's Report
2,871
99,126
120,235
11.8
Remuneration Report
Investments in resource-friendly technologies
← = Q
Remuneration Report
- 1.0
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Production and Supplier Network
To Our Stakeholders
BMW Group Report 2023
108
The BMW Group is also investing in research and innovation pro-
jects such as Circular Republic to implement closed material
cycles for certain product groups. The joint initiative of the organ-
isation "UnternehmerTUM" and the BMW Group focuses on the
transfer of knowledge between the world of science and compa-
nies to promote the circular economy.]]
Via the BMW i Ventures venture capital fund, the BMW Group in-
vests in fast-growing technology start-ups. One focus of the in-
vestment activity is on businesses that can make a strong con-
tribution to achieving carbon neutrality and conserving re-
sources. One example is the Swiss company Bcomp, which the
BMW Group has held a share in since 2022. Bcomp uses flax to
create structural components made from natural fibre compo-
sites as an alternative to plastic composites. By increasing our
stake in the US start-up Boston Metal in April 2023, we are scal-
ing up our investment in innovative processes for the manufac-
ture of carbon-reduced steel. In April 2023, BMW i Ventures also
acquired a stake in Cyclic Materials, a company developing a re-
cycling technology that extracts rare earths and base metals
from end-of-life products.
The Car2 Car project focuses on the recycling of aluminium, steel, glass,
copper and plastic. Together with representatives of the recycling in-
dustry, raw materials processors and the scientific community, the
BMW Group is leading a project to improve the quality of secondary
raw materials obtained from the recycling of end-of-life vehicles. Inno-
vative dismantling and automated sorting processes will enable reus-
able materials to be extracted to a far greater extent than previously.
As part of the funding project, the BMW Group is providing 433 end-
of-life vehicles. In order to cover a representative range, various mod-
els out of the Company's own inventories are being used – from MINI
to Rolls-Royce - with combustion engines, plug-in hybrid systems and
all-electric drives. ]]
[[ From scrap to raw material: the Car2Car funding
project
At the same time, we promote the recovery of end-of-life vehi-
cles, components and materials in order to retain them in various
material cycles as a source of secondary raw material. Together
with its national sales companies and importers, the BMW Group
has already organised the return of end-of-life vehicles in 32
countries and offers environmentally friendly recycling at more
than 2,800 points of return. GRI Index: 301-1, 301-3, 7 SASB Index
Compared to primary raw materials, the use of secondary mate-
rials also helps reduce carbon emissions - by up to 80% for al-
uminium and up to 70% for steel to name two examples. At the
same time, potential risks associated with the extraction of pri-
mary materials, such as high levels of energy consumption and
therefore carbon emissions, long transportation routes, environ-
mental damage and risks arising due to a lack of social standards
are being mitigated. As a result, the increased use of secondary
materials also promotes resilience throughout the value chain.
Purchasing and Supplier Network
The BMW i Vision Circular vehicle is emblematic of our ambitions
and made entirely from recycled or renewable raw materials. The
NEUE KLASSE is also consistent with this vision in that the com-
ponents cobalt, lithium and nickel used to produce battery cells
will in future contain a certain percentage of secondary materials,
thus reducing the volume of primary materials needed and miti-
gating the associated negative environmental impacts. The
NEUE KLASSE will also contain a higher proportion of secondary
materials in other material groups such as steel and aluminium.
materials used bythe BMW Group must meet the same high
standards of quality, safety and reliability. GRI Index: 3-37 Average
distribution of materials in BMW Group vehicles
The BMW Group already uses a certain extent, depending on the
vehicle, of recycled and reused materials to manufacture its ve-
hicles. In line with the "Secondary First" approach, we aim to in-
crease the use of secondary materials going forward, taking both
technical feasibility and market availability into account. Within
the framework of selected product, material and supplier require-
ments, we have therefore decided to give preference to second-
ary materials in our future vehicles. All secondary and primary
The BMW Group pursues the strategic aim of reducing the pro-
portion of primary materials in its value chain. An important start-
ing point in this endeavour is to close cycles for certain materials
and components. With this objective in mind, the BMW Group re-
turns selected production residues to the supplier, enabling
those materials to be recovered and reused in a new production
process. At the BMW Group, the circular economy principle ("De-
sign for Circularity") is already being implemented as an opera-
tional concept in the design of the NEUE KLASSE by the corpo-
rate function "Total Vehicle Development" and systematically
applied in the development of new vehicle models.
Closing material loops
[[The significance of the circular economy concept continues to
grow against a backdrop of increasingly scarce resources, up-
ward price trends on raw materials markets, geopolitical tensions
and the need to meet sustainability targets. For these reasons,
the BMW Group is taking further steps to increase the proportion
of recycled materials in its products and thus reduce its depend-
ence on primary raw materials. The BMW Group is also continu-
ally enhancing its local supply chains in line with the "local for
local" principle. At all levels of in-house production, we remain
committed to consistently conserving resources, continuously
improving energy efficiency and further reducing carbon emis-
sions.
CIRCULAR ECONOMY,
RESOURCE EFFICIENCY AND
RENEWABLE ENERGY
Other Information
6,239
3.3
29.2
65.9
143,654
238,301
282,661
291,907
- 1.3
10.1
279,645
307,972
217,480
416,301
6.5
395,021
420,586
Change
in %
2022
2023
high level of 613,640 units (2022: 462,396 units; +32.7%) in
the 2023 reporting year, of which 415,692 were all-electric
(2022: 252,077 units; +64.9%). The number of motorcycles
produced by BMW Motorrad rose by 2.8% to 221,988 units
(2022: 215,932 units) over the 12-month period.
Other Information
410,793
201,323
8.0
188,199
8,208
10,608
1.0
12,912
13,044
53.3
9,960
15,264
10.8
61,609
68,238
84.9
63,600
117,576
- 0.5
186,301
185,400
23.9
151,949
6,179
← = Q
Combined Management Report
Production and Supplier Network
A steering committee manages the international environmental
protection network within the BMW Group. Each individual facil-
ity, area and building is assigned to an internal operator, who,
within their area, is responsible for the technical systems, the
smooth running of processes and workflows and their environ-
mental impacts.
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Total
To Our Stakeholders
BMW Group Report 2023
110
5 Value of the base year 2016 to the target reduction of -25% by 2030: 2.21 These figures have
been subjected to a limited assurance review.
← = Q
4 Efficiency indicator calculated on the basis of total energy consumption (adjusted for CHP losses)
of automobile production (BMW Group plants, excluding partner plants and contract manufactur-
ing) divided by the number of vehicles produced in automobile production (BMW Group plants
and partner plants, excluding contract manufacturing).
37 Consumption and Carbon Disclosure.
2 For a definition of beyond value chain mitigation (contribution to climate protection outside the
BMW Group's own value chain), see the
'To the degree recordable within the carbon footprint; market-based method in accordance with
the GHG Protocol.
The BMW Group is pursuing the goal of reducing its dependence
on fossil energy sources. With this aim in mind, we are currently
in the process of investigating all our production sites to ascertain
whether natural gas can be fully dispensed with and replaced by
sources such as electricity, biogas, hydrogen or geothermal en-
ergy.
2023
2022
2021
2020
Glossary.
Carbon emissions from the BMW Group locations per vehicle
produced¹
in tonnes
0.40
Carbon emissions generated by transport logistics
[[With its Green Transport Logistics project, the BMW Group has
been pursuing the aim of continuing emissions-reduced trans-
portation within its global production and sales network since
2015. In addition to second-generation biofuels (e.g. HVO 100,
produced from residual and waste materials), battery-powered,
heavy-duty commercial vehicles have been increasingly de-
ployed for transporting goods at the Group's main plant in Mu-
nich since 2023. For the first time, the use of bio-LNG on public
roads was tested in Germany to supply production. Moreover,
the BMW Group has been involved in the "H2Haul" research pro-
ject since 2019 and the "HyCET" research project since 2022 in
order to gain early experience in the use of hydrogen trucks.
In collaboration with partners such as atmosfair and First Cli-
mate, we support climate protection projects operating in the vol-
untary market for the full extent of our Scope 1 and Scope 2 car-
bon footprint and our Scope 3 category "business travel" emis-
sions. These projects are certified by independent institutions in
line with international standards and have to meet a set of strict
criteria such as additionality, permanence and other factors. It is
also important to us that the projects in the global South gener-
ate social benefits in line with applicable sustainable develop-
ment goals (SDGs). These include, for example, initiatives that
enable people to earn an income or programmes that prevent
illness. GRI Index: 305-5
these initiatives without them counting towards the the
BMW Group's CO₂ reduction targets.
The BMW Group is committed to achieve a technically feasible,
substantial reduction in Scope 1 and Scope 2 emissions in order
to continue meeting this target for each financial year. Further-
more, the BMW Group also supports projects dedicated to de-
carbonisation outside its own value chain. We voluntarily back
The carbon emissions generated directly and indirectly by
BMW Group locations are already within the 1.5°C pathway cal-
culated for the enterprise as a whole. Reducing carbon emissions
across the entire value chain
Contribution to climate protection outside the BMW Group's own
value chain
7 Carbon footprint, 7 GRI Index: 305-1, 305-2, 305-3, 305-5
At 705,398 t CO2, total carbon emissions generated at
BMW Group locations were on a par with the previous year
(2022: 705,417 t CO₂). In a contrasting trend, the mild temper-
atures led to a reduction in the use of natural gas for heating pur-
poses.
Carbon emissions generated at BMW Group locations
By reducing energy consumption while simultaneously increas-
ing production volumes, carbon emissions generated per vehicle
produced at BMW Group locations fell by 12.5% to 0.28 t CO₂
(2022: 0.32 CO₂). The figure corresponds to a reduction of
30.0% compared to the base year 2019.
2023
2022
2021
2020
2019
0
0.28
0.32
0.33
0.35
2019
[[Resource management at all BMW Group locations
Within the BMW Group's global production network, resource ef-
ficiency and the control of resource consumption have been inte-
gral parts in the environmental management system for dec-
ades. Alongside 7 Carbon Emissions, the other key indicators for
managing resource efficiency and controlling resource consump-
tion within the BMW Group are energy consumption, potable water
consumption, the amount of waste generated and the use of VOC
solvents. The BMW Group intends to reduce its energy and pota-
ble water consumption, waste for disposal, and the amount of
solvents used per vehicle produced by 25% in each category by
2030 (base year: 2016).
| | ||
2.13
109
7 Efficiency indicator calculated from solvent emissions generated in automobile production
(BMW Group plants, excluding partner plants and contract manufacturing) divided by the number
of vehicles produced in automobile production (BMW Group plants and partner plants, excluding
contract manufacturing).
6 Solvent emissions (volatile organic compounds = VOC) are especially generated during the paint-
ing process and can be reduced by deploying new painting technologies.
5 Efficiency indicator calculated from the waste for disposal in automobile production (BMW Group
plants, excluding partner plants and contract manufacturing) divided by the number of vehicles
produced in automobile production (BMW Group plants and partner plants, excluding contract
manufacturing).
3 Potable water consumption refers to water purchased from external water suppliers. If a
BMW Group site does not purchase water from an external supplier, the primary source of supply
is counted as potable water. This method of measurement applies to the BMW Group plants in
San Luis Potosí (Mexico) and Araquari (Brazil) where groundwater is the main source of supply.
4 Waste for disposal in relation to the total weight of waste.
2 Efficiency indicator calculated from the potable water consumption measured for automobile pro-
duction (BMW Group plants, excluding partner plants and contract manufacturing) divided by the
number of vehicles produced in automobile production (BMW Group plants and partner plants,
excluding contract manufacturing).
1 In accordance with the environmental management system, each operator is required to describe
the environmental impacts in the aspects register and identify measures for improvement (e.g.
long-term targets).
biodiversity in countries where our renewable raw materials are
grown. In Indonesia, for instance, we therefore support local na-
ture conservation initiatives that are dedicated to preserving nat-
ural biodiversity via the "Living Rubber" project. We are also cur-
rently analysing biodiversity-related impacts as well as the op-
portunities and risks in order to develop corresponding targets
and the next steps moving forward. 7 GRI Index: 304-2]]
BMW Group Report 2023
The BMW Group also takes biodiversity into account at its vari-
ous locations worldwide. It assesses biodiversity in the context of
its plants, using a biodiversity indicator as an example within the
framework of ecological verification procedures. Based on this
assessment, measures to improve these habitats are then pro-
posed accordingly. We are also committed to protecting
The VOC solvent emissions per vehicle produced 6,7 fell again signifi-
cantly by 14.8% to 0.52 kg (2022: 0.61 kg) during the year un-
der report. Due to the progress made in the use of solvent-free
substances and the constant optimisation of painting processes,
we expect to see a further slight decrease in emissions levels in
the coming year. GRI Index: 305-7
VOC solvent emissions
To minimise the total volume of waste generated, the
BMW Group utilises coordinated recycling and processing con-
cepts that are adapted to the specific waste streams at its vari-
ous plants, regionally applicable statutory regulations and local
waste management structures. In 2023, a total of 99.4% 4
(2022: 99.3%) of the waste generated by production was either
recycled or recovered. The amount of waste for disposal per vehicle
produced in the automobile production fell significantly by 22.6%
year on year to 2.12 kg (2022: 2.74 kg). The BMW Group in-
tends to maintain its high rates of recycling and recovery as it
gradually transitions to electric mobility. 7 GRI Index: 306-4, 306-5,
7 Waste generation in detail, 7 SASB Index
Waste
paint shops and washing facilities at the assembly plants is re-
cycled. Moreover, slightly contaminated water (so-called "grey
water") is used as process water at the BMW Group's Dadong
vehicle plant (Shenyang, China). In regions where water is
scarce, the BMW Group ensures that it is used as sparingly as
possible. At the BMW manufacturing plant in Chennai, India, for
example, rainwater is collected during the monsoon season that
covers up to 100% of its water demand. vAt 1.78 m³ per vehicle
produced, specific potable water consumption²,³ in automobile pro-
duction was moderately below the previous year's level due to
the higher production volume (2022: 1.90 m³/-6.3%). 7 Water
consumption in detail
The BMW Group also aims to continuously reduce water con-
sumption at its production plants in order to prevent potential
water supply risks. With this point in mind, wastewater from the
Water
A certified environmental management system in accordance
with ISO 14001 has been implemented at all BMW Group pro-
duction sites. Moreover, all the Group's German plants are certi-
fied under the EMAS environmental management system. The
BMW Group coordinates its worldwide environmental protection
measures relating to imissions, water, waste, qualification stand-
ards, environmental management system in a total of five cen-
tralised competence centres. Environmental improvements that
have proven effective at one location are then implemented at
other locations to the extent possible. Regular further training
courses and the exchange of experiences within the workforce
ensure that relevant knowledge is effectively applied throughout
the organisation. During the year under report, our proactive en-
vironmental management system again made a major contribu-
tion to ensuring that there were no significant environmental in-
cidents involving the payment of fines throughout the global pro-
duction network.
Biodiversity
To Our Stakeholders
Combined Management Report
Production and Supplier Network
Group Financial Statements Responsibility Statement and Auditor's Report
2.10
2.12
2.04
0
in MWh
Energy consumption per vehicle produced 4,5
At present, the BMW Group is unable to entirely cover its energy
needs by generating its own renewable energy and therefore
purchases from renewable sources, for example via power pur-
chase agreements (PPAs). The directly sourced green electricity
from defined generation plants is used, for example, to produce
the BMW iX3 and BMW i4³ models.
All BMW Group production sites worldwide and the majority of
other BMW Group locations use green electricity, which is either
generated in-house, procured directly or using Energy Attribute
Certificates (e.g. guarantees of origin).
Renewable energy
6,295,990 MWh; +1.3%). Energy consumption in detail, ▾ GRI Index:
302-1, 302-4
The BMW Group continuously invests in improving the energy ef-
ficiency of its worldwide production network. In this context, clear
roles in each case with corresponding responsibilities, targets
and reporting obligations - are assigned to central strategy de-
partments, regional management units and plants at local level.
After the persistent restrictions put in place due to the corona-
virus pandemic and the impact of the war in Ukraine, production
volumes increased again significantly in 2023. Due to the asso-
ciated improvement in plant capacity utilisation, specific energy
consumption in automobile production fell to 1.97 MWh per ve-
hicle produced (2022: 2.13 MWh; -7.5%) for the year under re-
port. At 6,380,652 MWh, the total amount of energy consumed
by the BMW Group during the period under report was higher
than the previous year due to production volume factors (2022:
7 Contribution to climate protection outside the BMW Group's own value chain
Energy management and efficiency
As a further contribution to protecting the climate, the
BMW Group finances various climate protection projects outside
its own value chain, equivalent to the amount of Scope 1 and
Scope 2 emissions remaining in 2023 as well as Scope 3 emis-
sions from the category "business travel".²
The remaining emissions are largely attributable to the use of
natural gas. In this respect, the BMW Group faces the challenge
of replacing natural gas with non-fossil energy sources such as
biogas, green hydrogen or green electricity. However, the transi-
tion to alternative energy sources depends largely on their avail-
ability, the technical retrofitting of the systems and the political
framework conditions.
The BMW Group intends to reduce carbon emissions per vehicle
produced (Scope 1 and Scope 2) by an average of 80% by 2030
compared to the base year 2019. Production accounts for the
majority of Scope 1 and Scope 2 emissions within the BMW Group.
As in the past, we remain committed to energy efficiency
measures, electricity generated in-house from renewable
sources, the purchase of green electricity from Power Purchase
Agreements and the use of Energy Attribute Certificates (e.g.
guarantees of origin).
Energy use and carbon emissions
← = Q
Other Information
Remuneration Report
1.97
Partner plants
BMW 2 Series, BMW 3 Series, BMW 5 Series, BMW 7
Series, BMW X1, BMW X3, BMW X5, BMW X6, BMW X7
BMW motorcycles
Born (VDL Nedcar]
NETWORK
PRODUCTION AND SUPPLIER
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Production and Supplier Network
BMW Group Report 2023 To Our Stakeholders
104 Production Network
104
* Consumption and Carbon Disclosures.
HAJDROGEN FUEL CELL
M DH1024E
The BMW Group is also committed to promoting hydrogen tech-
nology at a higher level, including involvement in global organi-
sations and associations such as the ▾ Hydrogen Council. As an as-
sociated partner of H2 Mobility Deutschland GmbH, the BMW Group
is also supporting the development of hydrogen infrastructure in
Germany.]]
Firstly, the findings from the pilot project are being incorporated
into the development of a potential series product. Secondly, we
are using them to promote initiatives for the construction of hy-
drogen filling stations worldwide. In this context, the Alternative
Fuel and Infrastructure Regulation (AFIR) will provide new impe-
tus at EU level. Among other things, it provides for the establish-
ment of a basic network of hydrogen filling stations along the
main European transport routes.
Hydrogen-powered pilot fleet operating successfully
Since the beginning of 2023, a pilot fleet of the hydrogen-pow-
ered BMW iX5 Hydrogen has been driven on roads worldwide.
The aim is to ascertain whether the product is ready for series
production and to obtain initial customer feedback. On the one
hand, we are focusing on countries where the hydrogen industry
is developing positively, for example with the establishment of a
filling station network. On the other hand, we are also active in
areas where the production of preferably green hydrogen and its
distribution and use in various applications are gaining in im-
portance. These areas currently include parts of Europe, Japan,
South Korea, China, the USA and the Middle East.
The BMW Group also promotes the use of renewable energy.
Since 2022, for each charging process conducted via BMW and
MINI Charging, the equivalent amount of energy consumed is fed
into the power grid as green electricity, which is certified via En-
ergy Attribute Certificates (EACs) as recognised proofs of origin.
Moreover, we are working continuously on integrating electric ve-
hicles with their high-voltage storage systems in the public power
grid. In 2023, we launched Connected Home Charging, the first
customer-oriented solution on the European market in collabo-
ration with E.ON. Electrified vehicles as part of the power grid
[[Solutions for simple, eco-friendly charging
Charging should be as easy as conventional refuelling and we
are working on digital solutions in particular to meet this demand.
Via the Connected Charging app, drivers not only receive up-to-
date charging information, they can also control the charging
process at the touch of a button. Customers can use the eRoute
function to plan charging stops on long journeys. In 2023, the
first BMW models, such as the BMW i7* and the BMW iX1*, were
equipped with a Plug&Charge function in which both authentica-
tion and billing are carried out automatically by connecting the
vehicle to the charging system. Using the so-called multi-con-
tract functionality, individual driving electricity tariff contracts
from various providers can also be stored digitally within the ve-
hicleto facilitate the use of charging stations from different oper-
ators.
MCI 3790
← = Q
107 Circular Economy, Resource Efficiency and
Renewable Energy
PRODUCTION AND SUPPLIER NETWORK
BMW Group vehicle plants
Location
From 2025, the NCAR will feature a vehicle architecture system-
atically geared to suit electric drive systems. The vehicle is due to
be manufactured initially at the new Debrecen plant in Hungary
as well as in Munich as of 2026. We aim to gradually transfer the
new vehicle architecture to the global production network in the
years that follow. We also plan to produce all-electric vehicles at
our plant in Spartanburg (USA), and at least six all-electric X
models are scheduled to be manufactured there by 2030.
Electric mobility has been growing in importance for the BMW
Group for many years. With the start of production of the BMW
151 at the Dingolfing plant and the BMW iX21 at the Regensburg
plant, the BMW Group has continued to expand the production
of all-electric models at its German plants. Production has also
started in Zhangjiagang at the Spotlight plant, a joint venture
with Great Wall Motors. The site has been manufacturing the all-
electric MINI for the global market since November 2023. We are
therefore currently producing automobiles and motorcycles with
electrified drive systems at 15 7 BMW Group locations and at two
partner plants within our global production network. In 2023, all-
electric cars rolled off production lines in Dingolfing, Goodwood,
Munich, Regensburg, Oxford, Shenyang, at VDL Nedcar² in Born,
and in Zhangjiagang. Moreover, all-electric motorcycles were
manufactured both in Berlin and at our partner plant in Hosur
(India).
Electric mobility globally integrated
← = Q
Other Information
Remuneration Report
111 Purchasing and Supplier Network
Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023 To Our Stakeholders
105
The new Cell Manufacturing Competence Centre (CMCC) in Pars-
dorf near Munich plays a key role for the BMW Group. Using a
pilot production approach, the CMCC's experts can accurately
replicate the value-added processes involved in manufacturing
battery cells The BMW Group will take the findings of this pilot
scheme and apply them in close collaboration with its mass pro-
duction partners for battery cells at a later stage. The strategy
enables the BMW Group to set new standards regarding the
quality, performance, cost and ecological sustainability of battery
cells.
In line with the "local for local" principle, the BMW Group's high-
voltage battery assembly facilities worldwide are set up close to
the Group's vehicle plants with a view to increasing the resilience of
supply chains. Production facilities for the sixth generation of the
high-voltage battery are being established in Debrecen (Hun-
gary), Woodruff near Spartanburg (USA), San Luis Potosí (Mex-
ico) and Shenyang (China). The BMW Group is also planning to
produce sixth-generation high-voltage batteries in Germany at
the Irlbach-Straßkirchen site to supply German vehicle plants.
Integrated component production for electrified vehicles
The competence centre in Dingolfing plays a leading role in the
production of electrified drive systems, as battery modules, high-
voltage batteries and fifth-generation electric motors are all pro-
duced at the site. At the same time, we are preparing the BMW
Group's network to produce next-generation electrified drive sys-
tems. For this reason, the Steyr engine manufacturing plant in
Austria is to be expanded and the new drive systems will be pro-
duced there alongside diesel and petrol engines. Production is
scheduled to begin in the course of 2025.
The production system is based on the strategic vision of the
BMW iFACTORY, with a keen focus on sustainability, electrifica-
tion, digitalisation and profitability. The BMW iFACTORY utilises
innovative technologies that facilitate flexible, efficient production
with the aim of minimising the use of resources and promoting
digital solutions in the fields of data science, Al, virtual planning
and development.
With its flexible production network, the BMW Group is capable
of manufacturing vehicles with both all-electric and plug-in hybrid
drive systems as well as conventional combustion engines on
one single line, making it far easier to tailor the product range to
suit a wide variety of customer wishes and needs.
PRODUCTION NETWORK
Combined Management Report
Production and Supplier Network
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
With BMW and MINI Charging, we offer attractive electricity tariffs
and convenient charging solutions whether on the road, at
home or at work. Customers can use a large number of public
charging points via their BMW or MINI charging card and the My
BMW and/or MINI app. Digital Charging Solutions GmbH (DCS)
provides broad access to various charging networks throughout
Europe. DCS is one of Europe's leading providers of digital charg-
ing solutions and a joint venture between the BMW Group, Mer-
cedes-Benz and bp.]]
-
Reliable, comprehensive charging opportunities
It is therefore particularly important to the BMW Group to include
environmental and social aspects in the production of compo-
nents such as electric motors, high-voltage storage systems and
battery cells. Carbon emissions in the supply chain, Social and ecological
responsibility. Other approaches to mitigating the environmental
impacts include increasing the use of recycling and reusing high-
voltage storage units from our BEV and PHEV models in an ap-
propriate manner. The BMW Group offers customers who pur-
chase its battery-powered vehicles the option to take back their
high-voltage batteries free of charge. The offer also applies to
markets where take-back is not mandatory by law.
The BMW Group's electrified vehicles are characterised by their
high efficiency and low consumption. However, the BMW Group
has greater aspirations: its vehicles need to be as eco-friendly
as possible, not only during their locally carbon-free use phase,
but also in terms of their overall footprint, including the supply
chain and production. Carbon Emissions Unlike conventional com-
bustion engine-powered vehicles, the environmental impact of
battery-powered automobiles lies predominantly in the up-
stream value chain. Where the use of natural raw materials to
manufacture battery cells and the carbon-intensive production of
batteries make a significant impact.
Thinking holistically about electric mobility
compact segment can cover up to 110 kilometres (WLTP²) solely
on battery power.
The new all-electric MINI Cooper SE1, which is mainly designed
for urban use, has a customer-focused range of around 400 kil-
ometres (WLTP2). The new BMW i51 can achieve a range of up
to 582 km in the statutory WLTP test cycle, depending on factors
such as equipment and type of motor. With offers such as the
BMW eDrive Zone, attractive electricity tariffs for driving, charg-
ing equipment, the integration of charging in the vehicle app and
increased ranges, we are helping drivers of plug-in hybrids to
drive electrically as frequently and over as long a distance as
possible. For instance, the BMW X5 Plug-in-Hybrid from the
17 Consumption and Carbon Disclosures.
Designing electric vehicle ranges to match user behaviour
The BMW Group assesses the increase in the electric ranges of
its vehicles from various points of view. Our main approach is to
optimally adapt vehicle ranges to the respective purpose of use
and user behaviour. With this strategy we also take into account
the environmental impact, as greater range also means deploy-
ing larger and therefore heavier high-voltage batteries. This re-
lationship has an effect on resource consumption and the carbon
footprint of the supply chain as well as the vehicle's weight and
therefore its electricity consumption.
Our product portfolio serves the growing level of demand for
electrified models and at the same time takes into account the
varying framework conditions and customer needs in each indi-
vidual market. In addition to all-electric vehicles, our customers
can therefore choose from a wide range of plug-in hybrids and
vehicles powered by efficient combustion engines. Our flexible
production systems and scalable modular vehicle system reflect our
rigorous focus on customer needs. With the launch of the new
BMW i51, a further model series is now available with all three
types of drive system, which previously applied to the BMW X1,
BMW X3, BMW 3 Series and the BMW 7 Series.
[[Offering with consistently dedicated customer focus
← = Q
Remuneration Report Other Information
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Products
BMW Group Report 2023 To Our Stakeholders
101
About half of the vehicles produced by the BMW Group leave its
plants by rail. In Germany, a significant volume of rail transport
relating to production and the sale of spare parts is already pow-
ered by green electricity.]]
At the BMW Group, customer-oriented technological diversity
also includes the ongoing development of fuel cell technology.
Depending on the segment, we see hydrogen-powered electric
vehicles as a potentially key alternative to battery-powered elec-
tric mobility and thus as an opportunity to reduce carbon emis-
sions even more quickly. Hydrogen-powered pilot fleet operating
successfully
2 Range calculated based on the new WLTP test cycle (Worldwide Harmonised Light Vehicles Test
Procedure). However, the actual range possible depends on a variety of factors, particularly varia-
bles such as personal driving style, route conditions, outside temperatures, heating, air condition-
ing and pre-heating. Preliminary figure.
102
BMW Group Report 2023
Combined Management Report
Products
BMW Group Report 2023 To Our Stakeholders
103
2 Primarily via direct purchase and Energy Attributes Certificates (e.g. certificates of origin).
37 Consumption and Carbon Disclosures.
1 Total number of charging points displayed on BMW front-ends (vehicle & app). The network can
be accessed by registered customers wherever a local partner is available.
3
HDC 4628E
With the publication of the Vehicle Footprint for the BMW 153, the
BMW Group is further enhancing transparency at product level. The innova-
tion provides customers and other interested parties with comprehensive in-
formation on the vehicle's key sustainability-related performance data.
These data include the four core CO₂e emissions indicators over the vehicle's
entire life cycle, including raw materials procurement, production, the supply
chain, recycling, energy consumption in the use phase, the secondary raw
material quota and key aspects of social sustainability in the supply chain.
The vehicle footprint includes a life cycle assessment performed in accord-
ance with DIN EN ISO 14040:2021 and DIN EN ISO 14044:2021 and au-
dited by TÜV Rheinland Energy. Going forward, the BMW Group will publish
analogous reports for vehicle start-ups based on a representative model per
drivetrain type. ]]
[[ New level of transparency achieved for vehicle data
BMW and MINI Charging provide the Flexible Fast Charger and
other charging products for use both on the move and at home.
We also offer charging solutions for corporate customers in co-
operation with our partners. The BMW Group itself operates one
of the largest company charging networks in Germany. ]]
With the new charging infrastructure under the terms of a coop-
eration with Mercedes-Benz in China, the BMW Group is meeting
its charging commitment in its three most important markets.
With this aim in mind, at least 1,000 charging stations with
around 7,000 charging points are to be installed by the end of
2026. The network will be open to drivers of all brands. The first
charging stations will go into operation as early as 2024 in
regions with a high density of electrified vehicles.
In the year under report, the BMW Group also announced the es-
tablishment of a charging network in the USA and Canada to-
gether with six other manufacturers. The aim is to install at least
30,000 charging points in cities, towns and along major
transport routes. The first charging stations are scheduled to
open in summer 2024.
[[BMW and MINI customers have access to over two million charg-
ing points worldwide¹ through the navigation system or the rele-
vant vehicle app. In Europe alone, we provide easy access to a
network with over 588,000 charging points through the public
BMW/MINI Charging service. These also include fast-charging
stations from IONITY, a company launched by the BMW Group,
with a charging capacity of up to 350 kilowatts (kW). IONITY cur-
rently operates 590 stations with more than 3,300 charging
points in a total of 24 countries, which are publicly accessible,
brand-independent and designed in accordance with the Euro-
pean Combined Charging System (CCS) charging standard. Fur-
thermore, they are all powered by 100% green electricity².
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Products
To Our Stakeholders
Country
Brazil
Production programme 2023
Germany
BMW Series, BMW X1, BMW X3, BMW X4
BMW motorcycles
To Our Stakeholders Combined Management Report
Production and Supplier Network
BMW Group Report 2023
106
BEV
Electrification portfolio
Including Lydia extension since June 2022.
2 Contract manufacturing.
17 Consumption and Carbon Disclosures.
Group Financial Statements Responsibility Statement and Auditor's Report
MINI Cooper
Production programme 2023
Country
Zhangjiagang (Spotlight)
Location
Jointly controlled vehicle plants
Regensburg
Rosslyn
PHEV
BMW X3, BMW X4, BMW X5, BMW X6, BMW X7, BMW
XM1, BMW M
China
Remuneration Report
Other Information
← = Q
Zhangjiagang (Spotlight)
Goodwood
Araquari
Rayong
Chennai
Rosslyn
San Luis Potosí
Leipzig
Oxford
Regensburg
Munich
Dingolfing
Tiexi
Dadong
Spartanburg
in units
BMW Group automobile production by plant
Production volume record despite challenging environment
The BMW Group manufactured a total of 2,661,922 BMW, MINI
and Rolls-Royce brand vehicles in the year under report (2022:
2,382,305 units; +11.7%). BMW brand models accounted for
2,340,547 units (2022: 2,089,801 units; +12.0%), MINI for
315,196 units (2022: 286,265 units; +10.1%), and Rolls-
Royce Motor Cars for 6,179 units (2022: 6,239 units; -1.0%).
Production of electrified vehicles increased to a new
The BMW Group's production network also includes engine
plants in Hams Hall (UK), Steyr (Austria) and Shenyang (China),
as well as component plants at sites in Eisenach, Landshut and
Wackersdorf (all in Germany) and Swindon (UK). Engine produc-
tion in Munich (Germany) was discontinued in 2023. The pro-
duction network currently comprises a total of 32 plants in 15
countries.
The BMW Group manufactures BMW motorcycles, components
and scooters at its Berlin plant and also at international locations
in Ma-naus (Brazil) and Rayong (Thailand), where motorcycle
components are also produced. Components for motorcycles are
also produced in Rayong. BMW motorcycles and scooters are
also produced by the partner companies TVS Motor Company in
Hosur (India) and Loncin Motor Co., Ltd in Chongqing (China).
The BMW Group plants in Europe, South Africa, the USA and
Mexico manufacture for the global market. Production of the all-
electric MINI for the global market also began at the Spotlight
joint venture plant in China in November 2023. The BMW Bril-
liance plants in China mainly manufacture for the local market.
The BMW Group plants in Araquari (Brazil), Rayong (Thailand)
and Chennai (India) primarily serve their respective regional mar-
kets and produce BMW and MINI brand models. The same ap-
plies to the BMW Group's automotive partner plants in Jakarta
(Indonesia), Cairo (Egypt), Kulim (Malaysia) and Chu Lai (Vi-
etnam). The Group also awards contracts for the series produc-
tion of automobiles and motorcycles to external partners (con-
tract manufacturers). During the period under report, Magna
Steyr Fahrzeugtechnik produced both the BMW 5 Series Sedan
(up to May 2023) and the BMW Z41 in Graz (Austria). VDL Ned-
car2 in Born (the Netherlands) has continued to produce the MINI
Convertible and the MINI Countryman until the beginning of
2024.
Production sites in key markets
USA
Graz (Magna Steyr)
Spartanburg
BMW 1 Series, BMW 3 Series, BMW X1, BMW iX11,
BMW X2, BMW i3 (extended-wheelbase version of BMW
3 Series),
BEV
Rolls-Royce Cullinan', Dawn', Ghost¹, Phantom',
Wraith¹, Spectre¹
UK
BEV, PHEV
BEV
Electrification portfolio
BMW 4 Series, BMW 5 Series, BMW i5¹, BMW 6 Series,
BMW 7 Series, BMW i7¹, BMW 8 Series, BMW M, BMW
iX1
BMW 2 Series, BMW 3 Series, BMW 5 Series, BMW 6
Series, BMW 7 Series, BMW X1, BMW X3, BMW X5,
BMW X7, MINI Countryman
Germany
Brazil
Germany
Germany
Rayong
Oxford
Manaus
Munich
Goodwood (Rolls-Royce Manufacturing)
Leipzig
Dingolfing
Chennai
Berlin
Araquari
India
BMW 1 Series, BMW 2 Series, MINI Countryman
BMW motorcycles
PHEV
UK
China
Shenyang (Tiexi)³
BEV, PHEV
BMW 5 Series, BMW X3, BMW iX31, BMW X5
China
Shenyang (Dadong)
PHEV
BMW 2 Series, BMW 3 Series, BMW M
Mexico
San Luis Potosí
BMW X3
South Africa
BMW 1 Series, BMW X1, BMW iX11, BMW X2, BMW iX21 BEV, PHEV
Germany
PHEV
Thailand
BEV
BEV, PHEV
BMW 3 Series, BMW 4 Series, BMW ¡41, BMW M
MINI, MINI Clubman, MINI Cooper SE¹
BEV
1 Efficiency indicator calculated on the basis of Scope 1 and Scope 2 carbon emissions (market-
based method according to GHG Protocol Scope 2 guidance; mainly based on the use of emis-
sion factors for electricity, district heating and fuels of the VDA, each in the most current valid ver-
sion: 12/2023) and occasionally using local emissions factors; excluding climate-impacting gases
other than carbon dioxide from vehicle production (BMW Group plants including Motorcycle, but
excluding partner plants and contract manufacturing), as well as BMW Group non-manufacturing
sites (e.g. research centres, sales centres, offices) divided by the number of vehicles produced
(BMW Group plants and partner plants, but excluding contract manufacturing). Glossary.
2 Using the market-based method in accordance with the GHG Protocol Scope 2 guidance.
An expanded, customer-friendly charging infrastructure will pave
the way for the rapid and widespread use of electric mobility. With
the adoption of the Alternative Fuels Infrastructure Regulation
(AFIR) in 2023, the EU resolved to set up a basic network of both
electric charging stations and hydrogen filling stations by the end
of 2030. From the BMW Group's point of view, this is a first key
step towards providing a customer-friendly charging infrastruc-
ture. The BMW Group remains committed to achieving standard-
ised framework conditions and encourages offers that enable
customer-friendly charging on a broad basis. An expanded, cus-
tomer-friendly charging infrastructure will pave the way for the
rapid and widespread use of electric mobility.
The BMW Group aims to actively promote decarbonisation in its
own supply chain and reduce carbon emissions along the entire value
chain. For this reason, one of our sourcing criteria requires that
suppliers commit to undertaking decarbonisation measures. We
specifically enable our suppliers with online training via the
BMW Group Partner Academy and additionally provide face-to-
face formats for partner workshops at the BMW Group plant in
Landshut (Germany) as well as other locations. GRI Index: 3-3
In 2023, a total of 1,200 young people started an apprenticeship
or dual study programme at BMW AG (2022: 1,200). The same
number of vocational training and study places were advertised
for the coming year. In the reporting year, the apprenticeships on
offer were expanded to include dual study programmes in Cyber
Security and Environmental Protection. BMW AG continues to of-
fer its apprentices and dual study students permanent employ-
ment at the BMW plants and headquarters after they have com-
pleted their vocational training. 7 GRI Index: 401-1
Specifically, we offer young people approximately 30 apprentice-
ships and 20 dual study programmes at 20 training locations
and 20 branches worldwide, in order to prepare them for their
future career at the BMW Group. The focus is on the future topics
of electrification, digitalisation, automation and sustainability.
The total number of apprentices, dual study students and partici-
pants in the young talent programmes² rose solidly to 5,007³
during the reporting year (2022: 4,690/+6.8%). In 2023, the
training cohort started at the new production site in Debrecen in
Hungary. The BMW Group has now established the successful
model of dual vocational training and instruction in nine countries
outside of Germany. We promote cross-location networking
through the MOVE exchange programme. Apprentices and dual
students are given the opportunity to gain practical experience
both in Germany and abroad.
The BMW Group offers a comprehensive programme with a va-
riety of entry opportunities to attract and promote young talent
and ensure the development of skills within the BMW Group. The
basis for this is the vocational training approach that has grown
over the years, the opportunities to pursue a dual study pro-
gramme and other student development programmes.]]
The BMW Group's preventive measures continue to have an im-
pact. In 2023, these also meant that the accident frequency rate
remained at a low level of 2.0 (2022: 1.93). There were no fatal
accidents during the reporting year (2022: no fatal accidents).
7 Further GRI Information, GRI -Index: 403-9
[[Accident frequency rate❝
3.5
3.2
2.8
2.0
1.93
0
2019
2020
2021
2022
2023
]]
In addition to the wide range of vocational training options, the
BMW Group also offers programmes for top talents: participants
in the "ProMotion" doctoral programme go on to write their doc-
toral dissertations in cooperation with the BMW Group and thus
contribute valuable innovations to the Company. Our trainee pro-
gramme AcceleratiON4 aims to prepare future managers for the
tasks that await them in the future.
Number
4,000
4,801
3.73
4.00
4.71
5.51
3.39
in % of workforce size
Employee attrition rate BMW AG6
The BMW Group is one of the most attractive employers world-
wide. A positive perception of the Company, challenging and fu-
ture-oriented tasks, individual opportunities for personal devel-
opment, attractive remuneration and additional benefits, and a
modern working environment contribute to this.]]
Occupational safety along the value chain
Cooperation with contractual partners on safety-related aspects
at the sites is regulated by way of a separate contractor declara-
tion. At major BMW Group construction sites, all employees of
partner companies receive safety briefings from BMW Group ex-
perts. In the case of smaller orders, the contractor is responsible
for the process of familiarisation. The commissioning specialist
department monitors compliance with the occupational health
and safety requirements, and is supported by the relevant spe-
cialist department for occupational safety and ergonomics.
[[Attractive employment conditions
2022
2021
2020
2019
5,007
4,517
4,690
4,672
2023
illi
Suppliers to the BMW Group are obligated to comply with inter-
nationally recognised occupational health and safety require-
ments via the Purchasing Terms and Conditions.5
1 Occupational Health and Risk Management System.
Sexual orientation and identity
The BMW Group provides information about its commitment to
these categories on our website.
[[BMW AG employees by age group
divided into functions and gender
in %
<30
years
30-50
years
2021 in total
9.8
59.9
> 50
years
30.3
2022 in total
10.8
59.8
29.4
2023 in total
11.3
60.0
Physical and mental ability
Cultural background
Age and experience
Gender
Our Company-wide concept for diversity, equal opportunities and
inclusion forms the basis of our holistic commitment. The HR de-
partment manages the content and implementation together
with Diversity Officers and disciplinary managers. The concept
contains aims and measures that focus on five key dimensions:
2 The calculation takes into account apprentices, interns, temporary staff, doctoral students, long-
term sick-leave and people on sabbatical.
3 Previous year's value adjusted due to a correction in working hours.
4 Number of workplace accidents resulting in at least 1 lost day per million working hours.
5 Management systems in accordance with ISO 45001 and derived from the International Labour
Organization (ILO) or United Nations Global Compact (UNGC).
120
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Employees and Society
Group Financial Statements Responsibility Statement and Auditor's Report
7 GRI Index: 403-7]]
Remuneration Report
← = Q
DIVERSITY, EQUAL
OPPORTUNITY AND
INCLUSION
[[An appreciative, unprejudiced and inclusive working environment
for all employees is a fundamental prerequisite for successful
collaboration at the BMW Group. People from over 110 nations
bring different perspectives, experiences and competencies to
their daily work at the BMW Group, thereby strengthening the
Company's innovative power and competitive ability. Key princi-
ples such as protection against discrimination, equal treatment
of all employees and respect at all times are firmly embedded in
the BMW Group Code of Conduct and the BMW Group Code of Human
Rights and Working Conditions.
Equal opportunities at the BMW Group are also expressed in a
remuneration system that is designed to be independent of gen-
der, religious denomination, origin, age, disability, sexual orien-
tation or country-specific characteristics. In the reporting year,
BMW AG was the first German company to be certified as a Fair
Pay Leader by the Fair Pay Innovation Lab (FPI). The certifica-
tion is evidence that BMW AG's remuneration structures are ef-
fective in ensuring equal salaries between women and men. This
is supported by annual, science-based equal pay analyses, a
practice which the BMW Group also aims to expand to interna-
tional locations in the future. GRI Index: 405-2
All employees can contact their managers, the relevant specialist
departments, the HR department, the Works council and the rep-
resentative body for employees with disabilities with concerns
relating to diversity, equal opportunities and inclusion. The BMW
Group SpeakUP Line is a telephone service available in over 30 lan-
guages that gives employees worldwide the opportunity to report
possible violations both anonymously and confidentially.
Compliance and Whistleblower Systems Controls Employees in Ger-
many also have access to the "Zero Tolerance" hotline, a free,
anonymous and professional advice centre for discrimination,
bullying and sexual harassment in the workplace.
7 GRI Index: 406-1
Promoting diversity
Other Information
28.7
0
2020
2021
2020
2019
2.0
أنني
3.8
4.2
3.4
3.4
3.7
in %
[[Sickness rate BMW AG*
Nevertheless, we aim to reduce this level, for example, with tar-
geted measures in accordance with our "Attendance Manage-
ment Works Agreement" (BAM) and the relevant health manage-
ment initiatives. BAM is a service provided by the BMW Group to
promote the health of employees and increase their attendance.
Health-preserving and health-promoting measures and offers
from the Company are also suggested to employees. The dis-
cussions are conducted by managers regularly or as needed.
7 GRI Index: 403-10]]
sickness rate in Germany remained at a high level until the mid-
dle of 2023 and normalised over the course of the year.
One of the ways in which the Company measures the success of
health management is by its sickness rate, which at 3.8% at
BMW AG was below the previous year (2022: 4.2%). The
It is important to the BMW Group that all employees have access
to the Company's own health services. In Germany, these ser-
vices focus on providing acute care to employees and temporary
employees during working times. At some locations
such as
South Africa, Thailand, India and Mexico - health management
also involves the provision of basic healthcare. The
BMW Group's occupational physicians advise employees on in-
dividual preventive measures on request. They also help to or-
ganise the respective working environment in such a way that
health and performance can be maintained over the long term.
The provision of occupational healthcare and medical advice
helps to prevent work-related health problems at an early stage
and avoid accidents at work. GRI Index: 3-3, 401-2, 403-3, 403-6
-
2022
2023
* Number of hours of absence due to paid sick leave divided by the contractually agreed number of
working hours.
119
Carbon emissions in the supply chain
Accident frequency at a low level
The BMW Group ensures the quality of its processes by means
of annual internal audits. Audits and certifications of sites are
conducted by external service providers. All necessary audits
were again successfully performed in 2023. The results and re-
sulting measures are made available to all BMW Group locations.
7 GRI Index: 403-2, 403-7
The BMW Group regularly assesses all methods and instru-
ments used within the Company. The results of the assessments
are subsequently used to enhance internal norms. The Works
Council and, if necessary, the representatives of severely disa-
bled employees and HR management are involved.
The BMW Group conducts comprehensive risk and stress ana-
lyses in order to identify potential work-related risks in both pro-
duction and office workplaces. With the Digital Workplace Stress
Management (DWSM) project - a fully automated ergonomics
assessment - the BMW Group continues to set standards in the
automotive industry. Over the last two years, ergonomics spe-
cialists from the BMW Group have been training employees in
the use of DWSM at all assembly locations in Germany. Prepa-
rations have also been made at the locations in Mexico, the UK,
the USA and South Africa for the implementation of DWSM.
Recognising and avoiding risks
The BMW Group has set the goal of obtaining certification to one
of the aforementioned international standards for all of its plants
by 2025. Employer and employee representatives work together
at nearly all locations to bring about a continual improvement in
health and safety standards. GRI Index: 403-1, 403-4, 403-8
The BMW Group follows the globally recognised ISO 45001
standard for occupational health and safety. Occupational health
and safety management systems are in place at all production
sites, and 29 of the 32 plants are certified in accordance with this
standard or OHRIS¹, which is based on ISO 45001. This means
that 99.80% (2022: 99.79%) of employees and 100% (2022:
99.98%) of temporary employees at BMW Group plants work at
a site covered by an international occupational health and safety
management system. The BMW Group plant in Manaus (Brazil,
certification planned for 2024), the contract manufacturing facil-
ities in Born (the Netherlands, production will end in 2024) and
the jointly managed Spotlight plant in Zhangjiagang (certification
planned for 2024) are not currently certified.
To help promote a balanced diet, BMW AG runs company can-
teens in Germany. We focus on regional and sustainably pro-
duced food. The sustainability criteria used in supplier audits in-
clude sustainable water management during production, the use
of renewable energy and compliance with product-group-spe-
cific regulations. Since 2023, the "Sustainable Catering" guide-
lines have also been in place at most international locations,
aimed at further improving the environmental impact of BMW's
catering services.
Certified occupational health and safety management
system
[[Regular training for employees
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Employees and Society
To Our Stakeholders
BMW Group Report 2023
BMW Group employees at all locations are trained in occupa-
tional health and safety as part of qualification programmes. The
necessary qualification requirements for occupational safety are
determined in coordination with the specialist department for oc-
cupational safety and ergonomics. The seminar curriculum is
drawn up in collaboration with safety specialists, Company doc-
tors and the BMW Group Academy.
2019
We use regular action days, dialogue events and training courses
to inform our employees and raise awareness of current health-
related topics such as nutrition, exercise and fitness, behavioural
ergonomics and cancer prevention.
Responsibility for the topics of health and occupational safety is
enshrined in the Work Environment, Group Safety and Group
Data Protection division. 7 GRI Index: 403-1
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
Employees and Society
BMW Group Report 2023 To Our Stakeholders
117
6 Departures of employees with permanent employment contracts.
5 Since 2022 including BMW Brilliance.
4 The trainee programme was launched in April 2023 under its new name "AcceleratiON" (formerly
the Global Leader Development Programme, GLDP).
3 Including the BMW Group plant in Debrecen, Hungary, for the first time in 2023.
2 Includes the programmes "Speed Up" (an undergraduate programme) and "Fastlane" (a master's
programme). These programmes vary by country, and are adapted to local market requirements
and university curricula.
1 The key figure "Spending on employee training and development" includes the BMW Group's in-
vestments in vocational training, instruction and further education (for definition see Glossary),
limited to consolidated BMW Group subsidiaries.
2023
2022
2021
[[In terms of total remuneration, we aim to ensure that our em-
ployees earn above average for the respective labour market. To
confirm this, we conduct remuneration studies each year on a
worldwide basis. The BMW Group also consistently applies the
principles of performance-related compensation. The total salary
package consists of a monthly remuneration and a variable com-
ponent dependent on the Company's overall performance. We
also offer additional benefits such as Company pension schemes
and an attractive range of mobility benefits, including subsidised
tickets for local public transport. For example, the BMW Group
subsidises the purchase of the "Deutschlandticket" for the ma-
jority of its scale-wage employees in Germany. Apprentices and
dual study students receive the ticket free of charge. 7 GRI Index:
2-21, 401-1, 401-2
The BMW Group offers its employees an individual scope of free-
dom to organise their work and their working hours. The tools
used include flexible working times, remote work, additional
leave with corresponding reductions in pay, sabbaticals, and
temporary or permanent part-time solutions. Further GRI
information As part of our "ConnectedWorks" initiative, we ad-
vanced the methodological, technical and spatial foundations for
flexible and collaborative work in the reporting year.
Involving employees
The employees of the BMW Group are one of the most important
stakeholder groups for the Company, and are actively involved in
shaping the future direction of the Company. Dialogue with
Stakeholders
The use of management systems and certifications (e.g. Occu-
pational Health and Safety Assessment Series, OHSAS 18001)
is aimed at continuously developing internal guidelines for occu-
pational safety and the ergonomic design of the workplace.
measures.
The BMW Group also applies additional safety standards that go
beyond the legal obligations. The digital safety and ergonomic
risk analysis (SERA) records threats and sources of stress for
production workplaces and production-related areas worldwide.
The SERA takes into account the stricter US regulations and re-
quirements in addition to the German legal regulations. In pro-
duction, the use of laser scanners for presence monitoring in
small robot cells serves as another example of increased safety
[[The health and performance of people employed by the
BMW Group enjoys top priority. The different activities at the op-
erating sites result in extensive requirements for occupational
health and safety. The Company is committed to complying with
applicable occupational health and safety laws worldwide. The
right to health and safety in the workplace is also enshrined in
the BMW Group's Code on Human Rights and Working Conditions.
HEALTH AND PERFORMANCE
← = Q
Other Information
Remuneration Report
Health management on a holistic basis
The BMW Group bundles all measures to maintain health and
performance in the "Health Initiative". In the reporting year, the
focus of health management was on psychological and mental
health. We discussed various mental health topics in expert pan-
els in the new "Health Talks" format. Our "Health and Leader-
ship" programme also focuses on managers' responsibility for
the mental health of our employees.
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders
BMW Group Report 2023
118
*All BMW Group employees on permanent contracts at 1 August 2023 were surveyed. In 2023,
this included the employees of BMW Brilliance Automotive Ltd. for the first time.
Also, in 2023, highly regarded employer ratings once again ranked the
BMW Group as one of the world's most attractive employers: the
BMW Group again achieved the top spot in the Trendence Profession-
als Barometer for Germany in 2023 for the 12th time in a row. In the
current ranking of the World's Most Attractive Employers 2023 of
the study provider Universum, the BMW Group moved up to third place
worldwide among prospective engineers, directly behind the technol-
ogy companies Google and Microsoft. The BMW Group is one of the top
15 employers globally among students in the fields of IT and business.
Excellent results in employer rankings
Employees also have a central opportunity to participate through
idea management, which allows employees to contribute ideas
outside of their area of responsibility. If the proposals have a pos-
itive impact on the BMW Group in terms of efficiency or sustain-
ability, they will be honoured accordingly. In 2023, numerous
employees submitted a total of 5,470 ideas (2022: 5,028). At
the same time, a total of 1,267 ideas (2022: 1,188) were imple-
mented, resulting in first-year benefits totalling € 52.0 million
(2022: € 20.5 million). More than a fifth of these had their pri-
mary impact in the area of sustainability. GRI Index: 2-29]]
The BMW Group measures the general mood in the workforce
and the performance of the organisation every two years as part
of a Company-wide employee survey*. This is measured using
the "High Performance Organisation Index" (HPO-I). In the sur-
vey in autumn 2023, the participation rate was higher than ever
before at 84%. At the same time, the HPO-I improved again
when compared to the last survey in 2021. 88% of the workforce
would recommend the BMW Group as an employer. 86% of em-
ployees were convinced by the strategy of integrating sustain-
ability and setting ambitious targets in this respect. They also
signalled a high level of willingness and motivation to play an ac-
tive role in this process, This contributes significantly to the fact
that approximately 85% of respondents are optimistic about the
future of the BMW Group. The topic of Compliance also scores
well among the workforce, with 88% approval. Despite progress
compared to the last survey, employees identified room for im-
provement in the optimisation of processes. The results of the
survey will form the basis for concrete measures that are sched-
uled for implementation by mid-2024.
Combined Management Report
Employees and Society
direct¹
Apprentices and participants in future talent programmes
54.6
In order to avoid cyber risks and deal effectively with an increas-
ing number of supplier-related incidents, the BMW Group contin-
ues to rely on supplier certification in accordance with the TISAX
automotive standard. When it comes to purchasing materials
both directly and indirectly, TISAX is an integral part of the pro-
curement process and an inherent component of contracts with
suppliers that meet the specific relevance criteria. The initiative
for joint IT security analyses and the regular exchange of infor-
mation via a B2B portal also enable us to make the supplier net-
work more resilient.]]
112
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Production and Supplier Network
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
[[An increasing number of training courses and informational
events are being organised both internally and externally to raise
awareness of the rapidly growing level of cyber risk.
Raw materials security and strategy
The volatile situation on energy and raw materials markets had
a major impact on purchasing over the course of 2023. The long-
term supply of critical raw materials required for electric mobility
remains a strategic challenge. Measures taken by the
BMW Group to increase supply security and promote the pro-
curement of raw materials from responsible sources include,
among other things, sourcing lithium and cobalt directly. Further-
more, the BMW Group analyses the development of raw materi-
als prices and hedges against price fluctuations - provided the
capital market offers the opportunity to do so. 7 Raw materials price
risks and opportunities
For the BMW Group, the responsible procurement of raw mate-
rials is the result of a holistic approach that takes economic, eco-
logical and social aspects equally into account. Our commitment
to upholding environmental and social standards as well as hu-
man rights throughout our raw materials supply chains is set out
in, among other places, the 7 BMW Group Supplier Code of Conduct in
which we oblige our Tier 1 suppliers to pass on our requirements
to their upstream sub-suppliers. There are also raw-materials-
specific statements such as the High Level Commitment for
sustainable natural rubber.
Annual risk analyses form the basis for implementing raw-mate-
rials-related preventive and remedial measures to reduce envi-
ronmental and human rights risks. Key levers in this respect are
to forgo, substitute or reduce the use of primary raw materials
that entail a high level of risk. The BMW Group's secondary raw
materials strategy is of vital significance in this context: > Circular
economy, resource efficiency and renewable energy. We also focus in par-
ticular on collaborating closely with our partners in the supplier
network as well as in multistakeholder initiatives and projects.
We use scientific findings to gain an even better understanding
of the extraction processes of raw materials and take them into
account accordingly when analysing the level of risk. 7 Lithium
Study
Among other things, the BMW Group focuses on the conflict min-
erals tin, tantalum, tungsten and gold (3TG) and uses standard-
ised tools of the Responsible Minerals Initiative (RMI) to trace raw
materials back to the smelter. We use existing certifications for
other raw materials. The BMW Group is also involved in develop-
ing certified standards for critical stages of the value chain, for
example as part of the Initiative for Responsible Mining Assur-
ance (IRMA), and is engaged in their implementation by suppli-
ers. Further details and raw materials profiles are available
7 online. SASB Index
Moreover, the BMW Group has set itself the goal of generating a
positive impact for selected raw materials through our involve-
ment in local development projects. This currently applies to the
raw materials lithium, mica, cobalt and natural rubber.
Purchasing battery cells
An interconnected risk management system is fundamental for
managing the supplier network. It takes preventative action when
nominating suppliers, while also reacting quickly in order to iden-
tify and analyse impending supply bottlenecks. The
BMW Group's RiskHub analyses information from external, pub-
lic-ly available data sources with regard to potential risks such as
natural disasters or financial risks. We also employ state-of-the-
art methods derived from the fields of Al and big data analytics.
For selected topics such as the reliable supply of semiconductor
components, we also take the locations of sub-suppliers into ac-
count when assessing overall risk.
Eastern Europe
19.4
Risk management in purchasing
*Direct and indirect purchasing.
Procuring high-quality components at competitive prices
Recognising innovative solutions at an early stage
Further digitalising processes within the supplier network
Integrating social and ecological standards within the
supplier network
Supply security
The year 2023 was characterised by improved supply chain sta-
bility on the one hand, but also by rising material prices driven by
rampant worldwide inflation on the other. The latter resulted in
higher costs for the BMW Group, primarily for raw materials,
semiconductors, energy and transportation. The overall supply
situation also remained challenging in 2023. The supply situa-
tion for semiconductors in particular will remain challenging for
certain technologies in the current financial year. 7 Outlook, Risks
and Opportunities
Natural disasters pose an additional risk. Extensive flooding in
Slovenia led to delivery difficulties during the year under report.
The prospect of climate change and the increasing number of
extreme weather events are likely to make planning more difficult
going forward. However, the BMW Group is able to mitigate the
effects of these unexpected events through its flexible supply
network and thus largely ensure its ability to deliver vehicles.
To lessen the impact of the war in Ukraine on its European
plants, since 2022 extensive measures have been in place, and
therefore continues to source components from western Ukraine.
At the same time, our partners have established additional pro-
duction sites outside Ukraine. As a result of these various
measures the supply of wiring harnesses to our plants has
largely returned to normal. The situation is, however, being mon-
itored continually.
Expanding resilient supply chains
During the year under report, the BMW Group was generally able
to rely on the stability of its supply chains, despite the problems
caused by geopolitical crises and the availability of critical raw
materials. Price increases on global markets also tended to in-
tensify the tense purchasing situation. The BMW Group RiskHub
plays a key role in making our global supply chains more resilient.
For example, it helps to identify risks at an earlier stage through
the use of artificial intelligence (AI). We see the development of
the Catena-X digital ecosystem as the key to standardised data
transfers throughout our supplier network.
As of 2025, the BMW Group plans to deploy a new generation of
battery cells. Against this backdrop, we have concluded contracts
with our partners that guarantee us annual production capacities
in Europe, China and the USA. We are strategically establishing
supply chains for battery cells close to our production sites,
thereby underpinning the "local for local" approach. During the
year under report, we entered into a new partnership in North
America to make the battery cell supply chain more resilient.
The BMW Group follows the principle of procuring vehicle com-
ponents close to its production sites, wherever possible. We are
therefore represented by local purchasing teams in all key mar-
kets in order to quickly identify local risks and opportunities and
respond flexibly to the respective market conditions. In the face
of geostrategic aspects, a resilient strategy for the Group's sup-
ply chains is also becoming increasingly important and the
BMW Group takes this fact increasingly into account when se-
lecting its partners.
in %
China 17.4
Other 3.3
Other Western
Europe 11.9
Total
96.1 Mrd. €
Germany 32.5
North America
15.5
Regional distribution of the BMW Group's purchased
volumes*
Ensuring security of supply to the production plants
Expanding resilient supply chains within a highly
challenging geopolitical environment
To strengthen this resilience even further, we plan to anchor the
upstream value chain for critical components in the respective re-
gions while accounting for geopolitical risks and economic effi-
ciency. Through this, the BMW Group also aims to improve its
resilience in the face of external events while reducing its de-
pendence on geopolitical factors and its exposure to related
risks.
In-house production as a strategic competitive advantage
The BMW Group regularly examines its range of products in
terms of their profitability and strategic significance. The main fo-
cus is being directed at electric mobility, digitalisation and sus-
tainability. In these key areas of transformation, the BMW Group
is expanding its in-house expertise on a targeted and long-term
basis on matters relating to strategically important components.
At the same time, in-house production aims to improve both se-
curity of supply and the ability to innovate. The benefits of this
approach have already been seen, for example, with the control
unit of the high-voltage storage system and scopes of the electric
drive equipment. At the same time, we are looking to strengthen
our process competencies in technologies relevant for quality
management and enablement within the supplier network.
Risk analysis
The BMW Group monitors and assesses the sustainability risks
in its supplier network in business relationships at both potential
and active supplier locations. In order to identify and assess ab-
stract environmental and human rights risks, various internal and
external data sources such as country- and product-group-spe-
cific indicators as well as media analyses at Group and location
level are drawn upon. The BMW Group uses standardised sus-
tainability surveys and commissions external on-site audits (as-
sessments) to conduct in-depth risk analyses for its Tier 1 sup-
pliers. Supply chain mapping forms the basis for analysing risks
at n-Tier suppliers. The BMW Group continuously endeavours to
increase transparency along the entire supply chain. 7 GRI Index:
2-24, 308-1,414-1
Prevention and remediation
Prior to signing a contract with the BMW Group, if any risks are
identified in the course of the specific risk analysis, our suppliers
are required to implement or expand the necessary preventive or
remediation and control measures by an agreed target date. Our
suppliers are also required to request these from their subcon-
tractors based on their respective risks. The measures, which are
queried, validated and evaluated as part of the sourcing process
using the industry-wide questionnaire from Drive Sustainability,
serve to minimise potential risks or eliminate existing deficien-
cies. Further GRI information, ▾ Sustainability assessment of relevant
supplier locations This online assessment is performed for suppliers
of production-related goods and services with a contract volume
over a certain threshold. Different modules are used depending
on the size of the company being assessed. Implementation
must be successfully completed prior to the start of production.
For suppliers of non-production-related goods and services, this
procedure is also carried out depending on country- and product-
group-specific risks. The extent of the preventive measures is
based on the potential risks, the nature and scope of the busi-
ness activity and the size of the supplier. In addition, we offer
training courses on sustainability in the supply chain, some of
which are mandatory for internal purchasers. These trainings
also address process partners and suppliers on a voluntary ba-
sis.
The BMW Group has put additional control mechanisms in place
for suppliers in high-risk regions or high-risk product groups. Key
instruments in this respect are audits of environmental and social
standards at supplier locations using cross-industry assessment
programmes provided by the Responsible Business Alliance
(RBA) and the Responsible Supply Chain Initiative (RSCI) of the
VDA. The BMW Group reviewed a total of 95 potential and active
supplier locations using this method during the reporting year
(2022:49). The BMW Group has set itself the goal that all Tier 1
supplier sites that have been assessed meet the locally applica-
ble statutory requirements for sustainability as well as interna-
tional human rights standards (BMW Group minimum require-
ments). In 2023, 17 of the 19 closure assessments confirmed
that all cases of non-compliance with minimum requirements
(priority non-conformities) that were identified in initial ]]
114
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Production and Supplier Network
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
[[assessments had been redressed. In two cases, the closure as-
sessment carried out was not immediately able to confirm that
the agreed measures had been implemented. However, together
with the suppliers the BMW Group has now implemented these
measures, which will be reviewed by means of a new assess-
ment in 2024. GRI Index: 2-24, 308-2,414-2
Effectiveness and complaint mechanisms
Information on possible violations of the BMW Group's sustaina-
bility requirements in the supplier network can be submitted via
the BMW Group Human Rights Contact Supply Chain, among
other options. We also use the standardised RBA Voices com-
plaint mechanism as a complementary measure. Moreover,
whistle-blower systems are in place to detect and report possible
statutory violations. Our aim is to ensure that all substantiated
reports of environmental or human rights violations are rectified
by agreeing on remediation measures. Further information on
whistle-blower systems at the BMW Group can be found in the
chapter Compliance and Human Rights and on the website.
If necessary, the BMW Group temporarily suspends a given busi-
ness relationship during efforts to mitigate the detected risk.
However, the business relationship will only be terminated if no
other effective means are available and we are unable to further
leverage our ability to exert influence. We endeavour to avoid this
latter situation by carefully selecting our suppliers and empower-
ing and working with them to improve their sustainability perfor-
mance. No existing supplier relationships needed to be termi-
nated due to serious sustainability violations during the year un-
der report. GRI Index: 2-24, 3-3, 308-1, 414-1
Our corporate responsibility for environmental and social stand-
ards in the supply chain is institutionalised as part of a multi-
stage due diligence process. We mainly use standardised control
procedures to carry out the due diligence obligations incorpo-
rated in our business processes. The BMW Group also cooper-
ates with initiatives and associations such as the Responsible
Business Alliance (RBA) and Drive Sustainability. In this context,
we follow the guidelines developed by the German Automotive
Industry Dialogue. We also remain committed to establishing an
industry-wide complaints mechanism, among other things.
Due diligence in the supplier network
The BMW Group's overarching approach to respecting human
rights and upholding social standards along the entire value
chain is provided in the chapter on 7 Compliance and Human Rights.
The BMW Group views responsible supply chain management
as an integral part of good corporate governance The develop-
ment of established processes was continued throughout the
year under report. The BMW Group's requirements and the ex-
pectations it places on its suppliers are set out in the 7 BMW Group
Supplier Code of Conduct and contractually enshrined as an integral
part of the BMW Group's Terms and Conditions of Purchase.
7 GRI Index: 2-23, 3-3, 407-1, 408-1
Quality assurance
Quality is a promise we make to our customers as well as a de-
cisive competitive advantage and an essential factor for the en-
during success of the BMW Group. The quality management sys-
tem is the basis for continuously improving the quality of our
products, processes and services. It consists of an intercon-
nected, comprehensive system that encompasses the entire
product development process, industrialisation and series pro-
duction with respect to both in-house production and the supplier
network. The various steps are supported based on need by our
teams of quality experts when necessary. The ultimate aim is to
ensure - both preventatively and systematically - that all quality
requirements are met at all times.
Innovations
Collaboration with technology partners and the establishment of
new networks enables us to implement innovations in our vehi-
cles within a very short time. In this context, we work closely with
the BMW Startup Garage and BMW i Ventures.
The specialist teams cooperate in technology clusters to sharpen
the focus on innovation screening, which is implemented through
strategic supplier dialogue formats (Future Vision Deep Dive) and
other means. Findings from the supplier network are systemati-
cally processed within the technology clusters.]]
113
BMW Group Report 2023
To Our Stakeholders
Secondary raw materials will be increasingly deployed to cover
the BMW Group's cobalt, lithium and nickel requirements, to-
gether with purchased green electricity for the latest generation
of battery cells. Contracts and framework agreements have al-
ready been concluded with suppliers to this end. This will help
further reduce our carbon footprint from the new battery cell in
the supply chain compared to the previous generation. 7 Carbon
emissions in the supply chain
Combined Management Report
Production and Supplier Network
Remuneration Report
Other Information
← = Q
[[Digitalisation in the supply chain
For the BMW Group, a digital flow of information throughout the
supply chain is an essential prerequisite for establishing more re-
silient and flexible supply chain management.
Catena-X is the pioneering initiative within the automotive indus-
try for digitalising the supply and value chains between automo-
bile manufacturers, suppliers, sub-suppliers and, in the future,
recycling companies. The digital platform enables partners
within value chains to tackle key challenges facing the industry,
such as enhancing resilience, meeting sustainability goals and
regulatory matters through digital collaboration. After two years
of development work, including a significant contribution from the
BMW Group as consortium leader, a beta test phase was suc-
cessfully conducted in 2023. Among other things, pilot projects
were carried out in conjunction with BMW component produc-
tion, providing valuable insights that will serve to promote inno-
vative data processing methods in a production environment.
Catena-X has been in the rollout phase since October 2023.
The BMW Group is focusing mainly on component traceability
along multistage supply chains, cooperative root cause analysis
to combat any potential quality problems and the collection of
carbon-emissions-related data in the supply chains. In 2024, ef-
forts will be scaled up with suppliers with the aim of further im-
plementing and developing additional "use cases" as well as
scaling these for strategic relevant components through the in-
dustry network. Another key advancement is the provision of dig-
ital product passports, which contain product-specific data for
components such as batteries or even for entire vehicles. Based
on information from the n-tier supply chain via Catena-X, data
are available in particular regarding origin, material composition
and recycling.
14.4
Group Financial Statements Responsibility Statement and Auditor's Report
When it comes to purchasing and the supplier network, the main
focus areas are:
Social and environmental responsibility
[[Supply chains and supplier network
2021
2020
2019
200
469
389
416
279
370
in € million
Spending on employee training and development¹
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
Employees and Society
2022
2023
[[Recruiting and supporting new staff
3 Abbreviation for all sexual orientations and forms of identity.
30.9
The BMW Group's Purchasing and Supplier Network is respon-
sible for the global procurement and quality assurance of produc-
tion materials, raw materials, components, capital goods and
services as well as the in-house production of vehicle compo-
nents.
indirect²
9.5
63.2
27.3
male
10.4
BMW Group Report 2023 To Our Stakeholders
59.2
female
15.6
20.3
The aim of diversity management is to anchor the importance of
diversity in thought and action. A key component is web-based
training against discrimination in the workplace. This training has
been mandatory for all employees in Germany since 2023. From
2024, all BMW Group employees will be offered anti-discrimina-
tion training. We have also introduced measures such as the
7 Senior Expert Programme and the Joint Leadership Programme,
which were used with increasing frequency in 2023. The BMW
Group also commissioned an external analysis of its existing
commitments, with a focus on the dimensions of sexual orienta-
tion and identity. This took place within the framework of our
membership with "PROUT AT WORK", a leading foundation and
consultancy in Germany focusing on LGBTIQ+3 issues in the
workplace, aimed at promoting equality for individuals within the
queer community. We will use this as the basis for specific
measures in the next step.
-
The established "Diversity Week" was expanded in 2023 to be-
come the international "Days of Diversity" for the first time.
Throughout the year, numerous activities such as lectures,
workshops and interactive events for employees - took place at
our locations worldwide, including special events on International
Women's Day and the International Days of Cultural Diversity
and Tolerance. In the reporting year, we also implemented
measures that were adopted in 2022 as part of the revised ver-
sion of BMW AG's general operating and inclusion agreement for
employees with disabilities. Examples of this include our require-
ments for barrier-free access in the areas of Manufacture and IT.
As in previous years, BMW AG in Germany awarded contracts
amounting to around € 42.7 million (2022: € 41.1 million) in
2023 to workshops staffed by people with disabilities.]]
1 Direct: Clock-controlled and production employees.
2 Indirect: All employees not engaged in clock-controlled work.
30.4
116
64.0
The progress of our Company-wide qualification measures is
also reflected in the number of participants* which, at around 1.4
million, was significantly higher than the previous year (2022: 1
million). The number of training hours per employee also in-
creased in 2023 to an average of 23.7 hours (2022: 21.6).
▾ Further GRI information ]] Standing at a total of € 469 million, in-
vestments in training and further education for employees were
once again higher than the previous year (2022: € 416 million).
7 GRI Index: 404-1,404-2
To Our Stakeholders
BMW Group Report 2023
115
2 In-house generation, direct purchase or Energy Attribute Certificates (e.g. guarantees of origin).
3 The procedure for determining the key figures is explained in the glossary. The methodology used
to calculate carbon emissions in the supply chain and related to logistics changed in the 2023 re-
porting year. Glossary.
1 The BMW Group includes measures that reduce carbon emissions, such as the use of green elec-
tricity, the use of secondary raw materials, new manufacturing processes for raw materials, and
product and material innovations such as biomaterials. Accordingly, compensation measures are
not included.
[[We continue to rely on the Carbon Disclosure Project (CDP) Sup-
ply Chain Programme to assess the performance of the supply
chain in terms of its decarbonisation. This helps suppliers to de-
fine their decarbonisation targets, integrate these into their busi-
ness processes and report on the actual reductions achieved.
Their efforts are linked to a rating from which we derive measures
for supplier development and empowerment. In 2023, 282 sup-
pliers took part in the rating (84% of the production-relevant pur-
chasing volume).]]
current upward trend will reverse by 2026 at the latest thanks to
the implementation of carbon-reducing measures.
Furthermore, we continue to engage an external service provider
to carry out annual reviews relating to decarbonisation measures
in series production. In the course of 2023, the BMW Group re-
viewed compliance with contractually agreed decarbonisation
measures in the supply chain at 72 suppliers (2022: 23). As a
result, the BMW Group reduced the volume of carbon emissions
generated in the supply chain by around 1.7 million t CO₂e during
the reporting period. In 2023, carbon emissions generated in the
supply chain and via logistics on behalf of the BMW Group world-
wide averaged 13.9 t CO₂e per vehicle produced (t CO₂e)³. As ex-
pected, the gradual electrification of the fleet leads to a rise in
emissions generated in the supply chain. We assume that the
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Employees and Society
In 2023, the number of contractual agreements with suppliers
that specified decarbonisation measures rose to 707 (2022:
468), Including those specifying the use of secondary raw mate-
rials, biomaterials and carbon-reduced steel. In our view, how-
ever, the use of green electricity has the greatest impact on de-
carbonising the supply chain². Accordingly, the BMW Group
specifies its use by direct suppliers (Tier 1) and for energy-inten-
sive processes in the upstream supply chain (n-Tier) as a crite-
rion for awarding new contracts to supply carbon-intensive com-
ponents and materials. During the year under report, we con-
cluded agreements of this kind for 676 contracts (2022: 343
contracts). In addition, since mid-2021 the BMW Group has con-
cluded numerous framework agreements with suppliers regard-
ing the use of green electricity.² In 2023, the BMW Group had 72
valid green electricity framework agreements in place with its
largest suppliers (2022: 46). During the year under report, we
developed an approach to review suppliers' concepts for the use
of green electricity even prior to series production.]]
Combined Management Report
Production and Supplier Network
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
* The number of participants takes into account the fact that there are employees who attended
several training events within the reporting year.
← = Q
PURCHASING AND SUPPLIER
NETWORK
111
Remuneration Report
BMW Group Report 2023 To Our Stakeholders
ATTRACTIVENESS AND
EMPLOYEE DEVELOPMENT
measures.
In 2023, the BMW Group accelerated the comprehensive devel-
opment of digital skills across the Company with the "Digital
Boost" training campaign. Further training measures in the re-
porting year also focused on the future-oriented fields of electrics
and electronics, data analytics, artificial intelligence, innovative
production technologies and new working methods.
At 31 December 2023, the BMW Group employed a total work-
force of 154,950 people worldwide. This represents a slight in-
crease compared to the previous year (2022: 149,475/+3.7%).
Further GRI information We are, therefore, continuing to build up
employment, particularly in Development and IT, as well as in our
global production network. GRI Index: 2-7, 2-8
[[ Sustainable employment with appealing general conditions is a
cornerstone for individuals who decide to join the BMW Group.
We aim to provide a stable outlook, fostering personal growth
opportunities and empowering individuals to contribute to shap-
ing the Company's future. This forms the basis for the BMW
Group's long-term success when competing for talented profes-
sionals.]]
EMPLOYER
EMPLOYEES AND SOCIETY
GROUP
BMW GROUP
Unchen
Developing expertise for the future
[[The transformation shaping the automotive industry, particularly
with regard to electrification and digitalisation, is associated with
far-reaching changes. The BMW Group is adopting a forward-
looking approach to the associated challenges facing its employ-
ment structure, by systematically building up and transforming
expertise. As part of our integrative "Just Transition" approach,
we actively facilitate a socially responsible transformation of our
employees through comprehensive qualification and training
120 Diversity, Equal Opportunity and Inclusion
118 Health and Performance
Development
115 Employer Attractiveness and Employee
EMPLOYEES AND SOCIETY
← = Q
122 Corporate Citizenship
Other Information
Responsible Leadership for sustainable development
The BMW Group wants to support and bring together people
who are committed to societal needs. The annual One Young
World Summit represents an international networking oppor-
tunity. The BMW Group has been sending a delegation of young
managers to the global forum for sustainable development since
2016, including in 2023. Selected IIH organisations also had the
opportunity to take part in the international event.
[[As part of its social commitment, the BMW Group is committed
to environmental, economic and social issues outside its core
business. As such, we not only live up to our own aspirations but
also the expectations of society and our stakeholders worldwide.
The BMW Group aims to act in a targeted, long-term and effec-
tive manner. We also provide quick and unbureaucratic assis-
tance in the event of a crisis. We have defined four key topics that
are reflected in our projects on the basis of our core business and
skill sets:
Inclusion for equal opportunities
The BMW Group is a partner of the Intercultural Innovation Hub (IIH).
This platform has emerged from our long-standing partnership
with the UN Alliance of Civilizations and supports selected organ-
isations around the world that are engaged in concrete projects
promoting intercultural dialogue, peace and diversity, among
other initiatives. For this purpose, they receive support for over a
year in the form of expertise, networking opportunities and finan-
cial resources. The currently funded projects were honoured at an
event in Berlin in May 2023.
We also contribute, for example, by supporting the 7 JOBLINGE
programme. The initiative helps people with a difficult start in life
to begin their professional lives.
1 The share of employees with severe disabilities is based on the statutory requirements in accord-
ance with the German Social Code (SGB IX).
the BMW Foundation Herbert Quandt expands our network with more
than 2,300 Responsible Leaders from over 100 countries on all
continents. As an important partner, the independent corporate
foundation contributes with its activities to the perception of so-
cial responsibility at the BMW Group.
Education for future generations
CORPORATE CITIZENSHIP
The BMW Group has been supporting educational projects at its
locations worldwide for many years. With BRIDGE. We are taking the
next step with Educating young people for tomorrow, today - a global and
long-term collaboration with UNICEF that started in 2023. The
collaboration aims to qualify young people in Brazil, China, India,
Mexico and South Africa for careers in the mathematical and
technical fields, while also collecting donations for the education
of children and adolescents in crisis areas within existing plat-
forms, and with the involvement of international subsidiaries and
stakeholders. The BMW Group is thereby making a long-term
contribution to UNICEF's goal of reaching more than ten million
children and adolescents through education. By undertaking this
commitment, we are simultaneously implementing our corporate
citizenship strategy at the local level, for example, through men-
toring and internship opportunities directly at our locations.
Culture and Sports for a united world
To support young talent, the BMW Group awards full-time schol-
arships for the Global Online Master in Business Administration
(MBA) at the European School of Management and Technology (ESMT)
Berlin as part of the BMW Group Change Maker Fellowships. In addition,
← = Q
122
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
Employees and Society
To Our Stakeholders
BMW Group Report 2023
6 Excluding sales companies.
training and instruction (MINT areas) was reported.
5 Up to and including the reporting year 2022, only the proportion of women in technical vocational
"The trainee programme was launched in April 2023 under its new name "AcceleratiON".
3 For a definition of the term employee, please refer to the Glossary.
The BMW Group supports numerous sports and cultural activi-
ties worldwide. For example, the "Opera for All" initiative pro-
vides free access to opera and classical music in Munich, Berlin,
Melbourne and London. In the context of our sports sponsor-
ships, we also contribute, for example, through the scholarship
programme of the Evans Scholars Foundation in conjunction with
the BMW Championships golf tournament.
2 For a definition of the term management positions, please refer to the Glossary.
Other Information
Valuing and supporting employee commitment
The BMW Group promotes and encourages employees to sup-
port social issues around the world in various ways through its
SOCIAL DRIVE initiative. The first pillar is the annual BMW Group
AWARD for social commitment, which has recognised the out-
standing commitment of individual employees for 12 years. Of
the ten finalists in 2023, four emerged as winners - one of whom
also won the special Doppelfeld Foundation prize. The prize
money of € 10,000 each will be used to fund the relevant charity
projects. The second pillar is the SOCIAL DRIVE IT platform,
which informs employees about specific support needs. The
platform launched in Germany in 2022 and is currently being
rolled out internationally. With our employees' help, we can also
provide more comprehensive support for existing projects, for ex-
ample through volunteer work and monetary donations. The
third pillar is the SOCIAL DRIVE DAYS, which are intended to
strengthen our employees' interest in social commitment.
The growth rate in the USA is expected to slow to 1.8% in 2024.
Higher interest rates are burdening companies and private
households in that country as well, while continually low unem-
ployment levels are supporting the economy.
The BMW Group's expenditure within the strategic focus areas
in 2023 totalled € 44.2 million (2022: € 38.7 million). This in-
cludes donations for those affected by earthquakes in Turkey,
Syria and China, as well as fires in Hawaii and the floods in Italy.
Beyond financial support, the BMW Group also provides assis-
tance in the form of knowledge transfer, networking opportuni-
ties, projects to promote public infrastructure, and the engage-
ment of its own workforce. We also generate additional societal
impact through memberships in associations and institutions,
the provision of vehicles, including for vocational schools, and
participation in projects aimed at promoting more sustainable
mobility in cities. Shaping the future of mobility In doing so, we aim
International motorcycle markets
in the total workforce
The generally stable macroeconomic conditions should allow for
slight growth on international automobile markets in 2024
(+3.9%). Growth is expected to be spread across many mar-
kets, particularly the US and China. A higher global supply of new
vehicles is, however, expected to give rise to increasing price
competition, which will also have an effect on prices for pre-
owned vehicles.
International automobile markets
The currencies of emerging countries such as India and Brazil
may benefit from the monetary policies of the EU and USA sta-
bilising in 2024. No further devaluations against the euro and US
dollar are therefore expected at present.
Low inflation in China could lead to a more expansionary mone-
tary policy on the part of the central bank of China, potentially
resulting in a depreciation of the renminbi against the euro.
It is possible that Japan's highly expansionary monetary policy
may come to an end in 2024. If it does, the yen would appreciate
somewhat against the euro compared to its current very low
level.
It is expected that inflation in the US and in Europe will continue
to fall, and the BMW Group therefore does not expect any further
interest rate hikes from central banks. Accordingly, the US dollar
is expected to move sideways against the euro in 2024, with the
pound/euro exchange rate also expected to remain stable.
won.
Currencies of particular importance for the international opera-
tions of the BMW Group are the Chinese renminbi, the British
pound, the US dollar, the Japanese yen and the South Korean
Currency markets and international interest rate
environment
The Japanese economy is expected to see slower growth in
2024 than in the previous year (+0.8%).
Growth is expected to reach 4.6% in China, where continued up-
heaval in the real estate sector and the resulting drop in con-
sumer confidence are dampening expectations.
A slight uptick in economic output (+0.4%) is forecast for the UK,
where higher interest rates and continued higher inflation are
slowing growth.
Forecasts for the eurozone as a whole indicate slight growth
(+0.6%). France (+0.7%), Italy (+0.5%) and Spain (+1.6%) are
expected to meet or outstrip the average for the eurozone. Ger-
many is expected to record at least a slight increase in economic
output in 2024 (+0.3%), although the continued modest growth
in the global economy is dampening the country's export econ-
omy.
The International Monetary Fund anticipates global growth of
3.1% in 2024. Geopolitical conflicts and the effects of tighter
monetary policy in many countries will be the greatest burdens
on the global economy in 2024. Higher interest rates are affect-
ing consumer spending and investment, with a corresponding ef-
fect on the economy. Further information on political and global
economic risks is also available in the Risks and Opportunities sec-
tion.
Economic outlook
The continuous forecasting process applied within the
BMW Group ensures that it is constantly ready to take advantage
of opportunities as they arise, but also to react appropriately to
any unexpected risks. The principal Risks and Opportunities are de-
scribed in detail in the section of the same name and concern all
performance indicators. Actual outcomes may, however, deviate
from the outlook due to unexpected events.
The outlook and Risks and opportunities of the BMW Group pre-
sented in this report reflect the expected development in 2024
from the perspective of Group management. In line with the
Group's performance management, the outlook covers a period
of one year. Short-term risks and opportunities are managed on
the basis of a two-year assessment period. In addition, we report
on medium- and long-term risks and opportunities arising in con-
nection with climate change.
OUTLOOK
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Outlook
To Our Stakeholders
BMW Group Report 2023
123
to contribute as corporate citizens and play our part in address-
ing major future questions and challenges.]]
Corporate citizenship with impact
in management functions
[[The BMW Group is also aware of the need to achieve a high per-
centage of women in our future talents programmes. By doing
so, we aim to ensure that the share of women in the total work-
force and in management positions continues to rise in the fu-
ture. The proportion remained high in the trainee programme Ac-
celeratiON in 2023 at 41% (2022: 45%). The same applied to
the student support programmes (Fastlane, SpeedUp), with a
proportion of around 28% (2022: 31%). For our regular voca-
tional training and instructions, the share of women at BMW AG
in 2023 was 21.9%, and 22.1% in the BMW Group6.
in management functions
The BMW Group has set targets for the percentage share of
women at all levels of the Company. By 2025, we aim to increase
the share of women in the BMW Group workforce as a whole to
between 20 and 22% and to between 17 to 19% for BMW AG.
We aim to boost the share of women holding management posi-
tions in the BMW Group to 22% by 2025, and to 20% for
BMW AG.
The BMW Group is working continuously to increase the share of
women in the workforce as a whole, and in management func-
tions, in particular. This remains a challenging task in that it is still
the case that more men go through the process of vocational
training, particularly in technical fields, and are, therefore, in the
majority on the labour market.
Increasing the share of women
[[Our employees play a key role in ensuring that diversity, equal
opportunity and inclusion are actively practised. To this end,
many are involved and networked via internal networks. These
include family and women's networks at numerous locations,
and the BMW Group PRIDE association. This association advo-
cates for the interests of the LGBTIQ+ community across coun-
tries. The spirit of cooperation and dialogue with the internal net-
works provides the BMW Group with important impetus and sup-
port for the further development of its commitment.]]
Concepts to promote diversity, equal opportunity and inclusion
have also been developed by the BMW Group in relation to the
composition of the Board of Management and Supervisory
Board. Information on the stipulated diversity criteria and their
implementation is provided in the Corporate Governance Statement.
7 GRI Index: 3-3, 405-1]]
The share of women in the BMW Group workforce as a whole
reached 19.2% (2022: 18.6%). For BMW AG, the share was
17.1% (2022: 16.5%). The share of women in management
positions within the BMW Group has been rising steadily for
many years. Globally, the share of female managers in the
BMW Group stood at 20.8% at the end of the reporting year
(2022: 20.2%). In the last ten years, the number of women in
management positions in BMW AG has almost doubled. When
expressed as a percentage, the share of female managers at
BMW AG was 18.7% at the end of 2023 (2022: 18.2%).
7 Further GRI Information
2023
2022
2021
2020
2019
4.0
6.0
Share of women in management positions and in the
total workforce (BMW AG)²
6.2
6.5
6.6
in %
[[Share of employees with severe disabilities at BMW AG¹
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Employees and Society
To Our Stakeholders
BMW Group Report 2023
121
The BMW Group expects the world's motorcycle markets in the
500 cc plus class to remain in line with the previous year overall
in 2024. In Europe, market growth is also expected to be in line
with last year's level, with a slight decrease forecast in the USA.
Economic expectations will influence the motorcycle market in
China, while the motorcycle market in Brazil is expected to re-
main in a stable condition in 2024, as in the previous year.
6.5
in %
18.2
18.7
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
0
0
19.2
18.6
20.8
20.2
18.819.7
17.8
17.2
19.5
19.3
in %
Share of women in management positions and in the
total workforce (BMW Group)²
17.1
16.5
16.0
16.215.9
15.515.7
17.5
in the total workforce
124
Group Financial Statements Responsibility Statement and Auditor's Report
Group Financial Statements
Performance
Management
Risk
Management
Supervisory
Board
Internal and external audit
129
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Risks and Opportunities
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Steering
Committee
← = Q
The impact of risks and opportunities is presented separately
without offsetting against each other.
Group-wide effects and trends can be identified by aggregating
all material short-term risks at Group level. For this purpose, the
potential earnings impact of the risks is aggregated, taking cor-
relation effects into account. In order to assess the risk-bearing
capacity of the BMW Group, the aggregated amount of risks is
compared with the risk cover amount (the equity of the
BMW Group recognised for accounting purposes). A limit system
for various risks helps monitor the risk-bearing capacity.
Reputational risks
Quite apart from the financial consequences, risks can also have
an impact on the BMW Group's reputation. For these purposes,
the BMW Group assesses all material risks with regard to their
impact on its reputation using a scoring model. Moreover, other
overarching topics are monitored by means of regular media
analysis. Any material reputational repercussions are described
in the section Material Short-Term Risks and Opportunities.
Climate-related risks
Risks associated with climate change are presented in the sec-
tion Climate-Related Risks and Opportunities. Climate-related risks are
evaluated as physical and transitory risks in accordance with the
recommendations of the Task Force on Climate-related Finan-
cial Disclosures (TCFD). Transitory risks arise from the transition
to a low-carbon economy and are evaluated with the help of cli-
mate-related risk drivers and qualitative expert assessments.
Physical risks arise due to climate change and are evaluated us-
ing external data on potential natural hazards. Potential short-
term impacts of climate change are already included in the short-
term risks. All short-term risks are evaluated for their climate im-
pact. If a risk is categorised as climate-relevant, the climate-re-
lated portion of the risk is determined. The potential development
of climate-related risks is evaluated for two reporting periods
(medium-term until 2035 and long-term until 2050) and for
three global warming scenarios.
Non-financial risks as reported in the non-financial
statement (NFS)
Alongside the maintenance of a comprehensive system of risk
management, sustainability constitutes a core strategic principle
of the BMW Group. Risks resulting from sustainability issues are
generally identified via the Group-wide risk management
network.
In accordance with § 289c of the German Commercial Code
(HGB), risks that could have an impact on the non-financial as-
pects referred to in the relevant legislation are reviewed as part
of the reporting process. Material risks in this context are defined
as those stemming from business activities, business relation-
ships and products and services provided by the BMW Group
that are highly likely to have a seriously adverse impact. No ma-
terial non-financial risks were identified during the reporting year.
Opportunity management
Identifying opportunities is an integral part of the BMW Group's
strategic planning process. The Group's range of products and
services is continually reviewed on the basis of these analyses.
The continuous monitoring of key business processes and strict
cost controls are also essential factors for ensuring high levels of
profitability and returns on capital employed.
Risks are classified according to the risk amount (average earn-
ings impact, taking into account the probability of occurrence).
The earnings impact may be significantly higher if the risk actu-
ally materialises (worst-case scenario, confidence level: 99%).
The importance of short-term opportunities for the BMW Group
is classified on a qualitative basis in the categories “material” and
"immaterial". Probable measures aimed at increasing profitabil-
ity are already incorporated in the outlook.
Board of
Management
Short-term risks
The aim of our risk management system (RMS) is to identify,
measure and actively manage risks, both individual and cumula-
tive, that could pose a threat to the success of the business.
Risks and opportunities (including risks to reputation and cli-
mate-related risks) are considered for the current and subse-
quent financial year. Material Short-Term Risks and Opportunities In
addition, medium-term and long-term risks and opportunities
are also presented in connection with climate change. Climate-
Related Risks and Opportunities
Organisation of risk management
Risk management is organised as a decentralised, Group-wide
network and steered by a centralised risk management function.
The various BMW Group divisions are represented by Network
Representatives. We draw on the expertise of climate experts in
order to evaluate climate-related risks and opportunities. The re-
sponsibilities and tasks of the centralised risk management func-
tion, Network Representatives and climate experts are docu-
mented and accepted. All material risks are firstly presented for
review to the Risk Management Steering Committee, which is
chaired by Group Controlling. Any material risks are then re-
ported to both the Board of Management and the Supervisory
Board's Audit Committee.
Other functions such as Group Compliance and the Internal Con-
trol System (ICS) form key interfaces to the risk management
system. In its capacity as an independent control body, Corporate
Audit reviews the RMS established by the Board of Management
on an annual basis.
128
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Risks and Opportunities
Remuneration Report
Other Information
← = Q
According to our Group-wide guidelines, all employees and man-
agers have a duty to report risks through the designated report-
ing channels. The key elements of the risk management pro-
cesses and an appropriate risk culture are embedded in the
BMW Group's core values, the Group's extensive rules and reg-
ulations on risk management and in its overall risk strategy. Fur-
thermore, the BMW Group's risk management strategy is contin-
ually being refined in order to reflect new findings and require-
ments. Training programmes and informational events are reg-
ularly conducted throughout the BMW Group, particularly within
the risk management network.
Risks relating to the current and subsequent financial year are
shown in the section Material Short-Term Risks and Opportunities.
These risks are evaluated using value-at-risk models and as-
sessed on the basis of uniform loss distribution metrics, thereby
enabling better comparability of risks for both internal and exter-
nal reporting purposes. Risks are evaluated net of any effective
risk mitigation measures (net basis).
The risk management process is applicable across the entire
Group and comprises the early identification, analysis and eval-
uation of risks, the use of appropriate risk management tools and
the monitoring and assessment of the measures taken. If no spe-
cific reference is made, risks and opportunities relate to the Au-
tomotive segment.
Risk Management in the BMW Group
Internal
Control
System
Risk
Management
System
Reporting/
Monitoring
Appropriateness
Identification
Analysis
and
Evaluation
Measures
The BMW Group uses standardised, suitable methods for meas-
uring all short-term risks, reputational risks and medium to long-
term climate-related risks.
Compliance
Management
System
Effectiveness
Risk Evaluation
The foundation of BMW Group's business success lies in effec-
tively managing risks and making use of any opportunities. This
is based on an effective risk and opportunity management strat-
egy, which puts us in a position to be able to react quickly and
flexibly to changes in political, economic, environmental, social,
technical or legal conditions. The general risk situation is regu-
larly evaluated as part of this.
Climate-related opportunities are identified progressively as part
of the strategy development process and described in the section
* Climate-Related Risks and Opportunities.
BMW Group Report 2023 To Our Stakeholders
High
Immaterial
High
Immaterial
Low
Immaterial
Information security, data protection and IT
Financial risks and opportunities
High
Immaterial
Foreign currencies
Raw materials
Liquidity
Immaterial
Other financial risks
Legal risks
High
Increased
Medium
Decreased
Material
Material
Low
Medium
Medium
Immaterial
Material
Medium
Pension obligations
130
Immaterial
to prior year
Combined Management Report
Risks and Opportunities
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
MATERIAL SHORT-TERM
RISKS AND OPPORTUNITIES
The overall risk situation for the BMW Group deteriorated mod-
erately year-on-year.
Consistently high inflation with high interest rates and lower real
incomes along with a corresponding widespread drop in demand
may have a negative impact on sales volumes and result in un-
favourable price and product mix effects. A prolonged war be-
tween Russia and Ukraine as well as further escalation of the
conflict in the Middle East could also significantly strain the global
economy. The present fragility of the Chinese economy poses an
extra risk to sales.
On balance, neither the Board of Management nor the Supervi-
sory Board see any threat to the BMW Group's status as a going
concern at the balance sheet date or at the date on which the
Group Financial Statements were drawn up. As in the previous
year, the current set of risks to the BMW Group are considered to
be manageable. All risks and opportunities that are expected to
materialise have already been addressed in the Outlook Report
as well as in the long-term corporate planning and are accord-
ingly not included in the risk and opportunity assessment below.
Liquidity requirements are currently covered by existing liquidity
as well as the various financing instruments available.
The following sections illustrate potential future developments or
events that could result in a negative (risk) or a positive (oppor-
tunity) deviation from the outlook for 2024 and 2025 and indi-
cate their significance to the BMW Group.
In addition, unforeseen events could affect business operations
and hence the BMW Group's results of operations, financial po-
sition and net assets as well as its reputation.
The following overview provides a summary of the material
short-term risks and opportunities:
Immaterial
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Risks and opportunities relating to operations
Production and technology
Purchasing
Sales network
Classification
of the risk level
High
High
High
Risks
Change compared
to prior year
Opportunities
Change compared
Classification
Strategic and sector-specific risks and opportunities
Changes in legislation and regulatory requirements
Market developments
RISK AND OPPORTUNITY
MANAGEMENT
Macroeconomic risks and opportunities
141 Summary and Outlook
The RoE in the Financial Services segment is predicted to finish
between 14% and 17%. As expected, the supply of and demand
for pre-owned vehicles is continuing to stabilise. It is therefore to
be expected that revenues from remarketing lease returns will fall
further as compared to 2023.
Group profit before tax will decrease slightly. As the BMW Group
continues to take a leading role among its competitors in the dig-
italisation and electrification of the vehicle fleet and intends to
strengthen this position, expenses associated with future pro-
jects will remain high in the Automotive segment in 2024. The
production network will also be expanded in 2024 in connection
with the NEUE KLASSE. The decrease in the financial services
business will also contribute to the fall in Group profit before tax.
The aforementioned targets are to be met with a slight growth in
the size of the workforce. Likewise, the share of women in man-
agement positions in the BMW Group is expected to increase
slightly.
The BMW Group's actual business performance may also devi-
ate from current expectations due to the risks and opportunities
discussed below in the Risks and Opportunities section.
BMW Group key performance indicators
GROUP
Profit before tax
Workforce at year-end
AUTOMOTIVE SEGMENT
EBIT margin
Return on capital employed (ROCE)
Deliveries
Share of all-electric vehicles in deliveries
CO2 emissions EU new vehicle fleet 1,2
The stable demand situation can also be seen in the Motorcycles
segment, where deliveries are predicted to increase slightly
owing to the full availability of models, including the BMW R
1300 GS. The EBIT margin is expected to be between 8% and
10% and the segment RoCE between 21% and 26%.
CO2 emissions BMW Group locations per vehicle produced³
EBIT margin
Return on capital employed (ROCE)
Deliveries
FINANCIAL SERVICES SEGMENT
Return on equity (ROE)
2023
Reported
2024
Outlook
€ million
17,096
154,950
Slight decrease
Slight increase
%
20.8
Slight increase
MOTORCYCLES SEGMENT
← = Q
Other Information
Remuneration Report
RISKS AND OPPORTUNITIES
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Outlook
← = Q
Expected consequences for the BMW Group
Future developments on international automobile markets have
a direct impact on the BMW Group. A challenging competitive en-
vironment and macroeconomic and geopolitical developments
could all have a significant impact on business performance. The
close cooperation between our sales network and our production
network and our flexible vehicle architecture allow us to respond
to even unforeseeable developments effectively. 7 Risks and
Opportunities
Assumptions used in the outlook
The outlook contains forward-looking statements based on the
BMW Group's expectations and assessments and may be influ-
enced by unforeseeable events. As a result, actual outcomes can
deviate either positively or negatively from the expectations de-
scribed below due to changes in the political and economic envi-
ronment as well as other factors.
The following outlook covers a forecast period of one year and is
based on the composition of the BMW Group during that time.
The outlook takes account of all information available at the time
of reporting that could have an impact on the BMW Group's
performance.
The expectations contained in the outlook are based on the
BMW Group's forecast for 2024 and reflect its status at the time
of preparation of the Group Financial Statements. The basis for
the preparation of and the principal assumptions used in the
forecasts which consider the consensual opinions of leading
organisations, such as economic research institutes and banks -
are set out below. The BMW Group's outlook takes account of
these assumptions.
-
It is expected that a fall in inflation and stabilised interest rates in
many countries will allow for a slight increase in demand in 2024.
The number of vehicle deliveries is set to increase slightly against
this backdrop and in light of the full availability of new models
such as the BMW 7 Series and the BMW 5 Series, model
launches such as the BMW X2 and BMW X3, and the renewal of
the MINI product range. Pricing across the product portfolio is ex-
pected to remain at prior year's level.
The BMW Group anticipates an improved situation on the com-
modity markets in 2024 in light of the downward price trend for
precious metals and battery materials in the second half of 2023.
The continued rise in all-electric and electrified vehicle numbers
does, however, mean that expenditure will remain at a high level.
Higher costs for employees are expected in 2024, along with
higher costs from the supply chain, owing to high inflation in pre-
vious years.
In addition, the continued implementation of the electrification
and digitalisation strategy will lead to greater research and de-
velopment costs in 2024. Expenditure related to the NEUE
KLASSE, such as the further development of the sixth generation
of battery technology and manufacturing preparations in the pro-
duction network, will also impact the Group's earnings and result
in greater capital expenditure.
The situation in the Middle East became increasingly volatile at
the end of 2023. The conflict between Israel and Palestine is not
having a significant effect on the BMW Group's business at pre-
sent as the Group does not operate directly in that region. How-
ever, it must be assumed that the threat posed in the Red Sea by
the Houthi militia will cause some logistical challenges in 2024.
Our outlook does not account for any further escalation of the sit-
uation. The BMW Group is monitoring developments.
The war in Ukraine and its potential implications for the
BMW Group's course of business are also being closely moni-
tored. All applicable restrictions resulting from sanctions have
been factored into the outlook.
In view of the growing unpredictability of political developments,
actual macroeconomic and geopolitical developments in some
regions may deviate from expected trends and outcomes. Poten-
tial sources of political uncertainty include policies affecting trade
and customs tariffs, security developments and a possible wors-
ening of international trade conflicts.
Outlook for the BMW Group - key performance indicators
Deliveries of BMW, MINI and Rolls-Royce brand vehicles in the
Automotive segment are expected to rise slightly year-on-year
due to a slight increase in demand, full availability of new models
and model launches. In this context, the share of all-electric ve-
hicles relative to total deliveries is expected to increase signifi-
cantly compared to 2023.
An EBIT margin of between 8 and 10% is forecast for the Auto-
motive segment in 2024. The RoCE for the Automotive segment
is also being affected by the increasing investment in electrifica-
tion and digitalisation, and expected to be between 15 and 20%.
The BMW Group expects to achieve its target of slightly reducing
the carbon emissions generated by its EU new vehicle fleet by
further improving the overall fuel consumption of its products and
deploying an increasing number of vehicles with electric
drivetrain systems. It is therefore expected that we will continue
to remain significantly under the legal limits.
A moderate reduction is expected in carbon emissions from
BMW Group plants per vehicle produced (Scope 1 and 2) due to
increased production volumes and BMW making greater use of
green energy.
125
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Outlook
Group Financial Statements Responsibility Statement and Auditor's Report
2,554,183
%
Share of women in management positions in the BMW Group
Between 8 and 10
← = Q
APPROPRIATENESS AND EFFECTIVENESS
OF THE INTERNAL CONTROL SYSTEM AND
RISK MANAGEMENT SYSTEM*
The BMW Group complies with recommendation A.5 of the Ger-
man Corporate Governance Code and accordingly provided its
statement in accordance with § 161 of the Stock Corporation Act
www.bmwgroup.com/ezu in December 2023 on the following
basis:
The BMW Group has set up an internal control system and a risk
management system in accordance with the German Corporate
Governance Code.
The internal control system includes all the principles, instruc-
tions and measures introduced by the Board of Management to
ensure:
the effectiveness and efficiency of business operations
the propriety of accounting and financial reporting
compliance with the statutory regulations relevant to the
BMW Group
The BMW Group's internal control system comprises the follow-
ing: the internal control system for accounting and financial re-
porting, the internal control system for reporting selected non-
financial key figures Internal Control System (ICS in the narrower
sense), the Compliance Management System Compliance
Management System (CMS) and the Internal Audit Function (IAF).
The Risk Management System (RMS) comprises the entire set of
organisational rules and measures in place to identify, assess,
manage and communicate risks, including system monitoring.
7 Risk and Opportunity Management
The ICS (in the narrower sense), the RMS and the CMS are au-
dited independently on a risk-oriented basis by Internal Audit as
part of the "Three Lines" model, with all systems interconnected
by overarching structural elements. Internal Audit's findings are
reported to the Board of Management and the Supervisory
Board on a regular basis.
Other Information
The design and implementation of the internal control system
and the risk management system take into account the size,
structure and complexity of the BMW Group in particular. These
systems are intended to detect, manage and mitigate significant
risks. However, despite the comprehensive analysis of risks in
general, any control and risk management system has inherent
limitations. For this reason, the occurrence of risks cannot be
ruled out in all circumstances.
127
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Risks and Opportunities
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
RISKS AND OPPORTUNITIES
127 Risk and Opportunity Management
130 Material Short-Term Risks and
Opportunities
137 Climate-Related Risks and Opportunities
9.8
Taking this into account, the Board of Management is not aware
of any circumstances that give rise to doubts regarding the ap-
propriateness and effectiveness of the systems. In particular, no
material cases of non-compliance or systemic weakness were
identified that preclude such appropriateness and effectiveness.
Remuneration Report
* The information provided in this section is extraneous to management reports which are not cov-
ered by PwC's audit.
To Our Stakeholders
%
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Appropriateness and Effectiveness of the Internal Control System and Risk Management System
Between 15 and 20
units
%
14.7
20.2
102.1
tons
0.28
Slight increase
Significant increase
Slight reduction
Moderate reduction
%
g/km
%
126
8.1
3 Efficiency ratio calculated on the basis of Scope 1 and Scope 2 carbon emissions (i.e. a market-based method according to GHG Protocol Scope 2 guidance; mainly based on the use of emissions factors
for electricity, district heating and fuels of the VDA, each in the most current valid version: 12/2023) and occasionally using local emissions factors; excluding climate-changing gases other than carbon
dioxide from vehicle production (BMW Group manufacturing sites and Motorrad, but excluding partner plants and contract manufacturers), as well as BMW Group non-manufacturing sites (e.g. research
centres, sales centres, offices) divided by the number of vehicles produced (BMW Group manufacturing sites and partner plants, but excluding contract manufacturers).
BMW Group Report 2023
Between 14 and 17
17.2
1 EU-27 countries including Norway and Iceland; with effect from 2021, values are calculated on a converted basis in line with WLTP (Worldwide Harmonised Light Vehicles Test Procedure).
2 Including an allowance for eco-innovations (amounts of minor significance).
Slight increase
209,066
units
Between 8 and 10
Between 21 and 26
22.1
%
The greatest risk relating to purchasing comes from supply
shortages due to supplier bottlenecks. Production problems at
the supplier level could lead to consequences caused by in-
creased expenditure for the BMW Group due to production inter-
ruptions and a corresponding reduction in vehicle sales. Supply
bottlenecks may also have a negative impact on the reputation
of the BMW Group if customer demand cannot be met as
expected.
Risks and opportunities relating to purchasing
The BMW Group sees opportunities relating to production pro-
cesses primarily in the competitive edge gained from mastering
new and complex technologies. Given the long lead times in-
volved in developing new products, additional opportunities are
not expected to have a significant earnings impact on the
BMW Group.
Potential reasons for the failure of suppliers to deliver include the
lack of availability of raw materials, energy and other input ma-
terials, the occurrence of natural hazards and/or fires, develop-
ments in the security situation of a country, IT-related risks and
Product recalls can lead to additional costs. The BMW Group es-
tablishes appropriate provisions for statutory and non-statutory
warranty obligations. It cannot be ruled out, however, that addi-
tional costs could be incurred that are either not covered or not
fully covered by these provisions. Despite the deployment of
thorough quality assurance processes, such risks can always
arise if the materials and/or processing procedures used prove
insufficient - in some cases years after a product has been
launched. A high number of recalls could also have a negative
impact on the BMW Group's reputation. Further information on
risks in conjunction with provisions for statutory and non-statu-
tory warranty obligations is provided in 7 Note [34] to the Group
Financial Statements.
time and, in extreme cases, may lead to the non-admission of a
vehicle derivative, sub-market or even a complete market. This,
along with a delayed start of production for new models, could
lead to sales losses. Numerous control points have been imple-
mented as part of the homologation process in order to identify
and mitigate risks.
Potential short-term changes to the relevant legislation and reg-
ulations or changes in their national interpretation by the author-
ities may jeopardise our ability to receive type approvals in good
Risks and opportunities relating to production and technologies
Plant downtime is the main risk affecting production. Disruptions
to production can have various causes, including equipment and
tool shortages, supplier bottlenecks, scarcity or shortages of pro-
duction resources such as gas or electricity, as well as problems
with logistics. Furthermore, IT disruptions caused by cyber-
attacks, for example, are playing an increasingly significant role
in disruptions to the supply chain and production. Damage to the
factory infrastructure, caused by fire or natural events such as
hail, storms or heavy rainfall, can lead to production downtime.
The risk level for the occurrence of such risks is assessed as high.
Potential natural hazards are already taken into account when
selecting a site and through the implementation of measures
during construction. The risk posed by natural hazards or fire is
reduced by the use of on-site fire services and employee training.
A variety of measures are also being taken to prevent and coun-
teract longer downtimes of manufacturing equipment due to tar-
geted cyberattacks.
All BMW Group plants have implemented measures for risk
avoidance and reduction. These include, for example, predictive
maintenance. The risk of production downtime due to parts sup-
ply is reduced via measures related to logistics, purchasing and
the use of the production network.
the same time, capitalise on opportunities in terms of sales
growth and pricing. Opportunities arising as a result are classified
as immaterial.
← = Q
Other Information
Risks resulting from property-related damage and damage due
to downtime, as well as transport damage to vehicles already
manufactured, are transferred to highly solvent insurance com-
panies. Due to the volatility of the international insurance mar-
kets, the BMW Group itself bears significant risks today. This so-
lution may become increasingly relevant if premiums and de-
ductibles continue to rise.
non-compliance with sustainability or quality standards. The risk
is categorised as high.
Remuneration Report
An increasing complexity within the supplier network, particularly
with sub-suppliers over which the BMW Group has only an indi-
rect influence, as well as a lack of solvency on the part of suppli-
ers, may influence the delivery of supplies to plants. A prevention
programme was put in place in order to identify relevant devel-
opments early on and define individual measures.
Remuneration Report
The BMW Group continuously strives to align its sales strategies
with future trends, prioritising the needs of both prospective and
current customers as the focal point of its operations. Opportuni-
ties arising as a result are classified as immaterial.
Overall, the risks arising from the sales network can be catego-
rised as low.
← = Q
Other Information
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Risks and Opportunities
To Our Stakeholders
BMW Group Report 2023
133
In order to sell its products and services, the BMW Group oper-
ates a global sales network comprising subsidiaries, importers,
branches and independent dealerships. The insolvency of deal-
erships may have a negative impact on global vehicle sales and
the range of services available to our customers.
Risks and opportunities relating to the sales network
Cost advantages gained by developing local supplier structures
near BMW plants in addition to innovative manufacturing tech-
nologies could lead to lower material expenses for the
BMW Group. Opportunities arising as a result are classified as
immaterial.
The rising threat of cyberattacks along the entire value chain af-
fects both the security of supply and the protection of expertise
relevant to the BMW Group. In order to optimise the level of in-
formation security throughout the entire value and supply chain,
the BMW Group requires its suppliers to provide proof of ade-
quate information security certification. Purchasing and Supplier
Network
Additional risks arise from the inflation-related price increases of
recent years and the resulting demands from suppliers, which
can have a negative impact on earnings. In addition to price risks,
the number of suppliers at risk of insolvency which the
BMW Group must support to maintain supplier operations is
increasing.
During the selection of suppliers a standardised assessment of
risk criteria is part of the sourcing process.
Group Financial Statements Responsibility Statement and Auditor's Report
The following ranges apply for the purpose of classifying the risk
amount for material short-term risks:
To Our Stakeholders
Due to the particular features of the business model, material
risks and opportunities relating to the Financial Services seg-
ment are presented separately in the section 7 Risk management
system in the Financial Services segment.
> € 200-1,000 million
> € 1,000 million
Risk amount
€ 0-200 million
Medium
High
Low
Class
Information security, data protection and IT
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Risks and Opportunities
To Our Stakeholders
BMW Group Report 2023
131
Macroeconomic risks and opportunities
Combined Management Report
Risks and Opportunities
Economic conditions have an impact on business performance
and hence on the level of earnings generated by the BMW Group.
Unforeseen disruptions in global economic relations can have
highly unpredictable effects. The level of risk continues to be
classified as high.
Further escalation of the conflict in the Middle East could nega-
tively impact the price of oil, which in turn could lead to rising in-
flation rates.
BMW Group Report 2023
132
The sales markets of the BMW Group are constantly monitored
in order to minimise risks, meet customer requirements and, at
The constant change in consumer preferences or an altered
brand perception pose both risks and opportunities. For instance,
the BMW Group could be confronted with short-term disruptions
in both supply and demand during the transition from conven-
tionally powered vehicles to alternative drive systems. The likeli-
hood of market risks occurring may be categorised as high.
Market developments
Changes in trade policies could also have a positive impact on
the BMW Group's earnings in the short to medium term. Any re-
duction in tariff barriers, import restrictions or direct excise duties
could result in lower manufacturing costs or enable products and
services to be offered to customers at more attractive prices. Op-
portunities potentially arising from changes in legislation and
regulations are classified as immaterial.
The legally required fleet-wide carbon emissions target in the EU
has been reduced to 0 g/km for 2035, thus requiring complete
electrification of the passenger car new vehicle fleet by 2035.
Moreover, the European Commission is working on a proposal to
determine if and how vehicles powered exclusively by e-fuels can
be recognised as zero-emission vehicles. In 2026, a review will
take place during which the necessary framework conditions to
achieve the zero emissions target in 2035 will be analysed. Risks
can arise from the availability of renewable energies, inadequate
private and public charging infrastructure as well as limited ac-
cess to resources for the construction of electric drives. A discus-
sion of consumption values and carbon emissions may have an
impact on the Company's reputation.
The BMW Group is seeing increasingly stringent vehicle emis-
sions regulations for conventional drive systems. In December
2023, a political deal was reached in the EU on the Euro 7 reg-
ulation. Risks may arise from the details of the regulation still to
be finalised by the European Commission. In addition to pollutant
emissions, brake particle emissions, tyre abrasion and high-volt-
age battery durability (BEV, PHEV) are also being regulated for
the first time. Following the implementation of Euro 7, additional
targeted tightening measures are anticipated around 2030.
Country- and sector-specific trade barriers can also be subject to
change at short notice. Any tightening up of regulations could ne-
cessitate significantly increased investments and costs, influence
customer behaviour, and lead to interruptions in supply. The risk
is categorised as high.
Strategic and sector-specific risks and opportunities
Changes in legislation and regulatory requirements
The introduction of more stringent legislation and regulations,
particularly regarding emissions, safety and consumer protection
as well as regional vehicle-related purchase and usage taxes,
poses a significant risk for the automobile industry.
At the moment, macroeconomic opportunities that could influ-
ence the earnings situation of the BMW Group positively in the
long term are rather unlikely to materialise. If significantly more
positive economic development were to occur in a market due to
stronger fiscal or monetary policy measures, this could certainly
have a positive impact.
To mitigate the effects, sales markets are being monitored on an
ongoing basis, and individual measures are being defined by
standardised processes and committees.
Another risk is of recession in Europe and the United States. In
both regions, interest rates were raised considerably in order to
curb inflation. Inflation rates have significantly decreased by this
point and the majority of economies have continued to grow de-
spite the interest rate hikes - labour markets have shown partic-
ular resilience. However, monetary policy measures such as in-
terest rate hikes often take effect with some delay and could
therefore slow down the economy in 2024, posing a risk to sales.
The present fragility of the Chinese economy also represents a
risk to sales. If the situation in the real estate sector were to de-
teriorate further, the potential impacts on the economy would be
significantly felt.
could have negative consequences for trade between Europe
and China, resulting in both sales risks and risks in the supply
chain.
In the trade war between the US and China, the focus is currently
shifting from simple tariff increases to further import and export
restrictions on specific technologies. This could also lead to less
favourable import and export conditions for the BMW Group.
With the recent anti-dumping and anti-subsidy probe launched
against China (the EU is examining, among other things, whether
subsidies for electric vehicles produced in China lead to distorted
competition), the EU is also considering imposing punitive tariffs
on the People's Republic, which in turn increases the risk of a
trade war between the two parties. An escalation of the conflict
With regard to the war in Ukraine, there is a risk of a further es-
calation of the conflict and therefore of further sanctions imposed
by Western countries on Russia as well as possible counter-
sanctions and/or retaliatory measures by Russia. Withdrawal of
US support for Ukraine could have major ramifications for the
course of the war.
Digitalisation and automation across all areas of the business
and its products offer a wide range of opportunities for the
BMW Group. Especially in the field of artificial intelligence, poten-
tial uses as well as risks are evaluated on a continuous basis. At
the same time, information technology (IT) requirements regard-
ing the confidentiality, integrity and availability of information are
becoming increasingly strict. The threat level has continued to
rise over recent years. Increasing geopolitical conflicts also con-
tribute to the rise in cyberattacks. Moreover, legal and regulatory
requirements are becoming ever stricter worldwide, which could
also necessitate higher investments in hardware and software.
The BMW Group works together with banks to ensure that the
available liquidity is optimally invested in order to hedge against
financial market risks (particularly currency, commodity and in-
terest rate risks) using derivative financial instruments and to
protect payments made in advance. Counterparty risk denotes
the risk that the BMW Group will not receive, or not receive in full,
the payments due to it in connection with the investment and
hedging transactions referred to above. A value-at-risk model is
employed to measure counterparty risk, taking into account the
creditworthiness of the banks and the business volumes in-
volved. Risk is managed using a limit system, which includes
daily monitoring of the extent to which limits are being utilised at
the level of the individual counterparties.
In order to protect vehicle functions from manipulation, we have
introduced processes such as standardised safety assessments
and regular penetration tests. However, risks in this regard can
never be fully ruled out due to the high complexity and increasing
connectivity.
Risk management system in the Financial Services segment
Risk management in the Financial Services segment is based on
various pillars; namely, the prevailing risk culture, the risk strat-
egy and the defined risk appetite for the various types of risk. In
addition to this, there are a wide range of guidelines in place
worldwide that are implemented by the individual companies in
the Group.
A Compliance Management System is in place across the
BMW Group to, among other things, encourage its representa-
tive bodies, executives and staff members worldwide to consist-
ently act in a lawful manner. Further information on this can be
found in the chapter 7 Compliance and Human Rights.
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
Risks and Opportunities
To Our Stakeholders
BMW Group Report 2023
135
The BMW Group recognises appropriate levels of provision for
lawsuits and risks. In addition, a part of these risks is insured to
an economically reasonable extent. Nevertheless, it cannot be
ruled out that damages may occur in excess of the insured
amounts. In accordance with International Financial Reporting
Standards (IFRS), the required information is not provided if the
BMW Group concludes that disclosure of the information could
seriously prejudice the outcome of the relevant legal proceed-
ings. Further information on contingent liabilities is provided in
Note [39] to the Group Financial Statements.
BMW Group companies are subject to governmental tax and
customs audits in each country where they operate, potentially
resulting in back taxes, retrospective customs duties, interest,
penalties and similar payments. Payments of this nature may, for
instance, result from the non-recognition of inter-company trans-
fer prices in the countries concerned. Further substantial legal
risks may emerge from contested interpretations of tax or cus-
toms legislation. The findings of the tax audit in the countries are
effective for the audit period and, if applicable, in subsequent
years. Risk management relating to tax and customs legislation
is enshrined in the BMW Group's RMS. In order to minimise ma-
terial procedural tax and customs risks, the BMW Group has set
up a comprehensive Tax Compliance Management System (Tax
CMS) that is already being applied in its major entities in Ger-
many, China and, since the end of 2023, Austria, and will be
rolled out successively in other major countries.
International movements of goods require compliance with ex-
tensive export control regulations. In addition to goods-related
restrictions, international trading may also involve personal,
country-specific and end-use-related restrictions. In particular,
non-compliance with applicable EU and US export control regu-
lations could result in significant legal consequences for the
BMW Group. In light of its strong presence in the USA and China,
any intensification of the trade dispute between the two countries
could be a potential source of additional risk exposure.
The potential financial impact of the matters covered under con-
tingent liabilities, including those related to legal and warranty
risks, cannot be conclusively assessed at this stage.
The central goal of risk management in the Financial Services
segment is the continuous assurance of risk-bearing capacity.
Limits are assigned depending on the type of risk. Various value-
at-risk models are used for this purpose, which are validated at
regular intervals. The confidence level used in this model is con-
servative. Care is always taken to ensure that the coverage
amounts based on the equity of the Financial Services segment
are sufficient.
The level of risk from legal risks is classified as medium.
Regular stress tests are carried out to support this model. These
are another indicator of potential risk management measures
and create a high degree of transparency with regard to extreme,
realistic events, particularly in volatile times.
BMW Group Report 2023 To Our Stakeholders
Low
High
Medium
of the risk level
Classification
Operational risks
Interest rate changes
Residual value
Credit risk
The following table provides an overview of the material short-
term risks and opportunities in the Financial Services segment:
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Risks and Opportunities
Risk management in the Financial Services segment is based on
the requirements of the supervisory authorities, which are imple-
mented consistently worldwide. Climate-related risks are also
taken into account and analysed at regular intervals, thereby
considering a medium-term period in the future. > Climate-Related
Risks and Opportunities
In view of the higher incidence of observed attacks, the risk
amount - despite extensive security measures - is still classified
as high.
Like all entities with international operations, the BMW Group is
confronted with legal disputes, alleged claims relating in particu-
lar to warranty and product liability or intellectual property rights
infringements and proceedings initiated by government agen-
cies. Any of these could, amongst other consequences, have an
adverse impact on the Group's reputation. Such proceedings are
typical for the sector, may result as a consequence of realigning
product or purchasing strategies to changed market conditions,
or are antitrust related. Particularly in the US market, class action
lawsuits and product liability risks can have substantial financial
consequences and cause damage to the Group's reputation.
More rigorous application, interpretation of, or changes to, exist-
ing regulations could result in a greater number of recalls.
Reevaluations on the liabilities and assets sides are recognised
net of deferred taxes through other comprehensive income and
hence directly in equity of the BMW Group (within revenue re-
serves). Further information on risks in conjunction with pension
provisions is provided in 7 Note [33] to the Group Financial State-
ments.
The liquidity concept, based on the experience gained during the
global financial crisis, is rigorously adhered to and continuously
developed. In the Financial Services segment, the use of the
"matched funding principle" ensures that liquidity risks are gen-
erally avoided.
The major part of the Financial Services segment's credit financ-
ing and leasing business is refinanced on capital markets. The
risk of restricted access to funds is deemed low.
Liquidity risks
The prices of many raw materials continue to be subject to un-
certainty on commodity markets. Accordingly, the risk amount
associated with raw materials prices is classified as medium, but
there are also material opportunities. This risk is lower than in the
previous year due to the decline in prices of raw materials.
The analysis of raw materials price risks is based on planned pur-
chases of raw materials and components containing those prod-
ucts. A cash-flow-at-risk model is deployed to measure risks re-
lating to raw materials prices. Price fluctuations for raw materials
such as precious metals, non-ferrous metals, raw materials for
batteries and steel, and also energy, are hedged using financial
derivatives and supply contracts with fixed pricing arrangements.
Risks and opportunities relating to raw materials prices
As a manufacturing company, the BMW Group is subject to price
risks, particularly in relation to the raw materials used in vehicle
production.
Depending on exchange rate fluctuations, opportunities may
also arise, which means they can be considered material.
The BMW Group manages currency risks at both the strategic
(medium to long term) and operational level (short to medium
term). Over the medium and long term, it is possible to ramp up
production or purchase volumes in foreign currency regions (nat-
ural hedging). Currency risks are managed in the short to me-
dium term and for operational purposes by means of hedging on
financial markets, the primary objective of which is to improve
planning reliability for the BMW Group as a whole. Regularly up-
dated cash-flow-at-risk models are used to limit currency risks
and identify opportunities. The risk amount associated with cur-
rency risks is classified as high. The strengthening of the euro in
2023 has led to an increased level of risk compared to the pre-
vious year.
As an internationally operating enterprise, the BMW Group con-
ducts business in a variety of currencies, thus giving rise to cur-
rency risks and opportunities. A substantial portion of Group rev-
enues, production, other purchases and funding occur outside
the eurozone.
Currency risks and opportunities
Financial risks and risks relating to the use of financial
instruments
However, despite continuous testing and preventive security
measures, it is impossible to completely eliminate risks in this
area. All authorised persons are required to treat information
such as confidential business, customer and employee data with
great care, use information systems securely and handle risks in
a transparent manner. Uniform requirements that apply through-
out the Group are documented in a comprehensive set of rules
and guidelines. A consistently applied policy of updating such
rules and regulations to the current situation, coupled with regu-
lar communication, awareness-raising and training measures,
form the basis for a high level of security and risk awareness in
general.
protection and IT are systematically documented, allocated ap-
propriate measures by the departments concerned and continu-
ously monitored with regard to threat level and risk mitigation.
Regular analyses and controls as well as tight security manage-
ment policies ensure an appropriate level of security.
Protecting information, for example from unauthorised access or
misuse, has the highest priority. In conjunction with risk manage-
ment requirements, risks relating to information security, data
Information and data can also be compromised by a lack of risk
awareness and inappropriate behaviour. The main direct conse-
quences would be negative effects on Group revenues, disrup-
tion in production, or reputational damage. For this reason, the
BMW Group has launched an interactive programme to provide
regular training for every employee on the correct way to handle
dangerous emails.
Solvency is assured at all times throughout the BMW Group by
adhering to liquidity ratios and using a broadly diversified range
of refinancing sources.
Legal risks
The liquidity position is monitored continuously and managed
through the Group-wide planning of financial requirements and
funding. Further information on risks in conjunction with financial
instruments is provided in 7 Note [40] to the Group Financial State-
ments.
BMW Group Report 2023
The fluctuation of pension assets reflects the volatility of various
asset classes on capital markets. Investments are broadly diver-
sified (interest-bearing securities, equities, real estate and other
asset classes).
Pension obligations are chiefly measured by projecting future
payouts, gauged with a current discount rate derived from mar-
ket yields from top-rated corporate bonds. This discount rate is
subject to market fluctuations and therefore influences the level
of pension obligations in terms of present value. Changes in
other parameters, such as inflation rates and life expectancy,
also impact the amount as well as the duration of future pension
payments. Regulatory requirements may also affect the amount
of pension obligations.
arise if the value of pension assets on the capital markets devel-
ops favourably or if pension provisions decreased at a more pro-
nounced rate than the related assets.
The risk associated with pension provisions based on IFRS val-
uations is categorised as medium. Material opportunities can
Risks and opportunities relating to pension obligations
Future pension obligations are financed largely via external pen-
sion funds or trust constructs that are legally separate from the
BMW Group. Externally managed funds are invested on capital
markets in a broadly diversified portfolio with a view to enabling
future pension payments to be disbursed out of pension assets.
These arrangements greatly reduce the need to fund pension
payments out of ongoing operations. Fluctuations in pension
provisions and the related pension assets give rise to risks that
may have varying effects due to the differences in accounting
standards between IFRS and HGB.
The risk associated with other financial risks is classified as me-
dium. Potential opportunities resulting from the revaluation of in-
vestments are evaluated as immaterial.
The BMW Group holds equity investments of varying amounts in
numerous entities. The recoverability of these investments is
monitored on an ongoing basis as part of a standardised pro-
cess. However, risks from impairment losses could still arise.
Other financial risks worth mentioning include counterparty risks
as well as those arising in connection with investments in other
entities.
Other financial risks
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Risks and Opportunities
To Our Stakeholders
134
136
Fossil
development
Risks
Risk profile
low
high
Short-term
Scenarios medium-term (2035)
Scenarios long-term (2050)
"today"
Society
Risk dimension
The middle
of the road
Fossil
development
Paris
Agreement
The middle
of the road
Production/
distribution
Paris
Agreement
and regulations
Politics, law
financial market
Scenarios medium-term (2035)
Short-term
"today"
Risk dimension
Paris
Agreement
The middle
of the road
Fossil
development
Technology
Physical climate risks
In addition to the transitory risks, the BMW Group also evaluates
physical risks. In doing so, the increasing frequency and intensity
of acute extreme weather events, such as heatwaves, storms
and floods, are taken into account, along with longer-term
changes such as in terms of temperature and rainfall.
In order to measure such risks, we draw on external data that
evaluate the development of acute and persistent natural phe-
nomena across the global warming scenarios and across time.
For the BMW Group, this may result in damage to assets such as
buildings, vehicles or parts on the one hand, and on the other
hand, such events may lead to downtime at BMW Group sites or
at suppliers' sites.
Physical climate risks also increase for the BMW Group particu-
larly in the long-term >+4 °C scenario. This leads to a higher risk
both for the BMW Group's production sites and also for suppliers'
sites. The risks regarding interruptions to production and distri-
bution as well as risks in the supply chain are shown in the con-
text of global warming scenarios over a medium-term (2035)
and long-term (2050) period:]]
[[ Physical climate risks
Market and
competition
Capital and
disruption
Supply chain
Risk profile
low
Mitigation measures (Scope 1 and 2) can help to reduce energy consumption and operating costs.
- With its flexible vehicle architectures and production systems, opportunities arise for the BMW Group in terms of its ability to respond quickly and flexibly to fluctuating customer demand
as well as regulatory and infrastructural differences in its markets.
-
Due to the convincing sustainability performance of its offered products and the acceleration towards a circular economy, the BMW Group may experience advantages arising from higher
customer demand.
Differentiation through the consistent reduction of carbon emissions in the vehicle portfolio by means of the electrification and highly efficient combustion engines can further increase the
BMW Group's market share.
Leveraging BMW tools and other offers to manage carbon emission reduction efforts among Tier 1 suppliers has the potential to be a distinguishing feature for both investors and customers,
raising brand reputation in the process.
Further diversification of the investor base by proactively managing the risks posed by climate change.
An excellent ESG rating for the BMW Group could further enhance the Group's appeal to investors.
An above-average performance compared to industry benchmarks in terms of ESG indicators could lead to heightened appeal to investors.
Improvements in the tax environment and incentives for customers, along with investment grants and easements for climate protection measures in production may
accelerate progress in terms of reducing carbon emissions.
Significantly higher investments in charging infrastructure and in the generation and distribution of hydrogen may give the demand for low-emission vehicles a significant boost
and make it easier to replace the fossil source in production.
- Eligibility to participate in global government initiatives and grants which facilitate the continued acceleration of climate change adaptation efforts (Scope 1 and 2), encompassing tax
reforms, green and digital stimulus packages as well as research and development incentives.
Implementing early-stage adjustments to the supply chain to address climate change enhances its long-term resilience, thereby ensuring business continuity.
Subsidy programmes for alternative drivetrain technologies are helping to increase sales.
Together with its suppliers, the BMW Group helps to reduce carbon emissions along the value chain and to work towards implementing decarbonisation measures. By taking action at an
early stage, the BMW Group will be prepared and also will benefit from a business perspective.
Thanks to its focus on sustainability, the BMW Group can make a valuable social contribution to the prevention of global warming.
Medium
By embracing the circular economy, the BMW Group is contributing towards achieving its decarbonisation target within the supply chain and reducing its dependence on primary materials,
also in terms of their availability, costs and ESG risks.
[[Transitory climate risks
By expanding the portfolio of electrified products and developing and producing our own electric drivetrains, batteries and battery cell prototypes, we will be able to safeguard know-how and
system expertise early on. This may result in competitive advantages.
Transitory opportunities
| high ]]
140
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Risks and Opportunities
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
[[Climate-related opportunities
The BMW Group also sees economic opportunities on the 1.5°C
trajectory arising from adjustments to products, production pro-
cesses and the value chain required to reach this goal. The op-
portunities identified are also distributed across the five dimen-
sions.]]
Technology
Market and competition
Capital and financial market
Politics, legal affairs and regulatory framework
Society
-
In the Paris Agreement global warming scenario, the potential
transitory risks are deemed the highest over the medium term as
a result of the fast-paced, sometimes unforeseeable develop-
ments. It cannot be ruled out that more decisive measures will
have to be taken globally in the next few years in order to achieve
the <+1.5°C target. For the BMW Group, this is reflected primar-
ily in the risk dimensions of "Politics, legal affairs and regulatory
framework", as well as "Market and competition". Regulatory re-
quirements introduced at short notice may enter into force, which
could have an impact on products, production and supply chains.
In the "Market and competition" risk dimension, risks may also
increase due to higher demand and the resulting higher prices for
select (scarce) raw materials on the one hand and due to rising
energy prices on the other.
[[DIMENSION
← = Q
Remuneration Report
Other Information
← = Q
Risks and Opportunities
CLIMATE-RELATED RISKS
AND OPPORTUNITIES
[[Climate changes may have an impact on the BMW Group busi-
ness model. Consequently, the company analyses a range of cli-
mate scenarios, identifies and evaluates climate-related risks
and opportunities and takes the relevant measures. 7 GRI Index:
201-2
The BMW Group follows the recommendations of the TCFD by
continuously refining processes for reporting and the internal
steering of climate-related risks and opportunities.
During the 2023 reporting year, all material risks and opportuni-
ties for the BMW Group were analysed in terms of their sensitivity
regarding three different climate scenarios in accordance with
the TCFD. For the medium-term period until 2035, we distin-
guish between transitory and physical climate risks. For the long-
term period until 2050, the evaluation focuses on the physical
climate risks.
Climate scenarios
The BMW Group uses three scenarios to identify and evaluate
climate-related risks, which are based on the scenarios of the
Shared Socioeconomic Pathways (SSP) of the Intergovernmen-
tal Panel on Climate Change (IPCC).
These climate scenarios range from a low-emissions scenario
with global warming of <+1.5 °C (Paris Agreement, SSP1-2.6),
a medium scenario with warming of an average of +2.5 °C (mid-
dle of the road, SSP2-4.5) to >+4 °C (fossil-fuelled development,
SSP5-8.5).
The BMW Group has committed to aligning its business activities
with the low-emissions scenario of the Paris Agreement and has
consistently based its long-term corporate planning on this.
7 Carbon Emissions
Transitory climate risks
Transitory climate risks arise from the transition to a low-emis-
sions economy across all sectors that is necessary in order to
mitigate climate change. These risks become particularly appar-
ent when conditions change more quickly and/or differently than
expected. The transitory climate risks were identified and evalu-
ated along five different risk dimensions.]]
138
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Risks and Opportunities
Responsibility Statement and Auditor's Report
Group Financial Statements
Group Financial Statements
BMW Group Report 2023 To Our Stakeholders
Change
compared
to prior year
[[The following graphic juxtaposes the risk dimensions of the tran-
sitory risks with the global warming scenarios. Potential impacts
are grouped into five different levels.
Classification
Immaterial
Material
Material
Opportunities
Change
compared
to prior year
Credit risks and opportunities
In the Financial Services segment, the risk of default is factored
into the interest rate when concluding an agreement. Further-
more, the credit portfolio is evaluated on an ongoing basis with
the aim of determining if any impairment allowances need to be
made for financial receivables. This evaluation is based on sta-
tistical methods and takes into account the following aspects,
among others: the creditworthiness of the customer, the cus-
tomer's payment history and the economic context in the cus-
tomer's region. The amount allocated to credit risks remains cat-
egorised as medium.
There may be positive effects in the ongoing assessment of the
portfolio's creditworthiness that lead to a reduction of the overall
risk and therefore constitute an opportunity. The BMW Group
continues to classify potential opportunities in this area as imma-
terial. In order to take account of the volatile economic environ-
ment, parameters within the credit awarding process were re-
viewed and adjusted to factor in or not accept declining credit
ratings.
Residual value risks and opportunities
Residual value risks are classified as high in terms of their risk
level, while residual value opportunities are deemed significant.
They arise primarily when leased vehicles are sold after they are
returned at the end of the leasing period. A negative deviation
from the residual value forecast results in a residual value risk,
while a positive deviation represents a residual value oppor-
tunity.
Each lease contract is assigned a forecasted sales value for the
vehicle at the end of the lease term. Current market trends are
taken into consideration within the routine portfolio evaluation. In
addition, the portfolio composition (e.g. by drivetrain type) is an-
alysed on an ongoing basis. Relevant changes and their impacts
are incorporated into the portfolio evaluation. The residual value
calculation models, as well as the portfolio evaluation models,
are continually being refined.
Interest rate risks
Operational risks
Operational risks result from any form of ineffective or defective
internal processes, systems, external events or human error. The
aim is to systematically record and quantify all risks except for
those listed in the paragraphs above. Because the risks arise in
a wide range of areas of the Company, such as IT security or sup-
plier management, the close dovetailing of these areas is essen-
tial and ensures that there is adequate transparency regarding
the current risk situation of the entire division. All individual oper-
ational risks are recorded in a system and appropriate mititgation
measures are implemented. The risk amount is categorised as
medium.
137
Combined Management Report
Responsibility Statement and Auditor's Report
To a limited degree, interest rate risks are deliberately accepted
in order to make use of the associated return potential. Risks
thereby result when there is a partial mismatch between fixed in-
terest rate periods, which means they are rated as low. The as-
sociated opportunities are classed as material.
Other Information
This may impact the credit rating and refinancing costs of the BMW Group.
The short-notice termination of government subsidies to promote low-carbon mobility may reduce the demand for electrified vehicles.
Uneven adjustments of prices for carbon emissions could have a negative impact on the macro- and microeconomic situation of a national economy, causing distortions in the credit risk, for
example.
Any short-notice tightening of legislation or regulations in the BMW Group's main markets (EU, US, China) may exceed the speed at which BMW Group and its suppliers can respond and pose
risks in terms of delivery volume, costs and residual values.
Production processes must quickly be changed to green energy sources and resource-friendly facilities. The BMW Group already consistently implements known requirements. However,
additional costs may result if additional requirements are announced at short notice.
For suppliers, stricter requirements regarding circular economy, recycling and avoiding the use of resources may lead to higher costs in the short term.
Fast rising and/or selectively discriminating regional vehicle-related purchase and usage taxes may lead to higher costs or a decrease
in deliveries.
139
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Risks and Opportunities
Group Financial Statements
Responsibility Statement and Auditor's Report
Other Information
Remuneration Report
Remuneration Report
A good ranking in the ESG ratings has a positive effect on the perception of a company on the capital market and has a favourable effect on investment decisions. Investment and
financing decisions by investors or lenders depend on a good ESG rating. Short-term and unforeseeable regulatory changes may reduce the appeal of a company on the capital market and
increase refinancing costs if it is not possible to react to the changes in the regulatory framework in time.
Any serious failure to comply with sustainability or quality standards and providing incorrect information accordingly, could cause disruptions in the supply chain or a shortfall of individual
suppliers to deliver.
Around the world, people's environmental awareness is increasing. Social discussions arising from a perceived worsening of the climate's health may lead to changes in mobility patterns
and/or customer preferences that may vary by region. This may require us to adapt the product portfolio, which may impact deliveries and residual values for vehicles.
Due to a global focus on sustainable products, energy prices and commodities costs are rising. This has a direct impact on manufacturing costs for the BMW Group and
may go on to affect deliveries. Furthermore, credit and residual value risks in the Financial Services segment may also be impacted.
The following table illustrates the transitory climate risks for the
← = Q
Existing and new competitors are accelerating the production of electrified vehicles. If products and business models are perceived as being more attractive by customers,
this may have the corresponding impact on deliveries by the BMW Group.
BMW Group:
[[RISK DIMENSION
Technology
Capital and financial market
Politics, legal affairs and regulatory framework
Society
Market and competition
-
they may jeopardise the availability and acceptance of planned or expected conditions for the customer.
-
Innovations in sustainable technologies are fostered, accelerating the prevalence of electromobility. For the BMW Group, this may have a negative impact on deliveries
and the residual value of existing products. In the areas of Production and Purchasing, remanence costs and impairment risks may result from changing processes and equipment.
The digital connectivity between companies and products to support decarbonisation is increasing in order to streamline processes and better manage emissions. Risks for the BMW Group
result from the time delay until such technologies can be used if, for example, some areas of the supply chain cannot provide the relevant
Significant technological innovations may make product and production technologies, which are in use or in the pipeline today (from energy storage to recycling), as well as investments in
these innovations, obsolete or challenge their efficiency. In terms of infrastructure (such as new fuel options, charging technologies for electric vehicles),
Transitory climate risks
standards and interfaces quickly enough.
(b) payment of an advance dividend of € 0.02 per € 1 par
value on non-voting preferred shares, and
* Information according to § 289a and § 315a HGB.
Contractual holding period arrangements also apply to ordinary
shares acquired by Board of Management members and certain
senior vice presidents in conjunction with share-based remuner-
ation programmes. 7 Remuneration Report (on shareholding periods for
members of the Board of Managers)
When the Company issues non-voting preferred shares or ordi-
nary shares to employees in conjunction with its Employee Share
Programme, these shares are generally subject to a Company-
imposed blocking period of four years in compliance with private
law, calculated from the beginning of the calendar year in which
the shares were issued.
Restrictions affecting voting rights or the transfer of shares
In addition to ordinary shares, the Company has also issued non-
voting preferred shares. Further information can be found in the
section Composition of subscribed capital.
(c) uniform payment of any other dividends on ordinary and
preferred shares, provided the shareholders do not resolve
otherwise at the Annual General Meeting.
The Company's non-voting preferred shares are shares as de-
fined in §§ 139 et seq. AktG, which carry a cumulative preferen-
tial right in terms of the allocation of profit and for which voting
rights are excluded. These shares confer voting rights only in ex-
ceptional cases stipulated by law, in particular if the preference
amount has either not been paid or not been paid in full within
one year and the arrears are not paid in the subsequent year
alongside the full preference amount due for that year. With the
exception of voting rights, holders of preferred shares are entitled
to the same rights as holders of ordinary shares. In addition, § 25
(3) of the Articles of Incorporation confers preferential treatment
to the non-voting preferred shares with regard to the appropri-
ation of the Company's unappropriated profit. Accordingly, the
unappropriated profit is required to be appropriated in the follow-
ing order:
148
(a) subsequent payment of any arrears on dividends on non-
voting preferred shares in the order of accruement,
As of 31 December 2023, the Company owned a total of
5,161,255 ordinary and preferred treasury shares (2022:
16,760,957), from which the Company has no rights pursuant
to § 71 b AktG. The Company regularly provides information
about the current status of the share buyback on its website.
BMW Group Report 2023 To Our Stakeholders
Susanne Klatten Beteiligungs GmbH, Bad Homburg v. d. Höhe, Germany
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Direct or indirect investments in capital exceeding 10% of
voting rights
Based on the information available to the Company, the follow-
ing direct or indirect shareholdings exceeded 10% of the voting
rights at the end of the reporting period:1
in %
Stefan Quandt, Germany
AQTON SE, Bad Homburg v. d. Höhe, Germany
The rights and duties of shareholders derive from the German
Stock Corporation Act (AktG) in conjunction with the Group's Ar-
ticles of Incorporation, the full text of which is available at
7 www.bmwgroup.com. The right of shareholders to have their
shares individually certified is excluded in accordance with the
Articles of Incorporation. The voting power attached to each
share corresponds to its par value. Each € 1 of par value of share
capital represented in a vote entitles the holder to one vote (§ 19
no. 1 of the Articles of Incorporation).
AQTON GmbH & Co. KG für Automobilwerte, Bad Homburg v. d. Höhe, Germany
Susanne Klatten, Germany
AQTON Verwaltung GmbH, Bad Homburg v. d. Höhe, Germany
Combined Management Report Group Financial Statements
Disclosures Relevant for Takeovers and Explanatory Comments
€ 662,839,475) and, in accordance with § 5 of the Articles of
Incorporation, is subdivided into 579,795,667 ordinary shares
(90.78%) (2022: 601,995,196/90.82%), each with a par value
of € 1 and 58,920,408 (9.22%) (2022: 60,844,279/9.18%)
non-voting preferred shares, each with a par value of € 1. The
Company's shares are issued to the bearer.
The principal features of the BMW Group's ICS are a role-based
approach embedded throughout the organisation, a clearly de-
fined control environment that is underpinned by a combination
of risk assessment procedures, control activities, information and
communication, and monitoring activities.
Composition of subscribed capital
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Internal Control System
Remuneration Report
Based on voluntary notifications provided by the listed shareholders as at 31 December 2023.
Other Information
← = Q
INTERNAL CONTROL SYSTEM
The Internal Control System (ICS) is part of the BMW Group's
overall system of internal governance and based on a set of
monitoring measures and control activities that are integrated in
processes and organisational structures with a view to ensuring
the accuracy of external financial and non-financial reporting.
The requirements for the design and structure of ICS procedures
incorporated in accounting and financial reporting processes as
well as those used to generate selected non-financial infor-
mation included in the BMW Group Report are defined on a
Group-wide basis.
The ICS for financial reporting has the task of ensuring that sig-
nificant accounting and financial reporting processes deployed
within the BMW Group are both accurate and reliable. The ICS
for non-financial reporting focuses primarily on the further devel-
opment of the processes used to gather data as the basis for re-
porting the non-financial performance indicators disclosed in the
BMW Group Report.
The ICS is based on the "three lines" model, including a clear def-
inition of how the various functions are required to interact with
one another in order to manage risks. As a component of the
second line, the ICS serves as the link between the operating
units (first line) and Corporate Audit (third line).
In principle, the aim of every appropriate and effective ICS is to
prevent potential risks in external financial and non-financial re-
porting or reduce the likelihood of potential risks materialising.
Internationally acknowledged standards for internal control sys-
tems were taken into account when designing the various ele-
ments of the ICS deployed by the BMW Group (e.g. COSO
model²).
Both the system itself and the methods applied are subject to
continuous improvement, with its functionality being assessed
on a regular basis. Notwithstanding the measures taken, every
control system is subject to inherent limitations, given that it is
not possible to prevent all incorrect disclosures or detect them in
a timely manner.
As of 31 December 2023, the subscribed capital (share capital)
of BMW AG amounted to € 638,716,075 (2022:
Relevant BMW Group working instructions and guidelines for
recognising, measuring and allocating items to accounts as well
as definitions of non-financial performance indicators are avail-
able to all employees via the BMW Group's intranet system. New
reporting standards are assessed for their potential impact on
the BMW Group's reporting.
Responsibilities for ensuring the appropriateness and effective-
ness of ICS procedures for accounting and financial reporting
processes as well as those relating to non-financial performance
indicators are clearly defined in a role-based model and allocated
to the relevant line and process managers. They report annually
on their assessment of the ICS for accounting and financial re-
porting processes and the processes for non-financial perfor-
mance indicators. The assessment takes into account the results
of internal and external audits as well as the results of continuous
monitoring. The results of the assessment are gathered and doc-
umented in a centralised IT system. Both the Board of Manage-
ment and the Audit Committee are informed about the status of
the ICS on an annual basis. The Board of Management and,
where appropriate, the Supervisory Board, are promptly in-
formed in the event of any significant changes to the ICS.
1 Disclosures pursuant to § 289 and § 315 HGB.
2 Committee of Sponsoring Organizations of the Treadway Commission.
147
BMW Group Report 2023
To Our Stakeholders
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Disclosures Relevant for Takeovers and Explanatory Comments
Remuneration Report
Other Information
← = Q
DISCLOSURES RELEVANT FOR TAKEOVERS*
AND EXPLANATORY COMMENTS
The principle of segregation of duties is taken into account for all
IT systems that are relevant for accounting and financial report-
ing. ICS requirements are also embedded in the ongoing devel-
opment of all IT systems used in these areas. Furthermore, the
BMW Group deploys data analysis tools to identify and subse-
quently eliminate any weaknesses detected in its processes
and/or control systems.
2 Controlled entities, of which 3% or more are attributed: AQTON SE, AQTON Verwaltung GmbH, AQTON GmbH & Co. KG für Automobilwerte.
-
4 Controlled entities, of which 3% or more are attributed: AQTON GmbH & Co. KG für Automobilwerte.
According to § 5 (5) of the Articles of Incorporation, the Board of
Management is authorised, with the approval of the Supervisory
Board, to increase the share capital during the period up to and
including 15 May 2024 by up to € 282,625 for the purposes of
an Employee Share Programme by issuing new non-voting
shares of preferred stock, which carry the same rights as existing
non-voting shares of preferred stock (Authorised Capital 2019).
The subscription rights of existing shareholders are excluded. No
conditional capital was in place at the reporting date.
Significant agreements of the Company which are subject to
a change of control provision following a takeover bid
BMW AG is party to the following major agreements, which con-
tain provisions that would apply in the event of a change of con-
trol or the acquisition of control as a result of a takeover bid:
An agreement concluded with an international consortium
of banks relating to a syndicated credit line, which was not
being utilised at the balance sheet date, entitles the lending
banks to give extraordinary notice to terminate the credit
line, such that all outstanding amounts, including interest,
would fall due with immediate effect if one or more parties
jointly acquire direct or indirect control of BMW AG. The term
"control" is defined as the acquisition of more than 50% of
the share capital of BMW AG, the right to receive more than
50% of the dividend, or the right to direct the affairs of the
Company or appoint the majority of members of the
Supervisory Board.
BMW AG is the guarantor for all obligations under the
agreement regarding the joint venture BMW Brilliance
Automotive Ltd. in China. This agreement generally grants
an extraordinary right of termination to either joint venture
partner in the event of a change of control at either one of
the parties, or if more than 25% of the shares of the other
party are acquired by a third party either directly or
indirectly or if the other party is merged with another legal
entity. Termination of the joint venture agreement may lead
to the dissolution of the joint venture, with an optional
purchase right for BMW AG (or the partner) to acquire the
shares of the other partner or to the liquidation of the joint
venture company.
-
BMW AG has entered into framework agreements with
credit institutions for trading in derivative financial
instruments (ISDA Master Agreements). In the event of a
significant deterioration in creditworthiness, the contracting
parties are entitled to terminate the agreement with
immediate effect if the deterioration in creditworthiness
results from a direct or indirect acquisition of the majority of
the capital in a contracting party, which confers the right to
elect the majority of the Supervisory Board members (or a
comparable body) on a contracting party, from any other
transaction that enables control over a contracting party or
from a merger or transfer of assets. In the event of
extraordinary termination, all current transactions will be
settled.
BMW AG and Mercedes-Benz Group AG have entered into
a joint venture agreement relating to mobility services, which
includes the areas of ride-hailing and vehicle charging, and
entitles both Mercedes-Benz Group AG and BMW AG
(hereafter referred to as "principals") to initiate a bidding
procedure in the event that (i) the other principal receives
notice in accordance with § 33 of the German Securities
Trading Act (WpHG) that including shares attributed
pursuant to § 34 WpHG - a shareholding of more than 50%
has been attained or, in accordance with § 20 of the
German Stock Corporation Act (AktG) that a shareholding of
more than 50% has been attained, or (ii) a shareholder or a
third party including shares attributed pursuant to § 30
WpHG - holds more than 50% of the voting rights or shares
in the other principal, or (iii) the other principal has concluded
a control agreement as a dependent company. The
outcome of such a bidding procedure is that the joint venture
will go to the principal making the highest bid.
-
Several supply and development contracts between
BMW AG and various industrial customers relating to the
sale of components for drivetrain systems, grant an
extraordinary right of termination to the relevant industrial
customer in specified cases of a change in control at
BMW AG (for example if BMW AG merges with a third party
or is taken over by a third party; an automobile manufacturer
acquires more than 50% of the voting rights or share capital
of BMW AG).
BMW AG is party to the shareholder agreement relating to
There Holding B.V., which is the majority shareholder of the
HERE Group. In accordance with the shareholder
agreement, each contracting party is required to offer its
directly or indirectly held shares in There Holding B.V. for
sale to the other shareholders in the event of a change of
control. A change of control of BMW AG arises if a person
150
BMW Group Report 2023
To Our Stakeholders
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Disclosures Relevant for Takeovers and Explanatory Comments
Remuneration Report
Other Information
← = Q
takes over or loses control of BMW AG, with control defined
as (i) holding or having control over more than 50% of the
voting rights, (ii) the possibility to control more than 50% of
voting rights exercisable at Annual General Meetings on all
or nearly all matters, or (iii) the right to determine the
majority of members of the Board of Management or the
Supervisory Board. Furthermore, a change in control occurs
if competitors of the HERE Group, or certain potential
competitors of the HERE Group from the technology sector,
acquire at least 25% of the share capital or voting rights of
BMW AG. If none of the other shareholders acquire these
shares, the other shareholders are entitled to resolve that
There Holding B.V. be dissolved.
The development collaboration agreement between
BMW AG, FCA US LLC and FCA Italy S.p.A., relating to the
development of technologies used in conjunction with
automated vehicles, may be terminated by any of the
contracting parties if certain competitors in the technology
sector acquire and subsequently hold at least 30% of the
voting shares of one of the other contractual parties.
BMW AG has entered into an agreement with Great Wall
Motor Company Limited to establish the joint venture
Spotlight Automotive Ltd. in China. The underlying joint
venture agreement generally grants an extraordinary right
of termination to either joint venture partner in the event that
- either directly or indirectly - more than 25% of the shares
of the other party are acquired by a third party or the other
party is merged with another legal entity. The termination of
the joint venture agreement may result in the sale of the
shares to the other joint venture partner, or in the liquidation
of the joint venture entity.
The software licence agreements concluded between
BMW AG and Google LLC for the use of "Projected Mode"
in BMW vehicles' head units grant both parties the right to
extraordinary termination in the event of a change of control
(not further defined in the agreement).
Compensation agreements with members of the Board of
Management or with employees in the event of a takeover
To Our Stakeholders
bid
In accordance with the resolution taken at the Annual General
Meeting on 11 May 2022, the Board of Management is author-
ised until 10 May 2027 to acquire treasury shares (ordinary
and/or non-voting preferred shares) representing a total of up to
10% of the share capital in place at the date on which the reso-
lution was adopted or if lower - at the date on which the au-
thorisation is exercised.
3 Controlled entities, of which 3% or more are attributed: AQTON Verwaltung GmbH, AQTON GmbH & Co. KG für Automobilwerte.
The Board of Management is authorised to buy back shares and
sell repurchased shares in situations specified in § 71 AktG, for
example to avert serious and imminent damage to the Company
and/or to offer shares to persons either currently or previously
employed by BMW AG or one of its affiliated companies.
← = Q
5 Controlled entities, of which 3% or more are attributed: Susanne Klatten Beteiligungs GmbH.
Direct share
Indirect share
of voting rights
0.2
of voting rights
26.62
9.4
17.23
17.24
17.2
0.2
21.55
21.5
The percentages of the shareholdings with voting rights dis-
closed above may have changed subsequent to the stated date
if these changes were not required to be reported to the Com-
pany. As the Company's shares are issued to bearer, the Com-
pany is generally aware of changes in shareholdings only if such
changes are subject to mandatory notification requirements.
Shares with special rights that confer control rights
There are no shares with special rights that confer control rights.
Control of voting rights when employees participate in
capital and do not directly exercise their control rights
Like all other shareholders, employees exercise their control
rights pertaining to any shares they have acquired in conjunction
with the Employee Share Programme and/or the share-based
remuneration programme directly on the basis of relevant legal
provisions and the Company's Articles of Incorporation.
Statutory regulations and provisions contained in the
Articles of Incorporation governing the appointment and
removal of members of the Board of Management and
changes to the Articles of Incorporation
The appointment or removal of members of the Board of Man-
agement is based on the rules contained in §§ 84 et seq. AktG
in conjunction with § 31 of the German Co-Determination Act
(MitbestG).
Amendments to the Articles of Incorporation must comply with
§§ 179 et seq. AktG. Amendments must be decided upon by the
shareholders at the Annual General Meeting (§ 119 (1) no. 6,
§ 179 (1) sentence 2 AktG). The Supervisory Board is authorised
to adopt amendments to the Articles of Incorporation that only
concern the wording (§ 179 (1) sentence 2 in conjunction with
§ 15 (3) of the Articles of Incorporation). Resolutions are passed
at the Annual General Meeting by a simple majority of shares
cast unless otherwise explicitly required by binding provisions of
law or, if a majority of share capital is required, by a simple ma-
jority of shares represented in the vote (§ 21 (1) of the Articles of
Incorporation).
149
BMW Group Report 2023
To Our Stakeholders Combined Management Report Group Financial Statements
Disclosures Relevant for Takeovers and Explanatory Comments
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Authorisations of the Board of Management, in particular
with respect to the issuing or buying back of shares
BMW Group Report 2023
The compliance programme Compliance for Regulated Financial
Services Units takes into account the particularities of the
7 GRI Index: 2-23, 2-241]
The Quality Management department is responsible for Product
Compliance as part of the CMS with a focus on preventing in-
fringements of product-related laws and official regulations as
well as ensuring compliance with directly associated require-
ments for products within the BMW Group's Automotive and Mo-
torcycles segments. During the reporting year, there was a ex-
pansion of the Detect processes in particular, aimed at enhanc-
ing preventive activities. This expansion was accompanied by
the implementation of new training and communication formats.
143
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Compliance and Human Rights
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
As part of the CMS, the Group's HR department oversees the Ex-
ternal Workforce Compliance programme, which is designed to
safeguard the BMW Group from the repercussions of collabora-
tions with employees from external entities that are not compli-
ant with labour law. In the reporting period, External Workforce
Compliance was restructured to ensure that the requirements for
Three-Stage Approach of the Compliance Management System
Risk-reducing
compliance measures("remediation")
146
Compliance
reporting
9
10
RESPOND
compliant contracts for work and labour are even more firmly
rooted in the procurement of services and cooperation with ser-
vice providers.
Compliance risk assessment
Legal Compliance Code and
compliance regulations
Compliance communication
and training
1
2
3
4
One component of the CMS is the compliance programme Data
Privacy Protection, which is the responsibility of the department
Group Data Privacy Protection. This is based on the directive Pri-
vacy Corporate Rules and the so-called Binding Corporate Rules,
which contractually protect the transfer of employee data within
the BMW Group. Implementation of the programme is validated
through regular reporting by affiliated companies and independ-
ent audits carried out by Group Data Privacy Protection.
Compliance IT system
and processes
During the reporting period, a key area of focus was the updating
and further development of the compliance regulatory land-
scape. This included an update of the BMW Group Code of Conduct
as the central policy for the BMW Group's expectations of its em-
ployees in terms of compliance with applicable legal provisions
and internal regulations. An analysis of the BMW Group's activi-
ties to further improve antitrust compliance was also carried out.
Further priority areas emerged in the context of export control,
due to the war in Ukraine, and in anti-money-laundering efforts,
due to the increase in legislative initiatives as well as in anticipa-
tion of changes to the business model aiming to intensify direct
sales.
Further development of CMS
141
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Risks and Opportunities
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
SUMMARY AND OUTLOOK
[[The material short-term risks, reputational risks and climate-re-
lated risks may point towards potential challenges for the
BMW Group. The BMW Group actively considers the risks and
corresponding opportunities and takes them into account in de-
cision-making and planning processes. Drawing on internal and
external momentum, the risk management system is being con-
tinuously refined.]]
142
BMW Group Report 2023
To Our Stakeholders
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Compliance and Human Rights
Remuneration Report
Other Information
← = Q
COMPLIANCE AND HUMAN RIGHTS
Compliance lays the foundation for the long-term success of the
BMW Group. Compliance builds trust in our products and brands
and shapes our public image. Compliance means much more to
the BMW Group than simply complying with applicable laws and
BMW Group directives around the globe. It forms part of our iden-
tity, our understanding of leadership and our living culture of in-
tegrity. Compliance creates a binding framework for all our busi-
ness activities worldwide.
Compliance as a corporate function
Compliance is the managerial responsibility of the Board of Man-
agement of BMW AG, executed by creating an appropriate regu-
latory and supervisory framework, as well as through regular and
ad hoc reporting, accompanied by clear communications. This
approach is based on the core belief that compliance with applic-
able laws and related internal regulations is the responsibility of
all employees. As role models, managers are tasked with an-
choring compliance culture in their area of responsibility and en-
suring compliance requirements and processes are imple-
mented accordingly. GRI Index: 2-23
In addition to being responsible for the Company-wide Compli-
ance Management System, the Chief Compliance Officer also
manages the Group Compliance division and briefs the Board of
Management and Supervisory Board of BMW AG at regular
intervals.
Compliance Management System (CMS)
The BMW Group's Company-wide Compliance Management
System (CMS) reinforces the culture of compliance and integrity
and helps reduce sanction and liability risks, as well as risks aris-
ing from other (non-) financial disadvantages, such as reputa-
tional risks. The CMS focuses on adequacy and effectiveness
and is based on the Prevent, Detect, Respond model, which de-
fines specific preventive, monitoring, control and response
measures. Clear assignment of roles and responsibilities is also
essential.
The CMS is tailored to the BMW Group's risk situation and ad-
dresses all relevant compliance topics. Group-wide, these in-
clude anti corruption and fraud prevention, anti-money-launder-
ing, antitrust and human rights compliance, export control com-
pliance, data privacy protection and product compliance. In the
reporting year, the already established compliance programmes
External Workforce Compliance and Compliance for regulated Fi-
nancial Services Units were incorporated into the CMS. Respon-
sibility for Data Privacy Protection, Product Compliance, External
Workforce Compliance and Compliance for Regulated Financial
Services Units outside Group Compliance lies with independent
departments. GRI Index: 2-27, 205-1, 205-3, 206-1
The CMS is reviewed on a regular basis and refined as needed.
This primarily involves evaluating strategic focus topics, legal
and regulatory requirements and trends, best practices as well
as industry standards, all of which are taken into account from a
risk perspective. The objective is to consistently improve the
CMS. The BMW Group is an active member of various associa-
tions and interest groups, including the German Institute for
Compliance e. V. (DICO), at Board level.
5
including sanctions
6
CMS monitoring and controls
The CMS provides differentiated monitoring levels for reviewing
observance and implementation of compliance rules and pro-
cesses at regular intervals. In addition to the direct checks per-
formed by Compliance Responsibles as business managers,
risks are further reduced by additional measures integrated into
business processes, which generally form part of the Internal
Control System.
Compliance investigations are carried out when the need arises
or ad hoc as part of the Detect function of central Group Compli-
ance. These include internal investigations in connection with of-
ficial investigations, which serve to clarify the facts internally.
Risk-based compliance audits aimed at identifying specific com-
pliance risks are focused on antitrust law. In 2023, export control
and anti-money-laundering efforts were incorporated as new
topics. Corporate Audit also monitors adherence to compliance
requirements by business managers, as well as selected ele-
ments of the CMS.
All control checks are geared towards reducing compliance risks.
Any infringements are immediately remedied, with an emphasis
on reducing the risk of repeat offences as far as possible. Where
infringements can be traced to an individual, that person will be
appropriately sanctioned, in accordance with the processes de-
fined for this purpose.
As part of the annual review of the BMW Group CMS, its appro-
priateness and effectiveness are assessed on the basis of de-
fined criteria. In addition to the assessment of the Compliance
Responsibles, the measurement also takes into account the as-
sessment of compliance and other governance functions. Our
overall statement on the adequacy and effectiveness of the In-
ternal Control and Risk Management System, including the
CMS, can be found in the section 7 Appropriateness and Effectiveness
of the Internal Control System and Risk Management System.
Regular compliance reporting to the Board of Management
and Supervisory Board
The Board of Management and Supervisory Board of BMW AG,
the Audit Committee (a committee of the Supervisory Board) and
the Company's other executive committees are briefed regularly
(at least twice a year), as well as on a case-by-case basis, by the
CCO.
145
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Compliance and Human Rights
Compliance consulting
Remuneration Report
Other Information
← = Q
[[ Respect for human rights
The BMW Group fulfils its social responsibility to protect human
rights. Our Group-wide approach, which is subject to continuous
improvement, is based on established due diligence processes
that encompass our own business operations, our supply chains
as well as other business partners. The individual steps include
a risk analysis, prevention, control and mitigation measures,
7 Complaint mechanisms, review of effectiveness and reporting.
The focus is on topics where the BMW Group has identified high
risks in terms of human rights and environmental aspects and
where it has a certain level of influence. We place particular em-
phasis on our global, extensive and highly complex supply chain.
We offer comprehensive details about the multistage due dili-
gence process for upholding human rights within the supplier
network in the section Purchasing and Supplier Network.
Internationally recognised guidelines for the protection of human
rights set the benchmark for the BMW Group's entire value chain.
We regard them as specific demands placed on ourselves, our
supply chain and other business partners. They are closely inter-
linked with the Human rights compliance programme and the
7 BMW Group Code of Conduct and anchored in the following specific
Company-wide policies:
Joint Declaration on Human Rights and Working Conditions:
Commitment to value-driven corporate governance,
formulated in collaboration with employee representatives
and the trade union.
7 BMW Group Code on Human Rights and Working Conditions:
Guidance for employees, suppliers and authorised sales
partners regarding the BMW Group's efforts to safeguard
human rights and ensure fair working conditions.
7 Declaration of Principles on Respect for Human Rights and Related
Environmental Standards: Approach and processes regarding
the implementation of the German Supply Chain Due
Diligence Act (LkSG).
7 BMW Group Supplier Code of Conduct: The BMW Group's
requirements and expectations for its global supplier
network in accordance with internationally recognised
sustainability standards and guidelines.
The BMW Group has established clear responsibilities across the
organization for implementing and monitoring due diligence ob-
ligations. Within the BMW Group, responsibility rests with the re-
spective departments and the management of the Group enti-
ties, while outside the BMW Group it lies with the relevant busi-
ness partners and suppliers. Central functions such as Group
Compliance and Sustainability in the Supply Chain oversee and
monitor compliance with due diligence obligations in the relevant
area. The BMW Group Human Rights Officer, who was ap-
pointed by the Board of Management of BMW AG at the end of
2021 as one of the requirements of the LKSG, also assumes a
support and monitoring function.
In the reporting period, we focused on further developing the ex-
isting due diligence processes following the first-time application
of the LkSG. In addition to the policy statement published at the
end of 2022, this includes the further development of the risk
analysis for our own business operations. In 2023, we have also
updated the Human Rights Code and integrated the topic of hu-
man rights into the BMW Group Code of Conduct.
The BMW Group protects information providers in two ways:
first, individuals may provide information without disclosing their
identity; second, no one providing information faces retaliatory
action. All queries and concerns relating to compliance are doc-
umented and processed using a Group-wide electronic case
management system. If necessary, Corporate Audit, Corporate
Security, the legal departments or the Works Council may be
brought in. GRI Index: 2-16
Reports regarding potential compliance violations can also be
submitted anonymously and confidentially in several languages
via the BMW Group SpeakUP Line notification system or via the
ombudsperson. Checking effectiveness
Group Financial Statements Responsibility Statement and Auditor's Report
Compliance and notification systems
Employees with questions or concerns relating to compliance
can discuss these matters with their managers or relevant de-
partments and, specifically, with the Compliance functions. The
Compliance contact serves as a further point of contact for both
employees and external parties.
Compliance monitoring
PREV
financial services business and the risks and regulations in-
volved. The specific focus of the programme – in addition to the
proper implementation of other compliance topics - is on legis-
lative and regulatory monitoring, consumer protection and the
implementation of financial services supervisory requirements.
The Financial Services segment has established its own dedi-
cated risk management unit, which works closely with the central
Group Compliance function as part of the CMS. On the basis of
an annual analysis, it identifies the possible need for adjustments
and defines appropriate measures. Group-wide implementation
by the BMW Group's financial services companies is continu-
ously reviewed and reported on to the management of the Fi-
nancial Services segment on a quarterly basis.
In the Financial Services segment, compliance is incorporated
into the target management process. Integration of specific tar-
gets into strategic steering helps monitor implementation. A
management system also supports the process of identifying
risks arising from non-compliance with internal and external reg-
ulations at an early stage. 7 GRI Index: 3-3
DETECT
Compliance investigations
8
7
Notification system
COMPLIANCE CULTURE
144
The BMW Group has not concluded any compensation agree-
ments with members of the Board of Management or with em-
ployees for situations involving a takeover offer.
Combined Management Report
Compliance and Human Rights
BMW Group Report 2023 To Our Stakeholders
IT-based compliance systems are used for transparent and effi-
cient documentation, assessment and approval of compliance-
relevant matters Group-wide. This includes topics such as
money laundering and sanctions lists, exchange activities with
competitors, business partner due diligence and verifying the le-
gal admissibility of benefits in kind. The data collected in this way
forms the basis for the compliance risk assessment.
Digitalisation supports compliance
Compliance training opportunities are continuously refined for
specific target groups. The online training courses with case
studies and test questions, repeated every two years, strength-
ens the compliance culture and reinforces compliant behaviour.
More than 95,500 staff and managers worldwide have so far
completed the Compliance Essentials training and 51,500 have
received the Antitrust Compliance training. This offering is sup-
plemented by target-group-specific classroom training on anti-
trust compliance as well as online training courses on data pri-
vacy and product compliance. 7 GRI Index: 205-2
Specialist departments worldwide are supported in their work by
the central Group Compliance function, as well as the network of
business unit and division Compliance Officers (heads of relevant
compliance functions), supplemented by around 80 local Com-
pliance Officers (heads of local compliance functions) at
BMW AG's international subsidiaries. Every Compliance Officer
is tasked with implementing the CMS and compliance pro-
grammes for defined topics in their area of activity, as well as
identifying and realising division-specific compliance measures.
Compliance training
Company-wide compliance network
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Relevant compliance risks are identified in the business depart-
ments on the basis of internal guidelines; an initial assessment
is then made and measures taken to mitigate them. Around 200
managers Group-wide perform these tasks for their area of re-
sponsibility as operational Compliance Responsibles.
153 Statement of Comprehensive Income for Group
Other Information
← EQ
152 Income Statement for Group and Segments
154 Balance Sheet for Group and Segments at 31 December 2023
173 Notes to the Income Statement
158 Statement of Changes in Equity for Group
160 Notes to the Group Financial Statements
160 Principles
Remuneration Report
180 Notes to the Statement of Comprehensive Income
156 Cash Flow Statement for Group and Segments
Responsibility Statement and Auditor's Report
18
To Our Stakeholders
BMW Group Report 2023
151
184
204
18
15
15
20
187
207
When assessing whether an investment gives rise to a controlled
entity, an associated company, a joint operation or a joint ven-
ture, the BMW Group considers contractual arrangements and
other circumstances, as well as the structure and legal form of
the entity. Discretionary decisions may also be required. If indi-
cations exist of a change in the judgement of (joint) control, the
BMW Group undertakes a new assessment.
182 Notes to the Balance Sheet
Combined Management Report Group Financial Statements
All consolidated subsidiaries have the same year-end as BMW
AG with the exception of BMW India Private Ltd. and BMW India
Financial Services Private Ltd., whose year-ends are 31 March
in accordance with local legal requirements. Interim financial
statements are prepared as at 31 December for the two compa-
nies with divergent reporting dates.
203 Other Disclosures
231 List of Investments at 31 December 2023
103
- 7,392
179
32
32
8,433
8,826
- 7,433
8,566
2
5
-228
-350
-206
-515
6
8,974
3
-11
159
- 31
- 310
-2,674
-523
- 2,715
1,870
- 3,649
8
1,888
3,236
- 1,346
2,794
- 999
100
159
100
-3,622
- 130
718
453
Group
Financial Services
Automotive
Cash inflow/outflow from investing activities
Proceeds from the sale of marketable securities and investment funds
Investments in marketable securities and investment funds
Proceeds from the disposal of investment assets and other business units
(unaudited supplementary information)
Proceeds from subsidies for intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for acquisitions, net of cash acquired
Expenditure for investment assets
Cash inflow/outflow from operating activities
Change in other operating assets and liabilities
Change in provisions
Change in trade payables
Change in trade receivables
Change in inventories
Changes in working capital
Total investment in intangible assets and property, plant and equipment
1,417
(unaudited supplementary information)
17,096
683
-487
-698
- 4,229
- 3,472
- 4,512
- 5,049
2023
3,205
18,918
12,642
2022
2023
2022
2023
2022
23,509
2,962
Change in receivables from sales financing
- 4,135
- 3,835
28
59
32
65
-86
-219
- 117
- 583
-222
3,587
2
101
115
103
116
102
5,011
102
-649
- 459
BMW Group Report 2023 To Our Stakeholders Combined Management Report
157
- 50
6
- 3,179
- 9,373
- 4,772
-530
-9,548
28
991
1,890
1,220
1,957
- 147
- 14
111
- 115
- 12
- 8,867
1,616
15
218
400
1,315
531
1,607
816
- 20
-866
- 154
- 939
- 187
- 125
-179
156
-70
.9
1,471
53
- 10,688
- 9,050
- 10,881
9,145
488
14,782
17,675
854
23,523
1,356
3,168
- 2,041
-447
- 1,970
1,735
47
17,542
Group Financial Statements
Change in leased products
Other non-cash income and expense items²
- 121
- 3,783
-2,633
- 100
315
34,515
1,185
36,092
33,037
59,620
57,629
- 39,117
815
20,795
21,253
71,217
70,966
Non-current provisions and liabilities
485
39,654
897
36,848
- 42,201
- 46,105
1,224
1,401
35
Current tax
6
7
519
- 41,850
558
128
6,668
8,547
7,316
9,240
34
Other provisions
123
1,045
721
6,840
2,786
2,601
2,765
2,797
13
Deferred tax
156
-
158
80
8,206
7,559
8,445
7,797
34
Other provisions
83
808
2,603
226
8,041
6,199
7,065
37
Other liabilities
32,249
16,343
3,447
18,003
2
2,730
2,726
53,469
52,880
36
Financial liabilities
2
Result from equity accounted investments
886
123
1,671
1,817
147,024
143,628
246,926
250,890
Total equity and liabilities
150,392
- 81,299
-79,565
-79,572
20,215
33,813
13,768
29,059
72,056
76,190
856
920
- 81,296
58,995
149,413
118,799
Depreciation and amortisation of tangible and intangible assets
Other interest and similar income/expenses¹
Interest received¹
Income taxes paid
Profit/loss before tax
in € million
FOR GROUP AND SEGMENTS
118,127
CASH FLOW STATEMENT
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Cash Flow Statement for Group and Segments
Group Financial Statements
156 BMW Group Report 2023 To Our Stakeholders Combined Management Report
- 169,981
- 163,074
← = Q
141
60,404
87,001
15,547
38
Trade payables
-3
13,366
15,065
25,718
14,120
25,392
1,680
40,727
42,130
36
Financial liabilities
215
215
1,646
84,421
13,906
566
Current provisions and liabilities
44,844
49,028
239
226
37,032
35,226
12,763
21,034
37
Other liabilities
11
4
852
1,071
494
18,683
Responsibility Statement and Auditor's Report
Cash Flow Statement for Group and Segments
Remuneration Report
Other Information
31 December 2022
Other changes
preferred stock
Premium arising on capital increase relating to
Authorised Capital
Subscribed share capital increase out of
Treasury shares acquired
Accumulated other equity
Dividend payments
Other comprehensive income for the period after tax
Net profit
1 January 2022
in € million
IN EQUITY FOR GROUP
STATEMENT OF CHANGES
← = Q
Comprehensive income at 31 December 2022
Other Information
Derivative
Subscribed
capital
661
31
Total
interests
of BMW AG
controlling
Non-
Note
Equity
attributable to
shareholders
Costs of
hedging
financial
instruments
Marketable
securities
Translation
differences
Revenue
reserves
reserves
Capital
Treasury
shares
2,325
Remuneration Report
To Our Stakeholders Combined Management Report
-1,222
-1,222
2,000
24
-24
- 2,000
- 6,915
- 1,485
-1,222
-5,430
9,653
607
9,046
496
- 1,201
78
- 1,499
- 5,430
Group Financial Statements Responsibility Statement and Auditor's Report
Statement of Changes in Equity for Group
-95
77
BMW Group Report 2023
159
92,923
119
3,327
89,596
- 500
172
-658
-29
- 2,083
89,072
2,456
639
31
42
699
11,172
71,705
17,941
2
BMW Group Report 2023 To Our Stakeholders Combined Management Report
160
91,288
4,163
87,125
- 1,278
- 1,154
Group Financial Statements
Notes to the Group Financial Statements
1,728
- 584
85,425
2,432
663
31
2,427
4,173
- 107
- 1,746
Responsibility Statement and Auditor's Report
Other Information
Foreign
Germany
Included at 31 December 2022
Included for the first time in 2023
No longer included in 2023
Included at 31 December 2023
In relation to fully consolidated companies, the following changes
took place in the Group reporting entity in the financial year
2023:
02 Group reporting entity and consolidation principles
The BMW Group Financial Statements include BMW AG and all
material subsidiaries over which BMW AG - either directly or in-
directly exercises control. This also includes 62 structured en-
tities, consisting of asset-backed financing arrangements and
special purpose funds. In some cases, contractual agreements
are in place with the asset-backed securities companies to offset
their losses in connection with residual value risks arising from
the receivables sold to them.
-
Approval for the publication of the Group Financial Statements
was granted by the Board of Management on 12 March 2024.
Remuneration Report
In order to provide a better insight into the results of operations,
financial position and net assets of the BMW Group, and going
beyond the requirements of IFRS 8 (Operating Segments), the
Group Financial Statements also include an income statement
and a balance sheet for the Automotive, Motorcycles, Financial
Services and Other Entities segments. The Group Cash Flow
Statement is supplemented by a statement of cash flows for the
Automotive and Financial Services segments. Inter-segment
transactions relate primarily to internal sales of products, the pro-
vision of funds for Group companies and the related interest. A
description of the nature of the business and the major operating
activities of the BMW Group's segments is provided in 7 note 46
(Explanatory notes to segment information).
Key figures presented in this report have been rounded in ac-
cordance with standard commercial practise. In certain cases,
this may mean that values do not add up exactly to the stated
total and that percentages cannot be derived from the values
shown.
The Group Financial Statements have been drawn up in euros.
All amounts are disclosed in millions of euros (Є million) unless
stated otherwise.
The consolidated financial statements of Bayerische Motoren
Werke Aktiengesellschaft (BMW Group Financial Statements or
Group Financial Statements) at 31 December 2023 were drawn
up in accordance with International Financial Reporting Stand-
ards (IFRS), as endorsed by the European Union (EU), and the
supplementary requirements of § 315e (1) of the German Com-
mercial Code (HGB). Pursuant to § 325 HGB, the Group Finan-
cial Statements and the Group Management Report are required
to be submitted electronically to the operator of the German
Company Register and made accessible via that agency's web-
site. Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
which has its seat in Germany, Munich, Petuelring 130, is regis-
tered in the Commercial Register of the District Court of Munich
under the number HRB 42243. BMW AG manufactures automo-
biles and motorcycles in the premium segment.
01 Basis of preparation
PRINCIPLES
NOTES TO THE GROUP FINANCIAL STATEMENTS
← = Q
The income statement for the BMW Group and segments is pre-
sented using the cost of sales method.
- 438
-607
107
1,598
38
1,560
-903
1,973
- 109
- 146
18,686
745
641
17,941
75,132
766
74,366
- 251
362
18,582
- 1,139
-146
1,973
107
107
2
2
2
- 1,278
- 1,278
- 109
- 1,278
- 1,455
-3,827
-3,827
20,180
679
19,501
-903
- 5,282
-2,512
-268
-2,244
11,614
34
16,050
20,633
9
9
- 521
-22,430
- 1,031
-186
-7,139
- 2,961
- 2,998
2,076
- 1,455
- 1,485
-222
- 1,455
-26,102
- 547
104
-705
- 9,042
-750
- 10,592
-7,346
- 17,984
-515
-6,859
1,396
- 51
247
- 1,235
3,281
11,584
-12,165
- 10,790
- 1,313
- 502
- 1,485
- 5,430
Cash and cash equivalents as at 1 January
Change in cash and cash equivalents
Effect of changes in composition of Group on cash and cash equivalents
Effect of exchange rate on cash and cash equivalents
Cash inflow/outflow from financing activities
Change in other financial liabilities
Proceeds from issue of non-current financial liabilities
Repayment of non-current financial liabilities
Cash and cash equivalents as at 31 December
Payment of dividends to non-controlling interests
Intragroup financing and equity transactions
Interest paid¹
Treasury shares acquired
Payments into equity
Payments out of equity
in € million
FOR GROUP AND SEGMENTS
CASH FLOW STATEMENT
← = Q
Payment of dividends to shareholders of BMW AG
- 3,827
With the exception of interest for lease liabilities, interest relating to financial services business is classified as revenues/cost of sales.
2 Includes in the financial year 2022 the elimination of the non-cash revaluation effect of the investment in BMW Brilliance amounting to € 7,649 million.
Group
- 3,827
- 5,430
- 1,278
-1,222
- 1,278
- 1,222
85
Automotive
85
2023
2022
2023
-20
2022
2023
-20
Financial Services
(unaudited supplementary information)
(unaudited supplementary information)
2022
99
-184
6
Total
Non-
controlling
interests
Equity
attributable to
shareholders
of BMW AG
Treasury
shares
Costs of
hedging
Derivative
financial
instruments
Marketable
securities
31
Translation
differences
reserves
Capital
Subscribed
capital
Note
Accumulated other equity
31 December 2023
Other changes
Revenue
reserves
Reclassification resulting from share redemption
663
85,425
11,290
496
- 1,201
78
- 1,499
- 118
12,165
875
2,432
11,290
4,163
87,125
- 1,278
- 1,154
1,728
- 107
-584
91,288
Treasury share redemption
Treasury shares acquired
Dividend payments
3,471
3,530
12,009
13,109
16,009
16,870
59
17,327
- 440
481
861
457
- 10
27
- 10
27
1,100
16,870
13,590
13,109
Comprehensive income at 31 December 2023
Other comprehensive income for the period after tax
Net profit
1 January 2023
in € million
IN EQUITY FOR GROUP
STATEMENT OF CHANGES
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Statement of Changes in Equity for Group
To Our Stakeholders Combined Management Report
BMW Group Report 2023
158
The reconciliation of liabilities from financing activities is presented in note [36] to the Group Financial Statements.
3,530
3,090
77
77
20
17
8,957
18,582
12,165
Net profit/loss
-37
-339
- 209
14,967
29
-861
-57
-75
- 3,951
-3,685
- 4,927
- 4,931
-673
13
183
2,101
17,941
11,290
Attributable to shareholders of the BMW AG
1
40
17
601
212
857
875
Attributable to non-controlling interests
85
995
786
-71
2,532
641
8,100
Income taxes
1,334
- 339
9,510
-1,386
1,194
-1,118
42
- 87
8,283
7,701
8,937
- 1,272
12
Financial result
Other financial result
1,846
3,237
- 67
122
-1
- 93
995
- 100
3,205
2,962
269
258
18,918
12
12,642
17,096
Profit/loss before tax
- 25
-866
1,198
-87
42
23,509
- 1,539
14,366
212
-118
-332
24
1,077
- 142
33
18,582
745
12,165
2023
Note
Total comprehensive income attributable to shareholders of BMW AG
Total comprehensive income attributable to non-controlling interests
Total comprehensive income
Items that can be reclassified to the income statement in the future
Other comprehensive income for the period after tax
Currency translation foreign operations
2022
Other comprehensive income from equity accounted investments
Income taxes
113
- 1,808
20,180
9,653
1,598
-2,512
19
853
-2,394
- 154
199
- 458
281
22
26
- 1,557
766
2,801
- 1,772
183
Costs of hedging
Marketable securities (at fair value through other comprehensive income)
14
Diluted earnings per share of common stock in €
27.33
17.69
14
Basic earnings per share of preferred stock in €
Dilutive effects
27.31
17.67
17.67
Basic earnings per share of common stock in €
85
995
786
-72
2,492
2,084
14
Derivative financial instruments
27.31
14
Items not expected to be reclassified to the income statement in the future
Income taxes
Remeasurement of the net liability for defined benefit pension plans
Net profit/loss
in € million
FOR GROUP
STATEMENT OF COMPREHENSIVE INCOME
Diluted earnings per share of preferred stock in €
← = Q
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Statement of Comprehensive Income for Group
To Our Stakeholders Combined Management Report
BMW Group Report 2023
153
27.33
17.69
Other Information
-2,372
- 6
- 11
8
11
2022
2023
2022
2023
2022
35,122
-16,231
2023
36,227
-31,548
-2,656
- 104,324
- 109,920
- 118,042
- 125,809
8
3,176
-2,628
3,214
- 19,298
18,315
9
Selling and administrative expenses
49
2,084
8
11
4,685
- 30,437
4,679
558
19,278
22,357
24,568
29,689
Gross profit
19,347
548
- 11,025
123,602
142,610
Motorcycles
Automotive
O
FOR GROUP AND SEGMENTS
INCOME STATEMENT
← = Q
Other Information
Group
Remuneration Report
Group Financial Statements
152 BMW Group Report 2023 To Our Stakeholders Combined Management Report
STATEMENTS
GROUP FINANCIAL
03
99%>
53
Responsibility Statement and Auditor's Report
Income Statement for Group and Segments
132,277
(unaudited supplementary
information]
Financial Services
(unaudited supplementary
information)
155,498
7
2022
2023
2022
2023
2022
(unaudited supplementary
information)
2023
Cost of sales
Revenues
in € million
information)
Eliminations
(unaudited supplementary
(unaudited supplementary
information)
Other Entities
Note
– 10,616
- 9,195
- 8,801
11
Interest and similar income
- 100
- 159
- 100
-159
24
701
Result from equity accounted investments
2,200
- 203
- 13
3,163
3,055
257
259
147
10,635
422
739
7
8
- 57
-1,502
251
-656
11
1,389
Interest and similar expenses
- 4,103
1,543
3,403
6
5
5
7
- 1,871
12,981
13,999
18,482
6
6
1,230
967
1,377
1,045
10
63
Other operating income
66
- 33
-34
- 1,543
- 1,559
- 296
-303
57
121
13
14
Profit/loss before financial result
35
54
- 192
-3
- 100
- 128
-1
-2
- 1,072
- 1,148
- 1,330
- 1,227
10
Other operating expenses
6
-4
607
228 Segment Information
679
19,501
210
611
3,530
45,222
45,218
970
1,050
71,621
59,128
68,310
94,972
Current assets
3,090
21
36
13,109
13,590
92,204
16,870
Total assets
246,926
Combined Management Report
To Our Stakeholders
BMW Group Report 2023
155
- 169,981
- 163,074
- 81,858
250,890
- 78,734
118,127
149,413
150,392
1,671
1,817
147,024
143,628
56,249
118,799
Group Financial Statements Responsibility Statement and Auditor's Report
Balance Sheet for Group and Segments at 31 December 2023
17,327
- 81,855
1,199
27
Current tax
-3
766
692
560
1,096
558
2,888
5,164
4,131
26
Financial assets
35,340
36,838
3,841
Cash and cash equivalents
911
102
- 78,727
54,857
57,638
5,020
3,753
4
7
547
31,576
9,602
7,596
28
Other assets
415
186
134
24,925
35,340
Remuneration Report
← = Q
3,327
Non-controlling interests
I
I
I
I
I
4,163
87,125
31
Equity attributable to shareholders of BMW AG
I
- 1,278
- 500
31
Treasury shares
89,596
- 117
Equity
91,288
9
7
233
326
339
427
33
92,923
Pension provisions
- 41,652
48,894
56,031
17,737
16,573
67,234
61,971
- 42,577
Other Information
- 2,071
Accumulated other equity
2023
2022
2023
2022
2023
Note
in € million
2022
Eliminations
(unaudited supplementary
information)
Other Entities
Financial Services
(unaudited supplementary
information)
Motorcycles
(unaudited supplementary
information]
Automotive
(unaudited supplementary
information]
Group
AT 31 DECEMBER 2023
BALANCE SHEET FOR GROUP AND SEGMENTS
(unaudited supplementary
information)
31
2023
2023
85,425
89,072
31
Revenue reserves
2,432
2,456
31
2022
Capital reserves
639
31
Subscribed capital
EQUITY AND LIABILITIES
2022
2023
2022
663
36,838
25
Receivables from sales financing
Leased products
121
94
491
533
31,514
34,639
23
32,126
22
Property, plant and equipment
1
370
366
185
216
35,266
21,220
43,118
50,415
23,084
28
28
14,775
420
443
14,697
1,351
42,820
1,197
420
443
24
Investments accounted for using the equity method
-7,047
-7,297
49,867
Other investments
23,020
19,439
20,022
Automotive
(unaudited supplementary
information]
Group
= Q
↑
Intangible assets
ASSETS
in € million
Motorcycles
(unaudited supplementary
information)
AT 31 DECEMBER 2023
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Balance Sheet for Group and Segments at 31 December 2023
Combined Management Report
To Our Stakeholders
BMW Group Report 2023
154
BALANCE SHEET FOR GROUP AND SEGMENTS
21,776
Financial Services
(unaudited supplementary
information)
Eliminations
21
2022
2023
2022
2023
2022
2023
Other Entities
2022
2022
2023
2022
2023
Note
(unaudited supplementary
information)
(unaudited supplementary
information)
2023
-36,612
-36,472
Receivables from sales financing
29
Inventories
- 88,123
- 84,340
-2,122
-42,247
- 38,878
38,315
62,550
29
58,999
105,174
701
767
75,403
75,318
154,722
155,918
104,191
Non-current assets
23,719
22,121
1
114
184
143
102
3,869
3,875
20,005
4,127
30
Trade receivables
524
693
802
905
18,679
4,162
35,249
2,325
2,852
643
481
256
1,522
588
3,073
1,387
1,191
26
-114
- 140
50,482
50,657
50,368
50,517
25
Financial assets
Deferred tax
13
2,431
25
18
2,612
2,296
1,030
1,537
28
Other assets
- 121
- 100
-1,313
23
22
517
506
3,340
3,216
1,758
9,046
Total
20
As a general rule, the BMW Group assumes that a receivable is
in default if it is more than 90 days overdue or if there are objec-
tive indications of insolvency, such as the opening of insolvency
proceedings. Credit-impaired assets are identified as such on the
basis of this definition of default. In the case of credit-impaired
assets which had not been credit-impaired at the time they were
acquired or originated, an impairment allowance is recognised at
an amount equal to lifetime expected credit losses (stage 3). This
is the case regardless of whether the general or simplified ap-
proach is applied. In the case of stage 3 assets, interest income
is calculated on the asset's carrying amount less any impairment
loss.
The cost of internally constructed plant and equipment com-
prises all costs which are directly attributable to the manufactur-
ing process as well as an appropriate proportion of production-
related overheads. This includes production-related depreciation
and amortisation as well as an appropriate proportion of admin-
istrative and social costs. Financing costs are not included in ac-
quisition or manufacturing cost unless they are directly attribut-
able to the asset. The carrying amount of items of depreciable
-
property, plant and equipment is written down according to
scheduled usage-based depreciation as a general rule on a
straight-line basis - over the useful lives of the assets. Depreci-
ation is recorded as an expense in the income statement.
The following useful lives are applied throughout the BMW
Group:
in years
Factory and office buildings, residential buildings, fixed
installations in buildings and outside facilities
8 to 50
Plant and machinery
Other facilities, factory and office equipment
3 to 30
2 to 25
The useful life of the plant and equipment is reviewed regularly
and extended or shortened as necessary. This review also takes
account of the impact of climate-related aspects on useful lives,
for example due to changes in demand patterns or regulatory re-
quirements. This assessment is based on the assumptions used
for long-term corporate planning purposes and product-related
decisions, as described above. Climate-related aspects have an
indirect impact on the utilisation of property, plant and equip-
ment. Adjustments to the useful lives of items of plant and ma-
chinery are avoided by a combination of flexible manufacturing
arrangements (independent of drivetrain type and capable of
handling all vehicle generations) and asset-preservation
measures. The useful lives of plant and machinery that are used
exclusively for internal combustion vehicle production are also
covered by the most up-to-date planning assumptions. For ma-
chinery used in multiple-shift operations, depreciation rates are
increased to account for the additional utilisation. If there is any
indication of impairment of property, plant and equipment, an im-
pairment test is performed as described above for intangible as-
sets.
167
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Assumptions and estimations are required regarding future re-
sidual values, since these represent a significant part of future
cash inflows. Relevant factors to be considered include the trend
in market prices and demand on the pre-owned automobile mar-
ket. The expected change in the drive-system mix going forward,
which is subject to regular analysis, is also taken into account.
The BMW Group has developed and implemented methods and
processes that enable sustainability aspects of residual value
risks, particularly climate-related aspects, to be appropriately as-
sessed and managed. A scenario-based approach is applied to
quantify the impact of the transition towards zero-emissions mo-
bility and factor in the technological progress of the products in-
volved, resulting potentially in the need to adjust the estimated
residual values of both internal combustion and electrified vehi-
cles. However, the transition to new drive systems will stretch
over a period of time. Under these circumstances, regulatory as-
pects, customer behaviour and the structure of the product range
all have to be taken into account. To varying degrees, the afore-
mentioned aspects will play a role in bringing about changes to
the existing product portfolio over the coming years. The nature
of these planned changes can already be anticipated today to
some extent, highlighting potential but calculable risks for future
operations. Disproportionate risks can only arise in the
Where the recoverable amount of a lease exceeds the asset's
carrying amount, changes in residual value expectations are rec-
ognised by adjusting scheduled depreciation prospectively over
the remaining term of the lease. If the recoverable amount is
lower than the asset's carrying amount, an impairment loss is
recognised for the shortfall. A test is carried out at each balance
sheet date to determine whether an impairment loss recognised
in prior years no longer exists or has decreased. In such cases,
the carrying amount of the asset is increased to the recoverable
amount, at a maximum up to the amount of the asset's amor-
tised cost.
case including initial direct costs. All leased products are depre-
ciated over the period of the lease using the straight-line method
down to their expected residual value.
Group products recognised by BMW Group entities as leased
products under operating leases are measured at manufactur-
ing cost and all other leased products at acquisition cost, in each
As lessee, the BMW Group makes use of the application exemp-
tions available for short-term leases and leases of low-value
assets.
Determining which items are to be counted as lease payments -
including the issue of the lease term underlying those payments
- and which discount rate to apply involves using estimates and
assumptions that may differ from actual outcomes.
All items of property, plant and equipment are measured at ac-
quisition or manufacturing cost less accumulated depreciation
and accumulated impairment losses.
The incremental borrowing rate comprises the risk-free interest
rate in the relevant currency for matching maturities plus a pre-
mium for the credit risk. Specific risks attached to an asset are
generally not taken into account, given that collateral received in
the context of alternative financing arrangements is not relevant
within the BMW Group.
The lease payments to be taken into account to measure the
right-of-use asset and the lease liability comprise fixed pay-
ments, variable lease payments that depend on an index or an
interest rate as well as amounts expected to be payable under
residual value guarantees. If it is reasonably certain that a pur-
chase or lease extension option will be exercised, the relevant
payments are also included. Payments for periods for which the
lessee has an option to terminate a lease unilaterally are only in-
cluded in the lease payments if it is reasonably certain that the
termination option will not be exercised. For the purposes of as-
sessing options, the BMW Group takes account of all facts and
circumstances that create an economic incentive to exercise or
not to exercise the option.
The lease liability is measured on initial recognition at the present
value of the future lease payments. Subsequent to initial recog-
nition, the carrying amount of the lease liability is increased to
reflect interest on the lease liability and reduced, without income
statement impact, by the lease payments made. Lease liabilities
are reported within financial liabilities, while interest expense is
reported as part of net interest result. In the cash flow statement,
both the repayment portion and the interest portion of lease pay-
ments are shown as cash outflows from financing activities.
The BMW Group recognises a right-of-use asset and a liability
for the outstanding lease payments with effect from the date on
which the leased asset becomes available for use by the BMW
Group. The cost of the right-of-use asset is the sum of the
amount at which the lease liability is initially measured, any lease
payments made at or before the lease commencement date, any
initial direct costs incurred by the lessee and the estimated costs
of dismantling, removing or restoring the leased asset. Lease in-
centives granted by the lessor are deducted. Right-of-use assets
are depreciated on a straight-line basis over the shorter of the
useful life of the leased asset and the expected lease term. If
ownership of the leased asset is automatically transferred at the
end of the lease term or the exercise of a purchase option is re-
flected in the lease payments, the right-of-use asset is depreci-
ated on a straight-line basis over the expected useful life of the
leased asset. Right-of-use assets are reported in the balance
sheet within the relevant line items for property, plant and equip-
ment. The depreciation expense on right-of-use assets is re-
ported in the income statement in cost of sales as well as in sell-
ing and administrative expenses.
A lease arises for IFRS 16 purposes either when an actual legal
rental/lease agreement for property, plant and equipment is
in place or when other contractual arrangements are in place that
are equivalent to a lease in substance. Depending on the specific
facts and circumstances of each individual case, power purchase
agreements and long-term supply contracts for battery cells may
also constitute a lease.
← = Q
Notes to the Group Financial Statements
IFRS 16 requires that lease payments are discounted as a gen-
eral rule using the interest rate implicit in the lease. However,
since the interest rate in leases entered into by the BMW Group
cannot readily be determined, amounts are discounted on the
basis of the incremental borrowing rate.
168
In conjunction with the impairment tests for cash-generating
units, sensitivity analyses are performed for the main assump-
tions in order to rule out that possible changes to the assump-
tions used to determine the recoverable amount would result in
the requirement to recognise an impairment loss. Even in the
case of a 10% deterioration in the individual measurement as-
sumptions, an impairment loss would not arise. If the WACC were
to develop as in the previous year, the value in use calculated for
the Financial Services cash-generating unit would fall slightly be-
low its carrying amount in 2024. The BMW Group does not, how-
ever, expect the WACC to develop as in the previous year.
13.7
In these cases, impairment is tested at the level of a cash-gener-
ating unit, which is the norm for the BMW Group.
For the purpose of the impairment test, the carrying amount of
an asset (or a cash-generating unit) is compared with the recov-
erable amount. The first step of the impairment test is to deter-
mine the value in use. If the value in use is lower than the carrying
amount, the next step is to determine the fair value less costs to
sell and compare the amount so determined with the asset's car-
rying amount. If the fair value is lower than the carrying amount,
an impairment loss is recognised, reducing the carrying amount
to the higher of the asset's value in use or fair value less costs to
sell.
If the reason for a previously recognised impairment loss no
longer exists, the impairment loss is reversed up to the level of
the recoverable amount, but no higher than the amortised acqui-
sition or manufacturing cost. Impairment losses on goodwill are
not reversed. As part of the process of assessing recoverability,
it is generally necessary to apply estimations and assumptions -
in particular regarding future cash inflows and outflows and the
length of the forecast period which could differ from actual
amounts. Actual amounts may differ from the assumptions and
estimations used if business conditions develop differently to
expectations.
-
The BMW Group determines the value in use of intangible assets
on the basis of a present value computation. The cash flows used
for this calculation are derived from the long-term corporate plan
approved by management, corresponding to a forecast period of
six years.
166
BMW Group Report 2023
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Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report Other Information
Notes to the Group Financial Statements
← = Q
For the purposes of calculating cash flows beyond the planning
period, a perpetual annuity return is assumed which does not
take growth into account. Forecasting assumptions are adjusted
to current information and regularly compared with external
sources. The assumptions used take account in particular of ex-
pectations of the profitability of the product portfolio, future mar-
ket share development, macroeconomic developments (such as
currency, interest rate and raw materials prices) as well as the
legal environment and past experience.
Assumptions also take into account the impact of climate-related
aspects and the influence of other sustainability factors on busi-
ness performance and the product portfolio, for example as a re-
sult of changes in demand patterns, regulatory requirements or
changes in production conditions. In line with the BMW Group's
strategy process and the ongoing transformation to electric mo-
bility, the detailed forecast takes account of key assumptions
such as the planned increase in the share of electrified automo-
biles to over 50% and the required level of expenditure on re-
search and development for vehicle models with battery-electric
drives. Other matters to be considered are the scale of future in-
vestments in resource-saving production facilities (including any
expected efficiency improvements), the cost of converting pro-
duction processes from fossil fuels to renewable energy sources
and, last but not least, the expected impact on the current leasing
portfolio.
Amounts are discounted on the basis of a market-related cost of
capital rate. Impairment tests are performed for accounting and
financial reporting purposes and using a risk-adjusted pre-tax
cost of capital (WACC) for the Automotive (excluding BMW Bril-
liance), BMW Brilliance and Motorcycles cash-generating units.
In the case of the Financial Services cash-generating unit, a pre-
tax cost of equity capital is used, as is customary in the sector.
By analogous application of the procedures used for the other
cash-generating units, the value in use is also determined for the
BMW Brilliance cash-generating unit in view of the time period
since the acquisition date.
The following pre-tax discount factors were applied:
15.2
12.4
13.7
15.4
15.6
12.4
The risk-adjusted discount rate, calculated using a capital asset
pricing model (CAPM), also takes into account specific peer-
group information relating to beta-factors, capital structure data
and borrowing costs. No environmental, social and governance
(ESG)-related adjustments were made to the WACC.
13.7
2023
Financial Services
Motorcycles
BMW Brilliance
Automotive excluding BMW Brilliance
in %
2022
If there is any indication of impairment of intangible assets, or
if an annual impairment test is required (i.e. intangible assets
with an indefinite useful life, intangible assets during the devel-
opment phase and goodwill), an impairment test is performed.
Each individual asset is tested separately unless the cash flows
generated by the asset are not sufficiently independent from the
cash flows generated by other assets or other groups of assets.
BMW Group Report 2023
Group Financial Statements
Derivative financial instruments are used within the BMW
Group for hedging purposes in order to reduce currency, interest
rate, fair value and market price risks. Derivative financial instru-
ments are recognised as of the trade date, measured at their fair
value. Depending on their market value at measurement date,
these financial instruments are reported in the balance sheet line
items "Financial assets" or "Financial liabilities".
Fair values are determined on the basis of valuation models. Ob-
servable market price, tenor and currency basis spreads are
taken into account in the measurement of derivative financial in-
struments. Furthermore, the Group's own credit risk and that of
counterparties is taken into account on the basis of credit default
swap values for market contracts with matching terms.
The BMW Group applies the option to recognise the credit risks
arising from the fair values of a group of derivative financial as-
sets and liabilities on the basis of their total net amount. Portfo-
lio-based valuation adjustments (credit valuation adjustments
and debit valuation adjustments) to the individual derivative fi-
nancial assets and financial liabilities are allocated using the rel-
ative fair value approach (net method).
Where hedge accounting is applied, changes in fair value of de-
rivative financial instruments are presented as part of other fi-
nancial result in the income statement or within other compre-
hensive income as a component of accumulated other equity,
depending on whether the hedging relationship is classified as a
fair value hedge or a cash flow hedge.
Fair value hedges are mainly used to hedge interest rate risks
relating to financial liabilities. The currency basis is not desig-
nated as part of the hedging relationship in the case of cross cur-
rency interest rate hedges accounted for as fair value hedges.
Accordingly, changes in the market value of such components
are recorded as costs of hedging within accumulated other eq-
uity. Amounts accumulated in equity are reclassified to other fi-
nancial result within the income statement over the term of the
hedging relationship.
In addition, for selected fixed-interest assets, a portion of the in-
terest rate risk is hedged on a portfolio basis in accordance with
170
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Notes to the Group Financial Statements
← = Q
IAS 39. The designated hedged items (underlying transactions)
are reported in the balance sheet as receivables from sales fi-
nancing or financial liabilities. Interest rate risks are hedged on
the basis of the present value of net cash flows relating to fixed
income assets (on the asset side) less cash flows relating to vari-
able-rate financing (on the liabilities side). The net cash flow de-
termined in this way is hedged by purchasing corresponding in-
terest rate swaps that have the effect of reducing the interest rate
risk. Hedge relationships are terminated and redesignated on a
monthly basis at the end of each reporting period, thereby taking
account of the constantly changing content of each portfolio.
Fair value hedge ineffectiveness is generally recognised in other
financial result.
Cash and cash equivalents comprise mainly cash on hand and
cash at bank with an original term of up to three months. With the
exception of money market funds, cash and cash equivalents are
measured at amortised cost.
Inventories also include vehicles held for sale in the financial ser-
vices business, measured at their amortised cost or lower net re-
alisable value.
Work in progress and finished goods are stated at the lower of
manufacturing cost and net realisable value. Manufacturing cost
comprises all costs which are directly attributable to the manu-
facturing process as well as an appropriate proportion of produc-
tion-related overheads. This includes production-related depre-
ciation and amortisation and an appropriate proportion of ad-
ministrative and social costs. Financing costs are not included in
the acquisition or manufacturing cost of inventories.
Inventories of raw materials, supplies and goods for resale are
generally stated at the lower of average acquisition cost and net
realisable value.
As a general rule, each income tax treatment is considered inde-
pendently when accounting for uncertainties in income taxes.
If it is not considered probable that an income tax treatment will
be accepted by the local tax authorities, the BMW Group uses the
most likely amount of the tax treatment when determining tax-
able profit and the tax base.
Current income taxes are calculated within the BMW Group on
the basis of tax legislation applicable in the relevant countries. To
the extent that judgement was necessary to determine the treat-
ment and amount of tax items presented in the financial state-
ments, there is in principle a possibility that local tax authorities
may take a different position.
Financial assets include in particular marketable securities and
shares in investment funds as well as derivative financial instru-
ments.
Deferred tax liabilities on taxable temporary differences arising
from investments in subsidiaries, branches and associated com-
panies as well as interests in joint arrangements are not recog-
nised if the Group is able to control the timing of the reversal and
it is probable that the temporary difference will not reverse in the
foreseeable future. This is particularly the case if it is intended
that profits will not be distributed, but rather will be used to main-
tain the substance and expand the volume of business of the en-
tities concerned.
Deferred tax assets and liabilities are measured at the tax rates
that are expected to apply to the period when the asset is real-
ised or the liability settled, based on tax rates and tax laws that
have been enacted or substantively enacted at the balance sheet
date.
as well as on unused tax losses and unused tax credits, when it
is probable that they can be utilised. As an exception to this, de-
ferred tax assets and liabilities resulting from the implementation
of the Pillar Two rules are not recognised. Further information is
provided in note 5.
Deferred income taxes are recognised for all temporary differ-
ences between the tax and accounting bases of assets and lia-
bilities, including differences arising on consolidation procedures,
In the case of raw materials hedges that are accounted for as
cash flow hedges, the hedging instruments are designated in full
as part of the hedging relationship. Amounts recorded in accu-
mulated other equity are included in the carrying amount of in-
ventories on initial recognition. Ineffectiveness arising on cash
flow hedges is recognised directly in cost of sales, whereas the
impact of prematurely terminated hedging relationships is recog-
nised in other operating income and expenses.
The time values of option transactions and the interest compo-
nent - including the currency basis of forward currency con-
tracts are not designated as part of the hedging relationship in
the case of currency hedges accounted for as cash flow hedges.
Changes in the fair value of such components are recorded as
costs of hedging on a separate line within accumulated other
equity. Amounts recorded in accumulated other equity from cur-
rency hedges are reclassified to cost of sales when the related
hedged item is recognised in profit or loss.
-
The recoverability of deferred tax assets is assessed at each bal-
ance sheet date on the basis of planned taxable income in future
financial years. If with a probability of more than 50% future tax
benefits will not be realised, either in part or in total, a valuation
allowance is recognised on the deferred tax assets. The calcula-
tion of deferred tax assets requires assumptions to be made with
regard to the level of future taxable income and the timing of re-
covery of deferred tax assets. These assumptions take account
of forecast operating results, announced legislative changes in
connection with climate change and the impact on earnings of
the reversal of taxable temporary differences. Since future busi-
ness developments cannot be predicted with certainty and to
some extent cannot be influenced by the BMW Group, the meas-
urement of deferred tax assets is subject to uncertainty.
To Our Stakeholders Combined Management Report
Input factors available on the market, such as ratings and prob-
abilities of default, are used to calculate valuation allowances for
cash and cash equivalents, financial assets, receivables from
subsidiaries and receivables from companies in which an invest-
ment is held. In the case of marketable securities and investment
funds, the BMW Group usually applies the option not to allocate
financial assets with a low default risk to different stages. Accord-
ingly, assets with an investment grade rating are always allo-
cated to stage 1.
Forward-looking information (for instance forecasts of key per-
formance indicators) is also taken into account if, based on past
experience, such indicators show a substantive correlation to ac-
tual credit losses.
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Notes to the Group Financial Statements
← = Q
event of unexpected regulatory changes that would also be to the
detriment of customers. In addition to these various considera-
tions, the vehicle portfolio subject to residual value risks is re-
measured on a quarterly basis, allowing new aspects to be incor-
porated in the valuation at an early stage. In this case, valuations
relevant for new business which are subject to the same turn of
events would also be adjusted. The forecasting models used by
the BMW Group are subject to regular review and can be supple-
mented where appropriate to include aspects relating to changes
in the market.
Using this approach, upward or downward adjustments can be
made to the forecast value on the basis of a range of scenario
analyses. The assumptions are based on internally available his-
torical data and current market data as well as on forecasts of
external institutions. Furthermore, assumptions are regularly val-
idated by comparison with external data. Certain types of con-
tracts require a high degree of judgement when deciding whether
they give rise to operating leases or receivables from sales
financing.
Investments accounted for using the equity method are
measured - provided no impairment has been recognised - at
cost of investment adjusted for the Group's share of earnings
and changes in equity capital. If there is any indication that an
investment is impaired, an impairment test is performed on the
basis of the discounted cash flow method. An indicator exists, for
example, in the event of a serious shortfall compared to budget,
the loss of an active market or if funds are required to avoid
insolvency.
With the exception of lease receivables financial assets are
measured on initial recognition at their fair value. Financial as-
sets include, in particular, other investments, receivables from
sales financing, finance-related receivables, trade receivables
and cash and cash equivalents. As a general rule, initial recogni-
tion takes place as soon as the BMW Group becomes a party to
a contract. In the case of so-called "regular way" purchases or
sales of non-derivative financial assets, initial recognition takes
place at the settlement date. Financial assets are derecognised
when contractual cash flows attached to them have expired or
are transferred and all significant risks and rewards have been
passed on to the acquirer.
Depending on the business model and the structure of contrac-
tual cash flows, financial assets are classified as measured at
amortised cost, at fair value through comprehensive income or at
fair value through profit or loss. The category "measured at fair
value through comprehensive income" at the BMW Group com-
prises mainly marketable securities and investment funds used
for liquidity management purposes. In the BMW Group, selected
marketable securities, shares in investment funds, money mar-
ket funds and convertible bonds are measured at fair value
through profit or loss, as their contractual cash flows do not solely
represent payments of principal and interest.
The BMW Group does not make use of the option to measure
equity instruments at fair value through other comprehensive in-
come or debt instruments at fair value through profit or loss.
The market values of financial instruments measured at fair
value are determined on the basis of market information avail-
able at the balance sheet date, such as quoted prices or using
appropriate measurement methods, in particular the discounted
cash flow method.
Items reported under other investments within the scope of
IFRS 9 are measured at fair value through profit or loss. Invest-
ments in subsidiaries, joint arrangements and associated com-
panies that are not material to the BMW Group are also included
in other investments.
Receivables from sales financing are measured as a general
rule at amortised cost using the effective interest rate method.
As part of its asset-backed securities (ABS) financing activities,
the BMW Group transfers some of its receivables from sales fi-
nancing - primarily retail customer and dealership financing re-
ceivables - to structured companies, which in turn securitise
them and place them on the capital market as collateralised
securities.
The transferred receivables are not derecognised and therefore
remain on the BMW Group's balance sheet. For this reason, re-
ceivables from sales financing fulfil the criteria of the "hold" busi-
ness model.
Loss allowances relating to the balance sheet line item “Receiv-
ables from sales financing" are determined primarily on the basis
of past experience with credit losses, current data on overdue re-
ceivables, rating classes and scoring information.
The BMW Group derecognises financial assets when it has no
reasonable expectation of recovery. This may be the case, for in-
stance, if the debtor is deemed not to have sufficient assets or
other sources of income to service the debt.
In addition, post-model adjustments are recorded if the risk is not
fully covered by the standard models.
The BMW Group applies the simplified approach described in
IFRS 9 to operating lease and trade receivables, whereby the
amount of the loss allowance is measured subsequent to the in-
itial recognition of the receivable on the basis of lifetime expected
credit losses (stage 2 – simplified approach). For the purposes of
allocating an item to stage 2, it is irrelevant whether the credit
risk of the assets concerned has increased significantly since in-
itial recognition.
← = Q
Group Financial Statements
Notes to the Group Financial Statements
Loss allowances on trade receivables are determined primarily
on the basis of information relating to overdue amounts. Further-
more, both positive and negative economic scenarios are used
alongside the latest forecasts of key performance indicators
when determining the level of valuation allowances. These sce-
narios are based on local analyses and take into account, for ex-
ample, anticipated political and economic developments.
Other Information
Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
169
With the exception of receivables from operating leases and
trade receivables, the BMW Group applies the general approach
described in IFRS 9 to determine impairment of financial assets.
Under the general approach, loss allowances are measured on
initial recognition on the basis of the expected 12-month credit
loss (stage 1). If the credit loss risk at the end of the reporting
period has increased significantly since initial recognition, the im-
pairment allowance is measured on the basis of lifetime ex-
pected credit losses (stage 2 - general approach). The measure-
ment of the change in default risk is based on a comparison of
the default risk at the date of initial recognition and at the end of
the reporting period. The default risk at the end of each reporting
period is determined on the basis of credit checks, current key
performance indicators and any overdue payments.
Receivables from sales financing also include finance lease re-
ceivables which are measured at the amount of the net invest-
ment in the lease. This balance sheet line item also includes op-
erating lease receivables at the end of the reporting period. The
related vehicles are reported within the line item "Leased
products".
Remuneration Report
Intangible assets also include emission allowances and similar
rights arising from programmes aimed at reducing carbon or
other climate-damaging emissions (for example in conjunction
with the EU Emissions Trading System or vehicle-related emis-
sions regulations in the USA or China). These allowances and
rights are carried at cost and, in the event that they are allocated
free of charge, recorded at a value of zero. Amounts are derec-
ognised when they are returned or, in exceptional cases, when
they are sold or expire. In parallel to the recognition of these al-
lowances and rights as assets, provisions are recognised in ac-
cordance with IAS 37 corresponding to the amount of obligations
expected to arise in conjunction with the related emissions regu-
lations. Provisions are measured on the basis of the expected
value of the allowances or rights that are to be returned.
BMW Group Report 2023
Development costs are capitalised if all of the criteria specified
by IAS 38 are met. They are measured on the basis of direct
costs and directly attributable overhead costs. Project-related
capitalised development costs are amortised on a straight-line
basis following the start of production over the estimated product
life (usually five to 12 years).
The exchange rates of currencies which have a material impact
on the Group Financial Statements were as follows:
1 euro =
US dollar
Chinese renminbi
British pound
Japanese yen
South Korean won
Argentina has fulfilled the definition of a hyperinflationary econ-
omy since 1 July 2018. Since that date, IAS 29 (Financial Re-
porting in Hyperinflationary Economies) has therefore been ap-
plied for the BMW subsidiary in Argentina. The price indices pub-
lished by the Federación Argentina de Consejos Profesionales de
Ciencias Económicas (FACPCE) are used to adjust non-mone-
tary asset, liability and income statement line items. The result-
ing effects are not material for the BMW Group.
Closing rate
Average rate
31.12.2023
31.12.2022
2023
2022
1.11
1.07
1.08
1.05
138.02
151.98
1,412.98
1,346.97
1,435.44
141.11
156.58
The financial statements of consolidated companies which are
presented in a foreign currency are translated using the modified
closing rate method. Under this method, assets and liabilities are
translated at the closing exchange rate, while income and ex-
penses are translated at the average exchange rate. Differences
arising on foreign currency translation are presented in "Accu-
mulated other equity". In the single entity accounts of BMW AG
and its subsidiaries, foreign currency receivables and payables
are measured on initial recognition using the exchange rate pre-
vailing at the date of first-time recognition. Advance payments to
suppliers or from customers in a foreign currency that result in
the addition of non-monetary assets or liabilities are recorded at
the exchange rate prevailing at the date of payment. At the end
of the reporting period, foreign currency receivables and pay-
ables are measured using the closing exchange rate. The result-
ing unrealised gains and losses, as well as realised gains and
losses arising on settlement, are recognised in the income state-
ment, in line with the underlying substance of the transaction.
Non-monetary balance sheet line items denominated in foreign
currencies are rolled forward on the basis of historical exchange
rates.
0.85
0.89
0.87
7.08
7.66
7.36
7.86
0.87
1,357.16
04 Foreign currency translation and measurement
Other Information
161
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
-
An entity is deemed to be controlled if BMW AG either directly
or indirectly has power over it, is exposed or has rights to vari-
able returns from it and has the ability to influence those returns.
-
An entity is classified as an associated company if BMW AG -
either directly or indirectly - has the ability to exercise significant
influence over the entity's operating and financial policies. As a
general rule, the Group is assumed to have significant influence
if it holds 20% or more of the entity's voting power.
Joint operations and joint ventures are forms of joint arrange-
ments. Such an arrangement exists when a BMW Group entity
jointly carries out activities with a third party on the basis of a
contractual agreement.
In the case of a joint operation, the parties that have joint control
of the arrangement have rights to the assets, and obligations for
the liabilities, relating to the arrangement. Assets, liabilities, rev-
enues and expenses of a joint operation are recognised propor-
tionately in the Group Financial Statements on the basis of the
BMW Group entity's rights and obligations (proportionate con-
solidation). The impact of joint operations on the Group Financial
Statements is of minor significance.
The BMW Group's largest joint operation is Spotlight Automotive
Limited (Spotlight), which has been operated together with the
Chinese automobile manufacturer Great Wall Motor Company
Limited (Great Wall) since 2019, jointly developing and manu-
facturing electric vehicles for the MINI and Great Wall brands in
China. The BMW Group and Great Wall each hold 50% of the
joint operation's equity.
In the case of a joint venture, the parties which have joint control
only have rights to the net assets of the arrangement.
Associated companies and joint ventures are accounted for us-
ing the equity method, with measurement on initial recognition
based on acquisition cost.
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
BMW Group Report 2023 To Our Stakeholders Combined Management Report
162
A closing rate of RUB 100.62 (2022: 77.12) to the euro was ap-
plied at 31 December 2023 to translate foreign currency items
denominated in Russian roubles. The BMW Group has been able
to execute transactions at this rate.
← = Q
The restrictions currently in place for payments continue to re-
strict the transfer of liquid funds from Russia. Developments in
this area are reviewed by the BMW Group on a regular basis. In
total, the Russian companies hold around 4% (2022: 5%) of the
BMW Group's cash and cash equivalents.
03 Other significant events
Russia-Ukraine war
The other changes to the Group reporting entity do not have a
material impact on the results of operations, financial position
and net assets of the Group.
On 30 September 2021, the BMW Group signed an agreement
with the Huachen Group to acquire all of the shares of Brilliance
Automobile Manufacturing Co., Ltd., a Huachen Group subsidi-
ary. The transaction will not, however, be completed.
Goodwill arises when the cost of acquiring a business exceeds
the Group's share of the net fair value of the assets, liabilities and
contingent liabilities identified during the acquisition.
On 19 July 2023, the BMW Group signed an agreement with the
companies of the Mercedes-Benz Group AG, the Stellantis
Group, the Honda Group, the Hyundai Motor Group and the Gen-
eral Motors Company Group to establish a company in Canada
with the aim of developing charging infrastructure in North Amer-
ica. Following approval by the relevant antitrust authorities, the
transaction was completed on 18 October 2023, with the BMW
Group holding a 16.67% stake. Although this is below 20%, the
newly founded entity is included in the BMW Group Financial
Statements as an associated company using the equity method,
reflecting the fact that the BMW Group is represented on the
management board and therefore has significant influence.
On 11 February 2022, via its subsidiary BMW Holding B.V., the
BMW Group increased its shareholding in the BMW Brilliance Au-
tomotive Ltd. (BMW Brilliance) joint venture from 50% to 75%
with the acquisition of a further 25% of BMW Brilliance's shares.
BMW Brilliance has been fully consolidated in the Group Finan-
cial Statements since that date. With regard to the figures re-
ported for the previous financial year, it should therefore be noted
that BMW Brilliance is only included for the relevant part of 2022
(i.e. from 11 February onwards). If BMW Brilliance had been fully
included in the Group Financial Statements with effect from 1
January 2022, Group revenues and profit after tax for the finan-
cial year 2022 would have amounted to € 145,521 million and
€ 18,842 million respectively. The remeasurement of the previ-
ously held shares resulted in a gain of € 7,649 million on first-
time consolidation, which was recognised in income from invest-
ments within the line item "Other financial result" in the previous
year. Detailed information is provided in 7 BMW Group Report 2022,
note [3] to the Group Financial Statements.
Major uncertainties remained at 31 December 2023 with re-
spect to the ongoing Russia-Ukraine war. The current sanctions
and the countermeasures taken significantly restrict economic
activities with Russia and also have an impact on the Russian
companies of the BMW Group.
163
On 6 November 2023, the BMW Group signed an agreement
with the Mercedes-Benz Group AG to establish a company in
China with the aim of developing a charging infrastructure there.
Approval has been granted by the antitrust authorities. The BMW
Group will hold a 50% stake in the newly founded entity. It will
be included in the BMW Group Financial Statements as a joint
venture using the equity method.
To Our Stakeholders Combined Management Report
Combined Management Report
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
06 Accounting policies, assumptions, judgements and
estimations
The impact of climate change has been taken into account by
the Board of Management when preparing the Group Financial
Statements. As a matter of principle, the Group Financial State-
ments are prepared in accordance with the BMW Group's long-
term corporate plan, as approved by management, taking into
account issues relevant for climate change such as the transfor-
mation to electric mobility, regulatory requirements and changes
in production conditions. In this context, the BMW Group incurs
expenditure on research and development for electrified models,
invests in resource-saving production facilities for the manufac-
ture of electrified automobiles and, in particular, is gradually con-
verting its production processes from fossil fuels to green energy
by concluding long-term power purchase agreements for elec-
tricity and gas from renewable sources.
As a consequence of joining the Business Ambition for 1.5°C
campaign led by the Science Based Target initiative (SBTI), the
BMW Group pursues validated SBTi Near Term Targets for the
year 2030, which are incorporated in the Group's long-term cor-
porate plan.
The targets set include a reduction in average carbon emissions
of 80% per vehicle produced in our own plants and locations
(Scope 1 and Scope 2), an average reduction of more than 50%
per kilometre driven in the use phase (Scope 3 downstream) and
an average reduction of more than 20% per vehicle in the supply
chain (Scope 3 upstream).
In line with the recommendations of the Taskforce for Climate-
related Financial Disclosures (TCFD), both physical and transi-
tion-related risks and opportunities are taken into account in the
Group's internal performance management system and in con-
junction with the preparation of the Group Financial Statements.
These aspects, referred to below as "climate-related aspects",
are highly relevant for the preparation of the Group Financial
Statements, particularly in the case of assumptions, judgements
and estimations relating to future developments that impact the
BMW Group and its environment, and are therefore included in
their assessment.
More detailed information on how climate-related aspects are
taken into account for recognition and measurement purposes is
provided below, particularly in the comments on property, plant
and equipment, leased products and the performance of impair-
ment tests. This includes an indication of the extent to which cli-
mate-related aspects have been taken into account in the esti-
mations and assumptions for the recognition and measurement
of balance sheet items.
Revenues from customer contracts include in particular reve-
nues from the sale of products (primarily new and pre-owned ve-
hicles and related products) as well as revenues from services.
Revenue is recognised when control is transferred to the dealer-
ship or retail customer. In the case of sales of products, this is
usually at the point in time when the risks and rewards of owner-
ship are transferred. Revenues are stated net of settlement dis-
count, bonuses and rebates as well as interest and residual value
subsidies. The consideration arising from these sales usually
falls due for payment immediately or within 30 days. In excep-
tional cases, a longer payment may also be agreed. In the case
of services, control is transferred over time. Consideration for the
rendering of services to customers usually falls due for payment
at the beginning of a contract and is therefore deferred as a con-
tract liability. The deferred amount is released over the service
period and recognised as revenue in the income statement. As a
rule, amounts are released on the basis of the expected expense
trend, as this best reflects the performance of the service. If the
sale of products includes a determinable amount for services
(multiple-component contracts), the related revenues are de-
ferred and recognised as income in the same way. Variable con-
sideration components, such as bonuses, are measured at the
expected value, and in the case of multi-component contracts,
allocated to all performance obligations unless directly attribut-
able to the sale of a vehicle.
Revenues from the sale of products, for which repurchase ar-
rangements are in place, are not recognised immediately in full.
Instead, revenues are either recognised proportionately or the
difference between the sales and repurchase price is recognised
in instalments over the term of the contract depending on the na-
ture of the agreement. In the case of vehicles sold to a dealership
that are expected to be repurchased in a subsequent period as
part of leasing operations, revenues are not recognised at Group
level at the time of the sale of the vehicle. Instead, assets and
liabilities relating based on the right of return of these vehicles
are recognised.
Revenues from leases of own-manufactured vehicles are recog-
nised at Group level in accordance with the requirements for
manufacturer or dealer leases. In the case of operating leases,
revenues from lease payments are recognised on a straight-line
basis over the lease term. Finance leases, on the other hand, are
accounted for as a sale. At the lease commencement date, rev-
enues are recognised at the amount of the fair value of the leased
asset and reduced by any unguaranteed residual value of vehi-
cles that are expected to be returned to the Group at the end of
the lease term. In addition, initial direct costs are recognised as
cost of sales at the lease commencement date.
BMW Group Report 2023
Intangible assets are measured on initial recognition at acquisi-
tion or manufacturing cost. Subsequently, intangible assets with
finite useful lives are amortised on a straight-line basis over their
useful lives of between three and 20 years. Impairment losses
are recognised where necessary. Intangible assets with indefi-
nite useful lives are tested annually for impairment. Internally
generated intangible assets mainly comprise development costs
for vehicle, module and architecture projects.
Earnings per share are calculated as follows: basic earnings per
share are calculated for common and preferred stock by dividing
the net profit for the year (after non-controlling interests) that is
attributable to each category of stock, by the average number of
shares of each category in circulation. Net profit for the year is
accordingly allocated to the different categories of stock. The
portion of the net profit that is not being distributed is allocated
to each category of stock based on the number of outstanding
shares. Profits available for distribution are determined directly
on the basis of the dividend proposals or resolutions for common
and preferred stock. Diluted earnings per share are calculated
and separately disclosed in accordance with IAS 33.
Public sector grants are not recognised until there is reasonable
assurance that the conditions attaching to them have been com-
plied with and the grants will be received. The resulting income
is recognised in cost of sales over the periods in which the costs
occur that they are intended to compensate. Information on the
accounting policy changes applied for the first time from the fi-
nancial year 2023 relating to government grants received for as-
sets as well as to investment tax credits is provided in ▾ note 5.
← = Q
Notes to the Group Financial Statements
To Our Stakeholders
Other Information
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
BMW Group Report 2023
165
Revenues also include interest income from financial services. In-
terest income arising on finance leases as well as on retail cus-
tomer and dealership financing is recognised using the effective
interest method and reported as interest income on credit financ-
ing within revenues.
Remuneration Report
BMW Group Report 2023
To Our Stakeholders
The impact of the changes in accounting policy is not material for
the results of operations, financial position and net assets of the
BMW Group.
Date of mandatory application IASB
Date of issue by IASB
18.5.2017
Insurance Contracts
International Tax Reform -
Pillar Two Model Rules
Amendments to IAS 12
IFRS 17
Standard/Interpretation
Date of mandatory application EU
Standards and Revised Standards significant for the BMW Group
and applied for the first time in the financial year 2023:
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
164
Group Financial Statements
Notes to the Group Financial Statements
05 Financial reporting rules
23.5.2023
a Financial reporting standards applied for the first time in the
financial year 2023
1.1.2023
1.1.2023
1.1.2023
1.1.2023
Also with a view to increasing consistency with internal perfor-
mance management, with effect from the financial year 2023
advance payments to suppliers are reported within other assets.
At 31 December 2022, advance payments to suppliers amount-
ing to € 259 million were reported within inventories. Prior year
figures have not been adjusted on the grounds of immateriality.
in the form of reduced depreciation/amortisation. In this context,
the accounting treatment applied for investment tax credits was
also changed. Instead of being recognised immediately as a re-
duction of income tax expense, with effect from the financial year
2023 investment tax credits are also deducted from the carrying
amount of the related assets. The income statement impact is
therefore also spread over the respective useful lives of the as-
sets in the form of lower depreciation/amortisation expense. The
change in accounting policy has not been applied retrospectively
on the grounds of immateriality. Prior-year figures have therefore
not been adjusted.
Government grants related to assets were previously reported as
deferred income and recognised through profit or loss over the
accounting periods in which the costs occur that they are in-
tended to compensate. With effect from the financial year 2023,
government grants relating to assets are deducted from the car-
rying amount of the relevant assets and therefore now recog-
nised in profit or loss over the respective useful lives of the assets
Deferred income for government grants relating to assets at 31
December 2022 amounted to € 465 million or 0.19% of Group
total assets at that date. At 31 December 2023, the correspond-
ing amount was € 370 million.
c Accounting policy changes in the financial year 2023
ments.
In order to increase consistency between internal performance
management and external reporting, the following accounting
policies were changed in the financial year 2023.
b Financial reporting pronouncements issued by the IASB, but not
yet applied
amendments provide for a temporary exemption from recognis-
ing deferred taxes resulting from the implementation of the Pillar
Two rules. The exemption has accordingly been applied by the
BMW Group. The amendments also include disclosures in the
notes to explain the impact of the introduction of minimum taxa-
tion on affected entities. The introduction of the Pillar Two regu-
lations is not expected to have any significant impact on the
BMW Group Financial Statements.
In May 2023, the IASB published International Tax Reform - Pil-
lar Two Model Rules (Amendments to IAS 12) which sets out a
mandatory exemption to the accounting for deferred taxes in
conjunction with the global minimum taxation (Pillar Two). The
In May 2017 the IASB published IFRS 17 Insurance Contracts.
The Standard replaces IFRS 4 and contains new rules relating to
the recognition, measurement, presentation and disclosure re-
quirements for insurance contracts. In a Group-wide project, the
BMW Group examined the impact of adopting IFRS 17 for exist-
ing agreements. The BMW Group offers various products that
meet the definition of an insurance contract in accordance with
IFRS 17. However, for the majority of these products, either an
exemption applies (e.g. for warranty agreements) or the insur-
ance arrangements qualify as fixed-fee service contracts, which
can continue to be accounted for in accordance with IFRS 15 due
to the option available in IFRS 17. In some markets, however,
products are offered (e.g. comprehensive vehicle insurance) that
are required to be accounted for in accordance with IFRS 17.
These contracts can be accounted for using the premium alloca-
tion approach, which is essentially the same as the accounting
method already being applied for such contracts. In the financial
year 2023, insurance premiums for insurance contracts amount-
ing to € 89 million were recognised in other income within the
line item "Revenues". At 31 December 2023, insurance liabilities
for the remaining terms of these contracts amounted to € 289
million.
Other financial reporting standards and revised standards issued
by the IASB that have not yet been applied are not expected to
have any significant impact on the BMW Group Financial State-
Manufacturing costs are reduced by public-sector subsidies in
the form of reduced taxes on assets and reduced consumption-
based taxes amounting to € 107 million (2022: € 115 million).
Impairment losses recognised in the income statement 2023 in
connection with receivables from sales financing amounted to
€ 168 million (2022: € 649 million). In view of the fact that the
impairment losses are of minor importance compared to total
Group cost of sales, they have not been disclosed separately in
the income statement.
118,042
174
BMW Group Report 2023
To Our Stakeholders Combined Management Report
125,809
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
in € million
← = Q
Research and development expenses are as follows:
10 Other operating income and expenses
2023
2022
Other operating income and expenses comprise the following
items:
7,178
1,157
Research and development expenditure
7,755
Notes to the Group Financial Statements
1,396
Cost of sales relating to financial services
business
2,780
Interest income on credit financing and finance leases includes
interest calculated on the basis of the effective interest method
totalling € 4,081 million (2022: € 3,656 million). This interest
income is not reported separately in the income statement as it
is not significant compared to total Group revenues.
The services included in vehicle sale contracts that will be recog-
nised as revenues in subsequent years represent only an insig-
nificant portion of expected revenues. Accordingly, use has been
made of the practical expedient contained in IFRS 15, permitting
an entity not to disclose information on a quantitative basis due
to the short-term nature of items and the lack of informational
value of such disclosures.
in € million
08 Cost of sales
Cost of sales comprises:
in € million
2023
2022
Manufacturing costs
82,549
76,760
2,775
27,764
thereof: interest expense relating to
financial services business
3,554
2,114
Research and development expenses
7,538
6,624
Warranty expenditure
3,782
3,209
Expenses for service contracts, telematics
and roadside assistance
Other cost of sales
Cost of sales
27,517
2023
422
In the financial year 2022, expenses for impairment allowances
included the write-down of receivables from a non-consolidated
Russian subsidiary, which negatively impacted the Other Entities
segment. Detailed information is provided in the BMW Group
Report 2022, note [4] to the Group Financial Statements.
58
45
09 Selling and administrative expenses
Other interest and similar income
691
Sundry operating income
316
274
thereof from subsidiaries
37
Gains on the disposal of assets
20
1,045
1,377
in € million
2023
- 332
Exchange losses
-401
Net interest income on the net defined benefit
liability for pension plans
-444
The major part of revenues expected to arise from the Group's
order book at the end of the reporting period relates to the sale
of vehicles. Revenues resulting from those sales will be recog-
nised in the next financial year.
Other operating income
2022
2022
in € million
New expenditure for capitalised
development costs
-2,604
- 2,819
Exchange gains
429
458
11 Net interest result
Amortisation
2,387
2023
2,265
240
521
Net interest result comprises the following:
Research and development expenses
7,538
6,624
Income from the reversal of impairment
allowances and write-downs
2
79
Income from the reversal of provisions
Other income relates mainly to the Automotive segment and the
Financial Services segment.
1,077
An analysis of revenues by segment is shown in the explanatory
comments on segment information provided in ♬ note [46].
-256
33
-154
113
745
-118
171
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report Other Information
Notes to the Group Financial Statements
← = Q
Financial liabilities, with the exception of lease liabilities, are
measured on first-time recognition at their fair value. For these
purposes, transaction costs are taken into account except in the
case of financial liabilities allocated to the category "measured at
fair value through profit or loss". Subsequent to initial recognition,
liabilities are - with the exception of derivative financial instru-
ments - measured at amortised cost using the effective interest
method.
Provisions for pensions are measured using the projected unit
credit method. Under this method, not only obligations relating to
known vested benefits at the reporting date are recognised, but
also the effect of future expected increases in pensions and sal-
aries. The calculation is based on independent actuarial valua-
tions which take into account the relevant biometric factors.
In the case of funded plans, the pension obligation is offset
against plan assets measured at their fair value. If the plan as-
sets exceed the pension obligation, the surplus is tested for re-
coverability. In the event that the BMW Group has a right of reim-
bursement or a right to reduce future contributions, it reports an
asset (within Other financial assets), measured on the basis of
the present value of the future economic benefits attached to the
plan assets. For funded plans, in cases where the obligation ex-
ceeds plan assets, a liability is recognised under pension provi-
sions.
The calculation of the amount of the provision requires assump-
tions to be made with regard to discount rates, pension trends,
employee fluctuation and the life expectancy of employees,
among other things. Discount rates are determined by reference
to market yields at the end of the reporting period on high-quality
fixed-interest corporate bonds.
Net interest expense on the net defined benefit liability or net in-
terest income on the net defined benefit assets are presented
separately within the financial result. All other costs relating to
allocations to pension provisions are allocated to costs by func-
tion in the income statement.
Past service cost arises where a BMW Group company intro-
duces a defined benefit plan or changes the benefits payable un-
der an existing plan. This cost is recognised immediately in the
income statement. Similarly, gains and losses arising on the set-
tlement of a defined benefit plan are recognised immediately in
the income statement.
Remeasurement of the net liability can result from changes in the
present value of the defined benefit obligation, the fair value of
the plan assets or the asset ceiling. Remeasurement can result,
amongst others, from changes in financial and demographic pa-
rameters, as well as changes following the portfolio develop-
ment. Remeasurements are recognised immediately through
other comprehensive income and ultimately in equity (within rev-
enue reserves).
80
102
- 1,808
2,801
24
10
1,598
-2,512
853
-2,394
199
-1,772
- 458
281
Other provisions are recognised when the BMW Group has a
present legal or factual obligation towards a third party arising
from past events, the settlement of which is probable and when
the amount of the obligation can be reliably estimated. Provi-
sions with a remaining period of more than one year are meas-
ured at their net present value.
22
742
868
-2,299
- 102
- 1,557
766
451
-1,301
2,350
-507
26
The measurement of provisions for statutory and non-
statutory warranty obligations (statutory, contractual and
voluntary) involves estimations. In addition to manufacturer
warranties prescribed by law, the BMW Group offers various fur-
ther standard (assurance type) warranties depending on the
product and sales market. No provisions are recognised for ad-
ditionally offered service packages that are treated as separate
performance obligations.
Provisions for statutory and non-statutory warranties are recog-
nised at the point in time when control over the goods is trans-
ferred to the dealership or retail customer or when it is decided
to introduce new warranty measures. With respect to the level of
the provision, estimations are made in particular based on past
experience of damage claims and processes. Future potential re-
pair costs and price increases per product and market are also
taken into account. Provisions for warranties for all companies of
the BMW Group are adjusted regularly to take account of new
information, with the impact of any changes recognised in the in-
come statement. Further information is provided in note 34. Sim-
ilar estimates are also made in conjunction with the measure-
ment of expected reimbursement claims.
2022
2023
Sales of products and related goods
118,769
Sales of products previously leased to customers
14,262
Income from lease instalments
11,664
106,678
15,040
11,872
Interest income on credit financing and
in € million
finance leases
4,129
Revenues from service contracts, telematics and
roadside assistance
3,648
3,394
Other income
1,876
155,498
Revenues
1,497
142,610
Revenues recognised from contracts with customers in accord-
ance with IFRS 15 totalled € 138,190 million (2022:
€ 126,384 million), spread across the first, second and fifth cat-
egories of the above table and proportionately to other income.
5,279
Revenues from the sale of products and related goods are gen-
erated primarily in the Automotive segment and, to a lesser ex-
tent, in the Motorcycles segment. Revenues from the sales of
products previously leased to customers, income from lease in-
stalments and interest income on credit financing and finance
leases are allocated to the Financial Services segment.
Revenues by activity comprise the following:
NOTES TO THE INCOME STATEMENT
The recognition and measurement of provisions for litigation
and liability risks necessitate making assumptions in order to
determine the probability of liability, the amount of claim and the
duration of the legal dispute. The assumptions made, especially
the assumption about the outcome of legal proceedings, are sub-
ject to a high degree of uncertainty. The appropriateness of as-
sumptions is regularly reviewed, based on assessments under-
taken both by management and external experts, such as law-
yers. If new developments arise in the future that result in a dif-
ferent assessment, provisions are adjusted accordingly.
If the recognition criteria relevant for provisions are not fulfilled
and the outflow of resources on fulfilment is not unlikely, the po-
tential obligation is disclosed as a contingent liability.
172
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Related party disclosures comprise information on associated
companies, joint ventures and non-consolidated subsidiaries as
well as individuals which have the ability to exercise a controlling
or significant influence over the financial and operating policies
of the BMW Group. This includes all persons in key positions of
the Company, as well as close members of their families or inter-
mediary entities.
07 Revenues
In the case of the BMW Group, this also applies to members of
the Board of Management and the Supervisory Board. Details
relating to these individuals and entities are provided in 7 note [41]
and in the list of investments disclosed in 7 note [47].
Share-based remuneration programmes expected to be settled
in cash are revalued to their fair value at each balance sheet date
between the grant date and the settlement date and on the set-
tlement date itself. The expense is recognised as personnel ex-
pense in the income statement over the vesting period and pre-
sented in the balance sheet as a provision.
The share-based remuneration programme for Board of Man-
agement members and senior heads of department entitles
BMW AG to elect whether to settle its commitments in cash or
with shares of BMW AG common stock. Based on the decision to
settle in cash, the share-based remuneration programmes for
Board of Management members and senior heads of depart-
ment are accounted for as cash-settled, share-based remunera-
tion programmes. Further information on share-based remuner-
ation programmes is provided in a note [42].
173
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Share-based remuneration programmes that provide for set-
tlement in shares or a cash payment with a direct obligation to
invest in shares of BMW AG common stock are measured at their
fair value at grant date. The related expense is recognised as
personnel expense in the income statement over the vesting pe-
riod and offset against capital reserves.
Selling expenses
2022
6,091
Group Financial Statements
BMW Group Report 2023 To Our Stakeholders Combined Management Report
179
Most of the expenses for leases of low-value assets and short-
term leases relate to low-value assets.
Personnel expenses include € 44 million (2022: € 40 million) of
costs relating to workforce measures.
Of the average number of employees, 995 (2022: 953) are at-
tributable to one proportionately consolidated entity within the
Automotive segment.
13,932
14,721
1,066
1,174
Other
1,385
1,377
Financial Services
11,481
12,170
Motorcycles
2022
2023
Automotive
94
8,474
8,440
98
56
66
Interest expense arising on the measurement of
lease liabilities
17
12
Expenses relating to variable lease payments not
included in the measurement of lease liabilities
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Services provided during the financial year 2023 by the Group
auditor PricewaterhouseCoopers GmbH Wirtschaftsprüfungs-
gesellschaft, Frankfurt am Main, Munich branch, on behalf of
BMW AG and subsidiaries under its control relate to the audit of
financial statements and other attestation services. The audit of
financial statements comprises mainly the audit of the Group Fi-
nancial Statements and the separate financial statements of
BMW AG and subsidiaries, and all work related thereto, including
the review of the Interim Group Financial Statements. Other at-
testation services include mainly project-related audits, comfort
letters and statutorily prescribed, contractually agreed or volun-
tarily commissioned attestation work. No tax advisory or other
services were provided in the financial year 2023 or in the previ-
ous year.
Fee expense
Audit of financial statements
Other attestation services
Tax advisory services
Other services
in € million
The fee expense pursuant to § 314 (1) no. 9 HGB recognised in
the financial year 2023 for the Group auditor and the PwC net-
work of audit firms amounted to € 19 million (2022: € 20 mil-
lion) and consists of the following:
17 Fee expense for the Group auditor
1,601
1,919
retail customers under finance leases
Selling profit on the sale of vehicles leased to
1,025
1,127
Financial income on the net investment in
finance leases
4
146,727
134,607
3,552
4
81
110
Income from variable lease payments for
operating leases
2022
2023
in € million
b As lessor
Information on right-of-use assets, lease liabilities as well as fur-
ther explanatory comments are provided in 7 note [6], ^ note [20],
note [22] and note [36].
Cash outflows for leases in the financial year 2023 amounted to
€ 675 million (2022: € 681 million). In addition, cash outflows
for right-of-use assets paid in advance amounted to € 674 mil-
lion (2022: € 732 million).
commence.
The BMW Group is also party to long-term supply contracts for
battery cells that give rise to fixed and variable payment obliga-
tions. Based on the current interpretation, these arrangements
include a lease component in accordance with IFRS 16. The fixed
payment obligations arising in conjunction with such IFRS 16
compatible contracts amount to € 749 million and will fall due
with effect from the financial year 2026 after series deliveries
The BMW Group is party to leases at the end of the reporting
period which have not yet commenced. These leases are ex-
pected to give rise to future cash outflows amounting to
€ 480 million (2022: € 873 million).
= Q
↑
Income from variable lease payments for
finance leases
152,111
139,779
3,794
77
81
16,327.7
10,250.3
€ million
17,941.0
11,290.3
€ million
2022
2023
Personnel expenses
Social insurance expenses
Pension and welfare expenses
Wages and salaries
in € million
The income statement includes personnel expenses as follows:
€ million
15 Personnel expenses
* Proposal by the Board of Management.
Dividend per share of preferred stock
Dividend per share of common stock
Average number of common stock shares in circulation
Average number of preferred stock shares in circulation
Basic/diluted earnings per share of common stock
Basic/diluted earnings per share of preferred stock
Profit attributable to preferred stock
Profit attributable to common stock
Net profit attributable to the shareholders of BMW AG
14 Earnings per share
← = Q
Other Information
- 142
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
In the case of preferred stock, the calculation of earnings per
share and the average number of shares in circulation only takes
account of shares of preferred stock that are entitled to receive a
dividend in each of the relevant financial years. As in the previous
year, diluted earnings per share correspond to basic earnings per
share.
PwC International
1,040.0
number
Expenses for leases of low-value assets and
short-term leases
2022
2023
in € million
2022
2023
In terms of accounting for leases as a lessee, the following ex-
penses are included in the income statement:
a As lessee
Leases
16
Average number of employees
The average number of employees during the financial year was:
The total pension expense for defined contribution plans of the
BMW Group amounted to € 179 million (2022: € 175 million).
Employer contributions paid to state pension insurance schemes
totalled € 806 million (2022: € 750 million).
8.52
1,613.3
6.02*
8.50
6.00*
€
27.33
17.69
Е
27.31
17.67
€
59,035,325
58,776,197
number
597,924,318
579,941,360
€
thereof PwC GmbH
2023
2022
No deferred taxes are recognised on taxable temporary differ-
ences arising from investments in subsidiaries, associated com-
panies and joint ventures if the BMW Group is able determine the
timing of the reversal of the temporary differences and it is prob-
able that the temporary differences will not reverse in the fore-
seeable future, in particular in view of the fact that there is no in-
tention to distribute the profits, but rather to use them to maintain
substance and reinvest in the companies concerned. Temporary
differences of this kind, for which no deferred taxes were recog-
nised, amounted to € 36,081 million (2022: € 32,882 million).
No computation was made of the potential impact of income
taxes on the grounds of proportionality.
The effects in connection with the first-time consolidation of
BMW Brilliance in the previous year gave rise primarily to net de-
ferred tax liabilities relating to the remeasurement of the assets
acquired and liabilities assumed as part of the purchase price
allocation.
Deferred taxes at 31 December (assets (+) / liabilities (-))
Effects in connection with the first-time consolidation of BMW Brilliance
Exchange rate impact and other changes
thereof relating to fair value gains and losses on financial instruments and marketable securities recognised directly in equity
thereof relating to the remeasurements of net liabilities for defined benefit pension plans
thereof from currency translation
Deferred tax expense (-)/ income (+) recognised through income statement
Change in deferred taxes recognised directly in equity
Deferred taxes at 1 January (assets (+)/ liabilities (-))
in € million
The change in deferred taxes relating to amounts recognised
with income effect or without income effect is shown in the fol-
lowing reconciliation:
Deferred tax assets and deferred tax liabilities are netted for
each relevant tax entity if they relate to the same tax authorities.
Capital losses available for carryforward in the UK which do not
relate to ongoing operations decreased due to changes in con-
solidated group companies and exchange rate factors and stood
at € 1,845 million (2022: € 1,856 million) at the end of the year
under report. As in previous years, deferred tax assets recog-
nised on these tax losses amounting to € 461 million (2022:
€ 464 million) were fully written down since they can only be uti-
lised against future capital gains.
A net surplus of deferred tax assets over deferred tax liabilities
amounting to € 95 million (2022: € 1,966 million) is reported for
entities that have suffered tax losses in the financial year 2023
or the preceding year. The basis for the recognition of deferred
taxes is the BMW Group business model or management's as-
sessment that there is material evidence that the entities will
generate future taxable profit, against which deductible tempo-
rary differences can be offset.
Tax loss carryforwards relating to Germany and foreign opera-
tions amounted to € 601 million (2022: € 711 million). This in-
cludes tax losses available for carryforward amounting to
€ 382 million (2022: € 416 million), on which a valuation allow-
ance of € 129 million (2022: € 141 million) was recognised on
the related deferred tax asset. Of these loss carryforwards,
€ 349 million (2022: € 382 million) can be used indefinitely,
while € 33 million (2022: € 34 million) expires after one to three
years.
Notes to the Group Financial Statements
2023
← = Q
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Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
177
1,007
366
2,765
2,797
1,758
2,431
- 13,740
-13,471
Other Information
- 13,740
2022
744
2022
2023
Other comprehensive income for the period after tax
Items that can be reclassified to the income statement in the future
Currency translation foreign operations
Other comprehensive income from equity accounted investments
Income taxes
thereof reclassifications to the income statement
thereof gains/losses arising in the period under report
Costs of hedging
thereof reclassifications to the income statement
thereof gains/losses arising in the period under report
Derivative financial instruments
thereof reclassifications to the income statement
thereof gains/losses arising in the period under report
- 1,007
Marketable securities (at fair value through other comprehensive income)
Income taxes
Remeasurement of the net liability for defined benefit pension plans
in € million
Other comprehensive income for the period after tax comprises
the following:
19 Disclosures relating to the statement of comprehensive
income
-3
- 326
24
- 190
203
- 519
227
142
439
Items not expected to be reclassified to the income statement in the future
To Our Stakeholders Combined Management Report
- 13,471
-461
264
263
5,176
4,674
15
NOTES TO THE STATEMENT OF COMPREHENSIVE INCOME
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
180
1,987
Variable lease payments are based on distance driven. The
agreements have, in part, extension and purchase options.
18 Government grants and government assistance
Income from asset-related and performance-related grants,
amounting to € 98 million (2022: € 118 million) and € 215 mil-
lion (2022: € 172 million) respectively, was recognised in the in-
come statement in 2023.
6
6
20
19
2
1
1
5
5
17
18
2022
2023
These amounts relate mainly to public sector grants aimed at the
promotion of regional structures as well as to subsidies received
for plant expansions and development.
-464
1,457
378
-245
-185
16,505
16,268
16,207
16,548
1,880
2,332
4,379
4,162
800
1,027
4,573
4,575
394
11
4,636
5,012
464
461
212
182
3,495
3,334
1,281
1,478
5
3
3,686
2,895
19
BMW Group Report 2023
Notes to the Group Financial Statements
-
1,167
- 1,215
Sundry other financial result
1,167
4,927
4,931
Income taxes
- 1,215
Income (+) and expenses (-) from financial
instruments
850
18
thereof relating to tax loss carryforwards and
tax credits
7,770
-57
Other financial result
Result on investments
-457
thereof relating to temporary differences
- 179
- 142
and participations
Expenses from investments in subsidiaries
-439
Deferred tax expense (+) / deferred tax income (-)
35
22
thereof from subsidiaries:
5,370
Current tax expense
7,949
2022
5,069
- 142
- 992
85
- 1,272
In addition to the investment result, the other financial result in-
cludes income and expenses arising on the measurement of
stand-alone derivatives and fair value hedge relationships, as
well as income and expenses from the measurement and sale of
marketable securities and shares in investment funds.
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
BMW Group Report 2023 To Our Stakeholders Combined Management Report
176
178
30.9
30.9
15.1
15.1
15.8
15.8
solidarity surcharge
Municipal trade tax rate
German income tax rate
Corporate tax rate including
8,937
5.5
Solidarity surcharge
15.0
15.0
Corporate tax rate
2022
2023
in %
Deferred taxes are determined on the basis of tax rates which
are currently applicable or expected to apply in the relevant na-
tional jurisdictions when the amounts are recovered. After taking
account of an average municipal trade tax multiplier rate (Hebe-
satz) of 430% (2022: 430%), the underlying income tax rate for
Germany was as follows:
Two calculation have been analysed for the BMW Group, taking
into account the statutory temporary simplification rules (for so-
called "transitional safe harbours"). Based on the results of the
analysis to date, the tax expense arising in the relevant jurisdic-
tions is estimated to be immaterial for the BMW Group. The BMW
Group is already applying the exemption relating to the recogni-
tion of deferred tax assets and liabilities in connection with Pillar
Two. Further information is provided in 7 note 5.
The BMW Group falls within the scope of the OECD Pillar Two
model rules aimed at ensuring a global minimum taxation rate of
15%. Under these rules, the BMW Group will be required pay a
top-up tax to the extent that the Pillar Two specific tax rate in
each jurisdiction where it operates falls below the minimum rate
of 15%. The Pillar Two model rules have been implemented in
Germany with effect for financial years beginning after 31 De-
cember 2023. The BMW Group is therefore not subject to a Pillar
Two tax expense for the financial year 2023. The impact of the
Pillar Two model rules from the financial year 2024 onwards is
currently being assessed. For this purpose, the jurisdictions that
could be affected by a top-up tax based on a preliminary Pillar
The tax income resulting from the change in the valuation allow-
ance on deferred tax assets relating to tax losses available for
carryforward and temporary differences amounted to € 19 mil-
lion (2022: expense of € 103 million).
The tax expense was reduced by € 33 million (2022: € 71 mil-
lion) as a result of utilising tax loss carryforwards, for which de-
ferred assets had not previously been recognised and in conjunc-
tion with previously unrecognised tax credits and temporary
differences.
The negative sundry other financial result was attributable in par-
ticular to the unfavourable fair value development of interest rate
hedges as a consequence of the decline in yield curves and port-
folio effects. The previous year's figure included the positive im-
pact of interest rate hikes in the financial year 2022.
The year-on-year decrease in the result on investments was due
in particular to the exceptionally high remeasurement gain rec-
ognised in the previous year on the BMW Group's previous at-
equity interest in BMW Brilliance in conjunction with that entity's
full consolidation in the financial year 2022. Further information
on this matter is provided in the BMW Group Report 2022, note [3] to
the Group Financial Statements.
5.5
Other Information
2023
Income from investments in subsidiaries
and participations
Other interest and similar expenses
- 231
-345
Sundry operating expenses
Selling and administrative expenses relate mainly to expenses
for marketing and communication, personnel and IT.
- 11
-9
Net interest expense on the net defined benefit
liability for pension plans
- 88
-67
Loss on the disposal of assets
481
-467
provisions
- 180
- 260
Net interest impact on other long-term
Expense for impairment allowances and
write-downs
10,616
11,025
Total selling and administrative expenses
4,425
4,934
422
701
Interest and similar income
- 307
- 399
Expense for additions to provisions
6,191
-15
in € million
- 219
- 1,227
2022
2023
in € million
Taxes on income of the BMW Group can be classified according
to their origin as follows:
13 Income taxes
12 Other financial result
← = Q
Notes to the Group Financial Statements
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
Other operating expenses
175
Interest expense from unwinding the discounting of other non-
current provisions on the one hand and interest income from ad-
justing the discount rate on the other are netted and, as in previ-
ous years, reported as a net interest effect within interest
expense.
Expenses for impairment allowances recognised on receivables
from contracts with customers amounted to € 15 million
(2022: € 61million).
Income from the reversal of provisions includes income arising
on the reassessment of risks from legal disputes. The expense
for additions to provisions includes litigation and other legal risks.
Income from the reversal of and expenses for the recognition of
impairment allowances and write-downs relate mainly to impair-
ment allowances on receivables.
673
45
251
- 1
-4
-656
Interest and similar expenses
Net interest result
47
-182
Other operating income and expenses
thereof to subsidiaries
- 1,330
In the previous year, steepening yield curves had a positive im-
pact on the discount unwinding result.
← = Q
Deferred taxes for non-German entities are calculated on the ba-
sis of the relevant country-specific tax rates. These ranged in the
financial year 2023 between 9.0% and 40.0% (2022: between
9.0% and 40.0%).
The allocation of deferred tax assets and liabilities to balance
sheet line items at 31 December is shown in the following table:
21.0%
28.8%
Effective tax rate
4,927
4,931
Actual tax expense
18
266
The difference between the expected tax expense based on the
underlying tax rate for Germany and actual tax expense is ex-
plained in the following reconciliation:
Eliminations
31
-7
Effects from tax rate changes
Liabilities
18
Valuation allowances on tax loss carryforwards and temporary differences
Valuation allowances on capital losses
The tax reductions due to tax-exempt income reported for the
previous year related primarily to the non-tax-relevant gain rec-
ognised in conjunction with the remeasurement of the BMW
Group's previous at-equity interest in BMW Brilliance.
The tax increases due to non-deductible expenses were mainly
attributable to withholding tax expenses.
Other variances included a net positive amount of € 304 million
(2022: net negative amount of € 54 million) attributable to de-
ferred tax effects relating to prior periods.
The tax returns of BMW Group entities are checked regularly by
German and foreign tax authorities. Taking account of numerous
factors including interpretations, commentaries and legal deci-
sions relating to the various tax jurisdictions as well as past ex-
perience adequate provision has been made, to the extent
identifiable and probable, for potential future tax obligations.
-
Deferred tax liabilities on expected dividends amounted to
€ 187 million (2022: € 199 million) and related primarily to divi-
dends from foreign subsidiaries.
- 1,007
- 1,312
-62
- 25
-366
18
-284
2022
2022
2023
Deferred tax liabilities
Deferred tax assets
Net
Deferred taxes
Netting
2023
Administrative expenses
Other variances
30.9%
44
44
Capital losses
802
632
Non-deductible expenses
Tax loss carryforwards
- 2,203
-217
Tax-exempt income
Sundry other assets
Tax increases (+) / tax reductions (-) due to:
Other investments
-1,047
-786
Variances due to different tax rates
Leased products
Property, plant and equipment
7,264
5,283
Expected tax expense
Intangible assets
30.9%
in € million
23,509
Provisions
Tax expense (+) / benefits (-) for prior years
Equity accounted
Tax rate applicable in Germany
17,096
2022
2023
Profit before tax
in € million
22,518
IONITY
38
52
The BMW Group operates the entity IONITY in collaboration with
Mercedes-Benz Group AG, the Ford Motor Company, the
Volkswagen Group and the Hyundai Motor Group. IONITY'S
business model envisages the construction and operation of
high-performance charging stations for battery-powered vehi-
cles in Europe.
On 1 November 2021, a contract was signed with GRP III HPC
Lux S.à.r.l. (Blackrock) for the provision of financing amounting
to € 500 million for the further expansion of the charging net-
work. The existing shareholders are also investing an additional
€ 200 million. With effect from 28 April 2022, following comple-
tion of the transaction, Blackrock became IONITY's largest
shareholder. As a result, the former joint venture became an as-
sociated company of the BMW Group.
The at-equity profit reported for IONITY amounted to € 12 mil-
lion (2022: €5 million). This includes remeasurement effects
arising in conjunction with the transaction with Blackrock.
Together with Mercedes-Benz Group AG, the BMW Group offers
mobility services via the YOUR NOW joint venture.
IONNA
In 2023, the BMW Group, together with the Mercedes-Benz
Group AG, the Stellantis Group, the Honda Group, the Hyundai
Motor Group and the General Motors Company Group, founded
the company IONNA in Canada with the aim of developing a
charging network in North America. The BMW Group holds
16.67% of the associated company IONNA.
IONNA's earnings are not significant for the BMW Group Finan-
cial Statements 2023.
Solid Power
The BMW Group holds shares in Solid Power, an industry-lead-
ing manufacturer of solid-state batteries for electric vehicles.
Joint development partnerships are in place with Solid Power
with a view to securing the supply of solid-state batteries for fu-
ture generations of electric vehicles. The investment meets the
criteria of an associated company and is accounted for using the
equity method.
The at-equity loss reported by Solid Power for 2023 amounted
to € 12 million (2022: loss of € 19 million). In both financial
years, the carrying amount of the investment was written down
in the BMW Group Financial Statements.
21,408
Impairment losses amounting to € 553 million
185
€ 527 million) were recognised on leased products in 2023 as a
consequence of changes in residual value expectations. Income
from the reversal of impairment losses amounted to € 274 mil-
lion (2022: € 282 million).
YOUR NOW
24 Investments accounted for using the equity method
Investments accounted for using the equity method comprise an
interest in the joint venture YOUR NOW Holding GmbH (YOUR
NOW), Munich, as well as interests in the associated companies
IONITY Holding GmbH & Co. KG (IONITY), Munich, IONNA LLC
(IONNA), Torrance, Solid Power Inc. (Solid Power), Wilmington,
Delaware and THERE Holding B.V. (THERE), Rijswijk.
Notes to the Group Financial Statements
← = Q
in € million
265
(2022:
Other Information
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
The at-equity loss reported for YOUR NOW for the financial year
2023 amounted to € 82 million (2022: loss of € 357 million). In
the previous year, impairment losses were recognised in relation
to the YOUR NOW subsidiary FREE NOW.
In 2023, public sector grants totalling € 252 million
(2022: €0 million) were deducted from the acquisition cost of
leased products for the first time. These amounts relate mainly
to investment tax credits in the form of tax credits for electric ve-
hicles. It is expected that the investment tax credits can be uti-
lised. The actual utilisation of investment tax credits will, how-
ever, depend on the extent to which they can be offset against
income tax liabilities and is therefore subject to a degree of
uncertainty.
Remuneration Report
DISCLOSURES RELATING TO
THE INCOME STATEMENT
Profit/loss after tax
Non-current financial liabilities, provisions and liabilities
2022
Notes to the Group Financial Statements
Financial information relating to equity accounted investments is
summarised in the following tables (from a 100% perspective):
in € million
2023
YOUR NOW
IONITY
THERE
2022
2023
2022
2023
2022
DISCLOSURES RELATING TO THE BALANCE SHEET
Non-current assets
Current assets
thereof cash and cash equivalents
Equity
← = Q
2023
Other Information
Remuneration Report
-43
- 12
thereof from continuing operations
Total comprehensive income
-43
-12
-43
- 12
THERE
Together with AUDI AG, Mercedes-Benz Group AG and other
companies, the BMW Group holds shares in THERE. HERE In-
ternational B.V. (HERE) is an associated company of THERE.
HERE's digital maps are laying the foundations for the next gen-
eration of mobility and location-based services, providing the ba-
sis for new assistance systems and, ultimately, fully automated
driving.
Current financial liabilities, provisions and liabilities
98
The at-equity loss reported for THERE for 2023 amounted to
€ 77 million (2022: loss of € 40 million). The loss mainly arose
due to impairment losses recognised in relation to THERE's as-
sociated company HERE.
186
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
68
305
-21
1,813
3,457
213
31,574
44,928
4,542
1,407
3,563
2,493
268
41,739
Plant and machinery
2,229
3,029
1,512
106
484
1,134
4,541
137
701
625
- 11
3,363
thereof right-of-use assets from
leases
9,434
13,295
8,147
339
1,000
I
4,506
30,738
14,190
1,229
2,295
447
370
28
2,344
3,524
479
155
393
164
40
3,251
office equipment
34
Other facilities, factory and
838
141
7
134
14
979
7
48
787
7
-1
145
thereof right-of-use assets from
leases
10,165
131
907
7,452
412
Other intangible assets
380
1,562
5
5
1,562
5
1,197
- 15
385
Goodwill
11,573
12,127
9,449
530
2,265
7,714
Disposals 31.12.2022 31.12.2022 31.12.2021
Reclassifi-
Value
cations adjustments¹
Current
year
1.1.2022 differences
Disposals 31.12.2022
21,576
530
2,819
19,287
Development costs
Translation
Reclassifi-
cations
Additions
1,975
-68
8,349
254
1,168
934
2,830
36
16,886
buildings on third party land
Land, titles to land, buildings, including
12,980
21,776
11,429
946
3,739
- 31
8,667
21,442
33,205
3,073
9,546
- 83
21,647
Intangible assets
1,027
8,087
1,980
411
1,474
-31
948
10,067
443
978
thereof right-of-use assets from
leases
131
2
184
3 Including assets under construction amounting to € 2,502 million.
2 Including advance payments for right-of-use assets amounting to € 160 million.
1 Thereof expense amounting to € 23 million recognised in profit or loss.
1,241
1,351
132
- 8
23
- 18
119
1,483
60
147
36
1,360
Other investments
988
1,060
42
- 8
23
574
32
1,102
57
112
27
1,020
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
between three and four years
between four and five years
later than five years
Minimum lease payments
3,465
3,875
between two and three years
6,522
6,872
between one and two years
9,606
9,601
31.12.2022
31.12.2023
in € million
within one year
Minimum lease payments of non-cancellable operating leases
fall due as follows:
23 Leased products
Participations
The regular review of the useful lives of items of property, plant
and equipment subject to systematic depreciation takes into ac-
count the assumptions contained in the long-term corporate
plan, and hence the ongoing transformation towards electric mo-
bility as well as the associated short- and medium-term impact
on the product portfolio. The review of useful lives did not lead to
any material adjustments in the financial year 2023.
Right-of-use assets arising from leases of land and buildings re-
late primarily to logistics and office premises and, to a lesser ex-
tent, to selling and production premises. In order to secure these
premises and, in the interests of flexibility, the property rental
agreements concerned often contain extension and termination
options.
As in the previous year, no financing costs were recognised as a
cost component of property, plant and equipment in 2023.
No impairment losses were recognised in 2023, as in the previ-
ous year.
22 Property, plant and equipment (including right-of-use
assets arising from leasing)
In 2023, government grants totalling € 2 million (2022: €0 mil-
lion) were deducted from the acquisition cost of intangible assets
for the first time. These grants include public sector funds aimed
at promoting development.
As in the previous year, no financing costs were recognised as a
cost component of intangible assets in 2023.
As in the previous year, there was no requirement to recognise
impairment losses or reversals of impairment losses on intan-
gible assets in 2023.
Other intangible assets include brand-name rights amounting to
€ 96 million (2022: € 95 million) which are allocated to the Au-
tomotive segment and are not subject to scheduled amortisation
since their useful life is deemed to be indefinite. The brand-name
rights are, to an extent, subject to a limited right of ownership.
Intangible assets also include goodwill of € 33 million
(2022: € 33 million) allocated to the Automotive excluding BMW
Brilliance cash-generating unit (CGU) and goodwill of
€ 1,107 million (2022: € 1,182 million) allocated to the BMW
Brilliance CGU. Goodwill amounting to € 347 million
(2022: € 347 million) related to the Financial Services CGU.
Intangible assets mainly comprise capitalised development costs
on vehicle, module and architecture projects as well as rights re-
acquired in conjunction with a business acquisition. Also included
are subsidies for tool costs, licences, purchased development
projects, emissions allowances, software and purchased cus-
tomer bases.
21 Intangible assets
Notes to the Group Financial Statements
← = Q
Other Information
Remuneration Report
In 2023, government grants totalling € 121 million (2022:
€0 million) were deducted from the acquisition cost of property,
plant and equipment for the first time. These amounts relate
mainly to public sector grants aimed at the promotion of regional
structures as well as to subsidies received for plant expansions.
253
291
90
Leased products
275
41,370
73,306
5,436
3,412
3
- 2,730
2,6472
7,537
7,072
373
63,760
Property, plant and equipment
1,585
53,847
29
construction in progress
Advance payments made and
62
91
63
48
I
41
1
69
154
48
68
1
1,884
1,512
1,096
18,077
3
87
381
3
35
9
340
subsidiaries
Investments in non-consolidated
5,112
420
240
240
660
16,027
5,094
5,352
equity method
Investments accounted for using the
22,390
42,820 44,700
10,073
32,126
41,180
5,292
5,146
1,884
3,4123
4,827
5,890
182
9,147
52,893
402
357
Credit financing for retail customers and
dealerships*
986
Other assets comprise:
28 Other assets
Notes to the Group Financial Statements
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
189
21,326
21,622
Net investment in finance leases
435
458
Loss allowances
2,018
2,372
Unrealised interest income
21,761
22,080
Net investment in finance leases without
loss allowances
Income tax assets totalling € 1,199 million (2022: € 1,096 mil-
lion) include claims amounting to € 29 million (2022: € 26 mil-
lion), which are expected to be settled after more than one year.
Claims may be settled earlier than this depending on the timing
of the underlying proceedings.
19
29
688
836
3,914
29 Inventories
Inventories comprise the following:
30 Trade receivables
Trade receivables comprise the following:
3,424
3,722
Raw materials and supplies
- 16
- 18
Allowances for impairment of stage 2 -
simplified approach
1,036
642
Receivables from subsidiaries
3,235
3,190
4,186
4,232
31.12.2022
3,935
31.12.2023
12,563
16,103
Finished goods and goods for resale
Work in progress, unbilled contracts
4,317
2,263
leased products
Return right assets for future
in € million
31.12.2022
31.12.2023
in € million
31.12.2022
31.12.2023
in € million
Gross carrying amount
27 Income tax assets
5,061
5,191
5,469
Derivative instruments
5,677
6,272
Marketable securities and investment funds
6,560
7,112
7,107
in € million
31.12.2022
31.12.2023
26 Financial assets
Financial assets comprise:
due later than five years
Gross investment in finance leases
4,134
due between one and two years
due between two and three years
due between three and four years
due between four and five years
due later than five years
in € million
Finance leases are analysed as follows:
The estimated fair value of vehicles held as collateral for credit-
impaired receivables at the end of the reporting period totalled
€ 488 million (2022: € 455 million). The carrying amount of as-
sets held as collateral and taken back as a result of payment de-
fault amounted to € 19 million (2022: € 35 million).
Impairment allowances include € 95 million (2022: € 99 million)
on credit-impaired receivables relating to finance leases.
An additional risk allowance for expected credit losses was rec-
ognised to take account of the negative impact on retail customer
and dealership business, to the extent not covered by the stand-
ard loss provisioning models (post-model adjustments). The
level of the additional risk allowance is reviewed regularly and
has been reduced compared to the previous year, as the weaker
macroeconomic environment has already been partially taken
into account in the standard models. However, in view of the on-
going unfavourable macroeconomic prospects and geopolitical
uncertainties, the additional risk allowance remains in the mid-
three-digit million range.
Notes to the Group Financial Statements
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
188
due within one year
Collateral assets
4,146
Other
5,694
5,857
5,164
4,131
3,073
1,387
8,237
5,518
379
404
34
18
4,386
2,926
Loans to third parties
3,438
31.12.2022
31.12.2023
6,385
6,232
thereof current
due within one year
due between one and two years
due between two and three years
due between three and four years
due between four and five years
thereof non-current
23,779
24,452
20
Financial assets
32
760
942
2,170
Derecognition and origination of receivables
Write-off of receivables
455
Allowances for impairment of stage 3
Shares in circulation at 1 January
Number of shares issued
31 Equity
← = 9
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2023
190
59
70
-1
Exchange rate impact and other changes
Balance at 31 December
-2
-3
Utilised
-5
-2
Reversed
34
17
Allocated
32
59
Balance at 1 January
2022
Shares issued in conjunction with Employee Share Programme
Less: shares repurchased and withdrawn from circulation
Shares in circulation at 31 December
Treasury shares
Number of shares issued at 31 December
On 3 May 2023, the Board of Management of BMW AG ap-
proved a second share buyback programme via the stock ex-
change. Under this programme, BMW AG is authorised to ac-
quire treasury shares of common and preferred stock amounting
to a maximum of € 1.65 billion and € 0.35 billion respectively.
The programme commenced immediately following completion
of the first buyback programme and will run until 31 December
2025 at the latest.
In conjunction with this authorisation, on 30 June 2022 the
Board of Management of BMW AG resolved the first of a number
of share buyback programmes via the stock exchange. Under
this initial programme, BMW AG was authorised to acquire treas-
ury shares of common and preferred stock amounting to a max-
imum of € 1.85 billion and € 0.15 billion respectively. The share
buyback programme was launched in July 2022 and completed
on 30 June 2023.
At the Annual General Meeting of BMW AG held on 11 May
2022, the shareholders authorised the Board of Management to
acquire treasury shares via the stock exchange, up to a maxi-
mum of 10% of the share capital in place at the date of the res-
olution and to redeem those shares without any further resolu-
tion by the Annual General Meeting. The buyback authorisation
remains valid until 10 May 2027.
Treasury shares
Accumulated other equity comprises amounts recognised di-
rectly in equity resulting from the translation of the financial
statements of foreign subsidiaries, changes in the fair value of
derivative financial instruments and marketable securities, costs
of hedging recognised directly in equity as well as the related de-
ferred taxes.
Accumulated other equity
The proposed distribution was not recognised as a liability in the
Group Financial Statements.
entitled to receive a dividend, a correspondingly amended reso-
lution concerning the appropriation of profit will be submitted to
the Annual General Meeting.
The number of shares entitled to receive a dividend may change
prior to the Annual General Meeting. In this case, based on an
unchanged distribution per share of common and preferred stock
The proposal for the appropriation of unappropriated profit takes
into account 4,218,363 treasury shares of common stock and
942,892 treasury shares of preferred stock held directly or indi-
rectly by the Company at 31 December 2023. In accordance with
§ 71b of the German Stock Corporation Act, these shares are not
entitled to receive a dividend.
The Board of Management and the Supervisory Board propose
that the unappropriated profit of BMW AG for the financial year
2023 amounting to € 3,802,488,470.32 be utilised to pay a div-
idend of € 6.02 for each share of preferred stock entitled to re-
ceive a dividend, and a dividend of € 6.00 for each share of com-
mon stock entitled to receive a dividend, and that the remaining
amount be transferred to revenue reserves. Based on the num-
ber of shares at 31 December 2023 entitled to receive a divi-
dend, the proposed dividend represents a total payout of € 3.8
billion.
Revenue reserves include the non-distributed earnings of com-
panies consolidated in the Group Financial Statements. In addi-
tion, remeasurements of the net defined benefit obligation for
pension plans are also presented in revenue reserves.
Revenue reserves
11,105,885 15,312,007
575,577,304 586,683,189
4,218,363 15,312,007
579,795,667 601,995,196
2023
601,995,196
59,404,304
1,439,975
1,448,950
59,395,329
1,448,950
60,844,279
1,417,813
57,977,516
942,892
58,920,408
59,395,329
2022
2023
2022
2023
Common stock
Preferred stock
Capital reserves include mainly premiums arising from the issue
of shares, and totalled € 2,456 million (2022: € 2,432 million).
Capital reserves
BMW AG is authorised to issue shares of non-voting preferred
stock amounting to nominal € 5.0 million prior to 15 May 2024.
At the end of the reporting period, 0.3 million shares of these
amounting to € 0.3 million remained available for issue.
All Company stock is issued to bearer. Preferred stock, to which
no voting rights are attached, bears an additional dividend of
€ 0.02 per share.
BMW AG's issued share capital totalling € 638,716,075 com-
prises 579,795,667 shares of common stock, each with a par
value of € 1, and 58,920,408 shares of non-voting preferred
stock, each with a par value of € 1. The issued share capital and
the number of shares were reduced by € 24,123,400 in 2023
following the redemption of 22,199,529 shares of common
stock and 1,923,871 shares of preferred stock. These treasury
shares had been acquired in conjunction with the first share buy-
back programme 2022/2023. The amount of the share capital
reduction was reclassified to capital reserves.
586,683,189
in € million
Expenses for impairment losses and income from the reversal of
impairment losses are not significant for the BMW Group and are
therefore not reported separately in the income statement.
In the case of trade receivables, collateral is generally held in the
form of vehicle documents and bank guarantees so that the risk
of bad debt loss is very limited.
3,506
Other assets (financial instruments)
4,125
4,159
thereof current
20,005
23,719
Inventories
50
48
investment is held
2
3
thereof non-current
5,971
259
Advance payments to suppliers
Receivables from companies in which an
4,127
4,162
Net carrying amount
524
693
financial services business
114
98
Deposits
Vehicles held for sale in the
-43
-52
11
454
Other taxes
1,846
Impairment allowances on trade receivables in accordance with
IFRS 9 developed as follows:
At 31 December 2023, the carrying amounts of inventories ex-
pected to be realised after more than 12 months amount to € 86
million (2022: € 98 million).
The expense recorded in conjunction with inventories during the
financial year 2023 amounted to € 81,497 million (2022:
€ 76,014 million).
Out of the total amount recognised for inventories at 31 Decem-
ber 2023, inventories measured at net realisable value
amounted to € 1,346 million (2022: € 1,940 million). Write-
downs to net realisable value in the financial year 2023
amounted to € 189 million (2022: € 112 million), while rever-
sals of write-downs amounted to € 13 million (2022: € 11 mil-
lion).
Collateral assets comprise mainly customary collateral (banking
deposits) arising on the sale of asset-backed financing instru-
ments.
* Presentation adjusted compared to previous year.
thereof current
thereof non-current
9,602
7,596
1,030
1,537
10,632
9,133
1,987
Other assets
1,457
Sundry other assets*
3,351
4,170
Other assets (non-financial instruments)
477
517
Prepaid expenses
872
819
Expected reimbursement claims
156
847
Advance payments'
1,310
1,109
2,145
35
2
2
18
23
3
- 1
-1
- 51
-27
-774
- 131
32
46
598
11
80
130
357
271
* Prior year figures restated.
Total comprehensive income
Other comprehensive income
thereof from discontinued operations
thereof from continuing operations
Profit/loss after tax
Income taxes
Interest expense
Interest income
Profit/loss before financial result
2
9
8
3
Group Financial Statements
Notes to the Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
187
- 143
- 337
53
-54
-776°
-117
- 9
2
24*
51
Scheduled depreciation
- 3
- 339
-53
-54
- 797
- 168
- 134
- 339
- 53
-54
- 800
- 168
8
25
- 5
-134
Revenues
DISCLOSURES RELATING TO THE INCOME STATEMENT
255
RECONCILIATION OF AGGREGATED FINANCIAL INFORMATION
2
81
124
121
91
129
137
26
41
36
28
858
973
Assets
412
159
77
1
3
113
96
144
77
1
3
162
164
218
128
573
Responsibility Statement and Auditor's Report
196
738
299
62
87
78
38
Carrying amount
255
299
62
87
78
38
Group's interest in net assets
858
316
973
573
159
77
Net assets
129
139
107
165
157
119
Provisions and liabilities
987
1,112
519
412
599
Remuneration Report
25 Receivables from sales financing
- 2
- 22
3
Reclassification to Stage 1
1,599
567
35
550
447
Impairment allowances at 1 January 2022
Total
Simplified
General
Stage 3
Stage 2
Stage 1
Reclassification to Stage 3
in € million
The carrying amount of the corresponding liabilities from asset-
backed financing transactions at 31 December 2023 stood at
€ 12,089 million (2022: € 11,603 million). The fair value of
these liabilities at that date was € 12,148 million
(2022: € 11,635 million).
was
The carrying amount of receivables from sales financing trans-
ferred, but not derecognised at 31 December 2023 stood at
€ 15,152 million (2022: € 14,487 million). The fair value of
those receivables
date
at that
€ 15,332 million
(2022: € 14,428 million).
For the purposes of ABS financing, only the senior tranches of
the issued securities are sold to external investors. Subordinated
tranches are retained by the BMW Group. Furthermore, the BMW
Group retains the exposure to interest rate risk in many transac-
tions for which it concludes corresponding interest rate deriva-
tives. The risk of delayed payments by debtors is reduced in the
majority of ABS financing agreements by cash reserves financed
by the BMW Group. Due to the risks remaining with the BMW
Group, the ABS financing arrangements did not result in the de-
recognition of the securitised financial assets.
As part of its ABS financing activities, the BMW Group transfers
some of its receivables from sales financing – primarily retail cus-
tomer and dealership financing receivables - to structured com-
panies, which in turn securitise them and place them on the cap-
ital market as collateralised securities.
2,189
643
36
929
581
Impairment allowances at 31 December 2023
- 21
Reclassification to Stage 2
- 18
241
935
576
Impairment allowances at 31 December 2022
42
2
-3
96
-53
134
3
2
44
85
Changes in risk parameters
Other changes
-166
- 103
-15
- 1
170
-24
2
77
115
138
177
-1
-36
-2
186
- 37
-87
- 11
2
- 138
2,145
599
35
935
576
Impairment allowances at 1 January 2023
85,708
87,355
Total
Simplified
General
in € million
21,326
21,622
Reclassification to Stage 1
64,382
Stage 3
Stage 2
Stage 1
31.12.2022
*Including operating leases.
Receivables from sales financing
Finance lease receivables
1.1.2022 differences combinations
31.12.2023
in € million
= Q
↑
Impairment allowances on receivables from sales financing in
accordance with IFRS 9, which only arise within the Financial
Services segment, developed as follows:
Receivables from sales financing comprise the following:
65,733
Other Information
5
-1
- 19
- 16
-2
-1
- 5
- 8
Changes in risk parameters
Other changes
-124
-98
1
-24
-1
Write-off of receivables
62
-47
-20
26
54
Derecognition and origination of receivables
159
215
-52
-3
Reclassification to Stage 3
172
-39
234
-23
Reclassification to Stage 2
-43
2
in € million
3,521
Translation
1
-54
3,524
office equipment
Other facilities, factory and
-86
1,273
405
444
141
1,717
3
43
701
-3
979
303
thereof right-of-use assets from
leases
91
3,519
156
43
49
-4
154
thereof right-of-use assets from
leases
1,229
448
1,271
430
1
15
395
business
-27
2,295
2,248
14,190
14,929
31,496
444
-114
4,541
thereof right-of-use assets from
leases
13,295
13,248
8,709
422
359
996
-74
8,147
21,957
538
1,475
356
1
4,449
1,512
-27
2,732
-14
3,726
-222
30,738
46,425
2,773
1,520
3,221
-471
44,928
Plant and machinery
3,029
2,790
1,659
299
473
63
998
- 1
42
58
323
90
-1
89
234
291
6
Participations
-16
101
35
1,152
42
13
115
1,102
- 19
-6
subsidiaries
5,591
5,748
9,830
43,118
42,820
Investments accounted for using the
equity method
381
660
145
683
240
240
443
420
Investments in non-consolidated
168
189
963
1,060
Property, plant and equipment
3,412
5,8183
5,818
1
- 1,967
4,050²
73,306
405
3,412
construction in progress
Advance payments made and
2
91
89
67
-81
- 1,019
518
8,674
Other investments
1,483
-22
107
93
35,266
42,453
5,117
-323
41,180
10,073
77,719
52,948
18,338
18,927
-534
52,893
Leased products
3,760
47
112
838
21,442
- 1,557
546
-220
766
1,960
- 841
2,801
- 1,272
536
442
- 1,808
45
- 154
78
181
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
- 109
← = Q
- 1,115
26
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
182
1,598
- 790
26
2,388
305
- 2,817
199
199
- 1,772
- 1,772
- 82
- 104
22
-2,512
Income taxes on components of other comprehensive income
are as follows:
in € million
Remeasurement of the net liability for defined benefit pension plans
278
1,197
1,351
1 Thereof expense amounting to € 115 million recognised in profit or loss.
2 Including advance payments for right-of-use assets amounting to € 79 million.
3 Including assets under construction amounting to € 4,565 million.
183
BMW Group Report 2023
To Our Stakeholders Combined Management Report
- 19
Group Financial Statements
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
Analysis of changes in Group tangible, intangible and investment assets 2022
Acquisition and manufacturing cost
Depreciation and amortisation
Carrying amount
Additions
arising on
Responsibility Statement and Auditor's Report
115
12
132
Marketable securities (at fair value through other comprehensive income)
Derivative financial instruments
Costs of hedging
Other comprehensive income from equity accounted investments
Currency translation foreign operations
Other comprehensive income
In 2023, other comprehensive income from equity accounted in-
vestments was a positive amount of € 26 million and is reported
in the Group Statement of Changes in Equity within currency
translation differences. In the previous year, the amounts re-
ported for equity accounted investments comprised a negative
amount of € 395 million within currency translation differences
and positive amounts of € 220 million and € 93 million within
derivative financial instruments and costs of hedging respec-
tively.
The hedging effects of derivative financial instruments that are
subsequently recycled to the acquisition cost of inventories are
not included in other comprehensive income after tax.
2023
2022
Before tax
Income taxes
After tax
Before tax
-142
24
- 118
1,077
Income taxes
-332
After tax
745
113
- 35
← = Q
-413
32,126
9,449
Goodwill
12,127
Disposals 31.12.2023 31.12.2023 31.12.2022
1,152
10,684
Value
Current Reclassifi-
cations adjustments¹
year
2,387
23,028
1,152
2,604
21,576
Development costs
1.1.2023 differences
Disposals 31.12.2023
cations
Translation
Reclassifi-
consolidated
companies Additions
1.1.2023 differences
in € million
Translation
to changes in
Additions due
Carrying amount
Depreciation and amortisation
Acquisition and manufacturing cost
20 Analysis of changes in Group tangible, intangible and investment assets 2023
NOTES TO THE BALANCE SHEET
Notes to the Group Financial Statements
1,562
-75
12,344
1,487
buildings on third party land
Land, titles to land, buildings, including
21,776
20,022
13,954
1,228
3,857
-104
11,429
33,976
1,386
2,766
1,487
33,205
Intangible assets
-609
6,191
1,562
Other intangible assets
8,087
-534
162
234
10,067
1,980
- 104
1,470
76
3,270
9,461
100
5
100
Christiane Benner
5
5
100
Marc Bitzer
5
5
Bernhard Ebner
5
5
100
Rachel Empey
5
8
5
18
100
18
5
5
Martin Kimmich*
Stefan Quandt
Stefan Schmid
Members of the
Supervisory Board
Norbert Reithofer
The attendance rate at Supervisory Board meetings was 99%, and 100% for the meetings
held by the various committees and the Presiding Board. The meetings were held in person,
with individual members participating virtually only in justified exceptional cases. Three meet-
ings of the Audit Committee that dealt with the quarterly reports were held as hybrid meet-
ings, with individual members connected by either telephone or video call as planned. Indi-
vidual meeting attendance can be seen in the table below:
Disclosure of attendance at meetings by individual members
With regard to the employee representatives, in January 2023 Dr Martin Kimmich was ap-
pointed to succeed the departing long-serving First Deputy Chairman of the Supervisory
Board, Manfred Schoch, for his remaining term of office. Dr Kimmich has been Chairman of
the Munich Works Council and the BMW AG Works Council since 2022.
There were no changes to the composition of the Supervisory Board during the past year on
the shareholder representative side. The Annual General Meeting elected Dr Kurt Bock to
the Supervisory Board for a further term of office of approximately four years. He was sub-
sequently appointed as Deputy Chairman of the Supervisory Board, member of the Presid-
ing Board and of the Personnel Committee as well as member and Chairman of the Audit
Committee.
Composition of the Supervisory Board, the Presiding Board and the Supervisory
Board's committees
On 1 November 2023, Jochen Goller was appointed as member of the Board of Manage-
ment responsible for Customer, Brands and Sales. Mr Goller has been at the BMW Group
since 1999 and has headed up activities in the China region since 2018. In Jochen Goller,
we have appointed an internationally experienced sales manager with particular expertise in
the Chinese market to the Board of Management.
On 31 October 2023, Pieter Nota left the Board of Management by mutual agreement, also
in line with the BMW Group's succession plans. After becoming the member of the Board of
Management responsible for Customer, Brands and Sales in 2018, Mr Nota was a key fig-
ure in driving forward the sale of all-electric models and the digitalisation of the customer
interface. He was also responsible for introducing a pioneering agency model for direct
sales in selected markets. We wish to thank Pieter Nota for his excellent work and valuable
inspiration.
On 12 May 2023, Walter Mertl was appointed as member of the Board of Management re-
sponsible for Finance. He joined the BMW Group in 1998 and was most recently responsi-
ble for corporate controlling. Mr Mertl has embodied the Group's commitment to sustainable
profitability during the transformation for many years.
Dr Nicolas Peter left the Board of Management on 11 May 2023 by mutual agreement as
part of a succession arrangement following three decades of successful work at the BMW
Group. As the Board of Management member responsible for Finance, he played a key role
in shaping the development of the BMW Group with his profound expertise, entrepreneurial
flair and vision. His work served to further cement the Group's excellent reputation, both on
the capital market and in the public eye. We are greatly indebted to Nicolas Peter for his out-
standing contribution.
The Supervisory Board extended the mandate of Oliver Zipse, the Chairman of the Board of
Management.
The Supervisory Board resolved to extend the term of office of one member and appointed
two new members to the Board of Management in the financial year 2023.
100
← = Q
Report of the Supervisory Board
Other Information
Attendance
Attendance in %
Meetings
Presiding
Board/
Presiding
Board/
18
5
100
100
17
5
17
5
Remuneration Report
100
18
5
18
5
Plenum Committees
Plenum Committees
Plenum Committees
Presiding
Board/
100
18
Responsibility Statement and Auditor's Report
Combined Management Report
16
In March 2023, the focus was on preparing for the Supervisory Board meeting at which the
financial statements for the financial year 2022 were discussed and examined. After verify-
ing the matter of independence, the Audit Committee recommended to the Supervisory
Board that PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft ("PwC") be
elected auditor at the Annual General Meeting 2023. There were no indications of conflicts
of interest, grounds for exclusion or lack of independence on the part of the auditor.
Unless a particular committee was responsible, the Presiding Board prepared the topics for
the plenary meetings at its four meetings in cooperation with the Board of Management and
senior heads of department. It also put forward proposals for reporting within the Supervi-
sory Board. The Presiding Board focused especially on the corporate strategy and its sus-
tainability-related aspects, in addition to longer-term corporate planning. The report on the
BMW Group's position was discussed in detail at every meeting of the Presiding Board.
The Audit Committee convened eight times in total.
The Supervisory Board has established a Presiding Board and four committees. At each
subsequent Supervisory Board meeting, the Chairman of the Audit Committee, Dr Bock,
and myself reported in detail on the work of the Presiding Committee and the other commit-
tees. Further information on the duties, composition and working methods of the Presiding
Board as well as the various other committees is provided in the Statement of Corporate
Governance on the BMW Group website.
Description of Presiding Board activities and committee work
The Supervisory Board is careful to avoid any conflicts of interest in the course of its deliber-
ations and decision-making processes. No conflicts of interest occurred in the financial year
2023.
In late 2023, we reviewed the effectiveness of the work of the Supervisory Board and its
committees with the aid of a questionnaire, and discussed the findings in our subsequent
meeting. Cooperation both within the Supervisory Board and with the Board of Manage-
ment was unanimously perceived as constructive and trustworthy. In the current financial
year, we intend to act on proposals to explore certain topics in greater depth, such as bat-
tery technology and the circular economy concept.
The onboarding programme for new Supervisory Board members was also continued in
2023. As part of the programme, new members are given an insight into the BMW Group's
key business areas and planning processes by representatives of internal specialist depart-
ments. The programme also includes an introduction to the ongoing work of the Supervisory
Board.
With the BMW Group's support, Supervisory Board members attended advanced training
courses on various topics during 2023. At our July meeting held at the BMW Group's Leip-
zig plant, the subject of which was "BMW Group Production - Electrified. Digital. Sustaina-
ble", we discussed the topic of sustainability in production and energy generation at BMW
Group sites. In September, we took a first in-depth look at the Group's technology, architec-
ture and product strategy for the period as of 2025, and more closely at the strategic mod-
ules of the NEUE KLASSE. The members of the Supervisory Board then tested new BMW,
MINI and Rolls-Royce models at the BMW M Driving Academy in Maisach. This involved a
drive on the A8 motorway in the new BMW 5 Series sedan, where we tried out the level 2+
Highway Assistant. In addition, we were presented with BMW brand design vehicles, sup-
plemented by a preview of the NEUE KLASSE. A talk by a renowned Chinese economics
expert on the state of the Chinese economy in the wake of the coronavirus pandemic and on
opportunities for multinational corporations provided some interesting insights into the Chi-
nese market. The Supervisory Board held two hybrid meetings in October and November at
which the heads of the responsible internal departments and an external consultant pro-
vided us with a comprehensive update on non-financial reporting and the EU taxonomy, fo-
cusing on implementation by the BMW Group. We also delved more deeply into the complex
processes involved in implementing and reviewing the ambitious decarbonisation targets
within the supply chain as well as the main levers for decarbonisation in this area.
100
5
17
5
17
100
100
Kurt Bock
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Report of the Supervisory Board
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
To Our Stakeholders
BMW Group Report 2023
17
The Mediation Committee, which is prescribed by law, did not need to convene during the
financial year under report.
The Nomination Committee held one meeting in the financial year 2023 in which it dis-
cussed the composition of shareholder representatives on the Supervisory Board. Taking
into account the composition requirements resolved by the Supervisory Board and the rec-
ommendations of the German Corporate Governance Code, the Nomination Committee is-
sued recommendations for the Supervisory Board's election proposals to the Annual Gen-
eral Meeting to be held in 2024.
In its role as a preparatory body, in the course of 2023 the Personnel Committee convened
four times to deliberate on the remuneration of, and succession planning for, the Board of
Management. The review of the appropriateness of the Board of Management's remunera-
tion for the financial years 2022 and 2023 and the determination of the factors for the
Board of Management's variable remuneration for those years were the subjects of thor-
ough preparation within the Personnel Committee. The determination of financial and ESG
targets for the Board of Management's remuneration for the financial year 2024 was also
discussed in great detail. In addition, the Personnel Committee prepared for the change of
remuneration consultant in the financial year 2023. The renewal of the anticipatory resolu-
tion on the approval of loans and transactions by BMW Bank GmbH was also on the
agenda.
The Audit Committee received regular reports on the state and development of significant
legal proceedings and internal investigations and, in individual cases, discussed product-
and emissions-related proceedings with external legal advisors brought in for that purpose.
In its report on the audit of over-the-counter derivatives entered into by BMW AG during the
financial year 2022, the external auditor confirmed to the Audit Committee the effectiveness
of the system in place at BMW AG in complying with the regulatory requirements of the Eu-
ropean Market Infrastructure Regulation.
Group Financial Statements
The head of Corporate Audit presented us with the key audit findings and plans for further
internal audits. The Chief Compliance Officer of the BMW Group reported on the structural
development of the compliance management system, the implementation of operational
measures and further planning. The report also addressed the implementation of the Ger-
man Supply Chain Due Diligence Act. In addition, we received a report on the BMW Group's
tax and customs control system from the responsible head of department.
At its meeting in July 2023, the Audit Committee considered the effectiveness and appropri-
ateness of the BMW Group's internal control system (including the Corporate Audit func-
tion), the compliance management system and the risk management system. In the half-
yearly risk reports, we addressed the principal risks facing the BMW Group and their classifi-
cation. We focused particularly on geopolitical risks and the resulting risk scenarios, espe-
cially for supply chains and sales markets, as well as measures to mitigate these risks.
The Board of Management informed the Audit Committee regarding the implementation of
the first share buyback programme (which the Audit Committee had already approved in
2022), the redemption of the shares on 18 July 2023 and related reduction in share capital,
as well as the second share buyback programme resolved by the Board of Management in
May 2023.
The Quarterly Statements were presented to us for discussion by the Audit Committee prior
to their publication by the Board of Management. Representatives of the external auditors
were also present when the Half-Year Financial Report was discussed in early August
2023.
The Audit Committee also examined the combined Non-financial Statement of BMW AG
and the BMW Group for the financial year 2022, which was part of the BMW Group Report
2022. The Audit Committee had representatives from PwC explain the results of their audit.
We have again engaged PwC to conduct a "limited assurance" audit of the Non-financial
(Group) Statement for the financial year 2023, to the extent that it relates to parts of the
management report that are not subject to a "reasonable assurance" audit. Going beyond
the formal review required by law, the Audit Committee also engaged PwC to audit the con-
tents of the Remuneration Report for the financial year 2023.
The Audit Committee also specified supplementary audit focus areas. Moreover, it approved
the scope of the non-audit services to be performed, and received regular reports from PwC
regarding these services. At its meetings, the Audit Committee discussed the quality of the
audit in depth on several occasions. In particular, it received a report from the relevant de-
partment on the Group's experience with the audit of the financial statements for the finan-
cial year 2022 and on the results of the survey conducted within the Group for this purpose.
Based on this report, the auditor's description of the quality assurance measures under-
taken, and the Audit Committee's own experience with the auditor, the audit was found be
of good quality.
The Audit Committee concluded that PwC's fee proposal for the audit of the Company and
Group Financial Statements and the BMW Group Report 2023, as well as for the review of
the Half-Year Report 2023, was appropriate in light of the scope of its tasks. The Commit-
tee therefore issued the corresponding contracts to PwC following its election at the Annual
General Meeting in May 2023.
← = Q
Other Information
We also addressed the topic of climate-related risks. We regularly monitor the further devel-
opment of the internal control system for non-financial reporting with regard to the Group's
sustainability-related targets.
Composition of the Board of Management
5,912
2,461,269
In December 2023, the Board of Management presented the budget for the financial year
2024. After exhaustive discussion with the Board of Management, we gave the budget our
approval.
2,554,183
0.2
6,032
0.8
295,358
292,922
6,021
2,399,632
302,138
5,586
2,521,514
2,325,179
2,537,504
292,582
3,756
7.2
2,252,793
2,100,689
2,213,790
2,028,841
6.4
2,205,841
1,980,740
2,166,644
11.7
2,661,922
- 1.0
6,179
10.1
12.0
2,340,547
315,196
2,184,939
347,465
5,100
286,265
6,239
2,382,305
2,255,637
2,564,025
3,776
288,713
271,121
352,729
5,455
2,089,801
8
12.7
469
416
Total²
Rolls-Royce
MINI
BMW²
Deliveries by brand
AUTOMOTIVE SEGMENT
Spending on employee training and development (in € million)¹
Production by brand
GROUP
← = Q
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
To Our Stakeholders
BMW Group in Figures
BMW Group Report 2023
11
OTHER NON-FINANCIAL PERFORMANCE FIGURES
2.04
BMW³
Rolls-Royce
389
279
370
Change in %
2023
2022
2021
MINI
2020
New contracts with retail customers
FINANCIAL SERVICES SEGMENT
BMW
Production
MOTORCYCLES SEGMENT
Energy consumption per vehicle produced (in MWh)"
Total³
2019
I also met with investor representatives on a regular basis to discuss topics specific to the
Supervisory Board during the financial year 2023. We touched on corporate governance
issues such as succession planning for the Supervisory Board, the system for the Board of
Management's remuneration and the future format of the Annual General Meeting as well
as committee work and the Supervisory Board's handling of geopolitical risks.
2.12
2.13
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Combined Management Report Group Financial Statements
Report of the Supervisory Board
To Our Stakeholders
BMW Group Report 2023
14
At Supervisory Board meetings we regularly addressed the topics of sustainability and
ESG. In a report on recent developments within the Group, the Board of Management in-
formed us about the cooperation with IONITY on rapid charging networks, the conversion of
BMW Group plants in Oxford and Swindon to enable the manufacturing of all-electric MINI
vehicles, and the successful outcome of the local referendum held in Irlbach-Straßkirchen on
the proposed construction of a new BMW Group plant to manufacture high-voltage batter-
ies, among other things. Furthermore, we were very pleased to note that the BMW Group
was presented with awards for activities relating to its sustainability strategy, conferred by a
management consultancy and the magazine "Automobilwoche", which voted the Group
number one in the automobile manufacturer category. Moreover, the Fair Pay Innovation
Lab awarded the BMW Group a gold medal in the category "Fair Pay Leader".
Within the framework of a presentation on the perception of the sustainability of the BMW
Group and its brands, we examined the objectives of the Group's corporate ESG strategy in
greater detail and looked at corporate communication regarding sustainability issues as well
as their media coverage. Regarding the energy transformation within the BMW Group as
well as decarbonisation at Group sites, we were informed in particular about the further im-
provement of energy management and the strategy involving the transition to renewable
energy sources at the BMW Group's existing production sites by 2030. We were also pro-
vided with reports on plans for new structures where no fossil fuels will be used (such as the
plant in Debrecen, where production is scheduled to begin in 2025).
The Supervisory Board also closely monitored developments relating to major strategic
collaborations. In 2023, the focus was once again on the Chinese market in particular, with
respect to both the BMW Brilliance Automotive joint venture and the cooperation with Great
Wall Motors for the local production of an all-electric MINI. We were also informed about the
status of the investments in YOUR NOW.
At each meeting, the Board of Management updated us on current issues and projects re-
lated to strategy development work and implementation. The Board of Management also
reported on recent events such as the Group's successful appearance at the IAA Mobility in
Munich, the world premiere of the all-electric BMW iX2 and the BMW X5 Hydrogen at the
Japan Mobility Show, and the implementation of the major internal training programme
"Digital Boost".
Board. Further topics covered by the Board of Management's extensive report were market
strategies focusing particularly on China and Europe, the resilience of supply chains, and the
holistic, Group-wide performance programme. The report was rounded off with an analysis
of the competition and the outlook for the BMW Group's product portfolio.
Corporate strategy, including sustainability, remained high on the Supervisory Board's
agenda. Following an analysis of the current situation in the automotive industry and the
ramifications of geopolitical developments, the Board of Management presented us with a
detailed strategy for implementing the automotive transformation. The strategy covered the
topics of electrification, digitalisation and sustainability, highlighting in particular the circular
economy concept as a key element of the Group's sustainable corporate approach. The
BMW Group's ambitious decarbonisation targets for2030 were also reaffirmed. With regard
to digitalisation, the Board of Management has placed the NEUE KLASSE at the centre of
its strategy, making it the benchmark for a holistic customer experience. The Board of Man-
agement also described the digitalisation of key business processes to the Supervisory
In its reports on the BMW Group's position, the Board of Management kept us well in-
formed at each meeting regarding current developments and the Group's overall perfor-
mance. A regular topic of discussion at Supervisory Board meetings was the development
of current sales trends based on figures analysed by brand, segment and market region, for
both the BMW Group and its competitors. There was also a keen focus on electrified vehi-
cles and an overview of the Group's key financial indicators and liquidity situation.
We continuously and thoroughly monitored the governance of the BMW Group based on in-
depth reports received from the Board of Management and provided its members with pru-
dent advice on the management and strategic development of the Group. We focused in
particular on driving forward the Group's electrification strategy and expanding it to include
all segments and markets, as well as on implementing the corporate strategies adopted in
the fields of digitalisation and sustainability. At each of the five plenary sessions of the Su-
pervisory Board (including one two-day meeting), we held detailed discussions with the
Board of Management regarding the Group's position. The Board of Management also kept
the Supervisory Board well informed regarding any matters of significance outside the
framework of formal meetings. Furthermore, I discussed matters personally and on a regu-
lar basis with the Chairman of the Board of Management. In addition, the Chairman of the
Audit Committee maintained a direct line of contact with the Board of Management member
responsible for Finance as well as with the external auditor's representatives outside of
meetings. We regularly dealt with internal Supervisory Board issues and personnel-related
matters without the presence of the Board of Management. Our cooperation, both within
the Supervisory Board and its committees and with the Board of Management, was con-
ducted in a spirit of trust, respect and constructiveness. Detailed documents on the main
topics of each meeting were distributed to the members in advance. Moreover, the share-
holder and employee representatives regularly prepared for the meetings in separate pre-
liminary discussions.
The Supervisory Board again performed the duties incumbent upon it with the utmost dili-
gence throughout the financial year 2023.
← = Q
In the course of our work on corporate governance, we further developed and updated
parts of the Supervisory Board's skills matrix, which was introduced in 2022. Based on a
self-assessment, we concluded that the composition of the Supervisory Board at 31 De-
cember 2023 fully meets the targets stipulated in the diversity concept and the competency
profile.
In the Declaration of Compliance with the German Corporate Governance Code issued in
December 2023, the Board of Management and the Supervisory Board confirmed that they
have complied with the recommendations of the Code as amended on 28 April 2022 with-
out exception and will continue to fully comply with them in future.
We also dealt with the Group's compliance management system in great depth. In his an-
nual report, the Chief Compliance Officer presented changes to the structure and content of
the BMW Group's compliance management system and the revision of compliance regula-
tions. The report also addressed the implementation of the German Supply Chain Due Dili-
gence Act and the handling of individual cases. Moreover, at the Compliance Days in Mu-
nich, the Chief Compliance Officer relayed a message from the Chairman of the Board of
Management that set the "tone from the top", and addressed operational prevention
The BMW Group's long-term business plan was the subject of comprehensive examina-
tion by the Supervisory Board. In view of the ramp-up of electric mobility in an environment
that remains challenging and volatile, the focus was on safeguarding growth and returns.
The Board of Management informed us about plans for the various vehicle and corporate
segments and ambitious long-term targets, while confirming its key objectives for growth,
market shares and profitability. We were presented with key financial indicators for each
segment, in addition to opportunities and risks for the planning period. After thorough ex-
amination, the Supervisory Board approved the long-term business plan drawn up by the
Board of Management.
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report Group Financial Statements
Report of the Supervisory Board
BMW Group Report 2023
Focus of Supervisory Board activities during the past financial year
15
In conjunction with the report on HR-related strategies, we looked at the BMW Group's at-
tractiveness as an employer, employee performance and commitment, and workforce avail-
ability. The Board of Management also brought us up to date on the status of the Group's
diversity concepts and the extent to which targets have been achieved regarding the pro-
portion of women employed at various levels.
In the highly detailed risk report, we were brought up to date with the structure and working
methods of the risk management system. A key focus of the report was on geopolitical risks,
especially in the areas of purchasing/supply chains and sales markets as well as the
presentation of measures to mitigate risk. On the subject of information security with a focus
on IT security, we were informed about the organisation and functioning of the information
security management system and the structure of the IT security risk model, as well as the
measures derived from it and their effectiveness. The Board of Management also reported
on the business performance, sector-specific risk profile and current projects of the Finan-
cial Services segment. In addition, we received a report on key topics relating to the Group's
treasury system, such as funding, liquidity management, hedging strategies for price and
currency risks and the current state of share buyback programmes.
In addition, key topics from the Board of Management's individual areas of
responsibility were on our agenda. Markets in the USA, Canada and Mexico as well as the
"fourth pillar" markets, in particular India, South Korea and Japan, were the subject of an in-
depth sales report. We discussed regional resilience and the growth strategy for these mar-
kets in great depth.
The Board of Management updated the members of the Supervisory Board biannually on
the current status of the level of attainment of defined financial KPIs and the KPIs for our
ESG targets, such as deliveries of all-electric automobiles, fleet carbon emissions, attrac-
tiveness as an employer, and diversity.
The Supervisory Board examined the Board of Management's remuneration in great de-
tail. It reviewed the target structure, maximum remuneration and expected remuneration for
the Board of Management for the financial year 2023, considering in particular the Group's
performance and the development of remuneration for senior executives and employees in
Germany over the past few years. Based on a comparative study conducted by an external
independent remuneration consultant and subsequent oral advice, we concluded that the
remuneration paid to Board of Management members for the financial year 2022 and the
target remuneration for 2023 were appropriate. Detailed information on the Board of Man-
agement's remuneration for the financial year 2023 is provided in the Remuneration Re-
port. In December 2023, following thorough preparation by the Personnel Committee, we
adopted the variable remuneration targets applicable to Board of Management members
for the financial year 2024, taking into account the budget for 2024, the long-term business
plan and the BMW Group's corporate strategy, including its ESG goals.
At each meeting, the Board of Management informed us about the current status of important
legal framework conditions and regulatory projects. These included in particular the EU's reg-
ulations regarding fleet carbon emissions in conjunction with the EU's "Fit for 55" package
and the Euro 7 emissions standards.
measures.
In December 2022, the Supervisory Board agreed to the plan to hold the Annual General
Meeting 2023 on a virtual basis in accordance with the regulations applicable at the time. In
March 2023, the detailed concept proposed by the Board of Management was approved.
With regard to the Annual General Meeting 2024, the Board of Management explained the
reasons for its decision in favour of the virtual format to the Supervisory Board.
← = Q
Remuneration Report Other Information
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Report of the Supervisory Board
12
-0.2
1 Training for BMW Group employees and temporary staff at consolidated companies worldwide. Data is collated on the basis of direct input by participants and, to a small extent, by extrapolation. Data also includes e-learning formats.
2 Deliveries including BMW Brilliance Automotive Ltd. also for the period prior to full consolidation in the Group Financial Statements (2019: 538,612 units, 2020: 602,247 units, 2021: 651,236 units, 1 January to 10 February 2022: 96,133 units).
3 Production including BMW Brilliance Automotive Ltd. also for the period prior to full consolidation in the Group Financial Statements (2019: 536,509 units, 2020: 602,935 units, 2021: 700,777 units, 1 January to 10 February 2022: 58,507 units).
4 Efficiency indicator calculated from the absolute energy consumption (adjusted for CHP losses) of automobile production (BMW Group plants excluding partner plants and contract manufacturing) divided by the number of units produced (BMW Group plants and partner plants, excluding contract
manufacturing).
1,542,514
1,545,490
1,956,514
1,845,271
12
2,003,782
221,988
215,932
187,500
168,104
187,116
-7.5
1.97
2.8
2.10
BMW Group Report 2023
Combined Management Report
To Our Stakeholders
BMW Group Report 2023
13
Chairman of the Supervisory Board
Norbert Reithofer
2024 promises to be an exciting year for the BMW Group with a record number of product
launches. We firmly believe that, thanks to the enthusiasm and precision of our strong
workforce, we will master the challenges ahead and continue to set ourselves apart from
the competition with our wide range of products across all brands and drivetrain types.
The enthusiastic response to the presentation of the BMW VISION Neue Klasse at IAA
Mobility in Munich clearly demonstrates that the BMW Group is on the right path.
We also achieved a great deal in terms of sustainability in 2023, as our vehicle fleet once
again attained figures well within the EU's target limit for fleet carbon emissions.
To Our Stakeholders
We look back on 2023 as a successful financial year in which the BMW Group continued
to make decisive progress in ramping up electromobility. This is impressively demon-
strated by the fact that all-electric automobiles now make up nearly 15% of total sales.
The record high achieved in 2023 for total deliveries across all drivetrain types, and the
leading position of the BMW brand in the global premium segment further demonstrate
that the BMW Group's flexible drivetrain strategy is the right approach. Rigorous, far-
sighted decision-making have made this overall corporate success possible, ensureing
that the Group remains resilient, especially in volatile times.
REPORT OF THE
SUPERVISORY BOARD
Report of the Supervisory Board
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
DEAR SHAREHOLDERS,
100
Other Information
Heinrich Hiesinger
Expression of appreciation by the Supervisory Board
The Supervisory Board acknowledged and approved the combined Non-financial (Group)
Statement drawn up by the Board of Management. Following a preparatory review con-
ducted by the Presiding Board as well as a further review at Supervisory Board level, the
Statement on Corporate Governance drawn up by the Board of Management was also ap-
proved by the Supervisory Board.
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Combined Management Report Group Financial Statements
Report of the Supervisory Board
To Our Stakeholders
BMW Group Report 2023
19
19
Based on the preparatory work of the Audit Committee, the Supervisory Board and the
Board of Management jointly prepared the Remuneration Report for the financial year 2023
in accordance with § 162 AktG. At the request of the Audit Committee, PwC reviewed the
contents of the Remuneration Report, reported to both the Audit Committee and the Super-
visory Board on the results of the review, and confirmed that the Remuneration Report com-
plies with the financial reporting provisions contained in § 162 AktG in all material respects.
The Audit Committee and the Supervisory Board also carefully examined the combined
Non-financial (Group) Statement for the year ended 31 December 2023. Following an in-
depth explanation of the statement by the Board of Management, representatives of PwC
presented the key findings of their audit and answered additional questions posed by the
members of the Supervisory Board. Based on the "limited assurance” audit performed by
PwC on those parts of the Management Report and certain sustainability disclosures in the
integrated BMW Group Report 2023 that were not subject to a reasonable assurance en-
gagement, PWC issued an unqualified opinion, signed for the second time by Michael Popp
(Wirtschaftsprüfer) and for the first time by Annette Fink.
€ 6.00 for each share of common stock entitled to receive a dividend and € 6.02 for each
share of preferred stock entitled to receive a dividend and to transfer the remaining amount
to other revenue reserves. We consider the proposal appropriate and have therefore ap-
proved it.
Furthermore, in both the Audit Committee and the full Supervisory Board, we examined the
Board of Management's proposal to use the unappropriated profit to pay a dividend of
Based on a thorough examination conducted by the Audit Committee and the Supervisory
Board, we concurred with the results of the external audit. In accordance with the final result
of this examination, no objections were raised. At our meeting held on 14 March 2024, we
accordingly approved the Group and Company Financial Statements of BMW AG for the fi-
nancial year 2023. The Company Financial Statements for the year ended 31 December
2023 have therefore been adopted.
In the course of their audit work, they did not identify any facts inconsistent with the con-
tents of the Declaration of Compliance pursuant to § 161 of the German Stock Corporation
Act (AktG) jointly issued by the Board of Management and the Supervisory Board.
The representatives of the external auditors confirmed that the risk management system
established by the Board of Management is capable of identifying at an early stage any de-
velopments that might threaten the Company's going-concern status. They also confirmed
that no material weaknesses in the internal control system and risk management system
were identified with regard to the financial reporting process.
At the two respective meetings, the Board of Management provided a detailed explanation
of the reporting documents submitted to the Audit Committee and the Supervisory Board.
The representatives of the external auditor reported on the main findings of their audit and
answered questions put to them by members of the Audit Committee and the Supervisory
Board, partially without the presence of the members of the Board of Management. Both
the Audit Committee and the Supervisory Board gave meticulous consideration to the key
audit matters and the related audit procedures.
At its meeting held on 13 March 2024, the Audit Committee diligently examined and delib-
erated on these documents before they were considered in detail at the plenary session of
the Supervisory Board on 14 March 2024.
Immediately after authorising their issue, the Board of Management submitted the Com-
pany and Group Financial Statements for the financial year 2023 and the Combined Man-
agement Report (including the Combined Non-financial (Group) Statement) to the Supervi-
sory Board. The auditor's long-form audit reports were also submitted to the Supervisory
Board in a prompt manner. In order to facilitate preparations, drafts of these documents had
already been made available to the Supervisory Board in advance.
At its meeting held on 29 February 2024, the Audit Committee initially gave in-depth con-
sideration to the preliminary version of the Company and Group Financial Statements and
the Combined Management Report (including the combined Non-financial (Group) State-
ment and the information on the EU taxonomy) as well as the draft version of the auditor's
long-form reports.
The Company Financial Statements and the Group Financial Statements of BMW AG for the
financial year ended 31 December 2023, including the Combined Management Report, on
which PwC has issued unqualified audit opinions, were authorised by the Board of Manage-
ment on 12 March 2024. These audit opinions were signed for the fifth consecutive finan-
cial year by independent auditor Petra Justenhoven (Wirtschaftsprüferin) and, for the second
time, by Michael Popp (Wirtschaftsprüfer) as the auditor responsible for the performance of
the engagement.
PwC was appointed external auditor for the financial year 2023. PwC initially conducted a
review of the condensed Interim Group Financial Statements and the Interim Group Man-
agement Report for the first half of 2023 and presented its findings to the Audit Committee.
No issues were identified that might indicate that the condensed Interim Group Financial
Statements and Interim Group Management Report had not been prepared in accordance
with the applicable provisions in all material respects.
With their great dedication and an outstanding collaborative effort during the past financial
year, the members of the Board of Management and the employees of the BMW Group
worldwide successfully defended the BMW brand's leading position in the global premium
segment and significantly expanded the share of electric mobility in Group sales. We there-
fore wish to express our deep thanks and appreciation to all of them.
We are confident that the Board of Management and the BMW Group's workforce will con-
tinue to pursue the BMW Group's chosen path of sustainable and digitalised mobility in
2024, and we eagerly await the launch of the NEUE KLASSE in 2025.
Munich, March 2024
On behalf of the Supervisory Board
100
Chairman of the
Board of Management
Oliver Zipse
That is what the BMW Group stands for, like no other company. It is one of the reasons why
you, our shareholders, continue to stand by us.
At the BMW Group, we call it continuous progress.
We deliver what we say we are going to do – systematically, without making excuses, con-
sistently and reliably. Becoming a little bit better every day - that is what I expect from the
Company and from myself. That is how we move forward - bringing ambitious goals closer
and gradually turning them into reality. Society likes to talk about the transformation of mo-
bility and the automotive industry.
You know your Company: we always think ahead.
LADIES AND GENTLEMEN:
DEAR SHAREHOLDERS,
Strong today – strong tomorrow.
-
Review of financial statements and the profit distribution proposal
BOARD OF MANAGEMENT
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Combined Management Report Group Financial Statements
Statement of the Chairman of the Board of Management
To Our Stakeholders
BMW Group Report 2023
20
20
Chairman of the Supervisory Board
Norbert Reithofer
STATEMENT OF THE
CHAIRMAN OF THE
← = Q
Yours
M
Remuneration Report
Dominique Mohabeer
100
5
5
100
5
5
100
5
5
80
5
1
1
5
Susanne Klatten
100
5
5
Johann Horn
100
5
Other Information
5
4
8
100
8
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Report of the Supervisory Board
To Our Stakeholders
5
BMW Group Report 2023
18
* Member of the Supervisory Board since 18 January 2023.
Sibylle Wankel
Anke Schäferkordt
Christoph M. Schmidt
Vishal Sikka
Gerhard Kurz
Jens Köhler
100
5
5
André Mandl
100
5
5
100
5
5
100
5
5
100
100
1,165
415
415
415
34
34
- 349
- 11
21
10
Net defined
benefit liability
338
Effect of limitation of the
net defined benefit asset
to the asset ceiling
1,187
Pensions and other benefits paid
- 25,011
Total
Plan assets
benefit obligation
24,989
Defined
Due to the fact that there is no right of reimbursement or right to
reduce future contributions to the fund, the amount of plan assets
reported for the UK pension plan has been limited to the amount
of the obligations.
thereof pension provisions
thereof assets
31 December 2022
Translation differences and other changes
Employee contributions
34
Transfers to fund
-22
6,417
894
6,417
-7,471
Changes in the limitation of the net defined benefit asset to the asset ceiling
- 143
339
196
- 698
- 18,383
17,685
-52
52
336
-284
-6
697
- 7,471
- 703
106
-367
-367
-367
-262
-262
462
462
462
- 201
- 201
- 201
6,417
-7,471
-106
Gains (-) or losses (+) arising from experience adjustments
-317
Gains (-) or losses (+) arising from changes in financial assumptions
667
- 673
- 107
107
- 353
- 353
- 353
- 155
- 155
329
329
-174
-174
458
-317
329
-174
458
458
196
- 317
27
27
27
-1
43
-44
-6
Gains (-) or losses (+) arising from changes in demographic assumptions
-6
-106
Gains (-) or losses (+) on plan assets, excluding amounts included in interest income
REMEASUREMENTS
Gains (-) or losses (+) arising from settlements
Past service cost
Interest expense (+)/income (-)
Current service cost
EXPENSE/INCOME
1 January 2022
in € million
Notes to the Group Financial Statements
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
195
-57
427
370
799
-429
- 19,347
18,918
17
-17
89
BMW Group Report 2023
(funds without a rating)
Group Financial Statements
Other provisions
2,818
1,443
Other obligations
Bonus and price reductions
3,249
8,251
Statutory and voluntary warranty obligations, product guarantees
Obligations for personnel and social expenses
combinations
1.1.2023
in € million
business
arising on
Additions
290
1
232
289
Other
Absolute return funds
50
78
15
27
35
51
28
15,761
78
in € million
Bonus and price reductions*
1,677
- 105
-761
1,144
-44
1,979
2,964
- 41
- 2,061
47
1,782
-12
4,333
9,650
- 326
within one year
31.12.2023
Reversed
Utilised
-2,674
391
4,243
- 235
thereof due
Reversal of
discounting
Additions
differences
Translation
Statutory and voluntary warranty obligations, product guarantees
Obligations for personnel and social expenses
28
27
1,082
Equity instruments
31.12.2022
31.12.2023
31.12.2022
31.12.2023
31.12.2022
31.12.2023
31.12.2022
31.12.2023
in € million
The BMW Group is exposed to risks arising both from defined
benefit plans and defined contribution plans with a minimum re-
turn guarantee. The discount rates used to calculate pension ob-
ligations are subject to market fluctuations and therefore influ-
ence the level of the obligations. Furthermore, changes in other
actuarial parameters, such as expected rates of inflation, also
have an impact on pension obligations. In order to reduce cur-
rency exposures, a substantial portion of plan assets is either in-
vested in the same currency as the underlying plan or hedged by
means of currency derivatives. As part of the internal reporting
procedures and for internal management purposes, financial
risks relating to the pension plans are reported using a value-at-
risk approach by reference to the pension deficit. The investment
strategy is also subject to regular review together with external
consultants, with the aim of ensuring that investments are struc-
tured to match the timing of pension payments and the expected
development of pension obligations. In this way, fluctuations in
pension provisions recognised in the balance sheet are reduced.
In the financial year 2024, disbursements out of plan assets are
expected to exceed the employer's contributions to plan assets
by € 298 million. Plan assets of the BMW Group include own
transferable financial instruments amounting to € 17 million
(2022: € 7 million).
32
1,155
232
665
Total
Other
United Kingdom
Germany
Plan assets in Germany, the UK and other countries comprised
the following:
Depending on the cash flow profile and risk structure of the pen-
sion obligations involved, plan assets relating to defined benefit
plans are invested in a diversified portfolio.
Notes to the Group Financial Statements
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
2,729
2,068
14
41
Money market funds
51
Real estate funds
665
1,082
thereof non-investment grade
-748
thereof mixed funds
9,830
9,769
51
53
4,343
To Our Stakeholders Combined Management Report
4,237
5,479
thereof investment grade
2,119
10,495
10,851
51
53
4,343
4,237
6,101
6,561
Debt instruments
2,770
37
5,436
704
- 143
366
In addition, a career trend component, which is plan-dependent
and lies within a range of 0.25% to 0.50%, is taken into account
in the measurement of pension obligations in Germany (2022:
career trend of 0.25% to 0.50%).
The assumptions stated below, which depend on the economic
situation in the relevant country, are used to measure the defined
benefit obligation of each pension plan. The following weighted
average values have been used for Germany, the UK and other
countries:
In the case of defined benefit plans, the BMW Group is required
to pay the benefits it has granted to present and past employees.
Defined benefit plans may be covered by provisions or pension
assets. In Germany, pension obligations of the BMW Group are
almost entirely covered by assets transferred to BMW Trust e.V.,
Munich (BMW Trust), in conjunction with a Contractual Trust Ar-
rangement (CTA) (funded plan). In addition, funded plans also
exist in the UK as well as in the USA, Switzerland, Belgium and
Japan. In the meantime, all of the main defined benefit plans
have been closed for new entrants and replaced by defined con-
tribution plans.
33 Pension provisions
Notes to the Group Financial Statements
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
192
- 4,268
-621
9,756
9,773
4,059
3,601
12,344
11,044
18,823
16,352
2,193
2,327
2,140
3,262
Germany
29,243
United Kingdom
in %
Germany
The following mortality tables are applied in countries in which
the BMW Group has significant defined benefit plans:
12.8
12.8
13.7
13.1
14.2
13.8
Weighted duration of all pension obligations in years
2.26
2.17
2.53
2.24
Pension level trend
5.88
5.57
4.73
4.54
3.67
3.19
Discount rate
31.12.2022
31.12.2023
31.12.2022
31.12.2023
31.12.2022
31.12.2023
Other
33,227
Total cash flows
181,321
Financial information relating to BMW Brilliance is summarised
in the following table from a 100% perspective (2022: from
11 February 2022):
Total comprehensive income allocated to the other shareholders
of BMW Brilliance amounts to € 615 million (2022: € 580 mil-
lion). A dividend of € 1,447 million (2022: € 1,445 million) was
distributed to these shareholders during the financial year 2023.
At 31 December 2023, non-controlling interests in BMW Bril-
liance amounted to € 2,970 million (2022: € 3,709 million).
The 25% non-controlling interests of other shareholders in the
subsidiary BMW Brilliance represent a significant item in the
BMW Group's balance sheet.
32 Non-controlling interests
revenue reserves.
Equity attributable to shareholders of BMW AG increased during
the financial year by 2.8%, primarily reflecting the increase in
Equity attributable to shareholders of BMW AG
Proportion of total capital
Non-current financial liabilities
Current financial liabilities
in € million
The capital structure at the end of the reporting period was as
follows:
A key aspect in the selection of financial instruments is the ob-
jective to achieve matching maturities for the Group's financing
requirements. In order to reduce non-systematic risk, the BMW
Group uses a variety of financial instruments available on the
world's capital markets to achieve diversification.
In order to manage its capital structure, the BMW Group uses
various instruments, including the amount of dividends paid to
shareholders and share buybacks. Moreover, the BMW Group
actively manages debt capital, carrying out funding activities with
a target debt structure in mind.
The BMW Group is not subject to any unified external minimum
equity capital requirements. Within the Financial Services seg-
ment, however, there are a number of individual entities which
are subject to equity capital requirements of relevant regulatory
banking authorities.
The capital structure is managed in order to meet needs arising
from changes in economic conditions and the risks of the under-
lying assets.
The BMW Group's objectives with regard to capital management
are to safeguard over the long-term the Group's ability to con-
tinue as a going concern and to provide an adequate return to
shareholders.
Capital management disclosures
On 19 September 2023, the Board of Management resolved a
share buyback programme for shares of common stock for em-
ployees ("Share Buyback Programme Employee Shares 2023")
which was carried out during the period from 8 November to 27
November 2023. The acquisition of shares of common stock un-
der this programme serves the sole purpose of fulfilling the obli-
gations arising from the Employee Share Programme. Based on
the applications received from eligible employees, 1,290,000
shares of common stock were bought back and subsequently
sold to employees at a preferential price of € 71.47 per share.
These shares are entitled to receive dividends for the first time
with effect from the financial year 2023.
Up to 31 December 2023, a total of 942,892 shares of preferred
stock had been bought back via the stock exchange at an aver-
age price per share of € 90.15 and a total acquisition cost of
€ 85 million, corresponding to 0.14% of share capital. The
shares concerned are held by BMW AG as treasury shares at the
end of the reporting period.
Up to 31 December 2023, a total of 4,218,363 shares of com-
mon stock had been bought back via the stock exchange at an
average price per share of € 98.38 and a total acquisition cost of
€ 415 million, corresponding to 0.64% of share capital. The
shares concerned are held by BMW AG as treasury shares at the
end of the reporting period.
Based on the authorisation granted by the Annual General Meet-
ing on 11 May 2022, the Board of Management of BMW AG re-
solved on 18 July 2023 (with effect as of 18 July 2023) to re-
deem the shares acquired by the Company as part of the first
share buyback programme (22,199,529 shares of common
stock and 1,923,871 shares of preferred stock each with a nom-
inal value of € 1) and to reduce the Company's share capital from
€ 663 million to € 639 million. This corresponds to around 3.6%
of share capital prior to the redemption of the shares and the re-
duction of issued share capital.
The shares are being acquired with the purpose of either re-
deeming them at a later date and reducing share capital or using
them in conjunction with the Employee Share Programme.
← = 9
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
BMW Group Report 2023 To Our Stakeholders Combined Management Report
191
in € million
2023
2022
DISCLOSURES RELATING TO THE
184,606
Total capital
CASH FLOW STATEMENT
51.9%
51.5%
Proportion of total capital
DISCLOSURES RELATING TO THE
94,196
95,010
Total financial liabilities
40,727
42,130
Current liabilities
United Kingdom
53,469
Non-current liabilities
48.1%
48.5%
Current assets
87,125
89,596
Non-current assets
31.12.2022
31.12.2023
DISCLOSURES RELATING TO THE
BALANCE SHEET
Total comprehensive income
Profit after tax
INCOME STATEMENT
Revenues
52,880
Mortality Table 2018 G issued by Prof. K. Heubeck (with invalidity rates reduced by 70%)
S3PA Tables and CMI_2020 model with improvement factor of 1.25%
193
BMW Group Report 2023 To Our Stakeholders Combined Management Report
in € million
The change in the net defined benefit liability for pension plans
can be derived as follows:
Notes to the Group Financial Statements
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
194
The defined benefit pension plans are administered by BMW
Pension Trustees Limited, Farnborough, and BMW (UK) Trustees
Limited, Farnborough, both trustee companies which act inde-
pendently of the BMW Group. BMW (UK) Trustees Limited, Farn-
borough, is represented by ten trustees and BMW Pension Trus-
tees Limited, Farnborough, by five trustees. A minimum of one
third of the trustees must be elected by plan participants. The
trustees represent the interests of plan participants and decide
on investment strategies. Funding contributions to the funds are
determined in agreement with the BMW Group.
Defined benefit plans exist in the UK which are closed for all plan
participants. Vested benefits remain in place. New benefits are
covered by contributions made to a defined contribution plan.
UK
The assets of the German pension plans are invested by BMW
Trust (a German association) in accordance with a CTA. The rep-
resentative bodies of the association are the Board of Directors
and the Members' General Meeting. BMW Trust currently has
seven members and three members of the Board of Directors
elected by the Members' General Meeting. The Board of Directors
is responsible for investments, drawing up and deciding on in-
vestment guidelines as well as monitoring compliance with those
guidelines. The members of the association can be employees,
employee representatives, senior executives and members of the
Board of Management of BMW AG. An ordinary Members' Gen-
eral Meeting takes place once every calendar year, and deals with
a range of matters, including receiving and approving the associ-
ation's annual report, ratifying the activities of the Board of Direc-
tors and adopting changes to the association's statutes.
plan with lifelong pension benefits remains in place which is now
closed to new entrants. The pension benefit is calculated by mul-
tiplying a fixed amount by the number of completed years of ser-
vice. Only employees who have not agreed to a one-time option
to switch to the defined contribution system will receive future in-
creases in entitlements under this plan.
Two employer-funded pension plans are in place that are based
on defined contributions for which the level of benefits depends
on developments on the capital markets. Benefits granted by the
two plans are funded by a combination of the payment of fixed
monthly contributions by the Company, a deferred remuneration
option for employees and a matching contribution by the Com-
pany. Further contributions are made on the basis of the BMW
Group's performance. A further plan is in place that is funded en-
tirely out of deferred remuneration. Due to the minimum interest
rate guaranteed by the BMW Group, these plans are all classified
as defined benefit plans in accordance with IAS 19. In addition to
the above plans, an employer-funded, defined benefit pension
Employer-funded as well as employee-funded benefit plans exist
in Germany. In addition to retirement benefits, pension benefits
also include disability and surviving dependents' benefits. The
level of ongoing pension payments is adjusted in accordance with
§ 16 of the Company Pensions Act (Betriebsrentengesetz).
Germany
The most significant of the BMW Group's pension plans are de-
scribed below.
1,545
- 57
- 1
4
- 45
-53
- 97
339
1 January 2023
EXPENSE/INCOME
Current service cost
Interest expense (+)/income (-)
366
196
894
- 698
benefit liability
Net defined
Effect of limitation of the
net defined benefit asset
to the asset ceiling
Total
Plan assets
18,383
benefit obligation
17,685
Defined
= Q
↑
427
thereof assets
31 December 2023
Translation differences and other changes
Pensions and other benefits paid
Employee contributions
Transfers to fund
Changes in the limitation of the net defined benefit asset to the asset ceiling
Gains (-) or losses (+) arising from experience adjustments
Gains (-) or losses (+) arising from changes in demographic assumptions
Gains (-) or losses (+) arising from changes in financial assumptions
Gains (-) or losses (+) on plan assets, excluding amounts included in interest income
REMEASUREMENTS
Gains (-) or losses (+) arising from settlements
Past service cost
thereof pension provisions
366
144
77
12,721
31.12.2022
31.12.2023
31.12.2022
31.12.2023
31.12.2022
31.12.2023
31.12.2022
31.12.2023
Total
Other
United Kindgom
Germany
thereof assets
thereof pension provisions
Carrying amounts
Effect of limiting net defined benefit asset to asset ceiling
Fair value of plan assets
Present value of defined benefit obligations
in € million
Based on the measurement principles contained in IAS 19, the
following balance sheet carrying amounts apply to the Group's
pension plans:
Notes to the Group Financial Statements
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
11,529
5,306
5,287
891
77
118
193
196
370
143
153
32
24
21
193
894
799
157
15
879
797
18,383
19,347
741
740
6,134
6,079
11,508
12,528
17,685
18,918
869
2
-44
119
38
Total with quoted market price
9,630
8,401
4,288
4,392
149
131
14,067
12,924
Debt instruments
341
340
682
55
1
4
1,024
thereof investment grade
336
332
336
399
332
thereof mixed funds
(funds without a rating)
5
8
682
1,457
55
5,061
3,292
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
200
Similarly, potential future cash outflows amounting to
€ 1,639 million (2022: € 1,608 million) (undiscounted) have not
been taken into account in the measurement of lease liabilities
as it is not reasonably certain that the leases will be renewed (or
not terminated). These cash outflows relate to periods of up to
90 years (2022: up to 61 years).
Planned future cash outflows from variable lease payments,
which are not taken into account in the measurement of lease
liabilities, are expected to amount to € 42 million
(2022: € 43 million).
94,196
10,990
42,479
40,727
95,010
10,267
42,613
42,130
Financial liabilities
1,063
230
138
695
1,046
206
108
732
1,712
1,712
3,292
Other Information
687
thereof non-investment grade
Total without quoted market price
2,898
3,107
1,791
1,742
591
610
5,280
5,459
Total plan assets
12,528
11,508
6,079
6,134
740
741
19,347
18,383
197
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
2,388
63
2,612
590
4
1
4
Real estate
431
455
622
700
1,053
Cash and cash equivalents
73
32
73
Absolute return funds
466
843
52
640
Notes to the Group Financial Statements
2
518
1,485
Other
1,587
1,437
435
347
604
← = Q
Notes to the Group Financial Statements
Liabilities related to financing activities can be reconciled as
follows:
7,255
- 186
- 25
- 1,613
9,079
Liabilities to banks
16,511
68
-11
410
- 658
16,702
Liabilities from customer deposits (banking)
18,746
-3
- 142
-471
19,362
41,084
3
31.12.2022
Other changes
Basis adjustments from
hedge accounting
- 3,321
1,011
- 8,107
Changes due to
exchange rate factors
of companies
Lease liabilities
Cash inflows/outflows
2,420
129
88,734
-1,272
- 3,532
1,349
129
- 11,287
103,347
Liabilities relating to financing activities
662
-14
- 30
- 18
724
Other (excluding interest payable)
-2,082
44
- 150
2,188
Financial liabilities towards companies in which an investment is held
1,712
77
261
1,374
Commercial paper
2,764
742
4
- 531
1.1.2022
51,498
Asset-backed financing transactions
Bonds
18,016
15
10
-247
1,727
16,511
20,085
7
-464
1,796
18,746
39,808
-23
31.12.2023
Other changes
Basis adjustments from
hedge accounting
1,135
-563
- 1,825
41,084
Changes due to
exchange rate factors
Changes due to the
acquisition or disposal
of companies
Cash inflows/outflows
1.1.2023
Liabilities from customer deposits (banking)
Asset-backed financing transactions
Bonds
in € million
Liabilities to banks
7,255
- 1,201
-279
in € million
Changes due to the
acquisition or disposal
90,057
354
1,194
- 1,709
493
-38
1,484
88,734
Liabilities relating to financing activities
-131
662
The defined benefit obligation relates to current employees, pen-
sioners and former employees with vested benefits as follows:
Other (excluding interest payable)
3,292
-54
1,634
1,712
Commercial paper
2,539
355
-64
-516
2,764
Lease liabilities
5,824
49
Financial liabilities towards companies in which an investment is held
1,399
Germany
Other
Maturity between one
and five years
Bonds
in € million
31.12.2022
31.12.2023
Financial liabilities of the BMW Group comprise the following:
36 Financial liabilities
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
199
liabilities totalling € 1,401 million
(2022: € 1,224 million) include € 50 million (2022: € 58 mil-
lion) which are expected to be settled after more than 12 months.
Liabilities may be settled earlier than this depending on the tim-
ing of the underlying proceedings.
35 Income tax liabilities
Current income tax
The provisions for other obligations cover numerous specific
risks and uncertain obligations, in particular for litigation and lia-
bility risks as well as risks relating to the order backlog.
Provisions for obligations for personnel and social expenses
comprise mainly obligations relating to performance-related re-
muneration components, workforce measures as well as pre-
retirement part-time working arrangements and long-service
awards.
Depending on when claims occur, it is possible that the BMW
Group may be called upon to fulfil the warranty or guarantee ob-
ligations over the whole period of the warranty or guarantee.
Warranty provisions include amounts recognised in connection
with the exhaust gas recirculation cooler. Expected reimburse-
ment claims at 31 December 2023 amounted to € 819 million
(2022: € 872 million) and are disclosed within other assets (see
7 note [28]).
* Presentation adjusted compared to previous year.
Other provisions
Other obligations*
7,316
15,761
- 1,783
- 5,356
Maturity later
- 585
than five years
Maturity within
one year
3,274
13,223
18,016
8
3,883
14,125
Liabilities from customer deposits (banking)
18,746
10,851
7,895
20,085
12,388
7,697
Asset-backed financing transactions
41,084
7,758
22,306
11,020
39,808
7,754
21,471
10,583
Total
than five years
and five years
Maturity later
Maturity between one
Total
8,355
184
992
872
6,600
within one year
31.12.2022
Reversed
Utilised
discounting
Additions
differences
thereof due
Reversal of
Translation
business
combinations
1.1.2022
arising on
Additions
9,240
17,037
- 1,005
- 6,428
476
8,568
-335
1,383
2,746
-533
- 932
141
3,820
-372
- 2,181
13,954
1,388
2,818
- 841
- 576
- 57
1,227
30
2,916
1,304
1,443
- 210
- 677
14
1,202
1
1,121
2,287
3,249
- 103
- 1,922
- 156
2,106
7
3,317
2,337
8,251
- 629
6
United Kingdom
16,511
3,868
100.0
100.0
The sensitivity analysis provided below shows the extent to
which changes in individual factors - independently of each other
- could influence the defined benefit obligation at the end of the
reporting period.
It is only possible to aggregate sensitivities to a limited extent.
Since the change in obligation follows a non-linear pattern,
estimates made on the basis of the specified sensitivities are only
possible with this restriction. The calculation of sensitivities using
ranges other than those specified could result in a dispropor-
tional change in the defined benefit obligation.
In the UK, the sensitivity analysis for the pension level trend also
takes account of restrictions due to caps and floors.
Change in defined benefit obligation
31.12.2023
31.12.2022
in € million
in %
in € million
in %
Discount rate
increase of 0.75%
- 1,418
-7.5
- 1,379
- 7.8
decrease of 0.75%
1,671
8.8
1,632
9.2
Pension level trend
increase of 0.25%
325
100.0
1.7
100.0
100.0
in %
Current employees
Pensioners
Former employees with vested benefits
Defined benefit obligation
31.12.2023
31.12.2022
31.12.2023
31.12.2022
31.12.2023
31.12.2022
58.2
57.7
57.1
56.7
35.2
35.6
59.2
59.5
35.6
35.8
6.6
6.7
40.8
40.5
7.3
7.5
100.0
Liabilities to banks
322
decrease of 0.25%
Other Information
← = Q
2,142
1,462
4,400
927
2,124
1,349
Other
Commercial paper
Derivative instruments
2,764
862
1,369
533
2,539
688
1,367
484
Lease liabilities
7,255
669
2,399
4,187
5,824
684
1,272
Remuneration Report
1.8
Responsibility Statement and Auditor's Report
Other provisions changed during the year as follows:
-319
- 1.7
- 307
- 1.7
Average life expectancy
increase of 1 year
515
2.7
492
2.8
decrease of 1 year
-533
- 2.8
Group Financial Statements
- 509
Career trend
increase of 0.10%
40
0.2
37
0.2
decrease of 0.10%
-40
-0.2
- 37
-0.2
198 BMW Group Report 2023 To Our Stakeholders Combined Management Report
34 Other provisions
- 2.9
Maturity within
one year
← = Q
Other Information
unquoted equity
instruments
fixed
2.9
6.6
HKD 1,224 million
fixed
3.2
2.8
USD 1,000 million
CNY 9,500 million
1.5
7.4
EUR 19,000 million
fixed
3.8
1.7
EUR 1.000 million
fixed
7.5
2.6
fixed
BMW International Investment B.V.
1.0
12.0
EUR 500 million
fixed
3.4
7.1
USD 14,795 million
fixed
5.4
2.9
USD 2,550 million
variable
BMW US Capital, LLC
3.2
10.0
AUD 273 million
variable
variable
(in %)
maturity period
(in years)
Other investments
Cash equivalents
Loans to third parties
Derivative instruments (assets)
Interest rate risks*
Currency risks
Combined interest rate/currency risks*
Marketable securities and investment funds
Raw material market price risks
Derivative instruments (liabilities)
Interest rate risks*
Currency risks
Combined interest rate/currency risks
Raw material market price risks
*Presentation adjusted compared to previous year.
31.12.2023
Other risks
in € million
Disclosures relating to financial instruments measured at fair value
The carrying amounts of financial instruments measured at fair
value are allocated to the measurement levels pursuant to
IFRS 13 as follows:
Notes to the Group Financial Statements
(ISO Code)
Interest
BMW Finance N.V.
Issuer
in relevant currency
Weighted average
Weighted average
Issue volume
Bonds comprise the following:
Notes to the Group Financial Statements
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
201
nominal interest rate
31.12.2022
GBP 100 million
5.6
Payables to subsidiaries
Payables to other companies in which an investment is held
Refund liabilities for future leased products
Bonuses and sales aides
in € million
Other liabilities comprise the following items:
37 Other liabilities
Deposits received
Notes to the Group Financial Statements
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2023
← = Q
Other liabilities (financial instruments)
Contract liabilities
Deferred income
1,047
1,079
255
241
51
38
5,777
2,963
4,809
5,447
31.12.2022
31.12.2023
Other liabilities
Other liabilities (non-financial instruments)
Sundry
Other advance payments received for orders
Social security
Other taxes
202
1.1
= Q
4.0
3.0
CNY 3,000 million
fixed
BMW China Capital B.V.
0.5
6.8
CHF 600 million
3.7
fixed
10.0
NOK 1,000 million
fixed
2.7
3.7
GBP 950 million
fixed
3.3
BMW Canada Inc.
fixed
CAD 700 million
19
5.4
14
(in %)
nominal interest rate
Weighted average
Weighted average
maturity period
(in days)
EUR 1,303 million
USD 2,210 million
in relevant currency
(ISO Code)
Issue volume
BMW Finance N.V.
BMW US Capital, LLC
Issuer
Commercial paper comprises the following:
3.5
3.4
↑
Level hierarchy in accordance with IFRS 13
Level hierarchy in accordance with IFRS 13
Level 1
the income statement
Gains (+)/losses (-) recognised in
7
7
accumulated other equity
Gains (+)/losses (-) recognised in
-23
14
- 5
814
Level 3
instruments
Financial
- 12
- 6
Disposals
75
2
2
14
Additions
Disposals
instruments
Convertible bonds
Gains and losses recognised in the income statement are re-
ported within the line item "Other financial result" and included a
net negative amount of € 39 million (2022: net positive amount
of € 14 million) relating to unrealised items.
849
2
8
839
31 December 2022
-71
-71
Level transfer
33
1
32
Currency translation differences
75
1 January 2023
67
724
-2
-94
the income statement
Gains (+)/losses (-) recognised in
accumulated other equity
Gains (+)/losses (-) recognised in
-59
57
1
-54
99
99
849
2
8
839
4
- 39
Currency translation differences
-25
Derivative
instruments
instruments
Convertible bonds
instruments
Additions
1 January 2022
in € million
Unquoted equity
Options on
824
58
1
765
31 December 2023
Level transfer
-26
1
23
in € million
Options on
unquoted equity
Unquoted equity
1,278
768
472
437
324
1,495
58
1,684
2
318
373
1,390
2,987
1,174
381
519
2,319
794
In the previous year, derivative instruments used to hedge raw
material price risks amounting to € 71 million were reclassified
from Level 3 to Level 2 as sufficient observable market data was
available for the first time for the instruments concerned.
As a general rule, any transfers between fair-value hierarchy lev-
els are made at the end of the relevant reporting period.
Level 2
Level 3
Level 1
Level 2
Level 3
1,864
306
3,048
390
146
765
164
839
1,272
10
1
8
209
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
specific contribution margins. Key liquidity-specific performance
indicators are cash on hand, cash burn rates and prospects for
future financing rounds.
Since the pricing from the financing rounds is considered to be
the decisive input factor for the valuation, increases and de-
creases in valuation give rise to a similar change in the equity
instrument that is recognised in the income statement.
In addition, equity instruments that are held outside the private
equity fund are measured using the income approach. This in-
volves discounting cash flows on the basis of current business
cases using the weighted average cost of capital to determine
the fair value of the financial instrument. Changes in fair values
determined in connection with adjustments to significant input
factors are not material for the BMW Group.
The convertible bonds that have been classified to Level 3 are
primarily used as instruments in advance of future financing
rounds relating to private equity investments. Valuations are
therefore performed in accordance with the IPEV guidelines.
Mandatory conversions are usually structured in such a way that
the number of shares to be received depends on the future share
price. Due to the generally short maturities, the instruments are
subject to only insignificant fluctuations in value. Irrespective of
this fact, impairment tests are performed at regular intervals.
The fair value of the options that the BMW Group holds in shares
of such investee companies is measured primarily on the basis
of a binomial model, taking into account the respective conditions
under which the options were granted. The comments provided
on the income-based approach used to measure equity instru-
ments held outside the private equity fund apply analogously for
the purposes of determining the relevant entity value that is
taken into account when measuring the fair value of the options.
The exercise price for share options arising in conjunction with
the private equity fund is generally low, verging towards zero.
Consequently, financing rounds have a direct impact on the fair
value of the options. In this respect, the valuation of options and
assessment of their impact on sensitivity is similar to the
approach taken to unquoted equity instruments, as described
above.
210
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
The balance sheet carrying amount of Level 3 financial instru-
ments developed as follows:
As part of the process of analysing valuations, the external fund
manager reviews the investment-specific milestones, including
an analysis of financial, technical and liquidity-specific perfor-
mance indicators, among others. Based on this analysis, it is
considered whether the price of the most recent financing round
is accept-able as a reasonable market valuation, in particular for
early-stage or growth-phase investments. Key performance in-
dicators used for the purpose of milestone analysis are depend-
ent on the business model underlying the investment. Typical
technical key performance indicators relate to licenses and pa-
tents held, the stage of technology development such as evi-
dence of feasibility and prototypes, market entries, customer and
user growth and appointments to key management positions.
Key financial performance indicators used are revenues, EBITDA
and the corresponding growth rate and/or development of
9,768
Financial instruments allocated to Level 3 relate mainly to invest-
ments in a private-equity fund. The valuation of unlisted equity
instruments is determined primarily using the market-based ap-
proach. In particular, the financing rounds that take place within
the private equity sector - usually on a regular basis at intervals
of approximately 12 to 24 months – represent a significant input
factor for these purposes. In addition, the investment advisor
provides the external fund manager with relevant, investment-
specific information on an ongoing basis (at least quarterly). The
latter subsequently assesses the underlying individual com-
panies in accordance with the guidelines for International Private
Equity and Venture Capital Valuations (IPEV).
8
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Notes to the Group Financial Statements
← = 9
Financial instruments measured at fair value using input factors
not based on observable market prices are allocated to Level 3.
The fair values of these financial instruments are shown in the
following table:
in € million
Unquoted equity instruments
Convertible bonds
Options on unquoted equity instruments
Fair value
31.12.2023
765
1
58
Fair value
31.12.2022
839
2
Financial
instruments
Level 3
11,939
7,651
1,046
Trade payables
Other
Lease liabilities
Other derivative instruments
Fair Value Hedges
Cash Flow Hedges
Derivative instruments
20,085
Asset-backed financing transactions
3,292
Commercial paper
18,016
Liabilities from customer deposits (banking)
5,824
15,547
Liabilities to banks
Other liabilities
241
1,712
16,511
7,255
41,084
2,539
729
2,073
1,598
112,068
8,171
38
Total
Remaining other liabilities
investment is held
Payables to other companies in which an
Payables to subsidiaries
39,808
Bonds
income
2,908
88,086
31,345
3,184
2,127
88,036
Total
1,489
7,998
1,218
Remaining other assets
454
455
Collateral assets
50
3,464
7,603
32,467
206
BMW Group Report 2023
At amortised cost
At fair value through
other comprehensive
Not allocated to an
IFRS 9 category
At fair value through
profit or loss
income
At amortised cost
At fair value through
other comprehensive
18,746
31.12.2023
LIABILITIES
in € million
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Notes to the Group Financial Statements
To Our Stakeholders Combined Management Report
Financial liabilities
1,063
14,120
255
51
41,084
42,173
39,808
40,919
21,900
22,600
22,263
23,539
63,808
65,237
65,092
67,307
Carrying
amount
Fair value
Carrying
amount
19,951
20,085
18,542
18,746
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
208
= Q
Fair value
↑
7,302
5,824
5,906
16,511
15,939
18,016
17,591
7,255
48
31.12.2022
Liabilities to banks
207
27,086
390
19,651
2,764
390
3,032
1,639
Not allocated to an
IFRS 9 category
At fair value through
profit or loss
31.12.2022
108,073
7,276
17,298
23,508
729
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Liabilities from customer deposits (banking)
Asset-backed financing transactions
Bonds
Receivables from sales financing - finance and operating leases
Financial liabilities
Receivables from sales financing - credit financing
in € million
For all other financial instruments not listed here that are meas-
ured at amortised cost, the carrying amount corresponds to the
fair value. For this reason, they are not presented separately.
31.12.2023
In the case of financial liabilities, own credit risk is taken into ac-
count based on credit default swaps available on the market, so
that the fair values of these items are allocated to Level 2.
The fair values are generally determined using the discounted
cash flow method, taking into account the relevant risk of default.
For the purposes of fair value measurement using the discounted
cash flow method, expected future cash flows are discounted on
the basis of up-to-date interest rate curves observable on the
market.
The following table shows the fair values and carrying amounts
of financial assets and liabilities that are measured at amortised
cost and whose carrying amounts differ from their fair value.
cost
Disclosures relating to financial instruments measured at amortised
Notes to the Group Financial Statements
Other Information
Remuneration Report
The fair values of receivables from sales financing are measured
using the discounted cash flow method, taking into account cus-
tomer-specific credit risk. In view of the fact that these allow-
ances are calculated in part on the basis of internal information,
receivables from sales financing are allocated to Level 3 in the
level hierarchy in accordance with IFRS 13.
investment is held
6,770
1,036
Beginning in 2014, regulatory authorities have ordered the BMW
Group to recall various vehicle models in conjunction with airbags
supplied by the Takata group of companies. Provision for the
costs involved has been recognised within warranty provisions.
In addition to the risks already covered by warranty provisions, it
cannot be ruled out that further vehicles of the BMW Group will
be affected by future recall actions. Further disclosures pursuant
to IAS 37.86 cannot be provided at present.
In relation to these allegations, numerous class action lawsuits
have been brought in the USA and Canada in the second half of
2017, as well as several individual customers' lawsuits in South
Korea in June 2018. In the USA, the customer class actions were
withdrawn in August 2021 and the dealer class action was dis-
missed in the final instance in June 2022. In Canada, the class
action lawsuits have been discontinued without any payments
made by BMW. The individual customers' lawsuits in South Ko-
rea remain at an early stage. Further civil lawsuits based on the
allegations are possible going forward. Further disclosures pur-
suant to IAS 37.86 cannot be provided at present.
In April 2023, the South Korean antitrust authority imposed a
fine of approximately 13 billion South Korean won (approxi-
mately € 9 million). BMW AG will no longer take action against
the authority's decision.
In addition, respective antitrust proceedings were opened
against BMW AG by the Chinese State Administration for Market
Regulation in March 2019 and the Korea Fair Trade Commission
in May 2020. Possible risks for the BMW Group in connection
with the antitrust proceedings in China cannot be currently fore-
seen, neither in terms of their outcome nor the amounts involved.
The EU Commission's antitrust proceedings were settled on 8
July 2021 (see note [10] to the BMW Group Financial State-
ments for the financial year 2021 included in the BMW Group
Report 2021).
The BMW Group determines its best estimate of contingent lia-
bilities on the basis of the information available at the date of
preparation of the Group Financial Statements. This assessment
may change over time and is adjusted regularly on the basis of
new information and circumstances. A part of the risks is covered
by insurance.
Other contingent liabilities mainly comprise risks relating to taxes
and customs duties.
1,112
1,358
1,969
1,801
89
22
94
80
63
In May 2023, the National Highway Traffic Safety Administration
(NHTSA), an agency of the US federal government, requested a
recall of airbags in the USA that are equipped with airbag inflat-
ors produced by ARC Automotive. Further implications for the
BMW Group in other regions outside of North America as well as
implications from class action lawsuits, which have been brought
in this context against the BMW Group in the USA, cannot be
estimated at present. Further disclosures pursuant to IAS 37.86
cannot be provided at present.
In March 2022, the European Commission (EC) conducted in-
spections at the premises of automobile manufacturers and as-
sociations located in several member states. In parallel, the EC
sent out formal requests for information to several automobile
manufacturers, including BMW AG. The inspections and re-
quests for information concern possible collusion in relation to
the collection, treatment and recovery of end-of-life vehicles and
light commercial vehicles. The inspections were conducted in co-
ordination with the UK Competition and Markets Authority, which
has initiated formal proceedings in respect of the UK market. The
competition authorities allege that car manufacturers (i) coordi-
nated the remuneration to be paid to dismantlers for the provi-
sion of their services and (ii) agreed that issues related to end-
of-life vehicles should be dealt with in a non-competitive way.
Appropriate risk provisions were recognised in the second quar-
ter 2022 in connection with these investigations. At the current
stage of the investigations, further risks for the BMW Group in
connection with the proceedings of the two authorities cannot be
quantified at present. In December 2023, the South Korean anti-
trust authority conducted an inspection at the premises of sev-
eral car manufacturers, including BMW Korea. The investigation
by the South Korean antitrust authority has the same back-
ground as the investigations of the European Commission and
the UK Competition and Markets Authority. Due to the early stage
of this investigation, it is also not possible to provide further in-
formation in this regard. Further disclosures pursuant to IAS
37.86 cannot be provided at present.
204
Purchase commitments for property, plant
and equipment
31.12.2022
31.12.2023
in € million
In addition to liabilities, provisions and contingent liabilities, the
following commitments exist for the BMW Group at the end of the
reporting period:
Other financial commitments
Furthermore, several BMW Group entities have been facing a
number of diesel emissions-related court claims in England and
Wales since November 2021 as well as in Scotland since March
2023. In November 2023, the High Court approved a group liti-
gation regarding the proceeding in England and Wales. In De-
cember 2023, the court ordered that at least three out of the 16
pending court proceedings against OEMS will proceed to trial
from October 2024 onwards. The proceedings against two other
OEMs have already been selected, and the selection of other
OEM proceedings is expected to follow in March 2024. In Scot-
land, the court also approved the combination of relevant claims
in group proceedings. It is estimated that any sued BMW Group
entities will have to file their statement of defence in April 2024.
Given that proceedings are still at an early stage, the probability,
amount or timing of any liability cannot be determined at present.
Further disclosures pursuant to IAS 37.86 cannot be provided at
present.
66
Receivables from companies in which an
Following a request for legal assistance from the Korean author-
ities in 2020 in connection with leaks in exhaust gas recirculation
modules in BMW Group vehicles, the Munich public prosecutor's
office initiated an investigation and searched BMW Group offices
in Munich and Steyr in June 2022. Potential risks for the BMW
Group cannot be quantified at the present time. Further disclo-
sures pursuant to IAS 37.86 cannot be provided at present.
← = 9
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
BMW Group Report 2023 To Our Stakeholders Combined Management Report
In several recent judgements, the European Court of Justice has
ruled on emission control systems in diesel vehicles and has sig-
nificantly tightened requirements pertaining to the justification of
these systems. As a result of these new judgements by the Eu-
ropean Court of Justice, the interpretation of regulatory require-
ments for emission control systems is evolving. This is reflected,
amongst other things, by the fact that established administrative
practices of type approval authorities are being questioned from
numerous sides. This development leads to a reassessment of
civil proceedings pending in Germany due to the emissions per-
formance of BMW and MINI diesel vehicles. According to previ-
ously established case law of German national courts, damage
claims could only be asserted on the basis of intentional damage
inflicted in a manner offending common decency. In its most re-
cent judgements linked to proceedings against other manufac-
turers and taking into account the case law of the European Court
of Justice, the German Federal Court of Justice has ruled that a
manufacturer can also be held liable for negligent breach of EU
homologation standards and on the basis of a far-reaching re-
versal of the burden of proof to the detriment of the manufac-
turer. An increase in the effort and complexity of the defence in
individual cases, an increasing number of new court proceedings,
increased legal risks and increased financial expenditure are to
be expected. Further disclosures pursuant to IAS 37.86 cannot
be provided at present.
7,712
31.12.2022
Contingent liabilities
Contract liabilities relate to obligations for service and repair work
as well as telematics services and roadside assistance agreed to
be part of the sale of a vehicle (in some cases multi-component
arrangements). An amount of € 4,239 million (2022:
€ 3,146 million) was released from contract liabilities in the fi-
nancial year and recognised as revenues from contracts with
customers.
27,233
25,748
2,241
2,643
13,053
13,337
237
237
120
130
1,412
1,613
3,633
3,359
Deferred income includes down payments received on leases
with customers as well as deferred grants.
Grants comprise mainly public sector funds to promote regional
structures and which have been invested in the production plants
in Brazil, China, Germany, Mexico, Austria and South Africa
amongst others. The grants are partly subject to holding periods
for the assets concerned of up to five years and/or minimum em-
ployment figures or minimum production figures. Grants and
subsidies awarded before 31 December 2022 are released to
income over the useful life of the assets to which they relate.
38 Trade payables
Trade payables mainly have a remaining term of up to one year.
Other
Guarantees
Litigation
Investment subsidies
in € million
The following contingent liabilities existed at the balance sheet
date:
39 Contingent liabilities and other financial commitments
Contingent liabilities
31.12.2023
OTHER DISCLOSURES
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
203
← = Q
5,758
In addition, the KBA determined in February 2024 that two func-
tionalities of the emission control system of the BMW vehicle
model X3 with 2.0 litre diesel engine (EU5), built between Sep-
tember 2010 and March 2014 do not comply with legal require-
ments. The KBA views these functionalities as prohibited defeat
devices. The BMW Group has filed a timely objection against this
decision. Corrective measures are currently being coordinated
with the responsible type approval authorities. Furthermore, the
BMW Group is investigating whether and to what extent function-
alities of the emission control systems of this and other past die-
sel vehicle models comply with legal requirements and is in dia-
logue with the responsible authorities in this regard. Also, against
the background of the development in case law referred to
above, it is possible that further authorities and/or courts find
fault with functionalities of the emission control systems or deem
them as non-compliant with legal requirements. Given that the
investigations will take some time, it is not currently possible to
make any disclosures pursuant to IAS 37.86 with regard to pos-
sible measures to be taken, possible effects on administrative
and civil court proceedings and any financial risks that may be
related thereto.
2,252
957
427
2,046
444
1,525
21,900
348
Purchase commitments for intangible assets
IFRS 9 category
Not allocated to an
31.12.2022
63,808
22,263
286
911
1,913
2,127
43
2,908
642
Receivables from subsidiaries
4,127
10
16,860
1,272
16,055
4,162
65,092
143
57
347
8
26
1
17
530
236
At fair value through
profit or loss
1,003
At amortised cost
ASSETS
in € million
The carrying amounts of financial instruments are assigned to
IFRS 9 categories in the following table:
40 Financial instruments
Notes to the Group Financial Statements
← = Q
income
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2023
205
1,912
Other investments
Receivables from sales financing
Other Information
Derivative instruments
Financial assets
At fair value through
other comprehensive
Not allocated to an
IFRS 9 category
At fair value through
profit or loss
income
At amortised cost
At fair value through
other comprehensive
31.12.2023
Derivative
instruments
Trade receivables
Other assets
Fair Value Hedges
Other derivative instruments
Cash Flow Hedges
Loans to third parties
Other
Cash and cash equivalents
Marketable securities and investment funds
71,418
8,311
975
446
72,839
370
Gross carrying amount of
financial assets with medium
credit ratings
3,971
797
22
12,314
8,792
3,726
37
40
841
32
12,555
530
388
2,145
Further disclosures relating to credit risk - in particular with re-
gard to the amounts of impairment losses recognised - are pro-
vided in the explanatory notes to the relevant categories of re-
ceivables in notes [25] and [30].
214
216
To Our Stakeholders Combined Management Report
Group Financial Statements
87,853
Responsibility Statement and Auditor's Report
Other Information
← = Q
Notes to the Group Financial Statements
Liquidity risk
The following table shows the maturity structure of expected
contractual cash flows (undiscounted) for financial liabilities:
in € million
Remuneration Report
NON-DERIVATIVE FINANCIAL LIABILITIES
968
5,853
1,004
318
1,152
21
968
2,459
504
934
7,472
560
1,068
89,544
2,189
80,528
80,444
2,938
Bonds
Liabilities to banks
Maturity later
than five years
Total
Maturity within
one year
Maturity between
one and five years
Maturity later
than five years
Total
one and five years
11,308
9,150
43,908
11,951
24,710
9,496
46,157
23,450
Asset-backed financing transactions
one year
Maturity within
Liabilities from customer deposits (banking)
Trade payables
Lease liabilities
Commercial paper
Other financial liabilities
DERIVATIVE FINANCIAL LIABILITIES
Maturity between
With gross settlement
Cash inflows
With net settlement
Cash inflows / outflows
Total financial liabilities
31.12.2023
31.12.2022
Cash outflows
1,068
19
1,600
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
← = Q
217
1,045
31.12.2022
31.12.2023
Cash flow at risk
in € million
The following table shows the potential negative impact for the
BMW Group resulting from fluctuations in prices across all cate-
gories of raw materials, measured on the basis of the cash-flow-
at-risk approach. The risk at each reporting date for the following
financial year was as follows:
1,115
The potential negative impact on earnings is calculated at the re-
porting date for each raw materials category for the following fi-
nancial year on the basis of current market prices and exposure
with a confidence level of 95%. The risk mitigating effect of cor-
relations between the various categories of raw materials is
taken into account when the risks are aggregated.
Notes to the Group Financial Statements
The following disclosures on hedging measures include deriva-
tives of fully consolidated companies that are designated as a
hedging instrument. The amounts shown are stated before de-
ferred taxes and take account of additional effects arising from
the application of the modified closing rate method.
1,405.05
0.87
0.87
7.54
7.40
31.12.2022
Disclosures on hedging measures
31.12.2023
EUR/KRW
EUR/GBP
EUR/CNY
Currency risks
The following table shows the average hedging rates of the fi-
nancial instruments used by the BMW Group to hedge significant
currency risk exposures:
The nominal amounts of hedging instruments were as follows:
31.12.2023
correlations serve as input factors to assess the relevant proba-
bility distributions.
This exposure is compared to all hedges that are in place. The
net cash flow surplus represents an uncovered risk position. The
cash-flow-at-risk approach involves showing the impact of po-
tential raw materials market price fluctuations on operating cash
flows on the basis of probability distributions. Volatilities and
10,153
In the case of CAD CDOR and PLN WIBOR, uncertainty remains
as to the exact timing and nature of the changes. Non-derivative
financial instruments that have not been converted to an alterna-
tive interest rate at 31 December 2023 all relate to the CAD
CDOR, with a nominal liability amount of € 171 million
(2022: € 242 million). Derivative financial instruments that have
not been converted to an alternative interest rate at 31 Decem-
ber 2023 all relate to the PLN WIBOR, with a nominal amount of
€ 584 million (2022: € 100 million).
The transition to the newly created or revised benchmark interest
rates is being managed, monitored and assessed with regard to
risk management implications as part of a multidisciplinary pro-
ject. The tasks of the conversion project includes the continual
monitoring of regulatory developments, the initiation of neces-
sary changes to systems, processes, risk and measurement
models as well as the clarification of the associated accounting
and financial reporting implications. In the financial year 2023,
all contracts based on USD LIBOR were converted to alternative
benchmark interest rates (€ 412 million).
← = Q
Notes to the Group Financial Statements
Other Information
Remuneration Report
The BMW Group applies a value-at-risk approach throughout the
Group for internal reporting purposes and to manage interest
rate risk.
Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
Gross carrying amount of
financial assets with poor
credit ratings
Total
251
Group Financial Statements
This approach is based on a historical simulation in which the
potential future fair value losses of the interest rate portfolios are
compared across the Group with expected amounts on the basis
of a holding period of 250 days and a confidence level of
99.98%. The risk mitigating effect of correlations between the
various portfolios is taken into account when the risks are aggre-
gated.
In the following table the potential volumes of fair value fluctu-
ations - measured on the basis of the value-at-risk approach –
are compared with the expected value for the interest-rate-sen-
sitive exposures of the BMW Group:
in € million
9,033
31.12.2022
31.12.2023
Raw material price exposures
in € million
The starting point for analysing raw materials price risk is to iden-
tify planned purchases of raw materials or components contain-
ing raw materials, the so-called "exposure". At each reporting
date, the exposure for the following financial year amounted to:
The economic relationship between the hedged item and the
hedging instrument is based essentially on the fact that they
have the same basis and term. The BMW Group designates only
the commodity price index-linked raw materials surcharge, which
is specified in the purchase contracts of vehicle components, as
a hedged item. The proportion of the hedged risk component as
a percentage of the total fair value depends on the specific types
of vehicle component involved. Other price components con-
tained in the contract are not designated as being part of the
hedge relationship as no effective hedging instruments exist for
these components.
Causes of hedge ineffectiveness are seen potentially only for
counterparty credit risk. However, in view of the processes that
have been established for credit risk management, ineffective-
ness is not expected to arise.
The BMW Group is exposed to market price risks on raw mater-
ials. In order to hedge these risks, the Group mainly uses forward
commodity contracts. As part of the implementation of the risk
management strategy, the extent to which risk exposures should
be hedged is decided at regular intervals and the corresponding
hedging ratio defined. Items are hedged on the basis of a con-
stant ratio of one to one between hedging instrument and risk
exposure.
Raw materials price risk
2,097
31.12.2022
1,967
31.12.2023
Value at risk
8,161
12,996
21,157
8,057
The cash flows from non-derivative financial liabilities comprise
principal repayments and the related interest. The amounts dis-
closed for derivative financial liabilities comprise only cash flows
relating to derivatives that have a negative fair value at the bal-
ance sheet date. It should be noted that, due to the various yield
curves used, a net positive cash flow may arise from inflows/out-
flows relating to derivative instruments with negative fair values.
At 31 December 2023, credit commitments available at short
notice to dealerships which had not been called upon at the end
of the reporting period amounted to € 13,218 million (2022:
€ 16,044 million).
Solvency is assured at all times by managing and monitoring the
liquidity situation on the basis of a rolling cash flow forecast.
The resulting funding requirements are covered by a variety of
instruments placed on the world's financial markets, with the aim
to minimise risk by matching maturities with financing require-
ments and in alignment with a dynamic target debt structure.
As a further reduction of risk, a syndicated credit line totalling
€ 8 billion (2022: € 8 billion) from a consortium of international
banks is available to the BMW Group. Intra-group cash flow fluc-
tuations are balanced out by the use of daily cash pooling ar-
rangements. Further information is provided in the Combined
Management Report.
114,343
215
To Our Stakeholders Combined Management Report
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
BMW Group Report 2023
Market risks
11,546
56,732
378
3,572
- 1,614
- 2,398
- 249
- 4,261
46,065
1,201
378
3,572
54,680
40,590
10,819
106,089
1,993
The principal market risks to which the BMW Group is exposed
are currency risk, interest rate risk and raw materials market price
risk.
Protection against such risks is provided in the first instance
though natural hedging which arises when the values of non-de-
rivative financial instruments have matching maturities and
amounts (netting). Derivative financial instruments are used to
reduce the risk remaining after netting.
Currency, interest rate and raw materials market price risks of the
BMW Group are managed at a corporate level.
The following table shows the potential negative impact for the
BMW Group for the following year resulting from unfavourable
changes in exchange rates, measured on the basis of the cash-
flow-at-risk approach.
in € million
Cash flow at risk
31.12.2023
31.12.2022
In light of the reform and replacement of certain benchmark in-
terest rates, some of the BMW Group's hedging relationships
have been redesignated to take account of alternative bench-
mark interest rates.
The potential negative impact on earnings is calculated at the re-
porting date for each currency for the following financial year on
the basis of current market prices and exposures with a confi-
dence level of 95%. The risk mitigating effect of correlations be-
tween the various currencies is taken into account when the risks
are aggregated.
For selected fixed-interest assets, part of the interest rate risk is
hedged on a portfolio basis. In this case, swaps are used as the
hedging instrument. Hedge relationships are terminated and re-
designated on a monthly basis at the end of each reporting pe-
riod, thereby taking account of the constantly changing content
of each portfolio.
sure.
Interest rate risk is managed through the use of interest rate de-
rivatives. As part of the implementation of the risk management
strategy, interest rate risks are monitored and managed at regu-
lar intervals. The interest rate contracts used for hedging pur-
poses comprise mainly swaps, which, if hedge accounting is ap-
plied, are accounted for as fair value hedges. The economic re-
lationship between the hedged item and the hedging instrument
is based on the fact that the main parameters of the hedged item
and the related hedging instrument (e.g. start date, term and cur-
rency) are the same. Items are hedged on the basis of a constant
ratio of one to one between hedging instrument and risk expo-
73,954
31.12.2022
31.12.2023
73,510
Fair values of interest rate portfolios
In view of the fact that own credit risk is excluded from the hedg-
ing relationship, ineffectiveness is expected to be low.
The currency exposure is compared to all hedges that are in
place. The net cash flow surplus represents an uncovered risk
position. The cash-flow-at-risk approach involves showing the
impact of potential exchange rate fluctuations on operating cash
flows on the basis of probability distributions. Volatilities and cor-
relations serve as the main input factors to determine the rele-
vant probability distributions.
Currency exposures include short positions amounting to
€ 2,136 million (2022: € 3,604 million).
in € million
Further information is provided in the 7 Outlook and ▾ Risks and
Opportunities sections of the Combined Management Report.
Currency risk
As an enterprise with worldwide operations, the BMW Group
conducts business in a variety of currencies, from which currency
risks arise. In order to hedge currency risks, the BMW Group
holds, as at 31 December 2023, derivative financial instruments
mostly in the form of forward currency contracts and currency
swaps.
As part of the implementation of the risk management strategy,
the extent to which risk exposures should be hedged is decided
at regular intervals. The economic relationship between the
hedged item and the hedging instrument is based essentially on
the fact that they are denominated in the same currency and
have the same maturities. Items are hedged on the basis of a
constant ratio of one to one between hedging instrument and risk
exposure.
Causes of hedge ineffectiveness are seen potentially only for
counterparty credit risk. However, in view of the processes that
have been established for credit risk management, ineffective-
ness is not expected to arise.
The BMW Group measures currency risk using a cash-flow-at-
risk model. The analysis of currency risk is based on forecast
foreign currency transactions which could result in exposures to
surpluses of foreign currency cash inflows and cash outflows. At
the end of the reporting period, the overall currency exposure -
in each case for the following year and determined by aggregat-
ing the individual currency exposures based on their absolute
amount was as follows:
in € million
Currency exposure
Interest rate risk
Interest rate risks arise when funds are borrowed and invested
with differing fixed-rate periods or differing terms. At the BMW
Group, all items subject to, or bearing, interest are exposed to
interest rate risk and can therefore affect both the assets and li-
abilities side of the balance sheet.
The fair value of the Group's interest rate portfolios was as fol-
lows at the end of the reporting period:
31.12.2023
31.12.2022
39,157
43,179
1,993
1,354.27
1,201
-249
15,512
35
15,547
14,080
40
14,120
16,636
497
882
2,839
533
1,460
1,094
3,087
1,460
3,298
14
13,285
11,470
19,527
3,998
1,386
850
6,234
3,337
4,456
775
7,825
14,280
4,037
8
18,325
2,594
3,298
1,714
1,714
1,017
13,087
319
33,943
- 19,096
- 13,172
-413
- 594
- 19,387
- 12,807
- 732
- 32,926
- 1,614
- 2,398
-32,862
280
1,150
20,537
31,393
191
146
174
511
305
181
202
688
-951
-522
4
- 1,469
18,145
12,650
598
- 4,261
The following table shows the average hedging rates of the fi-
nancial instruments used by the BMW Group to hedge significant
raw materials risk exposures:
Maturity
within
Maturity
between one
Designated components and costs of hedging within accumu-
*Presentation adjusted compared to previous year.
Combined interest/currency risks*
Interest rate risks*
Fair Value Hedges
Raw material price risks
lated other equity changed as follows:
Currency risks
in € million
Hedge relationships give rise to the following effects:
Notes to the Group Financial Statements
← = Q
Other Information
Remuneration Report
Cash Flow Hedges
Responsibility Statement and Auditor's Report
in € million
Change of designated
components in other
comprehensive income
3
1
13
recognised in
income statement
Hedge ineffectiveness
Change in costs of
hedging in other
comprehensive income
Opening balance at 1 January
Change of designated
components in other
comprehensive income
2022
2023
765
Change in costs of
hedging in other
comprehensive income
- 1,868
351
Hedge ineffectiveness
recognised in
income statement
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
2,605
- 1,401
41,854
13,443
-1,206
2,377
-75
-1,654
2,161
Continuing
hedge
relationships
Change in
value of
hedged items
Liabilities
Assets
Terminated
hedge
relationships
Continuing
hedge
relationships
Terminated
hedge
relationships
in € million
Cash Flow Hedges
Currency risks
220
257
2,647
3,433
43,970
10,979
662
2,026
- 1,8321
-5171
The accumulated amount of hedge-related fair value adjust-
ments is a negative amount of € 11 million (2022: negative
amount of € 283 million) for assets and a negative amount of
€ 1,551 million (2022: positive amount of € 2,880 million) for li-
abilities.
1 Prior year figures adjusted due to corrected currency translation.
2 Presentation adjusted compared to previous year.
Combined interest rate/currency risks²
Interest rate risks²
Fair Value Hedges
Raw material price risks
2023
Change in
value of
hedged items
2,300
- 1,539
135
-150
733
- 1,153
for terminated hedge relationships
for continuing hedge relationships
578
Reclassification to profit or loss
517
- 18
- 2,281
1,832
- 2,161
1
Change in fair value during the reporting period
- 103
739
- 110
* Presentation adjusted compared to previous year.
662
-3
- 1,783
2,026
- 895
2
- 1,206
2,377
Closing balance at 31 December
291
Reclassification to acquisition costs for inventories
-17
3
- 1,018
1,654
1,057
15
Designated
Raw material price risk
Combined
interest/
currency risk'
Interest rate
risk*
Currency risks
Raw material price risk
component
interest/
currency risk
Currency risks
Combined
2022
3
- 18
2
Interest rate
risk
Costs of
hedging
Costs of
hedging
Costs of
hedging
- 244
-274
662
-3
- 1,783
2,026
Costs of
hedging
Designated
component
Costs of
hedging
Costs of
hedging
Costs of
hedging
Designated
component
Costs of
hedging
component
Designated
- 395
493
Liabilities
Balances in accumulated
other equity
21,392
22,649
Currency risks
and five years
one year
in € million
Interest rate risks*
Maturity
between one
Maturity
areas.
Most of the hedges used in this context relate to variable yield
curves relating to the euro, US dollar and British pound currency
Information on average interest hedge rates is not provided,
since interest rate derivatives designated as hedging instru-
ments are used exclusively to hedge items in fair value hedges.
The hedge rates therefore correspond in each case to the current
market interest rate level.
Maturity
later than
five years
31.12.2022
within
1,958
9,473
9,034
218
*Presentation adjusted compared to previous year.
9,949
48,442
35,825
hedging instruments
19,350
Nominal amounts of
3,537
Raw material price risks
915
1,764
166
Combined interest/currency
risks*
5,936
1,465
17,309
18,916
Combined interest/currency
risks
Aluminium (EUR/t)
8,626
19,169
7,055
Interest rate risks
Copper (EUR/t)
Raw material price risks
22,648
Currency risks
Maturity
later than
five years
and five years
one year
in € million
18,328
908
961
791
7,120
7,398
2,313
2,270
31.12.2022
31.12.2023
9,417
43,787
34,130
hedging instruments
Nominal amounts of
Nickel (EUR/t)
Palladium (EUR/oz)
5,329
3,519
Raw material price risks
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Assets
Group Financial Statements
Notes to the Group Financial Statements
Remuneration Report
118
2,845
78
117
156
2,660
162
Combined interest rate/currency risks²
309
49,899
1,414
1,956
288
49,236
2,870
Interest rate risks²
-3,431
-254
2 Presentation adjusted compared to previous year.
Carrying amounts
other equity
Carrying amounts
Balances in accumulated
31.12.2022
31.12.2023
Prior year figures adjusted due to corrected currency translation.
The following table shows key information on hedged items for
each risk category as well as the balances of designated compo-
nents within accumulated other equity:
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
BMW Group Report 2023 To Our Stakeholders Combined Management Report
219
← = Q
1,832¹
5171
1,119
520
552
1,494
Assets
Nominal amounts
of designated
Change in fair value
Carrying amounts
Carrying amounts
Liabilities
31.12.2023
Raw material price risks
Currency risks
Cash Flow Hedges
in € million
The following table provides information on the nominal
amounts, carrying amounts and fair value changes of contracts
designated as hedging instruments:
Other Information
Fair Value Hedges
components
Nominal amounts
Assets
9,473
-2,161
1,387
325
8,848
44,041
1,654
211
1,200
40,976
Change in fair value
of designated
components
31.12.2022
= Q
↑
Liabilities
Responsibility Statement and Auditor's Report
74,292
BMW Group Report 2023
1,901
2,040
2,755
Net amount after offsetting
Non-derivative financial assets and liabilities are only offset if a
legally enforceable right currently exists and it is actually in-
tended to offset the relevant amounts. No financial assets and
liabilities have been netted in the BMW Group due to the fact that
the necessary requirements for netting have not been met.
Gains and losses on financial instruments
The following table shows the net gains and losses arising on
financial instruments in accordance with IFRS 9:
in € million
2023
2022
Financial instruments measured at fair value through other comprehensive income
113
- 154
Financial instruments measured at fair value through profit or loss
-161
1,438
Financial assets measured at amortised cost
Financial liabilities measured at amortised cost
-482
-652
-67
209
212
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Responsibility Statement and Auditor's Report
Remuneration Report Other Information
Group Financial Statements
Notes to the Group Financial Statements
← = Q
2,667
1,287
- 188
-228
509
211
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Offsetting of financial instruments
Derivative financial instruments of the BMW Group are subject to
legally enforceable master netting agreements or similar con-
tracts. However, receivables and payables relating to derivative
financial instruments are not netted due to non-fulfilment of the
stipulated criteria. Offsetting would have the following impact on
the carrying amounts of derivatives:
31.12.2023
Net gains and losses arising on financial instruments measured
at fair value through other comprehensive income relate to
changes in the fair value of marketable securities. Further details
are provided in note [19]. Total interest income arising on finan-
cial assets measured at fair value through other comprehensive
income amounted to € 82 million (2022: € 37 million) and total
interest expense to € 18 million (2022: € 10 million).
31.12.2022
Balance sheet amount as reported
Assets
2,926
Liabilities
Assets
Liabilities
4,400
4,386
Gross amount of derivatives which can be offset in case of insolvency
Cash collateral
- 1,638
-2,118
5,061
-2,118
-1
-95
in € million
Net gains and losses arising on financial instruments measured
at fair value through profit and loss mainly include results from
the fair value measurement of stand-alone derivatives, market-
able securities and shares in investment funds, as well as other
financial assets.
-1,638
Net gains and losses arising on financial liabilities measured at
amortised cost comprise mainly exchange rate gains/losses.
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
Receivables from sales financing are allocated to internally de-
fined rating categories based on credit risk. The classification into
creditworthiness levels is based on default probabilities. The re-
lated gross carrying amounts in accordance with IFRS 9 are al-
located as follows:
in € million
Gross carrying amount of
Stage 1
Stage 2
Stage 3
General
Combined Management Report
Simplified
Expected
credit loss
Stage 1
Stage 2
Stage 3
General
Simplified
31.12.2022
Total
Expected
credit loss
financial assets with good
credit ratings
71,882
Net gains and losses arising on financial assets measured at
amortised cost include mainly exchange rate gains/losses and
impairment losses/reversals.
31.12.2023
BMW Group Report 2023 To Our Stakeholders
Total
4,186
Financial instruments measured at amortised cost are some-
times subject to carrying amount adjustments that are recog-
nised through profit or loss as part of the application of hedge
accounting. These carrying amount changes are largely neutral-
ised by the offsetting changes in fair value arising on hedging
transactions and for this reason are not reported in the figures for
net gains and losses.
213
Total interest income arising on financial assets measured at
amortised cost relates mainly to the interest income earned on
credit financing and reported within revenues. Total interest ex-
penses arising on financial instruments measured at amortised
cost amounted to € 2.5 billion (2022: € 1.7 billion).
Credit risk
The BMW Group is exposed to counterparty credit risks if con-
tractual partners, for example a retail customer or a dealership,
are unable or only partially able to meet their contractual obliga-
tions. Information on the management of credit risk for receiv-
ables from sales financing is provided in the Combined Manage-
ment Report. ( Outlook and Risks and Opportunities)
Notwithstanding the existence of collateral accepted, the carry-
ing amount of financial assets (with the exception of derivative
financial instruments) generally represents the maximum credit
risk. In addition, the credit risk is increased by additional unu-
tilised loan commitments in the dealership financing line of busi-
ness. Total dealership financing credit risk at the end of the re-
porting period therefore amounted to € 32,149 million (2022:
€ 31,163 million).
In the case of all relationships underlying non-derivative financial
instruments, in order to minimise the credit risk and depending
on the nature and amount of exposure, collateral is required,
credit information and references obtained or historical data
based on the existing business relationship, in particular pay-
ment behaviour, reviewed.
In the case of trade receivables, customers are regularly as-
sessed with regard to their credit risk. Depending on contractual
status, necessary measures, such as dunning procedures, are
initiated in good time.
Within the financial services business, items financed for retail
customers and dealerships (such as vehicles, facilities and prop-
erty) serve as first-ranking collateral with a recoverable value.
Security is also put up by customers in the form of collateral asset
pledges, asset assignment and first-ranking mortgages, supple-
mented where appropriate by warranties and guarantees. Items
previously held as collateral that are subsequently acquired re-
late mainly to vehicles. As a rule, these assets can be converted
into cash at short notice through the dealership organisation.
Creditworthiness testing is an important aspect of the BMW
Group's credit risk management. Every borrower's creditworthi-
ness is tested for all credit financing and lease contracts entered
into by the BMW Group. In the case of retail customer financing,
creditworthiness is assessed using validated scoring systems in-
tegrated in the purchasing process.
In the area of dealership financing, creditworthiness is assessed
by means of ongoing credit monitoring and an internal rating sys-
tem that takes account not only of the material credit standing of
the borrower, but also of qualitative factors, such as past reliabil-
ity in business relations.
The credit risk on trade receivables is assessed mainly on the
basis of information relating to overdue amounts. The gross car-
rying amounts of these receivables are allocated in accordance
with IFRS 9 to overdue ranges used for management purposes
as follows:
in € million
31.12.2023
The credit risk relating to cash deposits and derivative financial
instruments is minimised by the fact that the Group only enters
into such contracts with parties of first-class credit standing.
Not overdue
1-30 days overdue
31-60 days overdue
61-90 days overdue
65
31.12.2022
104
More than 90 days overdue
Total
29
31
11
42
208
339
3,871
3,718
4,232
Fringe benefits
VARIABLE REMUNERATION
COMPONENTS
Strategic relevance
Retirement benefits
Member of the Board of Management:
Compensation payments
Bonus
The remuneration of members of the Board of Management and the Supervisory Board is structured as follows:
Parameters/measurement base, applicable amounts
FIXED REMUNERATION COMPONENTS
COMPONENT
← = Q
Remuneration Report
― € 0.90 million p. a. (first period of office = first remuneration level)
Other Information
Base salary
― € 1.05 million p. a. (from second period of office or fourth year of mandate = second remuneration level)
Earnings component
-€ 1.95 million p. a.
- € 0.95 million (first period of office = first remuneration level)
Responsibility Statement and Auditor's Report
- Target amount p. a. (at 100% target achievement):
50% of target amount)
(at 100% target achievement corresponds
to
(sum of earnings component and
performance component)
Bonus
Chairman of the Board of Management:
- Fixed remuneration components are required for remuneration to be competitive in order to attract and retain qualified members of the Board of Management
Chairman of the Board of Management: € 700,000
Member of the Board of Management: € 400,000
Pension contribution p. a.:
Benefits based on amounts credited to individual savings accounts for contributions paid and interest earned, various forms of disbursement
The Supervisory Board may award payments to compensate for loss of salary from a previous employment relationship and to cover relocation costs in the case of new entrants
Defined contribution system with a guaranteed minimum return
Contractual agreement, main points: non-cash benefits from the use of company cars and the BMW chauffeur service, insurance premiums, contributions towards security systems, employee discounts
Base salary is paid monthly on a pro rata basis
- The base salary counteracts the temptation to take disproportionately high risks in order to achieve short-term goals, and thus contributes to the long-term development of the Company
Group Financial Statements
Notes to the Group Financial Statements
Total expense
BMW Group Report 2023
in € million
Members of the Supervisory Board who perform a function rele-
vant to remuneration such as the Chairman or Deputy Chairman
of the Supervisory Board or the chairmen or members of com-
mittees, provided these committees meet on at least three days
in the financial year, receive higher remuneration because of
these additional requirements.
In accordance with the Articles of Incorporation, each member of
the Supervisory Board of BMW AG who does not exercise any
additional function relevant to remuneration receives fixed remu-
neration of € 200,000 p.a. in addition to the reimbursement of
his or her reasonable expenses, plus an attendance fee of
€ 2,000 for every plenary meeting that the member has
attended.
The remuneration system for members of the Supervisory Board
does not include any stock options, value appreciation rights
comparable to stock options or any other share-based remuner-
ation components.
A provision has been established for pension obligations to for-
mer members of the Board of Management and their depend-
ants in accordance with IAS 19 totalling € 101.6 million
(2022: € 93.5 million).
There are provisions for pension obligations to active members
of the Board of Management in accordance with IAS 19 totalling
€ 16.5 million (2022: € 16.6 million).
Total remuneration of former members of the Board of Manage-
ment and their dependants amounted to € 11.9 million
(2022: € 9.7 million). This remuneration also includes the con-
tributions accrued in connection with the departures of Dr Peter
and Mr Nota. Some of these amounts have not yet been paid out.
The costs for the active members of the Board of Management
arising from share-based remuneration, which was in force until
2020 inclusive, amounted to € 0.2 million (2022: € 0.1 million).
The provision for the share-based remuneration component
amounts to € 0.9 million (2022: € 1.2 million).
42.5
47.5
5.5
5.8
Remuneration for the members of the Supervisory Board
Short-term benefits
0.1
― € 1.15 million (from second period of office or fourth year of mandate = second remuneration level)
Overview of the remuneration of the Supervisory Board*
Factor Amount in € p.a.
Member of the Supervisory Board
Chairman of the Supervisory Board
Deputy Chairman of the Supervisory Board
Chairman of the Audit Committee
Chairman of another committee
Member of the Audit Committee
Member of another committee
1.00
225
BMW Group companies did not grant any loans to members of
the Board of Management or the Supervisory Board in the 2023
financial year, nor did they enter into any contingent liabilities in
their favour. In the year under review, members of the Board of
Management and the Supervisory Board concluded contracts
with BMW Group companies for the purchase of vehicles, other
services (maintenance and repair work) and cash deposits at
arm's length conditions.
*If a Supervisory Board member performs more than one of the functions referred to above, their
remuneration is measured only on the basis of the function that is remunerated with the highest
amount.
300,000
1.50
400,000
2.00
To Our Stakeholders Combined Management Report
400,000
450,000
2.25
400,000
2.00
600,000
3.00
200,000
2.00
- € 2.10 million (Chairman of the Board of Management)
― € 1.10 million (first period of office = first remuneration level)
― Payment as part of the next payroll run after the Annual General Meeting at which the Financial Statements are presented for the relevant vesting year
-Assessment period one year
Calculation
Personal cash investment amount
Share-based remuneration
Strategic relevance
- Performance component of bonus motivates the pursuit of non-financial strategic targets and is therefore beneficial for the long-term development of the BMW Group
― Earnings component of bonus rewards attainment of financial targets and is beneficial for earnings-related aspects of business strategy
- € 1.890 million (Chairman of the Board of Management)
- € 1.035 million (from second period of office or fourth year of mandate = second remuneration level)
― € 0.855 million (first period of office = first remuneration level)
- Maximum amount of performance component p. a.:
- Performance factor may not exceed 1.8
― Measurement parameters and target values are determined before the start of the financial year
- Criteria for the other cross-divisional targets include in particular: Market position compared to competitors, innovation performance (economic), development of the BMW Group's reputation based on
non-ESG-related aspects (e. g. perception on capital markets, brand strength), customer orientation
― Criteria for cross-divisional targets with ESG criteria include in particular: Innovation performance (environmental, e. g. reduction of carbon emissions), development of the BMW Group's reputation based on
ESG aspects (e.g. corporate culture, promotion of integrity and compliance), adaptability, attractiveness as an employer, leadership performance
-10% individual targets
― Requirement for Board of Management members to invest an earmarked cash amount (personal cash investment amount), net of tax and deductions, in shares of BMW common stock immediately after
disbursement
― Payment as part of the next payroll run after the Annual General Meeting at which the Financial Statements are presented for the relevant vesting year
― Requirement for Board of Management members to hold the acquired shares of common stock for at least four years; this requirement remains in effect for individuals who step down from the Board of
Management (share ownership guideline)
― Assessment period of five years in total (one year for determining the personal cash investment amount, four years holding requirement)
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
-40% other cross-divisional targets
227
- Capped at 180% of target amount
-50% of the target amount depends on the achievement of predefined strategic focus targets (strategic focus target component)
- 50% of target amount depends on ROCE achieved in the Automotive segment (ROCE component)
― € 2.35 million (Chairman of the Board of Management)
― € 1.28 million (from second period of office or fourth year of mandate = second remuneration level)
0.2
- Target amount p. a. (at 100% target achievement):
- Payment after the Annual General Meeting at which the Financial Statements are presented for the relevant vesting year
- Capped at 180% of target amount
-50% cross-divisional targets with ESG criteria
- Additional trend analysis over at least three financial years
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
226
― € 1.890 million (Chairman of the Board of Management)
- € 1.035 million (from second period of office or fourth year of mandate = second remuneration level)
― € 0.855 million (first period of office = first remuneration level)
- Maximum amount of earnings component p. a.:
―The earnings factor is 1.5 in case of a profit attributable to shareholders of BMW AG amounting to € 6.9 billion and a post-tax return on sales of 7.3%
―The earnings factor is 0 in case of a profit attributable to shareholders of BMW AG below € 3.0 billion or a post-tax return on sales of below 3.0%
-Earnings factor may not exceed 1.8
― Earnings factor is derived from an allocation matrix determined in advance based on the parameters "profit attributable to shareholders of BMW AG" and "Group post-tax return on sales" in the vesting year
―The earnings factor is 1.0 in case of a profit attributable to shareholders of BMW AG amounting to € 5.3 billion and a post-tax return on sales of 5.6%
- Formula: 50% of target amount x performance factor
― € 1.050 million (Chairman of the Board of Management)
― € 0.575 million (from second period of office or fourth year of mandate = second remuneration level)
― € 0.475 million (first period of office = first remuneration level)
- Base amount p. a. (50% of target bonus amount):
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
- Relevant period is the vesting year
― Primarily qualitative, non-financial criteria, expressed in terms of a performance factor, aimed at measuring the Board member's contribution to sustainable and long-term performance and corporate
orientation
-Formula: 50% of target amount x performance factor
- € 1.050 million (Chairman of the Board of Management)
- € 0.575 million (from second period of office or fourth year of mandate = second remuneration level)
- € 0.475 million (first period of office = first remuneration level)
- Base amount p. a. (50% of target bonus amount):
- Composition of performance factor:
Assessment period one year
50% of target amount)
to
(at 100% target achievement corresponds
Performance component
Bonus (continued)
COMPONENT
Notes to the Group Financial Statements
Parameters/measurement base, applicable amounts
Share-based remuneration
2023
mandate
753
15
16
2,058
2,058
2022
2023
2022
2023
2022
2023
2022
2023
Payables at 31 December
Receivables at 31 December
768
9,698
19,667
29
361
361
794
1,066
2,740
2,900
11
Supplies and services received
349
33
60
16,282
21,452
1,004
986
7
3,083
118
Supplies and services performed
in € million
Stefan Quandt, Germany, is a shareholder and Deputy Chairman
of the Supervisory Board of BMW AG. He is also the sole share-
holder and Chairman of the Supervisory Boards of DELTON
Health AG, Bad Homburg v.d.H., and DELTON Technology SE,
Bad Homburg v.d.H., as well as the sole shareholder of DELTON
Logistics S.à r.l. Grevenmacher.
No loans were granted by entities of the BMW Group to members
of the Board of Management and the Supervisory Board in the
financial year 2023, nor were any contingent liabilities entered
into on their behalf. During the year under report, members of the
Board of Management and the Supervisory Board concluded
contracts with BMW Group entities on customary market terms
and conditions for the purchase of vehicles, other services (in-
cluding maintenance and repair work) and the investment of
cash deposits in the low single-digit million range relating to the
Board of Management.
Transactions of Group companies with related parties were
carried out, without exception, in the normal course of business
of each of the parties concerned and conducted at market condi-
tions, i.e. conditions that are also granted to other third-party
manufacturers.
Associated companies, joint ventures, non-consolidated
subsidiaries, BMW Trust and BMW Foundation Herbert
Quandt
The Board of Management and the Supervisory Board of
the BMW Group
Stefan Quandt and Susanne Klatten as well as companies
controlled by them
The following individuals and entities are related parties in ac-
cordance with IAS 24:
41 Related party relationships
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
To Our Stakeholders Combined Management Report
221 BMW Group Report 2023
During the financial year 2023, DELTON Logistics S.à r.l. – via
its subsidiaries - performed logistic-related services for the BMW
Group. In addition, the DELTON companies held by Stefan
Quandt acquired vehicles from the BMW Group by way of
leasing.
Stefan Quandt, Germany, is also the indirect majority share-
holder of SOLARWATT GmbH, Dresden. Cooperation arrange-
ments are in place between BMW Group and SOLARWATT
GmbH, Dresden, within the field of electric mobility. The focus of
this collaboration is on the provision of complete photovoltaic so-
lutions for rooftop systems and carports to BMW i customers. In
addition, SOLARWATT GmbH purchases battery cells and re-
lated components for home battery storage applications as part
of a supply project. In addition to the deliveries of goods de-
scribed above, SOLARWATT GmbH, Dresden, also purchased
vehicles from the BMW Group by way of leasing during the finan-
cial year 2023.
Susanne Klatten, Germany, is a shareholder and member of the
Supervisory Board of BMW AG and also a shareholder and Dep-
uty Chairwoman of the Supervisory Board of ALTANA AG, Wesel.
In 2023, ALTANA AG, Wesel, acquired vehicles from the BMW
Group, mainly by way of leasing.
Susanne Klatten, Germany, is also the sole shareholder and
Chairwoman of the Supervisory Board of UnternehmerTUM
GmbH, Garching. In 2023, the BMW Group bought in services
from UnternehmerTUM GmbH, Garching, mainly in the form of
consultancy and workshop services.
In total, the following amounts of goods and services were sup-
plied to or received from other joint ventures and associated
companies:
UnternehmerTUM GmbH
ALTANA AG
SOLARWATT GmbH
DELTON Logistics S.à r.l.
DELTON Health AG
in € thousand
Other joint ventures and associated companies
Seen from the perspective of BMW Group entities, the volume of
significant transactions with the above-mentioned entities was
as follows:
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
BMW Group Report 2023 To Our Stakeholders Combined Management Report
222
Notes to the Group Financial Statements
108
3,387
3,215
Notes to the Group Financial Statements
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
224
The Board of Management members in office on the balance
sheet date hold 112,969 shares of BMW common stock with a
holding obligation arising from share-based remuneration for fi-
nancial years 2019 to 2022 (2022: 118,604).
Participants receive one additional share of common stock or the
equivalent value in cash for every three shares of common stock
held once the four-year holding requirement has been fulfilled, at
the Company's discretion.
Up to and including financial year 2021, eligible senior depart-
ment heads committed to invest 26% of their earnings-related
bonus in shares of BMW AG common stock and to hold the ac-
quired shares for four years. For the investment obligation, BMW
AG granted an amount corresponding to the entire investment
amount as a net subsidy.
In the event of death or invalidity, special rules apply for early
payment of share-based remuneration components (matching
components) based on the target amounts, and the holding pe-
riod is also dropped for shares of common stock that were ac-
quired with share-based remuneration components. Where the
service contract is terminated prematurely and the Company has
an extraordinary right of termination, or if the Board member re-
signs without the Company's agreement, entitlements to
amounts as yet unpaid relating to share-based remuneration
(matching components) are forfeited; a personal cash invest-
ment amount will be settled based on the target amount.
gross amount of the bonus that, net of tax and deductions, had
to be invested in shares of the Company's common stock (up to
and including financial year 2017, the investment component
amounted to 20% of the total bonus after tax, which the Board
of Management members received plus tax and social security
as additional cash remuneration). This amount was also subject
to a four-year holding period and on expiry thereof the Board of
Management members received one additional share of the
Company's common stock or the equivalent value in cash
(matching component) for every three shares of common stock
held, at BMW AG's discretion.
For financial years up to and including financial year 2020,
Board of Management members received an earmarked cash
amount (investment component) corresponding to 45% of the
Payment of the personal cash investment amount is made after
the Annual General Meeting at which the Financial Statements
are presented for the relevant financial year. The shares of com-
mon stock are purchased immediately after the personal cash in-
vestment amount has been paid out and are subject to a holding
period of four years from the date of purchase. The RoCE com-
ponent and the strategic focus target component each make up
half of the target amount for the personal cash investment
amount. For the RoCE component, a RoCE factor is determined
based on the RoCE achieved in the Automotive segment for the
grant year. For the strategic focus target component, a minimum
of two strategic focus targets are defined prior to the start of the
financial year. Minimum, target and maximum values are defined
and factors are assigned for the RoCE in the Automotive seg-
ment and for each strategic focus target. The relevant factors are
determined after the end of the financial year based on the extent
to which targets were achieved.
← = Q
The expenses and the corresponding allowance against revenue
reserves for the personal cash investment amount of the eligible
active Board of Management members and senior department
heads amount to € 21,776,062 (2022: € 20,175,614).
The share-based remuneration component is revalued at its fair
value at each balance sheet date between the grant date and the
settlement date and on the settlement date itself. The expense
for such programmes is recognised in the income statement (as
personnel expense) on a straight-line basis over the vesting pe-
riod of the options and in the balance sheet as a provision.
The remuneration system does not provide for any further
matching components for the members of the Board of Manage-
ment from financial year 2021 or for the senior department
heads from financial year 2022.
Benefits resulting from termination of the Board
33.8
3.1
3.2
Other long-term benefits
32.9
2022
2023
Board of Management members and eligible senior department
heads receive an earmarked cash amount (personal cash invest-
ment amount) that is, net of tax and deductions, to be invested
in shares of BMW AG common stock. This amount depends on
the achievement of certain financial and non-financial targets in
the past financial year (vesting year).
Short-term benefits
in € million
44 Remuneration for members of the Board of Manage-
ment and the Supervisory Board
The Board of Management and the Supervisory Board of
Bayerische Motoren Werke Aktiengesellschaft have issued the
prescribed Declaration of Compliance with the recommendations
of the "Government Commission on the German Corporate Gov-
ernance Code" required by § 161 of the German Stock Corpora-
tion Act (AktG). The declaration has been made permanently
available on the Company's website www.bmwgroup.com/ezu.
43 Declaration with respect to the Corporate Governance
Code
The total expense arising from the share-based remuneration
component for eligible active and former Board of Management
members and senior department heads was € 1,598,368 in fi-
nancial year 2023 (2022: € 638,715).
The total carrying amount of the provision for the share-based
remuneration component for eligible active and former Board of
Management members and senior department heads was
€ 5,982,815 on 31 December 2023 (2022: € 6,971,951).
The cash settlement of the share-based remuneration compo-
nent is measured at fair value on the balance sheet date (closing
price of BMW AG common stock in Xetra trading on 31 Decem-
ber 2023).
Remuneration for the members of the
Board of Management
Senior department head and Board of Management programme
Both the share-based remuneration programme for members of
the Board of Management that was in force in the reporting year
and the share-based remuneration programme for eligible sen-
ior department heads serve to reward long-term entrepreneurial
conduct with sustainable business management in mind.
As at 31 December 2023, the BMW Group recorded personnel
expenses resulting from the Employee Share Programme relat-
ing to the difference between the market price and the dis-
counted price for the shares of common and preferred stock, re-
spectively, purchased by employees totalling € 28 million (2022:
€ 23 million).
A total of 1,290,000 shares of common stock were transferred
to employees in the reporting year (2022: 1,439,975 shares of
preferred stock). The 1,290,000 shares of common stock were
acquired in the scope of the Employee Share Programme. The
1,439,975 shares of preferred stock in the previous year
stemmed from Authorised Capital 2019. BMW AG's Board of
Management decides each year whether to continue the
programme.
17
Notes to the Group Financial Statements
2022
Payables at 31 December
2023
2022
63
2023
86
2022
4
2022
2023
Receivables at 31 December
Supplies and services received
Supplies and services performed
29
71
4
5.4
17
Business relationships with non-consolidated companies are
small in scale.
The shares of common stock acquired in the scope of the Em-
ployee Share Programme are subject to a vesting period of four
years calculated from 1 January of the year in which the shares
of common stock were acquired. These shares of common stock
are entitled to receive dividends for the first time with effect from
the financial year 2023.
Within the scope of the Employee Share Programme in the finan-
cial year 2023, eligible BMW Group employees were granted
shares of BMW AG common stock on preferential terms (for in-
formation on the number and price of the shares of common
stock issued see note [31]). At their discretion, participants in the
programme were able to purchase packages of 10, 20, 30, 40
or 50 shares of common stock (2022: 10, 20, 35, 50 or 65
shares of preferred stock) with a discount of € 20.00 (2022:
€ 16.00) on each share as compared to the market price (aver-
age closing price in Xetra trading in the period 1 to 6 November
2023: € 91.47). Employees who are currently employed by
BMW AG or a wholly owned subsidiary of BMW AG based in Ger-
many were able to partake in the programme, insofar as the sub-
sidiary's management had decided to participate. Employees
were required to have been in their positions for at least one year
without interruption at the time the programme was announced
and had to remain in their positions until the shares of common
stock were transferred.
Employee Share Programme
The BMW Group has three share-based programmes: one for
eligible employees, one for eligible senior department heads and
one for members of the Board of Management.
42 Share-based remuneration
← = Q
Notes to the Group Financial Statements
BMW Brilliance has been fully consolidated as a subsidiary of the
BMW Group since 11 February 2022 (see note 2). Goods and
services performed (mainly vehicle components for further pro-
cessing) for BMW Brilliance up to the date of first-time consoli-
dation in 2022 totalled € 1,330 million. Supplies and services
received in the same period amounted to € 106 million and com-
prised mainly vehicles and services.
Other Information
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
223
The BMW Foundation Herbert Quandt, Munich, is an independ-
ent corporate foundation and, due to the BMW Group's signifi-
cant influence, qualifies as a related party according to IAS 24.
The BMW Group made donations to the BMW Foundation Her-
bert Quandt during the financial year 2023 totalling € 6.0 million
(2022: € 5.9 million) for ongoing foundation work and other ser-
vices. No other transactions arose.
BMW Trust e.V., Munich, administers assets on a trustee basis
to secure obligations relating to pensions in Germany and is
therefore a related party of the BMW Group in accordance with
IAS 24. This entity has no assets of its own. It had no income or
expenses during the period under report. BMW AG bears ex-
penses on an immaterial scale and performs services for BMW
Trust e.V.,
Munich.
Remuneration Report
COMPONENT
The expenses recorded in accordance with IFRS in financial year
2023 for remuneration for the active members of the Board of
Management and Supervisory Board are broken down as
follows:
(at 100% target achievement corresponds
31.12.2022
31.12.2023
in € million
The total of the segment figures can be reconciled to the corre-
sponding Group figures as follows:
← = Q
Notes to the Group Financial Statements
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
230
The information disclosed for capital expenditure and deprecia-
tion and amortisation relates to non-current property, plant and
equipment, intangible assets and leased products.
The Other Entities segment result includes interest and similar
income amounting to € 3,403 million (2022: € 1,543 million)
and interest and similar expenses amounting to € 2,372 million
(2022: € 1,539 million).
Reconciliation of segment assets
in € million
Reconciliation of segment result
2023
External revenues
50
61
Financial and other assets - Motorcycles
Trade payables - Motorcylces
Financial result of Motorcycles segment
Elimination of inter-segment items
8,283
15,092
The result of the Financial Services segment was negatively im-
pacted by impairment losses totalling € 616 million
(2022: € 578 million) recognised on leased products. Income
from the reversal of impairment losses on leased products
amounted to € 289 million (2022: € 300 million).
16,102
- 339
In the information by region, external sales are based on the lo-
cation of the customer. The information disclosed for non-current
assets relates to property, plant and equipment, intangible as-
sets and leased products. Eliminations disclosed for non-current
assets relate to leased products.
177,110
71,742
12,763
13,906
179,076
63,554
Financial and other assets - Automotive
Trade payables - Automotive
Total for reportable segments
2022
Total for reportable segments
Financial result of Automotive segment
Non-current assets
Write-downs on inventories to their net realisable value amount-
ing to € 189 million (2022: € 112 million) were recognised by
the Automotive segment in the financial year 2023. The reversal
of impairment losses had a positive impact of € 13 million
(2022: € 11 million) on the segment result of the Automotive
segment.
246,926
Group
to Group figures
Reconciliation
Other Entities
Financial Services
Motorcycles
Automotive
14,456
14,565
- 4,094
26,637
30,367
-5,038
-5,952
-4,136
10,016
in € million
Segment assets
Investments accounted for using the equity method
31.12.2022 31.12.2023
31.12.2022
31.12.2023
250,890
443
69,816
71,814
31.12.2022
31.12.2023
31.12.2022
95,727
420
31.12.2023
95,145
31.12.2023 31.12.2022
16,573
1,127
1,190
62,519
420
443
31.12.2022
31.12.2023
66,168
17,737
566
494
1
14,565
18,701
-4,136
Total for reportable segments
Elimination of inter-segment items
Total Group depreciation and
amortisation on non-current assets
amortisation on non-current assets
Reconciliation of depreciation and
26,637
30,367
non-current assets
Total Group capital expenditure on
2,903
3,255
12,805
15,689
Rest of Asia
- 5,038
14,456
18,550
- 4,094
The reconciliation of segment figures to the corresponding total
Group figures shows the inter-segment items. Revenues with
other segments result mainly from the sale of vehicles, for which
the Financial Services segment has concluded a financing or
lease contract. Eliminations of inter-segment items in the recon-
ciliation to the Group profit before tax, capital expenditure and
depreciation and amortisation mainly result from the sale of ve-
hicles in the Automotive segment, which are subsequently ac-
counted for as leased vehicles in the Financial Services segment.
In the reconciliation of segment assets to Group assets, elimina-
tions relate mainly to intragroup financing balances.
Eliminations
Share-based remuneration (continued)
RoCE component
96,722
98,406
155,498 142,610
- 7,047
-7,297
332
-5,952
285
3,068
3,003
2,926
4,941
5,386
Rest of the Americas
Other regions
Group
2,787
Elimination of inter-segment items
19,350
22,158
22,982
2022
2023
2022
2023
Information by
region in € million
Germany
Non-operating assets - Other
Entities
Reconciliation of capital expenditure
23,509
Group profit before tax
122
1,334
131,676
133,819
Total liabilities - Financial Services
12
17,096
9,759
on non-current assets
- 163,074
36,032
39,848
Rest of Europe
36,319
Total for reportable segments
18,919
19,106
Elimination of inter-segment items
Total Group assets
28,751
USA
16,087
43,175
18,829 15,413 44,012
40,833 41,881 13,961
China
23,072
- 169,981
246,926
250,890
31,845
101
31,675
8,433
Automobile and motorcycle leasing, retail and dealership financ-
ing, multi-brand fleet business, customer deposit business and
insurance activities are the main activities allocated to the Finan-
cial Services segment.
Activities relating to the development, manufacture, assembly
and sale of motorcycles as well as spare parts and accessories
are reported in the Motorcycles segment.
Within the Automotive segment, the BMW Group develops, man-
ufactures, assembles and sells automobiles powered with all-
electric drive systems, plug-in hybrid systems and highly efficient
combustion engines, as well as spare parts, accessories and mo-
bility services under the BMW, MINI and Rolls-Royce brands.
BMW and MINI brand products are sold in Germany through
branches of BMW AG and by independent, authorised dealer-
ships. Sales outside Germany are handled mainly by subsidiary
companies and by independent import companies in some mar-
kets. Rolls-Royce brand vehicles are sold in selected markets via
subsidiary companies and elsewhere by independent, authorised
dealerships.
The activities of the BMW Group are broken down into the oper-
ating segments Automotive, Motorcycles, Financial Services and
Other Entities.
For the purposes of presenting segment information, the activi-
ties of the BMW Group are divided into operating segments in ac-
cordance with IFRS 8. The segmentation follows the internal
management and reporting system and takes account of the or-
ganisational structure of the BMW Group based on the various
products and services of the reportable segments.
46 Explanatory notes to segment information
Information on reportable segments
SEGMENT INFORMATION
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Notes to the Group Financial Statements
To Our Stakeholders Combined Management Report
228 BMW Group Report 2023
No events have occurred after the balance sheet date with a par-
ticular significance for the results of operations, financial position
or net assets of the BMW Group.
Holding and Group financing companies are reported in the Other
Entities segment. This segment also includes the operating com-
pany Bavaria Lloyd Reisebüro GmbH, which is not allocated to
one of the other segments.
Internal management and reporting
Segment information is prepared as a general rule in conformity
with the accounting policies adopted for preparing and presenting
the Group Financial Statements. Exceptions to this general prin-
ciple include the treatment of inter-segment warranties, the earn-
ings impact of which is allocated to the respective segments on
the basis used internally to manage the business. In addition, in-
tragroup repurchase agreements between the Automotive and
Financial Services segments pursuant to IFRS 15, impairment al-
lowances on intragroup receivables and changes in the value of
consolidated other investments pursuant to IFRS 9 are also ex-
cluded. Intragroup leasing arrangements are not reflected in the
internal management and reporting system on an IFRS 16 basis
and therefore, in accordance with IFRS 8, do not give rise to any
changes in the presentation of segment information. Inter-seg-
ment receivables and payables, provisions, income, expenses
and profits are eliminated upon consolidation. Inter-segment rev-
enues are based on market prices. Centralised cost components
are included in the respective segments, without resulting in cash
flows.
The role of "chief operating decision maker" with respect to re-
source allocation and performance assessment of the reportable
segment is embodied in the full Board of Management. For this
purpose, different measures of segment performance as well as
segment assets are taken into account in the operating
segments.
External revenues
in € million
Segment information by operating segment is as follows:
Notes to the Group Financial Statements
← = Q
Other Information
Remuneration Report
45 Events after the end of the reporting period
Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
229
The success of the Other Entities segment is assessed on the
basis of profit or loss before tax. The corresponding measure of
segment assets used to manage the Other Entities segment is
total assets less asset-side income tax items and intragroup
investments.
The success of the Financial Services segment is measured on
the basis of return on equity (RoE). Profit before tax therefore rep-
resents the relevant measure of segment earnings. The measure
of segment assets in the Financial Services segment corresponds
to net assets, defined as total assets less total liabilities.
Further information is provided in the section "Managing oper-
ational performance at segment level" within the Combined Man-
agement Report.
The Automotive and Motorcycles segments are managed on the
basis of return on capital employed (ROCE). The relevant meas-
ure of segment results used is therefore profit before financial re-
sult. Capital employed is the corresponding measure of segment
assets used to determine how to allocate resources. Capital em-
ployed is calculated as the sum of intangible assets, property,
plant and equipment and net working capital, the latter compris-
ing inventories as well as trade receivables less trade payables.
Group Financial Statements
- Agreement entitling the BMW Group to reclaim variable remuneration already paid out in the event of specified serious incidences of non-compliance, incorrect calculation bases or incorrect financial statements
― Amounts may also be clawed back in principle after a member has left the Board
- Agreement to withhold variable remuneration in the event of specified serious compliance violations or (withholding amounts provisionally) in the event of reasonable suspicions of such
― Amounts may also be withheld in principle after a member has left the Board
Clawback
― Minimum, target and maximum values for ROCE are defined before the start of the financial year
― ROCE factor is derived from the ROCE achieved in the Automotive segment for the vesting year
- Formula: 50% of target amount x RoCE factor
― € 1.175 million (Chairman of the Board of Management)
― € 0.64 million (from second period of office or fourth year of mandate = second remuneration level)
― € 0.55 million (first period of office = first remuneration level)
- Target amount of ROCE component p. a. (50% of target amount for personal cash investment amount):
― ROCE factor may not exceed 1.8
Parameters/measurement base, applicable amounts
50% of target amount)
to
(at 100% target achievement corresponds
Strategic focus target component
50% of target amount)
116
to
Strategic relevance
Inter-segment revenues
- Maximum amount of ROCE component p. a.:
― € 1.152 million (from second period of office or fourth year of mandate = second remuneration level)
Malus and clawback rules
Malus
―The remaining 50% of the personal cash investment amount encourages achievement of strategic focus targets and therefore contributes to business performance in key strategic areas
-Commitment to purchase shares of the Company's common stock and the four-year holding period provide additional motivation to support the Company's long-term development
-50% of the personal cash investment amount within the target structure depends on the ROCE and is therefore directly linked to a key target for the corporate strategy and reflects BMW AG's aspiration to
generate a significant premium on the cost of capital
― € 2.115 million (Chairman of the Board of Management)
― € 1.152 million (from second period of office or fourth year of mandate = second remuneration level)
- € 0.990 million (first period of office = first remuneration level)
- Maximum amount of strategic focus target component p. a.:
― € 0.990 million (first period of office = first remuneration level)
-Factor for each strategic focus target may not exceed 1.8
- Formula in the event of two strategic focus targets with equal weighting p.a.:
- Weighting of the strategic focus targets is decided before the start of the financial year
- At least two strategic focus targets derived from the strategic plan
- € 1.175 million (Chairman of the Board of Management)
― € 0.55 million (first period of office = first remuneration level)
- Target amount of strategic focus target component p. a. (50% of target amount for personal cash investment amount):
- € 2.115 million (Chairman of the Board of Management)
25% of target amount for personal cash investment amount x factor for strategic focus target 1 + 25% of target amount for personal cash investment amount x factor for strategic focus target 2
― Minimum, target and maximum values are defined before the start of the financial year
Total revenues
― € 0.64 million (from second period of office or fourth year of mandate = second remuneration level)
Result from equity accounted investments
259
10,635
12,981
142,610
155,498
- 19,298
- 16,231
257
8
35,122
36,227
3,176
3,214
123,602
132,277
- 19,298
11
- 16,231
2,962
- 100
21,150
8,826
Segment result
24,896
171
184
10,354
3,205
11,239
-159
- 100
- 159
23,509
8,417
994
995
- 100
7
17,096
1,541
2022
2023
2022
2023
2022
2023
2023
2023
Group
Other Entities
Financial Services
Motorcycles
10
Capital expenditure on non-current assets
Depreciation and amortisation on non-current assets
Automotive
Reconciliation
to Group figures
2022
2022
2022
- 18
2023
2,251
17,768
14,011
142,610
-41
1
1
155,498
33,581
33,976
3,194
3,255
105,834
118,266
52
424
BMW Japan Finance Corp., Tokyo
BMW Japan Corp., Tokyo
390
101
316
100
100
Herald International Financial Leasing Co., Ltd., Tianjin
100
35
100
BMW Korea Co., Ltd., Seoul
273
114
BMW Leasing (Thailand) Co., Ltd., Bangkok
213
21
100
100
BMW China Automotive Trading Ltd., Beijing
126
345
9
SuperDrive Investments (RF) Ltd., Cape Town¹¹
BMW Financial Services Korea Co., Ltd., Seoul
0
0
100
0
BMW (South Africa) (Pty) Ltd., Pretoria
670
71
100
BMW Financial Services (South Africa) (Pty) Ltd., Midrand
172
14
100
748
0
BMW Brilliance Automotive Ltd., Shenyang
7,882
4,148
75
BMW Automotive Finance (China) Co. Ltd., Beijing
2,596
241
100
BMW China Investment Ltd., Beijing
1,019
376
100
Asia
BMW India Financial Services Private Ltd., Gurgaon
2021-1 ABL, Tokyo¹¹
BMW Asia Pacific Capital Pte Ltd., Singapore
BMW Malaysia Sdn Bhd, Kuala Lumpur
2019-2 ABL, Tokyo¹¹
2019-3 ABL, Tokyo¹¹
2020-1 ABL, Tokyo 11
2021-2 ABL, Tokyo¹¹
2022-1 ABL, Tokyo¹¹
↑
= Q
Equity in € million
Profit/loss in € million
Capital investment in %
100
100
100
51
0
0
0
0
0
0
2023-1 ABL, Tokyo¹¹
Bavarian Sky China 2021-3, Beijing
0
2023-2 ABL, Tokyo¹¹
PT BMW Indonesia, Jakarta
BMW Tokyo Corp., Tokyo
BMW Manufacturing (Thailand) Co., Ltd., Rayong
Companies
BMW Asia Pte. Ltd., Singapore
BMW Asia Technology Centre Sdn Bhd, Kuala Lumpur
BMW China Services Ltd., Beijing
BMW Credit (Malaysia) Sdn Bhd, Kuala Lumpur
BMW Holding Malaysia Sdn Bhd, Kuala Lumpur
BMW India Private Ltd., Gurgaon
BMW Lease (Malaysia) Sdn Bhd, Kuala Lumpur
105
8
100
100
100
100
BMW (Thailand) Co., Ltd., Bangkok
100
100
100
100
100
237
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Notes to the Group Financial Statements
100
0
Companies
0
100
235
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Notes to the Group Financial Statements
BMW SLP, S.A. de C.V., Villa de Reyes
BMW US Capital, LLC, Wilmington, Delaware
BMW Acquisitions Ltda., São Paulo
BMW Auto Leasing LLC, Wilmington, Delaware
BMW Consolidation Services Co., LLC, Wilmington, Delaware
BMW de Argentina S.A., Buenos Aires
BMW de Mexico, S.A. de C.V., Mexico City
BMW Extended Service Corporation, Wilmington, Delaware
BMW Facility Partners LLC, Wilmington, Delaware
BMW Financeira S.A. Credito, Financiamento e Investimento, São Paulo
BMW Financial Services de Mexico S.A. de C.V. SOFOM, Mexico City
BMW Floorplan Master Owner Trust, Wilmington, Delaware
BMW FS Funding Corporation, Wilmington, Delaware
BMW FS Receivables Corporation, Wilmington, Delaware
BMW FS Securities LLC, Wilmington, Delaware
BMW Insurance Agency, Inc., Wilmington, Delaware
BMW Leasing do Brasil, S.A., São Paulo
197
BMW Manufacturing Indústria de Motos da Amazônia Ltda., Manaus
551
100
2,643
Bavarian Sky China 2022-1, Beijing¹¹
1,877
100
2,415
583
100
2,232
1,228
100
BMW Bank of North America Inc., Salt Lake City, Utah
1,534
207
100
Financial Services Vehicle Trust, Wilmington, Delaware
832
- 105
100
BMW Canada Inc., Richmond Hill, Ontario
760
162
100
BMW Financial Services NA, LLC, Wilmington, Delaware
665
558
BMW do Brasil Ltda., Araquari
0
BMW Manufacturing LP, Woodcliff Lake, New Jersey
BMW Receivables 1 Inc., Richmond Hill, Ontario
100
100
100
100
0
0
0
0
0
0
0
236
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Notes to the Group Financial Statements
Companies
BMW Vehicle Lease Trust 2022-1, Wilmington, Delaware¹¹
BMW Vehicle Lease Trust 2023-1, Wilmington, Delaware11
BMW Vehicle Lease Trust 2023-2, Wilmington, Delaware11
BMW Vehicle Owner Trust 2020-A, Wilmington, Delaware¹¹
BMW Vehicle Owner Trust 2022-A, Wilmington, Delaware¹¹
BMW Vehicle Owner Trust 2023-A, Wilmington, Delaware¹¹
BMWCA 2023-A SMBC, Richmond Hill, Ontario¹¹
Africa
← = Q
Equity in € million
Profit/loss in € million
Capital investment in %
100
BMW of Manhattan, Inc., Wilmington, Delaware
100
100
BMW Receivables 2 Inc., Richmond Hill, Ontario
BMW Receivables Ltd. Partnership, Richmond Hill, Ontario
Rolls-Royce Motor Cars NA, LLC, Wilmington, Delaware
SB Acquisitions, LLC, Wilmington, Delaware
BMW 2021-A Lease Conduit, Wilmington, Delaware¹¹
BMW 2022-A Lease Conduit, Wilmington, Delaware¹¹
BMW 2023-A Lease Conduit, Wilmington, Delaware¹¹
BMW Canada Auto Trust 2021-1, Richmond Hill, Ontario¹¹
BMW Canada Auto Trust 2022-1, Richmond Hill, Ontario¹¹
BMW Canada Auto Trust 2023-1, Richmond Hill, Ontario 11
BMW Vehicle Lease Trust 2021-2, Wilmington, Delaware¹¹
← = Q
Equity in € million
403
Profit/loss in € million
Capital investment in %
309
107
- 245
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Bavarian Sky China 2022-2, Beijing¹¹
100
0
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
70
51
50
240
BMW Group Report 2023
To Our Stakeholders Combined Management Report
100
Group Financial Statements
100
Capital investment in %
BMW Mobility Services, LLC, Wilmington, Delaware
BMW Operations Corp., Wilmington, Delaware
BMW Shared Services, LLC, Wilmington, Delaware
BMW Technology Corp., Wilmington, Delaware
Designworks/USA, Inc., Newbury Park, California
MINI Business Innovation, LLC, Wilmington, Delaware
MINI Canada Inc., Richmond Hill, Ontario
Urban X Accelerator SPV, LLC, Wilmington, Delaware
Africa
BMW Automobile Distributors (Pty) Ltd., Midrand
BPF Midrand Property Holdings (Pty) Ltd., Midrand
Asia
BMW (China) Insurance Brokers Co. Ltd., Beijing
BMW Financial Services Singapore Pte Ltd., Singapore
BMW Hong Kong Services Ltd., Hong Kong
BMW India Foundation, Gurgaon
BMW India Leasing Private Ltd., Gurgaon
BMW Insurance Broker (Thailand) Co., Ltd., Bangkok
BMW Insurance Services Korea Co. Ltd., Seoul
BMW Middle East Retail Competency Centre DWC-LLC, Dubai
BMW Parts Manufacturing (Thailand) Co., Ltd., Rayong Province
BMW Technology Office Israel Ltd., Tel Aviv
Herald Hezhong (Beijing) Automotive Trading Co., Ltd., Beijing
Ling Yue Digital Information Technology Co., Ltd., Beijing
BMW Philippines Corp., Manila
BMW Financial Services Hong Kong Ltd., Hong Kong
BMW ArcherMind Information Technology Co., Ltd., Nanjing
Equity in € million
Profit/loss in € million
100
Companies
Responsibility Statement and Auditor's Report
Other Information
- 168
50
573
- 54
15
973
- 339
31
17
6
50
50
50
49
20
Critical TechWorks S.A., Porto
BMW Albatha Finance PSC, Dubai
BMW Albatha Leasing, LLC, Dubai
Bavarian & Co Co., Ltd., Incheon
50
50
40
40
20
BMW (US) Holding Corp., Wilmington, Delaware
BMW Manufacturing Co., LLC, Wilmington, Delaware
BMW of North America, LLC, Wilmington, Delaware
77
Remuneration Report
BMW AVTOTOR Holding B.V., Amsterdam
PDB - Partnership for Dummy Technology and Biomechanics GbR, Gaimersheim
← = Q
Notes to the Group Financial Statements
BMW AG's associated companies, joint ventures and joint operations at 31 December 2023
Companies
Equity in € million
Profit/loss in € million
Capital investment in %
Joint ventures - equity accounted
DOMESTIC
YOUR NOW Holding GmbH, Munich³
Associated companies - equity accounted
DOMESTIC
IONITY Holding GmbH & Co. KG, Munich³
FOREIGN
THERE Holding B.V., Rijswijk
IONNA LLC, Torrance
Solid Power, Inc., Wilmington, Delaware
Joint operations - proportionately consolidated entities
FOREIGN
Spotlight Automotive Ltd., Zhangjiagang
Not equity accounted or proportionately consolidated entities
DOMESTIC7
Encory GmbH, Unterschleissheim
The Retail Performance Company GmbH, Munich
IDEALworks GmbH, Munich
FOREIGN7
Bavarian Sky China 2023-1, Beijing¹¹
← = Q
Other Information
BMW Melbourne Pty. Ltd., Melbourne
100
BMW New Zealand Ltd., Auckland
100
BMW Sydney Pty. Ltd., Sydney
Bavarian Sky Australia Trust A, Mulgrave¹¹
BMW Australia Trust 2011-2, Mulgrave¹¹
100
0
0
238
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
BMW AG's non-consolidated companies at 31 December 2023
Companies
DOMESTIC7
BMW Fleet GmbH, Munich'
Automag GmbH, Munich
BMW Car IT GmbH, Munich'
100
BMW i Ventures GmbH, Munich
BMW Financial Services New Zealand Ltd., Auckland
64
0
Bavarian Sky China Leasing 2022-1, Tianjin¹¹
Bavarian Sky China Leasing 2023-1, Tianjin¹¹
Bavarian Sky Korea 2022-1, Seoul¹¹
Bavarian Sky Korea 2022-A, Seoul¹¹
Bavarian Sky Korea 2023-1, Seoul¹¹
Bavarian Sky Korea 2023-2, Seoul¹¹
Bavarian Sky Korea 2023-A, Seoul¹¹
0
0
0
0
0
0
0
0
0
0
0
Oceania
BMW Australia Finance Ltd., Mulgrave
182
2
100
BMW Australia Ltd., Melbourne
161
100
Notes to the Group Financial Statements
FOREIGN7
Alphabet Insurance Services Polska Sp. z o.o., Warsaw
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
239
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
100
Europe
100
100
BLMC Ltd., Bracknell 10
BMW (GB) Ltd., Farnborough
BMW (UK) Investments Ltd., Bracknell 10
BMW (UK) Pensions Services Ltd., Hams Hall
BMW Car Club Ltd., Farnborough
BMW Drivers Club Ltd., Farnborough
BMW Financial Services Czech Republic s.r.o., Prague
BMW Financial Services Slovakia s.r.o., Bratislava
BMW Group Benefit Trust Ltd., Farnborough
BMW Mobility Development Center s.r.o., Prague
BMW Motorsport Ltd., Farnborough
BMW Poland sp. z o.o., Warsaw
BMW Russland Automotive 000, Kaliningrad
BMW Services Ltd., Bracknell¹º
John Cooper Garages Ltd., Farnborough
John Cooper Works Ltd., Farnborough
000 BMW Leasing, Moscow
The Americas
217-07 Northern Boulevard Corporation, Wilmington, Delaware
BMW Experience Centre Inc., Richmond Hill, Ontario
BMW i Ventures, Inc., Wilmington, Delaware
BMW i Ventures, LLC, Wilmington, Delaware
Equity in € million
Profit/loss in € million
Capital investment in %
100
100
100
100
Bavarian Sky UK D Ltd., London¹¹
The Americas
BMW Finance (United Arab Emirates) FZE, Dubai
0
957
90
100
BMW i Ventures SCS SICAV-RAIF, Senningerberg
643
-59
100
100
BMW Finance S.N.C., Guyancourt
43
100
BMW (UK) Manufacturing Ltd., Farnborough
581
104
100
BMW (UK) Ltd., Farnborough
599
383
117
BMW Financial Services (GB) Ltd., Farnborough
11,458
668
100
4,149
411
100
1,489
1,054
105
1,468
45
100
BMW (UK) Holdings Ltd., Farnborough
1,459
635
100
100
144
100
BMW Finance N.V., The Hague
46
100
BMW Russland Trading 000, Moscow
227
- 13
100
BMW International Investment B.V., The Hague
239
207
100
BMW Italia S.p.A., San Donato Milanese
203
81
100
Alphabet France Fleet Management S.A.S., Saint-Quentin-en-Yvelines
198
- 95
100
112
241
ALPHABET (GB) Ltd., Farnborough
BMW France S.A., Montigny-le-Bretonneux
BMW Austria Leasing GmbH, Salzburg
Rolls-Royce Motor Cars Ltd., Farnborough
BMW Iberica S.A., Madrid
316
- 370
100
296
148
100
289
88
100
265
2
100
100
6,990
29,648
BMW España Finance S.L., Madrid
BMW Hams Hall Motoren GmbH, Munich 4,5,6
BMW High Power Charging Beteiligungs GmbH, Munich4,6
BMW M GmbH Gesellschaft für individuelle Automobile, Munich 3,5,6
BMW Vermögensverwaltungs GmbH, Munich
Bürohaus Petuelring GmbH, Munich
LARGUS Grundstücks-Verwaltungsgesellschaft mbH, Munich
Rolls-Royce Motor Cars GmbH, Munich4,5,6
BMW Vertriebszentren Verwaltungs GmbH, Munich
BMW Anlagen Verwaltungs GmbH, Munich³, 6
Parkhaus Oberwiesenfeld GmbH, Munich
Alphabet Fuhrparkmanagement GmbH, Munich
Alphabet International GmbH, Munich4,5,6
Bavaria Wirtschaftsagentur GmbH, Munich 3, 5, 6
BMW Fahrzeugtechnik GmbH, Eisenach 3,5,6
BAVARIA-LLOYD Reisebüro GmbH, Munich
100
6,139
1
100
2,075
100
250
11,559
BMW Finanz Verwaltungs GmbH, Munich
BMW INTEC Beteiligungs GmbH, Munich 3,6
BMW Beteiligungs GmbH & Co. KG, Munich
BMW Bank GmbH, Munich³
DOMESTIC¹
0
231
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Notes to the Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
LIST OF INVESTMENTS AT 31 DECEMBER 2023
47 List of investments at 31 December 2023
The List of Investments of BMW AG pursuant to § 285 and
§ 313 HGB is presented below. Disclosures for equity and earn-
ings and for investments are not made if they are of "minor sig-
nificance" for the results of operations, financial position and net
assets of BMW AG pursuant to § 286 (3) sentence 1 no. 1 HGB
and § 313 (3) sentence 4 HGB. It is also shown in the list which
subsidiaries apply the exemptions available in § 264 (3) and
§ 264 b HGB with regard to the publication of annual financial
statements and the drawing up of a management report and/or
notes to the financial statements (footnotes 5 and 6). The Group
Financial Statements of BMW AG serve as exempting consoli-
dated financial statements for these companies.
Affiliated companies (subsidiaries) of BMW AG at 31 December 2023
Equity in € million
Profit/loss in € million
Capital investment in %
Companies
32
68
100
14
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Notes to the Group Financial Statements
Companies
← = Q
To Our Stakeholders Combined Management Report
Equity in € million
Capital investment in %
FOREIGN 2,10
Europe
BMW Holding B.V., The Hague
BMW International Holding B.V., Rijswijk
BMW Österreich Holding GmbH, Steyr
BMW (Schweiz) AG, Dielsdorf
Profit/loss in € million
BMW Group Report 2023
232
51
100
179
100
129
12
100
100
100
100
100
100
100
100
100
100
100
100
200
100
BMW Motoren GmbH, Steyr
194
100
100
100
100
100
100
234
100
BMW Group Report 2023
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Notes to the Group Financial Statements
Companies
BMW Romania S.R.L., Bucharest
To Our Stakeholders Combined Management Report
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
BMW Slovenia, distribucija motornih vozil, d.o.o., Ljubljana
100
BMW Slovenská republika s.r.o., Bratislava
Park Lane Ltd., Farnborough
Bavarian Sky S.A., Compartment German Auto Leases 6, Luxembourg 11
Bavarian Sky S.A., Compartment German Auto Leases 7, Luxembourg¹¹
Bavarian Sky S.A., Compartment German Auto Leases 8, Luxembourg¹¹
Bavarian Sky S.A., Compartment German Auto Loans 10, Luxembourg¹
Bavarian Sky S.A., Compartment German Auto Loans 11, Luxembourg 11
Bavarian Sky S.A., Compartment German Auto Loans 12, Luxembourg¹
Bavarian Sky UK 4 plc, London¹¹
0
0
0
11
0
0
0
0
Bavarian Sky UK 5 plc, London¹¹
0
Bavarian Sky UK A Ltd., London¹¹
0
Bavarian Sky UK B Ltd., London¹¹
0
Bavarian Sky UK C Ltd., London¹¹
0
0
0
100
Riley Motors Ltd., Farnborough
Swindon Pressings Ltd., Farnborough
Triumph Motor Company Ltd., Farnborough
Bavarian Sky Europe S.A., Compartment Swiss Auto Lease A, Luxembourg11
Bavarian Sky S.A. Luxembourg¹¹
Bavarian Sky S.A., Compartment A, Luxembourg¹¹
← = Q
Equity in € million
Profit/loss in € million
Capital investment in %
100
100
100
100
100
BMW Financial Services Nederland B.V., Breda
100
Oy BMW Suomi AB, Helsinki
100
100
4
Alphabet Belgium Long Term Rental NV, Aartselaar
113
41
BMW Financial Services Scandinavia AB, Sollentuna
112
GG
100
100
42
233
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
100
8
124
BMW Malta Ltd., Floriana
100
60
100
BMW Austria Bank GmbH, Salzburg
189
10
100
BMW Manufacturing Hungary Kft., Debrecen⁹
167
- 28
100
159
14
100
134
51
100
Notes to the Group Financial Statements
Companies
BMW Finanzdienstleistungen (Schweiz) AG, Dielsdorf
BMW Vertriebs GmbH, Salzburg
BMW Belgium Luxembourg S.A./N.V., Bornem
BMW Hungary Kft., Vecsés
BMW Italia Retail S.r.l., Rome
BMW Nederland B.V., The Hague
BMW Norge AS, Fornebu
BMW Northern Europe AB, Stockholm
BMW Portugal Lda., Porto Salvo
BMW Renting (Portugal) Lda., Porto Salvo
← = Q
Equity in € million
110
Profit/loss in € million
2
100
110
82
100
Bavaria Reinsurance Malta Ltd., Floriana
102
BMW Financial Services Belgium S.A./N.V., Bornem
BMW Financial Services Denmark A/S, Copenhagen
BMW Financial Services Polska Sp. z o.o., Warsaw
BMW Hellas Trade of Cars A.E., Athens
BMW Financial Services (Ireland) DAC, Dublin
Capital investment in %
Alphabet Luxembourg S.A., Leudelange
Alphabet Fuhrparkmanagement (Schweiz) AG, Dielsdorf
Alphabet Italia S.p.A., Trento
Alphabet Polska Fleet Management Sp. z o.o., Warsaw
BiV Carry ISCS, Senningerberg
Alphabet España Fleet Management S.A.U., Madrid
BiV Carry II SCS, Senningerberg
000 BMW Bank, Moscow
BMW Austria GmbH, Salzburg
BMW (UK) Capital plc, Farnborough
BMW Bulgaria EOOD, Sofia
BMW Central Medical Trustees Ltd., Farnborough
BMW China Capital B.V., The Hague
BMW Czech Republic s.r.o., Prague
BMW Danmark A/S, Copenhagen
BMW Distribution S.A.S., Vélizy-Villacoublay
BMW Automotive (Ireland) Ltd., Dublin
BMW España Finance S.L., Madrid
The determination of provisions is associated with unavoidable
estimation uncertainties and is subject to a high risk of change,
depending on factors such as notification of detected defects as
well as claims made by vehicle owners. Against this background,
this matter was of particular significance during our audit.
vehicle model level. The expected amount of obligations is ex-
trapolated from costs of the past and recognized as a provision
in the corresponding amount, if the criteria of IAS 37 have been
met. For specific or anticipated individual circumstances, for ex-
ample recalls for vehicles sold, additional provisions are recog-
nized provided they have not already been taken into account.
1/ Provisions for statutory and non-statutory warranty obliga-
tions as well as product guarantees are included in the consoli-
dated financial statements of BMW Group as a material amount
in other provisions. The obligations amounted to EUR 9,650
million (approximately 3.8% of total assets) as at 31 December
2023. The BMW Group is responsible for the legally required
warranty and product guarantees in the respective sales market.
In order to estimate the liabilities arising from statutory and non-
statutory warranty obligations as well as product guarantees for
vehicles sold, information on the type and volume of damages
arising and on remedial measures is recorded and analyzed at
3/ Valuation of provisions for statutory and non-statutory
warranty obligations as well as product guarantees
BMW Group Report 2023 To Our Stakeholders Combined Management Report
In our view, the assumptions and parameters used in the meas-
urement of receivables from sales financing were appropriate
overall.
also evaluated the relevant IT systems and internal processes.
The evaluation included an assessment by our IT-specialists of
the appropriateness of the systems concerned and associated
interfaces to ensure the completeness of data as well as the au-
dit of automated controls for data processing. As part of our au-
dit we assessed in particular the appropriateness of the risk
classification procedures as well as the risk provisioning param-
eters used. For this purpose, we analyzed in particular the vali-
dations of parameters that are regularly conducted by the Com-
pany. To assess the default risk, we also used targeted sam-
pling of individual cases to examine whether the attributes for
assignment to the respective risk categories were suitably avail-
able and the impairment losses had been calculated using the
parameters defined for these risk categories.
← = Q
2/ In order to assess the appropriateness of the valuation
method used for the determination of the provisions for statu-
tory and non-statutory warranty obligations as well as product
guarantees including the assumptions and parameters, we pri-
marily obtained an understanding of the process for determining
the assumptions and parameters through discussions with the
responsible employees of the BMW Group. We also evaluated
the appropriateness as well as effectiveness of controls for de-
termining the assumptions and parameters. With the involve-
ment of our IT specialists, we checked the IT systems used re-
garding their compliance. We compared the expenses for claims
and technical actions with actual costs incurred in order to draw
conclusions on the forecast accuracy. Based on a targeted sam-
ple of vehicle models, the mathematical correctness of the valu-
ation model used across the Group was examined. We exam-
ined and evaluated the assumptions used by the BMW Group
concerning the extent to which the past values were representa-
tive of the expected susceptibility of damage, the expected value
of damage per vehicle (comprising parts and labor input) as well
as the expected assertion of claims from statutory and non-stat-
utory warranties.
Other Information
Remuneration Report
3/ The Company's disclosures on the applied "Accounting poli-
cies, assumptions, judgments and estimations" are contained in
the notes to the consolidated financial statements under note 6
and on "receivables from sales financing" are contained under
note 25.
In our view, the method for the valuation of provisions for statu-
tory and non-statutory warranty obligations as well as product
guarantees is overall appropriate. Taking into consideration the
information available, we believe that, overall, the measurement
The other information comprises further
3/ The Company's disclosures on the applied "Accounting poli-
cies, assumptions, judgments and estimations" are contained in
the notes to the consolidated financial statements under note 6
and on "Other provisions" are contained under note 34.
Other Information
The executive directors are responsible for the other infor-
mation. The other information comprises the following non-au-
dited parts of the group management report:
the section "APPROPRIATENESS AND EFFECTIVENESS
OF THE INTERNAL CONTROL SYSTEM AND RISK
MANAGEMENT SYSTEM" of the group management
report
the disclosures marked with [[ ]] of the non-financial
statement to comply with §§ 289b to 289e HGB and with
§§ 315b to 315c HGB
the statement on corporate governance pursuant to § 289f
HGB and § 315d HGB
the remuneration report pursuant to 162 AktG [Aktien-
gesetz: German Stock Corporation Act], for which the
supervisory board is also responsible
all remaining parts of the annual report - excluding cross-
references to external information - with the exception of
the audited consolidated financial statements, the audited
group management report and our auditor's report
Our audit opinions on the consolidated financial statements and
on the group management report do not cover the other infor-
mation, and consequently we do not express an audit opinion or
any other form of assurance conclusion thereon.
Responsibility Statement and Auditor's Report
Independent Auditor's Report
248
parameters and assumptions used by the executive directors
are appropriate.
Group Financial Statements
Our presentation of these key audit matters has been structured
in each case as follows:
247
Responsibility Statement and Auditor's Report
Independent Auditor's Report
Group Financial Statements
Remuneration Report
← = Q
provide a basis for our audit opinions on the consolidated finan-
cial statements and on the group management report.
Key Audit Matters in the Audit of the Consolidated
Financial Statements
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the consoli-
dated financial statements for the financial year from 1 January
to 31 December 2023. These matters were addressed in the
context of our audit of the consolidated financial statements as
a whole, and in forming our audit opinion thereon; we do not
provide a separate audit opinion on these matters.
In our view, the matters of most significance in our audit were as
follows:
1/ Measurement of leased products
2/ Valuation of receivables from sales financing
3/ Valuation of provisions for statutory and non-statutory
warranty obligations as well as product guarantees
1/ Matter and issue
2/ Audit approach and findings
3/ Reference to further information
Hereinafter we present the key audit matters:
1/ Measurement of leased products
1/ The BMW Group leases vehicles to end customers under op-
erating leases (leased products). At the balance sheet date, the
figure reported under the "leased products" line item for operat-
ing leases was EUR 43,118 million (approximately 17.2% of
total assets). Leased products are measured at cost, which is
depreciated on a straight-line basis over the lease term to the
expected residual value (recoverable amount). A key estimated
value for subsequent measurement of leased products is the
expected residual value at the end of the lease term. For the re-
sidual value forecasts the BMW Group uses internally available
data on historical empirical values, current market data and
market estimates as well as forecasts by external market re-
search institutes. The residual value estimates also contain reg-
ulatory changes in the individual markets and expectations re-
garding customer behavior, among others including climate pol-
icy considerations. The estimation of future residual values is
subject to judgment due to the large number of assumptions to
be made by the executive directors and the amount of data in-
cluded in the determination.
Against this background and due to the resulting significant un-
certainties with regard to estimates in the context of measuring
the residual values of the leased products, this matter was of
particular significance in the context of our audit.
2/ As part of our audit we obtained an understanding of the de-
velopment of operating leases, the underlying residual value
risks as well as the business processes for the identification,
management, monitoring and measurement of residual value
risks, among other things by inquiries and inspection of docu-
ments related to the internal calculation methods. Furthermore,
we evaluated the appropriateness and effectiveness of the in-
ternal control system, particularly regarding the determination of
expected residual values. This included the evaluation of the
propriety of the relevant IT systems as well as the implemented
interfaces therein by our IT-specialists. In addition, we evaluated
the appropriateness of the forecasting methods, the model as-
sumptions as well as the parameters used for the measurement
of the residual values based on the validations carried out by the
BMW Group. For this purpose, we inquired with the BMW
Group's experts responsible for the management and monitor-
ing of residual value risks and inspected the internal analysis on
residual value developments and residual value forecasts as
well as the validation results. We examined the mathematical
correctness of the forecast values using the key calculation
steps.
Based on our audit procedures, we were able to satisfy our-
selves that the methods and processes for determining the ex-
pected residual values of leased products underlying the
valuation are appropriate and the assumptions and parameters
included in the forecast model for the residual value are appro-
priate as a whole.
3/ The Company's disclosures on the applied "Accounting poli-
cies, assumptions, judgments and estimations" are contained in
the notes to the consolidated financial statements under note 6
and on leased products are contained under note 23.
2/ Valuation of receivables from sales financing
1/ The BMW Group offers end customers, dealerships and im-
porters various financing models for vehicles. In this context,
current and non-current receivables from sales financing total-
ing EUR 87,355 million are reported in the consolidated state-
ment of financial position as at the balance sheet date (approx-
imately 34.8% of total assets). Impairment losses amounting to
EUR 2,189 million were recognized on these receivables as at
the balance sheet date. In order to determine the amount of the
necessary valuation allowances to be recognized with respect
to receivables from sales financing, the BMW Group, among
others, evaluates the creditworthiness of the dealers, importers
and end customers, as well as any loss ratios, and risk provi-
sioning parameters are derived based on historical default prob-
abilities and loss ratios.
The determination of the valuation allowances by the executive
directors is subject to a significant degree of judgment due to
several value-influencing factors such as the estimation of cre-
ditworthiness, the determination of probabilities of default and
loss ratios and was therefore of particular significance in the
context of our audit.
2/ As part of our audit we obtained a comprehensive under-
standing of the development of receivables from sales financing,
the associated default-related risks as well as the business pro-
cesses for the identification, management, monitoring and
measurement of default risks, among other things by inquiries
and inspection of documents on the internal calculation meth-
ods. Furthermore, we evaluated the appropriateness and effec-
tiveness of the internal control system regarding the determina-
tion of the impairment loss to be recognized. In this context, we
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Responsibility Statement and Auditor's Report
Independent Auditor's Report
← = Q
Other Information
250
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Independent Auditor's Report
Remuneration Report
Other Information
OTHER LEGAL AND
REGULATORY
REQUIREMENTS
Report on the Assurance on the Electronic Rendering of the
Consolidated Financial Statements and the Group Management
Report Prepared for Publication Purposes in Accordance with §
317 Abs. 3a HGB
Assurance Opinion
We have performed assurance work in accordance with § 317
Abs. 3a HGB to obtain reasonable assurance as to whether the
rendering of the consolidated financial statements and the
group management report (hereinafter the "ESEF documents")
contained in the electronic file BMW_AG_KA+KLB_ESEF-
2023-12-31.zip and prepared for publication purposes com-
plies in all material respects with the requirements of § 328 Abs.
1 HGB for the electronic reporting format ("ESEF format"). In ac-
cordance with German legal requirements, this assurance work
extends only to the conversion of the information contained in
the consolidated financial statements and the group manage-
ment report into the ESEF format and therefore relates neither
to the information contained within these renderings nor to any
other information contained in the electronic file identified
above.
In our opinion, the rendering of the consolidated financial state-
ments and the group management report contained in the elec-
tronic file identified above and prepared for publication purposes
complies in all material respects with the requirements of § 328
Abs. 1 HGB for the electronic reporting format. Beyond this as-
surance opinion and our audit opinion on the accompanying
consolidated financial statements and the accompanying group
management report for the financial year from 1 January to 31
December 2023 contained in the "Report on the Audit of the
Consolidated Financial Statements and on the Group Manage-
ment Report" above, we do not express any assurance opinion
on the information contained within these renderings or on the
other information contained in the electronic file identified
above.
From the matters communicated with those charged with gov-
ernance, we determine those matters that were of most signifi-
cance in the audit of the consolidated financial statements of the
current period and are therefore the key audit matters. We de-
scribe these matters in our auditor's report unless law or regu-
lation precludes public disclosure about the matter.
Basis for the Assurance Opinion
Responsibilities of the Executive Directors and the Supervisory
Board for the ESEF Documents
The executive directors of the Company are responsible for the
preparation of the ESEF documents including the electronic ren-
dering of the consolidated financial statements and the group
management report in accordance with § 328 Abs. 1 Satz 4 Nr.
[number] 1 HGB and for the tagging of the consolidated finan-
cial statements in accordance with § 328 Abs. 1 Satz 4 Nr. 2
HGB.
In addition, the executive directors of the Company are respon-
sible for such internal control as they have considered necessary
to enable the preparation of ESEF documents that are free from
material non-compliance with the requirements of § 328 Abs. 1
HGB for the electronic reporting format, whether due to fraud or
error.
The supervisory board is responsible for overseeing the process
for preparing the ESEF documents as part of the financial re-
porting process.
Group Auditor's Responsibilities for the Assurance Work on the
ESEF Documents
Our objective is to obtain reasonable assurance about whether
the ESEF documents are free from material non-compliance
with the requirements of § 328 Abs. 1 HGB, whether due to
fraud or error. We exercise professional judgment and maintain
professional skepticism throughout the assurance work. We
also:
Identify and assess the risks of material non-compliance
with the requirements of § 328 Abs. 1 HGB, whether due
to fraud or error, design and perform assurance procedures
responsive to those risks, and obtain assurance evidence
that is sufficient and appropriate to provide a basis for our
assurance opinion.
Obtain an understanding of internal control relevant to the
assurance work on the ESEF documents in order to design
assurance procedures that are appropriate in the
circumstances, but not for the purpose of expressing an
assurance opinion on the effectiveness of these controls.
Evaluate the technical validity of the ESEF documents, i.e.,
whether the electronic file containing the ESEF documents
meets the requirements of the Delegated Regulation (EU)
2019/815 in the version in force at the date of the
consolidated financial statements on the technical
specification for this electronic file.
Evaluate whether the ESEF documents provide an XHTML
rendering with content equivalent to the audited
consolidated financial statements and to the audited group
management report.
Evaluate whether the tagging of the ESEF documents with
Inline XBRL technology (iXBRL) in accordance with the
requirements of Articles 4 and 6 of the Delegated
Regulation (EU) 2019/815, in the version in force at the
date of the consolidated financial statements, enables an
appropriate and complete machine-readable XBRL copy of
the XHTML rendering.
Group Financial Statements
We conducted our assurance work on the rendering of the con-
solidated financial statements and the group management re-
port contained in the electronic file identified above in accord-
ance with § 317 Abs. 3a HGB and the IDW Assurance Standard:
Assurance Work on the Electronic Rendering of Financial State-
ments and Management Reports, Prepared for Publication Pur-
poses in Accordance with § 317 Abs. 3a HGB (IDW ASS 410
(06.2022]) and the International Standard on Assurance En-
gagements 3000 (Revised). Our responsibility in accordance
therewith is further described in the "Group Auditor's Responsi-
bilities for the Assurance Work on the ESEF Documents" sec-
tion. Our audit firm applies the IDW Standard on Quality Man-
agement: Requirements for Quality Management in the Audit
Firm (IDW QMS 1 (09.2022)).
We also provide those charged with governance with a state-
ment that we have complied with the relevant independence re-
quirements, and communicate with them all relationships and
other matters that may reasonably be thought to bear on our
independence, and where applicable, actions taken to eliminate
threats or safeguards applied.
We communicate with those charged with governance regard-
ing, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant de-
ficiencies in internal control that we identify during our audit.
Perform audit procedures on the prospective information
presented by the executive directors in the group
management report. On the basis of sufficient appropriate
audit evidence we evaluate, in particular, the significant
assumptions used by the executive directors as a basis for
the prospective information and evaluate the proper
derivation of the prospective information from these
assumptions. We do not express a separate audit opinion
on the prospective information and on the assumptions
used as a basis. There is a substantial unavoidable risk that
future events will differ materially from the prospective
information.
← = Q
In connection with our audit, our responsibility is to read the
other information mentioned above and, in so doing, to consider
whether the other information
is materially inconsistent with the consolidated financial
statements, with the group management report disclosures
audited in terms of content or with our knowledge obtained
in the audit, or
otherwise appears to be materially misstated.
Responsibilities of the Executive Directors and the
Supervisory Board for the Consolidated Financial
Statements and the Group Management Report
The executive directors are responsible for the preparation of
the consolidated financial statements that comply, in all material
respects, with IFRSS as adopted by the EU and the additional
requirements of German commercial law pursuant to § 315e
Abs. 1 HGB and that the consolidated financial statements, in
compliance with these requirements, give a true and fair view of
the assets, liabilities, financial position, and financial perfor-
mance of the Group. In addition the executive directors are re-
sponsible for such internal control as they have determined nec-
essary to enable the preparation of consolidated financial state-
ments that are free from material misstatement, whether due to
fraud (i.e., fraudulent financial reporting and misappropriation of
assets) or error.
In preparing the consolidated financial statements, the execu-
tive directors are responsible for assessing the Group's ability to
continue as a going concern. They also have the responsibility
for disclosing, as applicable, matters related to going concern. In
addition, they are responsible for financial reporting based on
the going concern basis of accounting unless there is an inten-
tion to liquidate the Group or to cease operations, or there is no
realistic alternative but to do so.
Furthermore, the executive directors are responsible for the
preparation of the group management report that, as a whole,
provides an appropriate view of the Group's position and is, in
all material respects, consistent with the consolidated financial
statements, complies with German legal requirements, and
appropriately presents the opportunities and risks of future de-
velopment. In addition, the executive directors are responsible
for such arrangements and measures (systems) as they have
considered necessary to enable the preparation of a group man-
agement report that is in accordance with the applicable Ger-
man legal requirements, and to be able to provide sufficient ap-
propriate evidence for the assertions in the group management
report.
The supervisory board is responsible for overseeing the Group's
financial reporting process for the preparation of the consoli-
dated financial statements and of the group management re-
port.
Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements and of the Group Management Report
Our objectives are to obtain reasonable assurance about
whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error,
and whether the group management report as a whole provides
an appropriate view of the Group's position and, in all material
respects, is consistent with the consolidated financial state-
ments and the knowledge obtained in the audit, complies with
the German legal requirements and appropriately presents the
opportunities and risks of future development, as well as to issue
an auditor's report that includes our audit opinions on the con-
solidated financial statements and on the group management
report.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with § 317
HGB and the EU Audit Regulation and in compliance with Ger-
man Generally Accepted Standards for Financial Statement Au-
dits promulgated by the Institut der Wirtschaftsprüfer (IDW) will
always detect a material misstatement. Misstatements can
arise from fraud or error and are considered material if, individ-
ually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of
these consolidated financial statements and this group man-
agement report.
We exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of
the consolidated financial statements and of the group
management report, whether due to fraud or error, design
and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate
to provide a basis for our audit opinions. The risk of not
detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls.
Obtain an understanding of internal control relevant to the
audit of the consolidated financial statements and of
arrangements and measures (systems) relevant to the
audit of the group management report in order to design
audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an audit opinion on
the effectiveness of these systems.
Evaluate the appropriateness of accounting policies used
by the executive directors and the reasonableness of
estimates made by the executive directors and related
disclosures.
Conclude on the appropriateness of the executive directors'
use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast
significant doubt on the Group's ability to continue as a
going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in the auditor's
report to the related disclosures in the consolidated
financial statements and in the group management report
or, if such disclosures are inadequate, to modify our
respective audit opinions. Our conclusions are based on the
audit evidence obtained up to the date of our auditor's
report. However, future events or conditions may cause the
Group to cease to be able to continue as a going concern.
249
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Independent Auditor's Report
Remuneration Report
Other Information
← = Q
-
Evaluate the overall presentation, structure and content of
the consolidated financial statements, including the
disclosures, and whether the consolidated financial
statements present the underlying transactions and events
in a manner that the consolidated financial statements give
a true and fair view of the assets, liabilities, financial
position and financial performance of the Group in
compliance with IFRSS as adopted by the EU and the
additional requirements of German commercial law
pursuant to § 315e Abs. 1 HGB.
Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express audit opinions on the
consolidated financial statements and on the group
management report. We are responsible for the direction,
supervision and performance of the group audit. We remain
solely responsible for our audit opinions.
Evaluate the consistency of the group management report
with the consolidated financial statements, its conformity
with German law, and the view of the Group's position it
provides.
Remuneration Report
Combined Management Report
Other Information
BMW Group Report 2023
6 Exemption from publishing financial statements applied in accordance with § 264 (3) and § 264b HBG.
7 These entities are neither consolidated nor accounted for using the equity method due to their overall immateriality for the Group Financial Statements.
8 The amounts shown for entities accounted for using the equity method and for proportionately consolidated entities correspond to the annual financial statements drawn up in accordance with uniform
IFRS rules. Equity not denominated in euros is translated into euros using the closing exchange rate at the balance sheet date, earnings are translated using the average rate.
9 First-time consolidation.
10 Deconsolidation in financial year 2023: Alphabet Austria Fuhrparkmanagement GmbH, Salzburg (merger), BMW Services Ltd, Bracknell (in liquidation), BMW (UK) Investments Ltd, Bracknell (in
liquidation), BLMC Ltd, Bracknell (in liquidation).
11 Control on basis of economic dependence.
28
18
16
16
10
8
6
5
3
3
242
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
Munich, 12 March 2024
Bayerische Motoren Werke
5 Exemption from drawing up a management report applied in accordance with § 264 (3) and § 264b HBG.
Aktiengesellschaft
4 Profit and Loss Transfer Agreement with a subsidiary of BMW AG.
2 The amounts shown for foreign affiliated companies correspond to the annual financial statements drawn up in accordance with uniform IFRS rules. Equity and earnings not denominated in euros are
translated into euros using the closing exchange rate at the balance sheet date.
241
To Our Stakeholders
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Notes to the Group Financial Statements
BMW AG's participations at 31 December 2023
Companies
DOMESTIC7
IVM Industrie-Verband Motorrad GmbH & Co. Dienstleistungs KG, Essen
SGL Carbon SE, Wiesbaden
Hubject GmbH, Berlin
Joblinge gemeinnützige AG Leipzig, Leipzig
Joblinge gemeinnützige AG Berlin, Berlin
Racer Benchmark Group GmbH, Landsberg am Lech
Joblinge gemeinnützige AG München, Munich
Deutsches Forschungszentrum für Künstliche Intelligenz GmbH, Kaiserslautern
GSB Sonderabfall-Entsorgung Bayern GmbH, Baar-Ebenhausen
Northvolt AB, Stockholm
Equity in € million
Profit/loss in € million
Capital investment in %
1 The amounts shown for German affiliated companies correspond to the annual financial statements drawn up in accordance with German accounting rules (HGB).
3 Profit and Loss Transfer Agreement with BMW AG.
The Board of Management
FOREIGN7
Jochen Goller
Jochen Goller
Ilka Horstmeier
Walter Mertl
Dr-Ing Milan Nedeljković
Dr-Ing Joachim Post
Frank Weber
245
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Independent Auditor's Report
Remuneration Report
Other Information
← = Q
INDEPENDENT AUDITOR'S REPORT
Report on the audit of the consolidated financial
statements and of the group management report
Audit Opinions
We have audited the group financial statements of Bayerische
Motoren Werke Aktiengesellschaft, Munich, and its subsidiaries
(the Group), which comprise the balance sheet for the group at
31 December 2023, and the income statement for the group,
the statement of comprehensive income for the group, the state-
ment of changes in equity for the group and the cash flow state-
ment for the group for the financial year from 1 January to
31 December 2023, and notes to the group financial state-
ments, including material accounting policy information. In addi-
tion, we have audited the group management report of Bayer-
ische Motoren Werke Aktiengesellschaft, which is combined with
the Company's management report, for the financial year from
1 January to 31 December 2023. In accordance with the Ger-
man legal requirements, we have not audited the content of
those parts of the group management report listed in the "Other
Information" section of our auditor's report.
In our opinion, on the basis of the knowledge obtained in the
audit,
the accompanying consolidated financial statements
comply, in all material respects, with the IFRSs as adopted
by the EU, and the additional requirements of German
commercial law pursuant to § [Article] 315e Abs.
[paragraph] 1 HGB [Handelsgesetzbuch: German
Commercial Code] and, in compliance with these
requirements, give a true and fair view of the assets,
liabilities, and financial position of the Group as at 31
December 2023, and of its financial performance for the
financial year from 1 January to 31 December 2023, and
the accompanying group management report as a whole
provides an appropriate view of the Group's position. In all
material respects, this group management report is
consistent with the consolidated financial statements,
complies with German legal requirements and
appropriately presents the opportunities and risks of future
development. Our audit opinion on the group management
report does not cover the content of those parts of the
group management report listed in the "Other Information"
section of our auditor's report.
Pursuant to § 322 Abs. 3 Satz [sentence] 1 HGB, we declare
that our audit has not led to any reservations relating to the legal
compliance of the consolidated financial statements and of the
group management report.
Basis for the Audit Opinions
Oliver Zipse
246
We conducted our audit of the consolidated financial statements
and of the group management report in accordance with § 317
HGB and the EU Audit Regulation (No. 537/2014, referred to
subsequently as "EU Audit Regulation") in compliance with Ger-
man Generally Accepted Standards for Financial Statement Au-
dits promulgated by the Institut der Wirtschaftsprüfer [Institute
of Public Auditors in Germany] (IDW). Our responsibilities under
those requirements and principles are further described in the
"Auditor's Responsibilities for the Audit of the Consolidated Fi-
nancial Statements and of the Group Management Report" sec-
tion of our auditor's report. We are independent of the group en-
tities in accordance with the requirements of European law and
German commercial and professional law, and we have fulfilled
our other German professional responsibilities in accordance
with these requirements. In addition, in accordance with Article
10 (2) point (f) of the EU Audit Regulation, we declare that we
have not provided non-audit services prohibited under Arti-
cle 5 (1) of the EU Audit Regulation. We believe that the audit
evidence we have obtained is sufficient and appropriate to
Oliver Zipse
The Board of Management
To Bayerische Motoren Werke Aktiengesellschaft, Munich
Munich, 12 March 2024
Walter Mertl
Ilka Horstmeier
Dr-Ing Milan Nedeljković
Bayerische Motoren Werke
Aktiengesellschaft
Dr-Ing Joachim Post
Frank Weber
243
BMW Group Report 2023 To Our Stakeholders Combined Management Report Group Financial Statements
Remuneration Report
Other Information
←三〇
244 Responsibility Statement by the Company's Legal Representatives
245 Independent Auditor's Report
252 Independent Practitioner's Report
Responsibility Statement and Auditor's Report
RESPONSIBILITY STATEMENT
04
LEGAL REPRESENTATIVES
← = Q
RESPONSIBILITY STATEMENT BY THE COMPANY'S
Responsibility Statement and Auditor's Report Remuneration Report
Responsibility Statement by the Company's Legal Representatives
Other Information
Group Financial Statements
BMW Group Report 2023 To Our Stakeholders Combined Management Report
244
AND AUDITOR'S REPORT
"To the best of our knowledge, and in accordance with the appli-
cable reporting principles, the Group Financial Statements give a
true and fair view of the assets, liabilities, financial position and
results of operations of the Group, and the Group Management
Report includes a fair review of the development and perfor-
mance of the business and position of the Group, together with a
description of the principal opportunities and risks associated
with the expected development of the Group."
Statement pursuant to § 117 No.1 of the German Securities
Trading Act (WPHG) in conjunction with § 297 (2) sentence 4
and § 315 (1) sentence 5 of the German Commercial Code
(HGB)
The BMW Group aims to be the most successful and sustainable
premium provider of individual mobility. The business strategy
focuses on the customer and the provision of sustainable individ-
ual mobility in the premium segment, taking into account high
profitability, in order to secure the Company's independence in
the future. The remuneration system contributes to the imple-
mentation of the business strategy and the sustainable and long-
term development of the Company. It also takes into account the
concerns of the Company's important stakeholders (in particular,
shareholders, customers and employees). The incentive effects
of the various remuneration components have a complementary
effect.
The total remuneration is in line with market practice both in
terms of amount and structure, and takes into account the
size, complexity and economic situation of the Company.
The remuneration system observes the principle of
consistency between the remuneration systems in the
Company: the remuneration systems for the Board of
Management, executives and employees of BMW AG are all
designed in a similar way.
The remuneration system takes into account both the
performance of the entire Board of Management and the
achievement of individual targets.
The remuneration system ensures that both positive and
negative developments are appropriately reflected in the
remuneration ("pay for performance").
The total remuneration of the members of the Board of
Management is commensurate with their tasks and
performance as well as the Company's situation.
OF THE BOARD OF MANAGEMENT
The remuneration system which has been in place since the
2021 financial year complies with the provisions of the German
Stock Corporation Act (AktG) and the recommendations and
suggestions of the GCGC. The Supervisory Board has applied the
following principles in designing the remuneration system for the
Board of Management:
Principles of the remuneration system and the contribution of
remuneration to the promotion of the Company's business
strategy and its long-term development
1.
III. REMUNERATION OF THE MEMBERS
← = Q
Other Information
The fixed basic remuneration counteracts the temptation to
take disproportionately high risks in order to achieve short-
term goals, and thus contributes to the long-term
development of the Company. It ensures a minimum income
appropriate to the tasks and responsibilities of a member of
the Board of Management.
III. Remuneration of the Members of the Board of Management
The remuneration structure is geared towards the
sustainable and long-term development of the Company.
Therefore, variable remuneration components are pre-
dominantly granted on the basis of a multi-year
assessment.
The variable bonus is divided into two parts, which influence
behaviour in different ways. The earnings-related
component of the bonus rewards recipients for achieving
the Company's financial targets in the vesting year, and
promotes the earnings-related parts of the business
strategy. In contrast, the performance component of the
bonus is based on non-financial performance criteria, which
are also derived from the business strategy. In this respect,
the performance component of the bonus also offers
particular incentives to encourage individuals to pursue the
goals of the business strategy consistently for the long-term
development of the Company. These goals do not have to
be directly reflected in the key financial indicators for a given
vesting year.
The table below shows an overview of the current remuneration system.
COMPONENT
focus targets. The obligation to use the total net amount to
purchase shares of common stock in the Company and to
hold these shares for at least four years is a share ownership
guideline that strengthens the entrepreneurial long-term
orientation of the Board of Management. Implementing the
corporate strategy sustainably by taking appropriate
decisions also creates lasting value for the shareholders,
and thus regularly provides the basis for positive long-term
capital market performance. Due to the substantial
investment and the fixed holding period associated with
these shares, members of the Board of Management
participate in the long-term positive (and negative)
development of the Company, as reflected in the share price
and dividend trends.
Strategic relevance
Remuneration Report
Retirement benefits
Compensation payments
Fringe benefits
Base salary
Parameters/measurement base, applicable amounts
FIXED REMUNERATION COMPONENTS
Overview of the remuneration system
2.
III. Remuneration of the Members of the board of Management
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
259
The amount of the variable share-based remuneration also
depends on the fulfilment of financial and non-financial
objectives derived from the business strategy, since 50% of
the target personal cash investment amount earmarked for
share purchases is linked to a financial key indicator (ROCE
in the Automotive segment), and 50% is linked to strategic
Group Financial Statements Responsibility Statement and Auditor's Report
VI. Other Considerations
258
257
² Due to rounding, it is possible that individual figures in this report may not add up exactly to the
totals provided, and that the percentages presented here may not be an exact reflection of the
absolute values to which they relate.
1 For reasons of simplicity, this report partially uses the masculine form in reference to persons. It is
intended to represent all genders.
VII. Auditor's Report
305
304
The 2023 financial year was very successful for the BMW Group.
A total of 2,554,183 vehicles were delivered - a new record for
the BMW Group. The BMW brand defended its leading position
in the global premium segment by selling just under 2.3 million
delivered vehicles. The Rolls-Royce brand also achieved record
sales. BMW Motorrad achieved the strongest sales in the Com-
pany's history in the year of its 100th anniversary.
REVIEW OF THE 2023 FINANCIAL YEAR
FROM A REMUNERATION PERSPECTIVE
I.
schaft, Frankfurt am Main, Munich branch, has audited the Re-
muneration Report beyond the requirements of § 162 (3) Sen-
tences 1 and 2 AktG. The Auditor's Report is attached to this
report.
Wirtschaftsprüfungsgesell-
GmbH
PricewaterhouseCoopers
In order to facilitate understanding, the basic features of the re-
muneration system applicable to the members of the Board of
Management and the Supervisory Board, as applied in the 2023
financial year, are also set out below. In view of the fact that indi-
vidual members of the Board of Management also received re-
muneration components from the remuneration system in effect
in the 2018 financial year during the 2023 financial year, ele-
ments of these systems are also explained to the extent neces-
sary for comprehension.
The Board of Management and the Supervisory Board have pre-
pared this Remuneration Report in accordance with the require-
ments of § 162 of the German Stock Corporation Act (AktG). The
report shows and explains the remuneration granted and owed
to the individual current and former members of the Board of
Management and the Supervisory Board of Bayerische Motoren
Werke Aktiengesellschaft (BMW AG) in the financial year 2023.1.2
REMUNERATION REPORT
VARIABLE REMUNERATION COMPONENTS
BMW Group Report 2023
BMW Group Report 2023 To Our Stakeholders Combined Management Report
To Our Stakeholders Combined Management Report
Responsibility Statement and Auditor's Report
There are no plans to change the remuneration system for mem-
bers of the Supervisory Board for the 2024 financial year.
The remuneration system and the target remuneration for the
remuneration levels of the members of the Board of Manage-
ment, as described in this report for the 2023 financial year, will
continue to apply unchanged in the 2024 financial year. In De-
cember 2023, the Supervisory Board set the targets for variable
remuneration for the 2024 financial year on the basis of a pro-
posal by the Personnel Committee. A resolution was passed to
raise the required level of performance for the earnings compo-
nent of the bonus for the Board of Management, which remains
limited to 180% of the target remuneration.
2024 FINANCIAL YEAR
OUTLOOK FOR THE
II.
Incorporation. In the 2023 financial year, Dr Martin Kimmich was
appointed by the court to replace Mr Manfred Schoch as a mem-
ber of the Supervisory Board on 18 January 2023. Mr Schoch left
the Supervisory Board on 31 December 2022. On 23 January
2023, Dr Kimmich was appointed as the first deputy chair by the
Supervisory Board and as a member of the Personnel and Audit
Committee. As the first deputy chair, he is also a member of the
Presiding Board and the legally required Mediation Committee.
Apart from this, the composition of the Personnel Committee,
which is responsible for the preparation of remuneration deci-
sions in accordance with the Supervisory Board's rules of proce-
dure, did not change in the 2023 financial year. The Supervisory
Board awarded a contract to new external remuneration consult-
ants in the 2023 financial year. The Remuneration Report for the
2022 financial year was confirmed by the Annual General Meet-
ing on 11 May 2023 with a majority of 94.14% of the valid votes
cast. In view of the high level of approval, there was no reason to
rethink the implementation of the current remuneration system
or the manner of reporting. Changes were made to make certain
issues clearer.
The remuneration system for the members of the Supervisory
Board is set out in Article 16 of the Articles of Incorporation and
provides only for fixed remuneration. It was confirmed by the An-
nual General Meeting on 12 May 2021 with a majority of
99.40% of the valid votes cast, and implemented for the 2023
financial year in accordance with the provisions of the Articles of
The composition of the Board of Management changed during
the 2023 financial year. Mr Pieter Nota left the Board of Man-
agement on 31 October 2023 by mutual agreement as part of a
succession arrangement. Dr Nicolas Peter left the Board of Man-
agement on 11 May 2023. This was also by mutual agreement
as part of a succession arrangement. ▾ Premature termination of
activities and post-contractual non-competition clause Mr Walter Mertl was
appointed as the member of the Board of Management respon-
sible for Finance on 12 May 2023. Mr Jochen Goller was ap-
pointed as the member of the Board of Management responsible
for Customer, Brands, Sales on 1 November 2023. From the
start date of his second period of office on 1 July 2023, Mr Frank
Weber was eligible to receive the target remuneration in the sec-
ond remuneration level, which is available to members of the
Board of Management from their second period of office.
If necessary, and in the interest of the long-term success of
BMW AG, the Supervisory Board may temporarily deviate from
the remuneration system - as provided for in § 87a (2) Sentence
2 AktG. In accordance with G.11 of the German Corporate Gov-
ernance Code dated 28 April 2022 ("GCGC"), the Supervisory
Board has also reserved the right to make adjustments if extraor-
dinary developments occur, such as significant acquisitions and
disposals, or changes in accounting standards or tax regulations
that have a significant impact. After due examination, it did not
make use of these options for the 2023 financial year.
makes up part of the long-term variable remuneration (share-
based remuneration) component was also exceeded. In terms of
the non-financial strategic focus targets for the long-term vari-
able remuneration, the ambitious targets related to the reduction
of fleet carbon emissions in the EU were exceeded, while the
BMW Group's sales targets for all-electric vehicles were not quite
met in full. Share-based remuneration for the financial year 2023
Thanks to its strong overall performance, the Board of Manage-
ment exceeded both the financial and a large part of the non-
financial targets for short-term variable remuneration (bonuses)
for the 2023 financial year. 7 Bonus for the 2023 financial year The fi-
nancial target tied to ROCE in the Automotive segment which
In December 2022, the Supervisory Board set ambitious targets
linked to the variable remuneration of the members of the Board
of Management for the 2023 financial year. Of the total variable
target remuneration available, around 39% was linked to envi-
ronmental, social or governance (ESG) targets. The Supervisory
Board has set ambitious targets to reduce fleet carbon emissions
in the EU and to increase all-electric vehicle sales. These serve
as strategic focus targets that correspond to 50% of the long-
term variable remuneration (share-based remuneration). The
Supervisory Board has thus once again incorporated the strate-
gic importance of accelerating the electrification of the vehicle
fleet into the remuneration for the members of the Board of Man-
agement. The Supervisory Board placed particular emphasis on
environmental sustainability targets, which make up 50% of the
long-term variable remuneration.
The current remuneration system for the members of the Board
of Management came into effect on 1 January 2021. The Annual
General Meeting approved it on 12 May 2021 with a majority of
91.60% of the valid votes cast. The Supervisory Board did not
resolve any changes to the remuneration system or the target
remuneration in the remuneration levels set out for the members
of the Board of Management in the 2023 financial year.
The BMW Group generated a strong profit in the 2023 financial
year. Group net profit amounted to € 12.2 billion, with € 11.3 bil-
lion attributable to BMW AG shareholders, while the Group return
on sales after tax amounted to 7.8%. Under the leadership of the
Board of Management, the Company continued to drive the
BMW Group's transformation to electromobility forward in the re-
porting year. The BMW Group increased its sales of all-electric
ve-hicles at a significantly greater pace than the market as a
whole and has an all-electric offering in every major segment.
The proportion of total sales attributable to all-electric vehicles
went up to around 15%.
← = Q
II. Outlook for the 2024 Financial Year
Remuneration Report Other Information
Group Financial Statements
Member of the Board of Management:
-10% individual targets
― € 1.05 million p. a. (from second period of office or fourth year of mandate = second remuneration level)
- Criteria for the other cross-divisional targets include in particular: Market position compared to competitors, innovation performance (economic), development of the BMW Group's reputation based on
non-ESG-related aspects (e. g. perception on capital markets, brand strength), customer orientation
- Criteria for cross-divisional targets with ESG criteria include in particular: Innovation performance (environmental, e. g. reduction of carbon emissions), development of the BMW Group's reputation based on
ESG aspects (e. g. corporate culture, promotion of integrity and compliance), adaptability, attractiveness as an employer, leadership performance
Stock Corporation Act (AktG)
-40% other cross-divisional targets
-50% cross-divisional targets with ESG criteria
― Composition of performance factor:*
- Additional trend analysis over at least three financial years
- Relevant period is the vesting year
- Primarily qualitative, non-financial criteria, expressed in terms of a performance factor, aimed at measuring the Board member's contribution to sustainable and long-term performance and corporate
orientation
-Formula: 50% of target amount x performance factor
― € 1.050 million (Chairman of the Board of Management)
― € 0.575 million (from second period of office or fourth year of mandate = second remuneration level)
- € 0.475 million (first period of office = first remuneration level)
- Base amount p. a. (50% of target bonus amount):
Assessment period one year
Parameters/measurement base, applicable amounts
(at 100% target achievement corresponds to
50% of target amount)
― Measurement parameters and target values are determined before the start of the financial year
Performance component
- Performance factor may not exceed 1.8
― € 0.855 million (first period of office = first remuneration level)
-50% of the target amount depends on the achievement of predefined strategic focus targets (strategic focus target component)
― Capped at 180% of target amount
-50% of target amount depends on ROCE achieved in the Automotive segment (RoCE component)
― € 2.35 million (Chairman of the Board of Management)
― € 1.28 million (from second period of office or fourth year of mandate = second remuneration level)
― € 1.10 million (first period of office = first remuneration level)
- Target amount p. a. (at 100% target achievement):
― Assessment period of five years in total (one year for determining the personal cash investment amount, four years holding requirement)
- Requirement for Board of Management members to hold the acquired shares of common stock for at least four years; this requirement remains in effect for individuals who step down from the Board of
Management (share ownership guideline)
- Payment as part of the next payroll run after the Annual General Meeting at which the Financial Statements are presented for the relevant vesting year
― Requirement for Board of Management members to invest an earmarked cash amount (personal cash investment amount), net of tax and deductions, in shares of BMW common stock immediately after
disbursement
Calculation
Share-based remuneration
Personal cash investment amount
Strategic relevance
-Performance component of bonus motivates the pursuit of non-financial strategic targets and is therefore beneficial for the long-term development of the BMW Group
-Earnings component of bonus rewards attainment of financial targets and is beneficial for earnings-related aspects of business strategy
― € 1.890 million (Chairman of the Board of Management)
― € 1.035 million (from second period of office or fourth year of mandate = second remuneration level)
- Maximum amount of performance component p. a.:
Bonus (continued)
COMPONENT
III. Remuneration of the Members of the board of Management
- Target amount p. a. (at 100% target achievement):
(at 100% target achievement corresponds to
50% of target amount]
Earnings component
performance component)
(sum of earnings component and
Bonus
Bonus
- Fixed remuneration components are required for remuneration to be competitive in order to attract and retain qualified members of the Board of Management
The base salary counteracts the temptation to take disproportionately high risks in order to achieve short-term goals, and thus contributes to the long-term development of the Company
Chairman of the Board of Management: € 700,000
Member of the Board of Management: € 400,000
Pension contribution p. a.:
Benefits based on amounts credited to individual savings accounts for contributions paid and interest earned, various forms of disbursement
Contractual agreement, main points: non-cash benefits from the use of company cars and the BMW chauffeur service, insurance premiums, contributions towards security systems, employee discounts
The Supervisory Board may award payments to compensate for loss of salary from a previous employment relationship and to cover relocation costs in the case of new entrants
Defined contribution system with a guaranteed minimum return
Base salary is paid monthly on a pro rata basis
- € 1.95 million p. a.
Chairman of the Board of Management:
― € 0.95 million (first period of office = first remuneration level)
― € 1.15 million (from second period of office or fourth year of mandate = second remuneration level)
― € 2.10 million (Chairman of the Board of Management)
― Capped at 180% of target amount
← = Q
Other Information
Remuneration Report
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023
260
- € 1.890 million (Chairman of the Board of Management)
- € 1.035 million (from second period of office or fourth year of mandate = second remuneration level)
― € 0.90 million p. a. (first period of office = first remuneration level)
- € 0.855 million (first period of office = first remuneration level)
-The earnings factor is 1.5 in case of a profit attributable to shareholders of BMW AG amounting to € 6.9 billion and a post-tax return on sales of 7.3%
―The earnings factor is 0 in case of a profit attributable to shareholders of BMW AG below € 3.0 billion or a post-tax return on sales of below 3.0%
― Earnings factor may not exceed 1.8
― Earnings factor is derived from an allocation matrix determined in advance based on the parameters "profit attributable to shareholders of BMW AG" and "Group post-tax return on sales" in the vesting year
―The earnings factor is 1.0 in case of a profit attributable to shareholders of BMW AG amounting to € 5.3 billion and a post-tax return on sales of 5.6%
- Formula: 50% of target amount x performance factor
― € 1.050 million (Chairman of the Board of Management)
- € 0.575 million (from second period of office or fourth year of mandate = second remuneration level)
― € 0.475 million (first period of office = first remuneration level)
- Base amount p. a. (50% of target bonus amount):
- Payment as part of the next payroll run after the Annual General Meeting at which the Financial Statements are presented for the relevant vesting year
Assessment period one year
- Maximum amount of earnings component p. a.:
V. Comparison of Change in Remuneration and Earnings
pursuant to § 162 (1) Sentence 2 No. 2 of the German
REPORT
2. Principles and elements of remuneration
-
engagement
Obtaining an understanding of the structure of the
sustainability organization and of the stakeholder
In the course of our assurance engagement, we have, amongst
other things, performed the follow-ing assurance procedures and
other activities:
In a limited assurance engagement the procedures performed
are less extensive than in a reason-able assurance engagement,
and accordingly a substantially lower level of assurance is ob-
tained. The selection of the assurance procedures is subject to
the professional judgement of the assur-ance practitioner.
the Sustainability Disclosures in the sections "Dialog with
stakeholders", "Further GRI in-formation" and "SASB-
Index" of the Company's Integrated Group Report have not
been prepared, in all material aspects, in accordance with
the relevant GRI-Criteria.
the Disclosures on Non-financial Reporting denoted with the
symbol [[ ]] of the Com-pany's Combined Non-financial
Statement, which is integrated into the combined man-
agement report contained in the Integrated Group Report,
other than the external sources of documentation or expert
opinions mentioned in the Disclosures on Non-financial Re-
porting denoted with the symbol [[ ]] of the Combined
Non-financial Statement, have not been prepared, in all
material respects, in accordance with §§ 315c in
conjunction with 289c to 289e HGB and the EU Taxonomy
Regulation and the Delegated Acts issued thereunder as
well as the interpretation by the executive directors
disclosed in section "EU-Taxonomy" of the Combined Non-
financial Statement, or
We conducted our assurance engagement in accordance with In-
ternational Standard on Assur-ance Engagements (ISAE) 3000
(Revised): Assurance Engagements other than Audits or Re-
views of Historical Financial Information, issued by the IAASB.
This Standard requires that we plan and perform the assurance
engagement to obtain limited assurance about whether any
matters have come to our attention that cause us to believe that
Our responsibility is to express a conclusion with limited assur-
ance on the Disclosures on Non-financial Reporting denoted with
the symbol [[ ]] of the Combined Non-financial Statement and
the Sustainability Disclosures in the sections "Dialog with stake-
holders", "Further GRI infor-mation" and "SASB-Index" of the In-
tegrated Group Report based on our assurance engagement.
Responsibility of the Assurance Practitioner
Our audit firm applies the national legal requirements and pro-
fessional standards – in particular the Professional Code for Ger-
man Public Auditors and German Chartered Auditors
("Berufssatzung für Wirtschaftsprüfer und vereidigte Buch-
prüfer": "BS WP/vBP") as well as the Standard on Quality Man-
agement 1 published by the Institut der Wirtschaftsprüfer (Insti-
tute of Public Auditors in Germany; IDW): Requirements to quality
management for audit firms (IDW Qualitätsmanagementstand-
ard 1: Anforderungen an das Qualitätsmanagement in der
Wirtschaftsprüferpraxis - IDW QMS 1 (09.2022)), which requires
the audit firm to design, imple-ment and operate a system of
quality management that complies with the applicable legal re-
quirements and professional standards.
Audit Firm's Independence and Quality Management
We have complied with the German professional provisions re-
garding independence as well as other ethical requirements.
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Independent Practitioner's Report
Group Financial Statements
Inquiries of the executive directors and relevant employees
involved in the preparation of the Integrated Group Report
regarding the preparation process, the internal control
system relat-ing to this process and selected disclosures in
the Integrated Group Report
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Identification of the likely risks of material misstatement of
the Integrated Group Report
Analytical evaluation of selected disclosures in the
Integrated Group Report
We do not express an assurance opinion on the external sources
of documentation or expert opinions mentioned in the Disclo-
sures on Non-financial Reporting denoted with the symbol [[ ]]
of the Company's Combined Non-financial Statement.
the Sustainability Disclosures in the sections "Dialog with
stakeholders", "Further GRI in-formation" and "SASB-
Index" of the Company's Integrated Group Report for the
period from 1 January to 31 December 2023 have not been
prepared, in all material aspects, in accordance with the
relevant GRI-Criteria.
the Disclosures on Non-financial Reporting denoted with the
symbol [[ ]] of the Com-pany's Combined Non-financial
Statement for the period from 1 January to 31 December
2023, which is integrated into the combined management
report contained in the Inte-grated Group Report, have not
been prepared, in all material aspects, in accordance with
§§ 315c in conjunction with 289c to 289e HGB relevant to
these disclosures and the EU Taxonomy Regulation and the
Delegated Acts issued thereunder as well as the interpreta-
tion by the executive directors disclosed in section "EU-
Taxonomy" of the Non-financial Statement, or
Based on the assurance procedures performed and evidence
obtained, nothing has come to our attention that causes us to
believe that
Assurance Opinion
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Independent Practitioner's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
254
In determining the disclosures in accordance with Article 8 of the
EU Taxonomy Regulation, the executive directors are required to
interpret undefined legal terms. Due to the immanent risk that
undefined legal terms may be interpreted differently, the legal
conformity of their interpretation and, accordingly, our assurance
engagement thereon are subject to uncertainties.
Evaluation of CO₂ compensation certificates exclusively with
regard to their existence, but not with regard to their impact.
Evaluation of the presentation of the disclosures
Inquiries on the relevance of climate-risks
Evaluation of the process to identify taxonomy-eligible and
taxonomy-aligned economic activi-ties and the
corresponding disclosures in the Combined Non-financial
Statement
Testing of
processes for the collection, control, analysis and
aggregation of selected data from various Group sites on a
sample basis
Restriction of Use
253
The EU Taxonomy Regulation and the Delegated Acts issued
thereunder contain wording and terms that are still subject to
considerable interpretation uncertainties and for which clarifica-
tions have not yet been published in every case. Therefore, the
executive directors have disclosed their interpretation of the EU
Taxonomy Regulation and the Delegated Acts adopted thereun-
der in section "EU-Taxonomy" of the Combined Non-financial
Statement. They are responsible for the defensibility of this inter-
pretation. Due to the immanent risk that indeterminate legal
terms may be interpreted differently, the legal conformity of the
interpretation is subject to uncertainties.
The German Public Auditor responsible for the engagement is
Michael Popp.
RESPONSIBLE FOR THE ENGAGEMENT
GERMAN PUBLIC AUDITOR
Our auditor's report must always be read together with the au-
dited consolidated financial statements and the audited group
management report as well as the assured ESEF documents.
The consolidated financial statements and the group manage-
ment report converted to the ESEF format - including the ver-
sions to be filed in the company register - are merely electronic
renderings of the audited consolidated financial statements and
the audited group management report and do not take their
place. In particular, the "Report on the Assurance on the Elec-
tronic Rendering of the Consolidated Financial Statements and
the Group Management Report Prepared for Publication Pur-
poses in Accordance with § 317 Abs. 3a HGB" and our assur-
ance opinion contained therein are to be used solely together
with the assured ESEF documents made available in electronic
form.
REFERENCE TO AN OTHER MATTER -
USE OF THE AUDITOR'S REPORT
We declare that the audit opinions expressed in this auditor's
report are consistent with the additional report to the audit com-
mittee pursuant to Article 11 of the EU Audit Regulation (long-
form audit report).
We were elected as group auditor by the annual general meeting
on 11 May 2023. We were engaged by the supervisory board
on 4 July 2023. We have been the group auditor of Bayerische
Motoren Werke Aktiengesellschaft, Munich, without interruption
since the financial year 2019.
Further Information pursuant to Article 10 of the EU Audit
Regulation
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Independent Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
251
- Payment after the Annual General Meeting at which the Financial Statements are presented for the relevant vesting year
Munich, 13 March 2024
1 PricewaterhouseCoopers GmbH has performed a limited assurance engagement on the German version of the,,BMW Group Report 2023" and issued an independent practitioner's report in German language,
which is authoritative. The following text is a translation of the independent practitioner's report.
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
Michael Popp
Wirtschaftsprüfer
(German Public Auditor)
and making assumptions and estimates about individual non-fi-
nancial and sustainability disclosures of the Group that are rea-
sonable in the circumstances. Furthermore, the executive direc-
tors are responsible for such internal control as the executive di-
rectors consider necessary to enable the preparation of an Inte-
grated Group Report that is free from material misstatement
whether due to fraud or error.
This responsibility includes the selection and application of ap-
propriate non-financial and sus-tainability reporting methods
The executive directors of the Company are responsible for the
preparation of the Combined Non-financial Statement in accord-
ance with §§ (Articles) 315c in conjunction with 289c to 289e
HGB ("Handelsgesetzbuch": "German Commercial Code") and
Article 8 of REGULATION (EU) 2020/852 OF THE EUROPEAN
PARLIAMENT AND OF THE COUNCIL of 18. June 2020 on es-
tablishing a framework to facilitate sustainable investment and
amending Regulation (EU) 2019/2088 (here-inafter the "EU
Taxonomy Regulation") and the Delegated Acts adopted there-
under, as well as for making their own interpretation of the word-
ing and terms contained in the EU Taxonomy Regula-tion and
the Delegated Acts adopted thereunder, as set out in section
,,EU-Taxonomy" of the Combined Non-financial Statement and
the Integrated Group Report in accordance with the prin-ciples
stated in the Sustainability Reporting Standards of the Global
Reporting Initiative (hereinaf-ter the "GRI-Criteria") and for the
selection of the disclosures in the Combined Non-financial State-
ment and the Sustainability Disclosures.
Responsibility of the Executive Directors
Not subject to our assurance engagement are the external
sources of documentation or expert opinions mentioned in the
Integrated Group Report.
To Bayerische Motoren Werke Aktiengesellschaft, Munich
We have performed a limited assurance engagement on the dis-
closures in the "BMW Group Re-port 2023" of Bayerische Mo-
toren Werke Aktiengesellschaft, Munich, (hereinafter the
"Compa-ny") for the period from 1 January to 31 December
2023 (hereinafter the "Integrated Group Re-port") denoted with
[[ ]] of the Combined Non-financial Statement, which is inte-
grated into the combined management report (hereinafter the
"Disclosures on Non-financial Reporting") con-tained in the Inte-
grated Group Report, as well as the sustainability disclosures
contained in the sections "Dialog with stakeholders","Further
GRI information" and "SASB-Index" of the Integrat-ed Group Re-
port (hereinafter referred to as "Sustainability Disclosures"). Our
engagement in this context relates solely to the disclosures de-
noted with the symbol [[ ]] and the disclosures in the sections
"Dialog with stakeholders", "Further GRI information" and
"SASB-Index".
Independent Practitioner's Report on a Limited Assurance En-
gagement on Disclosures on Non-financial Reporting and Sus-
tainability Disclosures
Independent Practitioner's Report on a Limited Assurance
Engagement on Disclosures on Non-financial Reporting and
Sustainability Discloures¹
INDEPENDENT PRACTITIONER'S REPORT
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Independent Practitioner's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
252
Petra Justenhoven
Wirtschaftsprüferin
(German Public Auditor)
Remuneration granted and owed to members of the
Supervisory Board pursuant to § 162 of the German Stock
Corporation Act (AktG)
We draw attention to the fact that the assurance engagement
was conducted for the Company's purposes and that the report
is intended solely to inform the Company about the result of the
assurance engagement. Consequently, it may not be suitable for
any other purpose than the aforementioned. Accordingly, the re-
port is not intended to be used by third parties for making (finan-
cial) decisions based on it. Our responsibility is to the Company.
We do not accept any re-sponsibility to third parties. Our assur-
ance opinion is not modified in this respect.
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
279
6. Retirement benefits
279
Share ownership guideline
5.
278
Remuneration for the 2023 financial year
4.
268
3. Determination and review of the remuneration system and
individual remuneration
262
2. Overview of the remuneration system
259
business strategy and its long-term development
1. Principles of the remuneration system and the contribution
of remuneration to the promotion of the Company's
ment
III. Remuneration of the Members of the Board of Manage-
279
Outlook for the 2024 Financial Year
8.
280
300
3.
297
297
Articles of incorporation and procedure
1.
297
Board
IV. Remuneration of the Members of the Supervisory
11. Maximum remuneration and remuneration vested in the
2023 financial year (vesting year)
10. Remuneration granted and owed to former members of
the Board of Management pursuant to § 162 of the
German Stock Corporation Act (AktG)
Remuneration granted and owed to members of the Board
of Management pursuant to § 162 of the German Stock
Corporation Act (AktG)
Premature termination of activities and post-contractual
non-competition clause
297
294
291
9.
7. Malus and clawback provisions
Munich, 13 March 2024
Remuneration Perspective
258
297 IV. Remuneration of the Members of the Supervisory Board
258 III. Remuneration of the Members of the Board of Management
257 II. Outlook for the 2024 Financial Year
Perspective
256 I. Review of the 2023 Financial Year from a Remuneration
256 Remuneration Report
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
255
Annette Fink
(German Public Auditor)
Michael Popp
Wirtschaftsprüfer
300 V. Comparison of Change in Remuneration and Earnings Pursuant
to § 162 (1) Sentence 2 No. 2 of the German Stock Corporation
Review of the 2023 Financial Year from a
Act (AktG)
305 VII. Auditor's Report
258
II.
257
I.
256
REMUNERATION REPORT
← = Q
I. Review of the 2023 Financial Year from a Remuneration Perspective
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
256
REMUNERATION
05
304 VI. Other Considerations
* See below for the targets set for the 2023 financial year Variable remuneration for the 2023 financial year.
BMW Group Report 2023
239,583
266,667
16
640,000
16
550,000
16
550,000
16
Total variable remuneration
1,012,500
62
2,430,000
62
2,050,000
61
2,050,000
59
Total target remuneration
1,639,756
100
3,910,825
16
550,000
16
550,000
475,000
14
475,000
14
Performance component
239,583
15
575,000
15
475,000
100
14
14
Variable
remuneration
SHARE-BASED REMUNERATION
Personal cash investment amount³
RoCE component
Strategic focus target component
266,667
16
640,000
16
475,000
15
3,372,692
3,452,259
29,392
1
34,077
1
Contribution to the company pension scheme
400,000
11
400,000
12
Total fixed remuneration
1,404,392
39
1,334,077
39
BONUS
Earnings component
525,000
14
475,000
14
Performance component
Fringe benefits (other remuneration]²
27
900,000
27
100
1 Service contract comes to an end on 31 May 2023. See Premature termination of activities and post-contractual non-competition clause.
2 For more information about fringe benefits for the 2022 and 2023 financial years, refer to Remuneration granted and owed to members of the Board of Management pursuant to § 162 of the German Stock Corporation Act (AktG).
3 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
267
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Target remuneration for the 2023 (2022) financial year
FRANK WEBER
Development
since 1 July 2020¹
100
Fixed
remuneration
Other Information
III. Remuneration of the Members of the Board of Management
FY 2023
FY 2022
in €
in %
in €
in %
Fixed remuneration (base salary)
975,000
Remuneration Report
575,000
15
3 Member of the Board of Management until 31 October 2023, service contract comes to an end on 31 July 2024. See Premature termination of activities and post-contractual non-competition clause.
"Member of the Board of Management until 11 May 2023, service contract ended 31 May 2023. See Premature termination of activities and post-contractual non-competition clause.
5 Second remuneration level since 1 July 2023.
100
3,932,049
100
3,899,673
100
1 Second remuneration level since 1 October 2022.
2 Service contract comes to an end on 31 July 2024. See
Premature termination of activities and post-contractual non-competition clause.
3 For more information about fringe benefits for the 2022 and 2023 financial years, refer to Remuneration granted and owed to members of the Board of Management pursuant to § 162 of the German Stock Corporation Act (AktG).
"Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
266
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Target remuneration for the 2023 (2022) financial year
NICOLAS PETER
Finance
1 January 2017 to 11 May 20231
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
JOACHIM POST
Purchasing and Supplier Network
3,502,324
100
3,907,524
62
16
572,500
16
640,000
16
640,000
16
640,000
16
572,500
since 1 January 2022
16
16
640,000
16
2,430,000
62
2,145,000
61
2,430,000
62
2,430,000
640,000
← = Q
FY 2023
FY 2022
102,259
3
Contribution to the company pension scheme
166,667
10
400,000
10
400,000
12
400,000
1
12
627,256
38
1,480,825
38
1,322,692
39
1,402,259
41
BONUS
Earnings component
Total fixed remuneration
525,000
22,692
30,825
in €
in %
in €
in %
in €
FY 2023
in %
FY 2022
in €
in %
Fixed remuneration (base salary)
1
437,500
1,050,000
27
900,000
27
900,000
26
Fixed
remuneration
Fringe benefits (other remuneration]²
23,089
1
27
14
475,000
14
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
270
Maximum value
11.0
shareholders of BMW AG in € billion
Profit attributable to
Target value
5.3
3.0
Minimum value
Minimum value
3.0
0.135
2 Earnings factor 2023.
1 Simplified depiction.
1.000
1.680²
1.800
of target amount
Other Information
III. Remuneration of the Members of the Board of Management
← = Q
Targets set and extent of achievement - earnings component of the
bonus for the 2023 financial year
Oliver Zipse
Member of the Board of Management
Overview of earnings component of the bonus for the 2023 financial year
Profit attributable to shareholders of BMW AG in € billion
Group return on sales after tax in %
Performance criteria
1.680
168%
Earnings
factor
Extent to which
target achieved
Actual value
11.3
7.8
Capped at 180%
9.0
3.0
11.0
Maximum value
Target value
5.3
3.0
Minimum value
Targets set and extent of achievement – earnings component of the bonus for the 2023 financial year
The performance component of the bonus rewards the achieve-
ment of certain non-financial targets. Before the beginning of the
financial year, the Supervisory Board sets these targets in the
form of various non-financial performance criteria and associ-
ated metrics. The performance criteria are derived primarily from
the corporate strategy, long-term corporate planning and the
business development planning done for the following year. The
targets are divided into individual targets for the individual mem-
bers of the Board of Management (departmental targets) and
collective targets for the entire Board of Management (interde-
partmental targets). The Supervisory Board has discretion in
weighting the performance criteria. Approximately 10% of the
target amount for the performance bonus is intended to be allo-
cated to the departmental targets. Departmental targets can be
department-specific targets or contributions to shared targets
measured individually for each department. The remainder of the
target amount for the performance bonus (amounting to approx-
imately 90%) should be associated with interdepartmental, non-
financial targets. In this regard, around 50% of the target amount
should be connected to the achievement of non-financial targets
relating to environmental, social and governance (ESG targets).
Performance component of the bonus
The targets set and the extent to which they have been achieved,
as well as the specific amounts associated with the earnings
component of the bonus for the 2023 financial year, are shown
in the following tables. In the 2023 financial year, BMW AG's
share of profit attributable to shareholders was € 11.3 billion,
and the Group post-tax return on sales was 7.8%. Based on the
allocation matrix approved by the Supervisory Board, this pro-
vides an earnings factor of 1.680, which corresponds to a target
achievement level of 168%.
5.6
- Performance factor may not exceed 1.8
40% other cross-divisional targets
-10% individual departmental targets
-50% cross-divisional targets with ESG criteria
Earnings component of the bonus
The bonus consists of an earnings component and a perfor-
mance component. If 100% of the target is achieved for both the
performance and the earnings component, the share of the
bonus attached to each component is 50% of the individual tar-
get amount of the bonus. The bonus amount is capped at 180%
of the individual target amount. The bonus for the financial year
will be paid as part of the next payroll run after the Annual Gen-
eral Meeting 2024.
Overview
(1) Bonus for the 2023 financial year
← = Q
III. Remuneration of the Members of the Board of Management
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
The earnings component of the bonus rewards the performance
of the business in the 2023 vesting year, as measured by the
financial indicators "Profit attributable to shareholders of
BMW AG" and "Group post-tax return on sales". For this pur-
pose, the Supervisory Board adopted an allocation matrix, from
which an earnings factor is derived based on the values
achieved.
BMW Group Report 2023 To Our Stakeholders
*Incorporating the collective departmental targets for the performance component of the bonus.
(of which ESG
targets: 100%)
Approx. 26-27%
focus target
component
Share-based
remuneration
Strategic
Variable target remuneration
with ESG targets
Approx. 39% in total*
50%)
(of which ESG targets:
component
Approx. 23-24%
Bonus Performance
269
Jochen Goller¹
A minimum value, a target value and a maximum value were de-
fined for both key figures before the start of the 2023 vesting
year. If one of the minimum values is not reached, the earnings
factor is zero (corresponding to a target achievement of 0%). If
both target values are reached, the earnings factor is 1.000 (cor-
responding to a target achievement of 100%). If both maximum
values are exceeded, the earnings factor is 1.800 (correspond-
ing to a target achievement of 180%, the highest possible per-
centage). For intermediate values, the earnings factor is derived
from the allocation matrix.
Overview of the composition of the bonus
- Performance factor is derived from
Target value
5.6
7.8
Maximum value
9.0
after tax in %
Group return on sales
T
Earnings component of the bonus: allocation matrix¹
29,392
Earnings factor is derived from an allocation matrix based on the
parameters "Profit attributable to shareholders of BMW AG" and
"Group post-tax return on sales" in the vesting year
Earnings factor may not exceed 1.8
X
+
X
BONUS
PERFORMANCE FACTOR
50% OF TARGET AMOUNT
EARNINGS FACTOR
PERFORMANCE COMPONENT
50% OF TARGET AMOUNT
EARNINGS COMPONENT
=
640,000
Ilka Horstmeier
Walter Mertl²
Nicolas Peter
Joachim Post
Frank Weber5
↑
= Q
268
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
← = Q
4.
Remuneration for the 2023 financial year
In December 2022, the Supervisory Board determined the target
remuneration for the members of the Board of Management for
the 2023 financial year as well as the performance criteria for the
variable remuneration components provided for in the remuner-
ation system. In March 2024, the Supervisory Board set or con-
firmed the amount of the variable remuneration components due
to the members of the Board of Management for the 2023 finan-
cial year after reviewing and assessing the extent to which the
targets had been achieved.
a) Fixed remuneration for the 2023 financial year
Each member of the Board of Management receives a fixed base
salary, which is paid monthly on a pro rata basis. The amount of
the base salary depends on the individual's respective function
on the Board of Management and the duration of their tenure on
the Board of Management or their appointment period/remuner-
ation level, as applicable.
The fringe benefits include, in particular, non-cash benefits from
vehicle use and employee discounts and subsidies for safety
equipment. In addition, the Supervisory Board can approve pay-
ments to newly appointed members of the Board of Management
in order to compensate them for loss of salary from a previous
employment relationship and/or to cover relocation costs. A com-
mitment to cover relocation costs was issued in the 2023 finan-
cial year.
in €
Overview of fixed remuneration for the 2023 financial year
3 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
2 For more information about fringe benefits for the 2022 and 2023 financial years, refer to Remuneration granted and owed to members of the Board of Management pursuant to § 162 of the German Stock
Corporation Act (AktG).
1 Second remuneration level since 1 July 2023.
Total target remuneration
Variable
SHARE-BASED REMUNERATION
remuneration
Personal cash investment amount³
RoCE component
Strategic focus target component
Total variable remuneration
595,000
16
550,000
Base salary
16
16
550,000
16
2,240,000
3,644,392
61
2,050,000
61
100
3,384,077
100
595,000
Oliver Zipse
Jochen Goller¹
1,950,000
150,000
966,000
966,000
505,978
966,000
133,000
1,764,000
of the bonus in €
Earnings factor
Earnings component
525,000
402,500
475,000
575,000
1.680
575,000
301,178
575,000
79,167
1,050,000
amount in €
Proportionate target bonus
1 Member of the Board of Management since 1 November 2023.
2 Member of the Board of Management since 12 May 2023.
239,583
Milan Nedeljković
Pieter Nota³
798,000
975,000
1,050,000
Fringe benefits
(other remuneration)
26,113
3,331
66,981
570,652
111,981
Total fixed
remuneration
1,976,113
153,331
1,116,981
682,633
Milan Nedeljković
1,050,000
27,524
1,077,524
Pieter Nota³
882,000
1,050,000
Nicolas Peter
437,500
23,089
Joachim Post
900,000
22,692
1,102,049
460,589
922,692
Bonus
Earnings component
Frank Weber5
52,049
Total target remuneration
Total variable remuneration
Strategic focus target component
700,000
10
700,000
10
66,667
12
(-)
(-)
Total fixed remuneration
2,676,113
38
2,667,249
37
219,998
39
(-)
BONUS
Earnings component
1,050,000
15
1,050,000
Contribution to the company pension scheme
(-)
(-)
1
in %
in €
in %
in €
in %
in €
FY 2022
in %
Fixed remuneration (base salary)
1,950,000
15
27
27
150,000
(-)
(-)
Fringe benefits (other remuneration]1
26,113
0.4
17,249
0.2
3,331
1,950,000
79,167
14
(-)
16
Total variable remuneration
4,450,000
62
4,450,000
63
341,668
61
Total target remuneration
7,126,113
91,667
100
100
561,666
100
CCC
(-)
(-)
(-)
1 For more information about fringe benefits for the 2022 and 2023 financial years, refer to Remuneration granted and owed to members of the Board of Management pursuant to § 162 of the German Stock Corporation Act (AktG).
2 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
IIII
264
7,117,249
in €
17
16
1,050,000
15
1,050,000
15
79,167
14
(-)
(-)
Performance component
Variable
remuneration
1,175,000
SHARE-BASED REMUNERATION
RoCE component
1,175,000
16
1,175,000
17
91,667
16
(-)
Strategic focus target component
1,175,000
Personal cash investment amount²
BMW Group Report 2023
FY 2023
FY 2023
― € 0.55 million (first period of office = first remuneration level)
― € 0.64 million (from second period of office or fourth year of mandate = second remuneration level)
― € 1.175 million (Chairman of the Board of Management)
- Formula: 50% of target amount x RoCE factor
- ROCE factor is derived from the RoCE achieved in the Automotive segment for the vesting year
- Minimum, target and maximum values for ROCE are defined before the start of the financial year
- ROCE factor may not exceed 1.8
- Maximum amount of ROCE component p. a.:
― € 0.990 million (first period of office = first remuneration level)
- € 1.152 million (from second period of office or fourth year of mandate = second remuneration level)
- € 2.115 million (Chairman of the Board of Management)
- Target amount of strategic focus target component p. a. (50% of target amount for personal cash investment amount):
- € 0.55 million (first period of office = first remuneration level)
- € 0.64 million (from second period of office or fourth year of mandate = second remuneration level)
― € 1.175 million (Chairman of the Board of Management)
- At least two strategic focus targets derived from the strategic plan
- Weighting of the strategic focus targets is decided before the start of the financial year
- Formula in the event of two strategic focus targets with equal weighting p. a.:
25% of target amount for personal cash investment amount x factor for strategic focus target 1 + 25% of target amount for personal cash investment amount x factor for strategic focus target 2
― Minimum, target and maximum values are defined before the start of the financial year
-Factor for each strategic focus target may not exceed 1.8
- Maximum amount of strategic focus target component p. a.:
- Target amount of ROCE component p. a. (50% of target amount for personal cash investment amount):
Parameters/measurement base, applicable amounts
Strategic relevance
(at 100% target achievement corresponds to
50% of target amount)
b) Variable remuneration for the 2023 financial year
The variable remuneration for the 2023 financial year consists of
the bonus and the share-based remuneration. When determining
specific target values, the Supervisory Board takes into account,
in particular, long-term corporate planning and business devel-
opment planning for the following year as submitted to the Su-
pervisory Board for approval. For the strategic relevance of the
individual remuneration components, see also above 7 Overview of
the remuneration system.
5 Second remuneration level since 1 July 2023.
4 Member of the Board of Management until 11 May 2023, service contract ended 31 May 2023.
See Premature termination of activities and post-contractual non-competition clause.
3 Member of the Board of Management until 31 October 2023, service contract comes to an end on
31 July 2024. See Premature termination of activities and post-contractual non-competition
clause.
2 Member of the Board of Management since 12 May 2023.
1 Member of the Board of Management since 1 November 2023.
Ilka Horstmeier
Walter Mertl²
Approx. 23-24%
1,004,392
261
― € 0.990 million (first period of office = first remuneration level)
BMW Group Report 2023
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
III. Remuneration of the Members of the board of Management
COMPONENT
Share-based remuneration (continued)
RoCE component
(at 100% target achievement corresponds to
50% of target amount)
Strategic focus target component
To Our Stakeholders
― € 1.152 million (from second period of office or fourth year of mandate = second remuneration level)
― € 2.115 million (Chairman of the Board of Management)
-50% of the personal cash investment amount within the target structure depends on the ROCE and is therefore directly linked to a key target for the corporate strategy and reflects BMW AG's aspiration to
generate a significant premium on the cost of capital
Bonus
27-30%
Variable
Remuneration
58-66%
Share-based
Remuneration
31-36%
1 The remuneration structure as defined in the remuneration system for total target remuneration is
depicted.
2 Excluding a possible payment to new members of the Board of Management to compensate for
salary losses from a previous employment relationship and/or to cover relocation costs.
Target remuneration for the 2023 financial year
The following tables show the individual target remuneration of
the members of the Board of Management and the relative share
of the respective remuneration component in the total target re-
muneration. The maximum remuneration and remuneration
earned for the 2023 financial year are shown below. 7 Maximum
remuneration vested in the 2023 financial year (vesting year)
263
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Base salary
25-30%
Group Financial Statements
Target remuneration for the 2023 (2022) financial year
OLIVER ZIPSE
Chairman of the Board of Management since 16 August 2019
Member of the Board of Management since 13 May 2015
Fixed
remuneration
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
JOCHEN GOLLER
Customer, Brands, Sales
since 1 November 2023
← = Q
Responsibility Statement and Auditor's Report
FY 2022
ΤΟ
Contributions
Retirement
-The remaining 50% of the personal cash investment amount encourages achievement of strategic focus targets and therefore contributes to business performance in key strategic areas
-Commitment to purchase shares of the Company's common stock and the four-year holding period provide additional motivation to support the Company's long-term development
Malus and clawback rules
Malus
Clawback
- Agreement to withhold variable remuneration in the event of specified serious compliance violations or (withholding amounts provisionally) in the event of reasonable suspicions of such
― Amounts may also be withheld in principle after a member has left the Board
- Agreement entitling the BMW Group to reclaim variable remuneration already paid out in the event of specified serious incidences of non-compliance, incorrect calculation bases or incorrect financial statements
― Amounts may also be clawed back in principle after a member has left the Board
262
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
benefits
7-12%
Other Information
← = Q
3.
Determination and review of the remuneration system and
individual remuneration
Determining the system and structure of Board of Management
remuneration, and reviewing it regularly, is a task of the full Su-
pervisory Board, as is determining the individual level of remu-
neration of members of the Board of Management. The Person-
nel Committee of the Supervisory Board assumes a preparatory
function.
The Supervisory Board reviews the remuneration system annu-
ally to ensure it is appropriate in terms of structure, target and
maximum remuneration, as well as actual remuneration. The Su-
pervisory Board also takes remuneration studies into account
when assessing the market conformity of the target and maxi-
mum remuneration, as well as when assessing actual remuner-
ation in horizontal terms. Due to the size and structure of the
BMW Group, DAX companies are used as a comparison group
while taking revenues, employee headcounts and market capi-
talisation into consideration. This ensures that the main compet-
itors of BMW AG and other global companies are factored in. Ver-
tically, the Supervisory Board compares the remuneration of
members of the Board of Management with the remuneration of
senior executives and with the average remuneration of employ-
ees employed by BMW AG in Germany in areas inside and out-
side the scope of collective bargaining agreements, including in
terms of how they have changed over a period of several years.
Recommendations from independent external remuneration ex-
perts, as well as suggestions from investor and analyst circles,
may also be included in the deliberations. For the 2023 financial
year, the review has shown that the target, maximum and actual
remuneration are appropriate.
-
In accordance with the remuneration system, the Supervisory
Board acting on the proposal of the Personnel Committee
sets specific target remuneration for each individual member of
the Board of Management for the upcoming financial year, as
well as the performance criteria associated with the variable re-
muneration components provided for in the remuneration
system.
The total target remuneration is composed of the fixed remuner-
ation and the variable remuneration. Within the variable target
remuneration, the proportion of share-based remuneration as
long-term variable remuneration exceeds the share of the bonus
as short-term variable remuneration. The share of the individual
remuneration components is within the ranges specified by the
remuneration system.
Overview of total target remuneration for members of the
Board of Management¹
Fringe benefits²
1-4%
III. Remuneration of the Members of the Board of Management
Share-based
remuneration
RoCE component
Approx. 26-27%
To Our Stakeholders Combined Management Report
Target remuneration for the 2023 (2022) financial year
since 1 October 20191
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
PIETER NOTA
Customer, Brands, Sales
1 January 2018 to 31 October 2023²
← = Q
FY 2023
FY 2022
in €
in %
in €
in %
in €
FY 2023
in %
FY 2022
in €
in %
1,050,000
27
MILAN NEDELJKOVIĆ
Production
BONUS
Total fixed remuneration
Contribution to the company pension scheme
(-)
(-)
100
3,477,911
100
2,236,076
100
(-)
(-)
CCC
937,500
IIII
2 For more information about fringe benefits for the 2022 and 2023 financial years, refer to Remuneration granted and owed to members of the Board of Management pursuant to § 162 of the German Stock Corporation Act (AktG).
3 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
265
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Target remuneration for the 2023 (2022) financial year
Fixed
remuneration
Fixed remuneration (base salary)
Fringe benefits (other remuneration]³
1 Second remuneration level since 1 November 2022.
27
1,050,000
27
Earnings component
575,000
15
500,000
14
575,000
15
575,000
15
Performance component
38
575,000
500,000
14
575,000
15
575,000
15
Variable
remuneration
SHARE-BASED REMUNERATION
Personal cash investment amount"
RoCE component
15
58
1,469,673
1,502,049
1,050,000
27
27,524
1
19,824
1
52,049
1
19,673
1
38
400,000
400,000
11
400,000
10
400,000
10
1,477,524
38
1,357,324
39
10
Group Financial Statements Responsibility Statement and Auditor's Report
1,299,820
2,113,333
27
570,652
26
(-)
(-)
Fringe benefits (other remuneration]²
66,981
2
39,578
1
111,981
5
(-)
(-)
Contribution to the company pension scheme
400,000
10
400,000
12
253,623
11
925,000
27
1,050,000
Fixed remuneration (base salary)
Fixed
remuneration
ILKA HORSTMEIER
Human Resources and Real Estate, Labour Director
since 1 November 20191
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
WALTER MERTL
Finance
since 12 May 2023
← = Q
(-)
FY 2023
FY 2023
in €
in %
in €
in %
in €
in %
in €
FY 2022
in %
FY 2022
(-)
Total fixed remuneration
1,516,981
remuneration
Personal cash investment amount³
RoCE component
Strategic focus target component
Total variable remuneration
Total target remuneration
640,000
16
565,000
16
SHARE-BASED REMUNERATION
348,732
(-)
640,000
16
565,000
16
348,732
16
(-)
2,430,000
3,946,981
62
16
61
Variable
(-)
38
1,364,578
39
936,256
42
(-)
BONUS
Earnings component
575,000
15
(-)
491,667
301,178
13
(-)
Performance component
575,000
15
491,667
14
301,178
13
14
Overview of variable target remuneration 2023
27
271
Jochen Goller¹
Ilka Horstmeier
Walter Mertl²
Milan Nedeljković
Pieter Nota³
1,175,000
91,667
640,000
1,962,250
153,083
1,068,800
587,500
587,500
45,833
52,250
45,833
569,875
44,458
Oliver Zipse
320,000
Total
Personal cash
investment
amount
in €
component
BEV in €
RoCE component
Proportionate
target amount
Member of the Board of Management
in €
RoCE factor
ROCE
component
in €
Proportionate
target amount
in €
Strategic focus target component (CO2)
Strategic Strategic
focus target focus target
Strategic focus target component (BEV)
total
Strategic
factor component CO₂
(CO2)
in €
Proportionate Strategic focus
target amount
target factor
in €
(BEV)
focus target
in €
364,800
320,000
310,400
364,800
320,000
310,400
675,200 1,744,000
Nicolas Peter
Joachim Post
Frank Weber5
266,667
445,333
133,333
152,000
133,333
129,333
281,333
726,667
320,000
3,201,875
249,792
1,744,000
950,294
1,744,000
675,200
310,400
1,239,625
96,708
675,200
348,732
640,000
1.67
640,000
582,382
1,068,800
1,068,800
174,366
focus targets
198,777
169,135
367,912
320,000
1.14
364,800
320,000
0.97
174,366
Strategic
← = Q
Overview of share-based remuneration for financial year 2023
150%
100%
50%
0%
Actual value 2023
375,716
300,000
Minimum value
380,000
Target value
465,000
Maximum value
→ Extent to which target achieved: 97%
BEV sales in units
← = Q
277
BMW Group Report 2023
Extent to which target achieved
200%
180%
T
Targets set and extent of achievement - BEV sales
0%
98
Maximum value
103
Target value
→ Extent to which target achieved: 114%
125
Minimum value
CO₂ g/km
To Our Stakeholders Combined Management Report
276
Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
With regard to reducing fleet carbon emissions according to
WLTP, the Supervisory Board set the following values in g/km
CO₂ under WLTP for fleet consumption in Europe as threshold
values relevant to remuneration for the vesting year 2023: Mini-
mum value: 125 g/km CO₂ (target achievement 50%), target
value: 103 g/km CO2 (target achievement 100%), maximum
value: 98 g/km CO₂ (extent to which target achieved: 180%).
The actual value for the 2023 financial year was 102.1 g/km
CO2, resulting in a target achievement of 114%.
For sales of all-electric vehicles (BEV), the Supervisory Board set
the following reference values in units for the vesting year 2023:
minimum value: 300,000 units (target achievement 50%), tar-
get value: 380,000 units (target achievement 100%), maximum
value: 465,000 units (target achievement 180%). The actual
value for the 2023 financial year was 375,716 units, resulting in
a target achievement of 97%.
BMW Group Report 2023 To Our Stakeholders
550,000
Group Financial Statements Responsibility Statement and Auditor's Report
Targets set and extent of achievement for share-based remuneration for financial year 2023
Reduction of fleet
CO2 emissions (in g/km)
Sales of all-electric vehicles
(BEV) in units
25
125
103
98
102.1
114%
1.14
25
300,000
380,000
465,000
375,716
97%
0.97
Strategic focus target
component
1.67
167%
20.2
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
Weighting
Performance criteria
(in %) Minimum value
Target value Maximum value
The following tables provide an overview of the targets set and
extent of achievement for share-based remuneration for the
2023 financial year.
Actual value
Factor
RoCE component
RoCE in the Automotive
segment (in %)
50
12
16
21
Extent to which
target achieved
50%
918,500
313,500
in €
Oliver Zipse
Jochen Goller¹
Ilka Horstmeier
Walter Mertl²
Service cost in accordance
with IFRS for the
financial year 2023
Cash value of entitlements
to pension benefits
in accordance with IFRS
as at 31 December 2023
5,749,540
1,039,801
2,704,634
807,853
3,174,055
2,336,557
4,038,570
712,729
66,667
407,533
254,444
Milan Nedeljković
Pieter Nota³
407,391
407,516
Nicolas Peter'
Pension entitlements 2023
166,667
million were incurred. These benefits correspond in their entirety
to allocations to pension provisions in accordance with IAS 19.
Members of the Board of Management who retire immediately
after their service on the Board, or who are deemed to be in an
equivalent position, are entitled to acquire vehicles and other
BMW Group products and services at conditions that also apply
to BMW pensioners and to lease BMW Group vehicles in accord-
ance with the guidelines applicable to senior heads of depart-
ments. Retired Chairmen of the Board of Management also have
the option of using the BMW car service, subject to availability
and at a charge.
"Value of share portfolio as at 31 December 2023 in relation to base salary paid in 2023. For more information about the base salary, please refer to table in Remuneration granted and owed to mem-
bers of the Board of Management pursuant to § 162 of the German Stock Corporation Act (AktG).
5 Member of the Board of Management since 1 November 2023.
6 Member of the Board of Management since 12 May 2023.
7 Second remuneration level since 1 July 2023.
279
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
← = Q
6.
Retirement benefits
The retirement benefits system provides for the Company to
make annual contributions to a savings account for every year
that members of the Board of Management are appointed. After
they are confirmed, pension entitlements become vested when
the employment relationship has existed for one year. Members
of the Board of Management receive a disability pension in the
event of invalidity. Retired members of the Board of Manage-
ment are entitled to retirement benefits after the age of 62 at the
earliest and after leaving the Board. If a member of the Board of
Management dies before becoming entitled to a retirement or in-
validity benefit, a surviving spouse or registered partner is enti-
tled to a survivor's benefit; otherwise, surviving children are enti-
tled to a survivor's benefit depending on their age and level of
education. The amount of the benefits to be paid is determined
on the basis of the amount accrued in each Board member's in-
dividual pension savings account. This figure is in turn based on
the annual contributions and annual profit participation depend-
ing on the form of investment. For the contributions made, there
is a guaranteed minimum interest rate equal to the maximum in-
terest rates specified in the German actuarial reserve regulation
(Deckungsrückstellungsverordnung). The payment is made as a
lump sum or in annual instalments at the discretion of the mem-
ber of the Board of Management. For entitlements arising before
2016, there is an option to receive payment as a lifelong monthly
pension or in a combined form. In the event of death or invalidity,
a minimum benefit in the amount of the potential annual pension
contributions that could have been made up to the age of 60 is
approved. This benefit cannot exceed ten years of contributions.
For members of the Board of Management in office in the 2023
financial year, expenses for post-employment benefits of € 3.2
Joachim Post
Frank Weber
408,504
407,525
service contract is terminated prematurely and the Company has
an extraordinary right of termination, or if the Board member re-
signs without the Company's agreement, entitlements to match-
ing components as yet unpaid are forfeited. Entitlements to other
variable remuneration components (bonus, personal cash in-
vestment amount) are forfeited as soon as they exceed the target
amounts.
A one-year post-contractual non-competition clause has been
agreed with the Board members under specified circumstances
against payment of a remuneration amount. Service contracts
provide for the payment of a monthly waiting allowance in the
amount of the applicable monthly base salary for the duration of
the post-contractual non-competition clause. In accordance with
Recommendation G.13 of the GCGC, any severance payment is
offset against the waiting allowance. The same applies to other
income from third parties, except remuneration for Supervisory
Board appointments approved during the term of office. The
Company may unilaterally waive the requirement to comply with
the post-contractual non-competition clause.
Dr Nicolas Peter left the Board of Management on 11 May 2023
by mutual agreement as part of a succession arrangement. He
received fixed remuneration (base salary and other remunera-
tion) of € 0.05 million for the remaining term of his service con-
tract up to 31 May 2023. The bonus and personal investment
cash amount for the period between 12 May and 31 May 2023
came to € 0.08 million and € 0.09 million respectively. A pro rata
pension contribution of € 0.02 million was made for the period
between him leaving the Board of Management and the end of
his service contract. A one-year post-contractual non-competi-
tion clause applies. The waiting allowance contractually owed to
him amounts to € 1.1 million for the period from 1 June 2023 to
31 May 2024 and € 0.6 million for the period from 1 June to 31
December 2023.
Mr Pieter Nota left the Board of Management on 31 October
2023 by mutual agreement as part of a succession arrange-
ment. His service contract comes to an end on 31 July 2024. His
remuneration will continue to be paid to him on the contractually
agreed due dates until the end of his employment contract; his
remuneration will not be settled or paid early; he will not receive
a termination payment. For the period from 1 November to 31
December 2023, he received fixed remuneration (base salary
and other remuneration) of € 0.2 million, a bonus of € 0.3 million
and a personal cash investment amount of € 0.3 million (all pro
rata). The pension contribution comes to € 0.07 million for the
period from 1 November to 31 December 2023. For the period
from 1 January to 31 July 2024, his base salary comes to € 0.6
million, with a maximum bonus of € 0.7 million and a maximum
personal cash investment amount of € 0.7 million. The pension
contribution for the relevant portion of the 2024 financial year is
€ 0.2 million. A one-year post-contractual non-competition
clause applies. For the period from 1 August 2024 to 31 July
2025, the waiting allowance contractually owed to him amounts
to € 1.1 million.
9.
Remuneration granted and owed to members of the
Board of Management pursuant to § 162 of the German Stock
Corporation Act (AktG)
The following tables Remuneration granted and owed show the re-
muneration granted and owed to the members of the Board of
Management in office during the reporting year in accordance
with § 162 AktG. The remuneration shown for the members of
the Board of Management who left during the year also includes
the remuneration granted and owed in the reporting year after
they leave the company.
The tables include all amounts received by the individual mem-
bers of the Board of Management in the reporting period ("remu-
neration granted") and all remuneration legally due but not yet
received ("remuneration owed").
In addition to actual amounts received, "remuneration granted"
in the reporting year is also assumed to exist if the activity on
which the remuneration component is based has been fully per-
formed by the member of the Board of Management as of the
balance sheet date, and if all conditions for entitlement have
been met.
Thus, in addition to the fixed remuneration components, the fol-
lowing variable remuneration components are reported as remu-
neration granted for the 2023 financial year within the meaning
of § 162 of the German Stock Corporation Act (AktG):
Bonus for the 2023 financial year (to be paid out in 2024)
Share-based remuneration (personal cash investment
amount) for the 2023 financial year (to be paid out in 2024)
Share-based remuneration component (matching
component) for vesting year 2018, due to the expiry of the
four-year holding period in the 2023 financial year (paid out
in 2023)
Thus, the remuneration granted and owed includes all remuner-
ation components earned through the activities of the members
of the Board of Management in the 2023 financial year. In addi-
tion, it includes remuneration components already earned as a
result of activity in previous financial years, but for which the re-
spective member of the Board of Management's payment enti-
tlement only arose due to the occurrence of conditions in the
2023 financial year.
In addition to the absolute amount of remuneration, the relative
share of the relevant remuneration component in the total remu-
neration granted and owed is also shown. For the sake of com-
pleteness, the individual service cost in accordance with IAS 19
for the Company pension scheme is also shown, although this
service cost is not classified as granted or owed remuneration
within the meaning of § 162 AktG.
BMW Group Report 2023
← = Q
III. Remuneration of the Members of the Board of Management
Other Information
Remuneration Report
3,238,976
1,174,735
1,845,023
22,870,768
Total
1 Member of the Board of Management since 1 November 2023.
2 Member of the Board of Management since 12 May 2023.
3 Member of the Board of Management until 31 October 2023, service contract until 31 July 2024,
see Premature termination of activities and post-contractual non-competition clause.
"Member of the Board of Management until 11 May 2023, service contract until 31 May 2023,
see Premature termination of activities and post-contractual non-competition clause.
7.
Malus and clawback provisions
The current remuneration system provides for the possibility of
withholding variable remuneration (malus) and reclaiming vari-
able remuneration already paid out (clawback) under certain
conditions. The rules allow the Supervisory Board to withhold or
reclaim variable remuneration in the event of certain serious
compliance-related violations (compliance malus and/or compli-
ance clawback). These provisions can also be applied where var-
iable remuneration components linked to the achievement of cer-
tain targets have been paid out on the basis of incorrect calcula-
tion bases or incorrect financial statements. Remuneration can
also be withheld or reclaimed after an individual's departure from
the Board of Management.
3 Last trading day of 2023: 29 December 2023. XETRA closing price on 29 December 2023: € 100.78.
The Supervisory Board has not identified any reason to withhold
or reclaim variable remuneration components in the 2023 finan-
cial year.
Board of Management service contracts provide for severance
pay to be paid to the Board member in the event of premature
termination by the Company without due cause, the amount of
which is limited to a maximum of two years' remuneration (sev-
erance payment cap). The member will not be compensated for
more than the remaining term of the service contract. If the re-
maining term of the contract is less than two years, the sever-
ance payment is reduced proportionately. The annual remuner-
ation paid generally includes the base salary, the target amount
of the bonus and target amount of the personal cash investment
amount, unless the relevant target amount was not achieved in
the previous year. In this case, the bonus that was actually
granted or the personal cash investment amount that was actu-
ally disbursed will apply.
There are no specific severance arrangements covering early
termination of a Board member's mandate due to a change of
control or in connection with a takeover offer.
In the event of death or invalidity, special rules apply for waiving
the holding period for shares of common stock that were ac-
quired with share-based remuneration components. Where the
280
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
8. Premature termination of activities and
post-contractual non-competition clause
2 Payment of the 2022 cash remuneration component (personal cash investment amount) in May 2023 with subsequent acquisition of reported shares of BMW common stock (purchase date: 31 May
2023; purchase price: € 103.42), for which the four-year holding period until 2027 applies.
1 Includes only shares of BMW common stock acquired using the cash remuneration component of the share-based remuneration programme for members of the Board of Management, for which the four-
year holding period has not yet expired.
11,385,016
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
← = Q
5. Share ownership guideline
The members of the Board of Management in office as at 31 De-
cember 2023 hold a total of 112,969 shares of BMW common
stock which they are required to hold in accordance with the
terms of the share-based remuneration programmes for the fi-
nancial years 2019-2022. The four-year holding period re-
mains in effect even if the member leaves the Board of
Management.
The share-based remuneration (personal cash investment
amount) for vesting year 2022 was disbursed as part of the next
payroll run after the Annual General Meeting 2023. The afore-
mentioned members of the Board of Management acquired a to-
tal of 42,995 shares of BMW common stock immediately there-
after which must be held until 2027. The share-based remuner-
ation (personal cash investment amount) for vesting year 2023
will be paid as part of the next payroll run after the Annual Gen-
eral Meeting 2024. The shares of BMW common stock will be
acquired immediately thereafter and must be held until 2028.
The value of the shares of common stock in BMW held by the
members of the Board of Management in office as at 31 Decem-
ber 2023 came to between 237% and 75% of the respective
base salary for the 2023 financial year³,4.
Pursuant to Article 19 of the Market Abuse Regulation (EU) No.
569/2014 (Managers' Transactions), any purchase or sale of
BMW AG shares and related financial instruments by members
of the Board of Management must be reported, even after the
minimum holding period has expired. No member of the Board
of Management reported a sale of BMW AG shares or related fi-
nancial instruments in the 2023 financial year.
Shares of BMW common stock subject to holding requirements in connection with share-based remuneration for financial
years 2019-20221
Share portfolio as at
1 January 2023
Oliver Zipse
Jochen Goller5
Ilka Horstmeier
Walter Mertl6
Milan Nedeljković
Joachim Post
Frank Weber'
Total
278
Premature termination of activities and post-contractual non-competition clause.
Premature termination of activities and post-contractual non-competition clause.
5 Second remuneration level since 1 July 2023.
275,000
266,750
580,250
1,498,750
595,000
993,650
297,500
35,700
(-)
13,308
339,150
288,575
627,725
1,621,375
1 Member of the Board of Management since 1 November 2023.
2 Member of the Board of Management since 12 May 2023.
3 Member of the Board of Management until 31 October 2023, service contract until 31 July 2024. See
4 Member of the Board of Management until 11 May 2023, service contract ended 31 May 2023. See
297,500
275,000
Additions in the
financial year 2023²
14,285
Share portfolio as at Value in € as at
31 December 2023 31 December 20233
45,868
203%
(-)
6,686
(-)
6,686
673,815
75%
11,383
74,091
7,178
42,995
(-)
18,561
1,870,578
192%
4,117
112,969
2,133,714
21,172
(-)
7,472
(-)
(-)
(-)
7,374
(-)
20,682
4,622,577
(-)
2,084,332
End of the holding period
in the financial year 2023
4,117
Relation value/
base salary 2023 in %4
237%
(-)
(-)
(-)
(-)
(-)
(-)
(-)
13,700
199%
100%
669,750
150%
target achieved in %
108.0
Performance factor
Proportionate target
bonus amount in €
Performance component
of bonus in €
Oliver Zipse
Interdepartmental targets - Other non-financial
40
92.5
1.03
1,050,000
1,081,500
Departmental targets
10
118.8
50
Interdepartmental targets - ESG
in %
Targets
Continue development of a CO₂ management system in the supply chain
Develop competitive products
Hand over products ready for mass production on time; focus on new vehicle and digital architecture
Continue development of automated driving; develop hydrogen technology
Future MINI portfolio
1 Collective assessment of the Board of Management as a team. 2 Individual assessment for each member of the Board of Management.
Weighting 10%
273
BMW Group Report 2023
Interdepartmental targets - ESG
To Our Stakeholders Combined Management Report
Remuneration Report
Other Information
← = Q
III. Remuneration of the Members of the Board of Management
Overview of target achievement for the performance component of the bonus for the 2023 financial year
Weighting
Average degree to which
Group Financial Statements Responsibility Statement and Auditor's Report
Ensure access to technology and continued ability to innovate
50
Jochen Goller¹
10
110.0
Interdepartmental targets - ESG
50
108.0
Walter Mertl²
Interdepartmental targets - Other non-financial
40
92.5
1.02
301,178
307,201
Departmental targets
10
111.9
Departmental targets
586,500
575,000
1.02
Interdepartmental targets - Other non-financial
40
92.5
1.02
79,167
80,750
Departmental targets
108.0
10
Interdepartmental targets - ESG
50
108.0
Ilka Horstmeier
Interdepartmental targets - Other non-financial
40
92.5
108.1
Interdepartmental targets - ESG
Meet quality requirements and cost targets
Represent the Company in Chinese projects
2 Individual assessment for each member of the Board of Management.
3 Collective assessment of the Board of Management as a team.
272
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
III. Remuneration of the Members of the Board of Management
Targets set for the performance component of the bonus for financial year 2023
Interdepartmental
ESG targets
Innovation performance (environmental, e. g. proportion of sales attributable to all-electric vehicles (battery electric vehicles, BEV))
Reputation (corporate reputation, preventive activities in ensuring compliance)
Adaptability (investment in training and further education, sustainability)
Employer attractiveness (e. g. placement in rankings)
Weighting 50%
Based on the target amount of the performance component of the bonus.
Interdepartmental
ESG targets³
50%
interdepartmental
non-financial targets³
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
← = Q
Entire Board of Management'
Targets set and extent of achievement - performance component of
the bonus for the 2023 financial year
The Supervisory Board assessed the performance of the mem-
bers of the Board of Management in terms of the departmental
targets, on the one hand, and the interdepartmental targets, on
the other hand, within a target achievement corridor with a partial
performance factor between 0 (corresponding to a target being
0% achieved) and 1.80 (corresponding to a target being 180%
achieved, the highest possible percentage). The performance
factor for the bonus was determined from the partial perfor-
mance factors, with a weighting of 10% for the departmental tar-
gets and 90% for the interdepartmental targets, in each case in
relation to the target amount of the performance component of
the bonus. With regard to the interdepartmental targets, 50% of
the weighting is for non-financial environmental, social and gov-
ernance (ESG) targets, and 40% is for other non-financial tar-
gets, in each case in relation to the target amount of the perfor-
mance component of the bonus.
The leadership performance of the individual members of the
Board of Management was assessed along with the overall per-
formance of the Board of Management as a whole. With regard
to the departmental targets, the Supervisory Board assessed the
individual performance of each member of the Board of Manage-
ment. With regard to the interdepartmental targets, the Supervi-
sory Board considered the Board of Management as a team and
assessed the performance of all the members of the Board of
Management as a whole. The Supervisory Board's decision-
making process is based on a detailed, documented analysis of
performance as measured against all the agreed criteria, as well
as in-depth discussions at Personnel Committee and full Super-
visory Board level. As a basis for the targets set in the previous
year and the assessment process following the financial year, the
Supervisory Board was guided, in particular, by the quantitative
and qualitative metrics that were defined in the corporate plan-
ning before the beginning of the financial year.
The results of comparative studies and calculations vis-à-vis
competitors were also used to assess individual metrics. In addi-
tion to a review of performance in 2023, the Supervisory Board
carried out a trend review covering several financial years. In do-
ing so, it assessed the effects of decisions, measures and the
overall course set in previous financial years on the 2023 finan-
cial year and also estimated the significance of the performance
in 2023 for the future development of the Company.
The defined quantitative and qualitative metrics include indica-
tors such as vehicle sales, segment shares, the share of sales for
electrified and all-electric vehicles and the share of BMW brand
vehicles with remote software upgrade capability. Other metrics
included assessments of the quality of the customer experience
compared to the competition, the R&D ratio, spending on em-
ployee training and development and diversity targets.
Overview of targets of the performance component of the
bonus for the financial year 20231
10%
Departmental
targets²
40%
Other
The targets set by the Supervisory Board for the 2023 vesting
year as part of the performance component of the bonus, the
weighting of the relevant criteria and the individual target
achievement are summarised in the tables below.
Anticipate market requirements, manage the production network and safeguard the supply chain
Leadership performance (employee satisfaction)
Other interdepartmental
non-financial targets
Represent the Company's interests, present new products
Progress with sustainability strategy and transformation process
Future portfolio of the brands
Ensure the BMW Group is an attractive employer and ensure labour availability
Manage personnel structures, capacities and costs; oversee skills transformation
Real estate portfolio management
Progress in terms of decarbonisation and energy supply strategies for each location
Anticipate market requirements, manage the production network and safeguard the supply chain
Flexible production structure; enhancement of future-oriented production system
Continue development of high-quality standards and ensure compliance with these standards
Progress in terms of decarbonisation and energy supply strategies for each location
Plan sales and prices, realise potential in our sales markets
Anticipate market requirements, manage the production network and safeguard the supply chain
Continue development of digital marketing and sales concepts and prepare regional direct sales models
Effective communication and presentation of new products
Capital market communication; continue development of non-financial reporting and reporting structure
Risk management and Group financing; optimisation of capital structure; investment planning
Walter Mertl (Member of the Board of Management since Performance programme financial targets including untapped potential in digitalisation processes
12 May 2023)
Joachim Post
Frank Weber
Coordinate the work of the Board of Management
Increased quality focus
Preventive activities in ensuring compliance in the department
Leadership performance in the department and achievement of departmental diversity targets
Innovation performance (economic, e. g. proportion of sales attributable to new BMW vehicles with the ability to perform remote software upgrades)
Customer orientation (product, customer service quality, based on comparative studies and other information)
Reputation (e.g. brand strength)
Weighting 40%
Contribute to meeting growth and profitability targets
Joint
All members
Actual value 2023
102.1
of the Board of Management²
Market position (e. g. sales volume of the BMW Group)
Specific
departmental targets
Ilka Horstmeier
Milan Nedeljković
Pieter Nota (Member of the Board of Management until
31 October 2023)/
Jochen Goller (Member of the Board of Management
since 1 November 2023)
Nicolas Peter (Member of the Board of Management
until 11 May 2023)/
Oliver Zipse
50
departmental targets
Milan Nedeljković
FY n+3
FY +4
FY +5
Yn+1
Performance period: 4 years
Freely
available
shares
Total performance period: 5 years
Acquisition of shares
(amounting to 100%
of the payment amount]
2 At least two strategic focus targets and their proportion of the target amount are determined by the Supervisory Board.
3 Exemplary illustration of price development.
"Payment of the personal cash investment amount, acquisition of shares and the start of the four-year holding period occur as part of the next payroll run after the Annual General Meeting at which the
annual financial statements for the vesting year are presented.
determined by multiplying the RoCE factor for the vesting year by
50% of the individual target amount.
Strategic focus targets component of the personal cash investment
amount
FY n+2
FY
+
Performance period: 1 year
Target amount for the personal cash investment amount
The target amounts for the individual members of the Board of
Management for the 2023 financial year are presented in the
table Overview of share-based remuneration for financial year 2023.
RoCE component of the personal cash investment amount
Before the beginning of the relevant vesting year, the Supervi-
sory Board sets minimum, target and maximum values for the
RoCE in the Automotive segment in the vesting year on the basis
of corporate planning, and assigns a RoCE factor to each of these
values. If the minimum value is not reached, the RoCE factor is 0.
If the target value is reached, the RoCE factor is 1.00. If the max-
imum value is reached or exceeded, the RoCE factor is 1.80. The
ROCE component of the personal investment cash amount is
Overview of share-based remuneration¹
FYn
Target amount
50%
RoCE factor
The Supervisory Board sets at least two strategic focus targets
before the start of the vesting year. It derives these targets from
the corporate strategy and corporate planning. It then sets a min-
imum, target and maximum value for each strategic focus target,
and assigns a factor to each of these values. If the minimum
value is not reached, the factor for that target is 0. If the target
value is reached, the factor for that target is 1.00. If the maximum
value is reached or exceeded, the factor for that target is 1.80.
The strategic focus targets component of the personal cash
Extent of target achievement for
RoCE in the Automotive segment
(value between 0 and 1.80)
Target amount
50%
Strategic focus target factor
Extent of target achievement
for strategic focus targets²
(value between 0 and 1.80)
Personal cash
investment amount
(capped at 180%
of the target amount)
Taxes and deductions
Amount paid out
Share performance over 4 years³
1 Simplified depiction.
RoCE component + strategic focus target component
investment amount is determined in a two-step process. In the
first step, the factor for the vesting year achieved for the relevant
strategic focus target is multiplied by the share of the individual
target amount attributable to this target. In the second step, the
values determined for the individual strategic focus targets using
this calculation are added together. If two strategic focus targets
are set, each strategic focus target accounts for 25% of the indi-
vidual target amount, unless the Supervisory Board decides on a
different weighting. If more than two strategic focus targets are
set, the Supervisory Board determines the weighting of each
target.
BMW Group Report 2023
50%
0%
12
Minimum value
16
21
Target value
Maximum value
→ Extent to which target achieved: 167%
RoCE in Automotive segment in %
Targets set and extent of achievement - reduction of fleet carbon emissions (EU)
T
200%
180%
108.0
| Extent to which target achieved
100%
150%
20.2
Actual value 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
III. Remuneration of the Members of the Board of Management
275
Targets set and extent of achievement for the ROCE component for
the 2023 financial year
Targets set and extent of achievement for the strategic
focus targets component for the 2023 financial year
In December 2023, the Supervisory Board set the following stra-
tegic focus targets for the vesting year 2022 in accordance with
the remuneration system:
Reduce fleet carbon emissions in the EU according to
WLTP; weighting in relation to individual personal cash
investment target: 25%.
Targets set and extent of achievement - RoCE component
T
200%
180%
Extent to which target achieved
ROCE in the Automotive segment for the 2023 financial year is
defined as segment profit before the financial result, divided by
the average capital employed in the segment. In December
2022, the Supervisory Board determined the following values for
the ROCE component for the vesting year 2023, based on the
long-term corporate planning: minimum value: 12% (target
achievement 50%), target value: 16% (target achievement
100%), maximum value: 21% (target achievement 180%). The
ROCE achieved in the Automotive Segment for the 2023 finan-
cial year is 20.2% and the ROCE factor for calculating the per-
sonal cash investment amount is therefore 1.67.
Personal cash investment amount =
Sales of all-electric vehicles (battery electric vehicles, BEV);
weighting in relation to individual personal cash investment
target: 25%.
Personal cash investment amount
10
111.9
Interdepartmental targets - ESG
50
108.0
Nicolas Peter
Interdepartmental targets - Other non-financial
40
92.5
1.03
239,583
246,771
Departmental targets
10
116.9
Departmental targets
586,500
575,000
1.02
40
Interdepartmental targets - Other non-financial
The personal cash investment amount for the 2023 financial
year will be paid as part of the next payroll run after the Annual
General Meeting in 2024. The size of this amount depends on
the target amount, the RoCE achieved in the Automotive seg-
ment and the degree to which certain strategic focus targets
were achieved in the vesting year. The personal cash investment
amount is limited to a maximum of 180% of the target amount
and is calculated as follows:
92.5
1.02
575,000
586,500
Interdepartmental targets - ESG
Departmental targets
111.3
Interdepartmental targets - ESG
50
108.0
Pieter Nota3
40
92.5
10
50
Interdepartmental targets - Other non-financial
Joachim Post
535,500
Departmental targets
10
111.9
1 Member of the Board of Management since 1 November 2023.
2 Member of the Board of Management since 12 May 2023.
3 Member of the Board of Management until 31 October 2023, service contract comes to an end on 31 July 2024. See Premature termination of activities and post-contractual non-competition clause.
4 Member of the Board of Management until 11 May 2023, service contract ended 31 May 2023. See Premature termination of activities and post-contractual non-competition clause.
5 Second remuneration level since 1 July 2023.
525,000
BMW Group Report 2023
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
108.0
(2) Share-based remuneration for the 2023 financial year
As part of the share-based remuneration as a variable long-term
component of remuneration, the members of the Board of Man-
agement receive a cash payment earmarked for investment in
BMW shares of common stock (the "personal cash investment
amount"). This amount depends on the achievement of certain
financial and non-financial targets in the past financial year (vest-
ing year). The members of the Board of Management are obliged
to invest their personal cash investment amounts (less taxes and
duties) in BMW shares of common stock immediately after dis-
bursement, and to hold these shares for a period of at least four
years (share ownership guideline). The holding period remains in
effect even if the member leaves the Board of Management.
← = Q
III. Remuneration of the Members of the Board of Management
To Our Stakeholders Combined Management Report
1.02
274
40
92.5
92.5
40
Interdepartmental targets - Other non-financial
475,000
Departmental targets
10
484,500
Interdepartmental targets - ESG
50
108.0
Frank Weber5
Interdepartmental targets - Other non-financial
110.0
1.02
(-)
21
638,000
17
16
(-)
Total variable remuneration for vesting year 2023 or earlier vesting years
580,250
Strategic focus target component
RoCE component
775,500
25
(-)
918,500
(-)
(-)
(-)
(-)
I
2,781,250
(-)
(-)
(-)
(-)
100 or 0
2,734,000
2 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
1 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
12
3 For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the vesting year are to be taken into account. See table Maximum remuneration and remuneration vested in the 2023 financial year (vesting year).
4,144,763
4,112,446
Total remuneration plus service cost³
100
3,736,259
408,504
100
3,703,942
408,504
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost²
(-)
3,736,259
100 or 0
(-)
3,703,942
Remuneration for vesting year 2023 or earlier vesting years
73
2,734,000
75
2,781,250
Total
73 or 0
(-)
75 or 0
23
III. Remuneration of the Members of the Board of Management
27
in €
Earlier vesting years
Vesting year 2023
FY 2023
Other Information
Remuneration Report
Personal cash investment amount¹
Share-based remuneration component (matching component)
remuneration
SHARE-BASED REMUNERATION
Variable
in €
PCP 2020-2022
Performance component of bonus
Earnings component of bonus
BONUS
Total
Fringe benefits (other remuneration)
Fixed remuneration (base salary)
Fixed
remuneration
since 1 January 2022
290
JOACHIM POST
Purchasing and Supplier Network
PERFORMANCE CASH PLAN
as a % of
total remuneration
Vesting year 2022
Earlier vesting years
3
24
as a % of
total remuneration
FY 2022
← = Q
465,500
13
855,000
22
484,500
798,000
1,002,259
25
922,692
(-)
102,259
1
(-)
22,692
(-)
in €
in €
900,000
24
(-)
900,000
(-)
BMW Group Report 2023 To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
(-)
FRANK WEBER
75 or 0
(-)
3,038,875
Total variable remuneration for vesting year 2023 or earlier vesting years
Total
15
(-)
638,000
16
627,725
Strategic focus target component
18
2,734,000
(-)
25
(-)
993,650
RoCE component
(-)
(-)
(-)
(-)
(-)
(-)
14
775,500
572,900
572,900
3,038,875
Remuneration granted and owed in financial year 2023 (2022)
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost²
4 For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the vesting year are to be taken into account. See table Maximum remuneration and remuneration vested in the 2023 financial year (vesting year).
3 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
2 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
1 Second remuneration level since 1 July 2023.
4,648,502
4,450,792
Total remuneration plus service cost
100
4,240,977
407,525
64 or 14
100
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost³
86 or 14
572,900
3,668,077
100 or 0
(-)
4,043,267
Remuneration for vesting year 2023 or earlier vesting years
78
3,306,900
75
4,043,267
407,525
11
20
(-)
Earlier vesting years
Vesting year 2023
FY 2022
FY 2023
← = Q
III. Remuneration of the Members of the Board of Management
Other Information
Remuneration Report
Personal cash investment amount²
Share-based remuneration component (matching component)
remuneration
in €
SHARE-BASED REMUNERATION
PCP 2020-2022
PERFORMANCE CASH PLAN
Performance component of bonus
Earnings component of bonus
BONUS
Total
Fringe benefits (other remuneration)
Fixed remuneration (base salary)
Fixed
remuneration
since 1 July 20201
Development
Variable
in €
as a % of
total remuneration
Vesting year 2022
465,500
13
855,000
22
535,500
882,000
22
934,077
25
1,004,392
1
(-)
34,077
1
(-)
29,392
21
total remuneration
in €
in €
900,000
24
(-)
975,000
as a % of
Earlier vesting years
Remuneration granted and owed in financial year 2023 (2022)
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
(-)
289
1,967,249
19
1,764,000
1,081,500
22
1,890,000
(-)
19
13
1,039,500
(-)
10
2,156,800
21
(-)
135,416¹
2
15
(-)
1,239,625
Strategic focus target component
16
(-)
24
1,656,750
(-)
1,962,250
RoCE component
1
79,326
(-)
24
1,976,113
0.2
(-)
Earlier vesting years
Vesting year 2023
in €
FY 2022
FY 2023
← = Q
III. Remuneration of the Members of the Board of Management
in €
Other Information
Personal cash investment amount²
Share-based remuneration component (matching component)
remuneration
SHARE-BASED REMUNERATION
PCP 2020-2022
Variable
Remuneration Report
1,363,000
as a % of
total remuneration
Earlier vesting years
17,249
0.3
(-)
26,113
19
(-)
Vesting year 2022
1,950,000
(-)
1,950,000
total remuneration
in €
in €
as a % of
24
(-)
13
Total variable remuneration for vesting year 2023 or earlier vesting years
Total
Remuneration Report
Personal cash investment amount¹
Share-based remuneration component (matching component)
remuneration
SHARE-BASED REMUNERATION
PCP 2020-2022
Other Information
Variable
Performance component of bonus
Earnings component of bonus
BONUS
Total
Fringe benefits (other remuneration]
Fixed remuneration (base salary)
PERFORMANCE CASH PLAN
remuneration
III. Remuneration of the Members of the Board of Management
FY 2023
(-)
150,000
total remuneration
in €
in €
as a % of
← = Q
Earlier vesting years
as a % of
total remuneration
in €
in €
Earlier vesting years
Vesting year 2023
FY 2022
Vesting year 2022
PERFORMANCE CASH PLAN
Fixed
Customer, Brands, Sales
98 or 2
135,416
8,023,488
Remuneration for vesting year 2023 or earlier vesting years
81
8,185,376
7,916,499
76
59 or 22
2,236,126
5,949,250
74 or 2
135,416
6,047,375
6,182,791
since 1 November 2023
2,236,126
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost³
JOCHEN GOLLER
Remuneration granted and owed in financial year 2023 (2022)
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023
283
4 For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the vesting year are to be taken into account. See table Maximum remuneration and remuneration vested in the 2023 financial year (vesting year).
78 or 22
3 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
10,865,354
100
10,152,625
712,729
100
8,158,904
712,729
8,871,633
Total remuneration plus service cost
1 The number of shares purchased in 2019 with the 2018 cash remuneration component (investment component) for the financial year amounted to 4,117. The number of mathematical matching shares for calculating the equivalent value in cash amounts to 1,372.
2 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
24
Performance component of bonus
BONUS
(-)
total remuneration
in €
as a % of
Earlier vesting years
Vesting year 2022
in €
937,500
24
(-)
1,050,000
as a % of
total remuneration
in €
Earlier vesting years
Vesting year 2023
in €
FY 2022
FY 2023
← = Q
III. Remuneration of the Members of the Board of Management
Fringe benefits (other remuneration]
Total
BONUS
Earnings component of bonus
Performance component of bonus
PERFORMANCE CASH PLAN
19
Variable
SHARE-BASED REMUNERATION
remuneration
Share-based remuneration component (matching component)
Personal cash investment amount²
Remuneration Report
Other Information
PCP 2020-2022
27,524
(-)
1
(-)
(-)
(-)
(-)
(-)
(-)
23
RoCE component
(-)
24
807,225
(-)
16
Strategic focus target component
1,068,800
Fixed remuneration (base salary)
1,145,800
18
19,824
(-)
0.4
1,077,524
25
957,324
10
19
586,500
22
900,000
13
490,000
(-)
966,000
remuneration
Fixed
since 1 October 20191
a) Variable remuneration for the 2023 financial year
← = Q
III. Remuneration of the Members of the Board of Management
Other Information
Remuneration Report
2 Payment of 2018 cash remuneration component (investment component) in 2019, immediately following the acquisition of shares of BMW common stock subject to holding requirements for
2019-2023.
The variable remuneration for the 2023 financial year and the
extent to which targets were achieved are set out above in
7 Variable remuneration for the 2023 financial year.
1 Simplified depiction.
2024
Payment after the Annual
General Meeting 2024
Four-year holding period for
acquired BMW AG shares
Payment after the Annual
General Meeting 2024,
Acquisition of BMW AG
shares
Payout of matching component 2018
Contribution to company pension scheme
2028
Basic remuneration and fringe benefits
b) Share-based remuneration component (matching component)
Share-based remuneration components have been included in
the remuneration of members of the BMW AG Board of Manage-
ment since 2011. In the 2023 financial year, the matching com-
ponent of the share-based remuneration for vesting year 2018
was paid out. Under the share-based remuneration programme
for financial year 2018, the members of the Board of Manage-
ment in office in 2018 received an amount equal to 45% of the
gross bonus as additional cash remuneration from the Company
Total
Fringe benefits (other remuneration)
Fixed remuneration (base salary)
remuneration
Fixed
Chairman of the Board of Management since 16 August 2019
Member of the Board of Management since 13 May 2015
2018
OLIVER ZIPSE
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023
282
c) Presentation of remuneration granted and owed
The following tables show the remuneration granted and owed
to the members of the Board of Management in office during the
reporting year.
cash based on a reference price of € 98.70. A matching compo-
nent will be paid for the last time in 2025.
for financial year 2018 (the investment component), which they
were each required to invest in shares of the Company's com-
mon stock after taking taxes and deductions into account. Under
a matching plan, the member of the Board of Management re-
ceives from the Company - at the Company's discretion - either
one additional share of common stock or the equivalent in cash
(share-based remuneration component/matching component)
for every three shares of common stock held after the four-year
holding period. The investment component for financial year
2018 was paid out immediately after the 2019 Annual General
Meeting on 16 May 2019, and the shares of common stock were
acquired on 17 May 2019 at a price of € 65.84. The holding pe-
riod for the shares of common stock acquired in 2019 expired on
16 May 2023. The Company settled the matching component in
Remuneration granted and owed in financial year 2023 (2022)
Earnings component of bonus
11th May
2023
Personal cash investment amount 2023
(-)
(-)
Total remuneration plus service cost³
2,700,550
(-)
1 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
(-)
2 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
286
BMW Group Report 2023
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration granted and owed in financial year 2023 (2022)
MILAN NEDELJKOVIĆ
Production
3 For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the vesting year are to be taken into account. See table Maximum remuneration and remuneration vested in the 2023 financial year (vesting year).
Bonus 2023
(-)
(-)
2022
2021
2020
2019
2018
Four-year holding period for acquired BMW AG shares
III
Share-based remuneration 2018²
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
BMW Group Report 2023 To Our Stakeholders
281
2,446,106
254,444
100
Overview of remuneration granted and owed in 2023 financial year with payout profile¹
(-)
(-)
(-)
2 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
3 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
4 For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the vesting year are to be taken into account. See table Maximum remuneration and remuneration vested in the 2023 financial year (vesting year).
285
BMW Group Report 2023
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration granted and owed in financial year 2023 (2022)
WALTER MERTL
Finance
since 12 May 2023
Fixed
remuneration
Fixed remuneration (base salary)
Fringe benefits (other remuneration]
Total
BONUS
Earnings component of bonus
FY 2022
FY 2023
← = Q
III. Remuneration of the Members of the Board of Management
Other Information
Remuneration Report
1 Second remuneration level since 1 November 2022.
Personal cash investment amount¹
remuneration
SHARE-BASED REMUNERATION
Variable
PCP 2020-2022
PERFORMANCE CASH PLAN
Performance component of bonus
Share-based remuneration component (matching component)
5,336,794
4,821,014
Total remuneration plus service cost❝
13
(-)
655,400
2,818,883
75 or 0
(-)
3,296,500
1,145,800
Total variable remuneration for vesting year 2023 or earlier vesting years
Total
(-)
675,200
Strategic focus target component
16
(-)
796,650
15
Vesting year 2023
57 or 23
75
100
4,929,261
407,533
100
4,413,481
407,533
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost³
77 or 23
3,296,500
1,145,800
100 or 0
(-)
4,413,481
Remuneration for vesting year 2023 or earlier vesting years
80
3,964,683
3,783,461
Earlier vesting years
in €
in €
(-)
15
(-)
367,912
Strategic focus target component
(-)
(-)
(-)
24
(-)
582,382
RoCE component
(-)
(-)
(-)
(-)
(-)
1,763,473
(-)
100 or 0
(-)
2,446,106
Remuneration for vesting year 2023 or earlier vesting years
(-)
Total variable remuneration for vesting year 2023 or earlier vesting years
72
Total
(-)
(-)
(-)
72 or 0
(-)
1,763,473
24
(-)
(-)
111,981
(-)
(-)
(-)
23
(-)
(-)
570,652
in €
in €
as a % of
Earlier vesting years
Vesting year 2022
as a % of
total remuneration
total remuneration
(-)
5
(-)
I
I
13
(-)
(-)
(-)
(-)
21
505,978
(-)
(-)
28
682,633
(-)
307,201
(-)
1,068,800
RoCE component
(-)
75
463,541
Total
(-)
(-)
Remuneration for vesting year 2023 or earlier vesting years
(-)
(-)
463,541
Total variable remuneration for vesting year 2023 or earlier vesting years
(-)
(-)
(-)
75 or 0
16
616,872
100 or 0
1 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
(-)
(-)
(-)
(-)
(-)
(-)
III
100
616,872
66,667
683,539
Total remuneration plus service cost³
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost²
(-)
(-)
(-)
2 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
(-)
Strategic focus target component
(-)
22
80,750
133,000
(-)
(-)
(-)
25
(-)
(-)
(-)
1
(-)
3,331
153,331
96,708
(-)
I
(-)
(-)
(-)
25
(-)
153,083
13
RoCE component
(-)
(-)
(-)
(-)
(-)
I
(-)
675,200
3 For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the vesting year are to be taken into account. See table Maximum remuneration and remuneration vested in the 2023 financial year (vesting year).
BMW Group Report 2023
964,578
25
1,116,981
1
(-)
39,578
20
2
66,981
19
(-)
total remuneration
in €
in €
925,000
(-)
24
966,000
22
(-)
(-)
(-)
(-)
(-)
(-)
586,500
23
10
18
(-)
481,833
13
885,000
1,145,800
284
(-)
as a % of
PERFORMANCE CASH PLAN
Performance component of bonus
Earnings component of bonus
BONUS
Total
Fringe benefits (other remuneration]
Variable
Fixed remuneration (base salary)
Fixed
since 1 November 20191
Human Resources and Real Estate, Labour Director
ILKA HORSTMEIER
Remuneration granted and owed in financial year 2023 (2022)
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
remuneration
1,050,000
PCP 2020-2022
remuneration
Earlier vesting years
Vesting year 2022
as a % of
total remuneration
in €
Earlier vesting years
Vesting year 2023
in €
SHARE-BASED REMUNERATION
FY 2022
← = Q
III. Remuneration of the Members of the Board of Management
Other Information
Remuneration Report
Personal cash investment amount²
Share-based remuneration component (matching component)
FY 2023
BMW Group Report 2023
(-)
Total variable remuneration for vesting year 2023 or earlier vesting years
Total
4,389,100
76
3,426,587
59 or 21
1,145,800
3,243,300
73 or 3
130,087
3,296,500
Total variable remuneration for vesting year 2023 or earlier vesting years
Total
14
80
(-)
15
(-)
17
(-)
902,400
24
(-)
1,068,800
675,200
Strategic focus target component
RoCE component
(-)
742,400
(-)
Remuneration for vesting year 2023 or earlier vesting years
130,087
Fixed
1 January 2017 to 11 May 20231
Finance
NICOLAS PETER
Remuneration granted and owed in financial year 2023 (2022)
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023
288
4,936,152
5 For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the vesting year are to be taken into account. See table Maximum remuneration and remuneration vested in the 2023 financial year (vesting year).
4 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
4,398,549
2 The number of shares purchased in 2019 with the cash remuneration component (investment component) for the 2018 financial year amounted to 3,954. The number of mathematical matching shares for calculating the equivalent value in cash amounts to 1,318.
3 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
1 Member of the Board of Management until 31 October 2023, service contract until 31 July 2024. See Premature termination of activities and post-contractual non-competition clause.
Total remuneration plus service cost
100
5,458,773
407,516
100
4,528,636
407,516
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost
79 or 21
1,145,800
4,312,973
97 or 3
5,866,289
remuneration
(-)
130,0872
total remuneration
in €
in €
as a % of
Earlier vesting years
Vesting year 2022
as a % of
total remuneration
in €
Earlier vesting years
Vesting year 2023
in €
FY 2022
1,050,000
FY 2023
III. Remuneration of the Members of the Board of Management
Other Information
Remuneration Report
Personal cash investment amount³
Share-based remuneration component (matching component)
remuneration
SHARE-BASED REMUNERATION
PCP 2020-2022
Variable
PERFORMANCE CASH PLAN
Performance component of bonus
← = Q
3
(-)
1,050,000
(-)
21
1,145,800
10
10
563,500
19
(-)
1,035,000
21
13
586,500
23
966,000
1,069,673
24
1,102,049
0.4
(-)
19,673
1
(-)
52,049
19
(-)
20
Variable
remuneration
Fixed remuneration (base salary)
57 or 24
1,359,926
3,249,050
54 or 5
121,105
1,375,937
Total variable remuneration for vesting year 2023 or earlier vesting years
13
(-)
742,400
11
Total
(-)
Strategic focus target component
16
(-)
902,400
17
(-)
445,333
RoCE component
1
79,326
(-)
281,333
5
1,497,042
Waiting allowance
2,736,798
5 For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the vesting year are to be taken into account. See table Maximum remuneration and remuneration vested in the 2023 financial year (vesting year).
2 The number of shares purchased in 2019 with the cash remuneration component (investment component) for the 2018 financial year amounted to 3,683. The number of mathematical matching shares for calculating the equivalent value in cash amounts to 1,227.
3 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
4 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
6,097,075
1 Member of the Board of Management until 11 May 2023, service contract ended 31 May 2023. See Premature termination of activities and post-contractual non-competition clause.
Total remuneration plus service cost
100
5,689,801
407,274
100
2,570,131
166,667
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost
58
76 or 24
4,329,875
95 or 5
(-)
(-)
81
4,608,976
(-)
24
(-)
121,105
2,449,026
Remuneration for vesting year 2023 or earlier vesting years
612,500
1,359,926
121,105²
(-)
23
as a % of
Earlier vesting years
Vesting year 2022
as a % of
total remuneration
in €
in €
Earlier vesting years
Vesting year 2023
FY 2022
FY 2023
← = Q
in €
III. Remuneration of the Members of the Board of Management
Remuneration Report
Personal cash investment amount³
Share-based remuneration component (matching component)
SHARE-BASED REMUNERATION
PCP 2020-2022
PERFORMANCE CASH PLAN
Performance component of bonus
Earnings component of bonus
BONUS
Total
Fringe benefits (other remuneration]
Other Information
in €
total remuneration
437,500
1,280,600
10
569,250
10
18
(-)
1,035,000
16
246,771
402,500
19
1,080,825
18
460,589
1
(-)
30,825
1
(-)
23,089
18
(-)
1,050,000
17
(-)
Earnings component of bonus
15
(-)
PIETER NOTA
100
Total remuneration plus service cost❝
4,781,415
5,371,840
2 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
3 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
4 For the purposes of compliance with the maximum specified remuneration limit, only the service cost and the remuneration for the vesting year are to be taken into account. See table Maximum remuneration and remuneration vested in the 2023 financial year (vesting year).
287
BMW Group Report 2023
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration granted and owed in financial year 2023 (2022)
Customer, Brands, Sales
1 January 2018 to 31 October 20231
Fixed
remuneration
Fixed remuneration (base salary)
Fringe benefits (other remuneration)
Total
BONUS
4,964,449
407,391
407,391
1 Second remuneration level since 1 October 2022.
4,374,024
3,296,500
(-)
75 or 0
664,100
2,861,325
(-)
100
1,145,800
58 or 23
3,296,500
75
13
81
Remuneration for vesting year 2023 or earlier vesting years
4,374,024
(-)
100 or 0
3,818,649
1,145,800
77 or 23
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Service cost³
4,007,125
OUTGOING MEMBERS OF THE
FRANK WEBER (b. 1966)
Member since 2020
Development
Purchasing and Supplier Network
DR-ING JOACHIM POST (b. 1971)
Member since 2022
BMW (South Africa) (Pty) Ltd.***, Chairman
BMW Motoren GmbH***, Chairman
Mandates
Member since 12 May 2023
Finance
DR-ING MILAN NEDELJKOVIĆ (b. 1969)
BMW Brilliance Automotive Ltd.***, Chairman
(since 12 May 2023)
Mandates
BOARD OF MANAGEMENT
WALTER MERTL (b. 1974)
Member since 2019
Production
PIETER NOTA (b. 1964)
All our brands and drivetrain variants help assure the continued profitable growth of your
Company. We expect to see significant double-digit growth in sales of our BEV models again
in 2024. We continue to steer the e-mobility ramp-up smartly and precisely in line with differ-
entiated demand in all regions of the world.
Customer, Brands, Sales
Mandates
Rolls-Royce Motor Cars Ltd.***, Chairman
(until 1 November 2023)
DR NICOLAS PETER (b. 1962)
Member from 2017 until 11 May 2023
Finance
Mandates
BMW Brilliance Automotive Ltd. ***, Chairman
(until 11 May 2023)
General Counsel:
DR ANDREAS LIEPE
Not listed on the stock exchange.
BMW Group mandate.
***Group mandate (other).
- Memberships on other mandatory supervisory boards.
Labour Relations Director
Member from 2018 until 31 October 2023
People and Real Estate,
To Our Stakeholders
ILKA HORSTMEIER (b. 1969)
All these things make your Company strong and resilient. This is especially true in the cur-
rent conditions, where we face a variety of extremely demanding requirements in individual
regions of the world, with geopolitical uncertainty and entirely new challenges constantly
emerging. We provide a substantial response to all these things.
You lend us your support and give us the latitude we need to make decisions with a long-
term perspective. Entrepreneur Herbert Quandt laid the foundation for this many years ago.
His family's next generation and all of us who work at the Company are following his legacy.
In his spirit, the Company and its employee representatives work together - negotiating
firmly, but always focused on finding solutions for the future. That, too, is our lived BMW cul-
ture.
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Statement of the Chairman of the Board of Management
- Memberships on comparable boards in Germany and abroad.
BMW Group Report 2023
21
To Our Stakeholders
Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Composition of the Board of Management and Supervisory Board
Member since 2019
Remuneration Report
← = Q
COMPOSITION OF THE BOARD OF
MANAGEMENT AND SUPERVISORY BOARD
CURRENT MEMBERS OF THE
BOARD OF MANAGEMENT
OLIVER ZIPSE (b. 1964)
Member since 2015
Chairman (since 2019)
Mandates
Fraunhofer-Gesellschaft zur Förderung der
angewandten Forschung e. V.", Deputy Chairman
JOCHEN GOLLER (b. 1966)
Member since 1 November 2023
Customer, Brands, Sales
Mandates
Rolls-Royce Motor Cars Ltd.***, Chairman
(since 1 November 2023)
Other Information
30
BASF SE, Chairman
To Our Stakeholders
Member since 2017, elected until the AGM 2026
Chairman of the Supervisory Board of ZF Friedrichshafen AG
Mandates
Deutsche Post AG
Fresenius Management SE*
ZF Friedrichshafen AG*, Chairman
STEFAN QUANDT (b. 1966)
Member since 1997, elected until the AGM 2024
Deputy Chairman of the Supervisory Board
Entrepreneur
Mandates
DELTON Health AG****, Chairman
DELTON Technology SE*****, Chairman
Frankfurter Allgemeine Zeitung GmbH*
AQTON SE****, Chairman
Entrust Corp.****
DR-ING HEINRICH HIESINGER (b. 1960)
SOLARWATT GmbH****
DR MARC BITZER (b. 1965)
Member since 2021, elected until the AGM 2025
Chairman and CEO of Whirlpool Corp.
Mandates
Simex Trading AG*
Whirlpool Corp., Chairman
Employee of the enterprise.
2 Union representative.
Executive employee of the enterprise.
Not listed on the stock exchange.
BMW Group mandate.
Group mandate (other).
- Memberships on other mandatory supervisory boards.
- Memberships on comparable boards in Germany and abroad.
Note: Mr Quandt is the sole shareholder of DELTON Health AG, DELTON Technology SE and AQ-
TON SE, and indirectly holds majority interests in Entrust Corp. and SOLARWATT GmbH.
ZF Friedrichshafen AG* (since 15 March 2023)
-
Mandates
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Composition of the Board of Management and Supervisory Board
Remuneration Report
Other Information
← = Q
CURRENT MEMBERS OF THE SUPERVISORY BOARD
DR-ING DR-ING Eh NORBERT REITHOFER (b. 1956)
Member since 2015, elected until the AGM 2025
Chairman of the Supervisory Board
Former Chairman of the Board of Management of BMW AG
Mandates
Siemens AG (until 9 February 2023)
Henkel Management AG*
Henkel AG & Co. KGaA (Shareholders' Committee)
DR MARTIN KIMMICH¹ (b. 1972)
Member since 18 January 2023, appointed until the AGM 2024
Deputy Chairman of the Supervisory Board
(since 23 January 2023)
Chairman of the General Works Council and Works Council
Munich of BMW AG
STEFAN SCHMID¹ (b. 1965)
Member since 2007, elected until the AGM 2024
Deputy Chairman of the Supervisory Board
Chairman of the BMW AG Works Council Dingolfing
DR KURT BOCK (b. 1958)
Member since 2018, elected until the AGM 2027
Deputy Chairman of the Supervisory Board and
Chairman of the Audit Committee
Chairman of the Supervisory Board of BASF SE
Mandates
More than 150,000 associates worldwide carry your Company forwards through their hard
work and dedication every day. They all value your commitment and your loyalty to the
BMW Group as shareholders.
CHRISTIANE BENNER² (b. 1968)
Member since 2014, elected until the AGM 2024
First Chairwoman of IG Metall (since 23 October 2023)
Mandates
Continental AG, Deputy Chairwoman
BERNHARD EBNER¹ (b. 1978)
Member since 2021, appointed until the AGM 2024
Chairman of the BMW AG Works Council Landshut
RACHEL EMPEY (b. 1976)
Member since 2021, elected until the AGM 2025
Member of Supervisory Boards
BMW Group Report 2023
We aim to continue our profitable growth.
Your Company intends to stay on track for success.
We are taking advantage of these opportunities in our rolling strategic approach and our long-
term corporate planning. What sets us apart is that we make conscious decisions, that are
consistently based on facts, empirical findings and well-founded analysis - not driven by the
current "zeitgeist" or short-term hypes. And, of course, it takes experience and sometimes
also common sense.
With regard to employees: in autumn 2023, we once again asked our global team to share
their opinion. For the first time, all 150,000 associates worldwide were able to take part.
84% took advantage of this opportunity.
"We are steering the e-mobility ramp-up smartly
and precisely in line with demand in all regions of
the world."
People like working for the BMW Group.
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Statement of the Chairman of the Board of Management
To Our Stakeholders
BMW Group Report 2023
26
With our "i Supply Chain" strategy, we are ensuring resilient, excellent and digital supply
chains in all areas. Our plants worldwide need supplying with 36 million parts every day - at
the right time, in the best quality and in the right quantity. For the digitalisation of our supply
chains, we are relying on Catena-X, a shared data ecosystem for automotive manufacturers,
suppliers and subcontractors, as well as recycling companies in the future. This digital collab-
oration increases efficiency and transparency - for example, around the carbon footprint and
options for tracing components and raw materials.
Your Company is building production facilities for BMW high-voltage batteries not just in
Lower Bavaria, but all over the world - always in close proximity to our vehicle plants in
Hungary, the US, Mexico, China and Thailand. Our strategic "local for local" approach also
guarantees short transport distances for high-voltage batteries and secures our supply
against unforeseen events in different regions of the world.
The Gen6 batteries for our plants in Bavaria will be supplied from our planned new location
in Irlbach-Straßkirchen from 2026 onwards. Before embarking on the building project, we
sought frank and open dialogue with local residents. We were very pleased that they voted
strongly in favour of our site and see this as confirmation of our efforts.
For both basic research and development of mass-manufacturing processes for high-voltage
batteries, your Company is relying on in-house expertise. We want to understand every as-
pect of the high-voltage battery. To do so, we have created the necessary conditions for this
with the Battery Cell Competence Centre in Munich and the Cell Manufacturing Competence
Centre in Parsdorf, Bavaria, enabling us to span all value creation processes involved in cell
production; this is a crucial step for us.
Our sixth-generation BMW eDrive technology represents an enormous leap in technology,
compared to the previous generation: we are increasing energy density by more than 20%,
improving charging speed by up to 30% and boosting range by around 30% - at the same
time as lowering costs. We are also reducing CO₂ emissions from cell production by up to
60%.
We are talking here about powerful, innovative and sustainably produced battery cells - in
other words, high-voltage batteries. In the models of the NEUE KLASSE, we will be using our
newly developed round lithium-ion battery cells, which have been optimised for the new ar-
chitecture, for the very first time.
The vote was unequivocal: 85% support our strategy - our BMW way. Another very clear
majority of 88% said they would recommend our Company as an employer. 93% are proud
to work for the BMW Group.
Is there any better foundation for continuing on our successful course together?
2023 was another strong team effort.
Personally, and on behalf of the entire Board of Management, I would like to thank all our
associates. Everyone made a valuable contribution. I would also like to thank all our custom-
ers worldwide, our retail organisation and our suppliers.
27
22
Chairman of the Board of Managemen
Oliver Zipse
V.fiume
Yours
"I
That is continuous progress.
Mobility is movement - and movement requires energy and functioning supply
chains.
“Our customers experience their mobility in a
very individual way. We therefore are continually
laying the foundation for our future success.
All of this shows that we are continually laying the foundation for our future success. That is
continuous progress. In other words: DRIVING THE NEXT ERA.
Your Company is a high-performance organisation. That is why we once again have ambi-
tious plans for 2024: on the automotive side, 14 new models will go into production and
BMW Motorrad will release a further 12 new models - not to mention numerous model up-
dates and engine variants. We have never postponed a launch and we will not waver from
this.
That is what makes your Company different. We dare to chart our own course, even in turbu-
lent times; we are able to withstand the headwinds, as long as we are convinced that we are
on the right path.
Courage, pride in performance and resilience.
That is why it is so decisive that we recognise and systematically exploit our opportunities. It
is important to me that all of us at the BMW Group approach our tasks with self-belief, confi-
dence and the necessary grit. I travel the world a lot, visiting our markets and facilities.
Everywhere I go, I see how valuable and important individual mobility is in many people's
everyday lives.
Our business environment will again be dominated by a great many challenges this financial
year, including weak economic development in several markets, the price development in the
automotive sector, high interest rates and the uncertainty created by geopolitical shifts.
Dear Shareholders,
All of us at BMW are united by a can-do spirit: think ahead - perform - succeed!
That is why the following applies to your Company:
Strong today - strong tomorrow.
"The NEUE KLASSE is much more than just a
single car. It is an entirely new generation of
BMW models - all of them developed with an
all-electric heart, fully digitalised and with a
clear focus on sustainability."
After the official start of production, in 2025, at our newest BMW plant in Debrecen, Hun-
gary, the NEUE KLASSE will also come off the production line at our oldest plant in Munich
from 2026, with other locations worldwide to follow. Incidentally, one out of every two
BMWs leaving the Munich production line is already fully electric today. From 2027 on-
wards, our more than 100-year-old main plant will build only electric vehicles.
The Board of Management members already had the chance to drive prototypes of the
NEUE KLASSE. What a fantastic driving experience! The first camouflaged prototypes are
already being tested on the roads and we will be building the first pre-production vehicles
before the end of the year.
Automated driving: the car as digital companion.
It
We aim to digitalise and simplify the car-buying process for customers, with transparent, con-
sistent pricing nationwide. This will create a win-win situation for everyone involved. Our retail
partners and their profitable business model will remain an essential pillar of these new
arrangements.
For the BMW brand, we are also setting ourselves up for direct sales access to customers in
the future and will be launching NEW RETAIL for BMW in Europe from 2026
onwards.
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
goes without saying that we offer our customers the newest innovations and the latest,
state-of-the-art technology. Over-the-air upgrades ensure that every one of our vehicles is
always digitally up to date. The art lies in mastering this process: we anticipate far in advance
what our customers are going to need and want in five to ten years' time. That is how we
ensure they get the best overall package from us. This is our aspiration.
Group Financial Statements
To Our Stakeholders
BMW Group Report 2023
24
In January 2024, we sold and delivered our first vehicle, a MINI, through our new sales sys-
tem. We have already switched the MINI brand to a direct sales model in Poland, Italy and
Sweden, with other European markets to follow. In China, we have been successfully using
this approach for MINI since 2023.
NEW RETAIL: direct sales as win-win for everyone involved.
With the CE02, BMW Motorrad is already releasing its second all-electric model onto the mar-
ket, as well as the second M motorcycle model, the M 1000 XR, and the R 1300 GS Adven-
ture. That means there will be no fewer than three new top models at BMW Motorrad. They
all illustrate the breadth of the product line-up. Everyone - and that also applies to me as a
motorcycle rider - can find the right bike for their needs at BMW Motorrad.
The new MINI models for 2024 include the next member of the new MINI family, the Aceman,
which will celebrate its world premiere in April 2024. This electric-only crossover in the pre-
mium compact-car segment will also bring a massive leap in digitalisation. MINI has a de-
voted community and creates a unique sense of life and community spirit. The new MINI
family is produced at our Chinese joint venture, Spotlight, in Oxford, UK, and, for the first time,
in Germany, at the Leipzig plant. At Rolls-Royce, Spectre is the first battery-electric model to
become available. Rolls-Royce has long been a standout and unrivalled in the ultra-luxury
class with exclusive models.
We presented our latest models to members of the international media in Portugal in Febru-
ary 2024. Shortly afterwards, we invited 1,500 retailers from 30 European countries to Am-
sterdam for a glimpse of the future, including the new BMW 1 Series and the latest edition of
one of our top-selling individual models, the BMW X3.
Combined Management Report
Statement of the Chairman of the Board of Management
BMW Group Report 2023
And that is why we keep setting benchmarks:
Taking your hands off the steering wheel and even being able to temporarily turn your atten-
tion away from the road - that is Level 3 highly automated driving. From March 2024 on-
wards, our customers will be able to do precisely this in the models of the new BMW 7 Series.
BMW Personal Pilot L3 is the name of this new function, which takes over driving in certain
defined traffic situations and manages speed, distance and lane tracking autonomously.
I can promise you that both Vision Vehicles will be on the market soon in a very similar form.
In-between these two models, there is plenty of room for everything that will define the BMW
brand in the future.
We are preparing to launch the NEUE KLASSE onto the market at an unprecedented pace
from 2025 onwards, with six models within just 24 months of the start of production. We
showed the scope of the NEUE KLASSE in a very concrete way for the first time at the BMW
Group Annual Conference on 21 March 2024. Its offering ranges from sporty sedan to X
model. The BMW VISION Neue Klasse and our newest Vision Vehicle - the BMW VISION
Neue Klasse X - represent these two bookends.
The NEUE KLASSE is so much more than just a single car; it is an entirely new generation of
BMW models all of them developed with an all-electric heart, fully digitalised and with a
clear focus on sustainability. The innovations of the NEUE KLASSE will benefit all future BMW
models.
―
← = Q
Remuneration Report Other Information
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Statement of the Chairman of the Board of Management
The BMW 5 Series Sedan is the first car in Germany to be approved for partially automated
driving at speeds up to 130 km/h on motorways. The BMW Highway Assistant allows the
driver to take their hands off the steering wheel while driving longer distances. We also
added a completely new feature: Active Lane Change Assistant with eye confirmation. This
allows the vehicle to make an automated lane change without a steering intervention: a
glance in the exterior mirror is all that is required.
To Our Stakeholders
25
they get the best overall package from us.”
"We anticipate far in advance what our
customers want. That is how we ensure
We also presented this Vision Vehicle to our associates at an exclusive evening event. The
interest was huge. Up to 700 associates from across Germany were selected by lottery to
attend the event live with a companion. Another 25,000 watched the live stream or the re-
cording of the event. That is a sixth of our global workforce. I see that as genuine interest in
our joint future project, the NEUE KLASSE.
Last year, there were two major milestones: at the CES in Las Vegas at the start of the year,
we unveiled our BMW i Vision Dee, full of digital innovations. Then, in September, at the IAA
MOBILITY, we presented our BMW VISION Neue Klasse. No other car at the IAA MOBILITY
received as much media coverage and attention as the BMW VISION Neue Klasse.
With its spectacular Vision Vehicles, your Company showcases time and again indicates the
direction in which we are taking mobility, in line with the major global topics of the future -
through bold leaps in innovation and responsible action. This is what our NEUE KLASSE
mega-project represents in a unique way.
NEUE KLASSE - vision becomes reality.
For us, the highest level of premium functionality goes hand in hand with maximum safety
for our customers and all road users. We therefore opened the Future Mobility Development
Centre in Sokolov in the Czech Republic in summer 2023, where we are testing automated
driving and parking functions, up to and including fully automated driving (Level 4). At this
location, we are able to simulate virtually all situations that occur in road traffic and thus en-
sure the maturity of our technical solutions.
BMW Group Report 2023
Our business model – individual premium mobility in its different forms and in line with re-
gional requirements - continues to offer substantial potential for achieving profitable growth
and gaining market share.
To Our Stakeholders
Group Financial Statements Responsibility Statement and Auditor's Report
This is also reflected in our share of the global BEV market: at 4.1%, it is already significantly
higher than our share of the total global market, which remains stable at 3.3%.
By the end of 2024, we will have more than 15 all-electric models in our line-up across all
brands, from MINI to BMW to Rolls-Royce. All of this speaks for our fresh and highly attractive
product range - across all brands, all segments and all drive technologies.
In 2023, all our new vehicles went into production or were released onto the market, as
planned, including the new BMW 5 Series and the new BMW X2 with the all-electric variants,
the i5 and iX2. MINI also presented two models from the all-new MINI family at the IAA
MOBILITY: the Cooper 3-door and the Countryman.
BMW Motorrad celebrated its centenary in late September of last year, with Federal Chancel-
lor Olaf Scholz attending the anniversary celebrations at the Berlin-Spandau plant. There
were two main highlights: the inauguration of the BMW Motorrad Welt - the counterpart to
our BMW Welt in Munich, as a delivery and visitor centre - and the premiere of the R 1300
GS. Fans all over the world have been eagerly awaiting this leap in the next GS generation.
All I have to say is: pure high-tech on two wheels - earning extremely positive feedback from
the trade press.
Our technological expertise is delivering results.
Our broad, yet centred, approach, with systematic further development of all drive technol-
ogies, reflects BMW's typical self-belief, as well as the effectiveness of our strategy. General
recognition of our strategy keeps on growing since we continue to present measurable suc-
cesses in decarbonisation.
Your Company outperformed the EU CO₂ fleet target by 20%.
As in previous years, we not only met the EU CO₂ fleet target for the use phase in 2023, but
significantly overfulfilled it: the BMW Group's numbers came in at 26.5 grams significantly
below the applicable limit for the reporting year of 128.6 grams of CO2 per kilometre. We
therefore ended up below the CO₂ limit set for BMW by more than 20%.
As you can see, we are continuing the positive trend of recent years, through further electri-
fication of our vehicle portfolio and by using innovative Efficient Dynamics technologies
throughout our entire fleet.
Technology openness in BMW 5 Series and 5 Series Touring.
Following on from the new BMW 5 Series Sedan, which has been available since late 2023,
the new BMW 5 Series Touring is another perfect example of how our comprehensive tech-
nological expertise works in practice.
The Touring, which will be launched this spring, is especially popular in Europe. Here, also,
customers will have four drive concepts to choose from: all-electric, plug-in hybrid or highly
efficient diesel and petrol engines with 48-volt mild-hybrid technology. BMW is where Touring
meets e-drive. No one else in this segment offers a vehicle like the all-electric BMW i5 Tour-
ing, with an electric range of over 500 kilometres.
23
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Statement of the Chairman of the Board of Management
Group Financial Statements Responsibility Statement and Auditor's Report
In addition to significant growth in the luxury class and upper premium segment, the strongest
impetus for growth last year came from our all-electric vehicles. We sold over 375,000 BEVs
- which is about 75% more than the previous year. This means that, by the end of 2023, all-
electric vehicles made up around 15% of our total sales.
Dynamic growth for our all-electric models.
Our core BMW brand maintains its leading position in the global premium segment. In
March 2024, BMW was ranked number one in the US by the consumer portal "Consumer
Reports". This independent platform compared test ratings, reliability, customer satisfaction
and safety criteria among 34 automotive manufacturers. Four BMW models even earned
the "Green Choice" environmental seal for being among the vehicles in the United States
with the lowest emissions.
We delivered a total of 2.55 million vehicles to customers in 2023. As anticipated, we not
only posted solid year-on-year growth, but also achieved a new all-time high at Group level.
Our brands performed very well individually, too, with new all-time highs for BMW, BMW M,
Rolls-Royce and BMW Motorrad. Despite the model changeover due to the extensive realign-
ment of the brand, MINI reported higher sales than the previous year.
Our BMW, MINI, Rolls-Royce and BMW Motorrad brands enjoy an excellent reputation
worldwide. Our products don't just get people from A to B; they touch hearts and spark
emotions. Our customers experience their mobility in a very individual way. To achieve this,
we are making mobility more human, more intelligent and more sustainable.
A glance in the rear-view mirror shows that we are certainly capable of doing this: BMW has
overcome difficult situations many times in the past. This certainty has shaped our self-con-
fidence for 108 years. Your Company has constantly reinvented itself - taking bold leaps in
innovation at exactly the right time.
Timing is key in whether innovations gain traction and the Company stays relevant, but it is
also clear that:
The future is always ahead of us. And we are prepared!
We know where we are headed at all times and we know what we need. Our consistent be-
haviour shapes the image of your Company in the eyes of the public and among our stake-
holders. People expect us to consider things carefully and to come up with practical solu-
tions. We "walk the talk" - people know that we take big leaps, but that we also deliver. All-
electric vehicles are projected to account for half of our global deliveries before 2030. We
are right on track.
Your investment in the BMW Group must be worth it.
Your Company is robust and financially strong. Our Automotive EBIT margin for financial year
2023 was within our upwardly adjusted target range of 9.0 to 10.5%. As you know, we are
still targeting a range of 8 to 10% in the long term. At Group level, our EBT margin for 2023
of 11% exceeded our strategic target of 10%.
Our profitability puts us in a position where we can once again pay you an attractive dividend.
We are making major investments in our future. The same applies to 2023 as well as to the
current financial year. Our R&D spending focus on our products, further electrification and
digitalisation of our line-up and automated driving. At the same time, we are investing in the
NEUE KLASSE mega-project, our modular kits, construction of high-voltage battery produc-
tion facilities in various markets, and the new plant in Debrecen, to name just a few examples.
Your Company is going to profit noticeably from all this in the coming years.
Remuneration Report
"We make conscious decisions, that are
consistently based on facts."
22
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Statement of the Chairman of the Board of Management
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Strong products generate strong demand.
272
Other Information
← = Q
We also haven't forgotten the fans of the BMW M brand: they can look forward to a new
edition of the M5 this year - as both Sedan and Touring variants. Both M variants come with
an impressive partially electrified drivetrain.
Jochen Goller
Chairman of the Board of Management
Oliver Zipse
Member of the Board of Management,
Finance
Walter Mertl
From left to right:
THE BOARD OF
MANAGEMENT
Purchasing and Supplier Network
Member of the Board of Management,
Customer, Brands, Sales
Member of the Board of Management,
People and Real Estate
Member of the Board of Management,
Ilka Horstmeier
From left to right:
The Board of Management
← = Q
Other Information
Remuneration Report
Joachim Post
Combined Management Report
From left to right:
Member of the Board of Management,
Development
Our plug-in hybrid models remain an important element of our drivetrain portfolio. Current
Gen5 battery technology already enables an attractive range. Plug-in hybrids also provide a
boost to e-mobility that should not be underestimated. Many customers discover the ad-
vantages of electric driving for the first time this way.
Early in 2024, we passed the milestone of two million electrified vehicles sold. This includes
both pure electric vehicles and plug-in hybrids.
We are already testing hydrogen drivetrains in everyday situations.
We have been testing the BMW iX5 Hydrogen on the road in selected countries under every-
day conditions since last year. Our pilot fleet's world tour has raised awareness of the role
hydrogen can play in the energy transition – not just for mobility, but industry-wide. We see
hydrogen as a possible alternative drive technology in the mid to long term.
Our vehicles performed well under various climate and traffic conditions - and the public re-
sponse has been overwhelmingly positive. This is understandable, since hydrogen fuel cell
drivetrains combine the best of both worlds: the advantages of an emissions-free e-drive,
with the fast refuelling people are used to. We also demonstrated this at the COP28 UN Cli-
mate Change Conference in Dubai. Your Company is supporting the growth of the hydrogen
economy worldwide, as well as locally, including expansion of infrastructure networks for
hydrogen filling stations.
20
The Board of Management
← = Q
Frank Weber
Other Information
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2023
28
Member of the Board of Management,
Production
Milan Nedeljković
Remuneration Report
Last year, renowned US publication Time Magazine and online platform Statista compared
750 international companies. Your Company did exceptionally well to make it into the top 10,
and was, in fact, the highest-ranked automotive manufacturer in the global comparison.
Three criteria were decisive for this assessment: revenue growth, sustainability and employee
satisfaction. These three are not opposing factors but belong together.
BMW Group Report 2023
29
23,814
1 Second remuneration level since 1 July 2023.
2 For more information about fringe benefits for the 2023 financial year, refer to Remuneration granted and owed to members of the Board of Management
pursuant to § 162 of the German Stock Corporation Act (AktG).
3 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired
with the payout amount.
4 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
5 Maximum remuneration within the meaning of § 87a (1) Sentence 2 No. 1 AktG. The overall cap is lower than the sum of the maximum amounts for the indi-
vidual components. Any special payments to compensate for salary losses from a previous employment relationship and/or to cover relocation costs in the
case of new appointments are also subject to maximum remuneration.
Minimum remuneration of Board of Management members is
ensured by the fixed remuneration components, in particular the
basic remuneration.
The total fixed maximum remuneration is less than the sum of
the maximum amounts for the individual components.In addition
to the maximum limits for the individual components of overall
remuneration, the Supervisory Board also set minimum thresh-
olds that had to be exceeded in order for a target to be achieved.
If these minimum thresholds are not reached, the relevant com-
ponent of the variable remuneration is not paid.
The maximum limits for each individual element of the variable
remuneration in the 2023 vesting year and the stipulated maxi-
mum remuneration limits were complied with in all cases.
The remuneration granted and owed for the 2023 financial year
pursuant to § 162 AktG, see Remuneration granted and owed for the
actual financial year, includes the payment of the matching compo-
nent of the share-based remuneration for the 2018 vesting year
to the Board of Management members who were already in of-
fice in that financial year. This payment was made in May 2023,
after the expiry of the four-year shareholding period. This com-
ponent is subject to the overall cap set for the vesting year 2018,
which was complied with for the Board of Management mem-
bers in office at that time.
297
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
IV. Remuneration of the Members of the Supervisory Board
← = Q
IV. REMUNERATION OF THE MEMBERS OF
THE SUPERVISORY BOARD
1. Articles of incorporation and procedure
The regulation governing remuneration for the Supervisory
Board is set out in § 16 of the Articles of Incorporation, and spec-
ifies both the remuneration system to be used and the precise
framework for calculating the remuneration due to the members
of the Supervisory Board. The regulation was adopted by the An-
nual General Meeting on 14 May 2020 and confirmed on
12 May 2021 with a majority of 99.40% of the valid votes cast.
2.
Principles and elements of remuneration
The Supervisory Board remuneration is structured as a purely
fixed remuneration in line with suggestion G.18 of the GCGC.
Fixed remuneration strengthens the independence of the Super-
visory Board in advising and monitoring the Board of Manage-
ment. The structure and amount of the fixed remuneration
should ensure that highly qualified individuals can be proposed
to the Annual General Meeting for membership of the Supervi-
sory Board. This promotes the quality of advice and oversight,
which contributes to the Company's sustainable and long-term
development.
In accordance with the Articles of Incorporation, each member of
the Supervisory Board of BMW AG who does not exercise any
additional function relevant to remuneration receives fixed remu-
neration of € 200,000 p.a.
The GCGC recommends that exercising the functions of the chair
and deputy chair of the Supervisory Board should also be con-
sidered when determining the level of remuneration, along with
any committees an individual chairs or sits on (Suggestion G.17).
This is to take account of the extra time commitment associated
with these positions. The Articles of Incorporation of BMW AG
also take account of the requirements for the Audit Committee
and its Chairman. They stipulate that the Chairman of the Super-
visory Board shall receive three times the amount, and each
Deputy Chairman twice the amount, of remuneration paid to a
Supervisory Board member who has no additional remunera-
tion-relevant functions. The Chair of the Audit Committee re-
ceives two-and-a-quarter times the amount, the Chairs of other
Supervisory Board committees twice the amount, each member
of the Audit Committee twice the amount, and each member of
another committee one-and-a-half times the amount of the re-
muneration paid to a Supervisory Board member, provided the
relevant committee convened on at least three days during the
financial year. If a member of the Supervisory Board exercises
more than one of the functions referred to above, their remuner-
ation is measured only on the basis of the function receiving the
highest amount.
In the event of changes in the composition of the Supervisory
Board during the year, or if additional remuneration-relevant
functions are performed, remuneration is calculated on a propor-
tionate basis.
In addition, each member of the Supervisory Board receives an
attendance fee of € 2,000 per meeting for each meeting of the
Supervisory Board (plenary) in which he or she participates. This
also applies to participation by telephone or video link. If they at-
tend more than one meeting on the same day, the meetings are
not remunerated separately. A continuous session on two con-
secutive days is treated as one session.
The remuneration and the attendance fee are only paid after the
end of the respective financial year. Furthermore, the company
reimburses each member of the Supervisory Board for their rea-
sonable expenses. In order to be able to perform his duties, the
Chairman of the Supervisory Board is provided with secretariat
and chauffeur services.
4,450,792
5,212,500
Maximum remuneration5/Vested remuneration incl. service cost
407,525
Max.
vested
975,000
975,000
29,392
29,392
1,004,392
1,004,392
Performance component of the bonus
945,000
882,000
945,000
535,500
Variable
remuneration
3.
SHARE-BASED REMUNERATION
RoCE component
1,071,000
993,650
Strategic focus target component
1,071,000
627,725
Total variable remuneration
4,032,000
3,038,875
Total fixed and variable remuneration
Service cost
5,036,392
4,043,267
407,525
(PERSONAL CASH INVESTMENT AMOUNT) ³
Remuneration
Remuneration granted and owed to members of the
Supervisory Board pursuant to § 162 of the German Stock Cor-
poration Act (AktG)
Overview of remuneration of the members of the
Supervisory Board'
Norbert Reithofer (Chairman)
in €
600,000
total remuneration
in €
as a % of
total remuneration
as a % of
98
10,000
2
in €
610,000
total remuneration
(600,000)
(98)
(10,000)
as a % of
(2)
100
(100)
Manfred Schoch (Deputy Chairman) 1.2
379,545
97
10,000
3
389,545
100
(-)
(-)
(-)
Stefan Quandt (Deputy Chairman)
400,000
98
(610,000)
The following table shows the remuneration granted and owed
to the members of the Supervisory Board in the 2023 financial
year in accordance with § 162 (1) Sentence 1 German Stock
Corporation Act (AktG). The activity on which the remuneration
for the 2023 financial year is based was fully performed by the
balance sheet date. Therefore, the remuneration for the Super-
visory Board activities is classified as granted for the 2023 finan-
cial year, even if the payment of the Supervisory Board remuner-
ation (including the attendance fee) was made after the end of
the 2023 financial year.
Total remuneration
Fixed remuneration
Member of Supervisory Board
Chairman Supervisory Board
Deputy Chairman Supervisory Board
Chairman of the Audit Committee²
Chairman of other committee²
Member of the Audit Committee²
Member of other committee²
Factor
Amount in € p. a.³
1.00
200,000
3.00
600,000
2.00
400,000
2.25
450,000
2.00
400,000
Attendance fee
2.00
1.50
300,000
1 If a Supervisory Board member performs more than one of the functions referred to above, their
remuneration is measured only on the basis of the function that is remunerated with the highest
amount.
2 Provided that the Committee has met on at least three days during the financial year.
3 Plus attendance fee of € 2,000 per plenary session.
298
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration granted and owed to Supervisory Board members pursuant to § 162 AktG in financial year 2023 (2022)
MEMBERS OF THE SUPERVISORY BOARD IN OFFICE AS AT 31 DECEMBER 2023
Remuneration Report
Other Information
IV. Remuneration of the Members of the Supervisory Board
400,000
Earnings component of the bonus
BONUS
Total fixed remuneration
922,692
922,692
BONUS
Earnings component of the bonus
Performance component of the bonus
1,035,000
966,000
1,035,000
966,000
431,250
402,500
855,000
798,000
1,035,000
460,589
586,500
586,500
431,250
246,771
855,000
484,500
8
SHARE-BASED REMUNERATION
(PERSONAL CASH INVESTMENT AMOUNT)"
RoCE component
1,152,000
1,068,800
1,152,000
1,068,800
480,000
1,035,000
445,333
460,589
22,692
Max.
Remuneration
vested
Remuneration
Max.
vested
Max.
1 January 2017 to 11 May 20232
Remuneration
vested
since 1 January 2022
Remuneration
Max.
vested
1,050,000
1,050,000
Fixed
1,102,049
Fringe benefits (other remuneration)³
remuneration
Total fixed remuneration
1,077,524
27,524
1,077,524
1,050,000
52,049
1,102,049
1,050,000
437,500
437,500
900,000
900,000
52,049
23,089
23,089
22,692
27,524
10,000
990,000
Strategic focus target component
408,504
Maximum remuneration/Vested remuneration incl. service cost
5,500,000
4,781,415
5,500,000
4,806,065
2,291,667
2,003,193
4,925,000
4,112,446
1 Service contract comes to an end on 31 July 2024. See Premature termination of activities and post-contractual non-competition clause.
2 Service contract ended 31 May 2023. See Premature termination of activities and post-contractual non-competition clause.
3 For more information about fringe benefits for the 2023 financial year, refer to Remuneration granted and owed to members of the Board of Management pursuant to § 162 of the German Stock Corporation Act (AktG).
" Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
5 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
6 Maximum remuneration within the meaning of § 87a (1) Sentence 2 No. 1 AktG. The overall cap is lower than the sum of the maximum amounts for the individual components. Any special payments to compensate for salary losses from a previous employment relationship and/or to cover relocation costs in
the case of new appointments are also subject to maximum remuneration.
408,504
296
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
III. Remuneration of the Members of the Board of Management
← = Q
Maximum remuneration and remuneration vested in the 2023 financial year (vesting year)
FRANK WEBER
Development
since 1 July 20201
in €
Fixed
remuneration
Fixed remuneration (base salary)
Fringe benefits (other remuneration)²
BMW Group Report 2023
918,500
166,667
407,516
1,152,000
675,200
1,152,000
675,200
480,000
281,333
990,000
580,250
Total variable remuneration
4,374,000
3,296,500
4,374,000
3,296,500
1,822,500
166,667
1,375,937
2,781,250
Total fixed and variable remuneration
5,451,524
4,374,024
5,476,049
4,398,549
2,283,089
1,836,526
4,612,692
3,703,942
Service cost5
407,391
407,391
407,516
3,690,000
2
410,000
100
(95)
(200,000)
100
208,000
4
8,000
96
200,000
Susanne Klatten
100
(100)
(210,000)
(5)
(10,000)
(95)
(200,000)
210,000
5
10,000
95
total remuneration
in €
as a % of
as a % of
total remuneration
in €
total remuneration
in €
200,000
Johann Horn¹
as a % of
Total remuneration
(10,000)
(5)
(210,000)
(100)
10,000
95
200,000
André Mandl¹
(100)
(100,624)
[6]
(6,000)
(94)
(94,624)
100
210,000
5
10,000
Attendance fee
95
Gerhard Kurz
(100)
(210,000)
(5)
(10,000)
(95)
(200,000)
100
210,000
5
10,000
95
200,000
Jens Köhler¹
200,000
Fixed remuneration
IV. Remuneration of the Members of the Supervisory Board
Other Information
Rachel Empey³
(100)
(210,000)
(5)
(10,000)
(95)
(200,000)
100
210,000
5
10,000
95
200,000
Bernhard Ebner¹
400,000
(100)
(5)
(10,000)
(95)
(200,000)
100
210,000
5
10,000
95
200,000
Marc Bitzer
(100)
(210,000)
(5)
(210,000)
5
98
2
Remuneration Report
MEMBERS OF THE SUPERVISORY BOARD IN OFFICE AS AT 31 DECEMBER 2023
Remuneration granted and owed to Supervisory Board members pursuant to § 162 AktG in financial year 2023 (2022)
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
299
← = Q
1 These employee representatives have declared that they will transfer their remuneration to the Hans Böckler Foundation in accordance with the guidelines of the Confederation of German Trade Unions.
2 Member of the Supervisory Board since 18 January 2023, Deputy Chairman since 23 January 2023.
3 Member of the Audit Committee.
(100)
(210,000)
(5)
(10,000)
10,000
(95)
210,000
5
10,000
95
200,000
(200,000)
Heinrich Hiesinger
(100)
(260,000)
(4)
(10,000)
(96)
(250,000)
100
410,000
100
210,000
100
(148,333)
95
10,000
5
210,000
100
(200,000)
(95)
(10,000)
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
300
← = Q
200,000
1 These employee representatives have declared that they will transfer their remuneration to the Hans Böckler Foundation in accordance with the guidelines of the Confederation of German Trade Unions.
2 Member of the Audit Committee.
(4,975,344)
(4)
(184,000)
(96)
(4,791,344)
100
5,827,545
3
198,000
97
5,629,545
Total acting members of the Supervisory Board
(100)
(208,387)
(100)
(5)
Christiane Benner¹
(460,000)
(400,000)
(98)
(10,000)
(2)
(410,000)
(100)
Stefan Schmid (Deputy Chairman)'
400,000
98
10,000
2
410,000
100
(400,000)
(100)
(98)
(2)
(410,000)
(100)
Kurt Bock (Deputy Chairman, Chairman of the Audit Committee)
450,000
98
10,000
2
460,000
100
(450,000)
(98)
(10,000)
(2)
(10,000)
in €
(10,000)
(198,387)
(210,000)
(5)
(10,000)
(95)
(200,000)
100
210,000
5
10,000
95
200,000
Anke Schäferkordt
(100)
(260,000)
(100)
(4)
(96)
(250,000)
100
410,000
2
10,000
98
400,000
Dominique Mohabeer1,2
(100)
(156,333)
(5)
(8,000)
(95)
(10,000)
(95)
Christoph Schmidt
95
100
210,000
5
10,000
95
200,000
Sibylle Wankel¹
(100)
(210,000)
(5)
(10,000)
(95)
(200,000)
100
200,000
210,000
10,000
95
200,000
Vishal Sikka
(100)
(210,000)
(5)
(10,000)
(95)
(200,000)
100
210,000
5
10,000
5
1 January 2018 to 31 October 20231
Variable
remuneration
NICOLAS PETER
Finance
Variable
remuneration
Share-based remuneration component (matching component) 2018
(-)
142,5231
41
(-)
256,620²
94
Total variable remuneration
Waiting
Waiting allowance
142,523
(-)
41
256,620
94
(-)
(-)
(-)
(-)
(-)
allowance/
retirement
benefits
Retirement benefits
Total waiting allowance/retirement benefits
185,589
6
(-)
17,642
18,736
91
278,209
92
313,878
(-)
302,023
(-)
Total remuneration according to § 162 German Stock Corporation Act (AktG)
313,878
100
302,023
100
Financial year 2023
Fixed
Fringe benefits (other remuneration)
in €
18,736
vesting years in €
KLAUS FRÖHLICH
Member of the Board of Management until 30 June 2020
Earlier
as a % of
total remuneration
HARALD KRÜGER
5
Financial year 2023
in €
17,642
Chairman of the Board of Management until 15 August 2019
Earlier
as a % of
vesting years in €
total remuneration
6
remuneration
Total fringe benefits
5
54
(-)
(-)
as a % of
total remuneration
Financial year 2023
in €
Fixed
remuneration
Total fringe benefits
Variable
remuneration
Total variable remuneration
Waiting
Waiting allowance
allowance/
retirement
benefits
Fringe benefits (other remuneration)
33,568
9
21,600
Member of the Board of Management until 31 December 2017
Earlier
vesting years in €
(-)
as a % of
total remuneration
10
33,568
9
JOACHIM POST
Purchasing and Supplier Network
21,600
10
Share-based remuneration component (matching component) 2018
Earlier
vesting years in €
Financial year 2023
in €
Chairman of the Board of Management until 13 May 2015
Chairman of the Supervisory Board since 13 May 2015
IAN ROBERTSON
(-)
185,589
54
(-)
(-)
Total remuneration for financial years 2023 or earlier vesting years
204,325
142,523
17,642
256,620
Total remuneration according to § 162 German Stock Corporation Act (AktG)
346,848
285,612
100
100
1 The number of shares purchased in 2019 with the 2018 cash remuneration component (investment component) amounted to 4,333. The number of mathematical matching shares for calculating the equivalent value in cash amounts to 1,444.
2 The number of shares purchased in 2019 with the 2018 cash remuneration component (investment component) amounted to 7,801. The number of mathematical matching shares for calculating the equivalent value in cash amounts to 2,600.
293
BMW Group Report 2023 To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
III. Remuneration of the Members of the Board of Management
Remuneration granted and owed in financial year 2023
NORBERT REITHOFER
274,262
(-)
92
278,209
retirement
benefits
allowance/
Waiting
100
181,079
152,985
28,094
(-)
(-)
(-)
(-)
(-)
Retirement benefits
(-)
(-)
(-)
Waiting allowance
84
152,985
Total variable remuneration
remuneration
84
152,985*
(-)
Share-based remuneration component (matching component) 2018
Total waiting allowance/retirement benefits
Variable
Total remuneration for financial years 2023 or earlier vesting years
*The number of shares purchased in 2019 with the 2018 cash remuneration component (investment component) amounted to 4,652. The number of mathematical matching shares for calculating the
equivalent value in cash amounts to 1,550.
9
28,266
Total fringe benefits
remuneration
8
as a % of
total remuneration
Member of the Board of Management until 31 December 2016
Earlier
vesting years in €
(-)
23,814
9
Financial year 2023
in €
as a % of
total remuneration
Member of the Board of Management until 30 September 2016
Earlier
vesting years in €
(-)
Financial year 2023
in €
28,266
Fringe benefits (other remuneration)
Fixed
FRIEDRICH EICHINER
KLAUS DRAEGER
Remuneration granted and owed in financial year 2023
III. Remuneration of the Members of the Board of Management
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023 To Our Stakeholders Combined Management Report
292
Total remuneration according to § 162 German Stock Corporation Act (AktG)
16
28,094
Total fringe benefits
(-)
(-)
(-)
(-)
Total variable remuneration
(-)
(-)
(-)
Waiting
Waiting allowance
(-)
(-)
(-)
(-)
(-)
(-)
allowance/
retirement
benefits
Retirement benefits
Total waiting allowance/retirement benefits
Total remuneration for financial years 2023 or earlier vesting years
285,612
(-)
91
Share-based remuneration component (matching component) 2018
Variable
remuneration
← = Q
The presentation of average employee remuneration is based on
the average remuneration of all employees of BMW AG on a full-
time equivalent basis. In the 2023 financial year, this was
83,383 people. Worldwide, the BMW Group employed 154,950
people at 31 December 2023. In order to calculate the average
employee remuneration presented, the principles applicable to
the calculation of the remuneration granted and owed to the
members of the Board of Management and the Supervisory
Board pursuant to § 162 (1) Sentence 1 AktG were applied
accordingly.
remuneration
16
MILAGROS CAIÑA CARREIRO-ANDREE
Member of the Board of Management until 31 October 2019
Earlier
as a % of
vesting years in €
total remuneration
(-)
28,094
Financial year 2023
in €
Fringe benefits (other remuneration)
Fixed
Remuneration granted and owed in financial year 2023
For individual former members of the Board of Management, the
remuneration granted and owed also includes the share-based
remuneration component (matching component) 2018. In this
regard, please refer to the statements on remuneration granted
and owed for the active members of the Board of Management
7 Share-based remuneration component (matching component) 2018.
The following tables show the fixed and variable remuneration
granted and owed to the former members of the Board of Man-
agement in the reporting year in accordance with § 162 German
Stock Corporation Act (AktG). In accordance with § 162 (5) AktG,
individual figures are not shown for former members of the Board
of Management who stepped down from the Board of Manage-
ment in 2013 or earlier. The remuneration of the members of
the Board of Management who left in the reporting year is pro-
vided in Remuneration granted and owed to members of the Board of
Management pursuant to § 162 of the German Stock Corporation Act (AktG).
10. Remuneration granted and owed to former members of the
Board of Management pursuant to § 162 of the German Stock
Corporation Act (AktG)
← = Q
(-)
III. Remuneration of the Members of the Board of Management
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
291
Other Information
V. Comparison of Change in Remuneration and Earnings
V.
COMPARISON OF CHANGE IN REMUNER-
ATION AND EARNINGS PURSUANT TO
§ 162 (1) SENTENCE 2 NO. 2 OF THE
GERMAN STOCK CORPORATION ACT
(AKTG)
Pursuant to § 162 (1) Sentence 2 No. 2 German Stock Corpora-
tion Act (AktG), the following table shows the change in earnings,
the annual change in the remuneration of the members of the
Board of Management and the Supervisory Board, and the an-
nual change in the average remuneration of the employees on a
full-time equivalent basis over the last five financial years.
For the members of the Board of Management and the Supervi-
sory Board, the remuneration granted and owed in the relevant
financial year is presented within the meaning of § 162 (1) Sen-
tence 1 AktG. The remuneration granted and owed to former
members of the Board of Management includes any variable re-
muneration from previous vesting years and any remuneration
from any contracts of employment that remained valid beyond
the end of their mandate, as well as retirement benefit plans
(pension payments, payments from the retirement capital ac-
count), fringe benefits and any waiting allowances paid.
The change in earnings is presented on the basis of BMW AG's
net profit for the year in accordance with the German Commercial
Code (HGB). In addition, the changes in the key indicators "earn-
ings attributable to shareholders of BMW AG" and "Group return
on sales after tax" are reported, as these key indicators are rele-
vant for both the calculation of the variable remuneration of the
members of the Board of Management (earnings component of
the bonus) and the performance-related remuneration of man-
agers and employees.
Other Information
(-)
Fixed remuneration (base salary)
(-)
vested
Max.
vested
150,000
150,000
1,950,000
1,950,000
Fixed remuneration (base salary)
Max.
vested
Max.
in €
Remuneration
Remuneration
Remuneration
Remuneration
since 13 May 2015
WALTER MERTL
Finance
since 12 May 2023
Max.
vested
Fixed
Fringe benefits (other remuneration)¹
BONUS
682,633
682,633
111,981
111,981
570,652
570,652
1,050,000
66,981
1,116,981
ILKA HORSTMEIER
Human Resources and Real Estate,
Labour Director
since 1 November 2019
1,050,000
66,981
1,116,981
153,331
1,976,113
1,976,113
Total fixed remuneration
remuneration
3,331
26,113
26,113
3,331
153,331
JOCHEN GOLLER
Customer, Brands, Sales
since 1 November 2023
the bonus and the share-based remuneration (personal invest-
ment cash amount) for the vesting year 2023. Any special pay-
ments to compensate for salary losses from a previous employ-
ment relationship and/or to cover relocation costs in the case of
new appointments are also subject to maximum remuneration.
A commitment to cover relocation costs was issued in the 2023
financial year.
Chairman of the Board of Management
since 16 August 2019
Member of the Board of Management
Total remuneration according to § 162 German Stock Corporation Act (AktG)
Total remuneration for financial years 2023 or earlier vesting years
(-)
(-)
(-)
(-)
(-)
(-)
26,354
(-)
(-)
(-)
Total waiting allowance/retirement benefits
Retirement benefits
allowance/
retirement
benefits
(-)
(-)
(-)
(-)
Earnings component of the bonus
152,985
32,472
OLIVER ZIPSE
Maximum remuneration and remuneration vested in the 2023 financial year (vesting year)
The maximum remuneration of the Board of Management mem-
bers for the vesting year 2023 determined in accordance with
§ 87a (1) Sentence 2 No. 1 German Stock Corporation Act
(AktG) includes, as fixed components, the basic remuneration for
2023, other fixed remuneration for 2023, the service cost (in ac-
cordance with IAS 19) for 2023 and, as variable components,
remuneration (personal investment cash amount) are limited to
a maximum of 180% of the respective target amounts.
(-)
11. Maximum remuneration and remuneration vested in the 2023
financial year (vesting year)
← = Q
III. Remuneration of the Members of the Board of Management
32,384
Other Information
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023
294
1 The number of shares purchased in 2019 with the 2018 cash remuneration component (investment component) amounted to 4,652. The number of mathematical matching shares for calculating the equivalent value in cash amounts to 1,550.
2 The number of shares purchased in 2019 with the 2018 cash remuneration component (investment component) amounted to 988. The number of mathematical matching shares for calculating the equivalent value in cash amounts to 329.
100
64,856
100
179,339
Remuneration Report
(-)
Performance component of the bonus
1,764,000
254,444
407,533
2,446,106
3,022,307
4,413,481
1,763,473
2,339,674
3,296,500
4,374,000
5,490,981
407,533
66,667
66,667
712,729
8,736,217
712,729
9,850,000
Maximum remuneration"/Vested remuneration incl. service cost
Service cost³
616,872
768,331
254,444
820,833
683,539
5,500,000
Customer, Brands, Sales
PIETER NOTA
MILAN NEDELJKOVIĆ
Production
since 1 October 2019
Maximum remuneration and remuneration vested in the 2023 financial year (vesting year)
III. Remuneration of the Members of the Board of Management
← = Q
Other Information
Remuneration Report
8,023,488
Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
295
4 Maximum remuneration within the meaning of § 87a (1) Sentence 2 No. 1 AktG. The overall cap is lower than the sum of the maximum amounts for the individual components. Any special payments to compensate for salary losses from a previous employment relationship and/or to cover relocation costs in
the case of new appointments are also subject to maximum remuneration.
1 For more information about fringe benefits for the 2023 financial year, refer to Remuneration granted and owed to members of the Board of Management pursuant to § 162 of the German Stock Corporation Act (AktG).
2 Assessment period five years in total: one year for determining the personal cash investment amount, a four-year holding obligation for the shares acquired with the payout amount.
3 The service cost in accordance with IAS 19 represents the expense for the Company; this amount is not paid out to the Board of Management member.
2,700,550
3,122,736
4,821,014
Group Financial Statements
9,986,113
Total fixed and variable remuneration
463,541
(PERSONAL CASH INVESTMENT AMOUNT)²
remuneration
SHARE-BASED REMUNERATION
Variable
307,201
542,120
586,500
1,035,000
RoCE component
80,750
1,081,500
1,890,000
505,978
542,120
966,000
1,035,000
133,000
142,500
142,500
1,890,000
2,115,000
165,000
615,000
6,047,375
8,010,000
Total variable remuneration
367,912
627,717
675,200
1,152,000
1,962,250
96,708
1,239,625
2,115,000
Strategic focus target component
582,382
627,717
1,068,800
1,152,000
153,083
165,000
(-)
The Supervisory Board has set upper limits on the remuneration
of Members of the Board of Management for the 2023 financial
year (vesting year) in two ways: it has set maximum limits in
terms of the amount paid for all variable remuneration compo-
nents and, additionally, for the total remuneration of the Board of
Management members in each case. Both components of the
bonus as well as the two components of the share-based
Waiting allowance
Financial year 2023
100
216,478
100
363,765
Total remuneration according to § 162 German Stock Corporation Act (AktG)
216,478
363,765
90
194,878
91
330,197
in €
90
194,878
91
(-)
330,197
Total remuneration for financial years 2023 or earlier vesting years
Retirement benefits
(-)
(-)
(-)
(-)
(-)
(-)
(-)
Fixed
Total waiting allowance/retirement benefits
26,354
Waiting
Fringe benefits (other remuneration)
32,472
85
Total variable remuneration
50
32,4722
(-)
85
152,9851
(-)
Share-based remuneration component (matching component) 2018
Variable
remuneration
152,985
32,384
PETER SCHWARZENBAUER
Member of the Board of Management until 31 October 2019
Earlier
as a % of
vesting years in €
total remuneration
(-)
ANDREAS WENDT
50
Financial year 2023
in €
15
32,384
50
50
remuneration
15
Total fringe benefits
Member of the Board of Management until 31 December 2021
Earlier
as a % of
vesting years in €
total remuneration
(-)
26,354
1,001,199
2021
2022
2023
6,348,009
6,040,824
6,476,955
6,295,990
6,380,652
4,946,865
5,329,550
4,750,321
4,954,639
114,072
125,450
101,574
105,614
2020
5,226,227
120,583
Other Information
← = Q
979,887
5.2
1.2
19.4
1.6
22.2
1 From 2022, application of the international GLEC Framework directive in the version applicable during the yearly tranche, along with CleanCargo and DIN EN 16258/ISO 14083 still being in force. The methodology used to calculate carbon emissions changed in the reporting year 2023. Each vehicle is
assigned an average value based on the CO₂e assessment of individual transport movements. The values in the time series were adapted using the new methodology. The emission factors were also adjusted retrospectively (values prior to change in methodology and adjustment of transport logistics (inbound
and outbound) emission factors, excluding aftersales logistics: 2022: 2,100,161 t CO₂e). For more information about calculating the CO₂e emissions, please refer to the Glossary.
2 Figures relate to spare parts deliveries to vehicle production facilities (BMW Group and partner plants, excluding contract manufacturing). Further information can be found in the Glossary. In some cases, figures have been extrapolated for individual months.
3 These figures refer to the distribution of manufactured vehicles (BMW Group, contract manufacturing and partial volumes for partner plants) to markets worldwide. Glossary.
2019
Remuneration Report
in MWh
TOTAL ENERGY CONSUMPTION
Total energy consumption
TOTAL ENERGY CONSUMPTION BY AREA
Vehicle production
Motorcycle production
Non-manufacturing areas
CHP losses³
Further GRI Information
Energy consumption¹²
1,021,955
23,516
890,617
28,455
3,253,638
7.5
3,170,701
425,796
498,299
508,318
477,588
398,874
164,957
3,517,068
192,911
144,266
107,864
68,560
65,065
67,038
60,331
30,908
1,703
2,316
177,564
906,175
3,206,948
354,015
537,919
429,782
TOTAL ENERGY CONSUMPTION BY SOURCE
Electricity
Community heating
Community cooling
Natural gas
of which CHP losses
Biogas (landfill gas)
3,117,505
of which CHP losses
Other fossil fuels
2,653,855
367,040
33,688
2,320,314
2,453,215
2,542,434
2,711,392
274,484
33,322
284,763
31,882
307,163
Solar (photovoltaics)
5.5
Further GRI Information
30.9
4 Emissions from company cars (Scope 1) are also included on a pro-rata basis under employee commuting and use phase (both Scope 3). A distinction in the systems is currently not possible.
5 2019 is not directly comparable to the other years because an improved data basis was available from 2020 onwards. In some cases, figures have been extrapolated based on data collected at major national and international BMW Group locations. The sites in Farnborough, UK, and Woodcliff Lake, USA,
were included in the calculation for the first time in the reporting year 2023.
6 The methodology used to calculate carbon emissions changed in the 2023 reporting year. Previously, the CO₂e values were calculated on the basis of a small set of TÜV-validated life cycle assessments performed for European vehicles. Enhancements to the IT system have made it possible to perform a
differentiated calculation for all vehicles taking into account different energy mixes and carbon emission factors for different production regions (see Glossary). The values in the time series were adapted using this new methodology (values based on prior methodology: 2019: 18,505,921 t CO₂e, 2020:
16,234,959 t CO₂e, 2021: 18,534,765 t CO₂e, 2022: 19,758,702 t CO₂e). The values for 2019 through 2021 as well as 2023 shown in the table according to the new methodology were subjected to a reasonable assurance audit. The carbon-reducing measures are taken into account from 2022 onwards.
The implementation of measures for 2022 was subjected to a limited assurance audit.
7 Energy consumption values (lower calorific value)] in the "Purchased goods and services" category and the "Disposal" category are estimated using the methodology specified in footnote (9): 113,179 GWh in the "Purchased goods and services" category and 908 GWh in the "Disposal" category.
8 The absolute emissions in the use phase are based on the Carbon emissions of the new vehicle fleet worldwide, including upstream emissions (Scope 3 downstream, well-to-wheel). The total value in t CO2 is the result of multiplying the average value with all BMW Group vehicles sold in the reporting period
and an assumed average mileage of 200,000 km (as per VDA 900-100).
9 CO₂e calculated based on life cycle assessments as per ISO 14040/44 of representative vehicles from the product lines using the "LCA for Experts" tool provided by Sphera (including climate-impacting gases CO2, CH4, N2O, SF6, NF3). For definition, see Glossary.
309
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
2,344
2,209
1 Carbon emissions in the supply chain, including in transport logistics, as well as in upstream fuel production (well-to-tank) are referred to as CO₂e.
2 The methodology used to calculate carbon emissions changed in the reporting year 2023. Each vehicle is assigned an average value based on the CO₂e assessment of individual transport movements. The values in the time series were adjusted to reflect the new methodology. The emission factors were also
adjusted retrospectively (values prior to change in methodology and adjustment of transport logistics emission factors, excluding aftersales logistics: 2019: 1,454,534 t CO₂e, 2020: 1,225,688 t CO₂e, 2021: 1,748,700 t CO₂e, 2022: 2,100,161 t CO₂e) Glossary.
4,123
9,368
8,908
16,730
7,931
Other biogenic fuels
1,501
1,161
1,211
1,095
7,760
1,621,631
183,417
34,267,874
94,774,779
Employees' commuter traffic4,5
Purchased Goods and Services6,7
Use phase 4,8
Logistics - aftersales logistics
Disposal 1.7.9
2019
2020
2021
2022
2023
146,225,201
2,178,437
129,646
146,298
31,486,873
110,899,066
115,863
1,269,018
131,255,722
1,939,191
25,217
166,586
29,094,346
98,782,354
97,171
1,150,857
136,757,602
2,203,818
29,765
139,999
33,131,882
99,805,490
129,958,000
133,875,567
130,210
1,316,438
2,200,661
66,170
145,284
33,029,416
92,947,849
174,017
1,394,603
2,746,124
115,469
166,273
1,109
1 Energy consumption generated by vehicle production (BMW Group plants including BMW Motorcycle, excluding partner plants and contract manufacturing) and by other BMW Group locations not directly related to production (e.g. research centres, sales centres, office buildings).
2 Upper calorific value
3 CHP losses refer to the losses resulting from converting a fuel source into electricity and heat in a combined heat and power plant (CHP plant). These are listed separately as of the 2022 reporting year. Energy consumption for the automotive production, motorcycle production and non-manufacturing sites was
not adjusted retrospectively for previous years. As a result, the figures for 2022 are not directly comparable with previous years.
310
23,099
1,229,301
25,511
1,226,423
31,263
1,516,823
52,111
2,200,661
54,362
2,746,124
2,447
2,267
174,017
183,417
tkm
g CO₂e
tkm
g CO₂e
77.1
43.4
76.7
41.7
14.4
31.7
14.2
26,600
974,238
7.3
2023
← = Q
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Transport logistics: carriers and CO₂ emissions¹
MATERIAL SUPPLY OF THE PLANTS (INBOUND)²
Transport volume in million tkm
CO₂e emissions in t
DISTRIBUTION OF VEHICLES (OUTBOUND) ³
Transport volume in million tkm
CO₂e emissions in t
TOTAL MATERIAL SUPPLY OF THE PLANTS AND DISTRIBUTION OF VEHICLES (INBOUND AND OUTBOUND)
Transport volume in million tkm
CO₂e emissions in t
CUSTOMER SUPPORT LOGISTICS (AFTERSALES LOGISTICS)
Transport volume in million tkm
CO₂e emissions in t
PERCENTAGE SHARE OF CARRIERS IN TOTAL IN TERMS OF TRANSPORT VOLUME AND CO2 EMISSIONS
Sea in %
Road in %
Rail in %
Air in %
2022
3 Includes business trips by plane, rail and rental car. As a result of the extensive travel restrictions in place during the pandemic, 2019 is used as a base year for more conclusive comparisons in terms of business travel.
Remuneration Report
Total emissions
102,394
14%
99,169
-3%
86,715
89,353
Average remuneration of employees of BMW AG in €
II. AVERAGE REMUNERATION OF EMPLOYEES IN €
5,338,865
(-)
(-)
3,923,856
-40%
7.8
16%
13.0
3%
187%
102,047
III. REMUNERATION OF THE BOARD OF MANAGEMENT IN €¹
Milan Nedeljković
Walter Mertl
Ilka Horstmeier
(-)
(-)
(-)
10,152,625
64%
8,752,558
36%
(-)
since November 2023
Jochen Goller
Chairman since 16 August 2019
Oliver Zipse²
since May 2015,
0%
Pieter Nota3,4
11.2
3.9
2,107
Net income of BMW AG according to the German Commercial Code (HGB) (in € million)
Profit attributable to shareholders of BMW AG (in € million)
I. CHANGES IN EARNINGS
Change 2023
vs 2022 in %
2023
Change 2022
vs 2021 in %
2022
Change 2021
vs 2020 in %
2021
Change 2020
vs 2019 in %
2020
2019
Comparison of changes in earnings and remuneration for employees, the Board of Management and the Supervisory Board
← = Q
V. Comparison of Change in Remuneration and Earnings
1,702
- 19%
- 19%
188%
4.8
Group return on sales after tax (in %)
-37%
11,290
45%
17,941
228%
12,382
- 23%
3,775
4,915
- 31%
4,366
29%
6,311
4,910
since November 2019
since May 2023
384,435
(-)
- 55%
2,570,131
18%
5,689,801
55%
- 17%
4,528,636
13%
5,458,773
75%
4,820,525
4,824,746
(-)
(-)
(-)
1,006,759
(-)
3,736,259
(-)
(-)
(-)
- 1%
Other Information
Remuneration Report
FORMER MEMBERS OF THE BOARD OF MANAGEMENT IN €1
Comparison of changes in earnings and remuneration for employees, the Board of Management and the Supervisory Board
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023
302
5 Service contract ended 31 May 2023. See Premature termination of activities and post-contractual non-competition clause.
1 The reported remuneration for the years 2019 and 2020 has been recalculated pursuant to § 162 of the German Stock Corporation Act (AktG).
2 For the 2019 and 2020 financial years, the advance payments of € 566,667 and € 712,000 from the 2018-2020 and 2019-2021 Performance Cash Plans, which were paid in 2019 and 2020 respectively, were also included in the calculation of remuneration.
3 For the 2019 and 2020 financial years, the advance payments of € 500,000 each from the 2018-2020 and 2019-2021 Performance Cash Plans, which were paid in 2019 and 2020 respectively, were also included in the calculation of remuneration.
4 Service contract comes to an end on 31 July 2024. See Premature termination of activities and post-contractual non-competition clause.
-5%
4,043,267
10%
4,240,977
283%
3,856,458
3,703,942
17%
4%
2,757,590
3,117,471
(-)
(-)
(-)
(-)
(-)
(-)
(-)
-10%
-20%
8,158,904
616,872
4,413,481
25%
4,929,261
93%
3,949,908
432%
2,043,706
(-)
2,446,106
(-)
since October 2019
2,660,349
January 2017 until 11 May 2023
since January 2022
since July 2020
Frank Weber
Joachim Post
Nicolas Peter 3,5
2,651,143
January 2018 until 31 October 2023
Other Information
- 12%
24%
4,964,449
95%
4,017,337
283%
2,058,305
537,696
4,374,024
Remuneration Report
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023
(-)
48,237
(-)
210,000
335%
210,000
0%
Rachel Empey"
since May 2021
(-)
(-)
(-)
135,419
(-)
260,000
(-)
92%
(-)
Bernhard Ebner¹
210,000
0%
210,000
0%
Marc Bitzer
since May 2021
(-)
(-)
(-)
135,419
(-)
210,000
55%
210,000
0%
since October 2021
410,000
58%
Heinrich Hiesinger
0%
Susanne Klatten
since May 1997
220,000
210,000
- 5%
210,000
0%
210,000
0%
208,000
- 1%
Jens Köhler¹
since August 2021
Logistics - material supply of the plants and distribution of vehicles²
Business trips³
210,000
59%
210,000
(-)
since May 2017
220,000
210,000
- 5%
210,000
0%
210,000
0%
0%
0%
Johann Horn¹
since May 2021
(-)
(-)
(-)
132,344
210,000
V. Comparison of Change in Remuneration and Earnings
210,000
210,000
610,000
- 5%
610,000
0%
610,000
0%
610,000
0%
(-)
(-)
(-)
(-)
(-)
(-)
389,545
640,000
(-)
(-)
since January 2023, Deputy Chairman
since May 2015, Chairman
301
V. Comparison of Change in Remuneration and Earnings
← = Q
Comparison of changes in earnings and remuneration for employees, the Board of Management and the Supervisory Board
2019
2020
Change 2020
vs 2019 in %
2021
Change 2021
vs 2020 in %
2022
Change 2022
vs 2021 in %
2023
Change 2023
vs 2022 in %
IV. REMUNERATION OF THE SUPERVISORY BOARD IN €
Norbert Reithofer
Martin Kimmich 1,2
Stefan Quandt
Stefan Schmid¹
since 1997, Deputy Chairman
Kurt Bock³
Audit Committee
220,000
367,930
67%
460,000
25%
460,000
0%
460,000
0%
Christiane Benner¹
since May 2014
220,000
Other Information
since May 2018, Deputy Chairman and Chairman of the
0%
410,000
0%
430,000
410,000
- 5%
410,000
0%
410,000
0%
- 5%
410,000
since 2007, Deputy Chairman
430,000
410,000
- 5%
410,000
0%
410,000
0%
← = Q
16%
(-)
Change
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
Munich, March 14, 2024
We issue this auditor's report on the basis of the engagement
agreed with Bayerische Motoren Werke Aktiengesellschaft. The
audit has been performed only for purposes of the company and
the auditor's report is solely intended to inform the company as
to the results of the audit. Our responsibility for the audit and for
our auditor's report is only towards the company in accordance
with this engagement. The auditor's report is not intended for
any third parties to base any (financial) decisions thereon. We do
not assume any responsibility, duty of care or liability towards
third parties; no third parties are included in the scope of protec-
tion of the underlying engagement. § 334 BGB [Bürgerliches
Gesetzbuch: German Civil Code], according to which objections
arising from a contract may also be raised against third parties,
is not waived.
Restriction on use
The audit of the content of the remuneration report described in
this auditor's report includes the formal audit of the remuneration
report required by § 162 Abs. [paragraph] 3 AktG, including the
issuance of a report on this audit. As we express an unqualified
audit opinion on the content of the remuneration report, this audit
opinion includes that the information required by § 162 Abs. 1
and 2 AktG has been disclosed in all material respects in the re-
muneration report.
Reference to an Other Matter - Formal Audit of the
Remuneration Report according to § 162 AktG
In our opinion, based on the findings of our audit, the remunera-
tion report for the financial year from January 1, 2023 to Decem-
ber 31 2023, including the related disclosures, complies in all
material respects with the accounting provisions of § 162 AktG.
Audit Opinion
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
In making those risk assessments, the auditor considers internal
control relevant to the preparation of the remuneration report in-
cluding the related disclosures. The objective of this is to plan
and perform audit procedures that are appropriate in the circum-
stances, but not for the purpose of expressing an opinion on the
effectiveness of the company's internal control. An audit also in-
cludes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by
the executive directors and the supervisory board, as well as
evaluating the overall presentation of remuneration report in-
cluding the related disclosures.
An audit involves performing procedures to obtain audit evidence
about the amounts including the related disclosures stated in the
remuneration report. The procedures selected depend on the au-
ditor's judgment. This includes the assessment of the risks of
material misstatement of the remuneration report including the
related disclosures, whether due to fraud or error.
Our responsibility is to express an opinion on this remuneration
report, including the related disclosures, based on our audit. We
conducted our audit in accordance with German generally ac-
cepted standards for the audit of financial statements promul-
gated by the Institut der Wirtschaftsprüfer (Institute of Public Au-
ditors in Germany) (IDW). Those standards require that we com-
ply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the remuneration
report, including the related disclosures, is free from material
misstatement.
Auditor's Responsibilities
The executive directors and the supervisory board of Bayerische
Motoren Werke Aktiengesellschaft are responsible for the prep-
aration of the remuneration report, including the related disclo-
sures, that complies with the requirements of § 162 AktG. The
executive directors and the supervisory board are also responsi-
ble for such internal control as they determine is necessary to
enable the preparation of a remuneration report, including the re-
lated disclosures, that is free from material misstatement,
whether due to fraud or error.
Responsibilities of the Executive Directors and the
Supervisory Board
Petra Justenhoven
Wirtschaftsprüferin
(German Public Auditor)
We have audited the remuneration report of Bayerische Motoren
Werke Aktiengesellschaft, München, for the financial year from
January 1, 2023 to December 31, 2023 including the related
disclosures, which was prepared to comply with § [Article] 162
AktG [Aktiengesetz: German Stock Corporation Act].
Michael Popp
Wirtschaftsprüfer
(German Public Auditor)
BMW Group Report 2023
330 Glossary and Explanation of Key Figures*
328 BMW Group Ten-year Comparison
326 Consumption and Carbon Disclosures
325 NFS Index
321 TCFD Index
318 SASB Index
314 Employees and Society
307 Production, Purchasing and Supplier Network
307 Further GRI Information
←三〇
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
306
To Bayerische Motoren Werke Aktiengesellschaft, München
VII. AUDITOR'S REPORT
← = Q
Remuneration Report
Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report Group Financial Statements
BMW Group Report 2023
304
4 Member of the Audit Committee since 1 October 2022.
3 Dr Bock was elected Chairman of the Audit Committee in May 2020.
1 These employee representatives have declared that they will transfer their remuneration to the Hans Böckler Foundation in accordance with the guidelines of the Confederation of German Trade Unions.
2 Member since 18 January 2023, Deputy Chairman since 23 January 2023.
1%
210,000
(-)
208,387
(-)
(-)
(-)
Other Information
VI. Other Considerations
VI. OTHER CONSIDERATIONS
BMW Group companies did not grant any loans to members of
the Board of Management or the Supervisory Board in the 2023
financial year, nor did they enter into any contingent liabilities in
their favour. In the year under review, members of the Board of
Management and the Supervisory Board concluded contracts
with BMW Group companies for the purchase of vehicles, other
services (maintenance and repair work) and cash deposits at
arm's length conditions.
Other Information
Remuneration Report
VII. Auditor's Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
305
← = Q
337 Financial Calendar
Board of Management
Oliver Zipse
For the Board of Management
Norbert Reithofer
Chairman of the
Supervisory Board
Dr-Ing Dr-Ing Eh
For the Supervisory Board
Bayerische Motoren Werke Aktiengesellschaft
The Company maintains a financial loss liability insurance policy
for the members of the Board of Management and the
Supervisory Board. The insurance provides cover for legal
liability claims and protects the private assets of members of
BMW AG's Board of Management and Supervisory Board if a
claim is made against them for financial loss in the course of
exercising their function as a corporate entity. A deductible is
provided for members of the Board of Management that
complies with the requirements of the German Stock Corporation
Act (AktG).
Chairman of the
(-)
338 Contacts
06
OTHER
110,141
91,300
91,300
134,849
134,849
130,090
130,090
354,095
354,095
Electricity/heat purchased by BMW Group locations²,4,9
Total emissions
5,245
3,449
1,967
1,793
6,098
113,431
76,491
66,442
110,141
72,554
1 The CO2 emissions listed account for approximately 90% of the BMW Group's total Scope 1 to Scope 3 emissions. The methodology used to calculate CO2 emissions changed in the reporting year 2023 for the items "Purchased Goods and services" and "Logistics - material supply of the plants and
distribution of vehicles". The prior-year figures have been adjusted retrospectively.
3 This amount includes 15,881 t CO₂ from the direct use of biomass.
4 Calculation of Scope 1 and Scope 2 emissions, using the operational control approach in accordance with the GHG Protocol. Leased space without the direct influence of the BMW Group on energy supply is therefore not included.
SCOPE 3: INDIRECT GREENHOUSE GAS EMISSIONS
in t CO₂/CO₂e¹
BMW Group Carbon footprint
← = Q
Further GRI Information
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
308
9 Scope 2 emissions calculated using the market-based method in accordance with the GHG Protocol Scope 2 guidance; mainly based on the emissions factors for electricity, district heating and fuels reported by the VDA (each in the latest version dated 12/2023) and occasionally using local emissions factors;
alternative calculation using the location-based method: 1,195,818 t CO2.
7 The increase in this metric is the result of the scope being increased as compared to the previous year. Reporting was only submitted for Germany and the international test sites up to and including 2022. During the 2023 reporting year, all BMW Group plants and the 12 major markets were integrated into the
figure. A calculation based on the Scope from 2022 results in a comparative value for 2023 of 80,869 t CO2 (+5.7% compared to previous year). No retrospective adjustment was made. As a result, the figures for 2023 are not directly comparable with previous years.
8 As a result of the extensive travel restrictions in place during the pandemic, 2019 is used as a base year for more meaningful comparisons in terms of civil aviation.
6 Emissions from company cars (Scope 1) are also included on a pro-rata basis under employee commuting and use phase (both Scope 3). A distinction in the systems is currently not possible.
5 Includes the emissions of company cars and function-related vehicles of the BMW Group plants, as well as the 12 major markets. Emissions are preferably calculated on the basis of tank refills. This is the case for the plants and/or markets in Australia, Austria, Brazil, France, Germany, Hungary, India, Italy
(only Alphabet Italia S.p.A. and BMW Bank GmbH, Milan), Japan, Mexico, South Africa, South Korea (only BMW Financial Services Korea Co., Ltd., Seoul), Thailand and the UK. In the remaining cases, they are determined based on kilometres driven. For the USA, the data are partly extrapolated for 2023
because the information was not yet available for the entire period at the time the data was collected. For BMW Italia S.p.A. and BMW Italia Retail S.r.l., values for the reporting period are calculated based on average kilometres per day. For system-related reasons, the refuelling of company vehicles includes
both business and private trips, except refuelling paid for by employees themselves.
2 Carbon emissions (excluding climate-impacting gases other than carbon dioxide) generated by vehicle production (BMW Group plants and BMW Motorcycle, excluding partner plants and contract manufacturing) and by other BMW Group locations not directly related to production (e.g. research centres, sales
centres, office buildings).
85,667
595,257
614,117
Other Information
Remuneration Report
SCOPE 2: INDIRECT GREENHOUSE GAS EMISSIONS
Company-owned planes
Company vehicles 5,6,7
BMW Group locations 2,3,4
Total emissions
SCOPE 1: DIRECT GREENHOUSE GAS EMISSIONS
Total emissions¹
int CO₂
BMW Group Carbon footprint
PRODUCTION, PURCHASING AND SUPPLIER NETWORK
Change
307 BMW Group Report 2023 To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
INFORMATION
← = Q
Further GRI Information
2019
2020
631,304
604,620
586,638
713,933
694,057
699,713
678,967
*Part of the Combined Management Report
678,403
130,743,357
137,592,164
132,064,779
147,257,699
2023
2022
2021
134,699,641
0%
FURTHER GRI INFORMATION
0%
7%
10%
until October 2019
until December 2017
- 1%
363,765
1%
1%
-21%
until May 2015, since May 2015 Chairman of the Supervisory Board
- 70%
274,262
- 34%
- 64%
-34%
2%
- 62%
216,478
149%
303
6 For the 2019 and 2020 financial years, the advance payments of € 600,000 and € 500,000 from the 2018-2020 and 2019-2021 Performance Cash Plans, respectively, which were paid in 2019 and 2020 respectively, were also included in the calculation of remuneration.
4 For the 2019 and 2020 financial years, the advance payments of € 900,000 each from the 2018-2020 and 2019-2021 Performance Cash Plans, which were paid in 2019 and 2020 respectively, were also included in the calculation of remuneration.
5 Mr Krüger's employment contract ended on 30 April 2020.
2 For the 2019 and 2020 financial years, the advance payments of € 600,000 each from the 2018-2020 and 2019-2021 Performance Cash Plans, which were paid in 2019 and 2020 respectively, were also included in the calculation of remuneration.
3 Ms Caiña Carreiro-Andree's contract of employment ended on 30 June 2020.
1 The reported remuneration for the years 2019 and 2020 has been recalculated pursuant to § 162 of the German Stock Corporation Act (AktG).
- 97%
64,856
- 54%
120%
- 1%
until December 2021
Andreas Wendt
- 31%
50%
179,339
- 96%
-54%
346,848
24%
-23%
- 77%
181,079
- 1%
- 68%
-25%
until October 2019
Milagros Caiña Carreiro-Andree²,3
2023 vs 2022 in %
2023
2022 vs 2021 in %
2021 vs 2020 in %
2020 vs 2019 in %
Change
210,000
Change
Klaus Draeger
Friedrich Eichiner
Klaus Fröhlich²
Harald Krüger4,5
1%
1%
313,878
302,023
-25%
- 32%
62%
- 18%
BMW Group Report 2023
2%
until August 2019
until June 2020
until December 2016
until September 2016
Peter Schwarzenbauer
Ian Robertson
Norbert Reithofer
2%
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
- 69%
(-)
since May 2021
Christoph Schmidt
0%
210,000
0%
210,000
56%
210,000
(-)
134,344
(-)
since May 2020
Anke Schäferkordt
58%
410,000
(-)
24%
(-)
(-)
210,000
1%
(-)
210,000
49%
208,000
139,532
(-)
since January 2022
Sibylle Wankel¹
since May 2019
Vishal Sikka
0%
210,000
55%
210,000
135,419
260,000
(-)
(-)
100,624
(-)
(-)
(-)
(-)
since July 2022
210,000
Gerhard Kurz
210,000
143%
210,000
0%
(-)
(-)
0%
109%
(-)
34%
210,000
-5%
210,000
220,000
since June 2012
Dominique Mohabeer¹4
André Mandl¹
210,000
(-)
86,258
(-)
(-)
(-)
(-)
(-)
since April 2022
156,333
9,749
7,168
6,650
6,113
3.33
5,326
Waste for disposal
Waste¹
!!!!
2.90
2.74
2.12
VOC Solvent emissions per vehicle produced*
in kg
4.09
0.85
1 Waste generated by automotive production (BMW Group plants, excluding partner plants and contract manufacturing).
2 Includes both recycling and thermal recovery.
922,554
Waste for disposal per vehicle produced*
927,880
0.81
← = Q
in t
Total waste
in kg
2019
2020
2021
2022
2023
780,911
775,459
Materials for recycling²
771,162
768,292
829,498
822,848
818,387
812,274
0.70
Notifications of potential violations in the supply chain
0.52
in %
Proportion of suppliers of production-related material with implemented preventive measures at the time of awarding
Proportion of suppliers of production-related material with agreed preventive measures at the time of awarding
Basis: industry-specific sustainability questionnaire.
2022
2023
70
55
22
31
2 A new version of the questionnaire containing additional requirements was introduced. As a result, some suppliers had to redo their questionnaires. Some suppliers had to implement additional preventive
measures.
Number of notifications of potential violations of our sustainability principles received through our reporting channels
of which number of notifications that were clarified during the reporting year*
of which number of justified notifications that were clarified during the reporting year
2022
Further GRI Information
2023
Sustainability assessment of relevant supplier locations 1,2
0.61
Other Information
Group Financial Statements Responsibility Statement and Auditor's Report
0
2019
2020
2021
2022
2023
*The efficiency indicator is calculated on the basis of solvent emissions (VOCs) generated by auto-
mobile production (BMW Group plants, excluding partner plants and contract manufacturing) di-
vided by the number of vehicles produced in automobile production (BMW Group plants and part-
ner plants, excluding contract manufacturing).
0
2019
2020
2021
2022
2023
*Efficiency ratio calculated on the basis of waste for disposal in automobile production (BMW
Group plants, excluding partner plants and contract manufacturing] divided by the total number of
vehicles produced in automobile (BMW Group plants and partner plants, excluding contract man-
ufacturing).
313
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Remuneration Report
Other Information
Average distribution of materials in BMW Group vehicles¹²
Group Financial Statements Responsibility Statement and Auditor's Report
2.05
1.91
1.90
1.78
Elastomers (e.g. tyres,
seals) 3.6
0
2019
2020
2021
2022
2023
1 Calculated using unit-adjusted averages for the BMW 1 Series, 2 Series, 3 Series, 4 Series, 5 Se-
ries, 6 Series, 7 Series, 8 Series, the X1, X2, X3, X4, X5, X6, X7 of Rolls-Royce, MINI and M-
GmbH, as well as the BEV vehicles i3 long, 14, 15, 17, ix, iX1, ix2, iX3, MINI E, Rolls-Royce Spectre
and PHEV versions.
2 The number of vehicles produced (BMW Group plants, partner plants and contract manufactur-
ing] increased year-on-year to around 2.66 million vehicles (2022: around 2.38 million). Based
on an average vehicle weight of BMW Group vehicles of around 2.0 tonnes, the total weight of in-
put materials is around 4.9 million tonnes. To calculate the individual material flows, the total
weight is multiplied by the average distribution of the materials in BMW Group vehicles.
Efficiency indicator calculated from the potable water consumption measured for automobile pro-
duction (BMW Group plants, excluding partner plants and contract manufacturing) divided by the
number of vehicles produced in automobile production (BMW Group plants and partner plants,
excluding contract manufacturing).
² Potable water consumption refers to water purchased from external water suppliers. If a BMW
Group location does not purchase water from an external supplier, the primary source of supply is
counted as potable water. This applies to the BMW Group plants in San Luis Potosí, Mexico, and
Araquari, Brazil, where groundwater is the main source.
3 Value of the base year 2016 to the target reduction of -25% by 2030: 2.00.
Water consumption*
2.12
in m³
Non-ferrous metals 21.0
Steel and iron 48.4
8
311
BMW Group Report 2023
To Our Stakeholders Combined Management Report Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Potable water consumption per vehicle produced 1,2,3
in %
in m³
Others (including glass and
operating materials) 11.1
M.O.N. (mod. Organ.
Natural mat.) 0.3
Thermoplastic resins
Duromers 2.0
12.5
Textiles 1.1
Remuneration Report
Water consumption
of which groundwater in %
0.0
0.0
0.0
0.0
0.1
of which rainwater in %
0.0
0.1
0.3
0.3
0.2
*Water used by automotive production (BMW Group plants, excluding partner plants and contract manufacturing).
Further GRI Information
← = Q
312
BMW Group Report 2023
To Our Stakeholders Combined Management Report
of which surface water in %
of which potable water in %
15.9
14.6
2019
2020
2021
2022
2023
5,417,428
4,722,310
4,924,477
4,840,161
5,049,144
87.4
86.3
85.1
84.0
83.8
12.6
13.6
15.7
11
82
6
82.7
78.7
77.7
79.1
78.7
82.3
Driving 3.8
Transport 10.2
88.5
89.2
88.3
89.1
87.4
South Africa
85.9
Austria
Processing 6.2
90.2
88.8
89.5
89.8
87.5
Others 7.2
99.5
99.7
99.8
99.7
99.7
UK
Germany
USA
2023
85.4
85.8
Mexico
67.4
65.2
60.0
57.8
57.1
Thailand
Handling of pieces 12.8
Assembling/
disassembling 14.5
84.5
85.1
82.2
78.8
73.7
88.4
China
88.2
85.1
84.9
78.2
Brazil
Ancillary activities 12.6
75.6
80.0
78.4
68.4
82.1
India
Walking 28.2
Cleaning 2.4
Testing 2.1
86.0
2022
2021
2020
3,191
3,720
4,535
2,794
Total
2023
2022
2021
2020
2019
Number
Total number of employees leaving BMW AG, by reason for leaving¹
* Training for BMW Group employees at consolidated and non-consolidated subsidiaries world-
wide. Data is collated on the basis of direct input by participants and, to a small extent, by extrap-
olation. Data also includes e-learning formats. GRI Index: 404-1
2023
3,107
2022
2020
2019
0
lill
21.6
23.1
23.7
16.0
Average number of hours of training and further education
per employee of the BMW Group*
20.7
14.1
10.8
Tariff
68.9
2021
Part-time retirement, retirement, death
1,700
1,884
2019
in %
Principal hazard spots
Share of local employees in management positions at major Company locations*
= Q
↑
Further GRI Information
Other Information
Remuneration Report
BMW Group Report 2023 To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
317
= Q
↑
2 Increase mainly due to a set of personnel measures.
1 Figures refer to employees with permanent contracts.
91
70
1,938
2,110
2,105
Voluntarily left Company (termination or suspension of employment
contract by employee)
1,029
48.4
2,6012
1,011
911
Dismissed by employer
65
50
33
1,749²
43.1
62.9
72.7
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
320
In line with its corporate strategy, the BMW Group is pursuing a
clear course of decarbonisation. Against a backdrop of increasing
electrification, it is particularly important to consider carbon
emissions over the entire life cycle of a vehicle. In this context, the
BMW Group has set itself decarbonisation targets by 2030 (base
year 2019) during the usephase, in the upstream supply chain
and in production. These have been registered with the SBTi and
validated (Reducing carbon emissions across the entire value
chain). The BMW Group is also taking measures to mitigate and
adapt to climate change. It is therefore imperative to identify
climate-related risks and opportunities and to take appropriate
account of them in determining the strategic direction to be
followed, managing the business and organising a Group-wide
risk management system. For further information, see ▾ Climate-
related Risks and Opportunities. The BMW Group is also working
consistently to reduce vehicle pollutants such as nitrogen oxides
(NOx), carbon monoxide (CO) and particulate matter (PM)
(Pollutants).
(2) The BMW Group portfolio includes BEVs (1) and PHEVs (2).
Under the BMW Group definition, see Glossary Electrified
Vehicles, 48 V vehicles are not counted as hybrid vehicles.
(3) Plug-in hybrid electric vehicles (PHEV): 190,159
(1) Emissions-free vehicles (BEV): 375,716
7 As in previous years, statutory carbon emissions limits during the use
phase are met again
(2) The BMW Group provides the total number of days idle
resulting from work stoppages as per the definition in (1). The
total number of days idle can be calculated from the total number
of employees involved with each work stoppage and the number
of days the work stoppage lasted. The number of days idle for
2023 was zero. Strike action is usually taken to reinforce pay rise
demands.
(1) The BMW Group provides the number of work stoppages
(strikes and lockouts) affecting more than 1,000 employees and
that lasted one full shift or longer. The number of work stoppages
for 2023 was zero.
Notes
opportunities
TR-AU-410a.3
Other Information
Discussion of strategy for managing fleet Discussion and analysis n/a
fuel economy and emissions risks and
TR-AU-410a.2
Number
Quantitative
Number of (1) zero-emission vehicles
(ZEV), (2) hybrid vehicles and (3) plug-in
hybrid vehicles sold
Sales-weighted average passenger fleet Quantitative
fuel economy, by region
Mpg, L/km, gCO2/km, TR-AU-410a.1
km/L
(2) total days idle
Fuel economy and use-phase emissions
and
TR-AU-310a.2
Number, days idle
Code
Unit
Category
Quantitative
Fuel economy and use-phase emissions
(1) Number of work stoppages
← = Q
[[Topic
All BMW Group vehicles sold since 2008 meet the currently
applicable worldwide requirements for the recycling of end-of-life
vehicles, components and materials. Vehicles (except for
motorcycles) are already currently required to be 85% recyclable
or 95% recyclable including thermal utilisation (based on vehicle
weight).
]]
7 Closing material loops
At the Recycling and Dismantling Centre in Munich, 4,386
vehicles (including motorcycles) were taken back and recycled
during the reporting year. This corresponds to a total scrapping
weight for vehicles (including motorcycles) of 6,105 t. In relation
to the entire vehicle (excluding motorcycles), at least 85% of
materials are recycled and, including thermal utilisation, at least
95% as stipulated by legal requirements (European End-of-Life
Vehicles Directive ELV 2000/53/EC).
91.4% of the total amount of waste (927,880 t) was recycled
and 8.1% was thermally utilised.
7 Further GRI Information
tons (t)
sales-weighted metric
TR-AU-440b.3
Percentage (%) by
Average recyclability of vehicles sold Quantitative
TR-AU-440b.2
Metric tons (t),
Percentage (%)
Weight of end-of-life material recovered, Quantitative
percentage recycled
7 Waste
SASB-Index
TR-AU-440b.1
More information about this can be found online.
7 Raw materials security and strategy
Notes
Quantitative
Total amount of waste from
manufacturing, percentage recycled
Materials efficiency and recycling
TR-AU-440a.1
Discussion and analysis n/a
Code
Unit
Category
Description of the management of risks
associated with the use of critical
materials
Accounting Metric
Raw material sourcing
Metric tons (t),
Percentage (%)
Labour practices
Accounting Metric
[[Topic
TR-AU-000.B
Number
Quantitative
Number of vehicles sold
Activity metric
7 Production network
TR-AU-000.A
Number
Quantitative
Number of vehicles manufactured
Notes
Code
Unit
Category
7 Key performance indicators
Accounting metric
SASB INDEX
SASB-Index
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2023
318
case.
* "Local" refers to managers with local contracts. People deployed to work at the location who do not have a local employment contract are not included. These are reflected in the difference to 100 in each
74.2
[[Topic
Product safety
Percentage of vehicle models rated by
NCAP programmes with an overall 5-star
safety rating, by region
Quantitative
SASB-Index
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
319
7 Further GRI Information
TR-AU-310a.1
Percentage (%)
Quantitative
Share of employees represented by a
trade union or falling under collective
agreements
Labour practices
Product safety
7 Quality management in the BMW Group
TR-AU-250a.3
Percentage (%)
TR-AU-250a.1
Number of safety-related defect
complaints, percentage investigated
Quantitative
Number, Percentage
(%)
TR-AU-250a.2
67.8
- 88% - European New Car Assessment Programme
(Euro NCAP)
- 67% - Korean New Car Assessment Programme (KNCAP)
In its reporting on NCAP programmes, the BMW Group focuses on
markets in the EU (including the UK), China, the USA and South
Korea. More information about NCAP can be found in the chapter
Product Quality and Safety.
100%* of safety-relevant complaints were reviewed.
* The survey period runs from November of the previous year through to November of the
reporting year, as to allow for a processing time after the receipt of complaints.
Number of vehicles recalled
Quantitative
Number
- 100% - China New Car Assessment Programme (C-NCAP)
-40% - U.S. National Highway Traffic Safety Administration's
(NHTSA) New Car Assessment Programme (NCAP)
4
27.0
26.0
2020
2019
in %
Share of employees represented by a trade union or falling under collective bargaining agreements¹
Further GRI Information
← = Q
Other Information
Remuneration Report
To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023
315
6 Of this figure, 41.9% clock-controlled production employees of the BMW Group.
5 Of this figure, 42.5% clock-controlled production employees of the BMW Group.
4 Of this figure, 38.0% clock-controlled production employees of the BMW Group.
2021
3 Of this figure, 37.9% clock-controlled production employees of the BMW Group.
1 The term "employee" has been redefined with effect from the reporting year 2020 (for definition,
see Glossary).
2023
2022
2021
2020
2019
118.94
120.73
126.0²
155.06
149.55
0
Employees in
Germany
30
² Of this figure, 38.2% clock-controlled production employees of the BMW Group.
60
2022
Germany (BMW AG)²
100
USA (Spartanburg plant, no collective bargaining agreements in place)
Mexico (San Luis Potosí plant)²
70
70
70
63
59
South Africa (Rosslyn plant, Sales, IT, Financial Services)
100
100
100
100
100
Austria (Steyr plant)²
2023
100
100
100
100
China (Dadong, Tiexi incl. Lydia plants)
82
83
84
85
UK (Plants Hams Hall, Oxford, Swindon, Goodwood, Transport and
Logistics Centre (Bognor Regis))
100
100
100
100
100
100
abroad
90
Employees
106,928
108,676
113,719
154,950
149,475
118,909
120,726
126,016
2023
2022
2021
2020
2019
Other
137,056
Financial Services
Automotive
BMW Group
Employees at end of year¹
EMPLOYEES AND SOCIETY
Further GRI Information
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023 To Our Stakeholders Combined Management Report
314
← = Q
Further GRI Information
All notifications are processed until they are fully resolved, including across several financial years. Five notifications received in 2023 were still at the internal processing stage at the end of the financial
year and had not yet been fully resolved. Similarly, four notifications from 2022 were still being processed in 2023 that had not been fully resolved by the end of the 2022 financial year. Three of these
notifications were resolved in 2023 and were proven unjustified. The remaining notification will continue to be processed during the next financial year.
Motorcycles
142,441
3,503
3,474
120
150
Number of employees in thousands
Employees in Germany and abroad¹
2 Around 24% of these are women employed at BMW AG. For system-related reasons, this data is only collected for BMW AG.
3 Permanent and fixed-term employees.
1 The term "employee" has been redefined with effect from the reporting year 2020 (for definition, see Glossary).
7,973
7,315
6,846
6,433
6,318
Employees in part-time employment³
14,536
15,039
2,503
2,892
3,489
3,418
3,711
3,996
8,684
8,473
8,466
100
8,616
110
103
97
92
100
Employees with fixed-term contracts²
8,413
"Meister" (master craftsmen)
100
100
Thailand
3,938
4,183
5.1
4,211
5.4
4,158
5.2
4,082
4.9
in % of total number of employees
22
2
861
Brazil
0.8
0.74
0.6
691
0.8
23
436
2,867
South Africa
657
5604
464
653
764
35
2
3,703
Mexico
5.7
0.9
5.1
157
India
38.2
26.4
30.7
Non-tariff employees
2023
2022
2021
Employee category
Number of hours
employee category
Average training hours at the BMW AG Academy, by
Further GRI Information
Other Information
Remuneration Report
29
Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023
316
*Status: 31 December 2023.
"As a result of changes in the way information is recorded, data for 2022 have been retrospectively adjusted (Values before adjustment: 493 employees in sabbaticals; 0,6% of total number of employ-
ees).
3 Only workers in administrative positions who engaged in mobile work.
18
38
915
Hungary
2 Of which 4,118 were female (60%). For systemic reasons, this number is only calculated for BMW AG.
1 The term "employee" has been redefined with effect from the reporting year 2020 (for definition, see > Glossary).
9
3
572
To Our Stakeholders Combined Management Report
4.8
6.0
6.6
18
844
87,304
Germany
6,949
6,388
5,951
5,568
5,440
Parental leave
in % of total number of employees
Sabbaticals
in % of total number of employees
Vollzeit Select model
6.6
in % of total number of employees
in % of total number of employees
Part-time employment²
of which Share of women
fixed-term
in %
Total
2023
2022
2021
2020
2019
Number of employees
Number of employees per country with production site(s)*
Alternative ways of working at BMW AG¹
2 Excluding senior management and representatives. GRI Index: 2-30
Status: 31.12.2023.
Mobile work³
7.0
7.7
7.8
16
126
3,857
Austria
4,833
4,170
3,736
4,747
5,474
18
65
6,743
UK
85.4
85.9
84.3
87.2
8.2
China
28,076
12,623
15
36,208
100
43,309
43,707
45,673
USA
12,736
25
70.8
41,180
4.6
Carbon emissions in the supply chain, including in transport lo-
gistics, as well as in upstream fuel production (well-to-tank) are
referred to as CO₂e. Climate-impacting gases under Scope 1 and
2 are not recognised for reasons of materiality.
As of February 2024
16,060
23,509
17,096
€ million
Earnings before tax
9,118
9,593
9,386
9,899
8,933
5,222
7,411
13,400
13,999
18,482
€ million
Earnings before financial result
21.2
19.7
19.9
20.3
19.0
4,830
17.3
7,118
10,675
2,140
1,365
3,597
4,927
4,931
€ million
Income taxes
10.8
10.0
10.3
9,627
10.9
6.8
5.3
14.4
16.5
11.0
%
Return on sales (earnings before tax/revenues)
8,707
9,224
9,665
9.9
13.7
19.8
17.2
Business volume (based on balance sheet carrying amounts)
contracts
Contract portfolio
FINANCIAL SERVICES
2,165,566
133,615
2,279,503
151,004
2,359,756
145,555
2,505,741
185,682
2,541,534
162,687
2,564,025
187,116
€ million
2,255,637
168,104
2,382,305
215,932
2,661,922
221,988
units
units
Motorcycles
Automobiles
PRODUCTION VOLUME
2,117,965
123,495
2,259,733
136,963
2,349,962
145,032
2,461,269
187,500
5,312,689
137,910
5,513,129
135,689
5,859,890
139,530
19.1
%
80,401
92,175
94,163
98,282
96,855
104,210
98,990
111,239
142,610
155,498
€ million
Gross profit margin
Revenues
INCOME STATEMENT
4,359,572
96,390
4,718,970
111,191
5,114,906
123,394
5,380,785
124,719
5,708,032
133,147
5,973,682
142,834
5,981,928
133,093
2,530
2,465,021
164,153
2,000
2,828
3,922
5,012
7,791
8,836
€ million
Capital expenditure (excluding capitalised development costs)
56,844
61,831
66,864
73,542
5,650
84,736
81,807
86,173
92,204
94,972
€ million
97,959
110,343
121,671
121,964
124,202
90,630
137,404
5,029
3,731
92,923
€ million
5.7
4.2
4.0
4.8
5.2
5.4
4.0
4.5
4,688
5.5
%
Balance sheet total
Current provisions and liabilities
Non-current provisions and liabilities
Equity ratio
Equity
costs)
Capital expenditure ratio (excluding capitalised development
4,601
3,826
5.7
134,851
143,354
154,722
8,675
7,064
5,022
3,857
12,463
18,582
12,165
€ million
Net profit for the year
33.2
6,910
30.7
18.7
26.3
30.1
26.1
22.4
21.0
28.8
%
Effective tax rate
2,890
28.5
6,396
5,817
329
155,918
€ million
Current assets
Non-current assets
BALANCE SHEET
2014
2015
2016
2017
2018¹
2019
2020
2021
2022
2023
← = Q
Other Information
BMW Group Ten-Year Comparison
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
Combined Management Report
To Our Stakeholders
BMW Group Report 2023
2,755
2,486,149
165,566
2,537,504
175,162
2,325,179
169,272
575-611
20.3 - 19.1
BMW i7 M70 xDrive
BMW i7 xDrive 60
BMW i7 xDrive50
94-110
27.0-22.9
26-18
1.1-0.8
BMW X5 xDrive 50e
19.6 - 18.5
83-90
23-19
93-103
21.7 -19.9
17-13
0.8 -0.6
1.0-0.8
BMW 530e xDrive
BMW 530e
445-506
20.8 18.3
BMW i5 M60 xDrive Touring
23.2 - 21.6
457-516
589-624
BMW iX xDrive40
consumption
Electricity power
CO₂ emissions
in g/km
(combined/weighted
combined) max/min
← = Q
Disclosures regarding revenues that are taxonomy-eligible and taxonomy-aligned, capital
expenditure (CapEx) and operational expenditure (OpEx)
Consumption and Carbon Disclosures
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report Group Financial Statements
23.7-20.8
BMW Group Report 2023
in kWh/100 km
(combined/weighted
combined) max/min
Figures according to NEDC
Electricity power
consumption
501 - 564
587 633
490-559
403-435
24.7-21.9
21.3 -19.5
BMW iX M60
BMW iX xDrive50
21.4 -19.4
327
20.5-18.2
BMW i5 M60 xDrive
483-560
CO₂ emissions
in g/km
(combined/weighted
combined) max/min
Fuel consumption
in l/100km
(combined/weighted
combined) max/min
As of February 2024
apply for the assessment of taxes and other vehicle-related du-
ties which are also based on CO2 emissions. Further information
about the official fuel consumption and official specific carbon
emissions of new vehicles can be found in the "Manual on fuel
consumption, carbon emissions and electricity consumption of
new vehicles". www.dat.de/co2
may
For vehicles that were newly type-approved on or after 1 January
2021, official figures are only based on WLTP. In the vehicles,
different figures than those published here
The figures for fuel consumption, CO₂ emissions and power con-
sumption are calculated based on the measurement methods
stipulated in the current version of Regulation (EU) 715 / 2007.
The information is based on a vehicle with basic equipment in
Germany. Ranges take into account differences in wheel and tyre
size selected as well as optional equipment and can change
based on configuration. The figures have been calculated based
on the new WLTP test cycle and adapted to NEDC for compari-
son purposes.
Disclosures regarding fuel consumption, carbon emissions and electricity consumption
CONSUMPTION AND
CARBON DISCLOSURES
Consumption and Carbon Disclosures
Electricity power
consumption
← = Q
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
326
* Regulation (EU) 2020/852 of the European Council and of the European Parliament on the Es-
tablishment of a Framework to Facilitate Sustainable Investment, and amending Regulation (EU)
2019/2088, Commission Delegated Regulation (EU) 2021/2139, Commission Delegated Regu-
lation (EU) 2021/2178, Commission Delegated Regulation (EU) 2023/2485 and Commission
Delegated Regulation (EU) 2023/2486.
↑
NFS-Index
7 EU Taxonomy
7 Compliance and Human Rights
Other Information
in kWh/100 km
(combined/weighted
combined) max/min
Figures according to WLTP
Electric range
(combined/weighted
19.3-16.5
497-582
18.9-15.9
415-520
22.5-18.0
492-590
19.116.1
406-483
18.7 -15.8
234-229
10.4-10.1
BMW i5 eDrive40 Touring
BMW i5 eDrive40
BMW i4 M50
BMW i4 eDrive40
BMW i4 eDrive35
BMW M3 CS
BMW
Model
CO2 emissions
in g/km
(combined/weighted
combined) max/min
in l/100km
(combined/weighted
combined) max/min
combined)
Fuel consumption
in kWh/100 km
(combined/weighted
combined) max/min
Figures according to WLTP
Fuel consumption
Electric range
(combined/weighted
500-530
23.6-22.2
Rolls-Royce Spectre
369-357
16.3 15.8
Rolls-Royce Wraith
381-367
16.9-16.2
Rolls-Royce Dawn
359-347
328
15.8 -15.2
16.5-16.1
399-432
18.5-16.8
423-462
17.4-15.7
201
17.2
387-402
14.7 -14.1
203-232
377-368
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
2,521,514
194,261
2,399,632
202,895
2,554,183
209,066
units
units
Motorcycles
Automobiles
2014
2015
2016
2017
2018¹
2019
2020
2021
2022
2023
DELIVERIES
BMW GROUP TEN-YEAR COMPARISON
BMW Group Ten-Year Comparison
← = Q
Other Information
Remuneration Report
17.6-15.4
91,288
293-305
in l/100km
(combined/weighted
combined) max/min
1.7-1.3
76-82
33.5-32.5
45-35
2.0-1.6
76-83
33.6-32.5
43-35
1.9 1.5
453-461
37-30
18.9 - 18.5
17.7-16.3
417-439
18.1 - 16.9
in kWh/100 km
(combined/weighted
combined) max/min
consumption
Figures according to NEDC
Electricity power
CO₂ emissions
in g/km
(combined/weighted
combined) max/min
in l/100km
(combined/weighted
combined) max/min
combined)
430-474
17.2 - 15.4
417-449
32.2-31.5
78-84
7.4-6.9
8.1-7.9
Fuel consumption
Rolls-Royce Ghost
Rolls-Royce Cullinan
ROLLS-ROYCE
MINI Countryman SE ALL4
MINI Countryman E
MINI Cooper SE Cabrio
MINI Cooper SE (from model year 2024)
MINI Cooper SE (until model year 2023)
MINI Cooper E
MINI
BMW Z4 Roadster M40i
BMW Z4 Roadster sDrive20i
BMW XM 50e
BMW XM Label Red
BMW XM
BMW iX3
BMW iX2 xDrive30
BMW iX1 xDrive30
BMW iX1 xDrive20
Model
184-179
167-157
14.3 -13.8
7 Purchasing and Supplier Network
75,132
59,907
-Climate scenarios
-
-
-
Transitory climate risks
-
Physical climate risks
-
CDP Questionnaire 2023
C2.1, C2.2, C2.2a
Climate-related Risks and Opportunities
The BMW Group Strategy
- Managing sustainability
Cornerstones of the Strategy
-> Position - What does the BMW Group stand for?
C2.1, C2.2, C2.2a
-
B. Describe the Company's processes for managing
climate-related risks.
Risks and Opportunities
-
Risk and Opportunity Management
-
Performance Indicators and Performance Management
-
Climate-related risks
-> Organisation of Risk Management
-
Physical climate risks
-
Climate-related opportunities
CDP Questionnaire 2023
C2.1, C2.1a, C2.1b, C2.2a, C2.3, C2.3a, C2.4,
C2.4a
C2.1b, C2.3, C2.3a, C2.4, C2.4a, C3.1, C3.3, C3.4,
C3.5, C3.5a
C2.3, C2.3a, C2.4, C2.4a, C3.1, C3.3, C3.4, C3.5,
C3.5a
323
BMW Group Report 2023
- Risk measurement
To Our Stakeholders Combined Management Report Group Financial Statements
Remuneration Report
Other Information
TCFD-Index
[[Risk Management
Disclose how the Company identifies, assesses, and manages climate-related risks.
Recommended TCFD Disclosures
A. Describe the Company's processes for identifying
and assessing climate-related risks.
BMW Group Report 2023
Risks and Opportunities
-> Risk and Opportunity Management
Responsibility Statement and Auditor's Report
Risk measurement
C. Describe how processes for identifying, assessing,
and managing climate-related risks are integrated into
A. Disclose the metrics used by the Company to assess
climate-related risks and opportunities.
7 The BMW Group Strategy
-
Performance Indicators and Performance Management
-> Managing Sustainability
CDP Questionnaire 2023
C4.1b, C4.2, C4.2a, C4.2b, C4.2c
↑
B. Disclose Scope 1, Scope 2 and, if appropriate,
Scope 3 greenhouse gas (GHG) emissions.
C. Describe the targets used by the Company to
manage climate-related risks and opportunities.
Further GRI Information (Table BMW Group Carbon Footprint)
7 Dashboard
BMW Group Report 2023
7 Products
-
Carbon Emissions
Reducing carbon emissions across the entire value chain
The BMW Group Strategy
- Performance Indicators and Performance Management
Further GRI Information (Table BMW Group Carbon Footprint)
7 Products
- Carbon Emissions
7 Production and Supplier Network
- Circular Economy, Resource Efficiency and Renewable Energy
-
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.
Recommended TCFD Disclosures
[[Metrics and Targets
TCFD-Index
the Company's overall risk management.
Organisation of Risk Management
The BMW Group Strategy
- Performance Indicators and Performance Management
-
-> Managing and sustainability
Cornerstones of the Strategy
- Position - What does the BMW Group stand for?
Risks and Opportunities
-> Risk and Opportunity Management
-
-> Organisation of Risk Management
- Risk measurement
Climate-related Risks and Opportunities
C2.2
↑
]]
324
BMW Group Report 2023
To Our Stakeholders Combined Management Report Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Transitory climate risks
-
-
-
-> Risks and opportunities relating to purchasing
Strategic and sector-specific risks and opportunities
Material Short-term Risks and Opportunities
-
-
-
-> Non-financial risks as reported in the non-financial statement (NFS)
Climate-related risks
-
- Risk and Opportunity Management
Climate-related Risks and Opportunities
Risks and Opportunities
The BMW Group Strategy
BMW Group Report 2023
C. Describe the resilience of the Company's strategy,
taking into consideration different climate-related
scenarios, including a 2°C or lower scenario.
B. Describe the impact of climate-related risks and
opportunities on the Company's businesses, strategy,
and financial planning.
A. Describe the climate-related risks and
opportunities.
Disclose the actual and potential impacts of climate-related risks and opportunities on the Company's businesses, strategy, and financial planning where such information is material.
Recommended TCFD Disclosures
[[Strategy
↑
TCFD-Index
Other Information
- Environmental Analysis
Remuneration Report
- Climate scenarios
- Physical climate risks
7 Risks and Opportunities
- Carbon emissions in the supply chain
Purchasing and Supplier Network
-
7 Production and Supplier Network
- Thinking holistically about electric mobility
- Electromobility
-> Further reduction in pollutant emissions
- Making conventional drivetrains more efficient and lowering their emissions
Reducing carbon emissions across the entire value chain
-> Transitory climate risks
-
-
-
Drivetrain technologies of the future
- Innovation, Digitalisation and Customer Orientation
Products
- Cornerstones of the Strategy
-> Environmental Analysis
The BMW Group Strategy
Climate-related opportunities
-
Carbon Emissions
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
BMW Group Report 2023
The BMW Group Strategy
BMW Group Report 2023
B. Describe Management's role in assessing and
managing climate-related risks and opportunities.
A. Describe the Board's oversight of climate-related
risks and opportunities.
Recommended TCFD Disclosures
Disclose the Company's governance around climate-related risks and opportunities.
[[Governance
TCFD INDEX
← = Q
Other Information
- Cornerstones of the Strategy
Remuneration Report
Combined Management Report Group Financial Statements
To Our Stakeholders
BMW Group Report 2023
321
- Risk and Opportunity Management
-> Material Short-term Risks and Opportunities
Climate-related Risks and Opportunities
7 Risks and Opportunities
-
Climate-related Risks and Opportunities
Responsibility Statement and Auditor's Report
-
- Position - What does the BMW Group stand for?
Performance Indicators and Performance Management
322
C1.2
C1.1a, C1.1b
CDP Questionnaire 2023
TCFD-Index
Organisation of Risk Management
-
Risk and Opportunity Management
-
Risks and Opportunities
-
-
Performance Indicators and Performance Management
Cornerstones of the Strategy
The BMW Group Strategy
- Carbon Emissions
7 Products
7 Appropriateness and Effectiveness of the Internal Control System and Risk Management System
Organisation of Risk Management
-
- Risk and Opportunity Management
Risks and Opportunities
- Managing sustainability
Climate scenarios
61,520
-
Cornerstones of the Strategy
DIVIDEND
Personnel cost per employee²
Workforce at year-end²
PERSONNEL
3,481
5,404
5,792
4,459
2,713
7,688
154,950
6,122
9,039
10,979
12,036
2,567
13,537
3,395
16,009
6,354
11,071
6,942
€ million
Free cash flow Automotive segment
16,870
7,880
17,327
Е
149,475
94,952
2,303
2.50/2.52
1,646
1,253
1.90 / 1.92
3,827
5.80/5.82
8.50/8.52
5,481
3,802³
6,00/6,023
€
€ million
96,778
Dividend per share of common stock/preferred stock
92,337
97,136
116,324
122,244
124,729
99,575
129,932
100,760
134,682
101,178
126,016
98,901
120,726
99,647
118,909
103,569
Dividend total
€ million
Cash and cash equivalents at balance sheet date
CASH FLOW STATEMENT
85,502
83,175
77,929
71,217
70,966
€ million
24.2
24.8
25.1
27.7
79,698
27.7
28.4
32.7
37.0
37.0
%
37,437
42,764
47,363
54,107
57,829
26.3
69,634
73,183
63,819
154,803
172,174
188,535
195,506
208,938
228,034
216,658
229,527
246,926
250,890
€ million
59,078
65,591
67,989
71,765
71,411
82,625
71,963
76,466
84,421
87,001
€ million
58,288
3.50/3.52
The BMW Group Strategy
2,630
2,300
Integration of top management
Risks
Connection to figures in financial statements
Environmental matters
Employee matters
Social matters
-
The BMW Group Strategy
Cornerstones of the Strategy
- Performance Indicators and Performance Management
The BMW Group Strategy
* Environmental Analysis
-
-
About This Report
The BMW Group Strategy
Environmental Analysis
Performance Indicators and Performance Management
7 Products
7 Production and Supplier Network
7 Risks and Opportunities
-
7 Risks and Opportunities
7 Organisation and Business Model
BMW Group Report 2023
Business model
- Position - What does the BMW Group stand for?
Performance Indicators and Performance Management
-> Managing sustainability
Products
-
-
Carbon Emissions
Reducing carbon emissions across the entire value chain
7 To Our Stakeholders
-
Dialogue with Stakeholders
-> Financial market player with sustainability credentials
7 EU Taxonomy
C6.1, C6.2, C6.3, C6.4, C6.4a, C6.5, C6.10, C7.1,
C7.2, C7.3, C7.3a, C-TO7.4, C7.5, C7.6, C7.6a, C-
T07.8, C7.9, C7.9a, C7.9b
C4.1, C4.1b, C4.2, C4.2a, C4.2b, C4.2c
325
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
NFS INDEX
Mandatory disclosure pursuant to § 289 c - e HGB
-
4,00/4.02
-
The BMW Group Strategy
B
A form of corporate financing involving the sale of receivables to
a financing company.
Asset-backed financing transactions
The number of all people on multi-year vocational training
courses at a BMW Group company (includes all of the consoli-
dated and non-consolidated companies in which the BMW
Group holds more than 50 % of the shares), with these training
courses consisting of practical and theory sections.
Apprentices
A
GLOSSARY AND EXPLANATION OF KEY FIGURES*
← = Q
Other Information
Glossary and Explanation of Key Figures
Remuneration Report
Beyond Value Chain Mitigation (BVCM)
Responsibility Statement and Auditor's Report
BMW Group Report 2023
330
3 Proposal by management. The dividend total may change before the date of the Annual General Meeting due to the share buyback and a resulting change in the number of shares entitled to receive a dividend.
2 Since the reporting year 2020, a new definition for workforce size has been applied ( Glossary). To enable better comparability, the value for 2019 was adjusted accordingly (2019 before adjustment: 133,778 employees). For the timeframe including and prior to 2018, the share of the employees that are no
longer reflected in reporting is about 7.5-8.0%.
1 The 2018 figures were adjusted due to the change in accounting policy in conjunction with the adoption of IFRS 16 (see Annual Report 2019, note 6 to the Group Financial Statements). In addition, prior year figures were adjusted due to changes in the presentation of selected items that are of minor
importance overall.
2.90/2.92
1,904
3.20/3.22
2,102
3.50/3.52
To Our Stakeholders Combined Management Report Group Financial Statements
Climate-related Risks and Opportunities
Beyond Value Chain Mitigation (BVCM) refers to all investments
and measures that a company takes in addition to its Science
Based Targets (SBTS) to reduce emissions outside its value
chain. This includes activities that avoid or reduce greenhouse
gas emissions as well as those that remove greenhouse gases
from the atmosphere and store them. BVCM is strongly recom-
mended by the Science Based Targets initiative (SBTI) to vali-
dated companies in addition to CO₂ reduction in their own value
chain. The BMW Group is committed to this reduction hierarchy
and already actively manages both direct and indirect carbon
emissions from its plants in line with the 1.5°C pathway set by
the Science Based Targets initiative (SBTI), which involves im-
plementing significant measures in our value chain, plus addi-
tionally engaging in BVCM to address emissions outside our own
value chain. We voluntarily back these initiatives without them
counting towards the BMW Group's CO₂ reduction targets.
It is also important to us that projects in the Global South create
a social benefit in line with the Sustainable Development Goals
(SDGs). These include, for example, initiatives that create health
benefits such as avoiding open fires in enclosed spaces.
Cornerstones of the Strategy
Performance Indicators and Performance Management
7 Employees and Society
* Environmental Analysis
7 Purchasing and Supplier Network
Respect for human rights
Combating corruption and bribery
Mandatory disclosure pursuant to Section 8 of the EU Taxonomy Regulation*
*Part of the Combined Management Report.
CO₂e is a unit of measurement used to standardise the climate
impact of various greenhouse gas (GHG) emissions, such as me-
thane or nitrous oxide. This is necessary because the individual
gases do not all contribute equally to the greenhouse effect. In
addition, the expert committee at the United Nations (Intergov-
ernmental Panel on Climate Change, IPCC) has defined "global
warming potential" (GWP). This is an index used to express
warming impact compared with CO₂ so that all GHGs are aggre-
gated. For example, over a period of 100 years, methane has 28
times the impact of CO2, while for nitrous oxide the impact is 265
times higher.
BVCM involves, for example, purchasing certificates on the vol-
untary carbon market. Criteria such as additionality, perma-
nence, and certification by independent institutions following in-
ternational standards (Gold Standard) contribute to the quality of
the certificates employed, thereby bolstering the efficacy of our
commitment beyond our internal value chain.
Carbon dioxide equivalents/CO₂e
Capital expenditure ratio (excluding right-of-use assets and
capitalised development costs)
Investments in property, plant and equipment and other intangi-
ble assets (excluding capitalised development costs) as a per-
centage of Group turnover.
Capital expenditure ratio (excluding capitalised
development costs)
Capitalised development costs as a percentage of research and
development expenditure.
Capitalisation rate
C
The sum of the balance sheet line items "Leased products" and
"Receivables from sales financing" (current and non-current), as
reported in the balance sheet for the Financial Services segment.
Business volume in balance sheet terms
A securitised debt instrument in which the issuer certifies its ob-
ligation to repay the nominal amount at the end of a fixed term
and to pay a fixed or variable rate of interest.
Bond
Investments in property, plant and equipment (excluding right-
of-use assets in accordance with IFRS 16) and other intangible
assets (excluding capitalised development costs) as a percent-
age of Group turnover.
7 Compliance and Human Rights
331
BMW Group Report 2023 To Our Stakeholders Combined Management Report
www.BMWGROUP.COM
EU Taxonomy - operating expenditure (OpEx)
Operating expenditure only comprises non-capitalised develop-
ment costs, maintenance and refurbishment costs for buildings,
repairs to property, plant and equipment, relevant IT costs in the
Financial Services segment, non-capitalised expenses relating
to short-term lease contracts, expenditure for low value assets,
and purely variable remuneration. The KPI figure calculated for
taxonomy-purposes is not used by the BMW Group for financial
reporting purposes.
Equity capital as a percentage of the balance sheet total.
Equity ratio
retirement working arrangements and who are in the non-active
phase of this model (the second part, following the active phase
in this model).
The number of people with temporary or permanent employ-
ment contracts who have opted for retirement via partial
Employees in the non-work phase of partial retirement
working arrangements
Until 2019, temporary staff, postgraduate students, interns, ap-
prentices, and people on extended sick leave or on sabbatical
were also included in this definition.
Since 2020, all people with active temporary or permanent em-
ployment contracts (as of 31 December in the year in question)
with the BMW Group (includes all of the consolidated and non-
consolidated companies in which the BMW Group holds more
than 50% of the shares) have been considered "employees of
the BMW Group". This excludes apprentices, interns, temporary
staff (students on work experience), temporary employees,
dormant/inactive employment contracts due to maternity leave,
sabbaticals, parental leave, long-term illness (as defined in the
country in question), those in inactive early retirement phase, and
employees accompanying their partner abroad.
Employees BMW Group
The BMW Group uses the terms battery electric vehicle (BEV) to
denote fully electric vehicles and plug-in hybrid vehicle (PHEV) to
denote vehicles that can be charged and also driven on a fully
electric basis.
Electrified vehicles
The effective tax rate is calculated by dividing the income tax ex-
pense by the Group profit before tax.
Effective tax rate
EBIT plus financial result.
EU Taxonomy - capital expenditure (CapEx)
EBT
EBIT margin
Earnings Before Interest and Taxes. This is comprised of reve-
nues less cost of sales, selling and administrative expenses and
the net amount of other operating income and expenses.
EBIT
← = Q
Other Information
Glossary and Explanation of Key Figures
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
334
Basic earnings per share are calculated by dividing the earnings
attributable to the shareholders of BMW AG for ordinary and
preference shares by the average number of shares in each cat-
egory. Earnings per share of preferred stock are computed on the
basis of the number of preferred stock shares entitled to receive
a dividend in each of the relevant financial years.
Earnings per share (EPS)
-
Profit/loss before financial result as a percentage of revenues.
E
Capital expenditure is calculated on the basis of IAS 16.73(e)(i)
and (iii) for property, plant and equipment, IAS 38.118(e)(i) for
intangible assets and IFRS 16.53(h) for leases. In accordance
with the definition of capital expenditure provided in Annex I of
the Commission Delegated Regulation (EU) 2021/2178 and
taking into account the adjustments made by Delegated Regula-
tion (EU) 2023/2486, the KPI figure used for taxonomy pur-
poses comprises additions to intangible assets, in particular cap-
italised development costs, additions to property, plant and
equipment as well as right-of-use assets in accordance with
IFRS 16, and leased-out products. Capital expenditure relating
to the sale of parts to external third parties or the delivery of parts
to cooperation partners are not taken into account.
Revenues are calculated in accordance with Article 2(5) of Di-
rective 2013/34/EU. Revenues comprise the income and earn-
ings reported in accordance with IAS 1.82(a). Revenues relating
to the sale of parts and components (e. g. after-sales business
excluding the provision of repair services) and the supply of pro-
duction components to third parties, insurance premiums, and
interest income on deposit-taking and credit business were not
The number of people with active employment contracts who are
absent from work, as permitted by law, before and after the birth
of a child (maternity protection) or due to parenthood, as pro-
vided for by law in the country in question (parental leave).
Maternity protection, parental leave
Management positions are positions at functional levels I to IV
below the Board of Management level.
Management positions
M
Cash and cash equivalents as well as marketable securities and
investment funds.
Liquidity
L
← = Q
Glossary and Explanation of Key Figures
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
EU Taxonomy - revenues
To Our Stakeholders Combined Management Report
335
The number of people completing voluntary or mandatory work
experience programmes at a BMW Group company (includes all
of the consolidated and non-consolidated companies in which
the BMW Group holds more than 50 % of the shares) while stud-
ying for a degree.
Interns
Gross profit as a percentage of Group turnover.
Gross profit margin
Acquired goodwill is considered an intangible asset. It corre-
sponds to the difference between the purchase price and the net
assets of the acquired business as measured at fair value.
Goodwill
G
Free cash flow is derived from cash flows from operating and in-
vesting activities. The cash flows from investing activities from
the purchase and sale of marketable securities and investment
funds is not included. Cash flows from the purchase and sale of
shares and the dividend payout from investments accounted for
using the equity method are included in the cash flows from in-
vesting activities.
Free cash flow (Automotive segment)
A hedge against exposures to fluctuations in the fair values of
balance sheet items.
Fair value hedge
F
included, as these economic activities are not classified as tax-
onomy-eligible.
BMW Group Report 2023
A new or used vehicle will be recorded as a delivery once handed
over to the end user. End users also include leaseholders under
lease contracts with BMW Financial Services and - in the US and
Canada – dealerships when they designate a vehicle as a service
loaner or demonstrator vehicle. In the case of used vehicles, end
users may include dealerships and other third parties when they
purchase a vehicle at auction or directly from the BMW Group.
Vehicles designated for the end user which suffer a total loss in
transit are also recorded as deliveries. Deliveries may be made
by BMW AG, one of its international subsidiaries, a BMW Group
retail outlet, or independent dealerships. The vast majority of de-
liveries and hence the reporting to BMW Group of deliveries -
are made by independent dealerships. In the US and Canada,
the period start and end dates for the reporting of deliveries de-
viate immaterially from the beginning and, respectively, end of
calendar years or calendar quarters and instead follow industry-
standard reporting calendars. In the German-language version
of the BMW Group Report, the terms "Auslieferungen" (deliver-
ies) and “Absatz" (sales) are used interchangeably.
Deliveries
D
This approach gives each vehicle built during the period under
review its specific CO₂e value for supply chain emissions. The to-
tal fleet value of CO₂e supply chain emissions is calculated by
adding up the CO₂e contributions of all vehicles produced in the
reporting year.
to assess the cells. In addition to the actual assembly sites of the
battery cells, the material compositions and related production
processes, it also accounts for the unique characteristics of the
cell chemistry (anode and cathode) as well as the emissions as-
sociated with supplier-specific energy consumption.
← = Q
Other Information
Glossary and Explanation of Key Figures
Remuneration Report
Responsibility Statement and Auditor's Report
Group Financial Statements
BMW Group Report 2023 To Our Stakeholders Combined Management Report
332
Given the significant impact of battery cell production on the ve-
hicles' total CO₂e emissions, a detailed calculation model is used
The CO₂e emissions of supply chains vary across different re-
gions of the world. For this reason, we allocate the production
sites of the vehicles to one of three regions: Europe, Asia or the
USA. We then calculate the emissions for the entire vehicle sup-
ply chain using the Sphera datasets that are valid for that region.
The particularly emission-intensive components, battery cells
and catalytic converter coating are specifically calculated based
on their actual production region, regardless of the vehicle's
manufacturing location.
The methodology outlined above depends on the established
"LCA for Experts" database (previously known as "GaBi") from
Sphera to ascertain CO₂e factors for energy, raw materials and
manufacturing processes. In this process, the current datasets
are consistently used, starting with the 2023 reporting year. Ret-
rospectively from 2019 until the release of the current datasets
at the end of February 2023, data from 2019 are used to calcu-
late CO₂e emissions.
For example, in the baseline calculation for 2023, there is a 520i
listed as a bill of materials vehicle, but no 520i Touring. To en-
sure that the latter is accurately represented, the calculated CO₂e
emissions for components like the drivetrain, wheels, seats and
so on remain unchanged, while the body values are multiplied by
a scaling factor when calculating the Touring model.
The bill of materials of the representative vehicles is divided into
sections (modules) according to functional criteria, and these are
assessed in terms of their total CO₂e emissions. Previously un-
assessed vehicle derivatives can now be custom-built using
these basic components, with different building blocks selected
based on the specific technical features of the target vehicles, in-
cluding engine type, all-wheel drive or body style. Components
that do not fit are scaled from existing ones. The scaling tech-
niques are based on empirical data derived from similar analyses
as well as on expert evaluations. This encompasses the scaling
of detailed bodywork calculations ranging from sedans to touring
models with identical engine specifications.
Share of the reported value attributable to the supply chain
For the vast majority of vehicle models produced that are not in-
cluded in the representative vehicles, there is no individual CO₂e
calculation available on a bill of materials basis. A modular scal-
ing calculation method has been developed to include these in
the overall result:
The initial calculation of the supply chain CO₂e emissions for a
representative selection of vehicles is based on their bill of mate-
rials. This selection reflects the range of vehicle classes (from
premium compact to luxury) and types of drive (petrol, diesel,
PHEV and BEV) produced during the period under review.
Baseline calculation of supply chain emissions
The indicator quantifies greenhouse gas emissions (CO₂e) pro-
duced during production (GHG Protocol Scope 3 upstream cate-
gory 1), including the transportation of purchased goods and ser-
vices for production ("inbound"), as well as the global vehicle dis-
tribution of BMW Group automobiles ("outbound") (collectively
GHG Protocol Scope 3 upstream category 4). Contrary to the def-
inition of the scopes of the GHG Protocol, the following are not
included: motorcycles, racing vehicles and aftersales products,
including their transport logistics, as well as purchased IT cloud
services and engineering or development services.
(LCA). However, it should be noted that this approach may not
be directly comparable with methods or values employed by
other companies. Due to a lack of data availability, various esti-
mates, assumptions and average values are used to determine
the key indicator. The aim is to improve the quality of the model
for calculating key metrics in future years. This will be achieved
by boosting transparency in supply chains and expanding the de-
tail of the model, all while maintaining consistency in calculations
over time.
A methodology tailored specifically for BMW was created to as-
sess the supply chain and logistics emissions in terms of their
CO₂e equivalents. Due to the absence of supplier-specific CO₂e
values throughout the entire supply chain, a model incorporating
industry averages and, when accessible, supplier-specific data is
used. This method draws upon components of ISO 14040/44
and follows common practice in preparing life cycle analyses
CO₂e emissions from the supply chain including transport
logistics per vehicle produced (Scope 3 upstream)
This key indicator is calculated from the direct and indirect car-
bon emissions of BMW Group locations relating to the number of
vehicles produced during the year under report. The carbon
emissions result from energy consumption in the BMW Group
plants as well as non-manufacturing sites. Electricity from on-
site renewable generation, Power Purchase Agreements for
green electricity and Energy Attribute Certificates (e.g. guaran-
tees of origin) are all taken into account. The conversion is based
on emission factors for electricity, district heating and fuels from
the German Association of the Automotive Industry (VDA) in the
most current valid version and occasionally local emission fac-
tors. This key indicator is the basis for measuring the strategic
target by 2030 with regard to Scope 1 and 2 emissions. The re-
porting indicator is t CO₂ per vehicle produced.
Carbon emissions from BMW Group locations per vehicle
produced (Scope 1 and 2)
The carbon emissions generated by a company are reported in
various categories. The Greenhouse Gas Protocol, a partnership
between the World Resources Institute (WRI) and the World Busi-
ness Council for Sustainable Development (WBCSD), distin-
guishes between Scope 1, Scope 2 and Scope 3 emissions,
based on their various sources. Whereas direct emissions (Scope
1) are generated within a company through the combustion of
fossil fuels, Scope 2 refers to the indirect emissions caused by
the consumption of electricity and heat from externally generated
sources of energy. Additional indirect (Scope 3) emissions are
generated in the upstream and downstream stages of the value
chain, for instance in the supply chain (upstream) and in the sub-
sequent use of products and services (downstream).
Carbon emissions: Scope 1 to Scope 3
← = Q
Other Information
Glossary and Explanation of Key Figures
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
For the representative vehicles, the CO₂e emissions of all in-
stalled components are calculated on the basis of their material
composition and related processing steps. Up to around 60,000
individual entries are evaluated in each case. The CO₂e value of
the relevant vehicle is calculated by adding these contributions
together.
The reduction in CO₂e emissions compared to the BMW Group's
baseline is the result of emission-reducing measures in the sup-
ply chain that were contractually agreed with suppliers and veri-
fiably implemented during the reporting year (e.g. electricity from
renewable sources, use of recycled materials). Agreements with
suppliers of aluminium and precious metals as well as high-volt-
age storage cells resulted in particularly high reduction contribu-
tions.
The CO₂e value for these components and materials before the
implementation of measures is initially determined using the
"LCA for Experts" database on the basis of the type and quantity
of material. The emission-reducing measures are then deducted.
The calculation of the effect is also carried out using industry av-
erage values from "LCA for Experts" for green electricity and sec-
ondary raw materials.
The total emission-reducing measures for all components and
raw materials in the vehicles produced in the reporting year that
are evaluated in this manner is subtracted from the baseline
value. This results in the share of supply chain CO₂e emissions in
the reporting value of the overall indicator. The methodology for
calculating the supply chain CO₂e emissions outlined above
marks a key improvement over the previous approach. This im-
provement allows for the inclusion of agreed-upon emission-re-
ducing measures at the level of individual components and raw
materials, among other factors. Until 2022, each vehicle in the
credit default insurance agreements, the party receiving the pre-
miums gives a commitment to compensate the bond creditor in
the event of default.
Financial swap agreements, under which creditors of securities
(usually bonds) pay premiums to the seller of the CDS to hedge
against the risk that the issuer of the bond will default. As with
Credit default swap (CDS)
The process of consolidating separate financial statements of
Group entities into Group Financial Statements, depicting the fi-
nancial position, net assets and results of operations of the
Group as a single economic entity.
Consolidation
Deep-discounted bonds with a term of less than one year.
Hedges against exposures to the variability in forecasted cash
flows, particularly in connection with exchange rate fluctuations.
Commercial paper
Cash flow hedges
Similar to "value at risk" (see definition below).
Cash flow at risk
permitted credit factors (e.g. supercredits and eco-innovations)
and standardised according to the WLTP (European) driving cy-
cle. These core markets account for more than 80% of the BMW
Group's sales. The calculated figures are increased by 10% to
account for possible discrepancies between cycle values and real
emissions, as required by the Science Based Targets initiative.
This indicator also includes the upstream emissions of the en-
ergy sources (fossil fuels and electricity used for charging), in line
with the well-to-wheel approach. This covers the entire impact
chain behind vehicle motion, i.e. from the generation and supply
of power to its conversion into drivetrain energy. This approach
also includes the environmental impacts associated with the pro-
duction of fuel and electricity. For example, to calculate the vol-
ume of emissions resulting from upstream electricity (drivetrain
energy supply), the BMW Group uses the energy report pub-
lished by the International Energy Agency (IEA; reference basis:
previous year) as a basis in order to assess the emissions asso-
ciated with the electricity mix in its core markets. The perfor-
mance indicator for reporting purposes is g CO₂ per kilometre
driven.
This indicator documents the progress made by the BMW Group
in its strategic objective of reducing carbon emissions during the
use phase including upstream emissions (drivetrain energy sup-
ply) by an average rate of at least 50% per kilometre driven by
2030 (base year 2019). For the purpose of this calculation, vol-
ume-weighted average fleet carbon emissions are calculated for
the core markets EU (27 EU countries including Norway and Ice-
land plus UK) (driving cycle: Worldwide Harmonized Light Vehi-
cles Test Procedure; basis: vehicle registrations), USA (driving
cycle: United States Combined; basis: production volume) and
China (driving cycle: Worldwide Harmonized Test Cycle, subject
to China-specific framework conditions for testing; basis: import
or local production volumes) before deduction of legally
Carbon emissions of the new vehicle fleet worldwide
including upstream emissions (Scope 3 downstream, well-
to-wheel)
The average carbon emissions of a manufacturer's fleet (use
phase) are calculated on the basis of the weighted average of
carbon emissions across all vehicles newly registered during the
reporting period. This is based on the volume of new registra-
tions by a manufacturer in the EU, including Norway and Iceland,
in the calendar year and the individual vehicle-specific carbon
emissions determined in accordance with the WLTP type test
procedure. The BMW Group's fleet carbon emissions figure, as
measured internally, includes a legally permitted allowance for
eco-innovations with minor significance. The performance indi-
cator for reporting purposes is g CO₂ per kilometre driven.
Carbon emissions of the new vehicle fleet in the EU (Scope 3
downstream, tank-to-wheel)
the recording of transport flows and their CO₂e assessment. In
line with the range of factors and data sources used for emis-
sions from 2022 onward, a retrospective assessment of
transport logistics emissions is carried out for the years 2019 to
2021, following the same methodology as from 2022 onward.
This involves using factory- or market-specific inbound and out-
bound CO₂e emissions data from 2022 for the vehicles produced
in each corresponding year. Vehicle variants from 2019 to 2021
that are no longer produced in 2022 will be supplemented on the
basis of existing derivatives with similar transport routes.
← = Q
fleet was allocated the supply chain CO₂e value of the most sim-
ilar vehicle from a small selection of vehicles that already had
TÜV-validated life cycle assessments available. The reporting
metric is then obtained by adding the transport logistics CO₂e
emissions, the calculation of which is described in the following
section.
An external service provider commissioned by BMW conducts
the verification of measures at affected suppliers and their sub-
contractors at the impacted manufacturing sites. A defined
method is used to ensure that the contractually agreed emis-
sions-reducing measures are implemented clearly and without
duplication in the reporting year. There are some limitations re-
garding the clear and non-repetitive allocation of material flows
with secondary raw materials. Due to the lack of regulatory man-
dates, there is currently neither a requirement for the recording
and documentation of material flows for secondary materials
across the supply chain (for example on delivery notes), nor is
there a government-operated/regulatory registry similar to that
of green energy certificates that facilitates the distinct allocation
of secondary materials to specific customers without duplication.
Therefore, the secondary material quota is confirmed using sys-
tem extracts from the relevant suppliers' Enterprise Resource
Planning (ERP) systems, along with details and evidence of sec-
ondary material procurement through mass balances. Further-
more, written confirmation is obtained from suppliers and n-tier
suppliers (via declarations of conformity) to clearly attribute sec-
ondary materials to BMW products, preventing any possibility of
double-counting with other customers.
Transport logistics' share of the reporting value
This indicator takes into account transport logistics emissions in
the reporting year. Firstly, inbound and outbound transport flows
are documented using IT-enabled billing and movement data to
calculate the CO₂e emissions in tonnes and the transport volume
in tonne-kilometres.
In inbound logistics (production supply), all transport flows of in-
dividual component parts for automobile manufacturing (BMW,
MINI and Rolls Royce) are considered. This includes
transportation from the Tier 1 supplier's shipping location to the
receipt of goods at individual production plants worldwide, in-
cluding partner plants and excluding contract manufacturing
sites. In outbound logistics (vehicle distribution), all transport
flows of new vehicles transported from the production sites
through compounds and national distributors to individual deal-
erships worldwide are considered. Exceptions include partial vol-
umes from partner plants.
N
CO₂e emissions are calculated for the gross weight (component
weight including packaging and shipping material) as well as the
specific vehicle weight and the distance travelled in kilometres.
This calculation is based on the respective CO₂e emission factor,
which varies depending on the technology and mode of transport
(road, sea, rail or air). The CO₂e emission factors used are de-
rived from contemporary standards such as the GLEC Frame-
work V3.0 and ISO 14083, supplemented by supplier-specific
values whenever possible.
CO₂e emissions for the years 2019 to 2021 were calculated in
previous corporate reports using a variety of emissions factors.
Between 2019 and 2022, the recording or assessment of CO₂e
from transport movements was consistently improved. Among
other things, a new IT system was introduced in 2022 to expand
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
Glossary and Explanation of Key Figures
In a second step, an average, derivative-specific inbound CO₂e
value is assigned to each vehicle produced from the CO₂e as-
sessed transport flows, based on plant location and type of drive,
and an outbound CO₂e value is assigned based on the factory-
market relationship. If inbound and/or outbound CO₂e values for
individual derivatives are missing in the recorded transport
streams (step 1), these are supplemented on the basis of exist-
ing derivatives with similar transport routes. Consequently, each
manufactured vehicle is allocated an inbound and outbound
CO₂e factor based on the production site and intended market.
The share of CO₂e emissions attributed to transport logistics
within the "supply chain and logistics emissions" metric is deter-
mined by aggregating the inbound and outbound CO₂e emis-
sions of all vehicles manufactured in the reporting year.
This ap-
proach applies to the CO₂e contributions from transport logistics
in the base year and in 2022.
Net Zero
333
Number of training participants
Group Financial Statements
To Our Stakeholders Combined Management Report
BMW Group Report 2023
338
Quarterly Statement to 30 September 2025
5 November 2025
Half-Year Report to 30 June 2025
31 July 2025
Annual General Meeting
14 May 2025
Quarterly Statement to 31 March 2025
7 May 2025
BMW Group Annual Conference
20 March 2025
Responsibility Statement and Auditor's Report
BMW Group Report 2024
2025
Quarterly Statement to 30 September 2024
6 November 2024
Half-Year Report to 30 June 2024
1 August 2024
Annual General Meeting
15 May 2024
Quarterly Statement to 31 March 2024
8 May 2024
BMW Group Annual Conference
21 March 2024
2024
FINANCIAL CALENDAR
Financial Calendar
20 March 2025
← = Q
Remuneration Report
← = Q
Reduction of Scope 1, 2 and 3 emissions (in line with the sci-
ence-based principles [SBTi]) to a residual level that corre-
sponds with achieving net zero emissions at global or sectoral
level in recognised 1.5°C scenarios or sectoral pathways (corre-
sponding to a maximum of 10% of the emissions of the chosen
base year). In addition, all remaining emissions are to be neutral-
ised by the net zero target date and beyond.
Neue Klasse
BMW VISION
7 www.bmw-motorrad.com
7 www.rolls-roycemotorcars.com
7 www.mini.com
7 www.bmw.com
Information about the various BMW Group brands is available at:
ir@bmwgroup.com
+49 89 382-1 46 61
Email
Fax
Telephone +49 89 382-2 53 87
INVESTOR RELATIONS
Other Information
Telephone +49 89 382-0
7 www.bmwgroup.com/ir
Investor Relations information is available directly at:
presse@bmwgroup.com
Email
+49 89 382-2 44 18
Fax
7 www.bmwgroup.com
Further information about the BMW Group is available online at:
PUBLISHED BY
Contacts
THE BMW GROUP ON THE INTERNET
Telephone +49 89 382-2 45 44
BUSINESS AND FINANCE PRESS
CONTACTS
Bayerische Motoren Werke
Aktiengesellschaft
80788 Munich
Germany
Other Information
+49 89 382-2 41 18
Responsibility Statement and Auditor's Report
336
Up to the financial year 2021, capital employed corresponds to
the sum of all current and non-current operational assets, less
ROCE in the Automotive and Motorcycles segments is measured
on the basis of relevant segment profit before financial result and
the average amount of capital employed - at the end of the last
five quarters - in the segment concerned. Capital employed cor-
responds to the sum of intangible assets, property, plant and
equipment and net working capital, the latter comprising inven-
tories and trade receivables less trade payables.
Return on capital employed (ROCE)
The engineering, IT and process expertise required for the (pre-)
development of hardware and software for all BMW Group prod-
ucts and services is combined at the Group's international re-
search and development locations.
Research and development locations
Research and development expenditure ratio
Research and development expenditure as a percentage of
Group turnover.
The sum of research and non-capitalised development costs and
investments in capitalised development costs not including the
associated scheduled amortisation.
Research and development expenditure
R
Group profit/loss before tax as a percentage of Group revenues.
Pre-tax return on sales
Group net profit as a percentage of Group revenues.
Post-tax return on sales
The number of people with active employment contracts who are
absent from work on grounds of illness for an extended period of
time (as defined in the country in question - in Germany, this
means an absence of more than 42 calendar days with a given
illness).
People on extended sick leave
Ratio of unappropriated profit of BMW AG in accordance with
HGB to profit attributable to shareholders of BMW AG, based on
the BMW Group's net profit for the year under IFRS. Until the
2021 financial year, the payout ratio corresponded to the ratio of
unappropriated profit belonging to BMW AG in accordance with
HGB to the net profit for the year of the BMW Group in accord-
ance with IFRS.
The number of employees of the BMW Group participating in fur-
ther education worldwide (includes all consolidated subsidiaries
of the BMW Group). Data is collated on the basis of direct input
by participants and, to a small extent, by extrapolation. It com-
prises the overall number of participants on training and qualifi-
cation courses, including e-learning courses.
Remuneration Report
0
Outlook
Unless specific ranges are specified, the BMW Group uses the
following terminology and ranges as a basis when forecasting
key performance indicators:
At previous year's level [-0.9 %/+ 0.9%]
BMW Group Report 2023
Slight increase
Slight decrease
Solid increase
P
Part time, full time
[+ 1.0 %/+ 4.9%]
[-1.0%/- 4.9%]
[+5.0 %/+ 9.9%]
[-5.0 %/-9.9%]
≥ + 10.0 %
≤ -10.0 %
Payout ratio
Moderate decrease
Significant increase
Significant decrease
To Our Stakeholders Combined Management Report
The number of employees (see definition of "Employees"), dis-
tinguishing between employees who have contractually stipu-
lated weekly working hours as prescribed by law, in a collective
wage agreement or by the company in question (full time) and
employees with a contractually stipulated reduction in their num-
ber of weekly working hours, which are thus less than the respec-
tive number of full-time working hours (part time).
Remuneration Report
W
Well-to-wheel
The well-to-wheel method takes into account the entire impact
chain behind vehicle motion - from the generation and supply of
drivetrain power to its conversion into energy. This approach also
includes the environmental impacts associated with the produc-
tion of fuel and electricity. For example, the BMW Group uses the
current energy report from the International Energy Agency (IEA;
reference basis: previous year) as the basis for calculating emis-
sions from electrified vehicles (provision of electrical energy). As
a result, this approach can be divided into the following two com-
ponents:
The well-to-tank method takes into account the carbon emis-
sions from the supply chain as well as the upstream fuel supply
from the oil well or the energy generation source. As such, this
approach considers the impact chain that arises until the energy
is supplied to the vehicle, but does not include the vehicle itself.
By contrast, the tank-to-wheel method takes into account the im-
pact chain of energy received (fuel, electricity) until it is converted
into kinetic energy by the vehicle. As such, this approach consid-
ers the impact chain that arises during the use of the vehicle.
Contractually stipulated weekly hours of work.
A measure of the potential maximum loss in value of an item dur-
ing a set time period, based on a specified probability.
Glossary and Explanation of Key Figures
337
BMW Group Report 2023
To Our Stakeholders
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
Group Financial Statements
← = Q
Value at risk
Working hours/working times
The number of people employed on an hourly basis as tempo-
rary staff at a BMW Group company (includes all of the consoli-
dated and non-consolidated companies in which the BMW
Group holds more than 50 % of the shares) while studying for a
degree.
Return on equity (ROE)
liabilities that generally do not incur interest. The deductible cap-
ital consisted of capital shares that are available to the opera-
tional business, largely without interest.
V
RoE in the Financial Services segment is calculated as segment
profit before taxes, divided by the average amount of equity cap-
ital at the end of the last five quarters - attributable to the Fi-
nancial Services segment.
S
Sabbatical
Spending on employee training and development
Investment in training comprises all costs incurred in the report-
ing year for vocational training within the consolidated subsidiar-
ies of the BMW Group, including personnel costs for trainers and
apprentices as well as other costs and investments related to vo-
cational training. The investments in further training are calcu-
lated for all consolidated subsidiaries of the BMW Group. The in-
vestments in further training are calculated for all consolidated
subsidiaries of the BMW Group. This includes preparation and
implementation costs, opportunity costs and investments made
in order to provide such further education. These costs also in-
clude notional depreciation, measured on the basis of inventory
lists.
The number of people with active employment contracts who are
absent from work for at least one month and for not more than
six months due to an employee-funded leave of absence ("sab-
batical").
Other Information
T
Temporary employees
People who the BMW Group (includes all consolidated and non-
consolidated companies in which the BMW Group holds more
than 50% of the shares) has hired from a temporary employ-
ment agency to work on a temporary basis.
Temporary staff/working students
Low
85.20
73.30
55.20
High
55.05
79.55
82.00
32.50
67.85
58.85
51.60
47.54
KEY DATA PER SHARE IN €
6.00²
Year-end closing price
Common stock
Dividend
57.60
Stock exchange price in €¹
68.34
943
99.32
112.90
8.50
95.89
76.68
77.75
85.80
69.13
37.66
1,449
58.70
105.00
80.15
Number of issued shares in 1,000
58,920
60,844
59,404
57,689
56,867
Shares bought back as of reporting date in 1,000
89.95
5.80
2 Proposed by management.
2.50
Equity 5,6
141.42
134.85
93.26
90.92
1 Xetra closing prices.
3 Weighted average number of shares for the year.
4 Stock weighted according to dividend entitlements.
5 The key figure is calculated without the repurchased shares.
6 From the 2022 financial year, the equity of BMW AG shareholders will be used for the calculation.
52
37
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
73.14
Other Information
3.90
5.15
9.61
17.14
Preferred stock
6.02²
8.52
5.82
1.92
2.50
Earnings per share of common stock³
17.67
27.31
1.90
18.77
7.47
Earnings per share of preferred stock"
17.69
27.33
18.79
5.75
7.49
Free cash flow Automotive segments
10.96
5.73
72.23
→ Media
83.38
drives, trade shows
Neighbourhood talks, plant visits, press
conferences
→ Local stakeholders
One-to-one meetings / dialogues, answering
queries
→ Civil society and NGOs
7 GRI Index: 2-29
35
BMW Group Report 2023
To Our Stakeholders
Combined Management Report Group Financial Statements
BMW Group and Capital Markets
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
BMW GROUP AND CAPITAL MARKETS
RATINGS REMAIN AT HIGH
LEVEL
These above-average credit ratings are testimony to BMW AG's
excellent creditworthiness. Accordingly, BMW AG enjoys good
access to international capital markets and benefits from attrac-
tive refinancing conditions.
Outlook
Dialogue as part of press tours, press releases,
informational events on new products, test
→ Science
events with students
Visits to universities, lectures, discussions, dialogue
←=Q
topics for the Company
→ Political decicion makers
Dialogue with employees and managers,
employee survey, internal media
→ Employees
Dialogue, conferences and technology workshops
with investors and analysts
→ Capital market
Standard
Dialogue as part of branch initiatives,
presentations, supplier risk assessment
→ Suppliers
Dialogue with market and importer dealership
organisations
→ Business partners
Participation of Company experts in committees
and working groups, memberships in initiatives
and associations
→ Networks and associations
BMW Group
in dialogue
joint events, training sessions,
88.49
Moody's¹
A2
COMMON STOCK
Number of issued shares in 1,000
Shares bought back as of reporting date in 1,000
Stock exchange price in €¹
Year-end closing price
High
Low
PREFERRED STOCK
2023
2022
2021
2020
2019
579,796
601,995
601,995
601,995
601,995
4,218
15,312
100.78
BMW AG Stock
The Board of Management and the Supervisory Board will pro-
pose to the Annual General Meeting that the unappropriated
profit of BMW AG amounting to € 3,802 million (2022:
€ 5,481 million) be used to pay a dividend of € 6.00 for each
share of common stock entitled to receive a dividend (2022:
€ 8.50) and a dividend of € 6.02 for each share of preferred
stock entitled to receive a dividend (2022: € 8.52) and to transfer
the remaining amount to other revenue reserves. The payout ra-
tio (unappropriated profit of BMW AG in accordance with HGB in
relation to the Group net profit attributable to shareholders of
BMW AG in accordance with IFRS) for 2023 therefore stands at
33.7% (2022: 30.6%).
A HIGH LEVEL
DIVIDENDS ONCE AGAIN AT
A
P-1
A-1
stable
stable
GOOD PLACEMENT IN
SUSTAINABILITY RATINGS
The BMW Group again achieved a good ranking in prestigious
sustainability ratings in 2023, confirming its strong position in
this respect. The BMW Group has an AA rating from MSCI ESG,
a score of 24.8 from Sustainalytics, and a C+ rating and Prime
status from ISS ESG.
BMW AG continues to have one of the best credit ratings of any
automobile manufacturer. In 2023, the rating agencies Moody's
and Standard & Poor's (S&P) both confirmed BMW AG's high in-
vestment-grade credit ratings within a challenging market envi-
ronment. Moody's long-term rating remains at "A2 with stable
outlook", while the short-term rating is unchanged at "P-1".
S&P's long-term rating remains at "A with stable outlook", with a
short-term rating of "A-1".
The credit ratings reflect BMW's continued strong operating per-
formance. The credit rating is also backed up by the Company's
solid capital structure, balanced financial policy and solid liquidity
position. Moreover, the increasing proportion of Group sales of
all-electric vehicles is seen as a positive factor. With this profile,
the rating agencies view BMW AG as well prepared to master the
numerous challenges arising in conjunction with the transfor-
mation of the automotive industry and in terms of future macro-
economic developments (including volatile prices, supply bottle-
necks, geopolitical upheavals, inflation and rising interest rates).
& Poor's²
Company rating
Long-term debt
Short-term debt
² S&P scale for long-term ratings: AAA to D. S&P scale for short-term ratings: A-1 to D.
36
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
BMW Group and Capital Markets
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
1 Moody's scale for long-term ratings: Aaa to C. Moody's scale for short-term ratings: P-1 (Prime-
1) to NP (Not Prime).
38
Russia
78
Other Information
LOCATIONS WORLDWIDE
.
Sales subsidiaries and
7
Argentina*
14 Thailand
* Sales locations only.
■
Financial Services
8
South Africa
15 Malaysia
1
Headquarters
9
provided to political decision makers on relevant
16 Singapore*
2
Remuneration Report
Canada
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders
The MINI brand stands for maximum driving pleasure in the pre-
mium compact segment. The all-electric MINI Cooper SE* re-
mained the brand's best-selling model in the year under report.
When it unveiled the "New MINI Family" in the autumn of 2023,
the brand heralded the start of a new all-electric future focused
on the digital experience, innovative technologies and the unmis-
takable driving pleasure that comes from driving a MINI. In spring
2024, the MINI Aceman will celebrate its world premiere as the
first all-electric crossover model.
The Rolls-Royce brand is steeped in tradition and offers automo-
biles in the ultra-luxury class, with a focus on exclusive service
and meeting bespoke customer specifications. The luxury brand
is en route to the all-electric age after launching its first BEV
model, the Rolls-Royce Spectre*, at the end of 2023.
The global sales network of the BMW Group's automobile busi-
ness currently comprises more than 3,500 BMW, 1,600 MINI
and 147 Rolls-Royce dealerships. Automotive segment
Motorcycles segment
The BMW Group is also pursuing a consistent electrification
strategy in the premium motorcycles segment. In its centenary
year, the BMW Motorrad brand set a new milestone in the pre-
mium segment with the all-electric eParkourer CE 02 from the
Urban Mobility segment. BMW Motorrad offers a range of vehi-
cles in the Sport, Tour, Roadster, Heritage and Adventure cate-
gories. Currently, BMW motorcycles are sold by more than 1,200
dealerships and importers in over 90 countries worldwide.
7 Motorcycles segment
Financial Services segment
The BMW Group is a leading provider of financial services in the
automotive sector. It offers these services in more than 50 coun-
tries worldwide via subsidiaries and cooperation arrangements
with local financial service providers and importers. The Financial
Services segment's main line of business comprises credit fi-
nancing and the leasing of BMW Group brand automobiles and
motorcycles to retail customers.
Operating under the brand name Alphabet, the BMW Group is a
partner in the international multi-brand fleet business. Its ser-
vices consist mostly of vehicle fleet financing for large customers
and comprehensive management services for corporate car
fleets, including support of customers' sustainable and environ-
mentally friendly fleet management. Financial Services segment
R
LOCATIONS
Global overview
The BMW Group operates on a
worldwide
basis. The
BMW Group's largest automobile and motorcycle markets are lo-
cated in Europe, particularly in Germany and the United Kingdom
(UK), as well as in the USA and China.
* Consumption and Carbon Disclosures.
40
40
BMW Group Report 2023
Combined Management Report
Overview of the BMW Group
10 India
3
USA
BMW Group plant Araquari, Brazil
BMW Group plant Chennai, India
BMW Group plant Manaus, Brazil
BMW Group plant Rayong, Thailand
BMW Group plant Rosslyn, South Africa
BMW Group plant San Luis Potosí, Mexico
BMW Group plant Spartanburg, USA
BMW Brilliance Automotive, China (3 plants)
Spotlight Automotive, China (Joint operation)
Partner plants outside Europe
Partner plant, Chongqing, China
Partner plant, Chu Lai, Vietnam
Partner plant, Hosur, India
Partner plant, Jakarta, Indonesia
Partner plant, Cairo, Egypt
Partner plant, Kulim, Malaysia
Research and Development outside Europe
↑
= Q
BMW Group Designworks, Newbury Park, USA
BMW Group Technology Office USA, Mountain View, USA
BMW Group Engineering and Emission Test Center, Oxnard, USA
BMW Group Design, Technology and ConnectedDrive Lab,
Shanghai, China
BMW Group Development China, Beijing, China
BMW Group Development and Technology Office, Tokyo, Japan
BMW Group Development USA, Woodcliff Lake, USA
BMW Group IT Technology Office, Greenville, USA
19
BMW Group IT Technology Office, Nanjing, China
BMW Group IT Technology Office, Singapore
BMW Group IT DevOps Hub, Chennai, India
BMW Group IT DevOps Hub, Rosslyn, South Africa
BMW do Brasil Entwicklung, Araquari, Brazil
BMW Group Technology Office Tel Aviv, Tel Aviv, Israel
BMW Group R&D Center Seoul, Seoul, South Korea
BMW Group Prototype Testing, Rosslyn, South Africa
BMW Brilliance Automotive, Shenyang, China
Production outside Europe
ㅁ
◉
Π
11 China
4
Mexico
12 South Korea
17 Indonesia*
18 Australia
19 New Zealand
5
United Arab Emirates
← = Q
13 Japan
Brazil
41
Sales subsidiaries and Financial
Services locations worldwide
32
Production and assembly plants
ANO
17
Countries with research
and development locations
6
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Financial Performance
52
General and Sector-specific Environment
55 Overall Assessment by Management of the Financial Year
66
56
Comparison of Forecasts with Actual Outcomes
57 Financial Position
100 Electromobility
104 Production and Supplier Network
104 Production Network
107 Circular Economy, Resource Efficiency and Renewable Energy
111 Purchasing and Supplier Network
115 Employees and Society
115 Employer Attractiveness and Employee Development
118 Health and Performance
120 Diversity, Equal Opportunity and Inclusion
66
Course of Business and Segments
52
Performance Indicators and Performance Management
47
Cornerstones of the Strategy
EU Taxonomy
38
Organisation and Business Model
90
Products
38
Segments
90
Innovation, Digitalisation and Customer Orientation
74
39
95
Product Quality and Safety
42
The BMW Group Strategy
97
Carbon Emissions
42
Environmental Analysis
43
Locations
Overview of the BMW Group
Comments on the Financial Statements of BMW AG
123 Outlook
Electric, digital and circular - for the BMW Group, these are the
keys to individual mobility with a clear focus on sustainability.
The BMW Group is leading the way in shaping tomorrow's mo-
bility with its brands' innovative products. The Vision Vehicle
7 BMW VISION Neue Klasse marks the first time that all three areas -
electromobility, digitalisation and circularity - have been brought
together and provides a look ahead at the completely new model
generation of the NEUE KLASSE.
Bayerische Motoren Werke Aktiengesellschaft (BMW AG), based
in Munich, Germany, is the parent company of the BMW Group.
The BMW Group comprises BMW AG itself and all subsidiaries
over which BMW AG has either direct or indirect control List of
Investments. The BMW Group is subdivided into the 7 Automotive,
Motorcycles and Financial Services segments and the Other Entities
segment. Presentation of segments BMW AG assumes central re-
sponsibility for the management of the Automotive, Motorcycles
and Financial Services operating segments.
At 31 December 2023, the BMW Group employed a workforce
of 154,950 people worldwide.
Automotive segment
With its automobile brands BMW, MINI and Rolls-Royce, the
BMW Group caters to a wide range of customer requirements.
The essence of the BMW brand lies in the seamless interplay be-
tween components, which provide the distinctive driving dynam-
ics synonymous with the brand. An extensive and attractive
product range with a variety of drivetrains - from purely electric
drives (BEV¹) and modern plug-in hybrids (PHEV²) to highly effi-
cient combustion engines - reflects BMW's technology-oriented
approach. The product range includes automobiles ranging from
the premium compact class to the luxury class. The range of ve-
hicles in the various classes is rounded out by the innovative
high-performance automobiles in BMW M's high-performance
class.
C4420
B.CH264SE
14 496E
3
HY73 EZC
1 Battery Electric Vehicle Electrified Vehicles.
2 Plug-in Hybrid Electric Vehicle Electrified Vehicles.
37 Consumption and Carbon Disclosures.
39
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Overview of the BMW Group
Group Financial Statements
The BMW Group develops and manufactures innovative pre-
mium automobiles and motorcycles. Its BMW, MINI, Rolls-Royce
and BMW Motorrad brands are among the best-known in the
world. The BMW Group occupies leading market positions in
both the premium segment and the financial services sector.
SEGMENTS
ORGANISATION AND
BUSINESS MODEL
OVERVIEW OF THE BMW GROUP
126 Appropriateness and Effectiveness of the Internal Control System
and Risk Management System
127 Risks and Opportunities
127 Risk and Opportunity Management
130 Material Short-term Risks and Opportunities
137 Climate-related Risks and Opportunities
141 Summary and Outlook
142 Compliance and Human Rights
146 Internal Control System
147 Disclosures Relevant for Takeovers and Explanatory Comments
122 Corporate Citizenship
02
MANAGEMENT REPORT
38
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Overview of the BMW Group
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
COMBINED
Point of contact for questions on policy, information
113.60
social media, trade fairs, mass media
Mandates
Serviceplan Group Management SE*
Wayfair Inc.
-
SIBYLLE WANKEL² (b. 1964)
Member since 2022, appointed until the AGM 2024
Managing Director and First Representative
of IG Metall's Munich Office
Mandates
KraussMaffei Group GmbH*, Deputy Chairwoman
MAN Truck & Bus SE*
Note: Dr hc Klatten indirectly holds all shares in ALTANA AG and a significant non-controlling inter-
est in SGL Carbon SE; she is the sole shareholder of UnternehmerTUM GmbH. The mandates at
SprinD GmbH and UnternehmerTUM GmbH are primarily an expression of her corporate citizenship.
JENS KÖHLER1 (b. 1964)
Member since 2021, appointed until the AGM 2024
Chairman of the BMW AG Works Council Leipzig
PROF DR DR HC CHRISTOPH M. SCHMIDT (b. 1962)
Member since 2021, elected until the AGM 2025
President of RWI - Leibniz-Institute of Economic Research
Essen, University Professor
Member since 2020, elected until the AGM 2025
Member of Supervisory Boards
Mandates
Thyssen Vermögensverwaltung GmbH*
GERHARD KURZ³ (b. 1963)
Member since 2022, appointed until the AGM 2024
Head of Corporate Quality at BMW AG
Employee of the enterprise.
2 Union representative.
Executive employee of the enterprise.
Not listed on the stock exchange.
BMW Group mandate.
Group mandate (other).
- Memberships on other mandatory supervisory boards.
- Memberships on comparable boards in Germany and abroad.
32
Basalt-Actien-Gesellschaft*
ANKE SCHÄFERKORDT (b. 1962)
Member Since 2012, elected until the ACM 2024
DR DOMINIQUE MOHABEER¹ (b. 1963)
→ Customers
31
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Composition of the Board of Management and Supervisory Board
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
JOHANN HORN² (b. 1958)
Member since 2021, appointed until the AGM 2024
Union Secretary
Mandates
Siemens Healthcare GmbH*
ANDRÉ MANDL¹ (b. 1984)
Member since 2022, appointed until the AGM 2024
Chairman of the BMW AG Works Council Regensburg/
Wackersdorf
DR VISHAL SIKKA (b. 1967)
Member since 2019, elected until the AGM 2024
Mandates
GSK plc.
Oracle Corp.
DR HC SUSANNE KLATTEN (b. 1962)
Member since 1997, elected until the AGM 2024
Entrepreneur
Mandates
ALTANA AG****, Deputy Chairwoman
SGL Carbon SE, Chairwoman (until 9 May 2023)
SprinD GmbH*
UnternehmerTUM GmbH*, Chairwoman
32
BMW Group Report 2023
CEO and Founder, Vianai Systems, Inc.*
Combined Management Report
To Our Stakeholders
Dialogue with Stakeholders
Combined Management Report
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Financial market player with sustainability credentials
Regular, in-depth communication with capital market players has
always been given a high priority within the BMW Group. The
BMW Group kept investors, analysts and rating agencies up to
date again in 2023 with its regular quarterly and annual report-
ing. The BMW Group has stepped up its communication with in-
vestors who consider sustainability criteria in their investment
decisions in the past few years and now meets this group's in-
formation needs with in-person and virtual ESG conferences, in
addition to individual and group meetings. The Group's commu-
nication focused on the further development of the business
model, digitalisation and other technology trends in the automo-
tive industry, sustainability in the supply chain and the ramp-up
of electromobility. In 2023, the Group also focused on measuring
the carbon footprint of its pension plan assets in the UK and Ger-
many, and validating the data available for this purpose. The
7 TCFD Report was created for the UK BOPS* Plan, reiterating the
target to achieve carbon neutrality for the scheme's asset port-
folio by 2050.
The volume of non-liquid pension plan assets invested in our var-
ious impact funds continues to grow according to schedule, with
several new subscriptions exercised in the form of fund-based
investments. The investments made to date in this area relate
not only to climate protection, but also to other Sustainable De-
velopment Goals (SDGs) set out by the UN. Investments that
have a beneficial effect on the climate are at the forefront of the
impact funds.
Outlook
The BMW Group will continue to interact closely and construc-
tively with its stakeholders and develop existing dialogue oppor-
tunities in 2024, and will continue to maintain active dialogue
with capital market players such as investors, financial analysts
and rating agencies. As in previous years, our activities will in-
clude direct dialogue as well as participation in in-person and vir-
tual ESG conferences.
Moreover, plans are in place for the coming year to expand the
scope of recording the carbon emissions associated with those
investments, with the primary aim of reliably assessing and
transparently documenting the compatibility of our investments
with the climate goals enshrined in the Paris Agreement. To the
extent possible, our aim is to take account of non-liquid invest-
ments in the Group's reporting on sustainability, or at least for all
such investments to be reviewed from a sustainability perspec-
tive.
The Board of Management's collaboration with
stakeholders to identify and manage impacts
The Board of Management keeps up to date with stakeholder
feedback and positions through a variety of channels, for exam-
ple in regular Board meetings, in direct dialogue with stakeholder
groups (such as investors or political decision makers) and
through briefings conducted by BMW Group departments, espe-
cially prior to attending major events such as OECD conferences
or the Group's Annual General Meetings. The Chairman of the
Supervisory Board also maintains regular contact with stake-
holders. The members of the Supervisory Board attend the An-
nual General Meeting, and many of them also interact with stake-
holders as part of their other activities and mandates.
Approach taken to engage stakeholders
The BMW Group continuously communicates with a large num-
ber of different stakeholder groups at all locations and in all mar-
kets. Appropriate forms and methods of engagement are se-
lected, depending on the situation.
*BMW Operations Pension Scheme.
34
To Our Stakeholders
Dialogue with Stakeholders
Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Stakeholder groups and forms of dialogue
Surveys (including a corporate reputation study),
To Our Stakeholders
Dialogue with Stakeholders
BMW Group Report 2023
33
BMW Group Report 2023
The BMW Group's involvement in associations ranges from
board memberships in association bodies to active participation
in working groups as well as simple observer status. Our goal is
to coordinate our approach with the respective associations on
positions regarding relevant strategic issues. If the BMW Group
identifies discrepancies between association and Company po-
sitions, the Company works with the association concerned with
the aim of bringing the positions closer together. The BMW
Group sees its role as sharing its corporate opinions as part of
the associations' policy-forming process. In this way, we are able
to participate in discussions on key strategic issues such as cli-
mate protection, human rights, the circular economy, decarboni-
sation with a view to achieving the Paris climate targets, and
transparent supply chain management.
Group Financial Statements Responsibility Statement and Auditor's Report
A comprehensive overview of the BMW Group's key political po-
sitions and activities can be found at 7 Advocacy, a new section of
the website made available in May 2023 which goes beyond and
replaces the previous Climate Commitment Report.
Remuneration Report
Other Information
← = Q
DIALOGUE WITH STAKEHOLDERS
Stakeholder engagement
Key topics in 2023
The BMW Group's interaction with stakeholders includes topics
brought to its attention from outside the Group as well as those
in which it proactively engages in dialogue. This combination re-
sults in a comprehensive spectrum of topics:
-
The Paris Climate Agreement and climate neutrality goal of
the BMW Group
Emissions limits with a focus on technological diversity in
terms of drivetrain technologies and vehicle concepts
Hydrogen as a potential energy storage for electric
drivetrain systems
Circular design and use of secondary materials (particularly
in relation to battery recycling)
The BMW Group operates within a highly interconnected, com-
plex world. Its business activities impact the environment in
which it operates, and can have both a direct and an indirect
bearing on the interests of a wide variety of stakeholders. Con-
versely, societal trends and developments can influence many
aspects of the Group's business activities. Against this backdrop,
the BMW Group maintains a continuous dialogue with its stake-
holders worldwide. GRI Index: 2-29
Supply of critical raw materials
The BMW Group maintains an active, open and transparent dia-
logue with decision makers and representatives of politics, trade
unions, associations and non-governmental organisations
(NGOs), with a view to playing a constructive and transparent
role in helping to shape the general political framework to the ex-
tent that it concerns the Group's business activities. The
BMW Group is a member of numerous associations in various
countries. As a rule, membership and commitment are voluntary.
Active crisis management regarding the geopolitical
situation and energy supply
In certain cases, however, participation may also be based on
statutory requirements.
Participation in public policy development and work in
associations
The BMW Group XChange encompasses the well-established
forms of events organised by the Group, such as the BMW Group
Dialogues and the rad°hub, providing the appropriate platforms
to encourage dialogue with a variety of target groups. The for-
mats selected usually take place several times a year. The results
of these stakeholder dialogues are documented and incorpo-
rated in the Group's strategic considerations. GRI Index: 2-12
Establishment of a new site in Germany to assemble high-
voltage batteries
Increased transparency in the sustainability indicators
provided in product information
BMW Group Xchange
Social responsibility for employees
Sustainable financing, EU taxonomy and sustainability
reporting standards, greenwashing
standards and respect for human rights, especially
regarding the procurement of raw materials for
electromobility applications
Compliance with statutory due diligence obligations in
supply chains, particularly environmental and social
To Our Stakeholders
*Standard industry definition according to the Society of Automotive Engineers (SAE): Five levels
of automated driving.
Transitioning to the specific details of the BMW Group strategy,
the BMW Group Impact broadens the Company's long-term stra-
tegic vision and underscores its ambition to contribute to broader
societal development. "We make individual mobility more hu-
man, intelligent and responsible - creating an inspiring future for
all of us."
The BMW Group's strategy is oriented to its corporate purpose:
"The BMW Group exists to move body, heart and mind."
It is the driving force, the guiding principle and the orientation for
our employees, and our commitment to our active role in society.
Its long-term focus guides us purposefully through the extensive
transformation of the entire automotive industry and beyond.
BMW Group Strategy
BMW Group Report 2023
With this in mind, the BMW Group's corporate strategy
(BMW Group strategy) defines the strategic framework and lays
the foundation for the Company to maintain a consistent and
market-oriented focus on profitability, growth and sustainability,
even in an increasingly dynamic environment. The BMW Group
strategy outlines targets in four areas: position, direction, strate-
gic approach and collaboration.
Combined Management Report
The BMW Group Strategy
Position
Remuneration Report
Other Information
← = Q
Direction
Strategic approach
CORNERSTONES OF THE
STRATEGY
Do Do
Do
Group Financial Statements Responsibility Statement and Auditor's Report
In urban areas within the European Union, infrastructure bottle-
necks and selective reallocation of road space are likely to result
in increased traffic congestion and reduced accessibility. Simul-
taneously, there is an increasing trend towards policies that dis-
courage car use in city centres. The planned deployment of smart
city technologies would, however, primarily affect cities in China.
← = Q
Politics
43
Collaboration
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
The BMW Group Strategy
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
industrialisation of digital technologies, innovative usage con-
cepts for stationary and moving vehicles are gaining importance.
Politics and regulations are narrowing the scope for action across
the entire automotive value creation model. There is an increas-
ing variety of legislation in all regions of the world.
Technology
Alongside digitalisation, development of automated/autono-
mous driving remains a key expectation for the future of mobility.
Initial offerings of Level 4* features are expected to launch in the
market before 2030, although widespread adoption is expected
to occur only after 2030. Products
The acceleration of electromobility worldwide continues to be an
important prerequisite on the path to climate neutrality, although
the pace of adoption is expected to vary regionally. In the long
term, there will be a parallel range of electric vehicles and com-
bustion engine vehicles available worldwide. However, the num-
ber of all-electric models in the automotive industry as a whole is
expected to continue to increase. Addressing remaining uncer-
tainties, including regulations, the swift and widespread develop-
ment of charging infrastructure and the availability of raw mate-
rials will be essential for the future expansion of this sector. It is
necessary to increase the pace at which capacities are expanded
in order to meet the ever-increasing demand for climate-neutral
and green energy across industries. The share of regenerative
energies in the energy mix is on the rise, increasing the volatility
of the entire energy supply and making it increasingly difficult to
maintain the stability of networks. Due to these factors and the
limited capacities of distribution networks, every effort needs to
be continued to ensure that electromobility is a long-term suc-
cess. Electromobility
Environment
As governments around the world work to transpose the goals of
the Paris Climate Agreement's carbon reduction targets into na-
tional laws, an ambitious orientation towards climate policy will
serve as an important basis for successful action for businesses.
It is equally vital to prepare for the consequences of current and
anticipated changes brought about by climate change, which
create a tangible urgency to take action. The role of hydrogen as
an energy source is set to undergo a fundamental shift, propelled
by the global imperative for decarbonisation.
Business
Business and the environment are closely linked and influence
each other. Thus, alongside carbon emissions, resource effi-
ciency will also gain in importance. The demand for secondary
materials and recycling is also rising, for instance, due to quota
requirements. Simultaneously, this development is giving rise to
cross-industry initiatives and opportunities for new business
models. Circular Economy, Resource Efficiency and Renewable Energy
Competition among various political systems is a dominating
force in international politics, influencing changes in international
trade flows using instruments like sanctions, tariffs and subsi-
dies. The need to secure supply chains is intensifying due to the
dual challenges of climate change and geopolitical risks.
For a technology-based company like the BMW Group, general
developments in this area are of particular importance. This area
is undergoing constant change, with the market environment
evolving dynamically and new collaborative models emerging.
New solutions, particularly in artificial intelligence, are emerging
and are finding applications across all aspects of life. Modern ve-
hicles are already one of the most complex digital items owned
by consumers. Vehicle requirements are also increasingly influ-
enced by the digital ecosystems that customers interact with
every day. Automobiles should be a reliable source of support in
everyday life, fit seamlessly into a person's living environment
and create a holistic overall experience. Software updates with
further functional developments are expected and generally be-
coming standard. Innovation, Digitalisation and Customer Orientation
Position -
אם
With its inspiring and innovative products, the BMW Group is
committed to first-class individual mobility and contributes to
sustainable development. It aims to find the right balance be-
tween business, the environment and society. The key areas of
focus within the strategy are electrification, digitalisation and
sustainability or circularity. This enables us to seamlessly merge
enjoyment and responsibility, without compromising, and to
achieve our growth and profitability objectives.
What drives the BMW Group?
The BMW Group offers exciting products for current and future
generations and secures its independence as a company by
maintaining a high level of profitability. The BMW Group is shap-
ing the future of sustainable mobility with its passion and strong
capacity for innovation. Thanks to its exciting products, the BMW
Group is able to achieve maximum customer satisfaction and
brand strength, and thus grow its market share.
Economic performance is a very important aspect of our corpo-
rate management system and is anchored in our objective of har-
nessing growth potential and securing our profitability targets.
This is supported by our ambitious financial standards, which are
linked to the strategic key figures EBIT margin in the Automotive
segment (between 8 and 10%), ROCE in the Automotive seg-
ment of at least 18% and an EBT margin in the Group of more
than 10%. Performance Indicators and Performance Management
The quality and reliability of all of our products and services are
the critical drivers for customer satisfaction, enthusiasm and the
economic success of the BMW Group. We are therefore commit-
ted to a comprehensive approach to quality, centred on deliver-
ing the best possible customer experience. The "Mission Quality"
initiative was launched across the Company in 2023. As a key
area of focus for the Company, the initiative promotes the
strengthening of quality awareness and focuses on the individual
contributions of all employees.
Digitalisation is consistently extended beyond the vehicle
Innovation, Digitalisation and Customer Orientation, encompassing both
corporate and customer processes, as well as along the automo-
tive value chain, enhancing the resilience and business agility of
the BMW Group. There are corresponding initiatives in all
areas of the Company. Our "Digital Process & Impact" initiative
is an example of commitment to significantly accelerating the
digitalisation of our internal processes and operations across the
Company, harnessing digital potential in every area through the
use of digitalised process management. The dedicated process
and digitalisation functions ensure the consistent implementa-
tion and corresponding development of expertise across all de-
partments. Concurrently, March 2023 marked the launch of DIG-
ITAL BOOST, one of the most comprehensive training pro-
gramme in the BMW Group's history. This virtual training pro-
gramme, designed for employees in indirect roles across all lev-
els of the organisation, delivers insights and opportunities in dig-
italisation on both national and international fronts. The aim is
for all employees to acquire the same basic knowledge of digital-
isation, enabling them to identify potential within their own areas
of responsibility and harness it for the benefit of the BMW Group.
D'O
Strategic approach -
Where is the BMW Group heading?
-
The BMW Group is focused on its customers worldwide and on
meeting their different requirements. It does so by understanding
the needs of its current and future customers and exceeding their
expectations. It combines ground-breaking technologies, emo-
tional products and individual customer care to create a unique
overall experience. The fields of action electrification, digitalisa-
tion and circularity are of particular importance.
BMW Group had introduced at least one all-electric model across
all its brands and segments. In 2023, the extended-wheelbase
version of the iX1 for the Chinese market, the BMW i5* sedan and
the Rolls-Royce Spectre* were launched on the market. In 2023,
deliveries of all-electric automobiles increased by more than
74.1%, reaching 375,716 automobiles, up from 215,752 auto-
mobiles in 2022. Electromobility
In 2024, the market will welcome several new additions, includ-
ing the BMW iX2*, the extended-wheelbase version of the BMW
15 sedan tailored for the Chinese market, the BMW i5 Touring*,
the MINI Cooper SE*, the MINI Countryman SE* and the all-elec-
tric MINI Aceman, the brand's first crossover model. 7 Automotive
segment The BMW Group expects its attractive product range to
drive another significant increase in the number of all-electric ve-
hicles delivered in 2024. With intelligent vehicle architectures
and flexible production facilities, the company is well-prepared
for the continued expansion of electromobility. Society's ac-
ceptance of electromobility will depend on trends in customer de-
mand, regional regulations and the development of a suitable
framework, with a particular focus on infrastructure expansion.
The BMW Group is currently planning for all-electric vehicles to
account for more than 50% of all vehicles by 2030. The Rolls-
Royce brand is set to become all-electric by 2030, and the MINI
brand will follow suit by the early 2030s. Electromobility
The launch of the BMW CE 04 electric scooter has successfully
established BMW Motorrad's position in the electromobility land-
scape. Building on this success, the eParkourer - the BMW CE
02 - is set to advance the electrification strategy for urban mo-
bility in April 2024. Motorcyles segment
In addition to delivering product substance, we also offer custom-
ers a 360° approach with an appropriate charging ecosystem.
Customers can charge their vehicles at home, at work and in pub-
lic places, and can also use our BMW Charging and MINI Charg-
ing stations and we are actively involved in expanding the charg-
ing infrastructure. Electromobility
Consumption and carbon emissions data
46
BMW Group Report 2023 To Our Stakeholders
Individual mobility remains a fundamental human need, though
vehicle ownership continues to depend to a large extent on in-
come, household size and location. The coronavirus pandemic
has not had any significant or lasting effects on mobility behav-
iour in general. On-demand mobility (ODM) services, especially
in urban areas, remain a supplementary option. Fuelled by the
We recognised the importance of electromobility early on and
have been working resolutely to accelerate the adoption of all-
electric and connected mobility. By the close of 2023, the
What does the BMW Group stand for?
Direction
← = Q
The BMW Group is committed to the Paris Climate Agreement.
To achieve this, the BMW Group promotes the reduction of car-
bon emissions throughout the whole life cycle of its products as
well as the principles of the circular economy with a verifiable
track record of continuous improvement – from the supply chain
to production, the use phase and the recycling of its products. For
this reason, the BMW Group has laid out measurable, science-
based targets to be reached by 2030; these are firmly estab-
lished across the company (base year 2019). Carbon emissions
are to be reduced as follows:
1.
2.
3.
An average of 80% carbon reduction at our own plants
and locations (Scope 1 and 2) per vehicle produced
(Carbon emissions generated at BMW Group locations)
Carbon reduction during the vehicle's use phase (Scope 3
downstream) by an average of at least 50% per kilometre
driven. Increased efficiency in our electrified models and
the new generation of combustion engine technology will
make this possible. An additional driving force for this is the
dynamic growth in demand for our electrified vehicles
7 Electromobility, 7 Automotive segment
An average of at least 20%* carbon reduction in the supply
chain (Scope 3 upstream) per vehicle produced Carbon
emissions in the supply chain
We have joined the Science-Based Targets initiative (SBTI) for
this purpose. This will enable us to guarantee transparency and
comparability in the validation and measurement of our targets
and, at the same time, ensure they are in line with the latest sci-
entific findings and regulatory requirements. These are de-
scribed in more detail in the chapter 7 Carbon Emissions.
Sustainability aspects (ESG criteria) are built into individual mar-
ket strategies across our global organisation. Best practices in
the fields of environmental protection, social sustainability, cor-
porate citizenship and governance are also shared within an in-
ternational sustainability network.
* Performance management parameters such as Carbon Emissions over
the entire product life cycle are important Performance indicators
during the development phase of our vehicle projects. The Board
of Management receives and discusses a status report on sus-
tainability every quarter and derives appropriate measures as re-
quired.
* For the sake of simplicity, this figure has been rounded. The target validated under SBTi is 22%.
45
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
The BMW Group Strategy
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
The BMW Group is actively working on numerous projects and
initiatives to improve the framework conditions for electromobil-
ity, including the expansion of charging infrastructure on a broad
basis. The ambitious goals of the Paris Climate Agreement are
designed to tackle climate change in the transport sector, requir-
ing a combination of modern drive technologies that are closely
aligned with customer needs and different mobility requirements
around the world. In addition to all-electric models, plug-in hy-
brids and modern combustion engine technology also make an
important contribution to the reduction of global carbon emis-
sions. The BMW Group is also forging ahead with its work with
hydrogen. Products
Society
18 Austria
A company's success depends to a large extent on its ability to
recognise changes in its environment early on, plan for different
scenarios, effectively manage risks and take advantage of op-
portunities that may arise from such changes. Risks and
Opportunities To this end, we continuously monitor the business
environment in our key regions, using available data to analyse
the trends and developments that could affect our business in
the future. In 2023, we undertook an extensive update and re-
view of our environmental analysis, significantly broadening the
scope of subject areas considered. Regular 7 Dialogue with
Stakeholders within the scope of the established BMW Group
XChange formats completes the picture from the analysis of ex-
ternal and environmental factors.
Norway
10 France
11 Switzerland
Combined Management Report
The BMW Group Strategy
19 Slovakia
3
Denmark
12 Italy
2
20 Hungary*
Sweden
13 Slovenia*
21 Romania*
5
Finland*
14 Spain
22 Bulgaria*
6
4
The Netherlands
Germany
17 Poland
41
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Overview of the BMW Group
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
LOCATIONS IN EUROPE
1
.
8
Ireland
16 Czech Republic
* Sales locations only.
■
Financial Services
9
Belgium/Luxembourg
Sales subsidiaries and
Alongside the current development directions, certain trends are
gaining momentum, notably within digital technologies and the
political landscape. The most significant trends set to have a
long-term effect on the BMW Group's business model are clas-
sified according to their impact on society, technology, business,
environment and politics.
15 Portugal
7
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
The BMW Group Strategy
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
THE BMW GROUP STRATEGY
42 Environmental Analysis
42
43
47
Performance Indicators and Performance
Management
THE BMW GROUP STRATEGY
For the BMW Group, the ongoing development of our corporate
strategy is a continuous process that begins with environmental
analysis. Trends with significant implications for the automotive
industry are analysed and evaluated and the underlying prem-
ises are scrutinised. Taking into account these influencing fac-
tors, characterised by their in parts rapid rate of change, we con-
tinually refine our corporate strategy and adjust our strategic ob-
jectives accordingly.
The corporate strategy and strategic targets of the BMW Group
form the starting point for the departments to define concrete ap-
proaches and implementation measures. This process is based
on strategic fields of action and key success factors.
The strategy process allows plans to be drawn up for different
scenarios to account for increasingly volatile and challenging en-
vironmental conditions, thereby ensuring flexibility and respon-
siveness for the BMW Group. The BMW Group's strategy is
based on fundamental values such as the integrity of our
actions. Compliance and Human Rights
The strategy is integrated into annually revised, longer-range
corporate planning using a closed loop-based planning and
management system. Its implementation is monitored by a tar-
get system that is comprised of the aspects of finance, custom-
ers, processes, learning and development. Performance Indicators
and Performance Management
ENVIRONMENTAL ANALYSIS
Cornerstones of the Strategy
23 Greece
= Q
BMW France, S. A. S., Miramas, France
Rolls-Royce Motor Cars Ltd., Goodwood, UK
BMW Group Vehicle Testing, Arjeplog, Sweden
BMW Group Vehicle Testing, Granada, Spain
BMW Group Vehicle Testing, Sokolov, Czech Republic
UK
15
Production in Europe
BMW Group plant Berlin
BMW Group plant Dingolfing
BMW Group plant Eisenach
BMW Group plant Landshut
BMW Group plant Leipzig
BMW Group plant Munich
BMW Group plant Regensburg
BMW Group plant Wackersdorf
BMW Group plant Steyr, Austria
BMW Group plant Hams Hall, UK
BMW Group plant Oxford, UK
BMW Group plant Swindon, UK
Rolls-Royce Manufacturing Plant, Goodwood, UK
◉
Partner plants in Europe
↑
10
Partner plant, Graz, Austria (contract manufacturing)
Research and Development in Europe
BMW Group Research and Innovation Centre (FIZ), Munich,
Germany
BMW Car IT, Munich, Germany
BMW Group Autonomous Driving Campus, Unterschleißheim,
Germany
BMW Group Designworks, Munich, Germany
BMW Group Lightweight Construction and Technology Center,
Landshut, Germany
BMW Group Diesel Competence Center, Steyr, Austria
Critical TechWorks S.A., Porto/Lisbon, Portugal
Partner plant, Born, the Netherlands (contract manufacturing)
Group Financial Statements Responsibility Statement and Auditor's Report
44
Other Information
12,981
2022
10,635
2023
64,412
2022
2023
2022
58,728
20.2
2023
18.1
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
The BMW Group Strategy
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
↑
= Q
50
Return on capital employed (Motorcycles segment)
Automotive
in %
Other Information
← = Q
Managing operational performance at segment level
At segment level, operational performance is managed using an
aggregated approach based on returns on capital. Depending on
the business model, the segments are measured on the basis of
return on total capital or return on equity.
Return on capital employed (ROCE) is used for the Automotive
and Motorcycles segments and return on equity (ROE) for the Fi-
nancial Services segment. These indicators combine a wide
range of relevant economic information, such as profitability (re-
turn on sales) and capital efficiency (capital turnover) to measure
segment performance and the development of enterprise value.
Automotive segment
The most comprehensive key performance indicator used for the
Automotive segment is RoCE, which provides information on the
profitability of capital employed and business operations. Value
driver analyses are used to interpret the causes of a change in
ROCE and derive suitable measures to influence its development.
The capital employed items taken into account reflect the focus
of operational segment management. Capital employed is
calculated as the sum of intangible assets, property, plant and
equipment and net working capital, the latter comprising inven-
tories and trade receivables less trade payables. The amount of
capital employed increased in light of the full consolidation of
BMW Brilliance in the BMW Group Financial Statements as at
11 February 2022. The increase arose primarily due to the take-
over of property, plant and equipment and intangible assets, as
well as the capitalisation of reacquired rights in conjunction with
the purchase price allocation. The ROCE will be impacted tempo-
rarily by the higher capital base as well as the related amortisa-
tion expense expected to be recorded.
Return on capital employed (Automotive segment)
The strategic target for RoCE is 18%.
Furthermore, the Automotive segment manages its compliance
with fleet carbon emissions requirements in regulated markets.
This also includes the share of all-electric automobiles in deliver-
ies reported since the 2023 financial year. The proportion of
electrified automobiles, including PHEV models, was reported as
a performance indicator until 2022. Performance indicators As
compliance with regulatory requirements is a significant factor in
the BMW Group's success, business decisions relating to vehicle
projects also take targets for fleet carbon emissions into
account. Managing sustainability
RoCE Automotive
or Motorcycles
Profit before
Financial result
Average
capital employed
Profit before financial result
in € million
Average capital employed
in € million
Return on capital employed
Due to the special significance of ROCE for the BMW Group, the
Automotive segment is also managed on the basis of a number
of additional key performance indicators that have a significant
impact on ROCE and hence on segment performance. These
value drivers include deliveries and the operating return on sales
(EBIT margin: segment profit before financial result as a percent-
age of segment revenues) as a key figure for profitability in the
segment.
Remuneration Report
Profit before financial result
Average capital employed
in € million
24.9
Return on equity (Financial Services segment)
Profit before tax
in € million
Average equity
capital in € million
Return on equity
in %
2023
22.1
2022
3,205
2023
17,176
2022
2023
2022
17,891
Remuneration Report
17.9
2,962
in € million
1,031
2022
Return on capital employed
in %
Motorcycles segment
The Motorcycles segment is largely managed according to the
same logic applied to the Automotive segment. The principal key
performance indicator is the return on capital employed (ROCE).
The strategic RoCE target set for the Motorcycles segment is
18%.
The main value drivers are the deliveries and the operating return
on sales (EBIT margin: segment profit before financial result as
a percentage of segment revenues) as the key performance in-
dicator for segment profitability.
Financial Services segment
The performance of the Financial Services segment is measured
on the basis of the return on equity (ROE), a key performance in-
dicator commonly used in the banking sector. Within the BMW
Group, RoE is defined as segment profit/loss before tax, divided
by the average amount of equity capital in the Financial Services
segment. The target is a return on equity of at least 14%.
Motorcycles
1,171
Financial Services
Profit before
tax
Average
equity capital
2023
259
2022
257
2023
2022
2023
RoE Financial Services =
Responsibility Statement and Auditor's Report
17.2
Combined Management Report
The BMW Group Strategy
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
context, the BMW Group is making considerable investments to
also drive this continuous transformation in all aspects of sus-
tainability (ESG criteria). Production and Supplier Network,
7 Employees and Society
Beginning in 2025, we will take the next step in our transfor-
mation process with the NEUE KLASSE, which is expected to set
standards in electrification, digitalisation and circularity. The con-
cept vehicle, unveiled at the IAA Mobility 2023 International Mo-
tor Show in Munich, offered a glimpse into the future of the NEUE
KLASSE. The NEUE KLASSE is distinguished by its new cluster
architecture (NCAR), which is entirely focused on BEVS (battery
electric vehicles). The sixth-generation BMW e-drive technology
will significantly improve driving pleasure and efficiency. In the
interior, the next generation of BMW iDrive delivers a completely
fresh digital user experience, seamlessly blending real and virtual
worlds. Key components include BMW Panoramic Vision, a rev-
olutionary new head-up technology, the new BMW 3D Head-up
Display for presenting 3D animated and highly accurate driving
information, the multifunctional steering wheel for personalised
control of display content and the central display with intuitive
touch functionality. Another aim of the NEUE KLASSE is to
achieve a new level of sustainability across the entire vehicle life
cycle. To accomplish this, the BMW Group is increasingly inte-
grating secondary materials and implementing resource-efficient
production methods. Circular Economy, Resource Efficiency and
Renewable Energies
Production of vehicles for the NEUE KLASSE will get underway
in 2025 at the newly constructed BMW Group plant in Debrecen
and then be expanded to other locations. Production Network
PERFORMANCE INDICATORS
Combined Management Report
The BMW Group Strategy
AND PERFORMANCE
The BMW Group's strategic targets are derived from the findings
of the Environmental analysis in an ongoing strategic process and
subsequently translated into a system for measuring perfor-
mance ▾ Cornerstones of the strategy. The resulting target system is
therefore a key instrument for anchoring strategy throughout the
Company. For corporate management purposes, the strategic
targets are backed by effective performance indicators.
Long-range corporate planning for the Company as a whole and
its segments is geared towards the structure of the BMW Group
target system. In this way, the targets set out in the planning are
regularly compared with the BMW Group's strategic goals.
Once approved by the Board of Management and the Supervi-
sory Board, the target amounts decided upon within the strategic
target system become the basis of planning for the current re-
porting year and for the target agreements with BMW Group
managers. Remuneration Report. The following summarises the
key performance indicators defined in DRS 20, which also form
the basis for performance management in the BMW Group.
Group
-
Profit before tax (EBT)
Number of employees at the end of the year
Share of women in management positions (in %)
Automotive segment
Profit before financial result as a percentage of segment
revenues (EBIT margin; in %)
MANAGEMENT
Return on capital employed (RoCE; in %)
Deliveries (in units)
To Our Stakeholders
47
← = Q
Group Financial Statements
The BMW Group is making customer experience the focus of all
its marketing and sales activities. In an increasingly digital envi-
ronment with changing customer needs, the Company relies on
a future-oriented sales structure with a focus on the digitalisation
of the customer interface and direct customer access. The aim is
to offer the industry's best premium customer experience. In this
context, the My BMW App and MINI App play a significant role
with over 12 million users (as at December 2023). More than
three million customers (as at December 2023) access the apps
every day. Using their smartphones, they interact with their BMW
or MINI vehicles, the BMW Group itself and the BMW and MINI
dealerships, and also receive personalised offers. The relation-
ship with the customer thus becomes even closer.
The BMW Group is decisively and consistently driving forward
with its online sale of vehicles. Customers are free to choose
whether they would like to order their vehicle from agents or
online. They also have the option to seamlessly transition be-
tween both worlds.
A central aspect of the revamped sales structure is the transition
to direct sales. After the pilot market in South Africa, MINI was
the first Group brand to implement the new sales model in China
in March 2023, followed by Europe in January 2024 with Italy,
Poland and Sweden. The remaining European countries will
transition over the course of 2024 and 2025 and the BMW brand
will follow suit in Europe in 2026. Going forward, our existing
trading partners will continue in their roles as active commercial
intermediaries between the BMW Group and
customers.
our
The trading partners will be closely involved in the implementa-
tion. The new sales structure offers an attractive and sustainable
business model for these partners, and they will continue to be
the face for customers in the future, where they can focus on
providing the best advice and support. At the same time, we aim
to achieve consistent prices across each sales channel.
By enabling smooth transitions between physical and digital
channels and launching direct sales, the BMW Group is improv-
ing direct customer connections - an essential step for providing
the best customer experience Automotive segment. In the Finan-
cial Services segment, we are also continually expanding our ser-
vices to include digital and modular services. The aim is for our
products to be accessible to all customer groups across all chan-
nels within our strategic orientation in the Financial Services seg-
ment. Financial Services segment. This ensures that our customers
receive personalised offers designed to meet their specific
needs.
BMW Group Report 2023
Circularity is a key focus for the BMW Group in the drive towards
more resource-efficient mobility. The concept revolves around
recycling materials to the fullest extent, ensuring that resources
are utilised sustainably and retain their value over time. This ap-
proach opens up a range of opportunities across the entire value
chain. Reusing valuable resources reduces our reliance on pri-
mary raw materials and their fluctuating prices. Furthermore, the
use of high-quality secondary materials significantly reduces the
carbon footprint of our vehicles. Circular Economy, Resource Efficiency
and Renewable Energy. We aim to progress gradually towards a cir-
cular economy, from designing for circularity through to increas-
ing the use of secondary materials for parts and components and
ultimately advancing to the recycling of end-of-life vehicles.
8
DO DO
Collaboration -
How does the BMW Group achieve this?
The BMW Group constantly strives for the best results, support-
ing its employees with the discovery and development of their
potential so they are able to remain productive. We support and
challenge strong teams with complementary strengths who work
together to achieve the best solutions in a complex environment.
We see diversity as an important element of our competitiveness.
7 Employees and Society The diversity metric defines the share of
women in management positions as a key performance indicator
and a strategic target variable. The aim is to increase the share
of women in management positions at the BMW Group to 22%
by 2025. Performance Indicators and Performance Management
Together with our cooperation partners, we realise potential by
accessing more expertise and improving our profitability and
technology footprint. In addition to the collaboration with Qual-
comm in the advancement of assisted and automated driving,
the development partnership between the BMW Group and Solid
Power, for instance, presents advantages for both companies.
Examples include our Cell Manufacturing Competence Centre
(CMCC) in Parsdorf near Munich, where our expertise in design-
ing and manufacturing solid-state cells is continuously expanded
through a dedicated prototype line, bringing significant value to
our partnership with Solid Power. We continuously expand our
collaborations to unlock additional potential for value creation in
the Group. Innovation, Digitalisation and Customer Orientation
The BMW Group invests in the development of employee skills,
with the view that continuous training guarantees jobs world-
wide. Employees and Society The restructuring of our Munich head-
quarters is an example of this commitment. The complete re-
structuring of an entire plant, including combustion engine vehi-
cle production, to 100% electromobility, will be implemented by
2027 while production is ongoing. The BMW Group is already
designing and producing electrified drive components for its ex-
isting electric vehicles at German facilities in Munich, Dingolfing,
Leipzig and Regensburg, as well as in China at the Shenyang lo-
cation. For the next generation of high-voltage batteries, new as-
sembly sites will be established in Debrecen (Hungary), San Luis
Potosí (Mexico), Woodruff near Spartanburg (USA) and in Ger-
many at the planned new facility in Irlbach-Straßkirchen, accom-
panied by the development of corresponding expertise. In this
Do
Share of all-electric automobiles in deliveries
(in %)
BMW Group employees not only work closely together within the
Company, but also with external partners. The stable relation-
ships that have grown in our partner networks over time are
based on the same values as those at the BMW Group. They al-
low us to maximise our effectiveness and work together to lead
the Company to success. Experiences from the crisis years have
further strengthened these relationships, as exemplified by our
supply chains. Purchasing and Supplier Network
Motorcycles segment
Capital
turnover
The BMW Group's performance management system is based
on a multilayered structure. Operational performance is man-
aged primarily at segment level. In order to influence long-term
corporate performance, additional performance indicators are
taken into account within the management system at Group
level. In this context, the value added serves as one of several
indicators to measure the contribution made to enterprise value
during the financial year.
This aspiration to add value is measured at both Group and seg-
ment level by means of the key performance indicators. The link
between value added and the relevant value drivers is presented
in a simplified form below.
Profit
Capital
employed
Weighted
average cost
Expense
Return on
sales
Revenues
The BMW Group's long-term corporate strategy is determined
by the Board of Management. Responsibility for implementing
the Group's sustainability goals also lies with the full Board. Sig-
nificant decisions are therefore evaluated from the point of view
of sustainability. This ensures that sustainability issues are sys-
tematically integrated in decision-making processes and to
compensation at top management levels. As part of the proce-
dures for managing sustainability on an integrated basis at cor-
porate level, a Group target system has been created, which ap-
plies to specific departments.
The BMW Group has set itself the target of decarbonising its
vehicle fleet by at least 40% over the entire life cycle by 2030,
based on the reference year 2019. In this context, specific tar-
gets have been set for the scopes of the vehicle's use phase,
production and supply chain (7 Position, ▾ Carbon Emissions). This
entails setting specific carbon targets for each vehicle project,
managing them through digital processes and tracking their at-
tainment.
An integrated approach to target management ensures that the
BMW Group's vehicle projects make a positive contribution to-
wards achieving the sustainability targets that have been set.
Furthermore, the BMW Group will consistently increase its use
of secondary raw materials. The Group intends to already have
made significant progress by 2025 with the introduction of the
first X model of the NEUE KLASSE. Non-financial performance
indicators such as carbon emissions and, in future, secondary
raw materials quotas are therefore key performance indicators
for all new vehicle projects. It is also ensured that financial as-
pects are taken into consideration and the most effective
measures are prioritised for implementation in all areas. The
overall result is a cohesive management model across all as-
pects of the business. GRI Index: 2-13
49
To Our Stakeholders
Carbon emissions of the EU new vehicle fleet (in g/km)
Carbon emissions per vehicle produced (in tonnes)
BMW Group Report 2023
49
Managing sustainability
Cost of capital
of capital
Value added
Profit before financial result as a percentage of segment
revenues (EBIT margin; in %)
Return on capital employed (RoCE; in %)
Deliveries (in units)
Financial Services segment
(ROCE oder
RoE)
46
48
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
The BMW Group Strategy
Group Financial Statements Responsibility Statement and Auditor's Report
Return on equity (RoE; in %)
Remuneration Report
The BMW Group's performance management system follows a
value-based approach that focuses on profitability, consistent
Company growth, value enhancement for capital providers, sus-
tainability, climate change mitigation and job security. Capital is
considered to be employed profitably when the amount of profit
generated on a sustained basis exceeds the cost of equity and
debt capital. This strategy also secures the desired degree of cor-
porate autonomy in the long term.
BMW Group - Value drivers
Performance management
Return on
capital
Other Information
← = Q
The 2023 reporting year saw improved availability of vehicles,
high levels of orders on hand, and volume growth. Compared to
expectations at the beginning of the year, the BMW Group's per-
formance was bolstered by the easing of the supply situation as
well as by favourable pricing conditions in both new and pre-
owned vehicle markets, despite higher cost pressures.
Carbon emissions per vehicle produced decreased more than ex-
pected at BMW Group sites. This was due to reduced gas and
heating oil usage on the one hand and a simultaneous increase
in production volume on the other.
The following table summarises the development of the
BMW Group's key performance indicators as a whole as well as
those of the Automotive, Motorcycles and Financial Services
segments in the financial year 2023 compared to the forecasts
made in the BMW Group Report 2022.
Share of women in management positions
in the BMW Group
Detailed information on the BMW Group's key performance indi-
cators is provided below in conjunction with the analysis of the
Group's results of operations, financial position and net assets.
The development of the most significant performance indicators
is described in the respective chapters on the Automotive, Mo-
torcycles, and Financial Services segments. An explanation of
the development of other non-financial performance indicators is
provided in the chapters on Products as well as Employees and
Society.
GROUP
Profit before tax
in 2023
Workforce at year-end
Significant decrease
in € million
Slight increase
Actual outcome
17,069 (-27.3%)
Significant decrease
154,950 (+3.7%)
Slight increase
in %
Return on capital employed (ROCE)
Deliveries
20.8 (+3.0%)
Slight increase
AUTOMOTIVE SEGMENT
EBIT margin
Q2: 9 to 10.5
Between 8 and 10
Between 15 and 20
Slight increase
Forecast revision during
the year
BMW AG's solid financial condition is reflected in the results of
operations, financial position and net assets reported for the fi-
nancial year 2023. Performance was in line with management
expectations and the targets set for 2023. This assessment also
takes into account events after the end of the reporting period.
BMW Group: Comparison of the forecast for 2023 with actual outcomes in 2023
Americas
thereof Spain
in %
thereof USA
Change compared to
previous year in %
+ 18.6
+ 14.3
+ 13.4
+ 21.7
+ 20.9
+ 12.6
+ 0.4
OVERALL ASSESSMENT BY
MANAGEMENT OF THE
FINANCIAL YEAR
2023 was characterised by a volatile business environment
overshadowed by escalating geopolitical tensions. In many mar-
kets, higher inflation rates, accompanied by increased interest
rates, also weighed on consumer sentiment. Despite these fac-
tors, the BMW Group can look back on an overall positive course
of business in the financial
2023.
year
Deliveries of premium segment automobiles, motorcycles and
scooters were all at record-high levels. In particular, sales of all-
electric premium vehicles provided significant impetus for
growth.
thereof Brazil
+ 50.4
Asia
- 11.4
thereof China
- 22.9
Total
+ 11.7
56
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Financial Performance
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
COMPARISON OF FORECASTS
WITH ACTUAL OUTCOMES
Forecast for 2023 in 2022
Group Report
9.8 (+1.2% points)
To Our Stakeholders
in %
in %
17.2 (-0.7% points)
1 EU-27 countries including Norway and Iceland; with effect from 2021, values are calculated on a converted basis in line with WLTP (Worldwide Harmonised Light Vehicles Test Procedure).
2 This is a preliminary internal calculation with a potential variation of +/- 0.5 g CO2/km, as official registration figures from the authorities are not available for all EU states. Figures officially published by
the EU Commission are not expected to be available until November of the following year.
3 Including an allowance for eco-innovations (amounts of minor significance).
"Efficiency ratio calculated on the basis of Scope 1 and Scope 2 carbon emissions (i.e. a market-based method in accordance with GHG Protocol Scope 2 guidance; mainly based on the emissions factors
for electricity, district heating and fuels reported by the VDA (each in the latest version dated 12/2023) and occasionally using local emissions factors; excluding climate-changing gases other than carbon
dioxide generated during vehicle production (BMW Group manufacturing sites including Motorrad, but excluding partner plants and contract manufacturers), as well as BMW Group non-manufacturing
sites (e.g. research centres, sales centres, office buildings) divided by the number of vehicles produced (BMW Group manufacturing sites and partner plants, excluding contract manufacturers).
57
BMW Group Report 2023
Total
Combined Management Report
Financial Performance
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
209,066 (+3.3%)
Slight increase
Other Information
FINANCIAL POSITION
EARNINGS PERFORMANCE OF THE BMW GROUP
BMW Group Condensed Income Statement
in € million
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
Other operating income and expenses
Profit before financial result
Financial result
Profit before tax
← = Q
in units
22.1 (-2.8% points)
in %
20.2 (+2.1% points)
Slight increase
Q2: solid increase
in units
Share of all-electric cars in deliveries
CO2 emissions EU new vehicle fleet 1,2,3
CO₂ emissions BMW Group locations per vehicle
produced
MOTORCYCLES SEGMENT
EBIT margin
Return on capital employed (ROCE)
Deliveries
FINANCIAL SERVICES SEGMENT
Return on equity (ROE)
Significant increase
Slight reduction
Slight reduction
Between 8 and 10
Between 21 and 26
Slight increase
Between 14 and 17
Q2: 16 to 19
in %
in g/km
in t
2,554,183 (+6.4%)
Solid increase
14.7% (+63.3%)
Significant increase
102.1 (-2.8%)
Slight reduction
0.28 (-12.5%)
Significant reduction
in %
8.1 (+0.0% points)
Q2: 18 to 22
thereof Italy
Platinum
thereof France
2019
2020
2021
2022
2023
2024
WTI
Brent
Source: Weltbank via Macrobond
1250
350
1000
0
250
300
250
750
150
200
500
100
150
250
50
100
0
200
50
10
30
Income taxes
54
54
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Financial Performance
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Decrease in energy and raw materials prices over course of
year
Energy and raw materials prices decreased again in 2023.
Throughout the year, the prices of aluminium and steel declined,
ending the year at approximately the same level as at the begin-
ning of 2021. Precious and non-ferrous metals exhibited a simi-
lar trend, with prices lower on average in 2023 compared to the
previous year. This development was partly due to the significant
price declines in metals such as rhodium (approximately -60%)
and palladium (approximately -40%).
20
Prices for battery-related raw materials also fell again. For the
majority of 2023, cobalt was once again below the long-term av-
erage, while lithium prices fell by up to 80% over the course of
the year.
Oil price trend
Price per barrel Brent and WTI in US dollar
120
110
100
90
80
Development of raw material prices
Index: December 2018 = 100
70
60
50
40
Energy prices also fell over the course of the year, as Germany in
particular adapted to the changed availability of natural gas. By
the end of 2023, natural gas prices in Europe had returned to the
levels seen in autumn 2021, significantly lower than the levels
before the start of the conflict in Ukraine.
0
2019
2020
← = Q
International automobile markets achieve solid growth
Against the backdrop of economic developments described
above, international automobile markets also performed well
during the 2023 reporting year. Worldwide, the number of new
registrations rose by 8.3% to 77.1 million units.
International automobile markets
Europe
thereof Germany
thereof France
Change compared to
previous year in %
+14.1
International motorcycle markets (250 cc plus) mostly
showing significant increases
International motorcycle markets in the 250 cc plus class devel-
oped positively in 2023 (+11.7%). Overall, European markets
recorded growth of 18.6%. Among the major motorcycle mar-
kets, Italy (+21.7%), Spain (+20.9%) and France (+13.4%)
contributed significantly to this trend. Germany also recorded a
sharp year-on-year increase of 14.3%. The US market remained
stable, growing by 0.4%. In China, the downward trend in the
motorcycle market continued (-22.9%), influenced by the linger-
ing effects of the pandemic. In Brazil, however, motorcycle regis-
trations were significantly higher than one year earlier, with an
increase of 50.4%. Registration figures for international motor-
cycle markets developed as follows in the 2023 reporting year:
+ 7.3
+ 16.1
thereof Italy
+ 19.1
thereof Spain
Other Information
+ 20.8
thereof UK
+ 17.9
USA
+ 12.1
China
+ 5.6
Europe
Japan
+14.4
thereof Germany
South Korea
+ 3.8
International motorcycle markets
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
Financial Performance
2021
2022
2023
2024
2019
2020
2021
2022
2023
2024
2019
2020
2021
2022
2023
2024
Lithium hydroxide
Rhodium
Palladium
Cobalt
Steel
Aluminium
Copper
Nickel
Sources: CRU, LME, Fastmarkets, Bloomberg
55
BMW Group Report 2023
+ 8.3
Net profit
-9,373
Earnings per share of preferred stock in €
Research and development expenditure
Capitalised development costs
Amortisation
Research and development expenses
BMW Group performance indicators relating to research and development expenses
in %
Research and development expenditure ratio¹
Capitalisation rate²
1 Research and development expenditure as a percentage of Group revenues.
² Capitalised development costs as a percentage of research and development expenditure.
Similarly, the net interest result deteriorated year on year. In the
previous year, interest and similar expenses included income
arising on the change in interest rates in connection with the
measurement of provisions. By contrast, falling interest rates in
2023 had a negative impact.
Accordingly, Group profit before tax amounting to € 17,096 mil-
lion - as forecast - was significantly lower than one year earlier
(2022: € 23,509 million).
in € million
At € 4,931 million (2022: € 4,927 million; +0.1%), income tax
expense in the reporting year was at a similar level to the previ-
ous year.
In the reporting year, the size of the workforce was slightly higher
at 154,950 employees, which was in line with expectations
(2022: 149,475 employees; +3.7%).
2023
7,755
-2,604
2,387
7,538
2022
7,178
- 2,819
2,265
6,624
Change
in % points
2023
2022
5.0
5.0
33.6
39.3
The effective tax rate was 28.8% (2022: 21.0%). In the previous
financial year, the primary factor reducing the effective tax rate
was the tax-neutral gain resulting from the remeasurement of
the shares held prior to the business combination with BMW Bril-
liance.
- 5.7
BMW Group research and development expenses
Other Information
0.2
Warranty expenditure
3,782
3,209
17.9
Other cost of sales
1,396
1,157
20.7
Cost of sales
125,809
118,042
← = Q
6.6
Depreciation and amortisation on property, plant and equipment
and intangible assets recorded in cost of sales as well as in sell-
ing and administrative expenses totalled € 8,974 million (2022:
€ 8,566 million).
The net amount of other operating income and expenses deteri-
orated year on year. In 2022, other operating income was in-
creased by income arising on the reversal of provisions.
Due to the various factors affecting gross profit, as described
above, profit before financial result climbed to € 18,482 million
(2022: € 13,999 million; +32.0%). The impact of the previous
year's first-time full consolidation of BMW Brilliance and lower
intersegment eliminations related to leasing business had a par-
ticularly positive effect on the year-on-year change in gross
profit.
The financial result deteriorated significantly to a net negative
amount of € 1,386 million (2022: net positive amount of
€ 9,510 million). In the previous year, other financial result ben-
efitted primarily from the gain of approximately € 7.7 billion aris-
ing on the remeasurement of the shares already held by the
BMW Group prior to the business combination with BMW Bril-
liance.
Additionally, the other financial result was adversely impacted by
the fair value measurement of interest rate hedging transactions,
reflecting falling interest rates in the USA, the UK and the euro-
zone during the twelve-month period under report. In the previ-
ous year, the increase in interest rates resulted in favourable
measurement effects on interest rate hedging transactions.
* 7 Consumption and Carbon Disclosures
59
59
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Financial Performance
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Selling and administrative expenses went up slightly by 3.9%
year on year. The rise was due to higher administrative ex-
penses, primarily influenced by higher costs for IT projects, nota-
bly in connection with the planned switch to direct sales in Eu-
rope. The ratio of selling and administrative expenses to reve-
nues fell to 7.1% (2022: 7.4%).
Share buyback programme continued - share redemption
completed
At the Annual General Meeting of BMW AG held on 11 May
2022, the shareholders authorised the Board of Management to
acquire treasury shares via the stock exchange, up to a maxi-
mum of 10% of the share capital in place at the date of the res-
olution and to redeem those shares without any further action
required by the Annual General Meeting. The buyback authori-
sation remains valid until 10 May 2027. In July 2022, on the ba-
sis of this authorisation, BMW AG resolved an initial share buy-
back programme, with a volume of up to € 2.0 billion (total pur-
chase price excluding incidental acquisition costs), comprising up
to € 1.85 billion for shares of common stock and up to € 0.15
billion for shares of preferred stock. The programme was
launched on 1 July 2022 and ended on 30 June 2023. BMW AG
repurchased a total of 22,199,529 shares of common stock for
€ 1,850 million and 1,923,871 shares of preferred stock for
€ 150 million. On 18 July 2023, the Board of Management re-
solved to redeem all of the shares repurchased in conjunction
with the initial buyback programme. The process of redeeming
the shares was completed during the third quarter 2023.
On 3 May 2023, on the basis of the authorisation granted by the
Annual General Meeting on 11 May 2022, the Management
Board resolved to initiate a second share buyback programme,
which duly began on 3 July 2023. The programme, with a vol-
ume of up to € 2 billion (total purchase price excluding incidental
acquisition costs) pertains to common and preferred stock, the
latter of which is limited to a maximum volume of € 350 million.
The first tranche of the second share buyback programme was
successfully completed on 1 December 2023. As part of this first
tranche, a total of 4,218,363 shares of common stock and
942,892 shares of preferred stock were acquired between 3 July
2023 and 1 December 2023. A total purchase price (excluding
incidental acquisition costs) of around € 500 million was paid for
the shares repurchased as part of this tranche.
- 5,981
- 9,548
-4,772
-4,776
- 6,859
- 17,984
11,125
-678
457
94
-772
861
- 404
Change
2023
17,675
14,782
Change
2,893
Korean won
- 3,179
- 6,194
- 1,360
-532
- 828
6,942
11,071
- 4,129
2022
2022
23,523
2023
17,542
Adjustment for net investment in marketable securities and investment funds
Free cash flow Automotive segment
The second tranche of the second share buyback programme
will be carried out with a volume of up to € 410 million for com-
mon stock and up to € 90 million for preferred stock in the period
from 2 January 2024 to 28 June 2024, at the latest.
The second share buyback programme will be concluded by 31
December 2025, at the latest.
60
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Financial Performance
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
FINANCIAL POSITION OF THE
BMW GROUP
The consolidated cash flow statements for the Group and the
Automotive and Financial Services segments show the sources
and applications of cash flows for the 2023 and 2022 reporting
years, classified according to operating, investing and financing
activities. Cash and cash equivalents in the cash flow statements
correspond to the amounts disclosed in the balance sheet.
Cash flows from operating activities are determined indirectly,
starting with Group/segment profit before tax. By contrast, cash
flows from investing and financing activities are based on actual
payments and receipts.
The lower net cash inflow from operating activities was primarily
due to changes in leased products and receivables from sales
financing, particularly credit financing for dealerships. The year-
on-year increase in credit financing for dealerships was driven by
improved vehicle availability, model changes and a higher aver-
age financing volume per vehicle.
A further factor for the decrease in cash inflow from operating
activities was the higher level of inventories held with a view to
servicing markets and fulfilling customer demand. A lower in-
crease in receivables and higher payables had a positive impact
on the cash inflow from operating activities.
The cash outflow from investing activities was higher than one
year earlier. In 2022, the first-time full consolidation of BMW Bril-
liance resulted in a positive impact of € 3,587 million to cash out-
flow from investing activities, resulting from cash acquired on the
business combination and the purchase price paid. Moreover, in-
creased investments in property, plant and equipment, particu-
larly for introducing new vehicle models, digitalising the fleet as
well as pressing ahead with automated driving and the NEUE
KLASSE, resulted in a higher net cash outflow than one year ear-
lier.
In contrast, the net cash inflow arising on the sale of marketable
securities had a positive impact on cash flows from investing
activities.
The decrease in the net cash outflow from financing activities
was mainly the result of higher borrowings and lower repay-
ments.
Higher dividend payments to shareholders of BMW AG (2023:
€ 5,430 million; 2022: € 3,827 million) increased the net cash
outflow from financing activities.
BMW Group cash flows
in € million
Cash inflow (+) / outflow (-) from operating activities
Cash inflow (+)/ outflow (-) from investing activities
Cash inflow (+) / outflow (-) from financing activities
Effects of exchange rate and changes in composition of segment
Change in cash and cash equivalents
Free cash flow for the Automotive segment was as follows:
Free cash flow Automotive segment
in € million
Cash inflow (+)/ outflow (-) from operating activities
Cash inflow (+) / outflow (-) from investing activities
2,775
2,780
5.4
2,265
Americas
23.9
23.6
-11,025
- 10,616
- 3.9
Other regions
2.0
2.0
- 182
47
Group
20.8
100.0
18,482
13,999
32.0
-1,386
9,510
17,096
23,509
- 27.3
- 4,927
-0.1
12,165
18,582
100.0
24,568
38.3
36.4
2023
155,498
- 125,809
29,689
- 4,931
in %
Gross profit margin¹
Pre-tax return on sales²
Post-tax return on sales³
Effective tax rate"
1 Gross profit as a percentage of Group revenues.
2 Group profit before tax as a percentage of Group revenues.
3 Group net profit as a percentage of Group revenues.
4 Income taxes as a percentage of Group profit before tax.
Group revenues by region were as follows:
BMW Group revenues by region
2022
142,610
Change in %
in %
2023
2022
9.0
Europe
37.7
36.1
- 118,042
-6.6
Asia
- 34.5
Earnings per share of common stock in €
17.67
- 35.3
in € million
Manufacturing costs
Cost of sales relating to financial services business
These favourable factors were offset by unfavourable exchange
rate effects from the Chinese renminbi and the US dollar which
held down Group revenues.
The year-on-year increase in cost of sales reflected sales volume
growth as well as higher expenses for materials and warranty
obligations. Similarly, cost of sales recorded by BMW Brilliance
also contributed to an increase compared to 2022. Cost of sales
in the previous financial year were also additionally negatively
impacted by the first-time full consolidation of BMW Brilliance.
Rising interest rates increased interest expenses for the Finan-
cial Services segment.
Group research and development expenses increased signifi-
cantly by 13.8% year on year. Research and development ex-
penditure related primarily to the digitalisation and electrification
of the vehicle fleet across all model series, as well as the devel-
opment of automated driving functions. Further expenditure was
incurred for the development of new models, such as the all-elec-
tric BMW i5*, the X3 and X5 and the Rolls-Royce Spectre and
NEUE KLASSE models.
Due to revenue growth, the research and development expendi-
ture ratio remained at the same level as one year earlier.
2023
2022
Change
in %
82,549
76,760
BMW Group cost of sales
7.5
27,517
0.9
thereof interest expense relating to financial services business
3,554
2,114
68.1
Research and development expenses
7,538
6,624
13.8
thereof amortisation of capitalised development costs
Expenses for service contracts, telematics and roadside assistance
2,387
27,764
Reduced intersegment eliminations associated with leasing
business had a positive impact on revenues.
Group revenues totalled € 155,498 million in the reporting year
(2022: € 142,610 million), representing a solid increase over
the previous year (+9.0%). The main reason for revenue growth
was the higher number of vehicles delivered. Furthermore, fa-
vourable product mix effects and the aforementioned full consol-
idation of BMW Brilliance contributed to the year-on-year in-
crease in revenues. Additionally, higher interest rates and in-
come from dealership financing further increased revenues in
2023, mainly reflecting the impact of higher inventory levels held
by dealerships in light of improved vehicle availability, model
changes and a higher average financing volume per vehicle.
When comparing figures with the previous financial year, it
should be noted that BMW Brilliance Automotive Ltd. (BMW Bril-
liance) has been fully consolidated as a subsidiary since 11 Feb-
ruary 2022, whereas up to that date, it had been accounted for
using the equity method. Consequently, BMW Brilliance is in-
cluded for the whole of 2023, but only for a proportionate period
of the previous year.
17.69
27.33
- 35.3
Change
2023
2022
in % points
19.1
17.2
1.9
11.0
16.5
- 5.5
7.8
13.0
- 5.2
28.8
21.0
7.8
58
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Financial Performance
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Solid increase in Group revenues
27.31
Chinese renminbi
Comments on the Financial Statements of
BMW AG
British pound
2022
23,730
2023
11,615
2022
11,194
2023
5,642
2022
12,536
Earnings amount -
(cost of capital rate x capital employed)
In order to determine the internal rate of return, risk-adjusted cost
of capital rates are based on the average of actual rates in recent
years. In light of the long-term nature of product and investment
decisions, the following internal rates of return are used in con-
junction with segment management:
in %
Automotive
Motorcycles
Financial Services
2023
2022
12.0
12.0
12.0
12.0
13.4
13.4
Value-based management for project decisions
Operational business in the Automotive and Motorcycles seg-
ments is largely shaped by the life-cycle-dependent character of
investment projects that have a substantial influence on future
performance. Project-related decisions are therefore a crucial el-
ement of financial management in the BMW Group. Project deci-
sions are based on calculations derived from the expected cash
flows of each individual project. Calculations are made for the
complete term of a project, incorporating future years in which
the project is expected to generate cash flows.
Project decisions are taken on the basis of net present value and
the internal rate of return calculated for the project. The net pre-
sent value indicates the extent to which the project will be able to
generate future net cash inflows over and above the cost of cap-
ital. A project with a positive net present value enhances future
value added and therefore results in an increase in enterprise
value. The project's internal rate of return measures the average
return on the capital employed in the project. For all project deci-
sions, the project criteria and long-term impact on periodic re-
sults are measured and incorporated in the long-term Group
plan. This approach enables an analysis of the impact of project
decisions on periodic earnings and rates of return for each year
during the term of the project.
Board of Management remuneration
17,257
Performance criteria for the variable remuneration paid to mem-
bers of the Board of Management are based on the key strategic
targets and performance indicators. More information can be
found in the Remuneration Report.
2023
Earnings amount
Japanese yen
51
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Group Financial Statements
Responsibility Statement and Auditor's Report
Other Information
← = Q
The BMW Group Strategy
Strategic management at Group level
Strategic management and the measurement of its financial im-
pact are coordinated primarily at Group level in conjunction with
the long-term corporate plan. Group profit/loss before tax pro-
vides a comprehensive measure of the Group's overall corporate
performance after consolidation effects and enables a transpar-
ent comparison over time. Other key performance indicators at
Group level are the size of the workforce at the year-end as well
as the share of women in management positions. By 2025, the
BMW Group aims to increase the share of women in manage-
ment positions to 22%. Strategy Process
The information provided by these key performance indicators at
Group level is complemented by the two financial performance
indicators of pre-tax return on sales and value added. Value
added, as a highly aggregated performance indicator, also pro-
vides an insight into capital efficiency and the (opportunity) cost
of capital required to generate Group profit. A positive value
added means that a return on investment above the cost of cap-
ital has been achieved.
Capital employed comprises the amount of Group equity and
pension provisions as well as the financial liabilities of the Auto-
motive and Motorcycles segments employed on average at the
end of each of the last five quarters.
The earnings amount corresponds to Group profit/loss before
tax, adjusted for interest expense incurred in conjunction with the
pension provisions and on the financial liabilities of the Automo-
tive and Motorcycles segments (profit/loss before interest ex-
pense and tax). The cost of capital is the minimum rate of return
expected by capital providers in return for the capital employed.
Since capital employed comprises an equity capital (e.g. share
capital) and a debt capital element (e.g. bonds), the overall cost
of capital is determined on the basis of the weighted average
rates for equity and debt capital, measured using standard mar-
ket procedures. The pre-tax average weighted cost of capital for
the BMW Group in 2023 was 12%, unchanged from the previ-
ous year.
Value added Group
in € million
BMW Group
Earnings amount -
=
Cost of capital
Value added
Group
=
Value added Group
Cost of capital (equity + debt capital)
52
Remuneration Report
To Our Stakeholders
Remuneration Report
Other Information
← = Q
During the year, the US dollar fluctuated between 1.05 and 1.13
US dollars to the euro, culminating in an average annual ex-
change rate of 1.08 US dollars to the euro. In 2023, the British
pound was slightly weaker compared to the previous year, fluc-
tuating between 0.89 and 0.85 pounds to the euro, with an av-
erage annual exchange rate of 0.87 pounds to the euro.
In China, inflation was low during 2023, enabling the country's
central bank to pursue a newly evolving monetary policy, which
contributed to a depreciation of the Chinese renminbi. For the
year as a whole, the average exchange rate for the Chinese cur-
rency was 7.66 renminbi to the euro.
The Japanese currency fluctuated between 138 and 164 yen to
the euro during 2023. Based on an average exchange rate of
152 yen, the Japanese currency fell in value against the euro
compared to the previous year.
The currencies of major emerging markets mostly depreciated
against the euro. While the Indian rupee depreciated by approxi-
mately 8% on average, the South African rand declined by 16%.
On the other hand, the Brazilian real remained largely stable
against the euro, depreciating by less than 1% on average. Con-
versely, the Russian rouble depreciated markedly by 25% due to
the normalisation of energy prices and increasingly stringent
sanctions.
Exchange rates compared to the euro
Index: December 2018 = 100
130
120
110
100
90
80
2019
Source: ECB via Macrobond
2020
2021
2023
2024
BMW Group Report 2023
US dollar
Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders Combined Management Report
Financial Performance
2022
53
BMW Group Report 2023
Remuneration Report
← = Q
FINANCIAL PERFORMANCE
Combined Management Report
Financial Performance
52
General and Sector-specific Environment
55 Overall Assessment by Management of the
Financial Year
56 Comparison of Forecasts with Actual
FINANCIAL PERFORMANCE
Outcomes
Other Information
66
At the beginning of 2023, inflation remained relatively high in a
number of countries. Only in the second half of the year did the
inflation rate gradually begin to decline. Therefore, many central
banks continued to pursue their restrictive monetary policies and
raise benchmark interest rates.
57 Financial Position
Higher benchmark interest rates in many markets and a
strong euro
The Japanese economy recovered well during the reporting pe-
riod with a growth rate of 1.8%, benefiting from stronger export
demand on the back of the depreciated currency.
In the USA, the economy proved very resilient in the face of rising
interest rates and grew by 2.5% in the reporting period. A sus-
tained low level of unemployment in combination with rising
wages helped boost consumption. In China, the growth rate in
2023 stood at 5.2%, slightly higher than the target set by the
government. The momentum resulted in particular from catch-
up effects following the end of coronavirus lockdowns.
Group Financial Statements Responsibility Statement and Auditor's Report
The global economy performed better in 2023 than expected at
the beginning of the year. According to calculations of the Inter-
national Monetary Fund (IMF), global gross domestic product
(GDP) grew by 3.1% in 2023. While the US and China recorded
stronger growth than in the previous year, economic growth in
Europe weakened.
GENERAL AND SECTOR-
SPECIFIC ENVIRONMENT
Course of Business and Segments
In the eurozone, growth in 2023 was 0.5% due to high inflation
rates and the resulting fall in demand. In Germany, GDP con-
tracted by 0.3% as a result of rising prices, declining export de-
mand and the low level of investments in light of higher interest
rates. In France (+0.9%), Italy (+0.7%) and Spain (+2.5%), eco-
nomic growth was more robust. The UK experienced a significant
slowdown in growth to 0.1%.
74
12.2
14.1
Leased products
43,118
42,820
0.7
1.8
17.2
Investments accounted for using the equity method
420
5.5
5.4
Other investments
1,197
1,351
- 11.4
- 9.4
9.8
0.5
443
0.2
change in %
35,266
Proportion of
balance sheet total
in % 2023
Receivables from sales financing
The Group's balance sheet total is slightly higher than one year
earlier. Currency effects from the Chinese renminbi and the US
dollar had a dampening effect on the balance sheet total.1
Intangible assets decreased moderately compared to 31 De-
cember 2022 on a currency-adjusted basis. The main reason for
the decrease was the amortisation recognised on reacquired
rights and dealership relationships from the acquisition of
BMW Brilliance.
Adjusted for currency effects, property, plant and equipment was
up by 12.2% year on year. This increase was driven in particular
by additions to land, buildings and production facilities of the
newly fully consolidated entity, BMW Manufacturing Hungary Kft.
Higher investments in the sixth generation of electric drives, as
well as for new vehicle projects such as the new BMW 5 Series,
also had an impact. The capital expenditure ratio stood at 5.7%
(2022: 5.5%) whereas the capital expenditure ratio excluding
right-of-use assets increased to 4.9% (2022: 4.3%).
Leased products were slightly up on a currency-adjusted basis.
The increase was driven by the higher level of new leasing busi-
ness and a higher average financing volume. In contrast, the
managed contract portfolio decreased to 1,712,330 contracts
(2022: 1,807,904 contracts; -5.3%).
Receivables from sales financing increased slightly compared to
31. Dezember 2022 on a currency-adjusted basis. An increase
in dealership financing, especially in the USA and Germany, had
an impact at 31 December 2023. The year-on-year increase in
dealership financing was due to better availability of vehicles, the
introduction of new models such as the BMW 7 Series and the
BMW i52, and a higher average financing volume per vehicle. The
increase was offset by a decrease in customer financing, partic-
ularly in China. The decrease in China was due to strong com-
petition from local banks.
in € million
2023
32,126
2022
Currency-adjusted
ASSETS
Intangible assets
20,022
21,776
- 8.1
- 5.7
8.0
Property, plant and equipment
Change
in %
87,355
18.6
1.9
Trade receivables
4,162
4,127
0.8
4.5
1.7
Cash and cash equivalents
17,327
16,870
9.5
2.7
6.9
Total assets
250,890
246,926
1.6
3.9
100.0
EQUITY AND LIABILITIES
← = Q
6.7
21.8
20,005
23,719
4.3
34.8
Financial assets
5,518
8,237
- 33.0
-32.2
2.2
Deferred and current tax
3,630
2,854
27.2
31.2
1.4
Other assets
9,133
10,632
- 14.1
- 12.7
3.6
Inventories
85,708
BMW Group Condensed Balance Sheet at 31 December
56
Other Information
4,406
11,197
- 6,791
19,778
27,337
- 7,559
-2,775
- 2,734
17,003
- 1,249
24,603
2023
488
2022
Change
9,145
- 8,657
6
- 50
Equity
-750
-41
-7,600
- 9,042
3,031
481
Net financial assets Automotive segment
in € million
Cash and cash equivalents
Marketable securities and investment funds
Intercompany net financial assets
Financial assets
Less: external financial liabilities*
Net financial assets Automotive segment
* Excluding derivative financial instruments.
1,782
Cash and cash equivalents held by the Financial Services seg-
ment changed as follows:
in € million
Cash inflow (+) / outflow (-) from operating activities
Cash inflow (+) / outflow (-) from investing activities
Cash inflow (+) / outflow (-) from financing activities
Effects of exchange rate and changes in composition of segment
Change in cash and cash equivalents
The lower cash inflow from operating activities of the Financial
Services segment was primarily due to changes in leased prod-
ucts and receivables from sales financing, particularly credit fi-
nancing for dealerships. The year-on-year increase in credit fi-
nancing for dealerships was driven by improved vehicle availa-
bility, model changes, and a higher average financing volume per
vehicle.
The change in the net cash outflow from financing activities was
attributable to lower cash outflows relating to intragroup refi-
nancing on the one hand and the decreased repayment of exter-
nal financial liabilities on the other.
2023
2022
Change
13,590
13,109
Cash flows Financial Services segment
NET ASSETS POSITION OF THE BMW GROUP
8,292
6
in € billion
Euro medium-term notes
Commercial paper
* Measured at the year-end exchange rate.
Programme
volume
Amount
utilised*
50.0
22.9
13.0
Programmes
3.3
As at 31 December 2023, liquidity on hand amounted to € 19.5
billion, slightly below the previous year's level (2022: € 20.3 bil-
lion).
The BMW Group also has access to a syndicated credit line,
which was renewed in June 2023. The syndicated credit line
amounting to € 8 billion has a term without exercising extension
options until June 2028 and is provided by a consortium of 43
international banks.
The credit line was not being utilised at 31 December 2023. Fur-
ther information with respect to financial liabilities is provided in
7 note 36 to the Group Financial Statements.
63
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Financial Performance
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
The BMW Group continued to deploy robust liquidity-related
measures throughout 2023 to ensure its ability to act flexibly and
independently at all times.
- 184
The following table provides an overview of amounts utilised at
31 December 2023 in connection with the BMW Group's money
and capital market programmes:
Specific banking instruments, such as the customer deposits
used by the Group's own banks in Germany and the USA, were
also deployed for financing purposes. In addition, loans were
taken from international banks.
- 190
- 440
59
- 499
62
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Financial Performance
Group Financial Statements Responsibility Statement and Auditor's Report
During the reporting period, the BMW Group issued bonds total-
ling approximately € 9.2 billion. The Group refinanced itself by
means of 144A transactions with a total volume of 3 billion US
dollars on the US capital market and by means of so-called
Panda bonds with a volume of 3 billion Chinese renminbi on the
Chinese capital market. Furthermore, the BMW Group issued,
among others, two euro benchmark bonds totalling € 3.0 billion,
as well as a pound sterling benchmark bond of 0.4 billion British
pounds and a Canadian bond of 0.5 billion Canadian dollars on
the international capital markets. ABS transactions with a total
financing volume equivalent to € 16.0 billion were executed in
2023, including both new and rolled-over ABS transactions.
During the reporting period, ABS financing transactions were
carried out in the following markets: Australia, China, Germany,
Japan, Canada, Switzerland, South Korea, the USA and the UK.
Remuneration Report
← = Q
FINANCING ACTIVITIES
A broad range of instruments on international money and capital
markets is used to finance worldwide operations. The funds
raised are used almost exclusively to refinance the BMW Group's
Financial Services business. The overall objective of Group fi-
nancing is to ensure the solvency of the BMW Group at all times,
focusing on three areas:
1. The ability to act through permanent access to strategically
important capital markets
2. Autonomy through the diversification of refinancing instru-
ments and investors
3. A focus on value through the optimisation of financing costs
Financing measures undertaken at corporate level ensure ac-
cess to liquidity for the Group's operating subsidiaries at stand-
ard market conditions and consistent credit terms. Funds are ac-
quired in line with a target liability structure, comprising a bal-
anced mix of financing instruments. The use of longer-term in-
struments to refinance the Group's Financial Services business
and the maintenance of a sufficiently high liquidity reserve serves
to rule out any imminent liquidity risk for the portfolio. This con-
servative financial approach also has a favourable effect on the
Group's rating. Further information is provided in the section
Liquidity Risks within the chapter Risks and Opportunities.
Focused capital market management, good ratings and the high
level of acceptance enjoyed by the BMW Group on those markets
enabled it to refinance itself on the world's debt capital markets
at favourable conditions during the 12-month period under re-
port. In addition to bonds, the BMW Group also issued commer-
cial paper.
Furthermore, retail customer and dealership financing receiv-
ables, rights and obligations from leasing contracts, as well as
collateral interests in the financed vehicles, were transferred to
structured entities that securitise them and place them as collat-
eralised securities on the capital market as part of the Group's
asset-backed securities financing arrangements (ABS financ-
ing).
Other Information
92,923
Group Financial Statements Responsibility Statement and Auditor's Report
1.8
80,181
52.1
2.9
22,609
14.6
19,479
12.7
16.1
105,136
53.1
67.7
64.9
5.5
Gross value added
50,180
32.3
54,110
35.2
-7.3
Depreciation and amortisation of total tangible, intangible and investment
assets
99,660
14,565
82,527
100.0
in € million
in %
Change
in %
155,498
100.1
142,610
92.7
9.0
-1,227
1.0
-0.8
6.4
1,045
0.7
1,377
0.9
- 24.1
155,316
100.0
153,770
9,783
2022
9.4
9.4
4,866
12.3
4.1
3,802
10.7
5,480
13.8
- 30.6
Group
14.2
7,488
12,461
31.4
- 39.9
Non-controlling interests
875
2.5
641
1.6
Net value added
21.0
14,456
5,064
5.7
0.8
Net value added
35,615
22.9
39,654
25.8
- 10.2
ALLOCATION
Employees
61.2
14,721
13,932
35.1
5.7
Providers of finance
Government/public sector
Shareholders
3,665
10.3
2,274
41.3
2022
2023
in %
in € million
2.8
37.9
Trade payables
15,547
14,120
10.1
12.3
Other liabilities
25,748
0.9
27,233
-2.7
6.2
10.3
Total equity and liabilities
250,890
246,926
1.6
3.9
100.0
1 The adjustment for exchange rate factors is calculated by applying the relevant current exchange rates to the prior-year figures.
-5.5
27 Consumption and carbon emissions data.
94,196
Financial liabilities
4.3
37.0
Pension provisions
427
339
26.0
26.0
0.2
Other provisions
95,010
17,037
8.1
10.1
6.8
Deferred and current tax
4,198
3,989
5.2
6.2
1.7
15,761
64
BMW Group Report 2023
To Our Stakeholders
- 2.6
11.0
11.9
- 0.9
65
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Financial Performance
Group Financial Statements Responsibility Statement and Auditor's Report
45.7
Remuneration Report
← = Q
VALUE ADDED STATEMENT
The value added statement shows the value of work performed
by the BMW Group during the financial year, less the value of
work bought in. Depreciation and amortisation, cost of materials,
and other expenses are treated as bought-in costs in the net
value added calculation. The allocation statement applies value
added to each of the participants involved in the value added pro-
cess. The bulk of the net value added benefits the employees.
The remaining portion in the Group is retained to finance future
operations. The gross value added amount treats depreciation
and amortisation as a component of value added which, in the
allocation statement, would be treated as internal financing.
Net value added by the BMW Group declined in 2023 due to
lower earnings compared to the previous year.
BMW Group value added statement
WORK PERFORMED
Revenues
Financial income
Other income
Total output
Cost of materials*
Other expenses
Bought-in costs
2023
Other Information
43.1
37.0
37.0
Combined Management Report
Financial Performance
In the Automotive segment, net financial assets comprised the
following:
Remuneration Report
Other Information
← = Q
The managed contract portfolio with retail customers and deal-
erships fell by 2.8% to 3,600,359 contracts.
The increase in inventories was mainly due to the build-up of fin-
ished goods to service the markets and as a result of model
changes.
Group equity climbed to € 92,923 million, driven primarily by the
Group net profit amounting to € 12,165 million (2022: € 18,582
million).
Equity attributable to shareholders of BMW AG rose to
€ 89,596 million mainly due to the net profit for the year attribut-
able to shareholders of BMW AG amounting to € 11,290 million.
The dividend payout amounting to € 5,430 million reduced
Group equity and, to an equal extent, equity attributable to
BMW AG shareholders. The continued share buy-back pro-
gramme also reduced equity attributable to shareholders of the
BMW Group.
Pension obligations stood at € 427 million, surpassing the pre-
vious year's figure of € 339 million. The increase in the provision
for pensions resulted mainly from the application of lower dis-
count rates.
Other provisions increased significantly on a currency-adjusted
basis, largely due to higher provisions for statutory and non-stat-
utory warranty obligations, as well as product guarantees.
Currency-adjusted financial liabilities went up, primarily due to in-
creased volume of ABS financing and higher liabilities from cus-
tomer deposits. These increases took place against the backdrop
of rising financing requirements in light of the growth of Financial
Services business.
BMW Group equity ratio*
in %
Group
Automotive segment
Financial Services segment
* Equity in each case as a percentage of corresponding balance sheet total.
31.12.2023
31.12.2022
Change
in % points
91,288
Net financial assets of the Automotive segment decreased year
on year due to dividend payments and the share buyback pro-
gramme.
Remuneration Report
The main factor for the year-on-year decrease was the net cash
outflow from investing activities, which, in 2022, had included a
positive impact of € 5,011 million in connection with the full con-
solidation of BMW Brilliance. Excluding that impact, the seg-
ment's free cash flow would have amounted to € 6,060 million
in 2022.
1,073.1
1,031.0
1,067.9
986.5
930.8
South Korea
thereof China¹
826.3
793.5
Asia¹
847.9
724.7
3,3
Other markets
56.1
48.6
52.8
45.4
52.2
UK
778.4
USA
3,4
375.7
thereof UK
Americas
159.2
157.3
164.3
163.2
233.8
China
32,3
Italy
France
482.0
451.7
379.7
472.9
3,1
thereof USA
397.3
363.5
368.0
307.9
441.5
25,4
6,2
Total¹
BMW M is also on course for growth. With a significant increase
of 14.2% to a total of 202,431 units, sales of high-performance
automobiles surpassed the 200,000-mark for the first time
(2022: 177,258 units). The positive development is also a result
of the electrification of the BMW M model range: the highest-vol-
ume model was once again the Sports Coupé BMW i4 M50¹.
The focus on the electrification of drive systems was also evident
in market launches in 2023. Right at the beginning of the year,
the BMW XM was launched worldwide as BMW M's first high-
performance class PHEV. The BMW i7 M70 xDrive¹ and BMW i5
M60 xDrive models expanded the BMW M portfolio of all-elec-
tric high-performance vehicles.
The 2024 model year looks highly promising. Following the suc-
cess of the BMW M3 CS', another special model in the high-per-
formance class, the BMW M4 CS, is on the verge of being
launched. Further updates to the BMW M3, BMW M4 and BMW
M2 have already been announced and will be introduced during
the year. Alongside the new BMW M5, the lineup of BMW M in
the luxury segment has been complemented by the new BMW i5
M60 xDrive Touring¹.
Deliveries of BMW vehicles by model series²
in units
BMW 1 Series/BMW 2 Series
2023
2022
Change in %
BMW M sets new record
Share of BMW
deliveries 2023 in %
205,971
9.6
10.0
BMW 3 Series/BMW 4 Series
BMW 5 Series/BMW 6 Series
BMW 7 Series/BMW 8 Series
BMW Z4
BMW X1/X2
BMW X3/X4
225,827
15,6
The focus of product innovations in 2023 was predominantly
aimed at the business class. The new BMW X5 and BMW X6
flagship models were launched in the spring. The new BMW 5
Series Sedan followed in autumn. At market launch, all drivetrain
variants were available for this model, including the first all-elec-
tric BMW i51, the two PHEV models BMW 530e¹ and BMW 550e
xDrive, as well as models powered by conventional combustion
engines. The globally popular Business Sedan, which received
an overwhelmingly positive response from the international trade
press shortly after its launch, will be available on the Chinese
market from early 2024. In October 2023, the BMW X2 also cel-
ebrated its world premiere with its first all-electric BMW iX21
model. The market launch will start in spring 2024.
← = Q
2,554.2
2,399.6
2,521.5
2,325.2
2,537.5
Germany
Deliveries including BMW Brilliance Automotive Ltd., also for the period prior to that entity's full consolidation in the Group Financial Statements of the BMW Group (1 January to 10 February 2022:
96,133 units, 2021: 651,236 units, 2020: 602,247 units, 2019: 538,612 units).
10,7
2 Including BMW Brilliance Automotive Ltd., also for the period before full consolidation in the BMW Group Financial Statements.
New BMW brand products
37 Consumption and Carbon Disclosures.
99
68
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Financial Performance
Group Financial Statements
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
3
330.5
285.0
266.8
2023
BEV
375,716
2022
215,752
in %
74.1
BMW
330,197
172,008
Change
92.0
45,193
43,744
3.3
Rolls-Royce
326
PHEV
190,159
BMW
173,878
MINI
MINI
in units
The success of the BMW i44 and BMW iX14 models had a major
impact on sales growth. The BMW iX34 and the BMW iX4 also
continued to enjoy great popularity. Furthermore, electrification
made its debut in its top model series in the form of the BMW 174
Luxury Sedan. The new BMW 154 Business Sedan was also
added to the range of all-electric automobiles. This means that
the BMW Group now has an all-electric model in each of its core
segments.
39,654
100.0
- 10.2
* Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
66
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Financial Performance
Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group deliveries of electrified models
Remuneration Report
← = Q
COURSE OF BUSINESS AND
SEGMENTS
M.EV 544E
AUTOMOTIVE SEGMENT
BMW Group finishes reporting year with new sales volume
record
The BMW Group can look back on a positive course of business
in the financial year 2023. Customers worldwide responded pos-
itively to the appealing and contemporary product portfolios of
the BMW, MINI and Rolls-Royce brands. The BMW Group offers
a diverse range of drive systems, encompassing all-electric mod-
els (BEV), state-of-the-art plug-in hybrids (PHEV) and highly ef-
ficient combustion engines, to meet a wide range of customer re-
quirements. The ramp-up of electric mobility was also a signifi-
cant driver of growth in 2023.
In total, during the reporting year, the BMW Group delivered
2,554,183 automobiles across the BMW, MINI and Rolls-Royce
brands, setting a new record high. In line with expectations, a
solid year-on-year increase in deliveries was therefore achieved
in the reporting year (2022: 2,399,6322 units; +6.4%).
The BMW brand set a new record with deliveries totalling
2,252,793 units (2022: 2,100,6892 units; +7.2%). MINI deliv-
ered 295,358 units, similar to one year earlier (2022: 292,922
units; +0.8%). Rolls-Royce, the renowned luxury marque, deliv-
ered 6,032 units to customers, achieving a new all-time high
(2022: 6,021 units; +0.2%).
The share of all-electric vehicles in deliveries increased to 14.7%
in 2023 (2022: 9.0%; +63.3%). The significant increase also
had a positive effect on the development of fleet carbon emis-
sions. Carbon Emissions
Other Information
16,281
Total³
565,875
M.ED1871E
BMW Group deliveries of vehicles by region and market
in 1,000 units
Europe
thereof Germany
BMW Group - largest automobile markets in 2023
in % of sales
2023
2022
The core BMW brand set a new sales record in 2023 with
2,252,793 units (2022: 2,100,6891 units; +7.2%) delivered.
This performance confirms the brand's top position in the global
premium segment. The key driver of growth was sales of all-elec-
tric models, which nearly doubled in 2023 to 330,197 units
(2022: 172,0082 units; +92.0%). Models from the X family, es-
pecially the BMW X1, continued to enjoy great popularity. Almost
every fifth vehicle (19%) of this highly successful model was sold
in the all-electric BMW iX13 version.
2021
2019
943.0
878.5
949.1
913.6
1,081.6
Other
272.6
254.3
2020
BMW retains top spot in global premium segment
Sales markets in Asia recovered slightly from the downturns that
had arisen in the previous year due to general pandemic-related
restrictions. In the reporting year, deliveries in this region totalled
1,073,115 units (2022: 1,030,9871 units; +4.1%). The sales
situation in China also improved, with deliveries up slightly by
4.1% to 826,257 units (2022: 793,520¹ units).
In the Americas, the BMW Group recorded solid growth, with
sales up to 482,048 units (2022: 441,471 units; +9.2%). The
positive trend also continued in the USA, with deliveries up by
9.3% to 397,325 units (2022: 363,541 units).
218,040
200,945
17,095
433,792
- 12.8
- 13.5
- 4.8
30.4
Electric mobility maintains momentum
MIA115E
The BMW Group's sales growth in the reporting year was signif-
icantly influenced by the systematic electrification of its product
range. This was borne out by continued strong growth in deliver-
ies of all-electric vehicles. Market demand for all-electric vehicles
from the BMW, MINI and Rolls-Royce brands resulted in deliver-
ies rising to 375,716 units (2022: 215,752³ units; +74.1%).
Overall, the BMW Group delivered more than half a million elec-
trified vehicles (BEV and PHEV) to customers for the first time
with a total of 565,875 units (2022: 433,792³ units; +30.4%).
1See 7 Glossary for definition of deliveries. Retail vehicle deliveries during a given reporting period
do not correlate directly to the revenues that BMW Group recognizes in respect of such reporting
period.
² Deliveries include BMW Brilliance Automotive Ltd., also for the period prior to that entity's full con-
solidation in the BMW Group Financial Statements (1 January to 10 February 2022: 96,133
units).
3 Including BMW Brilliance Automotive Ltd., also for the period before full consolidation in the
BMW Group Financial Statements.
47 Consumption and Carbon Disclosures.
67
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Financial Performance
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
Solid growth in Europe and America, new record high in
Asia
A look at the international markets also confirms the successful
development of sales during the reporting year. All key regions
contributed to growth. Vehicle sales in Europe totalled 942,958
units (2022: 878,515 units; +7.3%). Solid growth was also rec-
orded in Germany, where deliveries totalled 272,589 units
(2022: 254,292 units; +7.2%). In the UK, sales rose to 159,202
units (2022: 157,329 units; +1.2%). Significant growth was rec-
orded in France, with sales up to 86,606 units (2022: 75,805
units; +14.2%), while Italy also saw strong growth with 78,763
units delivered (2022: 67,025 units; +17.5%).
558,462
Automotive segment cash inflow from operating activities im-
proved year on year, with the change in trade receivables and
trade payables contributing to the increase. In contrast, the build-
up of inventories to service the markets had a negative impact.
Liabilities for bonus payments to dealerships went up, partly due
to the higher sales volume, and had a positive impact on the cash
flow. In addition, the net cash inflow from operating activities rose
due to lower income tax payments.
478,932
24.8
326
295,358
292,922
0.8
100.0
Rolls-Royce total
6,032
6,021
0.2
Spectre
PUS659E
7 Consumption and Carbon Disclosures.
70
70
BMW Group Report 2023
To Our Stakeholders
Combined Management Report
Financial Performance
Group Financial Statements Responsibility Statement and Auditor's Report
Other Information
← = Q
M.JA 1737E
Automotive segment earnings performance in line with
expectations
28.2
76,700
1,510
2,015
- 25.1
32,141
24,423
31.6
10.9
Wraith/Dawn
168
8.7
328
24,207
27,870
- 13.1
8.2
Cullinan
3,523
3,260
8.1
83,403
- 48.8
Ghost
As in the analysis of the Group's earnings performance, it should
be noted that BMW Brilliance has been fully consolidated since
11 February 2022, and therefore for only part of the financial
year 2022. In 2023, it has been included for the full year.
The segment's cost of sales amounted to € 109,920 million and
was therefore moderately higher than the previous year (2022:
€ 104,324 million; +5.4%). Similar to revenue, higher vehicle
sales and full consolidation of BMW Brilliance also had an impact
in this regard. The segment's cost of sales was also negatively
impacted by increased expenses for warranties. A higher propor-
tion of electrified, especially all-electric, vehicles also contributed
to increased costs.
1.3
9.8
8.6
1.2
17.4
8.1
1 Gross profit as a percentage of segment revenues.
17.3
0.1
15.6
8.1
35,615
61
BMW Group Report 2023 To Our Stakeholders
Combined Management Report
Financial Performance
Group Financial Statements Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
← = Q
The Automotive segment generated a free cash flow in 2023 to-
talling € 6,942 million.
2 Profit before financial result as a percentage of segment revenues.
At € 132,277 million (2022: € 123,602 million; +7.0%, cur-
rency-adjusted: +11.3%), the Automotive segment recorded a
solid year-on-year increase in revenues on the back of higher ve-
hicle sales. In the previous year, vehicle sales fell due to produc-
tion cutbacks caused by the limited availability of semiconductors
and wiring harnesses as well as pandemic-related lockdowns in
China. Furthermore, the increased volume of high-revenue mod-
els sold, such as the BMW 7 Series and the BMW X5, as well as
growth in spare parts and accessories business, also contributed
to the year-on-year increase in revenues. The full consolidation
of BMW Brilliance also increased revenues. Unfavourable cur-
rency translation effects, primarily from the Chinese renminbi and
the US dollar, held down the increase in revenues.
16.9
2022
In the previous year, the impact of the full consolidation of
BMW Brilliance, including approximately € 1.8 billion in depreci-
ation from purchase price allocation and the elimination of ap-
proximately € 1.3 billion in intra-group profits, had a negative ef-
fect on the cost of sales. Depreciation from the purchase price
allocation amounted to approximately € 1.4 billion in 2023.
The increased research and development expenditure is primar-
ily related to the cross-series digitalisation and electrification of
the vehicle fleet, as well as the development of automated driving
functions. Furthermore, the expenditure resulted from the
development of new models, such as the BMW 5 Series and
NEUE KLASSE models, for example.
Selling and administrative expenses rose to € 9,195 million in
the reporting period (2022: € 8,801 million; +4.5%). A signifi-
cant reason for the increase is higher costs for IT projects.
The net amount of other operating income and expenses de-
creased year-on-year. Among other factors, other operating in-
come in the previous year included higher reversals of provisions.
At € 12,981 million, profit before financial result in the 2023 fi-
nancial year was significantly higher than in the same period of
the previous year (2022: € 10,635 million; +22.1%). The full
consolidation of BMW Brilliance had a dampening impact in
2022 in the year-on-year comparison.
The EBIT margin for the segment was at 9.8% for the reporting
year (2022: 8.6%; +1.2 percentage points). As forecasted in the
quarterly report for 30 September 2023, the EBIT margin was
within the range of 9.0 to 10.5%.
The financial result of the Automotive segment was a net nega-
tive amount of € 339 million and therefore significantly down on
the previous year's corresponding figure (2022: net positive
BMW Group margins by segment
Change
in % points
in %
Gross profit margin¹
EBIT margin²
MOTORCYCLES
Gross profit margin¹
EBIT margin²
amount of € 8,283 million). The main reason for the year-on-
year deterioration was the gain of € 7.7 billion recognised in
2022 in other financial result arising on the remeasurement of
the segment's previous at-equity interest in BMW Brilliance.
In the year under report, the interest result was primarily im-
pacted by higher expenses arising from the unwinding of interest
on discounted provisions, while interest income from bank de-
posits had an offsetting effect. In the previous year, interest in-
come arising from the change in interest rates in connection with
the unwinding of interest on discounted provisions was reported
within interest and similar expenses.
At € 12,642 million, profit before tax for the financial year 2023
was significantly down on the previous year (2022:
€ 18,918 million), whereby the decrease was primarily due to
the gain of € 7.7 billion recognised in other financial result in
2022 arising on the remeasurement of the segment's previous
at-equity interest in BMW Brilliance.
The Automotive segment's return on capital employed (ROCE)
for 2023 finished at 20.2%, and was therefore within the pre-
dicted target range of 18 to 22% (2022: 18.1%; +2.1 percent-
age points). The improvement was primarily due to the higher
profit before financial result.
2023
AUTOMOTIVE
52.7
- 5.1
163,929
12.5
BMW X7
61,117
57,905
5.5
2.7
BMW iX
BMW XM
BMW i3/18
1.3
BMW total
39,130
30.3
2.3
6,749
0.3
755
22,280
- 96.6
2,252,793
50,989
2,100,689
277,057
BMW X5/X6
273,877
315,590
- 13.2
12.2
59,763
48,708
22.7
2.7
10,957
280,684
12,029
0.5
318,051
242,189
31.3
14.1
405,562
400,898
1.2
18.0
- 8.9
7.2
100.0
thereof BEV
The
year 2023 was an extremely successful one for Rolls-Royce.
The luxury brand delivered a total of 6,032 units to customers in
the reporting year (2022: 6,021 units; +0.2%).
With this performance, Rolls-Royce achieved a new record high
in terms of deliveries of ultra-luxury class automobiles. Once
again, the most sought-after model was the Luxury Offroader
Rolls-Royce Cullinan. The Bespoke programme, which allows for
custom-made Rolls-Royce models tailored to individual cus-
tomer preferences, also enjoyed great success worldwide. To-
wards the end of 2023, the first all-electric Rolls-Royce Spectre*
made its market debut. The luxurious Supercoupé marks a mile-
stone in the history of the prestigious marque and already has a
backlog of orders stretching through to 2025.
Deliveries of Rolls-Royce automobiles by model variant
in units
MINI Hatch (3- and 5-door)
MINI Convertible
MINI Clubman
MINI Countryman
MINI total
Record high for Rolls-Royce
2023
Change in %
Share of MINI
deliveries 2023 in %
in units
Phantom
2023
505
2022
418
Change in %
20.8
155,607
2022
All-electric vehicles accounted for 15.3% of deliveries (2022:
14.9%; +2.7%). The new MINI family will be launched in the
course of 2024. In addition to the completely new MINI Cooper
E*, an all-electric version of the MINI Countryman* is also availa-
ble for the first time. The new MINI Aceman, the brand's first
crossover model, will make its debut as a purely electrically pow-
ered model in spring 2024.
Deliveries of MINI vehicles by model variant
In 2023, the MINI brand delivered a total of 295,358 units to
customers (2022: 292,922 units; +0.8%), similar to the previ-
ous year's level. Electrification also had a highly perceptible im-
pact in the premium compact segment, with the MINI Cooper SE*
once again finishing the year as the brand's best-selling model.
The MINI Cooper SE Convertible* was also launched during the
reporting year, providing electrified driving pleasure in combina-
tion with an open-air experience. The limited edition of 999 ve-
hicles was quickly sold out. Overall, electrified MINI models (BEV
and PHEV models) accounted for 20.8% of the brand's deliver-
ies (2022: 20.8%; +0.0%).
330,197
172,008
92.0
14.7
thereof PHEV
173,878
200,945
- 13.5
7.7
M.YH2739E
17 Consumption and Carbon Disclosures.
2 Deliveries including BMW Brilliance Automotive Ltd, also for the period prior to that entity's
full consolidation in the BMW Group Financial Statements (1 January to 10 February 2022:
96,133 units).
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MINI electrifies driving pleasure
16.6
100.0
Taxonomy
eligibility
IV
Differences in accounting treatments based on HGB (used for
the Company Financial Statements) and IFRS (used for the
Group Financial Statements) are mainly to be found in connec-
tion with the capitalisation of intangible assets, the creation of
valuation units, the recognition and measurement of financial in-
struments and provisions as well as the recognition of deferred
tax assets. Differences also arise in the presentation of assets
and liabilities and of items in the income statement.
Business environment and review of operations
The general and sector-specific environment of BMW AG is es-
sentially the same as that of the BMW Group and is described in
the Financial Performance section of the Combined Management
Report.
BMW AG develops, manufactures and sells automobiles and
motorcycles as well as spare parts and accessories manufac-
tured in-house, by foreign subsidiaries and by external suppliers,
and performs services related to these products. Sales activities
are carried out primarily through branches, subsidiaries, inde-
pendent dealerships and importers. Automobile deliveries in-
creased by 235,621 to 2,620,920 units in the financial year
2023. This figure includes 692,267 units relating to series sets
supplied to BMW Brilliance Automotive Ltd., Shenyang, an in-
crease of 50,473 units compared with the previous year.
As of 31 December 2023, BMW AG had 85,168 employees,
plus 5,733 apprentices, interns and thesis students (31 Decem-
ber 2022 81,683 employees, plus 5,500 apprentices, interns
and thesis students).
The
year 2023 was characterised by a volatile business environ-
ment marked by increasing (geo-)political tensions. In addition,
in many markets higher inflation rates accompanied by increased
interest rates had a negative impact on the consumer climate.
Despite these factors, BMW AG overall looks back on a positive
business performance in the reporting year.
BMW AG's solid financial condition is reflected in the results of
operations, financial position and net assets reported for the fi-
nancial year 2023. Business developed in line with management
expectations. This assessment also takes into account events
after the end of the reporting period.
75
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Group Financial Statements
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Results of operations
BMW AG Income Statement
in € million
Revenues
Cost of sales
2022
98,807
- 81,653
17,154
The key financial performance indicator for BMW AG is the divi-
dend payout ratio. This is defined as the unappropriated profit of
BMW AG in accordance with HGB in relation to the Group net
profit attributable to shareholders of BMW AG in accordance with
IFRS. The key non-financial performance indicators are essen-
tially identical and concurrent with those of the BMW Group.
These are described in detail in the ▾ Financial Performance section
of the Combined Management Report.
2,529
Bayerische Motoren Werke Aktiengesellschaft (BMW AG), based
in Munich, Germany, is the parent company of the BMW Group.
The comments on the BMW Group and Automotive segment
provided in earlier sections apply to BMW AG, unless presented
differently in the following section. The Financial Statements of
BMW AG are drawn up in accordance with the provisions of the
German Commercial Code (HGB) and the relevant supplemen-
tary requirements contained in the German Stock Corporation
Act (AktG).
COMMENTS ON THE
Dealership financing up on previous year
At 31 December 2023, the total business volume of dealership
financing stood at € 18,941 million, up sharply compared to the
end of the previous financial year (2022: € 15,209 million;
+24.5%). The increase was mainly due to improved vehicle
availability, model changes and a higher average financing vol-
ume per vehicle.
OTHER ENTITIES SEGMENT /
ELIMINATIONS
The Other Entities segment recorded a loss before tax
of € 100 million (2022: profit before tax of € 995 million). The
main reason for the deterioration was the level of fair value
measurement losses recognised on interest rate hedging trans-
actions in the line item "Other financial result" as a result of falling
interest rates in the USA, the UK and the eurozone during the
reporting year. In the previous year, sharply rising interest rates
led to fair value measurement gains on interest rate hedging
transactions reported by the Other Entities segment.
At the level of profit before tax, eliminations increased to a posi-
tive amount of € 1,334 million (2022: € 122 million). In compar-
ison to the previous year, lower eliminations in 2023 for leasing
and credit financing business had a positive impact on the result
reported.
Asia/Pacific/
Middle East/Africa
10.3
China
12.0
Europe
35.5
10"
EU Bank'
18.1
America
24.1
1EU Bank comprises BMW Bank GmbH with its branches in Italy, Spain and Portugal.
2 Previous year's value adjusted due to a change in brands for contracts with third-party branded
vehicles.
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BMW Group Report 2023 To Our Stakeholders
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FINANCIAL STATEMENTS OF
BMW AG
2023
Gross profit
107,874
-90,865
17,009
Net profit
Transfer to revenue reserves
Profit from the reduction of the share capital
Transfer to capital reserves according to § 237 V AktG
Unappropriated profit available for distribution
Revenues increased by € 9,067 million compared to the previ-
ous year. Price and product mix effects, along with increased
sales volume, had a positive impact on revenue growth. Ex-
change rate factors also had a positive effect on revenues. Geo-
graphically, the increase in revenues was mainly attributable to
Europe and Asia. Revenues totalled € 107,874 million (2022:
€ 98,807 million), of which Group internal revenues accounted
for € 83,231 million (2022: € 77,843 million) or 77.2% (2022:
78.8%).
-84
- 1,067
6,330
- 19
6,311
Production costs went up by € 9,212 million to € 90,865 million,
mostly due to higher costs for materials and logistics.
Gross profit decreased by € 145 million to € 17,009 million.
Overall, selling expenses increased slightly, while general admin-
istrative costs increased substantially.
A large proportion of research and development expenses was
related to new vehicle models, including the all-electric
BMW i5* and Rolls Royce Spectre* models and the electrified
BMW 5 Series, BMW X3 and BMW X5 models, as well as the
development of digital products, automated driving and the
NEUE KLASSE. In line with the ramp-up of vehicles and the ex-
penses for platforms related to the transformation towards
electromobility, research and development costs increased by
2.1% compared to the previous year.
Other operating income was reduced to € 1,872 million (2022:
€ 2,529 million). The change was mainly due to lower reversals
of other provisions and lower income from financial transac-
tions.
Other operating expenses decreased to € 2,067 million (2022:
€ 2,889 million) and, as in the previous year, mainly included
expenses from financial transactions and additions to other
provisions.
Income from profit and loss transfer agreements with Group
companies, reported in the line item Result on investments, de-
creased significantly. This was essentially due to the decrease
in the profit of BMW INTEC Beteiliungs GmbH, Munich, which,
among other things, received lower distributions.
The financial result improved by € 2,842 million compared to
the previous year. The previous year mainly included higher ex-
penses from the the fair value measurement of plan assets off-
set against pension obligations.
Taxes on income resulted primarily from the current tax calcu-
lation for the financial year.
* Consumption and Carbon Disclosures
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Other taxes
Profit after income tax
Income taxes
Financial result
Selling expenses
- 4,123
- 4,058
Administrative expenses
Research and development expenses
- 3,824
-6,924
- 3,624
- 6,782
Other operating income
1,872
-2,067
- 2,889
Under the brand name Alphabet, the Financial Services segment
primarily offers credit financing and leasing contracts, as well as
related services, mainly to commercial customers as part of its
fleet management business. Out of the total portfolio of credit fi-
nancing and leasing contracts with retail customers, this line of
business accounted for 720,094 contracts at the end of the re-
porting period (31 December 2022: 714,630 contracts²;
+0.8%).
3,592
- 1,594
4,384
- 18
4,366
-564
- 830
24
-24
3,802
5,481
Other operating expenses
Result on investments
8,520
-2,926
Fleet business at previous year's level
At 31 December 2023, a total of 4,952,318 credit financing and
leasing contracts were in place with retail customers (31 Decem-
ber 2022: 5,210,246 contracts; -5.0%), with a declining trend
arising in all regions (EU Bank¹ -6.0%; Europe -2.8%; Americas
-2.8%; Asia/Pacific/Middle East/Africa -1.2%; China -15.5%).
in 1,000 units
C
New products unveiled by BMW Motorrad
Deutschland
11.6
Frankreich
10.4
Italien
7.7
USA
8.1
China
7.6
For BMW Motorrad, the 2023 reporting year was dominated by
the centenary celebrations. Four new models and four model up-
dates were presented for market launches in 2024. BMW Motor-
rad presented the new BMW CE 02 at the BMW Motorrad Days
in July 2023. One year after the launch of the BMW CE 04,
BMW Motorrad announced a further electric vehicle for urban
centres and is systematically pursuing its electric mobility strat-
egy. The BMW CE 02 eParkourer opens up a new vehicle seg-
ment in urban mobility.
As model updates, the F 800 GS, F 900 GS and GS Adventure
revive the BMW Motorrad 2-cylinder family in the Adventure
segment.
In parallel to the presentation of the model update of the S 1000
XR in October, the M variant - the M 1000 XR - was announced
as a new model and will provide new impetus in the sports seg-
ment. The R nineT family received a refreshed look with the world
debuts of the new R 12 nineT and R 12 boxer models towards
the end of the year.
0
2019
2020
2021
2022
2023
*For a definition of deliveries see Glossary. Retail vehicle deliveries during a given reporting pe-
riod do not correlate directly to the revenues that BMW Group recognizes in respect of such re-
porting period.
BMW Group Report 2023 To Our Stakeholders
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Spanien
6.1
Brasilien
6.7
Sonstige
41.8
in % of sales
Transition to a
circular economy
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MOTORCYCLES SEGMENT
BMW Motorrad achieves record sales in centenary year
In 2023, BMW Motorrad celebrated its 100th anniversary and
achieved a new record, with a total of 209,066 motorcycles and
scooters* delivered to customers (2022: 202,895 units). This
represents a slight increase of 3.0%, in line expectations for the
financial year.
Sales growth in all key regions
Motorcycles segment earnings performance within target
forecast
All major regions worldwide contributed to the successful sales
result in 2023. In Europe, deliveries increased slightly to
116,011 units (2022: 110,788 units; +4.7%). Germany re-
mained at the previous year's level with 24,176 units (2022:
24,129 units; +0.2%). France achieved a slight increase with
21,668 units (2022: 21,223 units; +2.1%). Slight growth was
also recorded in Italy with 16,179 units (2022: 15,668 units;
+3.3%). Deliveries in Spain totalled 12,716 units (2022:
12,506 units; +1.7%).
units sold, slightly down on the high number achieved in the pre-
vious year (2022: 17,690 units; -3.8%). Sales in China in-
creased slightly to 15,832 units (2022: 15,404 units; +2.8%).
Market launches in the reporting year
In 2023, BMW Motorrad celebrated its centenary and took the
opportunity not only to renew but also expand its product portfo-
lio in the premium segment. The BMW R 1300 GS was intro-
duced as the highlight and start of the renewal of the legendary
GS Boxer family and has been available to customers since No-
vember 2023.
In the first half of the year, three model updates were introduced
in the Sport and Super Sport segment with the R 1250 RS, the S
1000 RR and their high-performance M variant - the M 1000
RR. The R 1250 R was updated within the Roadster lineup. The
M 1000 R, the first M Roadster, took to the roads as a completely
new model. The centenary celebrations were complemented in
the Heritage segment by two exclusive edition models: the BMW
R 18 100 Years and the BMW R nineT 100 Years. Another high-
light of the year was the opening of BMW Motorrad Welt in Berlin
as the "Home of the Brand". Fans and other interested parties
can enjoy a world of experience centred around the BMW Motor-
rad brand.
Deliveries of BMW motorcycles
in 1,000 units
209.1
202.9
194.3
175.2
169.3
BMW Group - largest motorcycle markets 2023
In the Americas, deliveries totalled 46,184 units, maintaining the
previous year's level (2022: 45,775 units; +0.9%). Solid growth
was recorded in Brazil with 14,106 units delivered to customers
(2022: 13,051 units; +8.1%). The USA saw a total of 17,017
Other Information
The EBIT margin of the Motorcycles segment came in at 8.1%
(2022: 8.1%) and therefore within the forecast target range of 8
to 10%.
The return on capital employed (ROCE) in the Motorcycles seg-
ment for the reporting year came in at 22.1%, and was therefore
within the expected target range of 21 to 26% (2022: 24.9%; -
2.8 percentage points). The primary factor for the year-on-year
change was the rise in net working capital, driven by a number of
factors, including the model update in 2023 and a moderate in-
crease in inventory levels.
2020
2021
2022
2023
*The calculation only includes automobile markets in which the Financial Services segment is rep-
resented by a consolidated entity.
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Retail customer contract portfolio in the Financial Services
segment in 2023
in 1,000 units
5,486
5,592
5,577
5,210
4,952
0
2019
2020
2021
2022
2023
Retail customer contract portfolio in the Financial Services
segment in 2023
2019
0
22.1
24.8
FINANCIAL SERVICES SEGMENT
Financial Services segment earnings down on previous year
Profit before tax reported by the Financial Services segment for
the financial year 2023 amounted to € 2,962 million (2022:
€ 3,205 million; -7.6%) and was therefore moderately down on
the previous year. Key reasons for the decrease were higher re-
financing costs due to rising interest rates and a decrease in the
contract portfolio. Remarketing revenues from lease returns re-
mained at a high level, but were nevertheless below the previous
year's figure. This also had a negative impact on earnings com-
pared to the previous year. On the other hand, a lower expense
for credit risk provisioning had a positive effect on earnings. In
the previous year, the level of expense recognised in connection
with credit risk provisioning was heavily influenced by geopolitical
uncertainties and a weaker macroeconomic outlook.
The credit loss ratio for the entire credit portfolio remained at a
low level in 2023, finishing at 0.18% for the year (2022: 0.13%).
In balance sheet terms, business volume increased slightly to
stand at € 137,910 million (2022: € 135,689 million; +1.6%).
Stable earnings performance by Financial Services segment
Return on equity for the Financial Services segment remained at
a similar level to the previous year, finishing at 17.2% for the fi-
nancial year 2023 (2022: 17.9%; -0.7 percentage points). Re-
turn on equity for 2023 was therefore within the revised target
range of between 16 and 19%.
New business with retail customers in line with last year's
level
Credit financing and leasing business with retail customers re-
mained at the same level in 2013, with a total of 1,542,514 new
contracts concluded (2022: 1,545,490 contracts; -0.2%). Out of
the new contracts concluded in 2023, 325,320 contracts (2022:
321,535 contracts; +1.2%) related to credit financing and leas-
ing of pre-owned BMW Group vehicles.
New lease business grew by 8.5% increase in 2023, whereas
credit financing business contracted by 4.1%. Leasing ac-
counted for 33.6% of total new business, credit financing for
66.4%.
The total volume new credit financing and leasing contracts with
retail customers rose by 3.4% to € 57,333 million (2022:
€ 55,449 million), mainly due to a higher average financing vol-
ume per vehicle as a result of an improved product mix in the
Automotive segment.
The share of new BMW Group vehicles either leased or financed
by the Financial Services segment stood at 38.2%* in 2023
(2022: 41.0%; -2.8 percentage points).
New BMW Group vehicles leased or financed by the
Financial Services segment*
in %
52.2
49.8
At € 258 million, profit before tax in the financial year 2023 was
down slightly (2022: € 269 million; - 4.1%), whereby sales vol-
ume growth and positive pricing effects were offset by unfavour-
able product mix effects and higher material costs. In a year-on-
year comparison, net interest expense of € 1 million in 2023 had
a negative impact on the financial result (2022: net interest in-
come of € 12 million). In the previous year, interest income aris-
ing from the change in interest rates in connection with the un-
winding of interest on discounted provisions was reported within
interest and similar expenses. In contrast, decreasing interest
rates had a negative impact in 2023.
50.5
38.2
22.3
21.4
20.8
16.2
16.1
IIII
Financing
Leasing
29.9
28.4
29.7
41.0
← = Q
72
Subject to the shareholders' approval of the appropriation of re-
sults at the Annual General Meeting, the unappropriated profit
available for distribution amounts to € 3,802 million (2022:
€ 5,481 million). This translates to a payout ratio of 33.7% cal-
culated based on the BMW AG shareholders' portion of the
Environmental Objectives III to VI for the first time, following the
new Delegated Regulation 2023/2486. New activities for Envi-
ronmental Objectives I and II are set out by Delegated Regulation
2023/2485. The BMW Group will be required to report on Tax-
onomy alignment for all environmental objectives from reporting
year 2024 onwards.
Our holistic understanding of sustainability
The BMW Group supports the overarching goal of the EU Tax-
onomy to promote the private financing of environmentally sus-
tainable economic activities in order to make Europe the world's
first climate-neutral continent by 2050. As a company aspiring
to achieve Net zero across its entire value chain² by no later than
2050, the BMW Group had already set ambitious, science-
based targets for all three scopes in 2020, which it aims to
achieve by 2030 (base year 2019). These goals were validated
by the Science Based Targets initiative (SBTi). Each year, the
BMW Group informs about the actual level of progress. The BMW
Group Strategy
In the coming years, as a result of the significant increase in elec-
tric mobility, the majority of carbon emissions will no longer be
generated primarily in the use phase, but in the upstream value
chain. Without the planned set of measures to reduce carbon
emissions generated within the BMW Group supply chain, these
emissions (Scope 3 upstream) would already exceed actual car-
bon emissions in the use phase prior to 2030 (Scope 3 down-
stream) The BMW Group Strategy, Production and Supplier Network,
7 Carbon Emissions. Accordingly, the BMW Group is taking a holistic
approach to achieving its sustainability-related targets and is
committed to considering 7 Carbon Emissions over the entire life cy-
cle. Among other things, the BMW Group's measures include a
further reduction in energy demand, increased use of renewable
energy (Scope 1 and 2), the use of new, efficiency-increasing
technologies (Scope 3 downstream), the use of green electricity
as a criterion when awarding contracts to suppliers and a contin-
uously increasing secondary raw material quota (Scope 3 up-
stream). However, for the economic activities that are relevant to
the BMW Group, the EU Taxonomy focuses exclusively on reduc-
ing carbon emissions during the use phase that are attributable
to low-emissions (until 2025) and emissions-free drivetrains. In-
direct carbon emissions, for instance those produced when gen-
erating charging current or during the energy-intensive produc-
tion of high-voltage batteries, are not taken into account in the
context of these economic activities. Moreover, the EU Taxon-
omy only reflects the impact of decarbonisation measures on in-
house production to the extent that they serve to manufacture
Taxonomy-aligned products or to the extent that they are explic-
itly included in the description of an activity. For example, in-
creasing the energy efficiency of paint shop processes also re-
duces carbon emissions in in-house production when an internal
combustion engine vehicle is painted. The BMW Group's sus-
tainability efforts in this regard is not or only partially taken into
account as part of currently defined economic activities in the EU
Taxonomy. Carbon Emissions ]]
1The definition of the three performance indicators and their differentiation from IFRS can be found
in the Glossary.
2 In this context the entire value chain is to be understood as Scope 1 and 2 as well as the Scope 3
categories applicable to the BMW Group (categories 1, 4 and 11) in accordance with the Green-
house Gas Protocol.
19
79
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Combined Management Report Group Financial Statements
EU Taxonomy
Responsibility Statement and Auditor's Report
Remuneration Report
Other Information
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]]
[[Explanatory comments on reporting procedures
For the reporting year 2023, we are continuing to report on Tax-
onomy eligibility and Taxonomy alignment in relation to Environ-
mental Objective I "Climate change mitigation" and Environmen-
tal Objective II "Climate change adaptation". We will also be re-
porting on Taxonomy eligibility in relation to Environmental Ob-
jective IV "Transition to a circular economy" for the first time.
There are, at present, no economic activities relevant to the
BMW Group relating to Environmental Objective III “Sustainable
use and protection of water and marine resources", Environmen-
tal Objective V "Pollution prevention and control" or Environmen-
tal Objective VI "Protection and restoration of biodiversity and
ecosystems". Taxonomy eligibility is an initial indicator of the
maximum environmental sustainability potential of economic ac-
tivities as defined by the EU Taxonomy. Taxonomy alignment,
on the other hand, serves as an indicator of an organisation's
transformation towards environmentally sustainable economic
activities.
An economic activity is considered as Taxonomy-eligible if it is
described in the Delegated Acts relating to one of the six envi-
ronmental objectives, regardless of whether that economic activ-
ity meets the technical screening criteria stipulated in those Del-
egated Acts. Following an analysis, the BMW Group's business
activities can be summarised under the following economic
activities*:]]
[[ Overview of economic activities
[[Explanatory comments on reporting procedures
Substantial
contribution
Do no
significant
harm (DNSH)
Minimum
safeguards
Economic
activity is
taxonomy-aligned
In the previous year, the BMW Group reported on the Taxonomy-
eligible and Taxonomy-aligned proportion of its revenues, capital
expenditure and operating expenditure for Environmental Objec-
tives I and II. From reporting year 2023 on, the BMW Group is
also required to report on the proportion of Taxonomy-eligible
revenues, capital expenditure and operating expenditure for
This contribution is based on fulfilment of specific predetermined
requirements. Moreover, no other environmental objective may
be significantly harmed during performance of the activity and
the company involved must observe minimum safeguards,
among them compliance with human rights.
VI. Protection and restoration of biodiversity and ecosystems
V. Pollution prevention and control
The decrease in liabilities to subsidiaries to € 22,648 million
(2022: € 25,703 million) was mainly due to the decline in finan-
cial liabilities.
Deferred income went up by € 450 million to € 4,501 million and
included primarily amounts for services still to be performed re-
lating to service and maintenance contracts.
Risks and opportunities
BMW AG's performance is essentially dependent on the same
set of risks and opportunities that affect the BMW Group and
which are described in detail in the Risks and Opportunities chapter
of the Combined Management Report. As a general rule, BMW
AG participates in the risks entered into by Group companies in
proportion to the respective shareholding percentage. At the
same time, the result on investments has a significant impact on
the earnings of BMW AG.
BMW AG is integrated in the Group-wide risk management sys-
tem and internal control system of the BMW Group. Further in-
formation is provided in the Internal Control System chapter of the
Combined Management Report.
Outlook
For the financial year 2024, BMW AG expects an unchanged div-
idend payout ratio (unappropriated profit of BMW AG in accord-
ance with HGB in relation to the Group net profit attributable to
shareholders of BMW AG in accordance with IFRS), and there-
fore within the targeted range of between 30 and 40% (2023:
33.7%).
Due to its significance in the Group and its close ties with Group
companies, expectations for BMW AG with respect to its non-fi-
nancial performance indicators correspond largely to the BMW
Group's outlook. This is described in detail in the 7 Outlook chapter
of the Combined Management Report.
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesell-
schaft, Frankfurt am Main, Munich branch, has issued an unqual-
ified audit opinion on the Company Financial Statements of BMW
AG, of which the balance sheet and the income statement are
presented here. For the purposes of their inclusion in Company
Register, the Company Financial Statements of BMW AG for the
financial year 2023 will be submitted electronically to the body
that maintains the Company Register, and may be obtained via
the Company Register website. The financial statements are also
available on the BMW Group website at www.bmwgroup.com/ir.
78
BMW Group Report 2023
To Our Stakeholders
Economic activities
Combined Management Report
EU Taxonomy
Remuneration Report
Other Information
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EU TAXONOMY
[[As part of the implementation of the European Green Deal and
the Action Plan "Financing Sustainable Growth", the EU Taxon-
omy is a cornerstone of the EU's aspiration to become climate-
neutral by 2050. It aims to channel capital flows towards envi-
ronmentally sustainable economic activities.
The EU Taxonomy is a classification system that defines eco-
nomic activities as environmentally sustainable based on fulfil-
ment of predetermined technical screening criteria.
Essentially, an economic activity can only be classified as sus-
tainable if it substantially contributes to one of the following six
environmental objectives:
I.
Climate change mitigation
II. Climate change adaptation
III. Sustainable use and protection of water and marine re-
sources
IV. Transition to a circular economy
Group Financial Statements Responsibility Statement and Auditor's Report
Other provisions decreased from € 11,686 million to € 11,537
million mainly due to a decline in provisions for taxes and provi-
sions for liability risks. Conversely, the provision for statutory and
non-statutory warranty and product guarantee obligations in-
creased.
are described in one of the Delegated
Acts
Economic activity does
not cause significant
harm to other environmental
objectives
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EU Taxonomy
Remuneration Report
Other Information
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[[The BMW Group examined the relevance of economic activity [[Environmental objectives of EU Taxonomy
CCM 3.18 "Manufacture of automotive and mobility compo-
nents" following the publication of the new Delegated Regulation
2023/2485. This economic activity may become increasingly
important in the next few years as the electrification of the vehicle
portfolio increases, but is not included in the reporting of the cur-
rent year.
In order to determine the Taxonomy alignment of economic ac-
tivities CCM 3.3 and CCM 6.5 in the reporting year, they must be
reviewed against the technical screening criteria relevant to
them:
1. They make a substantial contribution to the fulfilment of
the environmental objective based on the specific carbon
emissions for the respective vehicles ("Substantial contri-
bution").
2. They do not cause any significant harm to other environ-
mental objectives based on the specific requirements for
each relevant economic activity ("Do no significant harm"
or "DNSH").
It must also be ensured that the organisation carrying out the
economic activities has established minimum safeguards.]]
Protection and restoration
of biodiversity
and ecosystems
VI
V
Pollution prevention
and control
Climate change mitigation
х
||
Climate change
adaptation
о
III
Sustainable use
After deducting the expense for taxes, the Company reported a
net profit of € 4,366 million, compared to € 6,311 million in the
previous year.
and protection of water
and marine resources
80
Taxonomy eligibility
IV,,Transition to a circular economy"
Contribution to Environmental
Objective II is subsumed under
Environmental Objective I
Company establishes
minimum safeguard
procedures for human
rights, bribery and
corruption, taxation and
fair competition
Economic activities
Code(s)
Description
The production of automobiles and motorcycles, excluding
Environmental objectives
Reporting 2023
Comments
Manufacture of low carbon
technologies for transport
CCM 3.3, CCA 3.3
- the sale of parts and components, such as after-sales business excluding the
provision of repair services,
Substantial contribution
to at least
one of the environmental
objectives
I,,Climate change mitigation"
II,,Climate change adaptation"
Transport by motorbikes,
passenger cars and light
commercial vehicles
CCM 6.5, CCA 6.5
Sale of second-hand goods
CE 5.4
- the supply of components for production to third parties
The acquisition, financing, lease and operation of automobiles and motorcycles,
excluding banking and insurance services performed by our non-automotive
Financial Services segment
Sale of second-hand automobiles that have been used for their intended purpose
before by a customer
II „Climate change adaptation"
Contribution to
EnvironmentalObjective II is
subsumed under Environmental
Objective I
I,,Climate change mitigation"
Taxonomy alignment
Taxonomy alignment
After offsetting pension plan assets against pension obligations,
provisions for pensions decreased from € 2,871 million to
€ 2,231 million.
*The additional economic activities specified in Delegated Regulation (EU) 2022/1214 of 9 March
2022 (in particular with regard to nuclear energy and gaseous fossil fuels) are not relevant to the
BMW Group. Accordingly, specific reporting tables for these activities are not included.
Equity fell by € 2,286 million to € 17,932 million, mainly due to
lower unappropriated profit and lower retained earnings as a re-
sult of the share buyback programmes. The equity ratio changed
from 28.0% to 26.4%.
29,460
27,541
Revenue reserves
11,046
11,665
Inventories
8,505
7,523
Unappropriated profit available for distribution
3,802
5,481
Trade receivables
1,349
1,161
Equity
17,932
20,218
Receivables from subsidiaries
16,398
24,510
Registered profit-sharing certificates
24
25
Other receivables and other assets
3,120
Tangible, intangible and investment assets
2,426
2,450
Capital reserves
BMW Group's consolidated net profit in accordance with IFRS.
The payout ratio thus remains within the forecasted corridor of
30% to 40%, as in 2022 (30.6%).
Financial and net assets position
In order to secure pension obligations, cash funds totalling € 430
million were transferred to BMW Trust e. V., Munich, in conjunc-
tion with a Contractual Trust Arrangement (CTA), to be invested
in plan assets. Plan assets are offset against the related guaran-
teed obligations.
The payout ratio takes into account the number of shares entitled
to dividends at 31 December 2023 and may change prior to the
Annual General Meeting due to the ongoing share buyback
programme.
BMW AG Balance Sheet at 31 December
in € million
ASSETS
Intangible assets
2023
2022
in € million
2023
2,281
2022
1,444
639
663
Property, plant and equipment
15,560
14,004
Nominal amount of own shares
- 5
-17
Investments
12,077
12,093
1,823
Pension provisions
EQUITY AND LIABILITIES
Subscribed capital
2,871
902
Liabilities
31,599
33,392
Deferred income
4,501
4,051
Total assets
67,824
72,243
Total equity and liabilities
67,824
72,243
77
BMW Group Report 2023
To Our Stakeholders Combined Management Report
Financial Performance
Remuneration Report
Other Information
← = Q
Capital expenditure on intangible assets and property, plant and
equipment in the year under report totalled € 4,571 million
(2022: € 4,498 million). Depreciation and amortisation
amounted to € 2,607 million (2022: € 2,452 million).
Investment assets remained in line with last year's level and to-
talled € 12,077 million (2022: € 12,093 million). Inventories in-
creased to € 8,505 million (2022: € 7,523 million), primarily due
to higher levels of finished goods and goods for resale.
Receivables from subsidiaries declined to € 16,398 million
(2022: € 24,510 million). Specifically, there was a decrease in
financial receivables from BMW INTEC Beteiliungs GmbH, Mu-
nich.
Cash and cash equivalents decreased slightly by € 62 million to
€ 6,145 million due to outflows from investing and financing
activities. This was offset by the surplus from operating activities.
2,231
The increase in other receivables and other assets to € 3,120
million (2022: € 2,281 million) was due in particular to an in-
crease in other assets.
1,364
25,703
Group Financial Statements Responsibility Statement and Auditor's Report
Other liabilities
Marketable securities
2,705
2,904
22,648
Other provisions
11,537
11,686
Cash and cash equivalents
6,145
6,207
Provisions
13,768
14,557
Current assets
Liquidity within the BMW Group is ensured by means of a liquidity
concept applied uniformly across the Group. This involves con-
centrating a significant part of the Group's liquidity at the level of
BMW AG. An important instrument in this context is the cash pool
based at BMW AG.
38,222
Liabilities to subsidiaries
7,552
Trade payables
116
142
6,786
Liabilities to banks
1
35
44,586
Prepaid expenses
BMW Group Report 2023
98
86
1 Including intangible assets and right-of-use assets from lessee relationships.
2 Including Spotlight Automotive Ltd.
[[Revenues for economy activity CCM 3.3 include small amounts
from Taxonomy-aligned activities related to the BMW Group's
Company car programme. These Company cars are generally
transferred to the BMW Group's external sales programme
within 12 months after a short period of in-house use.]]
← = Q
1,661
2,062
6
CCM 6.5
3
2
3
9
1,655
2,051
156
191
11
To Our Stakeholders
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
14
CCM 3.3
2022-2028
2023-2029
Code(s)
2022
2023
Total
Transport by motorbikes, passenger cars and light commercial vehicles
Economic activities
in € million
[[CapEx plan for expansion of or transformation into Taxonomy-aligned economic activities
and contains various investment measures with different imple-
mentation times (e.g. electrification of the vehicle fleet, model re-
visions, structural investments in production sites). The CapEx
plan earmarks € 68,473 million for economic activity CCM 3.3
and € 24,847 million for economic activity CCM 6.5. The in-
crease in Taxonomy-aligned capital expenditure and operating
expenditure as compared to the previous year's plan can largely
be attributed to the anticipated faster electrification of the vehicle
portfolio in the Automotive and Motorcycles segments and, with
a time delay, in the financing and leasing lines of business, and
generally higher capital expenditure and operating expenditure
associated with electrification until the end of the decade.]]
A CapEx plan is required to be drawn up for capital expenditure
and operating expenditure that expand Taxonomy-aligned eco-
nomic activities or allow Taxonomy-eligible economic activities
to become Taxonomy-aligned. This plan has been approved by
the Board of Management of BMW AG and covers a seven-year
period (2023-2029). The CapEx plan covers capital expenditure
and operating expenditure for the reporting year and planned
capital expenditure and operating expenditure (only non-capital-
ised development costs) for 2023-2029 for economic activities
CCM 3.3 and CCM 6.5. The selected future period corresponds
to the detailed long-term corporate planning of the BMW Group
[[CapEx plan for Environmental Objective I "Climate change
mitigation"
← = Q
68,473
55,989
Other Information
Combined Management Report
EU Taxonomy
Manufacture of low carbon technologies for transport
Total
1,485
Maintenance/repair expenses
Right-of-use assets (lessee) - not capitalised
Development costs - not capitalised²
Economic activity CCM 6.5
Total
Maintenance/repair expenses
Right-of-use assets (lessee) - not capitalised
Development costs not capitalised²
Economic activity CCM 3.3
Operating expenditure
Total
Total
Leased products
Development costs
Property, plant and equipment¹
Economic activity CCM 6.5
24,847
Total
Leased products
Total
Remuneration Report Other Information
2023
2022
1,843
5,100
7,926
504
1,018
503
1,018
1
1
17
4,596
1,042
1,516
3,554
5,391
15,705
23,690
441
15,264
23,340
350
6,908
16,520
N
72,509 ]]
23,690
N/EL
N/EL
N/EL
N
Y
0.2
350
N/EL
N/EL
N/EL
N/EL
Y
15.0
23,340
CCM 3.3; CCA 3.3
CCM 6.5; CCA 6.5
Category transitional activity
Category enabling activity
revenues
15.2
15.2%
0%
0%
Y
Development costs
0%
0%
0%
0%
0%
15.0%
15.0
aligned (A.1) or eligible (A.2)
23,340
Y
Y
Y
Y
T
V V V V V V V 0.3
N/EL
0% Y
0%
0%
11.0
93,320
Proportion of Taxonomy
Biodiversity
A.2 Taxonomy-eligible but not environmentally sustainable activities
(not Taxonomy-aligned activities)
Of which transitional
Of which enabling
Transport by motorbikes, passenger cars and light commercial vehicles
Revenues of environmentally sustainable activities (Taxonomy-aligned) (A.1)
Manufacture of low carbon technologies for transport
A.1 Environmentally sustainable activities (Taxonomy-aligned)
A. TAXONOMY-ELIGIBLE ACTIVITIES
Economic activities
EU Taxonomy
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
To Our Stakeholders
BMW Group Report 2023
87
Financial year 2023
[Revenues
A. Revenues of Taxonomy-eligible activities (A.1+A.2)
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Revenues of Taxonomy-non-eligible activities
Total
Code(s)¹
Circular economy
Pollution
Water
Climate change adaption
Climate change mitigation
in % Y;N;N/EL Y;N; N/EL Y;N; N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N Y;N Y;N Y;N Y;N Y;N Y;N
in € million
DNSH criteria
Biodiversity
Minimum safeguards
Circular economy
2022
("Does not significantly harm")
Substantial contribution criteria
Water
Climate change adaption
Climate change mitigation
Proportion of Revenues³
2023
Revenues
Pollution
Property, plant and equipment¹
The following overview tables summarise the performance indi-
cators revenues, capital expenditure and operating expenditure
from Taxonomy-eligible and Taxonomy-aligned economic activ-
ities of the BMW Group. Regardless of the Taxonomy require-
ments, the BMW Group regularly and comprehensively ad-
dresses risks arising from climate change and their potential im-
pact on its sites and supply chains. 7 DNSH adaptation to climate
change, TCFD climate risks
Capital expenditure
For Taxonomy-eligible
[[For other operating expenditure (non-capitalised right-of-use
assets (lessee), maintenance/repair expenses) relating to
economic activity CCM 3.3, the allocator is based on the
Taxonomy-aligned revenues generated from the Automotive
and Motorcycles segment in the reporting period.
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
EU Taxonomy
BMW Group Report 2023 To Our Stakeholders
83
83
*PHEV volumes are only taken into account in the allocator until reporting year 2025 inclusive.
The allocator is based on detailed long-term corporate planning
for the next six years, as approved each year by the Board of
Management and Supervisory Board. It is used for capital
expenditure on property, plant and equipment (including right-of-
use assets from lessee relationships), intangible assets and
expenditure on research and development for economic activity
CCM 3.3. For operating expenditure, the allocator is only applied
to non-capitalised development costs.]]
Allocator for economic activity CCM 3.3: Proportion (BEV +
PHEV [<50 g CO₂]) x Automotive segment revenues
(2024-2029)*
In most cases, values from financial data were allocated directly
to the economic activities for all three performance indicators,
based for example on the drivetrain or the vehicle model. In the
remaining cases, an allocation mechanism was used for each
economic activity and each performance indicator. For Taxon-
omy-eligible and Taxonomy-aligned capital expenditure for eco-
nomic activity CCM 3.3, the allocator is based on long-term Tax-
onomy-aligned revenues generated from the Automotive and
Motorcycles segment:
In the case of capital expenditure and operating expenditure, all
Taxonomy-eligible expenditure is allocated to the two economic
activities CCM 3.3 and CCM 6.5. There is no separable Taxon-
omy-eligible capital expenditure and operating expenditure for
economic activity CE 5.4.
the BMW Group. All Taxonomy-eligible revenues, capital ex-
penditure and operating expenditure for economic activities CCM
3.3 and CCM 6.5 are disclosed under Environmental Objective I
"Climate change mitigation", given that there are no identifiable
values for Environmental Objective II "Climate change adapta-
tion" that can be separated from Environmental Objective I "Cli-
mate change mitigation". This approach avoids double counting
of revenues, capital expenditure and operating expenditure when
determining the KPI in the numerator across multiple economic
activities.
The proportion of total revenues, capital expenditure and oper-
ating expenditure relating to eligible and non-eligible economic
activities are shown in each case as an aggregate percentage for
Please refer to the remarks in the glossary for the definition and
calculation of the Taxonomy-specific performance indicators rev-
enues, capital expenditure and operating expenditure and their
differentiation from IFRS. Glossary
EU Taxonomy performance indicators
and Taxonomy-aligned capital
expenditure for economic activity CCM 6.5, the allocator is based
on the Taxonomy-aligned financing volume for new customers
in the current financial year:
The minimum safeguard requirements are met.
Allocator for economic activity CCM 6.5: DNSH alignment
factor x BEV proportion x financing volume attributable to
new customer contracts (2023)
Improvement in all three performance indicators for
reporting year 2023
Revenues¹
[[Voluntary additional information on the Taxonomy-aligned share per economic activity
[[As the overview tables from Delegated Regulation (EU)
2023/2486 do not provide a detailed picture of the BMW
Group's business model per economic activity, the following
table provides detailed information about the three performance
indicators as regards Taxonomy alignment, reported separately
for economic activities CCM 3.3 and CCM 6.5.]]
← = Q
Other Information
Remuneration Report
Responsibility Statement and Auditor's Report
Combined Management Report Group Financial Statements
EU Taxonomy
BMW Group Report 2023 To Our Stakeholders
84
Economic activity CE 5.4, "Sale of second-hand goods”
As stipulated by Delegated Regulation 2023/2486, the
BMW Group only reports on the Taxonomy-eligible propor-
tion of revenues for economic activity CE 5.4. This economic
activity includes revenues from pre-owned vehicles in the
Automotive segment and revenues from the sale of used
cars after their intended use by clients in the Financial Ser-
vices segment, but does not include revenues from the sale
of used motorcycles. Around 12% of total revenues are
Taxonomy-eligible in reporting year 2023.1]
Economic activity CCM 6.5, "Transport by motorbikes,
passenger cars and light commercial vehicles"
The Taxonomy-aligned shares for the three performance in-
dicators are at a low single-digit level for the Financial Ser-
vices segment. This is due to the fact that there is a time lag
before the effects of the vehicle fleet electrification ramp-up
are reflected in the financing and leasing lines of business.
A further reason is the varied, stricter DNSH requirements
for economic activity CCM 6.5, in particular those relating to
Environmental Objective V "Pollution prevention and con-
trol", which lead to the exclusion of almost all PHEV and a
significant restriction in the recognition of BEV (for details
see section Do no significant harm). Third-party brands are
not included in the vehicle portfolio in the reporting on Tax-
onomy alignment for economic activity CCM 6.5. A lack of
available data regarding the tyre categories or WLTP emis-
sions values of third-party products makes it impossible to
review compliance with the DNSH criteria in full. Moreover,
revenues from the sale of lease returns are reported under
the new economic activity CE 5.4, differently from the previ-
ous year. The Financial Services segment recorded a de-
cline in revenues for 2023 in absolute terms following the
reallocation of revenue components to the new economic
activity CE 5.4. The Taxonomy-aligned proportion of capital
expenditure in the Financial Services segment rose by more
than 50% on the previous year to 3.3% (€ 1,018 million).
Based on total capital expenditure in the Financial Services
segment, the Taxonomy-aligned proportion rose by signifi-
cantly more than 40% to 5.4%. Voluntary additional information
on the Taxonomy-aligned share per economic activity
The Taxonomy-aligned proportion of capital expenditure in
the Automotive and Motorcycles segment rose to 22.7%
from 19.1% in the previous year. Looking only at the Tax-
onomy-aligned additions to intangible assets and property,
plant and equipment in the context of additions recorded by
the Automotive and Motorcycles segment, however, gives
rise to a considerably higher proportion of Taxonomy-
aligned capital expenditure of more than 60%. Segment-
specific capital expenditure is thus around 17 percentage
points higher than in the previous year. This was driven by
increased investment in sustainable products and plant in-
frastructure as part of electrification. This underscores the
BMW Group's extensive capital expenditure on sustainable
products and technologies. Voluntary additional information on
the Taxonomy-aligned share per economic activity
The Taxonomy-aligned share of revenues generated by the
Automotive and Motorcycles segment corresponded to
15.0% (economic activity CCM 3.3 "Manufacture of low-
carbon technologies for transport") of total Group revenues
(2022: 10.7%). As a percentage of third-party revenues of
the two segments, the Taxonomy-aligned share rose to
22.1% (2022: 15.7%). As a result, revenues from the Au-
tomotive and Motorcycles segment that are associated with
the manufacture of low-carbon technologies for transport
(CCM 3.3) increased by approximately 41%. In contrast to
the previous year, revenues from pre-owned vehicles in the
Automotive segment are reported under the new economic
activity CE 5.4, somewhat dampening the rise in Taxonomy-
aligned revenues. Segment information
Economic activity CCM 3.3, "Manufacture of low-carbon
technologies for transport”
leased products. Consequently, an examination of the pro-
portion of Taxonomy-aligned capital expenditure at BMW
Group level does not reflect the huge investment in sustain-
able economic activities and products. Operating expendi-
ture incurred for Taxonomy-aligned economic activities
amounted to € 2,051 million, corresponding to over 31% of
Taxonomy-eligible operating expenditure (2022: 29%).
7 Voluntary additional information on the Taxonomy-aligned share per
economic activity
Taxonomy-aligned revenues of the BMW Group amounted
to € 23,690 million (2022: € 15,705 million), correspond-
ing to 15% of total Group revenues and an increase on the
previous year of four percentage points. The Taxonomy-
aligned share of capital expenditure was 26% (€ 7,926 mil-
lion), which corresponds to an increase of almost five per-
centage points on 2022. Taxonomy-aligned capital ex-
penditure as a proportion of the BMW Group's total capital
expenditure is impacted significantly by additions related to
All three performance indicators have grown markedly on
the previous year at BMW Group level, highlighting that the
BMW Group is on the right track with its sustainable eco-
nomic activities relating to the EU Taxonomy.
BMW Group perspective
It refers to capital expenditure on leased products.
Additionally, companies that carry out economic activities as de-
fined by the EU Taxonomy are required to establish minimum
safeguards. These require the implementation of processes to
ensure compliance with due diligence obligations both within an
organisation and in stages of the upstream and downstream
value chain that have been outsourced. Specifically, this refers to
compliance with human rights and topics like bribery, corruption,
taxation and fair competition. In its Policy statement on respect for
human rights and corresponding environmental standards, the BMW Group
has, among other things, committed to compliance with the fol-
lowing standards for minimum safeguards as defined in Arti-
cle 18 of the Taxonomy Regulation: Organization for Economic
Cooperation and Development (OECD) Guidelines for Multina-
tional Enterprises, the UN Guiding Principles on Business and
Human Rights and the Ten Principles of the UN Global Compact,
which we signed back in 2001. 7 Purchasing and Supplier Network,
7 Compliance and Human Rights
Minimum safeguards
The DNSH requirements for Environmental Objective V are ful-
filled for economic activity CCM 3.3; however, not all are fulfilled
for economic activity CCM 6.5, owing to the RDE and tyre label
requirements described.
The DNSH requirements for Environmental Objective II are ful-
filled for economic activities CCM 3.3 and CCM 6.5.
A robust climate risk and vulnerability assessment is required for
both economic activity CCM 3.3 and economic activity CCM 6.5
to determine that they do not cause significant harm to Environ-
mental Objective II. To satisfy this requirement, the physical cli-
mate risks at all key BMW Group production sites are considered
and an assessment of any damage that may occur as a result of
climate change is being carried out based on long-term climate
projection scenarios² up to 2035 and 2050. Moreover, we con-
sider potential natural hazards at all of our direct supplier loca-
tions in order to adequately take supply risks into account when
selecting and evaluating suppliers. Adaptive solutions to mitigate
risks are drawn up and implemented as appropriate based on
the results of this risk analysis and in consultation with site rep-
resentatives. For further information, see Climate-related Risks and
Opportunities.
Climate change adaptation
I
The vehicle portfolio for economic activity CCM 6.5 includes
BMW Group vehicles and vehicles from other manufacturers. As
no data are available regarding the relevant attributes of these
third-party products, it is currently not possible to make a com-
prehensive assessment in relation to the DNSH criteria. For this
reason, these vehicles are currently not reported as Taxonomy-
aligned.
Compliance with the DNSH criteria was reviewed in the reporting
year for the five additional environmental objectives, based in
each case on the specific requirements for economic activity CCM
3.3 "Manufacture of low carbon technologies for transport" and
economic activity CCM 6.5 "Transport by motorbikes, passenger
cars and light commercial vehicles".
Do no significant harm
In order to identify the specific carbon emissions of PHEV that
are not determined in line with Regulation (EU) 2019/631
(among others, USA and China), assumptions were made based
on the worst-case value for that vehicle model, even though
these emissions may have been lower in reality.
The BMW Group has reviewed its contribution to the environ-
mental objectives "Climate change mitigation" and "Climate
change adaptation" for the reporting year. Economic activity
CCM 3.3 and economic activity CCM 6.5 both make a substantial
contribution to Environmental Objective I "Climate change miti-
gation" due to the manufacture as well as financing and leasing
of low-emission (PHEV < 50 g CO2/km WLTP by 2025) and
zero-emission vehicles (BEV and motorcycles with 0 g CO2/km).
Economic activity CCM 3.3 and economic activity CCM 6.5 as un-
dertaken by the BMW Group are also described under Environ-
mental Objective II "Climate change adaptation". There are,
however, no identifiable values that can be separated from Envi-
ronmental Objective I "Climate change mitigation".¹
[[Substantial contribution
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
EU Taxonomy
To Our Stakeholders
BMW Group Report 2023
81
Y
до
Sustainable use and protection of
water and marine resources and
protection and restoration of
biodiversity and ecosystems
In order to establish that no significant harm is caused to Envi-
ronmental Objectives III and VI, it is necessary to perform a com-
prehensive risk analysis that looks at the preservation and pro-
tection of environmental, water and marine resources for eco-
nomic activity CCM 3.3 (in both cases, not relevant for economic
activity CCM 6.5).
In this context, the BMW Group carries out environmental impact
assessments in accordance with Directive 2011/92/EU during
the construction of new and expansion of existing sites within the
EU that also take account of water and biodiversity. At locations
outside the EU, the BMW Group carries out an environmental im-
pact assessment based on EU requirements. Moreover, a certi-
fied environmental management system pursuant to ISO 14001
has been implemented at all BMW Group production sites and all
local statutory requirements are met. Resource Management at all
locations
the requirements for rolling resistance coefficients for tyres and
in particular the external rolling noise of tyres. Owing to the lim-
ited availability of data, the eligibility of the models concerned is
calculated in a simplified manner based on the tyres approved
for these models, weighted by their purchase volumes and take
rates.
For the remaining PHEV and BEV models in the BMW Group's
vehicle portfolio, further deductions have to be made for individ-
ual models in the context of economic activity CCM 6.5 in light of
On the other hand, it is not possible to meet all criteria to do no
significant harm to Environmental Objective V in the case of eco-
nomic activity CCM 6.5. Current PHEV models with air pollutant
emissions under 50 g CO2/km WLTP offered by the BMW Group
and other manufacturers may make a substantial contribution as
defined by the EU Taxonomy. However, manufacturer specifica-
tions for air pollutant emissions in real driving conditions (real
driving emissions, RDE) can only be reduced for selected models
to 80% of the limit as required by the EU Taxonomy with refer-
ence to table 2 in the annex to the Clean Vehicles Directive, due
to potentially extreme driving situations. The vast majority of
PHEV in the vehicle portfolio for economic activity CCM 6.5 must
therefore be considered not Taxonomy-aligned, even if they
meet these values in everyday driving situations.
With regard to economic activity CCM 3.3, the BMW Group has
established corresponding processes which aim to monitor and
ensure legal compliance with any prohibitions and limits relating
to the use of chemical substances at vehicle level. All substances
used by the BMW Group are in compliance with national and Eu-
ropean laws. Substitutes are sought for hazardous substances
that are categorised as being of very high concern in accordance
with Article 57 and 59 of the REACH Regulation, if they are used
directly or in a proportion exceeding 0.1% weight by weight in a
mixture in the production processes of the BMW Group and are
consequently contained in the products of the BMW Group, while
taking factors such as economic and technical requirements into
account. If the use of these hazardous substances cannot be
avoided, the BMW Group uses them under controlled conditions
in accordance with hazardous material regulations.
The requirements to do no significant harm to Environmental
Objective V differ considerably for economic activity CCM 3.3 and
economic activity CCM 6.5.
control
Pollution prevention and
← = Q
Remuneration Report Other Information
Manufacture of low carbon technologies for transport (CCM 3.3)
Transport by motorbikes, passenger cars and light commercial
vehicles (CCM 6.5]
Group Financial Statements Responsibility Statement and Auditor's Report
BMW Group Report 2023 To Our Stakeholders
82
82
² SSP1-2.6, SSP2-4.5, SSP5-8.5.
1 The end-of-lease business for BEV previously included in economic activity CCM 6.5 is now re-
ported under economic activity CE 5.4 following the redefinition of this activity.
The DNSH requirements for Environmental Objective IV are ful-
filled for economic activities CCM 3.3 and CCM 6.5.1]
The requirements for both economic activities of the BMW Group
to do no significant harm to Environmental Objective IV differ for
each stage of the value chain. We fulfil these requirements during
the manufacturing process for BMW Group vehicles (economic
activity CCM 3.3) by, for example, using secondary raw materials
in our products, designing products to facilitate their recycling,
managing waste at our production sites in a way that prioritises
recycling over disposal, and systematically registering sub-
stances of concern along the entire supply chain. With regard to
the use phase and recycling of BMW Group vehicles (economic
activity CCM 6.5), we have set up appropriate processes to com-
ply with recycling requirements and established measures for
managing waste during maintenance and at the end of the life
cycle. All these criteria also form part of our comprehensive ap-
proach to the Transition to a circular economy.
Transition to a circular economy
The DNSH requirements for Environmental Objectives III and VI
are fulfilled for economic activity CCM 3.3.
Combined Management Report
EU Taxonomy
Sale of second-hand goods (CE 5.4)
Taxonomy-non-eligible revenues
Total revenues BMW Group
32.2
2,051
Proportion
Taxonomy-aligned
by activity
6,373
of which
21.2
26.0
7,926
30,449
n/a
n/a
n/a
76
3.74
5.4
1,018
18,942
43.24
Proportion
29.6
261
11
4.2
Total
Revenues related to financial services
Sales of products, related goods and revenue of service contracts
Revenues
in € million
[[Contextual KPI information related to Taxonomy-aligned economic activities
EU Taxonomy
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
To Our Stakeholders
60.4
BMW Group Report 2023
"Prior-year figures adjusted due to change in calculation basis.
3 Only includes the operating expenditure defined in the EU Taxonomy.
2 Taxonomy-aligned share calculated with denominator as the Taxonomy-eligible value of the re-
spective economic activity. See Note [20] to the Group Financial Statements for details on the
BMW Group's capital expenditure.
1 Taxonomy-aligned share calculated with denominator as third-party revenue from Taxonomy-
eligible values of the respective economic activity.
28.61]
2.5
31.1
2,062
6,634
85
Economic activity CCM 3.3
6,908
Proportion
Proportion
of which
Taxonomy-aligned
by activity
in %
in %
in € million
2022
2023
2023
in € million
2023
Total OpEx BMW Group³
Transport by motorbikes, passenger cars and light commercial
vehicles (CCM 6.5)
Manufacture of low carbon technologies for transport (CCM 3.3)
Operating expeditures
Total CapEx BMW Group
Taxonomy-non-eligible capital expenditures
Manufacture of low carbon technologies for transport (CCM 3.3)
Transport by motorbikes, passenger cars and light commercial
vehicles (CCM 6.5)
Capital expenditures²
Proportion
105,573
23,340
22.1
Taxonomy-aligned
by activity
11,431
of which
11.0
15.2
23,690
155,498
n/a
n/a
Proportion
n/a
n/a
n/a
n/a
18,799
1.44
1.9
350
18,465
15.74
12,661
Y
Climate change adaption
Y
Y
Y
N/EL
N/EL
N/EL
N/EL
N
Y
30.9
2,051
CCM 3.3; CCA 3.3
Category transitional activity
Category enabling activity
OpEx
aligned (A.1) or eligible (A.2)
Proportion of Taxonomy
Minimum safeguards
Biodiversity
Circular economy
Y
Pollution
Y
Y
Y
Y
Y
Y
Y
Y
Y
N/EL
N/EL
N/EL
N/EL
N
Y
0.2
11
CCM 6.5; CCA 6.5
E
28.5
Y
Y
Water
Climate change mitigation
in % Y;N;N/EL Y;N; N/EL Y;N; N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N Y;N Y;N Y;N Y;N Y;N Y;N
Economic activities
EU Taxonomy
← = Q
Other Information
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
To Our Stakeholders
BMW Group Report 2023
Financial year 2023
[[Operating expenditure
89
99
Total
E T
in %
]]
99.9
|
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (Taxonomy-aligned)
Manufacture of low carbon technologies for transport
Transport by motorbikes, passenger cars and light commercial vehicles
OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1)
Of which enabling
DNSH criteria
Biodiversity
Circular economy
Pollution
2022
("Does not significantly harm")
Substantial contribution criteria
Water
Climate change adaption
0.1
Climate change mitigation
2023
in € million
OpEx
Code(s)'
OpEx of Taxonomy-non-eligible activities
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
A. OpEx of Taxonomy-eligible activities (A.1+A.2)
A.2 Taxonomy-eligible but not environmentally sustainable activities
(not Taxonomy-aligned activities)
Of which transitional
Proportion of OpEx²
T
2,062
31.1 31.1%
༄།ཞ༐ རྗ།༅།
100.0
100.0
6,634
0.0
0
2 Taxonomy-aligned share of operatig expenditure per economic activity is 32.2% for CCM 3.3 and 4.2% for CCM 6.5, Voluntary additional information on the Taxonomy-aligned share per economic activity.
1 With reference to ANNEX II of Delegated Regulation (EU) of 27 June 2023 (EU 2023/2486).
EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL
100.0
6,634
68.9
4,572
OpEx of Taxonomy-eligible but not environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
N/EL
N/EL
N/EL
N/EL
EL
]]
in % E T
90
90
With the BMW VISION Neue Klasse, the BMW Group is demon-
strating what the next generation of core BMW brand vehicles
will look like. The Vision Vehicle, which was unveiled to the public
for the first time at the International Motor Show IAA Mobility
2023 in Munich, features a clear design language that is reduced
to the essentials with spacious surfaces and a small number of
striking lines. This approach focuses on signature features like
the BMW kidney grille and the Hofmeister kink in the side win-
dows. The design radiates more of the essence of BMW than
ever.]]
BMW VISION Neue Klasse
Remaining consistently one step ahead while keeping a firm eye
on the future is a core aspect of our philosophy as a company
and an expression of our firm commitment to innovation. The
BMW Group works tirelessly to provide our customers with for-
ward-thinking solutions today to simplify their daily lives. The
new BMW 5 series, for example, achieves a new level of digital
connectivity with its completely novel assistance systems. The
BMW VISION Neue Klasse offers a first glimpse at our next prod-
uct generation.
[[When developing innovations, the BMW Group attaches great
importance to rigorous customer orientation and the use of digi-
tal solutions. Innovations help to optimise processes, improve
products and introduce new technologies.
DIGITALISATION AND
CUSTOMER ORIENTATION
INNOVATION,
PRODUCTS
100 Electromobility
Carbon Emissions
EL
97
Innovation, Digitalisation and Customer
Orientation
90
PRODUCTS
← = Q
Other Information
Remuneration Report
Combined Management Report Group Financial Statements Responsibility Statement and Auditor's Report
Products
To Our Stakeholders
BMW Group Report 2023
95 Product Quality and Safety
78.7
3.8
CCM 6.5; CCA 6.5
Y
Y
Y
Y
0%
0%
0%
0%
0%
30.9%
30.9
2,051
28.6
YYYYYYY
0%
0%
0%
0%
0%
Y
Y
Y
28.5 E
Transport by motorbikes, passenger cars and light commercial vehicles
N/EL
N/EL
N/EL
N/EL
EL
EL
65.1
4,322
250
CCM 3.3; CCA 3.3
T
0.0
Y
Y
Y
Y
0%
0.0
0
Manufacture of low carbon technologies for transport
Y
25.0
53.7
30,449
Remuneration Report
Group Financial Statements Responsibility Statement and Auditor's Report
Combined Management Report
To Our Stakeholders
BMW Group Report 2023
Financial year 2023
[[Capital expenditure
88
88
Total
in % E T
]]
91.3
80.3
n/a
22.9
།
57.5
100.0
Other Information
155,498
← = Q
Economic activities
Substantial contribution criteria
Water
Climate change adaption
Climate change mitigation
Proportion of CapEx²
2023
in € million
Cap Ex
Code(s)'
CapEx of Taxonomy-non-eligible activities
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
A. CapEx of Taxonomy-eligible activities (A.1+A.2)
A.2 Taxonomy-eligible but not environmentally sustainable activities
(not Taxonomy-aligned activities)
Of which transitional
Of which enabling
Transport by motorbikes, passenger cars and light commercial vehicles
CapEx of environmentally sustainable activities (Taxonomy-aligned) (A.1)
Manufacture of low carbon technologies for transport
A.1 Environmentally sustainable activities (Taxonomy-aligned)
A. TAXONOMY-ELIGIBLE ACTIVITIES
EU Taxonomy
8.1
12,661
3 Taxonomy-aligned share of revenues per economic activity is 22.1% for CCM 3.3 and 1.9% for CCM 6.5, Voluntary additional information on the Taxonomy-aligned share per economic activity.
CCM 6.5; CCA 6.5
CE 5.4
Transport by motorbikes, passenger cars and light commercial vehicles
Sale of second-hand goods²
N/EL
N/EL
N/EL
N/EL
EL
EL
52.9
82,233
CCM 3.3; CCA 3.3
Manufacture of low carbon technologies for transport
T
0%
0.0
19
Y
Y
VVVVVVV 110 E
18,115
11.6
EL
EL
2 For economic activity CE 5.4, only the taxonomy eligibility is reported in accordance with Article 5 of Delegated Regulation (EU) of 27 June 2023 (EU 2023/2486).
1 With reference to ANNEX II of Delegated Regulation (EU) of 27 June 2023 (EU 2023/2486).
EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL
91.9
142,837
76.6
119,147
Revenues of Taxonomy-eligible but not environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
N/EL
("Does not significantly harm")
EL
N/EL
N/EL
N/EL
12.1
18,799
N/EL
N/EL
N/EL
N/EL
N/EL
2022
Pollution
Circular economy
14.9
4,524
CCM 3.3; CCA 3.3
CCM 6.5; CCA 6.5
Transport by motorbikes, passenger cars and light commercial vehicles
Manufacture of low carbon technologies for transport
0.0
Y
Y
T
T
YYYYYYY 19.1 E
Y Y Y Y Y Y Y 2-1
Y
Y
0.6%
0.6
168
0%
0%
EL
EL
N/EL
N/EL
0.2
76
2 Taxonomy-aligned share of capital expenditure per economic activity is 60.4% for CCM 3.3 and 5.4% for CCM 6.5, Voluntary additional information on the Taxonomy-aligned share per economic activity.
1 With reference to ANNEX II of Delegated Regulation (EU) of 27 June 2023 (EU 2023/2486).
EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL EL; N/EL
99.8
30,374
73.7
22,448
0%
CapEx of Taxonomy-eligible but not environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
N/EL
N/EL
N/EL
EL
EL
58.9
17,924
N/EL
N/EL
N/EL
100.0
0%
22.7%
Y
22.7
6,908
CCM 3.3; CCA 3.3
Category transitional activity
Category enabling activity
Cap Ex
aligned (A.1) or eligible (A.2)
Proportion of Taxonomy
Minimum safeguards
Biodiversity
Circular economy
Pollution
Water
Climate change adaption
Climate change mitigation
in % Y;N;N/EL Y;N; N/EL Y;N; N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N Y;N Y;N Y;N Y;N Y;N Y;N
DNSH criteria
Biodiversity
N
N/EL
N/EL
N/EL
22.7
6,908
N/EL
0%
0%
0%
0%
0%
26.0%
26.0
0%
7,926
N/EL
N/EL
N
Y
3.3
1,018
CCM 6.5; CCA 6.5
Y Y Y Y Y Y Y 19.1 E
N/EL
N/EL
Y Y Y Y Y Y Y 10.7 E